With the announcements from Bank of America, Wells Fargo, JPMorgan Chase, and Quicken Loans for non-Federal Housing Administration low-down payment programs, questions and thoughts have risen about the programs themselves and what their effect on the mortgage industry may be. For some first time buyers and low to moderate income buyers, these programs may be beneficial while for others it may not be a viable substitute for FHA lending.
According to Karan Kaul of the Urban Institute, first-time homebuyers and LMI buyers are heavily relying on FHA lending presently, but many home lenders have recently started to pull back from FHA lending, possibly due to the heightened risk of enforcement. Kaul says that he believes these new programs that don’t rely on FHA are creative attempts to increase lending to LMI borrowers. He doesn’t believe, though, that they will become meaningful substitutes for FHA with the way things are currently.
The Federal Reserve announced it would wait for the U.S. economy to stabilize a bit more before raising interest rates. The Fed released the minutes of its June Federal Open Market Committee meeting Wednesday, saying that given the pace of improvement in labor market conditions, which slowed in April and May, and the faster-than-expected rise in the gross domestic product, quote, consumer price inflation continued to run below the Committee’s longer-run objective of 2 percent. Close quote