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Mortgage Credit Availability Trends Upward in May

A new index from the ""Mortgage Bankers Association"":http://mbaa.org/default.htm (MBA) and ""AllRegs"":http://www.allregs.com/ shows credit availability opened up slightly from April to May.

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The Mortgage Credit Availability Index (MCAI) feeds current mortgage underwriting parameters into a single index number to measure credit availability from month to month. It is calculated using several metrics related to borrower eligibility and underwriting criteria for more than 85 lenders and investors.

""For lenders, the MCAI will provide an industry wide summary statistic regarding the trend in mortgage credit availability. For policy makers, the MCAI can be a helpful gauge regarding the impact of policy changes on the availability of mortgage credit,"" said Mike Fratantoni, MBA's VP of research and economics.

According to the association, the MCAI grew to a value of 108.9 in May, an increase from 108.6 in April and a continuance of trends in the last several months. Both figures are up from the survey benchmark of 100 in March 2012.

If the index had been tracked in 2007, MBA said, it would have measured roughly 800.

Also of note: The number of loan programs with allow for loan-to-value (LTV) ratios of 95 or higher has also been trending upward, largely due to participation in the Home Affordable Refinance Program (HARP). Some investors have lowered their requirements with regards to minimum credit score, the group noted.

""HARP lending continues to be an important component of the market. The availability of these very high LTV loans is one of the factors leading to the MCAI showing an increase over the past year,"" Fratantoni said.

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