Tag Archives: Credit Standards

Mortgage credit became a little more accessible in December, according to the monthly Mortgage Credit Availability Index from the Mortgage Bankers Association (MBA). The index score for December is 110.9, up 0.6 percent from a reading of 110.2 in November. The index has been hovering around the 110 mark for the past several months, fluctuating slightly with a decrease in November after an increase in October and two straight months of declines in August and September.

Confidence in housing among the Realtor crowd increased slightly in November, though concerns about credit availability continue to temper that optimism. A survey from the National Association of Realtors (NAR) shows that among who reported transactions in November but ultimately did not close a sale, 9 percent said the homebuyer could not obtain financing, and of those, 6 percent reported the buyer gave up on purchasing the home. If lenders returned to "normal" credit standards, NAR says as many as 500,000 more sales could occur.

Despite recent gains, which some of us believe are more of a mirage than an oasis, the economy still isn't creating enough good-paying full-time jobs to drive a full recovery in the housing market. At the same time, stricter lending requirements--and a lending environment I believe is going to get more challenging before it gets easier--are the other major headwinds that could slow down housing. While most forecasts are calling for a slight uptick in purchase loans in 2014, it's easy to build a scenario that goes terribly wrong.

The National Association of Realtors sent out a national survey in July, 2013 to buyers and sellers who made a transaction at some point in the last year. Among other findings, the survey showed increased use of online resources throughout the process. The first step in the process for 42 percent of buyers was searching online for properties. Use of the Internet to search for homes rose slightly to 92 percent. Eighty-eight percent of buyers purchased their home through an agent or broker--a share that has steadily increased from 69 percent in 2001.

A slight decline in mortgage rates spurred refinance activity up in November, Ellie Mae revealed in its latest monthly Origination Insights Report.

The Federal Housing Administration (FHA) published on Wednesday new guidelines for lenders to use when manually underwriting loan applications for borrowers applying for FHA-insured mortgages. Chief among the changes is a set of "compensating factors" for lenders to use when considering borrowers whose debt-to-income percentages exceed established ratios (31 percent for housing costs and 43 percent for total discretionary debt).

The Mortgage Bankers Association's" (MBA) Mortgage Credit Availability Index (MCAI) slipped 1.2 percent to settle at 110.2 in November, wiping out the 0.7 percent gain recorded a month prior.

Rising prices may be bringing some homeowners out from underwater, but tight credit will still preclude many traditional buyers from the market, according to a recent report from DataQuick.

Zillow expects conditions next year to be a bit friendlier to homebuyers--but that doesn't mean we'll necessarily see more owner-occupied housing, experts at the real estate marketplace say. Looking at ongoing trends, Zillow made four major predictions about the course of housing over 2014: a 3 percent increase in home values, a rise in mortgage rates to 5 percent, a clearer road to credit for borrowers, and a decline in homeownership to normal levels.

Though tightened underwriting standards have been partly to blame for why housing isn't recovering faster, CoreLogic's Sam Khater says the silver lining is that loan performance has improved greatly. "While there has been much consternation about underwriting being too tight in the context of forthcoming mortgage regulations, one underappreciated outcome has been the very good performance of mortgages during the last few years," Khater said in an article in CoreLogic's most recent Marketpulse report.