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Tag Archives: Underwriting Standards

Regulations May Preclude Borrowers with Lower Credit Scores

As the housing market experiences a burgeoning recovery with rising prices, an uptick in sales, and an increase in housing starts, Federal Reserve Governor Elizabeth A. Duke points out purchase-originations remain "subdued," especially among individuals with less than stellar credit scores. While originations are down across the board, "[t]he drop in originations has been most pronounced among borrowers with lower credit scores," Duke said at the Housing Policy Executive Council Thursday in Washington, D.C.

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Demand, Credit Terms for Loans Both Ease in Q1

The percentage of banks reporting stronger demand for mortgage loans dropped in the first quarter from the fourth quarter last year, and a slightly greater percentage are reporting easing lending standards, the Federal Reserve Reported Monday. In the case of "traditional" mortgage loans, 4.6 percent of banks reported standards easing somewhat. While the survey results suggest a direction of lending standards, they could be misleading: A bank which has tightened lending standards as much as possible may not ease them but cannot tighten further.

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CFPB Releases Qualified Mortgage Criteria, Establishes Legal Protections


After many long months of waiting, the Consumer Financial Protection Bureau (CFPB) has finally issued its finalized "qualified mortgage" (QM) rule designed to protect both consumers and responsible lenders. One of the biggest provisions of the QM rule is the newly set Ability-to-Repay rule, which does away with so-called "no doc" and "low doc" mortgages. In addition, the CFPB explained there are two kinds of QMs that have different protective features for consumers and legal consequences for lenders.

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NAR Projects Record High for Housing Affordability in 2012

In November, the National Association of Realtors' Housing Affordability Index reached 198.2, up 1.5 points from a year ago. The association projects the index will achieve a record high of 194 for 2012. However, record high affordability doesn't necessarily translate into more homeowners, as "excessively tight underwriting precluded many would-be homebuyers from locking-in generational low interest rates," explained chief economist Lawrence Yun.

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Barclays Keeps Positive Builder Outlook as Housing Skies Clear

With the fiscal cliff negotiation out of the way--at least, the first phase of it--analysts at Barclays assert in a new release that "housing policy is transitioning from being a source of negative headline risk to a potential positive factor for the housing stocks." As the haze surrounding the state of the mortgage interest tax deduction (MID) lifts and the Federal Housing Administration (FHA) prepares to make reforms to its business model, analysts note that "anticipated policy changes have been less severe than feared."

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NCUA Files Largest Suit Yet Against JPMorgan, Bear Stearns

The National Credit Union Administration (NCUA) announced Monday it has filed suit against JPMorgan Securities and Bear Stearns over allegations of falsely representing the quality of mortgage-backed securities (MBS) sold to corporate credit unions. NCUA's complaint alleges that although Bear Stearns' offering documents described the firm's adherence to underwriting guidelines, the originators had in fact "systematically abandoned the stated underwriting guidelines in the Offering Documents."

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