Tag Archives: Underwriting Standards

A bold move to shore up global financial liquidity by the Federal Reserve and central banks from five other countries created a surge in confidence for investors Wednesday, inspiring a pickup in stocks and shares for the nation├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós four biggest U.S. lenders. The Dow Jones Industrial Average jumped nearly 500 points to crest at 12,045.68 by end of day in response, with shares climbing for Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Central banks agreed to lower prices for U.S. dollar liquidity swaps by 50 basis points.

All-time highs for housing affordability helped elevate pending-home sales for October 9.2 percent above figures seen over the same month last year, with fewer bad appraisals scuttling deals across the country. The National Association of Realtors measured contract signings for homes last month against numbers from the month before and last year, which it released with the Pending Home Sales Index. The trade group recorded 93.3 for pending-home sales in October, up from 84.5 in September ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 10.4 percent above figures seen during that month.

A failure by lawmakers to slash $1.2 trillion from the national debt spurred Fitch Ratings to place U.S. debt on negative outlook Monday, a move that immediately hit GSEs Fannie Mae and Freddie Mac by association. The ratings agency revised a stable outlook for debt held by Fannie and Freddie to negative, even while it reaffirmed AAA-ratings in place for the GSEs. Multiple news reports suggest that Fitch will likely downgrade credit ratings for the U.S. federal government, along with Fannie and Freddie.

Rep. Barney Frank, a liberal icon on Capitol Hill and co-author of the financial reform law that bears his name, announced that he will not seek reelection Monday. A newly redistricted area of Massachusetts ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô which he represented for 40 years ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô adds less than half a million new constituents and straddles an area with which he is unfamiliar, according to Frank. He pledged to continue his public advocacy efforts from outside the Beltway and finish his term in office. Analysts say his departure makes repeal more likely for the Dodd-Frank Act.

With the global economy overshadowed by debt crises, fleeing investors keep mortgage rates at record lows, as Zillow reaffirmed Tuesday. The real estate Web site polled its online audience, reporting that the benchmark 30-year fixed-rate mortgage hit 3.8 percent, the lowest rate in seven weeks. A dearth for the 30-year fixed-rate loan reflects a fall by 10 basis points, down from 3.9 percent last week. The 15-year fixed-rate mortgage likewise hovered around 3.16 percent.

Low-balling appraisals, job loss, and denials for mortgage applications helped scuttle closed contracts over October, which advanced 13.5 percent.

After several weeks of intense deliberation, with backers and supporters on both sides, Congress again raised limits for Federal Housing Administration conforming loans to $729,750, which President Barack Obama signed off on Friday. House lawmakers included an amendment to raise the limits in a stopgap spending measure cobbled together by both houses to keep the government running through December this year. The House voted for the bill by a 298-121 margin, which the Senate followed with 70 yeas and 30 nays. Trade groups rushed to extol the raised limits.

With homeowners largely staying on the sidelines, mortgage application volume underwent a seasonally adjusted 10-percent squeeze last week, according to the Mortgage Bankers Association. In releasing the Weekly Mortgage Applications Survey, the trade group found that declines overwhelmingly led most of the survey components. The MBA found the Market Composite Index declining by 19.6 percent on a seasonally unadjusted basis from the week before.

The Federal Housing Administration submitted an annual actuarial report to Congress Tuesday that suggests diminishing returns from a fledgling growth strategy could lead the agency to a taxpayer-funded bailout next year. The reason why? The FHA currently fails to meet a 2-percent capital reserve ratio mandated by federal law, with cash reserves on hand falling to less than an eighth below the required threshold. The report said that cash reserves on hand fell accordingly from $4.7 billion last year to $2.6 billion over 2011. Estimates predict that it could require $50 billion.

The same day that lawmakers deluged the GSEs and their regulator with criticism, Fannie Mae and Freddie Mac finally released guidelines Tuesday for lenders and servicers about modifications to the Home Affordable Refinance Program. The Obama administration ended weeks of speculation when it announced the modifications ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô specific to HARP 2.0, as dubbed by the media ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô in October. New guidelines effectively took lenders and servicers off the hook by nixing their legal culpability for original loans before homeowners refinance with the GSEs.