Survey: 3.4 Billion People Are Financially Illiterate

Two out of three adults worldwide -- an estimated 3.4 billion total -- have low financial literacy, according to a survey released yesterday by Standard & Poor’s. Fifty-seven percent of U.S. adults are financially literate, the survey found, two points above the average for major advanced economies. Two-thirds of U.S. homeowners had high levels of financial literacy.

The survey of 150,000 adults in 148 countries also identified a financial literacy gender gap in virtually every country. In the U.S., the study found that 62 percent of men are financially literate, compared to only 52 percent of women, a gap twice the size of the global average. The study also found that Americans with less education and lower incomes have lower financial literacy levels than their counterparts in other countries

---ABA Daily Newbytes

ABA, States Urge Support for QM Portfolio Bill 

ABA and 53 state bankers associations yesterday urged Congress to pass legislation (H.R. 1210) that would deem all mortgage loans that institutions originate and hold in portfolio as “qualified mortgages” for purposes of the ability-to-repay rule’s safe harbor provisions. The House is expected to vote on the bill this week despite the threat of a presidential veto.

“Portfolio lending is among the most traditional and lowest risk lending in which a bank can engage,” the groups wrote, noting that the bank carries all the credit and interest rate risk. They added that existing mortgage rules, especially the QM standards, “are overly restrictive and have made it difficult and in some cases impossible for banks to make these otherwise safe and sound loans to creditworthy borrower.

---ABA Daily Newsbytes

Credit Union Mortgage Market Share Rises

In an analysis of 2014 data collected under the Home Mortgage Disclosure Act, the credit union consulting firm Callahan & Associates identified 10 metro areas where credit unions originated over 30 percent of total mortgage loans. According to the report, credit unions in Waterloo and Cedar Rapids, Iowa, originated 44 percent of the area's home loans last year. Also on the list were La Cross, Wis.-Minn.; Pocatello, Idaho; Iowa City, Iowa; Appleton, Wis.; Saginaw-Saginaw Township North, Mich.; Utica-Rome N.Y.; Anchorage, Alaska; and Cumberland, Md.-W.Va. Callahan found that credit unions' overall market share climbed 0.3 percent last year, even as overall mortgage originations declined.

From "Credit Union Mortgage Market Share Rises"
Credit Union Times (11/11/15) Morrison, David

FHA Closes Loophole for Student Debt in Revamped Lender Handbook

An overhaul of the Federal Housing Administration's Single Family Housing Policy Handbook offers clarity to lenders on acceptable underwriting practices, but closing the loophole for student debt reduces their flexibility to get loans qualified. One change that went into effect on Sept. 14 requires lenders to consider deferred loan payments -- such as student loans not yet in repayment -- when calculating a borrower's debt to income ratio. Such debt previously could be excluded with proper documentation. "Given the rise in student loan debt in the population, that will shut out many young professionals," says Pro Mortgage Branching Solutions President Daniel Jacobs. However, Brian Sullivan, a spokesperson for the U.S. Department of Housing and Urban Development, says, "Deferred student debt is debt all the same and really must be considered when determining a borrower's ability to sustain both student debt payments and a mortgage long term. Our primary interest is to make certain that a first-time homebuyer is put on a path of sustainable homeownership rather than being placed into a financial situation they can no longer tolerate once their student debt deferment expires."

From "FHA Closes Loophole for Student Debt in Revamped Lender Handbook"
National Mortgage News (11/10/15) Sinnock, Bonnie

Freddie Enlists Faith Groups, Nonprofits to Boost Homeownership

Freddie Mac is partnering with faith-based organizations in hopes of attracting more potential borrowers to its 3 percent down payment mortgage product. In recent years, such groups switched their attention from home buyer outreach to foreclosure prevention due to the financial crisis, but Freddie Mac is once again looking to partner on a homeownership effort. The initiative includes financial education seminars and counseling sessions hosted by faith-based bodies using materials provided by Freddie Mac. The mortgage finance giant also has partnered with Quicken Loans, other lenders, and nonprofits on the 3 percent down payment program. Many consumers are qualified to own a home but may not realize that, says Chris Boyle, a senior vice president at Freddie Mac. "We do think there's a market out there that is not coming to the fore, and Millennials [are] one group," remarks Boyle.

From "Freddie Enlists Faith Groups, Nonprofits to Boost Homeownership"
American Banker (11/03/15) Berry, Kate

FHFA: Freddie Mac Falls Short of Low-Income Housing Goals

The Federal Housing Finance Agency in its Annual Housing Report on Friday said that Freddie Mac failed to meet its affordable housing goals for low and very-low income buyers purchasing single-family homes in 2014.

The goal was for 23 percent of loans the GSEs buy to go to households with incomes under 80 percent of their area’s median income and 7 percent to go to households with incomes under 50 percent of AMI. According to the report, Freddie hit 21 percent for low-income households (those with incomes under 80 percent of AMI) and only 4.9 percent for very-low income households (those with incomes under 50 percent of AMI).

Fannie Mae achieved all of its single and multi-family goals, exceeding or equaling the market for mortgage purchases for both low and very-low income borrowers. --ABA Daily Newsbytes