The Majority of Consumers Have Subprime Credit Scores, Report Says

Approximately 56 percent of Americans are being held back by subprime credit scores, according to a new report from the Corporation for Enterprise Development. Many landed in that category during the housing bust and recession and are still trying to wipe away the black marks in their files. Financial blowback from defaults, foreclosure, or bankruptcy can last seven years to a decade. In the meantime, poor ratings are blocking consumers' access to traditional lending markets or, if they do qualify for financing, keeping them from obtaining the best rates on products. "There are millions of Americans who are being excluded from the financial mainstream," notes Jennifer Brooks, director of state and local policy at CFED. "They're relegated to using fringe, often high cost financial products that trap them in a cycle of debt." CFED analyzed TransUnion data based on the TransRisk score -- which ranges from 100 to 934, with any score below 700 deemed near prime or subprime. The organization acknowledges, however, that the TransRisk model is not the most common among the many different types of credit scores that lenders use.

From "The Majority of Consumers Have Subprime Credit Scores, Report Says"
Washington Post (01/29/15) Marte, Jonnelle

ICBA: 73 Percent of Community Banks Say Regulations Hurt Mortgage Lending

New mortgage regulations are preventing community bankers from making more residential mortgage loans, according to 73 percent of community bankers surveyed by the Independent Community Bankers of America. A large number are no longer active in the residential mortgage market, are considering an exit from this line of lending, or are leaving the market, reveals the ICBA's 2014 Community Bank Lending Survey. ICBA also reports that 44 percent of respondents said they originated fewer first-lien residential mortgage loans last year compared with 2013. Moreover, half of all rural banks said they do not qualify for the Qualified Mortgage rule's "rural" exception, which suggests that exemptions from the standard are too narrow and are limiting access to credit for customers who need it.

From "ICBA: 73 Percent of Community Banks Say Regulations Hurt Mortgage Lending"
Housing Wire (01/27/15) Garrison, Trey

News From ICBA

73 Percent of Community Banks Say Regulations Inhibit Mortgage Lending

Approximately three-quarters of community bankers responding to an ICBA survey said new mortgage regulations are keeping them from making more residential mortgage loans. Among its other findings, the 2014 Community Bank Lending Survey also found that: significant percentages of community banks are no longer active in the residential mortgage market, are considering an exit or are exiting the market, 78 percent of respondents reported increasing the number of staff members dedicated to lending compliance over the past five years, and 66 percent of respondents said they do not provide loans that are outside the Consumer Financial Protection Bureau’s Qualified Mortgage definition or would only do so in special cases. ICBA said the results show the negative impact of excessive community bank regulation and the need for Congress to act on ICBA’s Plan for Prosperity for the 114th Congress. ICBA’s regulatory relief platform includes a variety of provisions to protect community banks from the CFPB’s mortgage rules and other regulatory burdens.

Friday Rate Update

Mortgage Rates Lowest Since 2013


The rate for a 30-year fixed-rate mortgage averaged 3.63 percent this week, down from last week’s 3.66 percent and at its lowest level since May 2013, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.39 percent.

This week’s 15-year FRM rate averaged 2.93 percent, down from last week’s 2.98 percent rate. A year ago, the 15-year FRM rate averaged 3.44 percent.

--ABA Daily Newsbytes

Survey: Six in Ten Americans Checked Their Credit Report in Past Year
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Sixty percent of Americans have checked their credit report in the past 12 months, according to a survey conducted for ABA by Ipsos Public Affairs. Of those who accessed their credit report, nearly three in 10 have disputed something on their report.

Eighty-five percent say they are aware that they are legally entitled to a free credit report, while 44 percent believe a credit score and a credit report are the same thing with a different name. Consumers’ self-reported credit scores were in line with FICO’s average score of 692, and 49 percent believed that they had a score of 700 or above.

“The more consumers know about their own credit history, the better they can position themselves for lower rates when applying for loans,” said ABA SVP Molly Wilkinson. The survey, released in the latest issue of The Credit Line, polled more than 1,000 U.S. adult.

ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Continue to Fall

The rate for a 30-year fixed-rate mortgage averaged 3.66 percent this week, down from last week’s 3.73 percent and falling for the third consecutive week, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.41 percent.

This week’s 15-year FRM rate averaged 2.98 percent, down from last week’s 3.05 percent rate. A year ago, the 15-year FRM rate averaged 3.45 percent.

Mortgage Applications Soar as Consumers Snap Up Low Rates

Home loan demand registered the biggest weekly gain in more than six years, reports the Mortgage Bankers Association. Application activity spiked 49 percent in the week ended Jan. 9 as borrowers scrambled to lock in mortgage interest that has dipped to a nearly two-year low. Anecdotal evidence from mortgage brokers suggests that favorable borrowing costs, coupled with a recent White House announcement about lower fees for a popular federal loan program, motivated many prospective home buyers to get off the fence. Existing homeowners, however, drove last week's frenzy. MBA's refinance index reflected a 66 percent jump in volume, but the boomlet is not expected to last long, considering the limited number of existing borrowers who still carry high interest rates.

From "Mortgage Applications Soar as Consumers Snap Up Low Rates"
Wall Street Journal (01/14/15) Light, Joe