St Casimirs Mortgage Minute

Mortgage Lenders Ease Standards for Safest Borrowers

Americans are finding it slightly easier to get a mortgage, yet banks remain wary of lending to would-be home buyers with weaker credit histories. Nearly 10 percent of banks said they eased their lending standards for low-risk mortgages in the first quarter, according to the Federal Reserve's latest survey of senior bank-lending officers released Monday. The report showed more banks easing these standards compared with the less than 5 percent of banks easing prime-mortgage standards in a previous survey in February. Still, banks are focusing most of their lending on borrowers with strong credit histories. Most banks said they weren't any more willing to approve loans to borrowers with credit scores of 680 or 720—middle of the range—than a year ago. Meanwhile, a "modest net fraction" of banks were more likely to approve an application with a higher score of 720 and a 20 percent down payment.

From "Mortgage Lenders Ease Standards for Safest Borrowers"
Wall Street Journal (05/06/13) Shah, Neil


And conflicting news. . .


Fannie, Freddie Limited to QM Loans: FHFA

The Federal Housing Finance Agency announced Monday that Fannie Mae and Freddie Mac must restrict future mortgage purchases to "qualified mortgage" loans. The Consumer Financial Protection Bureau outlined the criteria for such loans in a rule issued in January, which included limitations on fees and points charged and verification of a borrower's income. When the rule goes into effect on Jan. 10 of next year, the FHFA said Fannie and Freddie will only purchase QM loans, effectively barring them from buying interest-only loans or those beyond a 30-year maturity.

From "Fannie, Freddie Limited to QM Loans: FHFA"
American Banker (05/07/13) Blackwell, Rob