Mortgage Delinquencies, Foreclosures Continue to Fall: OCC

The latest Mortgage Metrics report from the Office of the Comptroller of the Currency shows that 2013 was a more stable year for mortgage portfolios. Overall, 91.8 percent of the 24.9 million loans covered by the report were current in the fourth quarter, slightly better than 91.4 percent in the previous quarter and 89.4 percent a year earlier. Mortgages in the early stages of delinquency (defined as 30 to 59 days past due) accounted for 2.6 percent of the loans covered by the report, the lowest level since tracking began in January 2008. The share of home loans that were seriously delinquent fell 20.7 percent from a year earlier and one basis point from the previous quarter to 3.5 percent of the portfolio. Also, foreclosures initiated in the fourth quarter fell 20.6 percent from a year ago and nearly 5 percent from the previous quarter. Home-retention actions were nearly three times the number of completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions in the fourth quarter.

From "Mortgage Delinquencies, Foreclosures Continue to Fall: OCC"
American Banker (03/28/14) Witkowski, Rachel

Proposed Housing Bill Would Create a Co-Op of Mortgage Lenders

Rep. Maxine Waters (D-Calif.) believes the housing finance system should act more like a public utility. She plans to introduce a reform bill that would create a co-op of lenders that would be the sole issuer of mortgage-backed securities insured by the government. Private backers would be required to take the first 5 percent loss before the government guarantee takes effect. Karen Shaw Petrou, managing partner at Federal Financial Analytics, says whether enough entities will provide private-sector capital is a concern. "A utility, or co-op, may solve for that because it creates a special purpose entity that doesn't need to meet shareholder demand the same way a big bank or bondholder does," she explains. The proposal would establish a new federal regulator. A minimum down payment of 3.5 percent would be expected from a first-time buyer and 5 percent from everyone else, although the regulator would have the authority to lower those requirements.

From "Proposed Housing Bill Would Create a Co-Op of Mortgage Lenders"
New York Times (03/27/14) P. B3 Dewan, Shaila

Change Around the Corner for Credit Scoring

Data company FICO, which developed the credit scoring formulas often used by mortgage and auto lenders as well as credit card issuers, will release a new model this summer that it says will analyze risk more correctly. The new model is FICO's first major change in six years and is meant to address lenders' concerns about credit score consistency among the three major credit bureaus. The new formula, FICO Score9, will analyze data to see how a consumer's spending and credit habits may have changed compared to six years ago, before the recession. Consumers with good pre-recession scores may score slightly better in the new version.

From "Change Around the Corner for Credit Scoring"
Chicago Tribune (03/24/14) Umberger, Mary

Housing Advocates Criticize Johnson-Crapo GSE Bill

A number of advocacy groups have come together to protest legislation that would revamp the nation's residential finance system. They argue that a bipartisan bill from Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) would come at the expense of minority and lower-income households, whose access to credit could be narrowed. "The organizations warn that the measure also lacks provisions to ensure that the housing finance system is fair and non-discriminatory. The Johnson-Crapo plan would capitalize several affordable trust funds and offer incentives for lenders to work in underserved areas, but it would end affordable housing goals put in place under Fannie Mae and Freddie Mac. It also outlines lending criteria, including down payment requirements of 3.5 percent for first-time buyers and 5 percent for others, for mortgages to be included in a federally insured security.

From "Housing Advocates Criticize Johnson-Crapo GSE Bill"
American Banker (03/24/14) Finkle, Victoria

ABA Posts Staff Summary of Johnson-Crapo Proposal



ABA today released a staff summary of the bipartisan housing finance reform proposal unveiled recently by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho). The summary offers an overview of Johnson and Crapo’s proposals for a new Federal Mortgage Insurance Corporation, a mutual entity and securitization platform, multifamily housing finance, affordable housing and underwriting.

“We note that the draft includes many key provisions urged by ABA including equitable access to the secondary market for lenders of all sizes,” the summary says, adding that areas of concern include the regulatory authority of the FMIC, capitalization and first loss positions and the impact on affordable housing.

--ABA Daily Newsbytes

Adjustable-Rate Mortgages Make a Comeback

Adjustable-rate mortgages (ARMs) are riding a new wave of popularity. Some financial groups are even sweetening terms to attract more customers to these loans, whose rates can jump after a few years. The tactics recall a period prior to the 2008 economic meltdown when ARMs flourished as banks and mortgage brokers touted their low initial rates to the public. Now, though, financial executives insist that they are focusing on borrowers with strong credit who are using the option for "jumbo" mortgages -- not subprime borrowers who could not afford the loans after the rates reset. ARMs made up 31 percent of mortgages in the $417,001-to-$1 million range that were originated during last year's October-through-December period, notes Black Knight Financial Services. That is an increase from 22 percent during the same period a year prior and the largest share since 2008's third quarter.

From "Adjustable-Rate Mortgages Make a Comeback"
Wall Street Journal (03/17/14) P. A1 Andriotis, Annamaria ; Raice, Shayndi

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