Treasury Secretary Unveils Small Steps to Augment Loan Modification Program

The Obama administration will extend its Making Home Affordable initiative for at least one additional year, through 2016. The suite of federal programs was a key part of the White House's plan to help homeowners in the wake of the financial meltdown. The cornerstone of Making Home Affordable is a mortgage modification program known as HAMP, which has led to more than 1.3 million loan restructurings. However, the number of workouts is far fewer than anticipated. The administration also will takes steps to improve mortgage availability and address rising rents. Treasury Secretary Jacob Lew announced the new measures at a conference observing the fifth anniversary of Making Home Affordable, and housing advocates applauded the extension primarily because there is no replacement for it. Lew also urged Congress to extend the Mortgage Debt Relief Act but did not breach the topic of principal reduction.

From "Treasury Secretary Unveils Small Steps to Augment Loan Modification Program"
New York Times (06/27/14) P. B3 Dewan, Shaila

Keating Talks Housing Market on Fox Business


It’s harder for younger Americans to get mortgages, ABA President and CEO Frank Keating told host Maria Bartiromo yesterday on Fox Business’ “Opening Bell” program.

“I bought my first house when I was 27,” Keating said. “Now our estimates are that the average young person today will be 37 or even 40 the first time they have an opportunity to buy a home.” He attributed this to high prices as a percentage of income, a soft job market and heavy student loan debt.

Regulatory burden is also inhibiting the market, Keating explained. “We also face 4,000 pages of existing mortgage rules, 2,000 more pages of mortgage rules going forward in 2015,” he explained. “It’s not a friendly market."

--ABA Daily Newsbytes

Risky Form of Reverse Mortgage Nipped in the Bud by HUD

The FHA announced that it will no longer insure fixed-rate, line of credit reverse mortgages due to interest rate risk to lenders. This variation of the product commits lenders to funding additional draws at a fixed rate even if their own borrowing costs rise and ultimately threatens the FHA's insurance fund if lenders are unable to honor their commitment, according to a June 18 letter to originators. The product also raised concerns soon after its debut because many Home Equity Conversion Mortgage borrowers mistakenly assume that a fixed-rate reverse product is the better and more conservative option for them. Ginnie Mae banned fixed-rate, line of credit reverse mortgages from its securitizations this year due to similar concerns. Lenders started making the loans in October, and most stopped after the Ginnie Mae policy change.

From "Risky Form of Reverse Mortgage Nipped in the Bud by HUD"
American Banker (06/24/14) Sinnock, Bonnie

Keating Discusses Barriers to Homeownership on CNBC

"With a combination of rising house prices, a modest recovery, young people with a lot of student loan debt and very rigid mortgage rules, we've seen less [housing] activity than we'd like to see," ABA President and CEO Frank Keating told the hosts of CNBC's Nightly Business Report last night.

Keating noted that new regulations like the Qualified Mortgage rule pose a particular problem for younger borrowers who may not be able to meet the more stringent QM criteria.

"A home is a great investment long term. And I would hope that we would get some rationality in these regulations so young people can have a shot at [homeownership]," he said.

Existing Home Sales Jump in May


Existing home sales jumped 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million, the National Association of Realtors said yesterday. The increase was the biggest month-on-month gain since August 2011. Sales remained 5 percent below their rate a year before. At $213,400, the median sales price for May was 5.1 percent higher than the year before.

--ABA Daily Newsbytes

Housing Starts Slip in May

Housing starts fell 6.5 percent in May to a seasonally adjusted annual rate of 1 million units, the Commerce Department reported yesterday. Starts were 9.4 percent above their rate a year ago. Permits for new construction, which are considered a gauge of future demand, fell 6.4 percent to an annual rate of 991,000.

---ABA Daily Newsbytes

Why Mortgage Down Payment Requirement Is So Hard to Relax

Even as Washington explores strategies to improve access to credit, lowering down-payment criteria for mortgages continues to be ignored as a potential solution. March data, for instance, show that purchase mortgages with loan-to-value ratios between 96 percent and 100 percent made up the smallest slice of the origination market since at least 2000. Fannie Mae and Freddie Mac now require a minimum 5 percent contribution from most buyers, and while the FHA will insure loans with equity as low as 3.5 percent, rising premiums are making its products more costly. The industry is worried about losses from defaults, which are much greater on low-down payment mortgages. But National Association of Hispanic Real Estate Professionals President Jason Madiedo says even a slight drop in the requirement could be a huge help to borrowers -- especially in the Latino community. Moreover, he adds, "I don't think down payment amount has been as big a factor as income and credit portfolio in the performance of a mortgage."

From "Why Mortgage Down Payment Requirement Is So Hard to Relax"
American Banker (06/13/14) Sinnock, Bonnie