The pristine performance of mortgage loans in the U.S. with a vintage of 2009 or later is an indicator that underwriting standards could be loosened, according to CoreLogic senior economist Molly Boesel.
In an analysis entitled “What’s an Acceptable Level of Mortgage Default?” published in CoreLogic’s December 2014 edition of The MarketPulse, Boesel constructs an argument that there is room to relax lending standards based on her assessment that improved housing market conditions and economic conditions, and not just a tighter credit box, are responsible for improved loan performance since 2009.
“Do mortgage vintages really need to be as pristine as they have been in the most recent years?” Boesel said in her analysis. “While there are many factors besides loan performance that should be considered in the policy decisions around access to credit, it is clear that mortgage originations made in the mid-2000s are still driving the SDQ (serious delinquency) rate, and originations made since 2009 are performing much better.”
The percentage of mortgages in the U.S. that were seriously delinquent (more than 90 days past due or either in foreclosure or bank-owned) was 4.2 percent in CoreLogic’s latest data (October 2014), less than half of the peak percentage of 8.6 in February 2010. Out of all the mortgage loans that were active as of the end of September 2014, only 25 percent of them were originated during the years immediately prior to the housing bust (2004 through 2008) while 77 percent of all seriously mortgage delinquent loans as of September 2014 were originated during those years.
When excluding the mortgages originated during 2004 to 2008, the nation’s serious delinquency rate drops by half from 4.2 percent down to 2.1 percent, according to CoreLogic.
Boesel presented two graphs, one that demonstrated serious delinquency rate for all mortgages since 2004 and one that shows serious delinquency rate of “plain vanilla” mortgages (owner-occupied, fully-documented, 30-year-fixed rate, conventional conforming purchase mortgage with mid-to-high credit scores and moderate loan-to-value ratios). The serious delinquency rate was only slightly lower for the “plain vanilla” mortgages, and the loans with a 2005 through 2008 vintage still showed outsized serious delinquency rates, leading her to the conclusion that the impact of tighter lending standards on the declining serious delinquency rate has been minimal.
“Given that forecasts for the economy and unemployment rate indicate slow and steady improvement and for house prices to continue to increase at a moderate pace, the excellent performance of current mortgage vintages gives some support to the notion that underwriting could be loosened in a responsible manner that still supports sustainable homeownership,” Boesel said in her report.
About Author: Brian Honea
Fannie Mae Announces Incentives
Fannie Mae announced Thursday that home buyers can now receive up to 3.5 percent in closing cost assistance. The help is available within the FirstLook period of Fannie Mae’s HomePath properties in 27 states.
The FirstLook period has been extended from 15 to 20 days, and gives private homeowners the ability to buy a home without competition from investors.
HomePath is the branding used by Fannie Mae-owned properties, and offers low down payment mortgages on properties that are real estate owned (REO).
“This incentive will provide more opportunities for families to find a property to call home,” said Jay Ryan, Vice President of REO Sales. “Our goal is to sell as many HomePath properties as possible to owner-occupants who will stabilize neighborhoods and help the housing recovery.”
To be eligible for the recently increased incentive, initial offers must be submitted between February 14, 2014 and March 31, 2014, and close on or before May 31, 2014.
HomePath properties include a wide variety of homes, including single-family houses, condominiums, and town houses.
Great Location 1900 S 12th St W Missoula
1900 S 12th W MissoulaListing information for 1900 12th St, 2 bedroom 1 bath bungalow in a great location. Large backyard with alley access. Handyman"s delight
Older home in an area of revitalization with new homes, remodels and upgrades. Large back yard with alley access. Remodel was in progress but not finished, living room has a new wall that created an additional room could be used as an office, if a closet is installed it could be a third bedroom.
The kitchen has no appliances and no sink. The bathroom was upgraded but not finished. The basement was being explored for design elements and support systems, but again nothing was completed. A true handyman’s delight in a great area.
HUD homes sold “as is” Case#311-191985 see www.hudhomestore.com for more information, Addenda & Disclosures. Also see www.mmrem.com.
109 Justus Lane Missoula MT 59801
Spacious four bedroom home is close to everything, the Milwaukee bike trail, Good Food Store and much more.
On the main level is an up-to-date galley kitchen with stainless appliances and a lovely bright eating area in front of a large west facing window. The living room is part of the open space which adds to the large feeling. There are two more bedrooms on the main level with large windows and closets.
Second story vaulted ceilings with fans and dormer windows at the roof line make the rooms look and feel huge. The Master bedroom has a wall to wall closet and large windows on the south and east walls. The other bedroom upstairs could also be called a master bedroom it is as large with two closets. Upstairs is a cozy nook that could be a den, a reading library, a child’s playroom – let your imagine design the space. A very large bathroom completes the upstairs.
But there is more … a full unfinished basement with 3 egress windows. This is a HUD home, Case #303-027419. HUD Homes are sold “AS IS”. For further information, disclosures and addenda or to place a bid go to www.Hudhomestore.com or www.mmrem.com
Cute Bungalow 4468 Illinois Bench Rd Stevensville MT
Cute bungalow with great potential on 10 acres. There are three bedrooms with a bonus room. The galley kitchen is small but serviceable with a cute breakfast nook with two windows one facing east for the morning sun and one facing south for the afternoon rays.
A compact bedroom with an anti-chamber hosts a built in desk, extra seating or a single bunk bed. The other two bedrooms are bright and on either side of the bathroom.The living room while not huge is comfy with windows on two sides.
A very large detached double car garage has a great work bench with room for storage. A very nice covered patio is private and looks out over the 10 acres parcel. Great views of both the Sapphire Mountains and the Bitterroot Mountains.
Case#311-199345, “HUD homes are Sold As Is” visit HUD Home Store at www.hudhomestore.com for more information on bidding and additional addenda. Also visit www.mmrem.com for information
2314 147th Drive in Corvallis MT
A Great 4 Bedroom 2 Bath Manufactured Home on 2+ acres
This mobile is in very good condition with lots of open space making it feel even larger than it already is. There is a skylight in the kitchen making the galley kitchen feel bright and warm. There is a small eating area, a large utility room with cabinets and one end of the kitchen and a large pantry in the middle. Tiled edges and back splashes give the kitchen a unique look with the light colored wood cabinets. Lots of area to store all of your utensils and there is even a small island.
A formal style dining room just off the kitchen is open to the living room. Both rooms take advantage of the vaulted ceiling again giving a spacious feel to them.
Three bedrooms and a bath are at one end from the living room and the master suite with a garden tub, windows and a separate shower on the other side.
The views of the Bitterroots are incredible out the front windows and from the front deck. In the back there is a covered patio and fruit trees and a shed with great views of the Sapphire mountains. What’s not to like? and at a great price!
Just listed 922 Lynn Lane Missoula MT
2 bedrooms 1 bath, living room, dining room, kitchen on main level
2 bedrooms 1 bath, family room, laundry room, office on lower level
Really Cute Bungalow
$120,000 Just Listed
Be sure to visit the HUD home store to see the addenda and inspections