Economists See Possible Subprime Spillover Wall Street Journal (03/16/07) P. A4 ; Izzo, Phil
A new WSJ.com survey of 60 economists reveals that 32 of the respondents believe that it is "very" or "somewhat" likely that the problems in the subprime-mortgage market will spread to the rest of the home-finance market.
However, by a 4-to-1 margin, the economists agree "that the worst of the housing bust is behind us;" and only 22 percent say the subprime problems have led them to lower their economic forecasts. "The underlying problem is not the subprime market perse, but the reset of large quantities of adjustable-rate debt--some of which is classified as subprime, some as prime--to higher interest rates in an environment of flat or falling house prices in most of the United States," writes Jan Hatzius, chief U.S. economist at Goldman Sachs, in a research note.
About 10 percent of homeowners could have ARM problems, data from the government's 2005 American Housing Survey indicates.
The Market Is Working USA Today (03/15/07) P. 12A ; Robbins, John M.
Mortgage Bankers Association Chairman John Robbins says the correction in the subprime mortgage market is helping the industry weed out lenders that failed to use caution when writing loans for the riskiest borrowers, noting that most subprime lenders have imposed stricter underwriting standards in response to the shakeout. Robbins underscores the fact that 85 percent of subprime loans are in good standing and that without subprime loans, these borrowers would have no opportunity to increase their wealth. He cites a report from the Federal Reserve indicating that the median net worth of homeowners far surpasses that of renters, $184,000 versus $4,000. According to Robbins, MBA supports a national anti-predatory-lending law and measures to increase loan transparency and borrower education.
Mortgage Woes May Help Revive FHA Wall Street Journal (03/16/07) P. A4 ; Dunham, Kemba J.
Subprime lenders stole market share from the Federal Housing Administration in recent years with offers of zero-down and interest-only loans and less red tape, but experts believe rising foreclosures in the niche could prompt U.S. lawmakers to turn their attention to modernizing the agency.
Inside Mortgage Finance reports an increase in subprime origination volume to $600 billion in 2006 from $185 billion in 2002, while FHA-backed volume slipped to $53.7 billion from $145.1 billion over the same time span. Congress is considering a measure that would get rid of the FHA's down-payment requirement of 3 percent and boost maximum loan amounts, but lawmakers must first determine whether the agency should be allowed to refinance defaulted subprime loans to help homeowners avoid foreclosure--a move that is generating concerns about the government assuming an exorbitant amount of risk.
However, FHA Commissioner Brian Montgomery says the agency helped 75,000 delinquent borrowers keep their homes last year, with such workouts accounting for about 60 percent of defaulted mortgages.
LoanCentral LLC 10900 NE 8th Street Suite # 110 Bellevue, Washington 98004Washington Mortgage Broker Loan Central National NMLS License - Main Office in Bellevue, WA # MB-70191Kirkland, WA Branch NMLS # MB-106504Phone: 425-709-7900
NMLS Consumer Access link for more info: www.nmlsconsumeraccess.org
LoanCentral, LLC PRIVACY STATEMENT
Copyright © 2012 LoanCentral, LLC NMLS # MB-70191 Portions Copyright © 2012 a la mode, inc.Another XSite by a la mode, inc. | Terms of Use| Site Map
