In his interview with HousingWire, Mel Watt, the director of Federal Housing Finance Agency urges the opening of the mortgage credit box to less-than-optimal borrowers.
“We are getting lenders to reduce some of the credit overlays,” he said inthe exclusive interview.
Furthermore, FICO scores will ignore debts that have been paid off or settled, and a lesser weight will be assigned to medical bill collections, which account for about half of all unpaid collections on consumers’ credit reports.
Nonetheless, the average FICOs have been going down steadily since 2006 and it’s not hard to see why, what with the housing crisis, the financial meltdown and the general recession and record unemployment and underemployment.
So what can those with a FICO that is under 620 do to get a mortgage?
The sale of $15.8 billion in nonperforming loans by the U.S. Housing and Urban Development Department cut losses to its troubled insurance fund and helped stop foreclosure for about 6,400 homeowners, the agency said.
HUD has sold more than 91,000 loans, including almost 53,000 this year. Half of the about 38,000 loans sold through last year were resolved as of May — meaning they went through foreclosure or another outcome and are no longer considered nonperforming — and 34 percent of those resolutions resulted in property seizures being averted, the department said in a report released today.
While the MBA’s data does not present a specific cause or effect for the ongoing lack of significant movement in mortgage applications, a potential clue could be found in a report issued last week by RealtyTrac that analyzed affordability for buying a home. RealtyTrac found that as of the second quarter of this year 2014, one-third of the 1,000 counties analyzed by the company surpassed their historical averages for income-to-price affordability percentages since 2000, thus making them less affordable today than they have been on average over the last 14 years.”
“Sub-prime mortgages have been creeping back into the mainstream for months now, but a sympathetic article that appeared in The New York Times over the weekend presented them as a misunderstood tool that helps non-standard applicants get a mortgage. Rafferty Capital Markets VP of equity research Richard X. Bove sees this as confirmation that winding down Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) and the creation of Qualified Mortgage rules will only move the risk somewhere else.”
She had gone through a foreclosure after losing her job, and he was finishing his M.B.A. and had not yet found his current position. But they had managed to put together a down payment of more than $550,000, or three-quarters of the asking price for a four-bedroom house in Los Gatos, and thought they would find a bank willing to lend the rest. They didn’t.
So the Arroyos found an alternative: a subprime mortgage.
“We see a lot of boomerang buyers. I’d say about 20 percent of my current clientele has either suffered a short sale or a foreclosure in the past and are now re-buying back into the marketplace,” said Matt Weaver, a lender with PMAC Lending Services in Florida.
via ‘Boomerang’ Homebuyers Getting a Boost from Uncle Sam – NBC News.com.
Mortgage Choice Act of 2013 – Amends the Truth in Lending Act with respect to requirements for disclosure to a consumer of points and fees information about a consumer credit transaction, secured by the consumer’s principal dwelling, but which is not a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open end credit plan, when the total points and fees the consumer must pay at or before closing will exceed 8% of the total loan amount or $400, whichever is greater.