Aug202014
Despite industry spin, mortgage lending standards are not tight
Real estate industry lobbyists foster the false impression mortgage lending standards are tight. They are not.
Real estate industry lobbyists appeal to lawmakers for policies the real estate industry believes will promote more transactions at higher prices. Most often this lobbying is short sighted and causes unintended long-term detrimental impacts on the housing market.
For example, real estate industry lobbyists continually support relaxed lending standards. In 2004 they watched all of their dreams come true as all mortgage standards were abandoned causing a large boost in transaction volume and much higher home prices. Rather than being the panacea they envisioned, the abandonment of lending standards inflated a massive housing bubble that pulled forward demand, caused a deep house price crash, lowered home ownership rates to 20-year lows, and caused an 80% reduction in new home construction — a condition the industry has not recovered from.
Rather than learn an important lesson from this disaster, real estate lobbyists continue to pepper the press with complaints about how tight mortgage standards are today with hopes that policymakers will lower standards at the FHA and GSEs to promote more transactions by making bad loans to people who won’t repay them. In short, they learned nothing; lobbyists still promote short-term goals at the expense of long-term stability. And the worst part is they are completely wrong about mortgage standards being tight today.
The Truth about Mortgage Underwriting
by Lisa Marquis Jackson, John Burns Consulting
The world is awash in inaccurate sound bites related to mortgage credit. We spoke with numerous industry executives and identified three truths that need to be clarified:
1. Low income buyers actually have it easy. Buyers with poor credit and low income are finding it quite easy to buy a home below the FHA limit.
People with FICO scores below 620 can obtain FHA loans with only 3.5% down. FHA standards are not much above subprime.
2. Many affluent buyers find it very difficult. Automated underwriting prevents many highly qualified borrowers, especially affluent retirees, self-employed, or commissioned salespeople from getting a mortgage because their income situation does not fit squarely in the credit box.
This truth is counterintuitive because affluent borrowers who do qualify make up a higher percentage of today’s sales than normal. This is not because standards are too lose for them, it’s because so few lower-income households have the income or down payment necessary to buy a home.
3. Industry executives are unintentionally preventing a recovery. Mortgage industry executives lobbying for the good old days where FHA limits were higher, fees were lower, and documentation was easier need to stop whining because they look very unreasonable to regulators and politicians who are not sympathetic.
This is a surprisingly blunt and accurate statement. Whining industry lobbyists are asking for the very things that caused the housing bubble and ensuing crash.
Our purpose here is to shed some light on what is actually happening—because if there were clarity around this, we would have:
1. More entry-level home buyers. Many qualified people are not even shopping for a home because they presume they cannot get a mortgage. We provide several examples of easy qualification below.
2. More affluent home buyers. More good loans to very qualified buyers would be made if underwriters were allowed to use good business sense rather than fill in automated forms. As we did our research, we heard many stories of buyers reluctantly paying cash or deciding not to move at all and telling their friends who then also elect not to move. These include business owners, retirees, and commissioned salespeople.
3. More relocating home buyers. Many relocating employees are renting simply because they cannot provide historical pay stubs at their new employer. Given their track record of steady employment and desirability to multiple employers, does that make any sense?
One of the main reasons I did not buy a home in late 2011 was because I didn’t have qualifying W2 income, and it would have been very difficult to obtain a loan.
In the aftermath of the housing crisis, the reality is that we are lending aggressively to the poor and conservatively to the rich. While the Dodd-Frank rules were written with good intent, let the truth be known, so more first-time buyers can take advantage of current programs to buy homes. Let the bankers use good judgment again, so more affluent buyers can get a mortgage.
Easy Money through FHA
FHA federally insures 95%+ loan-to-value (LTV) mortgage loans made to people with poor credit and low incomes.
Here are three recently approved loans, all through FHA or VA:
1. Recent foreclosure. 96.5% loan on a $170,000 house to a couple with $36,000 in income, a foreclosure three years ago contributing to their 620 FICO score, and debt service equal to 55% of their gross income
2. 57% of income needed to pay debts. 96.5% loan on a $165,000 home to a couple with $38,000 in income, a 642 FICO score, and debt service equal to 57% of their gross income
3. Fixed income and disabled. 100% loan on a $160,000 home to someone permanently disabled with a 601 FICO score and a $34,000 fixed income
Does that sound like tight lending standards, or does it sound like a return of subprime? Each of those loans profiled is high-risk, and the chances of default are high, yet our government chose to back them.
Tight Money above FHA Limits
Affluent commissioned salespeople, self-employed, newly employed, and retirees who don’t have steady paychecks have tremendous difficulty getting a mortgage because they either: report inconsistent income to the IRS, cannot provide extended income history from a new employer, or do not have sufficient current income to qualify but are trying to keep some cash in the bank or delay paying taxes on an IRA distribution.
Here are six borrowers who were denied a mortgage:
1. 27% LTV. A couple with a 780 FICO score who wanted a $300K loan on a $1.1 million house and would have $300K in reserves after closing, but whose verifiable income was only 30% above the proposed mortgage payment.
2. 801 credit score. Newly retired couple with fantastic 801 credit score, $1 million in retirement accounts, and $400,000 in savings after they were going to put down $350,000 on a $550,000 home purchase, but whose Social Security income was less than double the proposed mortgage payment.
3. Affluent business owner. Owners of a small retail business who were turning the business over to their children to manage, with the intent of collecting dividend income; who had $500K in cash savings and wanted a 50% LTV.
4. Relocating borrower. A US citizen who has been working overseas takes a job in the US, has a 700 FICO, 20% down payment, and plenty of reserves, but cannot produce a W-2 because he does not exist in the country in which he was working and hasn’t started his new job yet.
5. New employee. A prospective borrower qualified in every way except she had only been in her current job for five months and had worked in the family business previously where she did not get a W-2.
6. Loan = 15% of applicant’s assets. A retiree who wanted a 50% LTV and had assets six times the proposed loan amount was turned down and eventually paid cash.
Some of those loans have risk, but how risky are they compared to the FHA loans listed in the previous section?
Mortgage Industry Vets Tell It Like It Is
We expect the borrowers and outcomes profiled above will be surprising to many. We also want to share the following sound bites from mortgage industry veterans to offer surprising clarity on other areas of debate:
Loans today are easier than the 1990s. “For the average borrower, I believe it was more difficult to qualify for a mortgage in the 1990s.“
That’s an astonishing statement given the spin we read in the financial media.
Huge improvements are being made in conforming loans. “For a while, if you didn’t have a credit score over 720 and you wanted a loan with less than 20% down, you were pretty much looking at an FHA loan. During this period, it’s fair to say that sales were being seriously impacted by 20%+. Slowly at first, and now more rapidly, things are changing. Credit requirements for 95% conventional financing are as low as 620, and MI companies have lowered premiums and relaxed guidelines. Banks have been peeling back overlays. You aren’t likely to get a conventional loan with a ratio above 45% anymore, but nor could you really get that back in the 90s either.”
The standard most responsible for borrower default is the high back-end DTI ratio. Nobody can afford to consistently pay more than 43% (the standard is 43% not 45%) without running a personal Ponzi scheme. These loans weren’t made in the 90s, they aren’t being made now, and hopefully, they will never be made again.
Disposable income is more important than gross income. “Our industry needs to focus more on disposable income versus debt-to-income ratios, meaning a borrower who makes $2,200 a month with a 40% debt-to-income ratio is more risky than someone who makes $12,000 a month with a 50% debt to income ratio. The first borrower has very little cushion after income taxes, utilities, car insurance, food, etc. for emergencies. But the person making $12,000 a month would have much more left over after all of these other debts.”
While their argument is sound, the focus on DTIs with a rigid cap is a sound safeguard in the system. Once you make that barrier flexible, it won’t take long before lenders completely ignore it and begin funding personal Ponzi schemes. Further, this does nothing but inflate house prices at the high end; it doesn’t make for any sustained increase in sales volumes.
Stated income should have its place. “There is a time and a place for Stated Income, not “No Doc” loans, but Stated Income loans. They were a great tool back in the 2000s that rarely went bad if they were used properly because the borrower had a lot of their own capital invested in the home.”
Sorry, but that one is bullshit. Stated-income loans have no place. They were called liar loans for a reason, and the presence of these loans, more than any other, caused the credit crunch of 2007. When investors realized they couldn’t trust the underwriting in the mortgage pools they were buying, they abruptly stopped buying them. This caused a cascade reaction where investors began to question all loans and stopped buying them. The private securitization market still hasn’t recovered.
Income is the problem. “The challenge is not credit based, it’s income based. Home valuations have increased at a steeper trajectory than income. Also, the new buyer pool is saddled with student loans and other debt, which has really created the (disposable) income issue. I believe credit is much more accessible than the media/public portrays (in terms of credit scores, LTV’s, etc.) My opinion will remain our immediate challenge is income/debt/DTI.”
Yes, the problem is one of income and down payment. The recession wiped out the meager savings of many potential homebuyers, and the lingering unemployment is keeping wage growth in check. I know I’ve said it a million times, but the housing market won’t have a true fundamental recovery without strong job and wage growth. Period.
Summary
In conclusion, let’s:
1. Get the word out that loans below the FHA limit are readily accessible, with monthly payments that are a great historical value in comparison to gross incomes.
2. Let the bankers use manual underwriting in instances where they can document that the loan has a very low likelihood of losses.
I don’t believe consumer education is the answer. Lenders constantly advertise for business, and I don’t believe anyone considering buying a house who has a sufficient down payment doesn’t at least talk to a lender about getting a loan. I think the real reason for the lack of low-end sales volumes is the lack of a 3.5% down payment. If people don’t have that, there isn’t much point in shopping for a loan.
The second point about allowing manual underwriting is a red herring. Banks who make non-conforming loans to hold on their own balance sheets can use any standards they want; they are not bound my automated underwriting standards. The only lenders limited by these standards are correspondent lenders who plan to obtain government backing for the loan and sell it into the secondary market. Those loans should be limited by automated standards because once you start allowing exceptions, the trickle becomes a flood, and lenders will stuff all kinds of bad loans into that loophole.
Looser lending standards won’t improve sales much, but they would increase risk to the US taxpayer. What the real estate industry needs is a strong economy with good job and wage growth. Until we get that, the housing market will remain in the doldrums.
[listing mls=”OC14174166″]
Are we facing yet another foreclosure crisis?
Despite numerous reports indicating that there has been a deep decline in foreclosure inventory over the past several months in many markets, the reality, as chronicled in several articles recently penned by this author and others, is that foreclosure rates are very likely to rise again in the not-too-distant future.
With that prospect just over the horizon, it is important to note that property preservation and repair services for bank-owned properties remain a vital component of mortgage default servicing.
As has been well documented, I am not alone in my beliefs about the prospects for increased foreclosure rates, at least not any more.
For example, author Keith Jurow has also been making the case that the so-called housing “recovery” is nothing more than an illusion. In a piece he wrote that appeared on Doug Short’s Advisory Perspective web site titled, “Why the Move-up Housing Market is Gone,” Mr. Jurow noted in particular that the mortgage delinquency problem just won’t go away.
In part, Jurow wrote, “I have also been writing about the serious delinquency problem for four years. Wall Street continues to disregard the issue.
“First, the delinquency figures put out by the Mortgage Bankers Association and others are misleading and quite useless. Why? More than 22 million homeowners have had their mortgages modified since 2008. Most of them had been delinquent in their payments. Once the modifications become permanent, the loan is considered current. So of course this pushes the delinquency rate ay down.”
To Jurow’s point, the recidivism rate on loans that have been modified following the housing crash has risen to be as high as 70%. The highly touted loan modification “workout” programs like HAMP, HAFA and other foreclosure alternative programs has only forestalled foreclosure, not eliminated them.
Many housing industry experts now expect the foreclosure numbers in 2015 to be higher than this year’s totals.
Sorry, when Jurow calls HAFA a program that has forestalled foreclosure, it only shows that he doesn’t know what he’s talking about. HAFA is the short sale program. How many properties that get short sold will eventually fall into foreclosure? Zero. By definition, the bank no longer has a claim to the property after a short sale. Instead, that property has a new owner underwritten to today’s lending standards.
Jurow relies on the fact that the average reader is even more misinformed that he is, so it makes him seem smart when he throws statistics and terminology around that people don’t understand. For those of us that do understand, it’s excruciating to read.
Uh… Mr Jurow didn’t call HAFA a program that has forestalled foreclosure. But, Lynn Effinger, the HWire piece author did.
Go back and re-read it.
Or, simply google “The highly touted loan modification “workout” programs like HAMP, HAFA and other foreclosure alternative programs has only forestalled foreclosure, not eliminated them”, and it links direct to Effinger on multiple occasions. No direct links to Jurow whatsoever.
Nonetheless, even if those were Jurow’s words, HAFA actually was a program that forestalled foreclosure because the short sale cleared the property in lieu of foreclosure.
btw…
forestall (fohr-stawl)
verb (used with object)
a. to prevent, hinder, or thwart by action in advance
I gotta go with el O on this one. HAFA did forestall foreclosures; it didn’t keep people in their homes, but it was widely used as a foreclosure alternative.
I am going to use Keith’s article as a basis for a post either tomorrow or Friday.
Forestall also means “to delay” and that is the definition he was using when referring to modifications.
Go back and re-read it.
I gave Jurow credit for another person’s misinformed analysis but if you look at the wording, it’s not particularly clear who the “facts” about mod recidivism are coming from. No other source is cited so it stands to reason that the source used for the prior three paragraphs, Keith Jurow, would continue to be the source for that paragraph, especially when it starts with “To Jurow’s point…”
The bottom line is that pre-foreclosures that instead went through short sale were eliminated, not forestalled (under his definition), and they won’t be coming back.
I am using his article for a post. The source of his recidivism rates is a company called TCW who is analyzing CoreLogic data.
Truth is, those recent housing numbers aren’t so shiny
The mainstream financial media have something to sell you.
It’s optimism. Or optimistic spin.
It doesn’t matter whether they are servicing, in the “old profession” sense of the word, their Wall Street sugar daddies and insider connections, or working as palace guards for Team Red and/or Team Blue, whichever they favor.
In some cases it’s just overworked writers promoted Peter Principle-style to covering subjects they don’t understand. The rest are market cheerleaders who believe in management of perspective economics – if people hear enough good news about the economy, they’ll spend and invest more.
Today’s housing starts and permits report from the Department of Housing and Urban Development is a prime example.
And here are the plain facts. After plunging in June, housing starts and housing permits recovered in July, printing at 1,093,000 and 1,052,000, respectively.
And yes, this is a 15.7% gain in starts and permits.
The bad news is that almost all of those gains from June to July in starts and permits are in multifamily rental housing.
That’s not the sign of a housing recovery. That’s the sign of a shift from an ownership society to a rental society.
In permits, almost all of the increase was due to multi-family unit construction, which soared by 73,000 to 382,000, a 24% increase, while single-family residential permits were up by just 6,000, or less than 1%.
And technically, apartments can be homes, but come on. That’s not what they mean when they say things like:
Construction on new U.S. homes jumped 15.7% in July to the highest level in eight months and starts were revised up sharply for June, indicating a pickup in home building after an early-year lull.
Emphasis mine.
And it’s not just the mainstream financial press. Check the wording in this report from Capital Economics.
“The sharp rise in housing starts in July is an encouraging sign that the recovery in construction activity is getting back on track. Booming homebuilder confidence points to further gains to come.”
If you’re feeling déjà vu, there’s a reason. Words to this effect are used every time there’s an uptick in housing starts, pending sales, and existing sales, while every downturn is blamed on everything from the weather to the weather.
It’s never, ever blamed on the tepid economy and the part-time job market that’s the new norm. As CNBC notes, since the recession ended, lower-wage jobs have grown by 2.3 million while medium- and higher-wage jobs actually contracted by 1.2 million. This is in line with the ground-losing 2% wage growth the job market is seeing.
Now you see why the big gains in housing starts and permits are pretty much concentrated in apartment construction, not home building.
And you see why housing won’t get its footing back until private enterprise and the economy as a whole is unshackled and unhobbled.
It must be agonizing to be a permabear that keeps predicting doom only to have the economic readings come in higher than expectations every month.
When the negative report for June came out, the reporter was all about using colorful language saying that “starts plummet(ed)” and “tumbled a whopping 9.3%”. He also informed us that the “summer construction boom fails to launch” and “This miss on both starts and permits is huge.”
Strangely, now that the numbers for July have not cooperated with his spin agenda, he chastises other media outlets for using terms like “up sharply”, “construction boom”, and “surge in starts”.
Pot meet kettle.
Sounds like they went to the same school of journalism to me.
There was a time when I felt it was necessary to use the same tools in the opposite direction because the MSM was terribly wrong. When they are bullish when bearish is more accurate, using opposing language is appropropriate. However, at some point, it becomes as much of philosophical perspective as a search for truth. As you point out, once it becomes the language of permabears, they differ in no way from the permabulls. They aren’t using contrasts to make a point, they are presenting an alternate world view, and it starts to read like political blogging.
Delinquency rate dropping because foreclosures clear delinquent loans
Overall, the mortgage delinquency rate declined for the 10th consecutive quarter, decreasing to 3.46% at the end of Q2 2014. This is down nearly 20% in the last year.
“Overall, the improvements in the mortgage delinquency rate can be attributed to a number of factors. These include the clearing of severely delinquent accounts through foreclosure as well as a lower rate of new delinquencies from post-recession vintages, which generally are of significantly higher credit quality and have experienced much better performance than mortgages originated before the recession,” Chaouki said.
“This dynamic is likely driving the low delinquencies among younger borrowers. It is encouraging to see younger borrowers perform well, since their generation was significantly impacted by the recession and their loans are among the newest,” he added.
Purchase application index continues to drop
The seasonally adjusted Purchase Index decreased 0.4% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 11% lower than the same week one year ago.
“Interest rates dropped last week as a result of the ongoing turmoil in Ukraine and other international concerns, which in turn pushed mortgage rates lower,” said Mike Fratantoni, MBA’s Chief Economist. “Overall application volume for conventional mortgages increased. However, there was a 5.9% decline in the number of applications for government mortgages, with both purchase and refinance applications declining. Within the government sector, this decline was led by an 8% decline in unadjusted Department of Veterans Affairs applications, while Federal Housing Administration and Rural Housing Service unadjusted applications also fell by 5% and 3% respectively.”
“Purchase applications never quite reached the aspirations of many housing bulls this summer,” said Quicken Loans vice president Bill Banfield. “These numbers continue to disappoint, given that rates have improved recently and continue to hold a firm grip near historic lows.”
California Home Sales Still Slow Despite 3.9 Percent Jump
Single family home and condominium sales in California experienced a month-over-month increase of 3.9 percent for July but saw a 9.2 percent decline year-over-year, according to PropertyRadar’s July 2014 Real Property Report for California.
Sales for single family homes and condos for the first seven months of 2014 year-to-date are at their lowest levels since 2008, the report stated.
Several factors contributed to the significant year-over-year decrease in California home sales, which fell in 13 of the state’s 26 largest counties, the report said. A major reason for the decrease was the decline in distressed property sales. In July 2014, 17 percent of home sales were distressed properties, down from 25.6 percent in July 2013. PropertyRadar reported that rising interest rates and affordability due to price increases were also factors in decreasing home sales.
“Lackluster sales volumes so far this year should come as no surprise given the fact that in many California counties houses have simply become unaffordable,” said Madeline Schnapp, director of economic research for PropertyRadar. “The decline in affordability in concert with the rapid decline in lower priced distressed properties for sale has exacted a toll on demand.”
The median price of a home in California in July edged slightly upward by 0.3 percent ($1,100) to $390,000, the smallest month-over-month gain since January 2014 according to PropertyRadar. By comparison, in July 2013, median home prices shot up 7.8 percent from the previous month. The slight uptick in median home price from June to July this year was fueled by a 4.4 percent month-over-month increase in the sales volume of more expensive non-distressed properties, which comprised 83 percent of total sales in July 2014 as opposed to 74.4 percent a year ago.
Other highlights from the PropertyRadar report for July 2014 for California include:
Cash sales comprised a significant percentage (21.6) of all sales even they have been falling since they reached their interim peak of 36.5 percent in August 2011.
Negative equity continues to decline but is still high. More than one million homeowners in California (12.1 percent) are underwater on their mortgage.
Foreclosures and notices of default (NODs) started a downward trend that began in March 2009. Foreclosures and NODs fell by2.9 percent month-over-month in July and 22.2 percent year-over-year.
The cloud inventory thesis I advanced early last year suggests that as prices rise, more inventory would come to market, but it would appear at near-peak pricing. Further, since foreclosures were concentrated at the low end of the market, more of the bad debt was cleared out there, so the new inventory would appear at the high end of the market and sit there because owners can’t lower their asking prices. A new study from Zillow confirms this is what’s happening.
Inventory Remains Low, Concentrated in Upper Value Tier
In recent years, inventory has fallen to historically low levels, reaching a national seasonally adjusted low of 1.28 million homes for sale down from 1.97 million homes in April 2011 – a 53.2% drop. Much of this drop can be attributed high levels of negative equity, locking homeowners into their homes. While inventory has rebounded slightly in most markets, as negative equity declined, nationally inventory remains low. In fact, of the top 50 metros, only Hartford, CT has returned to peak inventory levels as of June 2014 and 38 of the top metros are more than 30% below from their peak inventory levels in 2010 and 2011. …
While overall inventory remains suppressed, in many markets the bottom tier is particularly underrepresented. …
Given the state of the real estate market since 2010, it is difficult to gauge what the normal inventory composition is in these markets. We would expect the available inventory composition to match housing stock, but it will be interesting to see if this does indeed happen in more markets moving forward. As discussed in this recent post, while negative equity rates have eased overall, persistently high negative equity in the bottom tier is likely suppressing available inventory in that tier, skewing the composition. In general, while home shopping right now is difficult due to suppressed inventory, those shopping for home in the bottom tier will have a particularly difficult time until more of these homes come to market.
The “standard” back-end DTI is 43%, but that’s not an ironclad rule. A mortgage will receive the highest litigation protection from ATR claims if it is a “General” QM, which requires a back-end DTI of 43% or less. A creditor is free to make a loan with a back-end DTI greater than 43% and accept the additional ATR risk.
The GSE QM standard is also 43%, but the FHA QM standard includes no back-end DTI limit. These exceptions from the “General” QM standard are valid until 2021. The average back-end DTI in FHA loans has hovered around low-40s in the last year:
http://www.elliemae.com/origination-insight-reports/Ellie_Mae_OIR_JULY2014.pdf
Evaluating the additional ability-to-repay risk must be a challenge, particularly without much if any case law precedent to work with. I suspect this unknown will prevent many from lending beyond this standard. When you think about it, if someone is putting more than 43% of their gross income to housing expenses, how are they supposed to eat and pay taxes. If they are a low wage earner, they don’t have enough left over to eat. If they are a high wage earner, they get a bigger chunk taken out for taxes. I wouldn’t want to be a lender arguing that a borrower had demonstrated an ability to repay given those simple truths.
The fact that the FHA doesn’t conform to those standards is further proof the standards at the low end are not tight. With the high cost of FHA insurance, a more flexible DTI ceiling was probably necessary to ensure there would be any FHA lending at all. Default rates will remain high.
The GSEs, FHA, VA, and USDA place over-lays on DTI calculations requiring minimal residual income at lower income levels. The effective tax burden for households below $50k is very low. This might be why the tax burden isn’t considered in DTI calculations.
I run into this problem when calculating the cost of ownership for the properties on the site. I have to make an assumption of borrower income in order to calculate tax benefits, so I use a 31% front-end DTI standard to calculate income. If lenders allow borrowers will lower incomes to borrow the same amount utilizing a higher DTI, the tax benefits are overstated because the borrower is actually in a lower marginal tax bracket. Using the shifting sands of taxes in DTI calculations is difficult, and it varies from state to state.
Median Prices Fall in 13 of California’s Largest 26 Counties
Year-to-Date Sales Lowest Since 2008
California single-family home and condominium sales gained 3.9 percent in July 2014 but were down 9.2 percent from July 2013. Year-to-date sales for the first seven months of the year are the lowest since 2008.
The overall decline in sales is due to several factors: the decline in affordability due to rapid price increases, the rise in mortgage interest rates, lack of affordable inventory, and the rapid decline in distressed property sales. Whereas in July 2013 25.6 percent of sales were distressed properties, in July 2014 distressed property sales comprised only 17.0 percent of the total.
“Lackluster sales volumes so far this year should come as no surprise given the fact that in many California counties houses have simply become unaffordable,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The decline in affordability in concert with the rapid decline in lower priced distressed properties for sale has exacted a toll on demand.”
The July 2014 median price of a California home edged up 1,100 dollars, or 0.3 percent, to 390,100 dollars, the slowest monthly increase since January 2014. On a year-ago basis, median home prices gained 7.8 percent. Driving the month-over-month price increase in July was the 4.4 percent increase in the sales volume of higher priced non-distressed properties, which accounted for 83.0 percent of total sales. The median price of non-distressed homes was up only 0.2 percent over last year, indicating the gain in median prices was due mostly to a shift from less expensive to more expensive homes.
As the summer selling season winds down, median price increases have slowed or peaked in many of California’s largest counties. In July 13 of California’s 26 largest counties experienced monthly price declines compared to only six in April.
[…] Despite industry spin, mortgage lending standards are not tight Rather than learn an important lesson from this disaster, real estate lobbyists continue to pepper the press with complaints about how tight mortgage standards are today with hopes that policymakers will lower standards at the FHA and GSEs to promote … Read more on OC Housing News (blog) […]
[…] a recent post, Despite industry spin, mortgage lending standards are not tight, the staff of John Burns Real Estate Consulting urged industry activists to get out the word that […]
[…] is just wrong. Despite industry spin, mortgage lending standards are not tight. People with FICO scores below 620 can obtain FHA loans with only 3.5% down, and neither the FHA or […]
[…] This is another popular myth that refuses to die. (See: Despite industry spin, mortgage lending standards are not tight) […]
[…] Despite industry spin, mortgage lending standards are not tight, and the constant repetition of this lie prompted me to label tight lending standards as the biggest lie in housing in 2015. In my opinion mortgage lending standards should not be relaxed further. However, the competition for business among lenders will force a gradual loosening of credit standards over time. I believe higher mortgage rates will accelerate this process. […]