Mortgage Professionals Should be Optimistic About the Future

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Th e M Rep o RT | 41 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ORIGINATION Bofa chief says lender Has no Plans to loosen mortgage standards Moynihan suggests consuMers who don't Meet today's stricter credit criteria should stick to renting. NORTH CAROLINA // As policy- makers signal a desire to open up the mortgage credit box to include more borrowers, Bank of America's CEO says the bank isn't likely to loosen its standards any time soon. Speaking at an investor confer- ence in New York, BofA chief Brian Moynihan said his firm— which consistently ranks among the nation's top five mortgage lenders—has little incentive "to try to create more mortgage avail- ability where the customers are susceptible to default." Moynihan's comments run against one of the most common complaints about today's mort- gage market, which is that overly tight lending standards have cut too many potential homebuyers out of the picture. The issue is a commonly cited problem for younger first-time homebuyers, who, in addition to facing strict mortgage criteria, also have to clear the hurdle of saving for a down payment. Despite this, Moynihan said his bank has no intention of opening up low down-payment options, instead suggesting those consum- ers should consider renting a home instead of buying. As part of the government's effort to boost homeownership, both Fannie Mae and Freddie Mac have taken steps to enable lenders to expand their offerings. In October, Mel Watt, director of the Federal Housing Finance Agency (FHFA), announced the GSEs were working on devel- oping guidelines for mortgages with loan-to-value ratios between 95 and 97 percent, allowing for down payments as low as 3 percent. FHFA is also working with the enterprises to clarify their repre- sentation and warranty frame- work in order to reduce lenders' concerns about buyback risk. While those efforts may appease some who insist tight credit is holding back the housing market, Moynihan—whose bank has paid tens of billions of dollars in recent years to settle mortgage- related claims, many of which stemmed from its acquisition of Countrywide Financial—said his thinking takes a longer view. "I know that that doesn't sound good for an instant hous- ing recovery and faster housing markets, but it's actually good, because in the long term it keeps housing more fundamentally based," he said. FHa loan limits to remain Unchanged thresholds held at $625,000 for high-cost Markets and $271,050 for low-cost areas through 2015. WASHINGTON D.C. // The Federal Housing Administration (FHA) will leave loan limits unchanged for the highest- and lowest-cost housing markets in 2015. For most high-cost housing markets, the maximum allowable amount for an FHA loan will stay at $625,000, a threshold first set at the start of 2014. For low- cost metro areas, the limit will remain unchanged at $271,050, the agency announced. FHA recalculates its national loan limit every year, basing its math on a percentage calcula- tion of the national conforming loan limit for mortgages eligible for purchase or guarantee by the GSEs. That limit was also left un- touched by the Federal Housing Finance Agency, holding at $417,000 for most of the country for the next year. FHA will continue to insure mortgages at a much higher threshold—$938,250—in certain es- tablished high-cost areas, includ- ing Alaska, Hawaii, Guam, and the Virgin Islands. The agency also announced that loan limits for FHA-insured reverse mortgages will be left untouched. FHA's reverse mort- gage product, the Home Equity Conversion Mortgage (HECM), will have a maximum claim amount of $625,500. ORIGINATION LocaL Edition

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