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THE LATEST ORIGINATION LTV Levels on Rise Under HARP Spring numbers from LPS reveal rising numbers of mortgages with elevated loan-to- value ratios. O with high loan-to-value (LTV) ratios have been on the upswing the past few months with April as no exception, according to the latest data from Lender Process- ing Services (LPS). LPS suggests the rise in high- verall, mortgage originations declined in April. However, originations for loans LTV originations could be a sign that HARP is having an impact on originations the past few months. Total loan originations dropped 12 percent in April after rising steadily since the begin- ning of the year. April originations are still up of total loan originations to 33.8 percent in April. On the other hand, high-LTV loans, those with LTVs of more than 80 percent, posted a sharp increase early this year after de- clining toward the end of last year. The number of high-LTV, Credit Expected to Improve Despite Tight non-FHA originations jumped from 85,000 in January to 112,000 in February and then 130,000 in March. The category leveled off in April at 131,000. While HARP may be having year-to-date by 9.3 percent and year-over-year by about 7.4 percent. The percentage of non-FHA originations has also been mount- ing for several months, and it did not drop off in April. In fact, non-FHA loan originations have risen steadily since November 2011 when they took up 20.2 percent an impact on the originations sector, the housing market con- tinues to struggle with high lev- els of foreclosures, especially in judicial states, where foreclosures must be processed by the courts before they are completed. Foreclosure inventory nationwide stands at 4.14 percent, according to LPS' May data. In judicial states, foreclosures make up 6.5 percent of housing stock, while in non-judicial states, inventory is much lower, 2.46 percent. {33.8% 42 | THE M REPORT } risen steadily since November 2011 when they took up 20.2 percent of total loan originations to reach 33.8 percent in April Non-FHA loan originations have T its 18th annual Survey of Credit Underwriting Practices, showing that credit writing standards were mostly unchanged from the year before. The survey, which included fed- he Office of the Comptroller of the Currency (OCC) released the findings of Underwriting According to the OCC, stricter standards are displaying a stronger impact in the commercial market versus the residential sector. standards tended to do so in response to changes in economic outlook, the competitive envi- ronment, and the bank's risk appetite. Tightening was mostly due to product performance and a lower risk appetite. Changes from bank to bank eral savings associations for the first time, examined the underwriting standards of 87 banks with assets of $3 billion or more in the 12-month period ending February 29. It showed that while the larger banks eased their standards for some retail and commercial products, underwriting standards largely remained the same from the previous survey. Seventy percent of OCC examiners reported no change in underwriting, while 14 percent of banks eased their standards. Sixteen percent tightened their underwriting standards. The most prevalent tighten- ing occurred in commercial real estate (CRE) and international loans, while easing happened largely in leverage, asset-based, and large corporate lending. OCC noted that national banks that loosened their were caused by differing expec- tations about the future health of the economy, which also came into play for most banks when easing or tightening standards. Tightening in small business banking underwriting practices decreased, with 82 percent of banks reporting unchanged standards from the last survey. Credit risk levels in small busi- ness loans were stable and are expected to stay that way during the next year. Approximately 18 percent of commercial and retail loan prod- ucts showed increased credit risk relative to the 2011 survey, while 32 percent indicated decreased risk. Half of loan products showed the same level of credit risk. Over the next year, examiners speculate that credit risk will likely increase for 25 percent of loan products, decrease for 24 percent, and remain the same for 51 percent. SECONDARY MARKET ANALYTICS SERVICING ORIGINATION