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Federal Housing Finance Agency Unveils Plan To Loosen Mortgage Rules

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http://www.nytimes.com/2014/10/21/business/economy/federal-housing-finance-agency-unveils-plan-to-loosen-mortgage-rules.html?_r=0

A federal housing regulator on Monday announced a plan that could ease tight credit and allow more people to qualify for mortgages in an attempt to put the nation’s housing market back on track.

The plan, announced at a convention of mortgage bankers, includes offering reassurances to lenders that fear they could suffer unpredictable losses on the loans they sell to the government.

Separately, plans are in motion to set up programs for borrowers to receive government-backed loans with much smaller down payments than are now required.

“We know that access to credit remains tight for many borrowers, and we are also working to address this issue in a responsible and thoughtful manner,” said Melvin L. Watt, director of the Federal Housing Finance Agency, which regulates the mortgage finance giants Fannie Mae and Freddie Mac.

The move in large part is intended to reassure banks that have had to pay tens of billions of dollars to settle legal cases in the wake of the housing crisis and buy back bad loans sold to Fannie and Freddie. To avoid having to make those payments again, many lenders now demand that borrowers meet stricter requirements for loans, known in the industry as overlays.

Back on track ie GOING UP?

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The next housing bubble will be the end of the USA as we know it. If they do go for it with the 125% loans for a mirror mortage then I will take good advantage of the situation and stock up with PM's. I might then be able to buy meself a ticket out of the west when it all blows up.

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Comments from a US housing forum blog, below, about the above.

US low-mid-high prime areas are still in a significant bubble - imo.

Then again the impression Govs are going to do everything to underwrite the market, with same impression UK, may see final surge of buyers who can qualify for a big mortgage, to continue paying £500,000 for a house which in my view is expensive at £250,000 (and maybe £150,000 being fair value) - whilst settling sellers from panicking and cutting prices - to hold things steady for a while.

While also bring out the last of the "It's not earning anything in the bank" newbie entrant landlords into buying the houses for those going into care at toppy prices to do up and put on rental market (the 'smart money' - as some people at hpc describe them - and 'victims' as others describe them).

- The credit and down payment standards mean little. The ONLY way they could extend the Ponzi this cycle would be to bring back no-doc loans. I suspect even that wouldn’t be enough as too many got burned last time, but it’s the only tool they have left. However to do so would require congress and a rewriting of Dodd/Frank. I don’t see that happening.

- From what I have heard from mortgage dealers is that this will likely affect borrowers at the margin of qualifying and won’t create wholesale categories of newly eligible borrowers. Overall the fundamentals are still very weak, short sale and past foreclosure on your record, forget looking for a house you will be turned down.

- Suspect credit with low down, good job, you may get a look, but not at the prevailing rate but much higher rate, which will most likely disqualify you anyway.

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People are tapped out, don't see value, don't want to buy into a weakening market in many (not all) areas.

Even after the rush of money into safe treasuries driving down yields a bit recently... on a wider national level (with prime markets a bit different, yet still seeing some investor pullback and cooling now.. with a tickup in houses on market.)

Slump in mortgage rates fails to rally home buyers
Diana Olick | @diana_olick
2 Hours Ago

[..]Refinance applications jumped a whopping 23 percent week-to-week on a seasonally adjusted basis; volume was at the highest level since November. Mortgage applications to purchase a home saw no boost at all from lower rates, falling 5 percent from the previous week and 9 percent from a year ago.

[..]"More days on market, prices are coming down, the offers are even lower and there are just a lot of houses out there, so it's a challenge for sellers. I think you have to lower the price in order to sell it."

http://www.cnbc.com/id/102108564

Rest of link to read about the much tighter mortgage qualification criteria environment (away from the big plunge in applications above), and questioning whether FHFA is jawboning to soothe owners concerns giving them impression buyers will be given a boost toward buying. Yet how much real demand even from low-deposit would-be buyers (likely to be at lower buying end of market too) on expensive rates for those with little to put down, against wider market conditions?

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