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Monday Morning Cup of Coffee: Low-down loans coming back

Monday Morning Cup of Coffee is a quick look at the news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.

An article in USA Today is noting an uptick in non-FHA backed loans, but with less than 20% down payment. Loans with down payments between 5% and 10% accounted for almost a fifth of the conventional loan offers that lenders made on the LendingTree online exchange in the first quarter, the article states.

Compared to the same time last year, similar mortgages made up to 6% of the market share for new originations. And LendingTree is not the only website to notice.

The number of lenders quoting non-FHA loans with down payments of 5% to 10% is almost double what it was two years ago, Zillow says in the article.

The Home Equity Conversion Mortgage is one of the most popular forms of the reverse mortgage. Or at least it used to be, according to this article in Business Insider.

It was the most popular because it offered the most money, often hundreds of thousands in dollars. But there are problems, the article states that while HECM loans are still available, they are now offered only with variable rates, which yield less immediate cash.

"The FHA insures some 90% of reverse mortgages purchased from private lenders. It says about 58,000 loans — or nearly ten percent of its reverse mortgages — were in default in 2012," the article finds. "That's up from 2% ten years ago."

The FHA now faces $2.8 billion in losses from various mortgage defaults and the institution may seek a federal bailout later this year.

The government guarantees on Ginnie Mae mortgage bonds are as good as gold these days, according to an article in Bloomberg. That's because foreign investors, typically from Japan, love the debt because it is the only mortgage bond with an explicit government guarantee.

"Bond buyers from the Asian nation that has suffered three recessions in five years may increase their Ginnie Mae holdings by $50 billion annually as a result of the BoJ’s easing, Nomura Securities International estimates.," according to the article.

Playing the stock market? CBS News posted an article backing the strength of housing companies. Now, enter at your own risk, but the article states the spring selling season is just around the corner.

This should boost an already improving housing market, in an economy without many more bright spots.

"The construction sector actually did pretty well in the last jobs report, adding new positions faster than the overall economy," the article states. "It was also noteworthy that among the few category winners in the retail sales report were furniture stores and building materials. Those results underscore the healing of the beaten down housing market."

Investments in residential real estate, the article states, will likely increase through the year as well.

Barclays analysts expect the rally in Fannie Mae and Freddie Mac bonds will continue, according to a note sent to clients late Friday.

This prediction is based on the Federal mortgage-backed securities program continuing for at least the near term. They expect purchases to continue until the second quarter of next year, which is a farther window than many other analysts.

"Significant post-QE3 investor reallocation has also reduced new potential sources of MBS supply to meet strong ongoing Fed demand," Barclays said.

"Improving home prices and greater PMI availability could open up the conventional refinancing channel to an increasing number of marginally higher LTV borrowers," they add. "This should raise speeds for MBS and high LTV conventional stories, as well as higher MIP FHA loans."

The Federal Deposit Insurance Corp. did not close any banks this weekend.

jgaffney@housingwire.com

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