Mortgage

Housing risk is rising as more loans don’t meet QM on DTI

An early look at report shows loan climate getting riskier

On March 24 the International Center on Housing Risk will release a briefing on its National Mortgage Risk Index and its State Mortgage Risk Indices, but HousingWire has a preview available now and the risk is growing.

The two indices provide a measure of how mortgage loans originated month by month would perform under severely stressed conditions.

International Center on Housing Risk co-directors Edward Pinto and Stephen Oliner will analyze the riskiness of single-family mortgage originations based on data through February 2014.

This month’s NMRI update shows 24% of all purchase loans have a debt-to-income ratio greater than the QM limit of 43%.

The Federal Housing Administration leads with 45% of purchase loans exceeding the 43% DTI limit.  Both are new series highs.

Indices for Fannie/Freddie and FHA/RHS both hit new highs in February, while composite index ticked down as FHA’s share eased.

Risk levels remain higher than is conductive to long-run market stability, their report says, with no discernible impact from QM regulation.

HousingWire will cover the release in detail on Monday, but a preview of the presentation is available now. You can read or download the presentation here.

The International Center on Housing Risk is a part of the American Enterprise Institute.

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