Monday Morning Cup of Coffee takes a look at news coming across HousingWire's weekend desk, with more coverage to come on bigger issues.
Lower credit scores are leading to higher mortgage costs, according to an article in the Seattle Times.
The article begins by stating: “Even as the housing and mortgage markets are stabilizing, many borrowers with good credit remain shut out of the home-loan market or saddled with a new array of fees and extra costs.”
As the article continued, it leads into myriad reasons behind the difficulties in securing a mortgage, including high down payments and mortgage insurance costs.
The article states:
Those with fair-to-good credit — scores of 620 to 700 — usually can’t qualify for low-cost mortgages backed by government-sponsored financing giants Fannie Mae and Freddie Mac, which buy or guarantee more than half of the nation’s mortgages. In the first three months of this year, only about 1 in 6 of the loans written to Fannie Mae standards went to such middle-tier borrowers, according to Fannie Mae data.
The trends amount to a two-tiered mortgage market that heavily favors the affluent over the masses of workaday borrowers, experts and advocates said.
The article goes on to claim mortgage lenders are unnecessarily steering consumers to the higher-cost Federal Housing Administration mortgages, "designed for low-income or bad-credit borrowers."
"Borrowers with minor credit dings, or down payments of less than 20%, still can’t get access to federally backed loans once considered mainstream," claims writer E. Scott Reckard.
So, what's an FHA then? Some sort of non-federally backed mortgage? News to us, here at HousingWire.
Here’s a new opinion on disparate impact, one that paints it in a lot more positive light. A blog by Steve Sailor on Vdare.com mentions a new opinion separate from the many who view that last month’s Supreme Court decision supporting “disparate impact” will have costly repercussions.
The blog writes:
Other industry experts say a sky-is-falling response to the decision is overblown and unproductive. Rick Roque, the managing director of retail at MiMutual Mortgage, in Southfield, Mich., said lenders should set aside their “defense mechanisms” concerning the issue, take a serious look at their practices and find ways to go after the large “emerging markets” of blacks and Latinos.
“This presents a tremendous opportunity for banks to expand homeownership to classes that have been left out since the recession,” Mr. Roque said. “It’s not just an underserved market, but it’s also a tremendous financial opportunity that banks are passing on because of perceived risk.”
It’s a big earnings week for the industry, with some of the largest companies, or at least most watched, companies reporting.
Top banks like Wells Fargo (WFC) and JPMorgan Chase (JPM) posted their results earlier this moth, giving the first glimpse into the health of the housing market.
Now it’s time for the nonbanks to weigh in and show how they performed in the second quarter of 2015.
Ocwen Financial Services (OCN) and Nationstar Mortgage (NSM) are both reporting their results on Thursday.
Ocwen Financial went through some rough patches this year, most recently having its servicer rankings downgraded from “average” to “below average” by Standard & Poor’s.
Meanwhile, Nationstar dealt with a couple executive level changes over the past year, along with posting a surprising loss in the first quarter, driven somewhat by a loss of servicing revenue.
Other big earnings this week include Flagstar Bancorp (FBC) on Tuesday, D.R. Horton (DHI) on Tuesday, Black Knight Financial Services (BKFS) on Wednesday and Realogy Holdings (RLGY) on Friday.
The new GDP results will come out on Thursday, and according to forecasts from Econoday, it is expected to rise 2.9% in the second quarter.
In the previous results, the economy contracted 0.7% in the first quarter of 2015, revealing the truth behind how tough the start of the year was for the market.
The Federal Open Market Committee will meet again this week, possibly revealing more information about when interest rates will rise.
Federal Reserve Chair Janet Yellen recently went on record again telling the House Financial Services Committee that the Fed will look at raising interest rates in 2015 if and as the labor market improves and inflation hits medium-range goals.
There were no banks were closed during the week ending July 24, according to the FDIC.
Also, don’t forget that HousingWire just launched its fifth, and final, awards program: The HW Vanguard Awards.
Unlike our other, editorial and independent awards programs — Rising Stars, Influential Women in Housing, the Fast50 and the TECH100 — The Vanguard Awards will go to leaders in the mortgage finance industry who can prove they have a huge impact on the housing economy.
The Vanguard Awards are an open recognition program designed to highlight “leaders of the year” in the housing economy, and will be featured in our double December/January special issue.
The Federal Deposit Insurance Corp. closed no banks Friday.
