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John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

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Large Lenders Expect Credit Standards to Ease in Next Three Months

September 19, 2014 1:30 am

Large lenders’ expectations that underwriting standards will ease over the next three months coincide with overall lenders’ expected pullback in the demand for single-family purchase mortgages, according to results from Fannie Mae’s third-quarter Mortgage Lender Sentiment Survey. The share of lenders who expect purchase mortgage demand to go up over the next three months decreased significantly – between 26 to 33 percentage points depending on loan type – with the largest decline of 33 percentage points on GSE-eligible loans.

Among those surveyed, larger lenders continue to be more likely than their smaller counterparts to say they expect to ease their credit standards during the next three months, in particular for non-GSE-eligible and government loans, perhaps indicating an effort to boost purchase mortgage activity before the year comes to a close.

"Lenders’ diminished purchase mortgage demand outlook is broadly in line with the softened consumer housing sentiment seen in the August National Housing Survey results released last week," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Historically, as lenders face a more competitive market for loan volume, it’s not uncommon to see some loosening in the lending standards; however, this time, the easing will likely be around the edges."

These latest third quarter results are largely consistent with Fannie Mae’s study released last month, titled "Impact of QM," that shows larger lenders are more likely than smaller lenders to pursue non-QM loans. "Larger lenders are expecting to tap into the non-GSE-eligible and government loan market to maintain or grow their market share and offset their anticipated slowing mortgage demand as the peak spring/summer selling seasons are coming to an end," said Duncan.

Highlights from the survey include:
  • Compared to general consumers, senior mortgage executives continue to be more optimistic about the overall economy.
  • Consumer demand reported for single-family purchase mortgages over the prior three months remain little changed from Q2 to Q3 2014.
  • Larger lenders continue to be more likely than smaller lenders to say their credit standards eased over the prior three months and that they expect standards to ease during the next three months, in particular for non-GSE eligible and government loans.
  • As in Q1 and Q2, most lending institutions surveyed in Q3 2014 reported that they expect to maintain their post mortgage origination execution strategies for the next three months.
  • As in Q1 and Q2, the majority of lenders surveyed in Q3 2014 reported that they expect to maintain their Mortgage Servicing Rights (MSR) strategies for the next three months.
Source: Fannie Mae

Published with permission from RISMedia.


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Demographic Shifts Signal Need for Housing Changes

September 18, 2014 1:30 am

America’s older population is in the midst of unprecedented growth. According to a recent report by the Harvard Joint Center for Housing Studies and the AARP Foundation, the number of adults in the U.S. aged 50 and over is expected to grow to 133 million by 2030, an increase of more than 70 percent since 2000. It is more important than ever for older Americans to have access to affordable, physically accessible and well-located housing options.

Housing is critical to quality of life for people of all ages, but especially for older adults. Considering current housing costs, a third of adults 50 and over—including 37 percent of those 80 and over—pay more than 30 percent of their income for homes that may or may not fit their needs, resulting in cutbacks elsewhere, including retirement savings. Much of the nation’s inventory also lacks basic accessibility features (such as no-step entries, extra-wide doorways, and lever-style door and faucet handles), preventing older persons with disabilities from living safely and comfortably in their homes. Additionally, with a majority of older adults aging in car-dependent suburban and rural locations, transportation and pedestrian infrastructure that meets the needs of non-drivers is paramount.

“Recognizing the implications of this profound demographic shift and taking immediate steps to address these issues is vital to our national standard of living,” says Chris Herbert, acting managing director of the Harvard Joint Center for Housing Studies. “While it is ultimately up to individuals and their families to plan for future housing needs, it is also incumbent upon policy makers at all levels of government to see that affordable, appropriate housing, as well as supports for long-term aging in the community, are available for older adults across the income spectrum.”

Of special concern are the younger baby boomers now in their 50s. While a majority of people over 45 would like to stay in their current residences as long as possible, estimates indicate that 70 percent of those who reach the age of 65 will eventually need some form of long-term care. In this regard, older homeowners are in a better position than older renters when they retire. The typical homeowner age 65 and over has enough wealth to cover the costs of in-home assistance for nearly nine years, or assisted living for 6 and half years. The typical renter, however, can only afford two months of these supports.

“As Americans age, the need for safe and affordable housing options becomes even more critical,” says Lisa Marsh Ryerson, President of the AARP Foundation. “High housing costs, aging homes, and costly repairs can greatly impact those with limited incomes.”

Source: AARP

Published with permission from RISMedia.


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