home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Nonprime and Subprime News | Subprime Statistics
Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.


Subprime Still Needed

Treasury Secretary Paulson speaks at FDIC event

July 8, 2008

By MortgageDaily.com staff


U.S. Treasury Secretary Henry M. Paulson Jr. today told bank regulators that home prices will continue to fall, foreclosures will continue to rise and some borrowers should not be saved. He did note, however, that although subprime lending needs to be fixed -- it shouldn't be eliminated.

Paulson made his comments at the Federal Deposit Insurance Corporation's Forum on Mortgage Lending, according to a transcript of his prepared statement.

He explained that following several years of lax lending standards and rapid home price appreciation, the housing correction that began in 2006 was inevitable. Most forecasts call for a prolonged period of adjustment, with foreclosures continuing to rise and housing prices continuing to fall.

Excess inventory is combining with tighter credit -- which has reduced the number of prospective buyers -- to hurt the housing market.

Some positive signs include a 21 percent decrease in inventory of new single family homes from the 2006 peak and a flattening of existing home sales over the past several months. In addition, depreciation has helped bring starter home prices within reach of more buyers.

The secretary explained that home prices in California, Florida, Arizona and Nevada more than doubled between 2000 and 2006 while Indiana, Michigan and Ohio have seen greater economic challenges. These seven states, which account for one-third of outstanding mortgages, have seen foreclosures soar 300 percent during the past two years and are responsible for more than half of foreclosure starts during the first quarter of 2008.

Around 2.5 million foreclosures are expected to be initiated this year, compared to 1.5 million in 2007. During 2004, when the economy and housing market was strong, there were only 800,000 foreclosures started.

Paulson warned that policy makers should not attempt to prevent every foreclosure. He cited situations such as speculators who are walking away just because they have negative equity and borrowers who have suffered life events including job loss.

"Many of today's unusually high number of foreclosures are not preventable," he stated. "Due to the lax credit and underwriting standards of the past years, some people took out mortgages they can't possibly afford and they will lose their homes."

The official said the objective has been to prevent foreclosures where borrowers were willing to make payments and could afford a workout plan but could not make contact in time with overwhelmed servicers. The HOPE NOW alliance was created to address these issues by facilitating a process where delinquent borrowers, whose loans were owned by investors of residential mortgage-backed securities, were dealt with as if they were dealing with a bank that had originated and held the mortgage.

Paulson touted the achievements of HOPE NOW, noting the alliance has been especially productive at increasing communication with delinquent borrowers and assisting subprime adjustable-rate mortgage borrowers.

Second liens had become a problem for servicers attempting a loan workout, so HOPE NOW announced guidelines for automatic re-subordination of second liens.

The share of all new mortgages guaranteed by Fannie Mae and Freddie Mac has reached 70 percent, according to the secretary.

Paulson explained that some subprime loans should never have been made. He said that high loan-to-value, low- and no-documentation other lax credit loans have become a thing of the past. But he also said that subprime programs enabled many borrowers to purchase homes.

"We must not lose the benefits of the subprime market as we eliminate its flaws," he stated. "We know that subprime lending is vital to bring the dream and economic good of homeownership to millions of Americans. The subprime market will evolve as markets always do, to find better ways to evaluate and manage credit risk."

He pointed out the benefits of covered bonds, which remain on the issuer's balance sheet and give investors security in the event of default and enable an unsecured claim on the issuer.

Foreclosure News | Foreclosure Resources | Foreclosure Prevention Guide

Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.


Real Estate News | Real Estate Statistics
Residential real estate news and coverage of how residential real estate impacts the mortgage industry and residential mortgage-backed securities.



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders