Housing Finance at a Glance: a Monthly Chartbook, November 2020
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Residential Real Estate Lending, Comptroller's Handbook
Comptroller’s Handbook A-RRE Safety and Soundness Capital Asset Sensitivity to Other Adequacy Quality Management Earnings Liquidity Market Risk Activities (C) (A) (M) (E) (L) (S) (O) Residential Real Estate Lending June 2015 RESCINDED Updated June 16, 2016, for This document and any attachments are Credit Underwriting Assessment System replaced by version 1.2 of the booklet of the Updated January 6, 2017, for same title published January 2017 Nonaccrual Status Office of the Comptroller of the Currency Washington, DC 20219 Contents Introduction ..............................................................................................................................1 Overview ....................................................................................................................... 1 Mortgage Products .................................................................................................. 3 Home Equity Loan and Line of Credit Products .................................................... 5 Subprime Mortgage ................................................................................................ 7 Reverse Mortgage Loans ...................................................................................... 10 Investor-Owned RRE ............................................................................................ 12 Manufactured Housing.......................................................................................... 12 Affordable Housing ............................................................................................. -
Understanding Your FICO Score
UnderUnderstandingstanding YYourour FICFICOO® SScorecore Contents Your FICO® Score— A Vital Part of Your Credit Health . 1 How FICO® Scores Help You . 2 Your Credit Report— The Basis of Your FICO® Score . 3 How FICO® Scores Work . 5 What a FICO® Score Considers . 7 1. Payment History . 8 2. Amounts Owed . 9 3. Length of Credit History . 10 4. New Credit . 11 5. Types of Credit in Use . 12 How the FICO® Score Counts Inquiries . 13 Interpreting Your FICO® Score . 14 Checking Your FICO® Score . 15 Checking Your Credit Report . 16 Please note that FICO and myFICO are not credit repair organizations or similarly regulated organizations governed by the federal Credit Repair Organizations Act or similar state laws. FICO and myFICO do not provide so-called “credit repair” services or advice or give advice or assistance regarding “cleaning up” or “improving” your credit record, credit history, or credit rating. FICO and myFICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be trademarks of their respective owners. © 2000–2011 Fair Isaac Corporation. All rights reserved. This information may be freely copied and distributed without modification for non-commercial purposes. 1557EB 11/11 PDF Your FICO® Score— WHO IS FICO? Founded in 1956, FICO uses A Vital Part of Your advanced math and analytics to Credit Health help businesses make smarter decisions. Besides inventing When you’re applying for credit—whether it’s the FICO® Score, FICO has also a credit card, a car loan, a personal loan or a created other leading tools, mortgage—lenders want to know your credit risk including products that help level. -
FDIC QUARTERLY 51 2019 • Volume 1 3 • Number 4
TRENDS IN MORTGAGE ORIGINATION AND SERVICING: Nonbanks in the Post-Crisis Period Introduction The mortgage market changed notably after the collapse of the U.S. housing market in 2007 and the financial crisis that followed. A substantive share of mortgage origination and servicing, and some of the risk associated with these activities, migrated outside of the bank- ing system. Some risk remains with banks or could be transmitted to banks through other channels, including bank lending to nonbank mortgage lenders and servicers.1 Changing mortgage market dynamics and new risks and uncertainties warrant investigation of poten- tial implications for systemic risk. This article covers trends in the volume of 1–4 family mortgages outstanding, migration of mortgages between market participants, and the drivers of these shifts. Next, the article discusses trends in residential mortgage origination and servicing from 2000 to early 2019 and discusses the landscape of the mortgage industry, key characteristics of nonbank origi- nators and servicers, and the potential risks posed by nonbanks. Last, the article contem- plates the implications that the migration of mortgage activities to nonbanks may have for banks and the financial system. Trends in the Volume of and Mortgage originators and servicers have long competed for market share through innova- Competition for 1–4 Family tions in capital markets, customer service, and funding and business structures, and in Home Mortgage Loans applying technology to make processes more efficient and cost-effective. The composition and the concentration of the dominant market participants have varied with developments in regulation, government intervention and guarantees, primary and secondary mortgage markets, securitization, technological innovation, dynamics in housing markets, financial markets, and the broader economy. -
MULTIMEDIA CAROUSELS - an Educational Journey Describing the Relationship Between Humankind and the Different Elements of Nature and Main Natural Discoveries
FICO Eataly World DIGITAL CITIES CHALLENGE 29-30th January 2019 Algeciras, Spain FICO: the World’s largest food park We are a real place We represent Italy We speak to the World • The World’s largest food park: 1.000 square meters devoted to italian food culture • fields and stables: 2 hectares with 2.000 cultivars • 100 cities together at FICO with their recipes and • 2.500 media releases on Italian and and over 200 animals traditions foreign press • 40 producing factories • FICO and UNESCO are ambassador of the Italian • 2,8 milion visitors: 70% coming from • restaurants: 45 among street food kiosks and beauty outside Bologna area, of which 20% gourmet cuisine • over 100 events per month celebrating the coming from abroad • 5 guided tours e 20 courses per day, almost 2.000 different crafts and expertises of food producing guided visits in a year and Italian food culture • 700 events FICO: the World’s largest food park Opened in November 15th, 2017 FICO has been chosen by almost 3 million visitors, three quarters coming from outside Bologna of which 20% from abroad, especially from China, France, United Kingdom, Germany, USA, Switzerland, BOLOGNA and Spain. 40,000 of school children and teenagers have visited the park during organized school trips and educational activities. 300,000 people spent at least one hour of their time to discover and deepen the culture of food. FICO is a free entry park, so that everybody is invited to come and enjoy the experience. FICO: where people learn by doing and having fun Education with FICO is fun. -
Know Your Credit Score
mortgage ratecredit score payment historydebtinstallment loanAPR credit scoremortgage rate installment loanAPRpayment historydebt mortgage ratecredit score 720 665 600 680 740 620 720 665 Your Credit70 Scores 0 » Credit scores are vital to your financial health » For example A credit score is a number that helps lenders and Consider a couple who are others predict how likely you are to make your looking to buy their first house. Let’s say they want a 30-year mortgage credit payments on time. Each score is based on loan and their FICO® credit scores are 720. the information in your credit report. They could qualify for a mortgage with a low 6.2 percent interest rate.* But if their scores are 580, they probably would pay » Why do your scores matter? 9.4 percent* or more—that’s at least 3 full percentage points more in interest. On Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, a $100,000 mortgage loan, that 3 point mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you difference would cost them $2,650 dollars are more likely to be approved and pay a lower interest rate on new credit. a year, adding up to $79,500 dollars more over the loan’s 30-year lifetime. Want to rent an apartment? Without good scores, your apartment application may be turned Your credit scores do matter. down by the landlord. Your scores also may determine how big a deposit you will have to pay for telephone, electricity or natural gas service. -
Do Banks Pass Through Credit Expansions? the Marginal Profitability of Consumer Lending During the Great Recession
Do Banks Pass Through Credit Expansions? The Marginal Profitability of Consumer Lending During the Great Recession∗ Sumit Agarwal† Souphala Chomsisengphet‡ Neale Mahoney§ Johannes Stroebel¶ September 9, 2015 Abstract We examine the ability of policymakers to stimulate household borrowing and spending during the Great Recession by reducing banks’ cost of funds. Using panel data on 8.5 million U.S. credit card accounts and 743 credit limit regression discontinuities, we estimate the marginal propensity to borrow (MPB) for households with different FICO credit scores. We find substantial hetero- geneity, with a $1 increase in credit limits raising total unsecured borrowing after 12 months by 59 cents for consumers with the lowest FICO scores (≤ 660) while having no effect on consumers with the highest FICO scores (> 740). We use the same credit limit regression discontinuities to estimate banks’ marginal propensity to lend (MPL) out of a decrease in their cost of funds. For the lowest FICO score households, higher credit limits quickly reduce marginal profits, limiting the pass-through of credit expansions to those households. We estimate that a 1 percentage point reduction in the cost of funds raises optimal credit limits by $127 for consumers with FICO scores below 660 versus $2,203 for consumers with FICO scores above 740. We conclude that banks’ MPL is lowest exactly for those households with the highest MPB, limiting the effectiveness of policies that aim to stimulate the economy by reducing banks’ cost of funds. ∗For helpful comments, we are grateful to Viral Acharya, Scott Baker, Eric Budish, Alex Frankel, Erik Hurst, Anil Kashyap, Theresa Kuchler, Randall Kroszner, Marco di Maggio, Matteo Maggiori, Rick Mishkin, Jonathan Parker, Thomas Phillipon, Amit Seru, Amir Sufi, and Alessandra Voena, as well as seminar and conference participants at Berkeley Haas, NYU Stern, Columbia University, HEC Paris, BIS, Ifo Institute, Goethe University Frankfurt, SED 2015, NBER Summer Insti- tute, and LMU Munich. -
Thematic Review on Mortgage Underwriting and Origination Practices Peer Review Report
Thematic Review on Mortgage Underwriting and Origination Practices Peer Review Report 17 March 2011 Table of Contents Foreword .................................................................................................................................... 1 Executive Summary ................................................................................................................... 2 1. Introduction....................................................................................................................... 6 2. Regulatory and supervisory framework............................................................................ 9 2.1 Types of mortgage originators ............................................................................... 9 2.2 Consumer protection features related to residential mortgage loans ................... 10 2.3 Coordination and consistency of underwriting practices and oversight .............. 13 2.4 Policy reforms currently underway...................................................................... 14 3. Mortgage underwriting standards and practices ............................................................. 17 3.1 Effective verification of income and financial information................................. 17 3.2 Reasonable debt service coverage........................................................................ 19 3.3 Realistic qualifying mortgage payments.............................................................. 20 3.4 Appropriate loan-to-value ratios......................................................................... -
Residential Real Estate Lending, Comptroller's Handbook
Comptroller’s Handbook A-RRE Safety and Soundness Capital Asset Sensitivity to Other Adequacy Quality Management Earnings Liquidity Market Risk Activities (C) (A) (M) (E) (L) (S) (O) Residential Real Estate Version 1.0, June 2015 Version 1.1, June 16, 2016 Version 1.2, January 6, 2017 Office of the Comptroller of the Currency Washington, DC 20219 Version 1.2 Contents Introduction ..............................................................................................................................1 Overview ....................................................................................................................... 1 Mortgage Products .................................................................................................. 3 Home Equity Loan and Line of Credit Products .................................................... 5 Subprime Mortgage ................................................................................................ 7 Reverse Mortgage Loans ...................................................................................... 10 Investor-Owned RRE ............................................................................................ 12 Manufactured Housing.......................................................................................... 12 Affordable Housing .............................................................................................. 13 RRE Activities and Functions ..................................................................................... 15 RRE Loan -
COMMUNITY DEVELOPMENT Working Paper
COMMUNITY DEVELOPMENT Working Paper Sought or Sold? Social Embeddedness and Consumer Decisions in the Mortgage Market Carolina Reid Federal Reserve Bank of San Francisco December 2010 Working Paper 2010-09 http://frbsf.org/community FEDERAL RESERVE BANK OF SAN FRANCISCO 101 Market Street San Francisco, California 94105 www.frbsf.org/community1 Sought or Sold? Social Embeddedness and Consumer Decisions in the Mortgage Market Carolina Reid, Federal Reserve Bank of San Francisco1 Working Paper, December 2010 Introduction Cesario Gonzalez said he was encouraged to go for his first home last year by a mortgage broker handing out business cards in front of Pancho Villa Farmers Market on El Cajon Boulevard. Gonzalez said through a translator that he still is uncertain what kind of loans he signed up for on the $565,000 duplex he purchased in May 2007. With monthly mortgage payments of $4,200 and monthly income of $3,200, the purchase appeared dubious…He could see his neighbors being owners of houses. He trusted the Realtor and the loan officer. He wanted a home. (Crabtree 2008) Colvin Grannum, an African American who grew up in a black neighborhood in Brooklyn, explained that his father bought several properties in the 1950s and ’60s, often without turning to banks. “I don’t want to say it’s in the cultural DNA, but a lot of us who are older than 30 have some memory of disappointment or humiliation related to banks,” Mr. Grannum said. “The white guy in the suit with the same income gets a loan and you don’t? So you turn to local brokers, even if they don’t offer the best rates.” (Powell and Roberts 2009) These two anecdotes, taken from the San Diego Union Tribune and The New York Times respectively, provide uncommon insight into the social processes governing the mortgage borrowing decision. -
Subprime Mortgage Lending in New York City: Prevalence and Performance
Federal Reserve Bank of New York Staff Reports Subprime Mortgage Lending in New York City: Prevalence and Performance Ebiere Okah James Orr Staff Report no. 432 February 2010 This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors. Subprime Mortgage Lending in New York City: Prevalence and Performance Ebiere Okah and James Orr Federal Reserve Bank of New York Staff Reports, no. 432 February 2010 JEL classification: R10, R23 Abstract Subprime mortgage lending expanded in New York City between 2004 and mid-2007, and delinquencies on these subprime loans have been rising sharply. We use a rich, loan- level data set of the city’s outstanding subprime loans as of January 2009 to describe the main features of this lending and to model the performance of these loans. These subprime loans represent a smaller share of total housing units in the city than is true nationwide. In addition, they are found to be clustered in neighborhoods where average borrower credit quality is low and, unlike prime mortgage loans, where African- Americans and Hispanics constitute relatively large shares of the population. We estimate a model of the likelihood that these loans will become seriously delinquent and find a significant role for credit quality of borrowers, debt-to-income and loan-to-value ratios at the time of loan origination, and estimates of the loss of home equity. -
CFPB Mortgage Examination Procedures Origination
CFPB Mortgage Examination Procedures Origination Mortgage Origination Exam Date: [Click&type] Exam ID No. [Click&type] These Mortgage Origination Examination Prepared By: [Click&type] Procedures (Procedures) consist of modules Reviewer: [Click&type] covering the various elements of the mortgage Docket #: [Click&type] origination process; each module identifies specific Entity Name: [Click&type] matters for review. Examiners will use the Procedures in examinations of mortgage brokers and mortgage lenders. Before using the Procedures, examiners should complete a risk assessment and examination scope memorandum in accordance with general CFPB procedures. Depending on the scope, and in conjunction with the compliance management system review, including consumer complaint review, each examination will cover one or more of the following modules. Module 1 Company Business Model Module 2 Advertising and Marketing Module 3 Loan Disclosures and Terms Module 4 Underwriting, Appraisals, and Loan Originators Module 5 Closing Module 6 Fair Lending Module 7 Privacy Module 8 Examiner Conclusions and Wrap-Up CFPB January 2014 Procedures 1 CFPB Mortgage Examination Procedures Origination Examination Objectives 1. To assess the quality of a supervised entity’s compliance management systems in its mortgage origination business. 2. To identify acts or practices that materially increase the risk of violations of federal consumer financial law, and associated harm to consumers, in connection with mortgage origination. 3. To gather facts that help determine whether a supervised entity engages in acts or practices that are likely to violate federal consumer financial law in connection with mortgage origination. 4. To determine, in accordance with CFPB internal consultation requirements, whether a violation of a federal consumer financial law has occurred and whether further supervisory or enforcement actions are appropriate. -
Tackling the Mortgage Crisis: 10 Action Steps for State Government Alan Mallach1 “Although
ReSToRInG PRoSPeRITy Initiative FRoM THe MeTRoPoLITAn PoLICy PRoGRAM AT BRooKInGS Tackling the Mortgage Crisis: 10 Action Steps for State Government Alan Mallach1 “Although most media The mortgage foreclosure crisis has become an issue of growing concern over the past two years, one without easy remedies. While most atten- attention has tion has focused on what the federal government should do to manage the fallout, states, too, play a vital role in the process. This paper describes how focused on the mortgage crisis came to be, and the damage it has so far inflicted. It then provides a set of concrete action steps that states can take to mitigate the role of its impact on families and neighborhoods—and prevent a similar situation from occurring in the future. the federal government Introduction in stemming During 2006, the United States saw a considerable upswing in the number of this crisis, new mortgage defaults and foreclosure filings. By 2007, that upswing had be- come a tidal wave. Today, national homeownership rates are falling, while more states have than a million American families have already lost their homes to foreclosure. Across the country, boarded houses are appearing on once stable blocks. Some the legal of the hardest hit communities are in older industrial cities, particularly Midwest- ern cities such as Cleveland, Detroit, and Indianapolis.2 powers, Although most media attention has focused on the role of the federal government financial in stemming this crisis, states have the legal powers, financial resources, and political will to mitigate its impact. Some state governments have taken action, resources, negotiating compacts with mortgage lenders, enacting state laws regulating mortgage lending, and creating so-called “rescue funds.” Governors such as and political Schwarzenegger in California, Strickland in Ohio, and Patrick in Massachusetts have taken the lead on this issue.