This past September, the Office of the Comptroller of the Currency (OCC)deputy comptroller for credit and market risk identified home equity lines of credit (HELOCs) as a major point of concern for the organization, citing this topic as an area of focus for the coming year. According to the OCC, financial institutions are at varying stages of preparedness for the problems that may occur when a bulk of their HELOCs begin amortizing, and there is much work that still should be done to quantify and address the risks of delinquencies and losses.
CLICK HERE to read the full article.
In the aftermath of the housing crisis, Fannie Mae and Freddie Mac issued repurchase requests on nearly $100 billion in mortgages. Not surprisingly, this caused many lenders to look toward the future with uncertainty as to whether repurchases would abate or continue to abound. In the crisis era, the government-sponsored enterprises (GSEs) could at any time in the lifespan of a loan issue a repurchase request as part of their representation and warranty policies, even when a loan had been performing for many years. This created a tremendous amount of pressure on lenders that were unable to estimate and quantify the potential repurchases that would come their way.
As this article goes to print, our nation is nearing the 100-day mark until the presidential election of 2012. While the candidates debate, most polls rate the economy, jobs, and housing as differentiators. For the issue of housing to be included as top of mind speaks volumes to the challenges the housing market has brought to the policy makers on the one hand, and the confidence of the voters on the other. Policy makers want to f ind answers to the next gen-eration of housing finance and have sought to balance the fragility of the housing market with appropriate loan modification programs as an overall economic recovery takes hold. The questions of how to solve our homeown-ership conundrum are generational; and they are due additional quantitative analysis and scrutiny. Many factors affect the success of the various loan modification programs, and in this article, we review the different loan modification efforts that have been observed in the non-agency market and assess the performance of these different modification types. As the campaign rhetoric fades past November, we will continue to analyze the data surrounding the success and failure of the various loan modification programs and the impact these programs are having on our nation’s housing recovery.