August 4, 2015

In Case You Missed It: A Look at Recent National Housing Policy News

Homeownership rate drops to 48-year low

Despite record sales, fewer Americans own homes
The homeownership rate in the United States in the second quarter declined to 63.4%, the lowest it has been since 1967, according to data from the Department of Commerce’s Census Bureau.

Further, the steady decline since 2009 continues. On a quarterly basis, the rate was 1.3 percentage points (+/-0.4) lower than the second quarter 2014 rate (64.7%) and 0.4 percentage points (+/-0.4) lower than the rate last quarter (63.7%).   For the second quarter 2015, the homeownership rates were highest in the Midwest (68.4%) and lowest in the West (58.5%). The homeownership rates in the Northeast, Midwest, South and West were lower than the rates in the second quarter 2014.

Black Knight: Borrowers carry highest level of non-mortgage debt in a decade

Underwater population down 26% through May
Black Knight Financial Services analyzed U.S. mortgage holders’ levels of non-mortgage-related debt and found those levels are at their highest in over 10 years.   As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, non-mortgage debt among U.S. mortgage holders bears close watching due to its potential impact on both the lending and housing industries.

“Mortgage lenders know exactly how much debt borrowers are carrying at the point of origination, but often lose sight from that point forward,” said Graboske. “Non-mortgage debt is another key piece of the home affordability puzzle — the more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations.

The housing recovery's great big weak spot: Mid-tier homes

Clear Capital: Poorest performance in the most populated segment
The July market report from Clear Capital shows that trends have been manifesting across price tiers, and it shows that the biggest segment of housing — mid-tier priced homes — is doing the worst.
The Clear Capital HDI measures market appreciation rates across the lowest (up to 25%), middle (26%-75%), and highest (76% and above) priced homes in an area to dissect valuation risk.

The data revealed that the low-tier is closest to peak 2006 levels, with prices only 10.1% below 2006 peak levels.   Conversely, the mid-tier (homes selling between $120,000 and $345,000) is the worst performing segment with current price levels 24.8% below 2006 peak levels. This vast difference in market recovery underscores the continued challenges the majority of homeowners face, despite a quicker recovery in both the bottom and top segments of the market.

Fannie Mae: Mortgage lenders unnecessarily restrict credit

Higher credit scores, additional documentation most common
It appears the post-recession mantra of mortgage lenders is "better safe than sorry."   Despite pushes from the Federal Housing Finance Agency and the Federal Housing Administration, many mortgage lenders are still applying additional credit overlays to loans delivered to Fannie Mae and Freddie Mac, a new survey of lenders showed.

The survey, conducted by Fannie Mae’s Economic & Strategic Research Group and based on responses from senior mortgage executives in May 2015, found that approximately 40% of lenders who deliver loans to the GSEs or Ginnie Mae reported applying credit overlays that are more stringent than what the GSEs or Ginnie Mae require.

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