Economists' Outlook

Housing stats and analysis from NAR's research experts.

Current Lending Patterns Don’t Reflect Performance

The delinquency rate measured 12 months after origination has improved dramatically on mortgages backed by Fannie Mae and Freddie Mac. According to the FHFA’s first quarter report on the enterprises, the 12-month delinquency rate is now back to 2002 levels even though the unemployment rate is significantly higher than it was in 2002 and price growth was stagnant until this spring. Weak equity growth and high unemployment are the main drivers of delinquencies suggesting that the rates in 2002 and 2003 would have been much higher if similar home price and employment trends had been present.

Likewise, the delinquency rate on loans financed by the FHA 12 months after origination has fallen dramatically since 2007.

The heads of all three banking regulators, the Federal Reserve, OCC, and the FDIC, have made comments alluding to the need for more relaxed lending standards that are in line with sound underwriting. Yesterday’s announcement by the FHFA that it intends to cap the time frame for reviews of problem loans on new originations may help to relax the put-back and reputation risk to lenders going forward, but risks to lenders from the rebuttable presumption stipulation of the qualified mortgage rule and risk weights on high LTV loans under Basel III could mitigate this effort.

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.


Comment Policy

The opinions expressed in reader comments sections on this website are those of the reader and not NAR or REALTOR® Magazine.

About Economists' Outlook

Visit this blog daily to see what NAR experts are saying about the economy, the housing market, and other factors that will impact your business.

Housing Minute

Housing Minute is a monthly video series highlighting the latest housing data from the National Association of REALTORS® in a minute or less.