Mortgage Lenders Start to Loosen Credit Standards

Mortgage Lenders Start to Loosen Credit Standards

As home prices rise and mortgage demand cools, the competitive business arena of real estate and loans is starting to heat up. A new survey from Freddie Mac shows that mortgage lenders say they have eased credit standards recently and expect further easing in the coming months.

Lenders who said that they have loosened mortgage credit standards over the prior three months has ticked up gradually since the fourth quarter of 2016. The net share of lenders who also said that they plan to ease credit standards over the next quarter for GSE eligible, non-GSE eligible, and government loans reached or surpassed survey highs this quarter.

The main reason for the ease in credit is concerns over the current economic conditions in the country. Topping the list of mortgage concerns was the drop in purchase mortgage demand to the lowest net reading in years for the second-quarter period. This went in line with the latest Fannie Mae National Housing Survey®, which found the net share of consumers who reported that now is a good time to buy a home dropped to a record low.

A tightening national housing inventory has pushed up home prices, which is weighing on affordability and constraining sales.

“Expectations to ease credit standards climbed to survey highpoints in the second quarter as more lenders reported slowing mortgage demand and increasing concerns about competition from other lenders,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

“Lenders cited additional contributing factors such as diminishing compliance concerns and more support from the GSEs, including clarification on representations and warranties and tools that provide greater certainty during the loan underwriting process. Easing credit standards might also be due in part to increased pressure to compete for declining mortgage volume.”

Duncan added, “For the third consecutive quarter, the share of lenders expecting a decrease in profit margin over the next three months exceeded the share with a positive profit margin outlook. For the former, the percentage citing competition from other lenders as a reason for their negative outlook reached a survey high.”

Read more from Fannie Mae

Home Price Index Reaches All Time High

Home Price Index Reaches All Time High

Home prices have reached an all-time high in April, rising 1.2% since March and are up 6% year over year, according to the latest report from Black Knight Financial Services. Prices have risen across the nation by 3.6% just in 2017 alone.

Black Knight said that all of the nation’s 20 largest states and 40 largest metros saw home prices increase in April, while home prices in nine of the nation’s 20 largest states and 18 of the 40 largest metros hit new peaks in April.

Home prices went up by 2% or more in each of the top 10 best-performing metros. Tuscaloosa, Ala., was the only metro area to see a decline, with prices falling another 5.1% in its fifth consecutive month as the country’s worst-performing metropolitan area.

According to Black Knight, the state of Washington is outperforming all the other states in monthly appreciation for the third consecutive month with five of the nation’s top 10 best-performing metros located within the state

The Seattle metro area saw an 8.4% increase in home prices since the start of the year. Seattle and Bellingham, Wash. – along with Carson City – led all metropolitan areas with 2.3 percent monthly appreciation; Washington state accounted for five of the nation’s top 10 best-performing metros.

Here are the numbers in graphics from Balck Knight.

BKFS_HPI_Apr2017_Graphics
Illinois Loan Officer Arraigned in Connection with $7 Million Reverse Mortgage Scam

Illinois Loan Officer Arraigned in Connection with $7 Million Reverse Mortgage Scam

An Illinois loan officer was arraigned this week for his alleged role in a $7 million reverse mortgage scam that targeted lenders and elderly homeowners, according to the United States Department of Justice (USDOJ).

The defendant, Mark Steven Diamond, a loan officer with offices in Chicago and Calumet City, used his position to target his elderly victims in a home repair and loan fraud scheme. (more…)

VA Renovation Home Loan

VA Renovation Home Loan

Your home is a very important part of your life and as your home ages, repairs and upgrades become inevitable. The VA renovation home loan provides a convenient way for borrowers to make renovations, repairs or improvements which total up to 25% of the “as-completed” appraised value of the property with a first mortgage, rather than a second mortgage, HELOC or other more costly financing methods. (more…)

California Man Sentenced to Over 7 Years in Prison for Mortgage Fraud Scheme

California Man Sentenced to Over 7 Years in Prison for Mortgage Fraud Scheme

The United States Department of Justice (USDOJ) announced this past week that a former California loan officer was sentenced to 7 years in prison for his involvement in two mortgage fraud schemes and one tax fraud scheme.

Sergey Shchirskiy, 41, of Sacramento, pleaded guilty to one count of wire fraud in each of the two mortgage fraud cases, as well as one count of conspiracy to defraud the United States and one count of aggravated identity theft in the third tax fraud case. He was sentenced by U.S. District Judge Troy L. Nunley.

Shchirskiy operated the first straw buyer scam between April 2007 and November 2007. He worked with other co-conspirators who committed mortgage fraud by using straw buyers and fake documents to obtain Home Equity Lines of Credit on the properties. Shchirskiy role as the loan processor in the scheme was to create fake documents and statements.

All of the homes ended up in foreclosure, resulting in at least $1.5 million in losses to mortgage lenders.

The second scheme occurred between March 2011 and April 2011 and involved a fraudulent tax fraud scheme (2:14-cr-198). According to the USDOJ, Shchirskiy conspired with others to obtain false tax refunds by submitting fraudulent claims using the identities of various individuals, at least eight of which were stolen.

Shchirskiy claimed Earned Income Tax Credit based on false claims of employment from California’s In-Home Supportive Services program. Shchirskiy and his co-conspirators made approximately 80 attempts to file fraudulent tax returns, attempting to receive $661,286 in fraudulent returns from the Internal Revenue Service. The IRS ultimately issued approximately $88,728 in fraudulent refunds.