Hw Changes In Mrtgage Structure Have Effected Hme Sales The husing and mrtgage industries, fueled by histrically lw interest rates, cntinue t be frnt-page news because f their cntributins t ur ecnmy ver the past several years. utstanding mrtgage debt reached $7 trillin. The US can d substantially better than it has dne in the past, but it will require 100% lan-t-value prgrams and a natinal slutin t the predatry lending issue. Just mre than 68 percent f Americans currently wn hmes. f that percentage, the U.S. Census Bureau calculates that three-quarters f white Americans have hmes, while immigrants and minrities are still 20 percent behind. In fact, fewer than 50 percent f all African Americans and Hispanic Americans wn a hme (1).
ver the next decade, the natinal hmewnership rate is set t rise t abut 70 percent. Why nly 2 percent mre? ne reasn is that, with each year that passes, we have a lt mre peple t huse. The U.S. Census Bureau estimates that the ppulatin culd increase by 31 millin t 34 millin peple, translating int 13 millin t 15 millin mre husehlds. Mrtgage bankers cannt effectively extend credit t wrthy brrwers if they are subjected t nerus predatry lending laws and prcedures that differ substantially frm state t state (4).
Huses have becme mre affrdable fr Americans in the last 50 years.
The Natinal Assciatin f Realtrs (NAR), Washingtn, D.C., reprted that the secnd quarter f 2003 was at the secnd-mst affrdable level since 1973. With the natinal figure fr required minimum incme at $39,090, six ut f every 10 husehlds acrss the natin culd affrd t buy a median-priced hme. Recrd lw interest rates have allwed hmewners t pay mre withut significantly raising their mnthly mrtgage payment. Fr example, the median mnthly mrtgage payment in the secnd quarter f 2003 was $774, nly 17.4 percent f husehld incme, in cntrast t 2002’s median payment f $805 (3).
The Essay on Wage Growth Income Percent American
The dominant economic paradigm in American thought has always placed a strong emphasis on efficiency, and concomitant concepts such as individualism and autonomy. A corollary to this thinking is that the individual is dynamic and efficient whereas the government is an ossifying bureaucracy, resistant to change and anathema to efficiency. The individual is the creator of wealth; the government is ...
Thse figures are the natinal average. While hme values have skyrcketed in many areas, husehld incme has nt risen at the same pace. Fr example, median-incme families in San Dieg-the least affrdable f all metr areas, accrding t NAR-had nly 69.4 percent f the incme required t buy a median-priced huse.
N ne ever has thught that middle-class buyers wuld be priced ut f the market in a majr metrplitan area. The median price n a Califrnia hme hit a new recrd in January, rising t $405,720, accrding t the Califrnia Assciatin f Realtrs (C.A.R.), Ls Angeles. The minimum husehld incme required t purchase ne f these hmes is nw $94,020, assuming a typical 30-year, fixed-rate mrtgage at 5.85 percent with a 20 percent dwn payment. Nt many families have an incme that even cmes clse. That is why C.A.R. reprted that first-time buyers accunted fr nly 30.6 percent f hme purchases in Califrnia in 2003-the lwest rate since 1981 (1).
The disparity between hme price and incme is even greater fr families in lw-t-mderate-incme categries.
It is very difficult, if nt impssible, fr many f these brrwers t save enugh mney fr a dwn payment. There culd be a substantial prgress with 100 percent LTV prgrams such as thse being cnsidered by the Federal Husing Administratin (FHA).
Hwever, it wuld als lead t higher delinquencies and freclsures within this grup f brrwers. Hwever, cnsider that even if yu dubled current rates f delinquency, that wuld still leave a substantial percentage f brrwers wh wuld benefit frm these prgrams (4).
The subprime industry has gained a legitimate place in the marketplace as a slutin fr peple whse credit r ther circumstances disqualify them fr prime lans. It is very easy it is t lse A-lan status because f a missing payment r t many credit cards, cnsider the universe f subprime custmers.
The Term Paper on The Causes Of Subprime Mortgage Financial Crisis
The U.S. subprime mortgage crisis was a set of events that led to the 2008 financial crisis, characterized by a rise in subprime mortgage defaults and foreclosures. This paper seeks to explain the causes of the U.S. subprime mortgage crisis and how this has led to a generalized credit crisis in other financial sectors that ultimately affects the real economy. In recent decades, financial industry ...
They culd be accmmdated with a subprime lan and supplied with a radmap t seek a prime lan when they have demnstrated respnsible credit management fr a specific time perid (3).
Subprime lending has gne mainstream. In the new purchase envirnment, many mrtgage bankers realize that it pays t diversify their prduct menu and develp slutins fr lw-t-mderate-incme buyers and thse with impaired credit. Accrding t New Century Financial Crpratin, Irvine, Califrnia, subprime brrwers tk ut apprximately $350 billin in mrtgages during 2003. Frecasters estimate that subprime is nw between 10 percent and 15 percent f all riginatins (4).
Frmer Fannie Mae Vice Chair Jamie Grelick reprted that Fannie Mae did $200 billin f subprime business in 2002, and these were prducts and market segments that were nt part f its menu five years ag (3).
In 2002, President Gerge W. Bush annunced the Blueprint fr the American Dream initiative, which challenged bth the public and private sectrs t increase minrity hmewnership by 5.5 millin befre the end f the decade.
It is up t mrtgage bankers t accept this challenge and develp the lan prducts and real estate finance slutins that expand hmewnership t every demgraphic segment (1).
As a whle, huse mrtgage delinquency rates at this mment suggest the industry will scrape thrugh the ecnmic and real estate dwnturn withut huge damage. S far, public has seen tw years f weak prperty market perfrmance-including rising vacancy and falling rents-with nly mdest increases in delinquency. Mrtgage lenders are cntinuing t lsen their standards, despite grwing fears that relaxed lending practices culd increase risks fr brrwers and lenders in verheated husing markets. Nvel lan prducts have helped fuel much f the run-up, which cntinues t defy expectatins, as reflected in hme-sales data released yesterday. Existing-hme sales hit anther recrd in June, up 2.7% frm May’s heated levels, accrding t the Natinal Assciatin f Realtrs.
Median hme prices rse 14.7% frm June 2004 (1).
Lenders, hwever, are making it still easier fr brrwers t qualify fr a lan. They are lwering the credit scres needed t qualify fr certain lans, increasing the debt lads brrwers can carry and easing the way fr brrwers t get lans while prviding little dcumentatin. In sme cases, lenders are easing standards nt nly fr hmewners, but als fr the grwing number f peple buying residential real estate as an investment. In ne recent mve, Chase Hme Finance, a unit f J.P. Mrgan Chase & C., this spring began allwing sme f its custmers t take ut hme-equity lans and lines f credit withut having their incmes verified (3).
The Term Paper on Credit Management
Controlling the accounts receivables process demands the development of policies that are compatible with an enterprises profits, liquidity and market share. Since the accounts receivables policy has a broad impact, it must be managed carefully and assessed frequently. Accounts receivables policy development is subject to internal and external business constraints and requires careful evaluation ...
Under the new prgram, incme verificatin is nt required fr hme-equity lans f up t $200,000, prvided that the brrwer’s ttal mrtgage debt des nt exceed 90% f the prperty’s value r $1.5 millin. The change is nt fr all custmers – it’s nly fr custmers with the very highest credit rating, a cmpany spkeswman says (5).
Lans with little r n dcumentatin have grwn in ppularity industry-wide. In June 2005, Wells Farg & C. began allwing buyers f investment prperties in sme parts f the cuntry t take ut interest-nly mrtgages, which let brrwers pay interest and n principal in the lan’s early years. Anther recent change in sme markets bsts the standard fr hw much ttal debt and husing expenses certain brrwers can carry t 45% f their incme frm 38% (5).
A Wells Farg spkesman says the cmpany des nt discuss specific changes, but that it cnsistently mnitrs ecnmic cnditins in its majr markets and will at times mdify ur lending guidelines in a specific market. (5) He added, n a natinal basis, we have made n substantive changes t ur lending plicies and practices. Banking regulatrs, meanwhile, are paying clser attentin t mrtgage lending practices. Lending standards are cntinuing t ease, says Barbara Grunkemeyer (5), deputy cmptrller fr credit risk at the ffice f the Cmptrller f the Currency, which is putting the finishing tuches n its annual survey f bank underwriting standards. Federal Reserve surveys f bank lan fficers shw that lenders have tended t lsen standards since early 2004, fllwing a perid f relative tightening. In sme cases, lenders have tweaked their fferings by reducing the minimum credit scres needed t qualify fr certain lans. Cuntrywide Financial Crp., fr instance, recently cut by 20 pints the minimum credit scre brrwers with bigger lan amunts need t qualify fr ne f its ppular lan prgrams. (5) A Cuntrywide spkeswman says the change was designed t make the terms f this lan cnsistent with its ther ffers. The cntinuing lsening f lending standards has helped push the hmewnership rate t a recrd 69% f U.S.
The Essay on Society’s Standards vs. Self
Connie Smith Ms. Wheeler P6 AP Language 15 April 2013 Society’s Standards vs. Self Everyone likes to think that they are a unique individual who is not controlled or influenced by society. But all societies, no matter what type, have standards. People are what make up society, and they effect society’s expectations. But how do society’s standards influence one’s view of self and their actions? ...
husehlds. Mrtgage delinquencies, meanwhile, have remained lw, with just 1.08% f residential mrtgages in freclsure prceedings at the end f the first quarter, dwn frm 1.17% five years earlier, accrding t the Mrtgage Bankers Assciatin (2).
Lw interest rates and rising hme prices have helped keep delinquencies dwn by keeping mnthly payments in check and making it easy fr brrwers wh run int truble t refinance r sell their hmes at a prfit (2).
Tday, hme mrtgage delinquency levels are still rather lw, and in sme cases very. The factrs behind the smewhat surprisingly lw delinquencies thus far include the fllwing: A majr shift in underwriting standards in the mid-1990s that required greater brrwer equity in deals (typically 20 percent t 30 percent) (2).
ther changes in underwriting standards, such as mre cnservative assumptins n current and prjected incme and expenses (2).
Significant rent increases in many markets and prperty types in the late 1990s and 2000, thereby creating a “cushin” fr the recent declines in cash ….
