Five Star President: ‘Embedded Risks’ May Be Hindering Mortgage Market Recovery

first_img Tagged with: Five Star Institute HAMP Home Affordable Modification Program Loan Modifications Mortgage Rates REO The Best Markets For Residential Property Investors 2 days ago Sign up for DS News Daily Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Related Articles The Week Ahead: Nearing the Forbearance Exit 2 days ago About Author: Tory Barringer in Daily Dose, Featured, News, REO Demand Propels Home Prices Upward 2 days ago Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington’s student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News’ sister publication, MReport, which focuses on mortgage banking news. Home / Daily Dose / Five Star President: ‘Embedded Risks’ May Be Hindering Mortgage Market Recovery  Print This Postcenter_img Previous: Fannie Mae Expects Modest Economic Growth in 2015 Next: DS News Webcast: Friday 11/21/2014 November 20, 2014 775 Views Five Star President: ‘Embedded Risks’ May Be Hindering Mortgage Market Recovery Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Five Star Institute HAMP Home Affordable Modification Program Loan Modifications Mortgage Rates REO 2014-11-20 Tory Barringer Data Provider Black Knight to Acquire Top of Mind 2 days ago Share Save The Best Markets For Residential Property Investors 2 days ago While the housing market has made measurable strides toward recovery in the last two years, the coming year could bring the start of another downturn, one expert says.Delivering comments to a group of REO brokers and agents, Ed Delgado, president and CEO of the Five Star Institute, offered his take on how the stage is set for the mortgage sector in 2015.”There are several embedded risks in the mortgage market that pose future risk of performance that have yet to be expressed,” Delgado said. “In effect, the market may not be recovering at the rate that we think it is.”Chief among Delgado’s concerns is the government’s Home Affordable Modification Program (HAMP), which attracted nearly 900,000 struggling borrowers in the years 2009 to 2013.While modifications into super-low interest rates helped those hundreds of thousands of Americans stay in their homes, those “permanent” reductions came with a five-year expiration date, and the first waves of HAMP borrowers are now set to see their adjustable rates climb as high as 5 percent.Though that is still a historically low interest rate, it means a monthly payment increase of hundreds of dollars over the next few years—at a time when their financial situation likely can’t take the added cost.To make matters worse, another modification or refinance is unlikely to help, Delgado says.”Modifying an interest rate of 4.25 percent down to 3 percent isn’t going to provide sufficient payment relief to homeowners facing a financial hardship sufficient to threaten mortgage payment performance,” he said.What’s more, he estimates that out of every 10 recent-vintage loans that pass into 90-day delinquency or more, eight will be resistant to loss mitigation efforts owing to the current low interest rate environment.”Despite improvements related to credit quality and tighter rules for underwriting, the reality is that low interest rate mortgages created in recent vintage production will be less responsive to loss mitigation options in the future,” Delgado said.Editor’s note: The Five Star Institute is the parent company of DS News and DSNews.com. Demand Propels Home Prices Upward 2 days ago Subscribelast_img

first_img Tagged with: Five Star Institute HAMP Home Affordable Modification Program Loan Modifications Mortgage Rates REO The Best Markets For Residential Property Investors 2 days ago Sign up for DS News Daily Data Provider Black Knight to Acquire Top of Mind 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago Related Articles The Week Ahead: Nearing the Forbearance Exit 2 days ago About Author: Tory Barringer in Daily Dose, Featured, News, REO Demand Propels Home Prices Upward 2 days ago Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington’s student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News’ sister publication, MReport, which focuses on mortgage banking news. Home / Daily Dose / Five Star President: ‘Embedded Risks’ May Be Hindering Mortgage Market Recovery  Print This Postcenter_img Previous: Fannie Mae Expects Modest Economic Growth in 2015 Next: DS News Webcast: Friday 11/21/2014 November 20, 2014 775 Views Five Star President: ‘Embedded Risks’ May Be Hindering Mortgage Market Recovery Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Five Star Institute HAMP Home Affordable Modification Program Loan Modifications Mortgage Rates REO 2014-11-20 Tory Barringer Data Provider Black Knight to Acquire Top of Mind 2 days ago Share Save The Best Markets For Residential Property Investors 2 days ago While the housing market has made measurable strides toward recovery in the last two years, the coming year could bring the start of another downturn, one expert says.Delivering comments to a group of REO brokers and agents, Ed Delgado, president and CEO of the Five Star Institute, offered his take on how the stage is set for the mortgage sector in 2015.”There are several embedded risks in the mortgage market that pose future risk of performance that have yet to be expressed,” Delgado said. “In effect, the market may not be recovering at the rate that we think it is.”Chief among Delgado’s concerns is the government’s Home Affordable Modification Program (HAMP), which attracted nearly 900,000 struggling borrowers in the years 2009 to 2013.While modifications into super-low interest rates helped those hundreds of thousands of Americans stay in their homes, those “permanent” reductions came with a five-year expiration date, and the first waves of HAMP borrowers are now set to see their adjustable rates climb as high as 5 percent.Though that is still a historically low interest rate, it means a monthly payment increase of hundreds of dollars over the next few years—at a time when their financial situation likely can’t take the added cost.To make matters worse, another modification or refinance is unlikely to help, Delgado says.”Modifying an interest rate of 4.25 percent down to 3 percent isn’t going to provide sufficient payment relief to homeowners facing a financial hardship sufficient to threaten mortgage payment performance,” he said.What’s more, he estimates that out of every 10 recent-vintage loans that pass into 90-day delinquency or more, eight will be resistant to loss mitigation efforts owing to the current low interest rate environment.”Despite improvements related to credit quality and tighter rules for underwriting, the reality is that low interest rate mortgages created in recent vintage production will be less responsive to loss mitigation options in the future,” Delgado said.Editor’s note: The Five Star Institute is the parent company of DS News and DSNews.com. Demand Propels Home Prices Upward 2 days ago Subscribelast_img

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