CNBC calls for another housing crash

[patb]

http://www.cnbc.com/id/41133468/

What does this mean for housing? It implies that home prices may be due for a another crash, as lenders try to avoid incurring losses from mortgage put-backs by raising credit quality once again. Much of the supposed health of the housing market may have been just another easy money illusion.

We may be able to avoid a crash if the economy improves rapidly enough to take up the slack created by the loose lending. Alternatively, more cheap money flowing from the Fed through the banks and into shoddily underwritten mortgages, could keep the bubble inflating for a while longer (and maybe, fingers crossed, the economy will improve and rescue housing.) And if a crash occurs it will likely not be as severe as the last one, simply because the improvements in the housing market in 2009 and 2010 were modest.

But one thing seems certain: much of the improvement in housing over the last two years was built on easy credit.

[Effective Demand]

Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.

That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.

[Effective Demand]

Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.

That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.

[Effective Demand]

Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.

That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.

[Effective Demand]

Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.

That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.

[Effective Demand]

Watching mortgage underwriting guidelines is a great way for determining the direction of housing. Personally I’ve been doing so since early 2006. Right now it is much easier to track underwriting for the whole market since there are basically 3 major guidelines, Fannie, Freddie and FHA. Some lenders will have more restrictive overlays over the top but in general reading about Fannie/Freddie/FHA guidelines will get you a great idea of what is going on.

That said, I don’t see any huge underwriting changes on the horizon, they’ve raised min ficos somewhat over time and reduced max DTI but (IMHO!) the vast majority of restrictive guidelines are in the past.

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.

[patb]

[quote=Effective Demand

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.[/quote]

but during the bubble, fannie didn’t lower underwriting standards so much as sloppy paper was sent their way?
Wasn’t Fannie always prime conforming paper, from the very beginning, nonetheless, they were fed
shitpiles of bad paper.

it’s why the BofA bailout is so egregious.
they gave these miserable POS, so much room
to screw the taxpayers.

[patb]

[quote=Effective Demand

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.[/quote]

but during the bubble, fannie didn’t lower underwriting standards so much as sloppy paper was sent their way?
Wasn’t Fannie always prime conforming paper, from the very beginning, nonetheless, they were fed
shitpiles of bad paper.

it’s why the BofA bailout is so egregious.
they gave these miserable POS, so much room
to screw the taxpayers.

[patb]

[quote=Effective Demand

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.[/quote]

but during the bubble, fannie didn’t lower underwriting standards so much as sloppy paper was sent their way?
Wasn’t Fannie always prime conforming paper, from the very beginning, nonetheless, they were fed
shitpiles of bad paper.

it’s why the BofA bailout is so egregious.
they gave these miserable POS, so much room
to screw the taxpayers.

[patb]

[quote=Effective Demand

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.[/quote]

but during the bubble, fannie didn’t lower underwriting standards so much as sloppy paper was sent their way?
Wasn’t Fannie always prime conforming paper, from the very beginning, nonetheless, they were fed
shitpiles of bad paper.

it’s why the BofA bailout is so egregious.
they gave these miserable POS, so much room
to screw the taxpayers.

[patb]

[quote=Effective Demand

The issue addressed in the article is a company (Citi) in this case not underwriting to the guidelines they said they were following. In reviewing the mortgages that they had purchased from Citi , Freddie had determined they were flawed. Basically, Citi is being sloppy. This is NOT the same as huge underwriting guideline changes coming down the pike from Fannie/Freddie/FHA, it is just that Citi will have to clean up their underwriting and get their paperwork in order.

I dont see this as a huge driver of a contraction of mortgage credit and its effect on the market will be negligble.[/quote]

but during the bubble, fannie didn’t lower underwriting standards so much as sloppy paper was sent their way?
Wasn’t Fannie always prime conforming paper, from the very beginning, nonetheless, they were fed
shitpiles of bad paper.

it’s why the BofA bailout is so egregious.
they gave these miserable POS, so much room
to screw the taxpayers.

[Author]

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