OCC: Don't Cut Back Too Far on Lending
Comptroller of the Currency Thomas Curry said Monday that heightened mortgage standards have improved credit risk but he's concerned certain potential borrowers are being squeezed out in the process.
"Increasing homeownership opportunities remains a high priority," said Curry in prepared remarks before the Massachusetts Affordable Housing Alliance in Boston. "Because of the economic challenges facing minorities and lower income families, it is critical that we understand precisely what the barriers are to accessing mortgage credit, so that we can address them with appropriate strategies."
Curry said lenders are now requiring higher credit scores and bigger downpayments. For example, the median credit score is up 40 points since 2006 and averages 700 for Federal Housing Administration loans and 760 for government-sponsored enterprise mortgages, Curry noted. Most mortgages are being denied because of collateral-related issues and debt-to-income requirements, he said.
While Curry said some housing trends "are encouraging" he cautioned there's "a long ways to go to ensure that aspiring homeowners, particularly in minority and underserved communities, have access to financing."
Curry was clear, however, that he wasn't calling for banks to loosen mortgage standards.
He still blamed the "loose underwriting" of mortgage brokers and originators as a factor that triggered the housing crisis.
Separately, he noted that the agency continues to address issues with past loans by encouraging appropriate loan modifications as well as consulting with the Consumer Financial Protection Bureau on mortgage servicing standards.
Curry encouraged consumers to apply for an Independent Foreclosure Review process if they feel wrongfully foreclosed upon by any of the 14 major mortgage servicers that were issued consent orders last year.
"Time is short—borrowers must send in their requests for review by the end of the year," Curry warned.