Fitch Ratings has announced that it will adjust its treatment of interest-only affordability features on two- and three-year subprime hybrid adjustable-rate mortgages to reflect higher odds of default.Fitch analyzed the payment shock potential for 2005 subprime IO and non-IO ARMs and found that the payment increase for an IO at the rate reset is "significantly larger than the increase from principal amortization and is high even if rates do not rise due to the high margins and low initial rates." The credit performance of subprime IOs has been strong due to a favorable economic climate, but newer vintages "may not exhibit the same strong performance because more borrowers could face a payment increase as home price appreciation slows," said Fitch director Grant Bailey. Subprime borrowers are sensitive to the rate of home price appreciation because they tend to use accumulated home equity to pay off additional debt to lower their debt-to-income ratio. "If their DTI is too high to qualify for a new mortgage before the rate reset, they become vulnerable to payment shock risk," Mr. Bailey said. The report, "Rating Subprime RMBS Backed by Interest-Only ARMs," is available on Fitch's website at http://www.fitchratings.com.
-
In an interview, Candor Technology's Sara Knochel recounts how she applies her childhood interest in languages and numbers to crucial home lending issues.
46m ago -
The report seeks to help banks "disrupt rapidly evolving AI-driven fraud," according to Treasury's Nellie Liang. The report found banks have difficulties accounting for AI risks.
11h ago -
The lender accused its former leader of compromising its Fannie Mae seller/servicer number to prevent it from delivering loans.
11h ago -
Equity is entitled to a little over $70,000 worth of damages.
March 27 -
Audited financials, proof of fidelity bonds and errors and omissions insurance must be provided on Ginnie Mae Central after May 13.
March 27 -
Deferrals are up but still haven't outpaced loan modifications in conservatorship-era foreclosure prevention, according to the Federal Housing Finance Agency.
March 27