Lenders that specialize in adjustable-rate mortgage products could face a tough time this year as ARM volume drops to 16% of originations, according to the chief economist at Freddie Mac.ARM production (based on number of loans) accounted for 21% of originations in 2006 and 31% in 2005. However, chief economic Frank Nothaft said he believes that a flat or inverted yield curve will make ARMs less attractive to borrowers. In addition, the recently-issued regulatory guidance on nontraditional mortgages "may have some effect as well," he told MortgageWire. Freddie's chief economist is forecasting that single-family originations will total $2.50 trillion this year, down from $2.65 trillion in 2006. He projects that refinancings will remain relatively high at 38% of originations, compared with 44% last year. "Some people are facing a payment shock, and some people want to tap into the huge amount of home equity they have accumulated," Mr. Nothaft said. Nevertheless, it looks like total originations and ARM production will be the lowest since 2001, he said. Freddie Mac can be found online at http://www.freddiemac.com.
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A federal judge in Texas dismissed the Consumer Financial Protection Bureau's medical debt rule and prohibited states from passing their own laws prohibiting medical debt on credit reports.
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Dr. Mark Calabria takes on the additional role of chief statistician of the United States; retired Ally Bank executive Diane Morais has joined First Citizens Bancshares' board of directors; MainStreet Bank has promoted Alex Vari to chief financial officer; and more in this week's banking news roundup.
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While refinances are behind the latest increases, the pace of purchase activity may be a stronger indicator of where the housing market sits.
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The share of economists expecting a September rate reduction grew in the July Wolters Kluwer survey, but the October or later percentage also increased.
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Rising home prices and softening sales offer a mixed view of a market that some say is shifting to favor buyers.
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The notes are backed by home improvement installment loans originated by approved dealers in Foundation Finance Company's network.
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