The secondary market is beginning to question the unbridled growth of interest-only mortgages, 40-year loans, and other products designed to capitalize on the rapid run-up in housing prices.Interest-only loans "have a place, but where we get nervous is their suitability to the borrower," Thomas Lund of Fannie Mae said at the Mortgage Bankers Association's National Secondary Market Conference in San Francisco. Such loans may be appropriate for some borrowers, but they could prove disastrous for those who are relying solely on skyrocketing values, Mr. Lund said. Borrowers are "not saving much [in the form of lower monthly payments] in relation to the potential for an upward adjustment" in the interest rate, he said. Donald Disenius of Freddie Mac said he had similar concerns, particularly when consumers use their mortgages to accumulate wealth through appreciation rather than amortization. And William Batz, executive vice president of the Federal Home Loan Bank of Pittsburgh, said making interest-only and 40-year loans to some people could smack of predatory lending. "IOs may be suitable for the right market," he said, "but they could be characterized as predatory for the wrong borrower."
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The RMBS notes benefit from geographic diversity and credit enhancement.
9h ago -
A Consumer Financial Protection Bureau "waives any alleged noncompliance" by the mortgage company while continuing to dole out redress to borrowers.
9h ago -
Refinance apps made up more than 40% of all mortgage applications last week, driving an uptick as consumers seek out cheaper mortgage payments.
11h ago -
The chairman and regulator of Fannie Mae and Freddie Mac pointed to Jermone Powell's recent testimony about renovations to the Federal Reserve's headquarters.
July 2 -
It's a rare theft of trade secrets complaint by the industry leader, which stayed out of the spate of litigation between competitors during the refinance boom.
July 2 -
Navy Federal Credit Union will not pay a $15 million fine or $80 million in restitution to service members who were illegally charged surprise overdraft fees when their accounts had sufficient funds.
July 2