Newly released Home Mortgage Disclosure Act data show a big increase in subprime lending in 2005, and regulators are pointing to a jump in piggyback loans as one reason.More than one-half of all African-American borrowers purchasing a home in 2005 paid subprime interest rates, compared with 17.2% of whites, according to HMDA. It shows that 54.7% of blacks and 46.1% of Hispanics received subprime loans to buy a home -- a dramatic jump from 2004 results, when 32.4% of blacks and 20.3% of Hispanics received subprime purchase loans. Earlier this year, Federal Reserve Board officials warned that the flattening of the yield curve would increase the number of HMDA-reported loans with subprime rates, defined as 300 basis points or more above the rates of comparable Treasury securities. However, Fed researchers concluded that the yield-curve effect was not that large. A bigger factor was the 57% increase in piggyback loans from 2004 to 2005. "[T]he increase in the number of high-priced piggy-back loans in 2005 accounted for more than half of the increase in the number of all higher-priced loans," the Fed says in its analysis of the HMDA data.
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While the three largest lenders now offer VantageScore, Bank of America Securities says two agency pulls boosts consumers scores, no matter which model.
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Federal Housing Finance Agency Director Bill Pulte said last week that it will slash the budget for its inspector general, spurring Senate Banking Committee Democrats to seek his testimony.
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The technology provider now counts two top 10 servicers among its customers and intends to use new capital to accelerate product development and add staff.
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Fitch Ratings, noting the reduction in Wells Fargo's balances and sale of non-agency servicing, said the bank no longer meets expectations at its old grade.
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ARMs accounted for more than 11% of rate locks, their largest share in nearly four years and up more than three percentage points over the past three months.
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The chief risk officer's oversight extends to the modernization of loan pricing and scoring, which the GSEs' oversight agency has been accelerating.
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