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homes to rentals,” said Chris Herbert, managing director of the Joint Center For Housing Studies at Harvard, which publishes its report on the state of rental housing in the U.S. every other year. “Yet the crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes. These affordability challenges also are increasingly afflicting moderate-income households.”

Fed Approves Final Rule on Emergency Lending

The mortgage industry completed approximately 337,000 non-foreclosure solutions for at-

Royce Targets GSEs on FICO-Only Credit Scoring After successfully pushing through bipartisan legisla t i o n t h a t capped the salaries of the government-sponsored enterprise (GSE) chief executives, Rep. Ed Royce (R-CA) is taking

a new aim at Fannie Mae and Freddie Mac with a bill that would change the GSE credit scoring process. Rep. Royce, together with Rep. Terri Sewell (D-AL), has introduced HR 4211, the Credit Score Competition Act of 2015, which will allow the GSEs to use other credit scoring models besides FICO. Royce and Sewell based their legislation on the problems faced by would-be homebuyers—mostly lowand middle-income Americans—that have the wherewithal to responsibly pursue homeownership but are disqualified from consideration to a low or non-existent FICO score. The represents also noted that the GSEs maintain a continued on page 16

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n National Mortgage Professional Magazine n DECEMBER 2015

HOPE NOW: 337,000 Non-Foreclosure Solutions in Q3

“Our third quarter loan solution data continues to show evidence of an improving housing market on a national level,” said Erik Selk, executive director at HOPE NOW. “When we reach the end of the year, I believe that the last quarter of data will also show continuing trends towards a healthy housing market.”

The Federal Reserve Board has approved a final rule that changes its procedures for emergency lending for financial institutions considered too big to fail. In announcing the final rule, the central bank noted that the Dodd-Frank Act limited its ability to engage in emergency lending to programs and facilities with “broad-based eligibility” that were established with the approval of the Department of the Treasury. With the final rule, the Fed stated that it has achieved “greater clarity” regarding its emergency lending assistance while noting that it still must find that “unusual and exigent circumstances” exist as a pre-condition to authorizing emergency credit programs. “In the Dodd-Frank Act, Congress reviewed the scope of the Federal Reserve's emergency lending authority and determined to make significant modifications that enable the Federal Reserve to extend emergency credit only through broad-based facilities and programs designed to provide liquidity to the financial system,” said Federal Reserve Chairwoman Janet Yellen. “The Dodd-Frank Act amendments eliminated the authority to lend for the purpose of aiding a failing firm or preventing a firm from entering bankruptcy or another resolution process, such as was done with loans to Bear Stearns and AIG. “In place of this authority to lend to specific firms,” Yellen added, “Congress enacted a framework for orderly resolution and provisions that encourage large financial firms to develop plans for their resolution in bankruptcy. These modifications have been in effect since the passage of the Dodd-Frank Act, and would govern any lending pursuant to section 13(3). The ability to engage in emergency lending through broad-based facilities to ensure liquidity in the financial system is a critical tool for responding to broad and unusual market stresses.”

risk homeowners, according to new data released by HOPE NOW. During this period, there were approximately 98,000 permanent loan modifications and 21,000 short sales, with the remaining 218,000 solutions divided between repayment plans, deeds in lieu, other retention plans and liquidation plans. It is important to note that short term solutions often lead to permanent and sustainable positive outcomes for distressed homeowners. The third quarter also saw a decline in foreclosure sales—76,000, down 15 percent from 89,000 in the second quarter-decreased from the previous quarter—as well as a drop in foreclosure starts— 159,000, down nine percent from the second quarter level of 176,000.

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National Mortgage Professional Magazine December 2015  

National Mortgage Professional Magazine December 2015  

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