{"id":900,"date":"2010-07-30T13:31:26","date_gmt":"2010-07-30T13:31:26","guid":{"rendered":"http:\/\/www.nyonlinerealty.com\/blog\/?p=900"},"modified":"2010-07-30T13:53:22","modified_gmt":"2010-07-30T13:53:22","slug":"fannie-maes-ceo-lauds-new-realism-of-better-underwriting","status":"publish","type":"post","link":"https:\/\/blog.nyonlinerealty.com\/?p=900","title":{"rendered":"Fannie Mae’s CEO Lauds ‘New Realism’ of Better Underwriting"},"content":{"rendered":"
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By: Carrie Bay<\/p>\n

Fannie Mae<\/a> is building the \u201cstrongest book of business we\u2019ve seen in the last decade,\u201d the GSE\u2019s president and CEO, Michael Williams, proclaimed to a group of industry professionals this week.<\/p>\n

While tighter underwriting standards may mean fewer consumers are able to get loans and banks are holding credit close to their chests, Williams says the type of prudent lending that has taken hold in the aftermath of the housing bust is translating into higher quality, more sustainable loans for Fannie Mae.<\/p>\n

Speaking at a Women in Housing and Finance<\/a> luncheon in Washington, D.C. Wednesday, Williams attributed the improving loan quality to the GSE\u2019s emphasis on safer products, especially long-term, fixed-rate loans; better borrower documentation; and more accurate property appraisals.<\/p>\n

\u201cBy adopting these standards, we have begun to build a new book of business with some of the highest-quality loans we have ever seen,\u201d Williams said.<\/p>\n

He pointed to several specific loan characteristics that support his assertion. Credit scores for new borrowers are now averaging about 760, which FICO rates as \u201ctop tier.\u201d<\/p>\n<\/div>\n

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Over 90 percent of Fannie Mae\u2019s new borrowers have what Williams called \u201cplain, old-school mortgages,\u201d meaning long-term, fixed-rate loans. The number of subprime loans making their way to the GSE\u2019s new book of business is zero.<\/p>\n

In addition, loan-to-value ratios, on average, are nearly 70 percent. Williams says in a market where many homeowners have limited or no equity, 30 percent equity \u201cis quite strong.\u201d<\/p>\n

\u201cI believe that we are seeing across the U.S. housing market \u2013 from borrowers, lenders, and everyone with a stake in the future \u2013 what I would call a \u2018new realism,\u2019\u201d Williams said. \u201cStep-by-step, we are putting in place a new foundation for our industry. It\u2019s a foundation based on the right lending standards and on a broad reexamination of what constitutes sensible risk.\u201d<\/p>\n

According to Williams, building a strong foundation is more important now than perhaps ever before. He cited a recent report from Harvard University\u2019s Joint Center for Housing Studies<\/a>, in which analysts project the number of households in America to grow by 1.25 million to 1.5 million each year over the next decade. If the forecast holds up, this rate of growth in household formation would outpace the last five years, when the number of new households expanded by less than 1 million per year.<\/p>\n

\u201cWe need to make sure that we are preparing the housing market for this spike,\u201d Williams said. \u201cWe need to make sure that we\u2019ve learned from the lessons of the past \u2013 and that we\u2019re building a system that prevents housing bubbles and busts.\u201d<\/p>\n

He contends that practical and sensible lending, and prudent underwriting practices, are the key to a bubble- and bust-free market going forward.<\/p>\n

\u201cAs an industry, we can\u2019t just put people into homes,\u201d Williams said. \u201cWe have to make sure they can keep their homes. Otherwise everyone suffers \u2013 the borrower, the mortgage industry, the financial system, and the economy.\u201d<\/p>\n<\/div>\n

http:\/\/www.dsnews.com\/articles\/fannie-maes-ceo-lauds-new-realism-of-better-underwriting-2010-07-29<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By: Carrie Bay Fannie Mae is building the \u201cstrongest book of business we\u2019ve seen in the last decade,\u201d the GSE\u2019s president and CEO, Michael Williams, proclaimed to a group of industry professionals this week. While tighter underwriting standards may mean fewer consumers are able to get loans and banks are holding credit close to their […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[79],"tags":[140],"class_list":["post-900","post","type-post","status-publish","format-standard","hentry","category-articles","tag-fannie-mae"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/900"}],"collection":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=900"}],"version-history":[{"count":6,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/900\/revisions"}],"predecessor-version":[{"id":902,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/900\/revisions\/902"}],"wp:attachment":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}