Academic journal article ABA Banking Journal

Housing Market through Bankers' Eyes: Tighter Standards; Fixed-Rate Loans; Production Mostly about the Same

Academic journal article ABA Banking Journal

Housing Market through Bankers' Eyes: Tighter Standards; Fixed-Rate Loans; Production Mostly about the Same

Article excerpt

Anecdotal reports of tighter home mortgage underwriting standards were confirmed by results from the 17th annual ABA Real Estate Lending Survey. Standards for 1-4 family loans were tightened in 2009 as measured by higher FICO scores (720 and above) among the 164 surveyed banks, the survey found.

The nationwide sampling was split 64% savings institutions and 36% commercial banks. In addition, almost 75% of the respondents had assets under $1 billion with just over half being mutual banks or mutual holding companies and just under half being stocked-owned.

Surveyed banks reported that conforming mortgages represented the largest part of bank portfolios at 75%. In fact, conforming originations were the only product type to show an increase from the previous year (71.9%), while the others (jumbo and non-conforming) declined year to year.

A closer look at the sources for mortgage originations among the survey participants finds that a vast majority come from the retail channel although this percentage saw a drop from 86% in 2008 to 81% in 2009. Other sources saw an increase including wholesale/correspondent from 8.6% to 11.3% in 2009 and the internet, which while still small among respondents, went from 3.5% to 6.1% in 2009.

The average delinquency rate among survey participants was 1.62% as of December 2009, an increase from 2008's 1.02%. Average foreclosure rates were . …

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