New FICO Program Reveals Credit Score to Risky Borrowers

Idea comes from CFPB request

clouds dark

The credit score system operated by FICO (FICO) released its latest initiative geared to assist approximately 1 million consumers annually who are in need of more credit and financial guidance.

The predictive analytics company and decision management software company is expanding to provide FICO Scores to consumers though qualified non-profit credit counselors ad participating government entities.

In November of 2013, FICO launched its Score Open Access to enable Americas to regularly receive, at no cost, the actual FICO Scores purchases and used by lenders.

The new program titled, FICO Score Open Access for Credit & Financial Counseling, was designed to aid consumers who have credit management problems by providing FICO Scores along with credit education material that helps consumers understand credit scoring and learn about responsible financial health management.

Meanwhile, Experian, agreed to allow qualified credit counselors to share Experian credit reports with their clients, providing important information to consumers who are struggling financially.

“Because of FICO’s longstanding commitment to consumer financial education, when the CFPB approached us about enabling credit and financial counselors to share FICO Scores they purchase with their clients, we recognized the importance of working with our data partners to make it happen,” said Jim Wehmann, FICO’s executive vice president for Scores.

“The popular FICO Score Open Access program has now been extended to approximately one million people who seek assistance each year though these worthy organizations. We consider this a major milestone in our effort to ensure that all Americans have convenient and free access to their FICO Scores,” added Wehmann.

Eligible credit and financial counseling organizations may participate in the new program in coordination with membership associations, including the Association of Independent Consumer Credit Counseling Agenciesand Credit Builders Alliance.

This is only the latest move from the credit agencies to expand credit options for borrowers. In April, FICO, LexisNexis Risk Solutions and Equifax (EFX) released the official details to a new pilot program that could potentially open the door to help millions of borrowers secure financing for a home.

The three firms are working together to create a pilot program that will allow 12 of the largest credit card issuers in the U.S. to use alternative data to identify creditworthy individuals who would otherwise be unlikely to obtain traditional credit.

 

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Home Sales Skyrocketing!!!!!

Posted: 23 Apr 2015 KCM Crew

Home Sales Skyrocketing!! | Keeping Current Matters

Yesterday, the National Association of Realtors (NAR) released their Existing Home Sales Report. The numbers shocked many analysts as they revealed a 10.4% increase over the same month last year. This is the highest number of sales since September 2013. Sales have increased year-over-year for six consecutive months and the 10.4% increase is the highest annual increase since August 2013. March’s sales increase was the largest monthly increase since December 2010. Lawrence Yun, NAR’s chief economist, explained:

“After a quiet start to the year, sales activity picked up greatly throughout the country in March. The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”

Here is a graph showing home sales so far this year:Existing Home Sales | Keeping Current Matters An increase in sales occurred in every region of the country even the Northeast that experienced one of their roughest winters in years:Existing Home Sales by Region | Keeping Current Matters

Bottom Line

Houses are flying off the shelves. This may be the perfect time to sell yours.

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Has the Mortgage Market Turned a Corner?

Mortgage lending still below norms and signs point to…

crystal ball

The tepid growth in the job market and in the economy as a whole seems to be reflected in the mortgage lending space.

The widely followed measure of mortgage applications for home purchases put out by the Mortgage Bankers Association has shown tentative signs of improvement over the past six months, but research firm Capital Economics notes that it is still well below the levels seen in mid-2013.

“And the bigger picture is that it has done little but move sideways over the past five years. With the Fed set to begin raising interest rates later this year, there must be a risk that confidence among homebuyers will prove fragile, thus delaying further a meaningful upturn,” writes Paul Stansfield, chief property economist for Capital Economics, in a client note.

Wage growth and economic growth combined have brought secular stagnation, says Anthony Sanders, distinguished professor of finance at George Mason University.

Sanders will be one of the featured panelist on the “Economic and Policy Forum: State of the U.S. Housing Market” forum scheduled for Tuesday in Washington, D.C. starting at 9:30 a.m. E.T.

The National Association of Realtors is partnering with the National Association of Home Builders and theMcGraw Hill Financial Global Institute to host the forums, which will also include panels featuring economists Robert Shiller, David Crowe from NAHB and Lawrence Yun from NAR, among others.

“…(D)espite the massive expansion of The Federal Reserve’s balance sheet, average wage growth is low and real median household income is still below 2007 levels,” Sanders says. “I am sure someone will mention ‘credit is too tight’ for which I will respond ‘No, it isn’t.’”

Stansfield points to other indicators that paint a rather less downbeat picture, suggesting that an upturn might just be underway.

“At first glance, the mortgage market data do not look good. Even with mortgage interest rates close to record lows, applications for home purchase seem to have made no contribution whatsoever to the housing recovery” Stansfield says. “While total home sales are 45% higher than their low point in mid-2010, mortgage applications are up just 3.9% over the same period. Indeed, the gap between home sales and mortgage applications in recent years has been unprecedented.”

Click to enlarge

(Source: Capital Economic)

What’s more, he says, the subdued number of mortgages actually being originated suggests that the market could be even weaker than the applications data imply.

Click to enlarge

(Source: Capital Economic)

However, other indicators suggest there are some grounds for optimism.

“Firstly, credit conditions are gradually loosening. The two most recent readings from the Fed’s Senior Loan Officer Survey showed that more mortgage lenders are loosening credit standards now than at any time in the past 20 years,” Stansfield says.

Click to enlarge

(Source: Capital Economic)

“Secondly, despite the volume of mortgage applications remaining subdued, the total value of outstanding mortgage loans has risen steadily since early-2014. At 2%, growth over the past year has been modest, but it is a sharp turnaround from the 3% fall in the previous 12 months. Consistent with that, net mortgage lending flows have risen in four of the past five quarters, and by a total of $370 billion last year. This is the biggest expansion in lending since before the credit crunch.”

But a rising stock of outstanding loans doesn’t necessarily mean that the mortgage market is recovering. The apparent disconnect between the total value and volume of home purchase loans could reflect a tendency for banks to restrict lending to only the most credit-worthy, who will tend to buy the most expensive homes.

“So, has the mortgage market finally turned a corner? We would like to think so. After all, the rest of the housing market continues to improve. Home sales have rebounded after the weather- related weakness at the start of the year, reaching a seven-year high in February. What’s more, house prices are growing at a steady annual pace of just below 5% and, in line with our view that employment and income growth will stay strong, we expect price growth to accelerate to around 6.5% this year,” Stansfield says.

But Sanders is not convinced.

“While some speakers will undoubtedly tout the major recovery for the remainder of 2015 after the abysmal Q1 GDP, according to The Atlanta Fed’s GDP NOW real-time tracker, the long-term prognosis is weak, according to The Fed’s potential real GDP growth,” Sanders says. “This is secular stagnation, folks. Real GDP and wage growth are expected to be laconic going forward. On the other hand, there are economists who are forecasting a significant recovery.

“And with cash sales making up 39% of all home sales in January 2015, there just isn’t a recovery for the middle-class,” Sanders says.

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We Need You(r House)!!!!!

Posted: 21 Apr 2015 KCM Crew

We Need You(r House)!! | Keeping Current Matters

Though the real estate market has improved, we still have one item holding it back from a full recovery – a robust supply of homes for sale. Demand has increased dramatically. At the same time, housing inventory is decreasing especially at the lower price points. The National Association of Realtors (NAR) recently revealed that there is a pent-up seller demand caused by the uncertainty created by the housing crisis of the last decade.

What does that mean to you?

Houses listed today sell quickly. With prices still below peak values of 2007 in many parts of the country and mortgage interest rates at historic lows, this may be the perfect time for your family to make the move to the dream house you always wanted – whether that’s a larger home or that vacation/retirement home you have been looking at.

What does that mean to the economy?

Housing has always been an essential part of the U.S. economy. As we have reportedbefore, real estate not only provides housing for families. It is often the greatest source of wealth and savings for many. The recent increase in real estate sales has led to an increase in real estate prices. This has increased the value of everyone’s’ home, whether they are selling or not. This leads to an increase in consumer confidence which in turn leads to an increase in consumer spending. Plus, each home sale automatically puts money into the economy. NAR compiled data from research conducted by the Bureau of Economic Analysis & Macroeconomic Advisors on the economic impact of a home purchase. After reviewing the data, they concluded that the total economic impact of a typical home sale in the United States is an astonishing $52,205. The more homes that sell, the better the economy.

Bottom Line

In order for the U.S. economy to get better, we need to sell more homes. Perhaps, it makes sense for one of those homes to be yours. If you have considered selling but are still a little nervous, now might be the time to sit down with a real estate professional familiar with your market and see what your options truly are.

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Housing Market: Freddie Mac Remains Optimistic

Posted: 20 Apr 2015 KCM Crew

Housing Market: Freddie Mac Remains Optimistic | Keeping Current Matters

The April 2015 U.S. Economic & Housing Market Outlook from Freddie Mac revealed that they are optimistic about the real estate market in 2015. As a matter of fact, the sub-title of the report was “Great Expectations”. What made Freddie Mac so optimistic? Here are a few highlights from the report:

“For the remainder of the year we should see a resumption of solid economic growth and acceleration in housing activity. Notwithstanding a disappointing March jobs report the acceleration is already underway.”“With spring upon us, housing markets are poised to accelerate and we expect the best year for home sales since 2007. Despite harsh winter weather to start the year, home sales through February are only off from the 2013 pace by 7,000 sales… Pending home sales were up 3.1 percent in February to the highest level since June 2013. This marked the fourth consecutive month for rising pending home sales showing positive momentum in general for the housing market.”

Their projections…

“By the end of the spring home buying season in June, we should be well above the pace of home sales for any year since 2007.” “We are as optimistic about trends in housing markets moving forward as we have ever been since the depths of the Great Recession.”

Regarding prices…

“Due to strong growth, we are expecting house prices to increase 4.0 percent in 2015.”

But there were some warnings…

On available supply:

“With low mortgage rates, improving labor markets, and rising demand, one key issue for housing over the next two years will be the lack of supply of for-sale and for-rent homes.” “Many metro areas that have seen robust job growth and population increases are facing shortages of available for-sale inventory.”

On interest rates:

“However, by the end of the year long-term interest rates should only increase modestly, ending the year at about 4.3 percent for the 30-year fixed rate mortgage.”

Note: Freddie Mac worded this as being not that crucial. However, a 4.3% mortgage rate is about a .75 increase over current rates.

Bottom Line

Things are looking good for the real estate market. If you are thinking of selling, contact an agent to discuss how this applies to your neighborhood.

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I Need a VACATION ….. Home!

Posted: 17 Apr 2015 KCM CrewI Need A VACATION... Home!! [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Vacation Home Sales were up 57.4% in 2014
  • 1.13 Million Vacation Homes Sold
  • 2014 marked the highest level of sales in the U.S. since 2003

 

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Mortgage Rates Unchanged and Remain near 2015 Lows

Freddie Mac: 30-year at 3.67%

stacked rocks

Despite this, Mortgage applications have been largely flat this year so far.

“Mortgage rates were little changed following a light week of economic reports and remaining low at the spring homebuying season. Of the few releases, the advance estimate of retail sales rebounded 0.9% in March though slightly below market expectations,” said Len Kiefer, deputy chief economist, Freddie Mac. “Meanwhile, theNational Association of Home Builders/Wells FargoHousing Market Index jumped 4 points to 56 in April, suggesting home builders are optimistic and the housing market will continue to strengthen in 2015.”

The 30-year fixed-rate mortgage averaged 3.67% with an average 0.7 point for the week ending April 16, 2015, up from last week when it averaged 3.66%. A year ago at this time, the 30-year FRM averaged 4.27%.

The 15-year FRM this week averaged 2.94% with an average 0.5 point, up from last week when it averaged 2.93%. A year ago at this time, the 15-year FRM averaged 3.33%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.88% this week with an average 0.5 point, up from last week when it averaged 2.83%. A year ago, the 5-year ARM averaged 3.03%.

The 1-year Treasury-indexed ARM averaged 2.46% this week with an average 0.4 point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.44%.

 

Posted in Financing, Home Buying, Home Selling, Homeownership, Market Conditions, Mortgage | Tagged | Leave a comment