Housing Risk Watch, January 2014

Article Highlights

  • in December, nearly 1/2 of home purchase loans had down payments of 5% or less, and nearly 1/4 had DTI ratios over 43%.

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  • US homeownership rate is 65.3%, similar to in 1960.

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Editor’s Note: Starting with this issue, FHA Watch has been renamed Housing Risk Watch. Housing Risk Watch will cover all facets of housing risk, with a primary focus on government-sponsored risk, including the FHA.

This Issue’s Highlight

Homeownership and the State of the Union

The homeownership rate, as reported by the US Census Bureau, stands today at 65.3 percent. When adjusted for the millions of homeowners who are seriously delinquent, the rate drops to 62.7 percent. This is virtually unchanged from the rate of 61.9 percent in 1960, notwithstanding a dramatic loosening of lending standards over the last 50-plus years. Once again, the National Association of Realtors and community advocacy groups call for a loosening of what they term “tight credit” conditions. Yet, in December, nearly one-half of all home purchase loans had down payments of 5 percent or less, and nearly one-quarter had debt-to-income ratios exceeding 43 percent.

This Month’s Features

Homeownership and the State of the Union
Creating a Straight, Broad Highway to Debt-Free Ownership

Spotlight on Mortgage Risk
Fannie Leads Freddie in Year-over-Year Increase in Risk

Spotlight on Best Price Execution
Delay of Planned GSE Guarantee Fee Increase Adds to Ginnie Agency Price Advantage over Fannie

Spotlight on FHA Insolvency
FHA’s Private GAAP-Estimated Net Worth Declines to Lowest Level in 10 Months

Spotlight on FHA Delinquency
Overall Rate Tops 15 Percent, Highest Level Since June 2013

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About the Author

 

Edward J.
Pinto
  • American Enterprise Institute (AEI) resident fellow Edward J. Pinto is the codirector of AEI’s International Center on Housing Risk. He is currently researching policy options for rebuilding the US housing finance sector and specializes in the effect of government housing policies on mortgages, foreclosures, and on the availability of affordable housing for working-class families. Pinto writes AEI’s monthly Housing Risk Watch, which has replaced AEI’s FHA Watch. Along with AEI resident scholar Stephen Oliner, Pinto is the creator and developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.


    An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Pinto has done groundbreaking research on the role of federal housing policy in the 2008 mortgage and financial crisis. Pinto’s work on the Government Mortgage Complex includes seminal research papers submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis” and “Triggers of the Financial Crisis.” In December 2012, he completed a study of 2.4 million Federal Housing Administration (FHA)–insured loans and found that FHA policies have resulted in a high proportion of working-class families losing their homes.

    Pinto has a J.D. from Indiana University Maurer School of Law and a B.A. from the University of Illinois at Urbana-Champaign.

  • Phone: 240-423-2848
    Email: edward.pinto@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202-419-5212
    Email: emily.rapp@aei.org

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