Fed survey: Lending standards tighten further

Fed survey: Lending standards tighten further
A record three in four banks tightened standards for prime mortgages during the second quarter, according to a Federal Reserve survey of bank loan officers, and 30 percent said demand for such loans was lower. Of the 32 lenders still writing nontraditional mortgages like interest-only loans, 85 percent said they’d tightened standards and 45 percent said demand for such loans had fallen. Six of seven remaining lenders originating subprime loans said they’d tightened standards in the last three months, but only two said demand had fallen.

S&P: Fannie, Freddie pose greater risk to government
Standard & Poor’s Ratings Services has lowered its "risk to the government" ratings for Fannie Mae and Freddie Mac and affirmed rating on the companies’ senior unsecured debt, reflecting "the strong explicit and implicit U.S. government support" those securities hold in the marketplace. Standard & Poor’s analysts said Freddie Mac’s capital cushion has declined to just $2.7 billion, and while the company has committed to raise $5.5 billion of new equity in the near term, "the firm will be more challenged to maintain a regulatory capital cushion in the near term." Standard & Poor’s lowered Freddie Mac’s risk to the government rating from “A” to “AA-“ and affirmed the company’s senior unsecured debt at “AAA/A-1+.” In a separate action, Standard and Poor’s lowered Fannie Mae’s risk to the government rating from “A+” to “A,” and affirmed the company’s senior unsecured debt at “AAA/Stable/A-1+.”

ForeclosureRadar reports decline in default notices in California
ForeclosureRadar, an online site that tracks California foreclosure activity, today reported that sales at public foreclosure auctions jumped 22.5 percent in July compared to June in California, with combined loan value increasing from $2 billion to $12.55 billion. Meanwhile, notices of default declined for the third straight month, the total number of properties that are actively scheduled for auction increased to 64,598 at the end of July, up from 59,973 at the end of June and 53,793 at the end of May. Notices of default — which mark the beginning of the foreclosure process — fell 4.6 percent in July to 40,219 filings, with notices of trustee sale rising 9.8 percent in July. Notices of trustee sale are typically recorded 105 days after the notices of default and set the date and time for a public auction.

"Looking at this number in comparison to notices of default, it is clear that far fewer homeowners are finding a way out of foreclosure," ForeclosureRadar reported. The vast majority of properties up for sale at public auctions are repurchased by lenders and become bank-owned properties, also known as real estate-owned or REO properties that are typically listed by real estate brokers.


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