Garnet Capital Advisors Blog

Archived news

Residential Mortgage Sales (Performing and Nonperforming)

Our take on the latest trending events:

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Investors and the stock market as a whole did not seem to be fully prepared for the announcement from the Federal Reserve on Wednesday, June 16, 2021 that it would begin to reduce its levels of bond purchases and add some interest rate hikes to its forecast for 2023. In fact, the previous forecast from the Federal Reserve had zero anticipated rate hikes in 2023, but their most recent outlook called for two in that year. The US dollar jumped against all major currencies on the news, but the stock markets got a lot choppier as a result. CNBC reported on the response from one investment officer as such: 
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Home prices have increased over recent months thanks to a busy nationwide real estate market despite the coronavirus pandemic. This has led to a strong mortgage market, making now a good time to sell off mortgage portfolios that are not strategic or ideally performing.
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The housing market is seeing a significant increase in activity as demand increases, and housing prices rise, pointing to a potentially ideal time for lenders to review their loan portfolios to look for profitable opportunities.
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Prices in the secondary market for mortgages - particularly distressed assets - have rebounded from early pandemic pricing to near pre-pandemic pricing. And an increase in home sales points to a potential strengthening of the economy.
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Renting real estate has long been lucrative for investors, but a spike in demand for single-family homes presents a unique opportunity to grow an investment portfolio.
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Ginnie Mae is becoming a lender of last resort for mortgage servicers that are having a tough time advancing principal and interest to investors when borrowers are not making payments.
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Nonbank mortgage volume has overtaken traditional banks, with about half originated by nonbank lenders. This may be cause for concern should financial stress occur.
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The FNMA and FHLMC will increase conforming loan limits for 2020, though the increases are smaller compared to previous years.
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The CFPB's ability-to-repay rule was recently tested in court when an Ohio man sued his bank after facing foreclosure. The federal judge sided with the bank, which may discourage others from trying the same route in a last attempt to avoid foreclosure.
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Credit unions saw loan originations tumble over the first few months of 2019, but things have returned to roughly the same level as last year. That said, some loan types have weakened, prompting credit unions to take measures to add to their portfolios.
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New lending players have been supplying a large portion of the money in the lending ecosphere, in many cases overshadowing the contribution of banks. But with less regulation in this space, these nonbank finance companies are putting themselves at risk without proper strategies in place to protect themselves.
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Home sales dipped this past April, but with continued low mortgage rates and a strengthened job market, the housing market looks bright for the remainder of 2019.
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What's the likely scenario on interest rates for 2019? Click here to find out.
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The Consumer Financial Protection Bureau has released the final list of what pieces of information banks must report to the government about home mortgages. Loan industry groups say the costs of the regulations may still outweigh any good done by widening the net of data.
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Activists and politicians have launched a fresh campaign to restrict nonperforming loan sales to private equity and hedge funds. But they're getting pushback not only from the firms who argue the benefits of them buying up the distressed assets, but also by the housing officials who say the sale programs help neighborhoods.
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Richard Cordray, director of the Consumer Financial Protection Bureau, sought to allay fears that regulators would pounce immediately on improper use of the new forms.
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The gradual improvement of the economy makes it somewhat surprising that levels of bad loans remain above where they were before the Great Recession. And the rock-bottom interest rates that allowed bankers to keep carrying these loans funded with low-cost capital are about to end.
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This month the U.S. Department of Housing and Urban Development announced the latest of its debt sales. This one differs from previous rounds, though, as it is guided by important changes in the agency's Distressed Asset Stabilization Program.
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Overall loan originations declined 31 percent from 2013 to 2014, according to just-released federal data. The drop-off masks a slight rise in home purchase originations, which was offset by a radical pullback in refinancing.
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Higher interest rates are going to drown borrowers, right? Rate shock will shock the economic system, right? Poor home equity is going to lead to more delinquent borrowers, no?
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Investor, Fed activity following Greece and China market volatility will impact both small and large banks.
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The mortgage industry has faced substantial criticism following the financial crisis, and many critics and government officials have pounced on the opportunity to disparage this particular sector. While these views have been growing less harsh, those looking to spearhead meaningful reform have encountered numerous challenges, according to American Banker.  
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The banking sector has been benefiting from strong mergers and acquisitions activity, as economic conditions continue to improve and financial institutions look toward consolidation as a means of cutting costs, meeting capital requirements and even diversifying their businesses. 
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As many banks consider partnering with marketplace lenders, they must carefully evaluate each particular alliance to get a strong sense of its potential costs and benefits. Marketplace lenders have been rising in importance, growing a strong customer base and in some cases raising significant sums of money by working with receptive investors. 
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Many banks are making major changes as they take steps to comply with the liquidity coverage ratio, including selling off assets and running off deposits that do little to help them meet the requirement.
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Regional banks have been putting significant effort into either raising the threshold for being deemed systemically important - which currently stands at $50 billion - or scrapping the level completely. 
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Recently, the U.S. Supreme Court heard a consolidated lawsuit that involved whether a secondary lien placed on the asset of a debtor can be reduced to the value of the collateral securing the obligation obligation and reduced to zero if there is no asset coverage. The decision could have broad implications, potentially impacting many bankruptcy proceedings that followed the nationwide housing crisis, according to Inman Magazine. 
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A bill designed to help protect Montana bankers recently passed The Treasure State's House and Senate. Senate Bill 280 was introduced after the Montana Supreme Court ruled in 2014 that borrowers can press legal action in lending disputes on the basis of presumed oral agreements, according to American Banker.
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Loan demand has been rising all over the nation, according to figures provided in the Federal Reserve's March Beige Book. The Fed report revealed that most regions have been enjoying promising economic conditions, and banking activity stood out as a strong point in many cases.
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Puerto Rico's banking industry has undergone some seismic shifts in the aftermath of Doral Bank's failure earlier this year. While this troubled bank entered receivership, several competitors benefited from the situation, bolstering their market share by snapping up its branch locations, loans, deposits and mortgage servicing rights.
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Sterling Bancorp, one of the largest lenders doing business in the payroll lending market, recently acquired Damian Services Corporation, which provides payroll-related services to staffing firms. By making this purchase, Sterling will grow its client base, expand its lending capacity and open up new possibilities to earn fees in specialty finance, according to American Banker.
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Non-banks have been gaining an increasingly large share of the market for FHA-backed mortgage lending, according to a recent study conducted by the American Enterprise Institute's International Center on Housing Risk. These financial institutions, which are outside the reach of bank regulations and capital requirements, have been increasing issuance of these home loans as major banks retreat from this market.
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PacWest Bancorp recently announced an agreement to purchase Square 1 Financial, Inc., a lender that focuses primarily on the technology industry. Pursuant to this deal, Square 1 bank, owned by Square 1 Financial, will merge into Pacific Western Bank, a Los Angeles subsidiary of PacWest Bancorp.
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America's millennials could potentially represent a huge market for alternative banking, according to the results of the most recent FICO survey. Financial institutions looking to stay abreast of the latest shifts in the rapidly changing banking industry might benefit substantially from gathering further detail on these customer preferences. 
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Consumer Financial Protection Bureau Director Richard Cordray took a minute to delve into some of the agency's current concerns, as well as the disagreements its staff are having. 
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Community banks need to either innovate or face extinction in the current environment, according to several industry participants who spoke at the American Bankers Association's National Conference for Community Bankers. 
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Regulators shut down Doral Bank on Friday, Feb. 27, after the financial institution faced a string of challenges including a dispute surrounding a tax refund, government investigations and sharp declines in stock prices. The Office of the Commissioner of Financial Institutions of Puerto Rico announced in a statement Friday that it had appointed the Federal Deposit Insurance Corporation receiver. 
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Federal Reserve Chair Janet Yellen testified before lawmakers on Tuesday, Feb. 24, providing greater clarity on the central bank's timeline for boosting benchmark interest rates. 
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Many banks have been focusing on deposits in the current environment, building up these resources instead of taking on additional credit risk. This approach reflects a more conservative stance, as financial institutions are unsure when the Federal Reserve will opt to push its benchmark interest rates higher. 
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Major banks, already facing a tough environment, have been encountering an additional headwind stemming from the dollar's sharp rally. The currency's recent appreciation, along with proposed capital guidelines, could make US banks seem bigger relative to their European counterparts. 
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Doral Financial's problems only seem to be getting worse. While the Puerto Rico-based holding company was able to improve its financial position late last year by attaining a legal victory, it has been encountering rising pressure from regulators, according to American Banker. 
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Mergers and acquisitions activity involving banks has been increasing, and this momentum has grown to include not only smaller banks in the U.S., but also midsize and international financial institutions. 
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Banks could run into challenges generating revenue growth as their ability to tap into loan-loss reserves deteriorates. 
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New York Community Bancorp, Inc. has been generating many benefits by selling assets, keeping its balance sheet below the $50 billion mark and improving its financial results in the process. 
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The U.S. economy encountered some challenges during the fourth quarter, as weakness abroad and tepid business spending combined to limit fourth-quarter growth.
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While many banks have bemoaned the industry regulations created by the Consumer Financial Protection Bureau, smaller financial institutions in particular could benefit from the government agency's latest mortgage proposal.
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The recent announcement that Los Angeles-based City National has agreed to be acquired by Royal Bank of Canada could be a game changer for other banks in the region, providing them with stronger opportunities to find clients or buyers.
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A handful of innovative banking startups have been working on creating lending algorithms that consider more than the traditional variables such as one's credit score. Amid this push, companies are developing risk evaluation methods that account for how much time an applicant spends reading terms and conditions or whether they only use capital letters when filling out forms, The New York Times reported.
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Banks are striving to generate loan growth amid stiff competition and low interest rates. At the same time, analysts and shareholders are pressuring these financial institutions to reign in their expenses where possible, according to American Banker.
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Many banks have been reporting falling interest income in the current environment of low rates and tight competition.
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Banks have had a hard time generating satisfactory earnings growth lately, and this difficulty could easily continue in 2015. Banks both large and small have suffered these challenges, as the major financial institutions and the regional ones have been reporting lackluster earnings so far this year. Legal costs and compressed loan margins are the major drags for the larger banks.  Community banks are also feeling the pinch in generating good quality assets.
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U.S. economic conditions continue to improve at a time when the nation is benefiting from increased growth, falling energy costs and sustained job creation.
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U.S. economic conditions have been steadily improving, and this development has helped bolster the performance of major banks such as Wells Fargo, whose executives have been rather vocal about how much faith they have in the nation's recovery. 
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The Swiss National Bank eliminated its cap on the euro-franc exchange rate Jan. 15, at a time when the global currency markets are experiencing sharp volatility and central banks across the world are using increasingly divergent monetary policy.
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While many U.S. consumers have been benefiting significantly from sharply dropping oil prices, they may find they have even more money in their pockets after the Federal Housing Administration's recent decision to reduce its annual premiums. 
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Fintech startup Larky has been taking an innovative approach with its mobile applications, marketing them directly to banks so they can be used to provide consumers with discounts and offers from local stores.
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The Consumer Financial Protection Bureau has been quite active in recent years, and there is no sign that this trend will stop in 2015.
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The banking industry is encountering various disruptive forces - including stiff regulations, the proliferation of online lending and innovative new lending activities - that bankers should monitor if they want to capitalize on existing opportunities.
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Billionaire investor George Soros has been laying the foundation so he can back peer-to-peer lending, a burgeoning industry that is making greater use of more traditional funding methods in an effort to reduce lending costs. 
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Many banks have been encountering challenges in their efforts to originate high-quality loans, but have been taking steps to compensate for this situation.
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Distressed loan sale programs can help out homeowners, taxpayers and government organizations, but to generate these benefits, they must be set up in the right way, Sarah Edelman and Julia Gordon, who work for the Center for American Progress, wrote in a recent American Banker opinion piece.
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While some banks may feel challenged by their constantly-changing environment, the situation grants them an opportunity to better their reputation and stand out from the competition, two experts wrote recently in an American Banker opinion piece.
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The legal fees plaguing major banks continue to climb higher, and nobody knows when these financial institutions will get past these challenges.
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Sterling Bancorp and Hudson Valley Holding Corp. announced a definitive merger agreement on Nov. 5, which would create a larger combined entity catering to consumers and small - to medium-sized businesses in the New York metropolitan area.
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Earlier this fall, prominent members of different interest groups announced the creation of the Wealth Building Home Loan, a mortgage specifically designed to help low - to moderate-income borrowers accumulate equity.
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U.S. Bancorp CEO Richard Davis has been offering some fairly rosy views of the economy, predicting that growth will accelerate sharply next year.
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The revenue banks are generating from customer-account fees has dropped sharply, stemming from changes in consumer behavior and new regulations created to protect account holder interests.
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The Office of the Comptroller of the Currency recently published final risk management and governance guidelines for major financial institutions, giving them different expected timelines for compliance based on their size.
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As the real estate market continues to strengthen, investors are clamoring to get their hands on securities backed by pools of nonperforming residential mortgages.
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The value of many assets around the world - including real estate, stocks and bonds - has been rising, and several market participants have warned they have grown inflated and approach bubble status.
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Housing prices remain elevated amid current supply-demand fundamentals. This, along with tighter credit, may be keeping new buyers out of the market and slowing new home sales.
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Banks are on a mission to increase their loan income, and their desire to meet this objective has helped fuel mergers and acquisitions.
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Credit union lending ramped up in May and June, according to recent reports from the Credit Union National Association.
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Fledgling startup companies could one day dominate the banking industry, financial expert Richard Magrann-Wells wrote in a recent American Banker piece.
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The Consumer Financial Protection Bureau recently provided guidance for mortgage brokers that want to operate using a mini-correspondent lender model, outlining the questions it uses to evaluate these industry participants to determine whether they meet the definition of mini-correspondent.
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Bank mergers and acquisitions have surged lately, as the industry struggles to overcome numerous headwinds including a challenging compliance environment, higher capital requirements and the proliferation of alternative lending.
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New financial product structures are growing in availability, and a great deal of the finance industry's innovation centers around this trend, former Citigroup chief executive Vikram Pandit recently told American Banker. Amid this situation, Pandit highlighted a key opportunity.
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The Office of the Comptroller of the Currency recently took action to clarify best practices surrounding debt sales when it issued guidelines on Aug. 4.
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Loan sales have been picking up steam in the U.S., as the rising interest in home equity loans and non-performing loan securitizations helps increase the value of such transactions.
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Property tax bills are on the rise, and their steady climb has been causing stress for the already-troubled mortgage market.
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Certain mortgage lenders have been following more stringent requirements than those created by the Consumer Financial Protection Bureau in an effort to ensure compliance.
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Younger people are more likely to consider alternative banking, according to the results of a recent Accenture survey.
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Regulators have been intensifying their scrutiny of banks, and more specifically the relationships these institutions have with their vendors.
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The federal government recently announced plans to make mortgage lending standards less stringent, hoping that doing so will help jump-start the housing market.
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The Bank Director's 2014 Risk Practices Survey recently provided some insight into the risk management challenges that lending institutions are facing.
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A recent poll sponsored by real estate website Zillow has predicted that home prices will rise more than 4 percent in 2014.
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The Federal Deposit Insurance Corp. recently released its Quarterly Banking Profile, and this report contained data indicating that loan origination could increase sharply in the near future.
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The Consumer Financial Protection Bureau recently released a report on its supervision of non-bank activities.
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Younger Americans have been paying down their debts, gradually lifting the burden off their shoulders in the aftermath of the recession.
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Jobless claims recently fell to their lowest level in seven years, and this development could show the latest progress made by the labor market.
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Household debt rose during the first quarter, according to figures provided in a report from the Federal Reserve Bank of New York.
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Mortgage applications surged during the week ending May 2, according to Mortgage Bankers Association figures.
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Home prices experienced a sharp year-over-year surge in March, according to data contained in a CoreLogic report.
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Many U.S. banks recently reduced their standards for mortgage lending, and this development could boost loan sales by increasing the availability of this type of debt.
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The volume of weekly mortgage applications dropped to its lowest in almost 14 years during the week ending April 25, according to data from a recent Mortgage Bankers Association survey.
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The Labor Department's April jobs report provided some strong figures, and this development could easily help bolster the sentiment of everyday Americans.
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Homes values have been rising in several different metropolitan areas, and now many properties have prices that exceed the conforming loan values set forth by government programs.
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Americans have changed how they harness credit card debt, a financial consulting firm stated recently, and these new practices could potentially constrain loan sales by reducing the supply of available debt.
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The Consumer Financial Protection Bureau recently released a report containing information on how consumers can use electronic methods to complete the paperwork involved in a mortgage closing.
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Lending standards could potentially weaken as housing prices continue to increase, Lindsey Piegza, chief economist for privately-owned brokerage Sterne Agee, stated recently.
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Pending home sales surged in March, and this development could affect loan sales by increasing the supply of available mortgage debt.
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U.S. economic growth seems to be picking up, and this development could affect both loan origination and loan sales by bolstering the sentiment of consumers and the demand for credit.
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Various measures of consumer confidence have shown strength lately, and the continued improvement in this sentiment could fuel more robust loan origination by increasing the demand for credit.
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Strong durable goods order data for March showed the robust nature of the economy, and this continued improvement could help bolster loan origination by making consumers more confident.
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New home sales dropped sharply in March, and this development could combine with more stringent lending standards to affect loan sales by reducing the supply of debt.
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U.S. mortgage lending plunged during the first quarter of 2014, and this development could easily affect the price and volume of loan sales by reducing supply.
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Condominium developments have been springing up all over in U.S. metropolitan areas, and this trend could easily impact loan sales by increasing the amount of available debt.
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More than 80 percent of lenders taking part in a recent American Bankers Association survey predicted that consumers will have reduced access to mortgages as a result of new industry regulations.
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If current economic conditions send lenders' portfolio values higher, these banks could see an uptick in loan sale activity.
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