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Example research essay topic: U S Census Bureau Fannie Mae - 1,639 words

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Hw Changes In Mortgage Structure Have Effected Hme Sales The housing and mortgage industries, fueled by historically lw interest rates, continue t be from-page news because f their contributions t ur economy ver the past several years. ut standing mortgage debt reached $ 7 trillion. The US can d substantially better than it has dne in the past, but it will require 100 % lan-t-value programs and a national solution t the predatory lending issue. Just mre than 68 percent f Americans currently wn hme's.

f that percentage, the U. S. Census Bureau calculates that three-quarters f white Americans have hme's, while immigrants and minorities are still 20 percent behind. In fact, fewer than 50 percent f all African Americans and Hispanic Americans wn a hme (1).

ver the next decade, the national homeownership rate is set t rise t abut 70 percent. Why nly 2 percent mre? ne read is that, with each year that passes, we have a lt mre people t huse. The U. S. Census Bureau estimates that the population could increase by 31 million t 34 million people, translating int 13 million t 15 million mre husehld's.

Mortgage bankers can effectively extend credit t with brrwer's if they are subjected t news predatory lending laws and procedures that differ substantially frm state t state (4). Huse's have become mre affordable fr Americans in the last 50 years. The National Assciatin f Realtrs (NAR), Washington, D. C. , reported that the send quarter f 2003 was at the send-mst affordable level since 1973. With the national figure fr required minimum income at $ 39, 090, six ut f every 10 husehld's across the nation could afford t buy a median-priced hme. Record lw interest rates have allowed homeowners t pay mre with significantly raising their monthly mortgage payment.

Fr example, the median monthly mortgage payment in the send quarter f 2003 was $ 774, nly 17. 4 percent f household income, in contrast t 2002 's median payment f $ 805 (3). The figures are the national average. While hme values have skyrocketed in many areas, household income has nt risen at the same pace. Fr example, median-income families in San Does-the least affordable f all me areas, according t NAR-had nly 69. 4 percent f the income required t buy a median-priced huse. N ne ever has thought that middle-class buyers would be priced ut f the market in a may metropolitan area. The median price n a California hme hit a new record in January, rising t $ 405, 720, according t the California Assciatin f Realtrs (C.

A. R. ), Ls Angeles. The minimum household income required t purchase ne f these hme's is nw $ 94, 020, assuming a typical 30 -year, fixed-rate mortgage at 5. 85 percent with a 20 percent do payment. Nt many families have an income that even cme's case.

That is why C. A. R. reported that first-time buyers accepted fr nly 30. 6 percent f hme purchases in California in 2003 -the list rate since 1981 (1). The disparity between hme price and income is even greater fr families in lw-t-moderate-income categories. It is very difficult, if nt impossible, fr many f these brrwer's t save enough my fr a do payment.

There could be a substantial progress with 100 percent LTV programs such as the being considered by the Federal Housing Administration (FHA). However, it would als lead t higher delinquencies and foreclosures within this grup f brrwer's. However, consider that even if yu double current rates f delinquency, that would still leave a substantial percentage f brrwer's wh would benefit frm these programs (4). The subprime industry has gained a legitimate place in the marketplace as a solution fr people whse credit r ther circumstances disqualify them fr prime lans. It is very easy it is t lse A-lan status because f a missing payment r t many credit cards, consider the universe f subprime customers. They could be accommodated with a subprime lan and supplied with a radar t seek a prime lan when they have demonstrated responsible credit management fr a specific time period (3).

Subprime lending has get mainstream. In the new purchase environment, many mortgage bankers realize that it pays t diversify their product menu and develop slutin's fr lw-t-moderate-income buyers and the with impaired credit. According t New Century Financial Crpratin, Irvine, California, subprime brrwer's tk ut approximately $ 350 billion in mrtgage's during 2003. Frecasters estimate that subprime is nw between 10 percent and 15 percent f all riginatins (4). Free Fannie Mae Vice Chair Jamie Grelick reported that Fannie Mae did $ 200 billion f subprime business in 2002, and these were products and market segments that were nt part f its menu five years ag (3). In 2002, President George W.

Bush announced the Blueprint fr the American Dream initiative, which challenged bth the public and private secure t increase minority homeownership by 5. 5 million before the end f the decade. It is up t mortgage bankers t accept this challenge and develop the lan products and real estate finance slutin's that expand homeownership t every demographic segment (1). As a we, huse mortgage delinquency rates at this men suggest the industry will scrape through the economic and real estate downturn with huge damage. S far, public has seen tw years f weak property market performance-including rising vacancy and falling rents-with nly most increases in delinquency. Mortgage lenders are continuing t let their standards, despite growing fears that relaxed lending practices could increase risks fr brrwer's and lenders in ver heated housing markets. New lan products have helped fuel much f the run-up, which continues t defy expectations, as reflected in hme-sales data released yesterday.

Existing-hme sales hit anther record in June, up 2. 7 % frm May's heated levels, according t the National Assciatin f Realtrs. Median hme prices rse 14. 7 % frm June 2004 (1). Lenders, however, are making it still easier fr brrwer's t qualify fr a lan. They are lowering the credit sites needed t qualify fr certain lans, increasing the debt lads brrwer's can carry and easing the way fr brrwer's t get lans while providing little documentation.

In sme cases, lenders are easing standards nt nly fr homeowners, but als fr the growing number f people buying residential real estate as an investment. In ne recent me, Chase Hme Finance, a unit f J. P. Man Chase & C. , this spring began allowing sme f its customers t take ut hme-equity lans and lines f credit with having their incme's verified (3). Under the new program, income verification is nt required fr hme-equity lans f up t $ 200, 000, provided that the browser's that mortgage debt des nt exceed 90 % f the property's value r $ 1. 5 million. The change is nt fr all customers - it's nly fr customers with the very highest credit rating, a company spokesman says (5).

Lans with little r n documentation have green in popularity industry-wide. In June 2005, Wells Far & C. began allowing buyers f investment properties in sme parts f the country t take ut interest-nly mrtgage's, which let brrwer's pay interest and n principal in the lan's early years. Anther recent change in sme markets bst's the standard fr hw much that debt and housing expenses certain brrwer's can carry t 45 % f their income frm 38 % (5).

A Wells Far spokesman says the company des nt discuss specific changes, but that it consistently monitors economic conditions in its may markets and will at times modify ur lending guidelines in a specific market. (5) He added, n a national basis, we have made n substantive changes t ur lending policies and practices. Banking regular, meanwhile, are paying case attention t mortgage lending practices. Lending standards are continuing t ease, says Barbara Grunkemeyer (5), deputy comptroller fr credit risk at the ffice f the Cmptrller f the Currency, which is putting the finishing touches n its annual survey f bank underwriting standards. Federal Reserve surveys f bank lan fibers shw that lenders have tended t let standards since early 2004, following a period f relative tightening.

In sme cases, lenders have tweaked their feelings by reducing the minimum credit sites needed t qualify fr certain lans. Cuntrywide Financial Crp. , fr instance, recently cut by 20 pints the minimum credit site brrwer's with bigger lan amounts need t qualify fr ne f its popular lan programs. (5) A Cuntrywide spokesman says the change was designed t make the terms f this lan consistent with its ther fees. The continuing listening f lending standards has helped push the homeownership rate t a record 69 % f U. S. husehld's.

Mortgage delinquencies, meanwhile, have remained lw, with just 1. 08 % f residential mrtgage's in foreclosure proceedings at the end f the first quarter, do frm 1. 17 % five years earlier, according t the Mortgage Bankers Assciatin (2). Lw interest rates and rising hme prices have helped keep delinquencies do by keeping monthly payments in check and making it easy fr brrwer's wh run int table t refinance r sell their hme's at a print (2). That, hme mortgage delinquency levels are still rather lw, and in sme cases very. The factors behind the sme what surprisingly lw delinquencies thus far include the following: A may shift in underwriting standards in the mid- 1990 s that required greater browser equity in deals (typically 20 percent t 30 percent) (2).

ther changes in underwriting standards, such as mre conservative assumptions n current and projected income and expenses (2). Significant rent increases in many markets and property types in the late 1990 s and 2000, thereby creating a "cushion" fr the recent declines in cash...


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Research essay sample on U S Census Bureau Fannie Mae

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