More home buyers are seeking mortgage loans backed by FHA guarantees.

I have been looking at lending patterns in my own community – Durham, North Carolina – and the 2009 numbers paint an interesting picture that suggests a dual marketplace. One group – white and Asian borrowers – continues to eschew the FHA program in favor of conventional loans. Another, made up almost entirely of African-American borrowers, is turning to the FHA program. What is more interesting is the extent to which the sudden switch is unaffected by borrower income. Even well-off African-Americans are flocking to FHA.

I ran a chi-square that sorted borrowers by their race or ethnicity and by their incomes. Incomes were separated (more…)

President Obama says that he will nominate Joseph Smith, the current North Carolina Commissioner of Banks to become the new leader of the Federal Housing Finance Administration.

It is one more instance of how the progressive leadership in North Carolina is moving to Washington to take on the big banks.  Smith’s understudy, Mark Pearce, was recently named to a new position at the FDIC, where he will supervise consumer protections at the 8,000 financial institutions under the regulatory purview of the FDIC.  Eric Stein, formerly an attorney at the Center for Responsible Lending, has been working as the Deputy Assistant Secretary of Consumer Protections at the Department of the Treasury for more than a year.In that time, he has been the champion of the Consumer Financial Protection Bureau.

Smith will have an opportunity to shape reform of the GSEs.

The more things change, the more they stay the same.

Wells Fargo is moving the customers it inherited from legacy Wachovia over to the full-fledged Wells accounts. Wells has always believed in selling mulitple products to each customer. In this 2010 presentation made to the Sloan School of Business at MIT, Wells claims to have sold an average of 6.47 products to each banking customer.

Still, the speed at which Wells has utilized my new status as a Wells customer is surprising. I got my first sales call this morning. What’s even more surprising is what kinds of products they are offering.

It is easy to confuse subprime for a description of a borrower, when really, the term should describe a product. A loan is subprime. A person is not subprime.

It must be that it also easy to forget what happened in 2008. At least, Wells must have forgotten. Judging from a phone call that I got today, there must be some kind of amnesia spreading throughout San Francisco.

Wells is pushing interest-only adjustable rate home equity loans. (more…)

Today’s announcement by the IRS that it is canceling the debt indicator is very significant.

The debt indicator is what made the refund anticipation loan possible. Without it, banks would never have been able to tell if a tax filer had outstanding tax liens. Now that the IRS is ceasing to provide the debt indicator, the future of refund anticipation loans seems dim.

RALs were a big business. More than 470,000 North Carolina households spent almost $50 million on RAL fees in 2006 (according to research we did with the IRS’ SPEC data).

The IRS’ complicit involvement in the RAL business was undermining (more…)

I am seeing more evidence that a wave of multifamily apartment buildings are about to enter foreclosure, and the prospect of that development seem very concerning.

While the peak for resets on sub-prime loans issued in the last decade has already crested, lots of commercial real estate debt is only now coming to maturation. The Washington Post reports that $1.4 trillion in commercial estate debt should roll over in the next three years. Half of those loans will be underwater by 2011, which should thwart demand for new financing.

While this is troublesome for investors and lenders working in the multifamily housing industry, it is also something that poses significant challenges for neighbors.  One issue is the loss of many affordable rental units. Another (more…)