Skip to main content

New Vista Asset Management and Fannie Mae market foreclosures

National Mortgage Professional
Nov 28, 2007

NAMB says GAO foreclosures study vindicates brokers: Aggressive lending, securitization model led to lower underwriting standardsMortgagePress.comGAO sub-prime The Government Accountability Office (GAO) released a report on default and foreclosure trends in the mortgage industry on Oct. 16. The report, titled "Information on Recent Default and Foreclosure Trends for Home Mortgages and Associated Economic and Market Developments," comes in response to an April 25 House Financial Services Committee request to the GAO to investigate the high number of foreclosures and the sub-prime market. The National Association of Mortgage Brokers praised the long-awaited GAO report analyzing the rash of home mortgage defaults and foreclosures. "This study vindicates Mortgage Brokers by confirming what we have been saying all along," said NAMB President George Hanzimanolis, CRMS. "Mortgage Brokers are not to blame for the meltdown in the sub-prime mortgage market. According to GAO, the problem started with the rise of securitization, resulting in too much liquidity, which led to aggressive practices by banks and other lenders. Taken together, these forces shifted risk from lenders to investors, eliminated accountability and led to a weakening of underwriting standards. Simply put, blaming only Mortgage Brokers or any other one segment of this industry for this complex meltdown doesn't hold water with the facts." The GAO notes in its report that the overall mortgage default rate grew by 29 percent between 2005 and 2007, while the foreclosure rate increased by 55 percent. The sub-prime market accounted for two-thirds or more of the increase in the number of loans in default or foreclosure during the two-year time frame. GAO pointed out a number of factors that contributed to the collapse of the market, including a drop-off in home price appreciation rates and a weakening labor market in certain parts of the country. But it stressed that the easing of underwriting standards and the wider use of certain loan features such as low- and no-documentation loans and higher loan-to-value ratios contributed to default and foreclosure increases by making loans available to borrowers who could not keep up with their payments. "The real tragedy, of course, is that GAO projects more than one million homeowners will experience foreclosure during the next six to seven years due to this combination of circumstances," Hanzimanolis said. He urged Congress to consider the study's findings carefully when drafting legislation designed to make improvements in the mortgage market. For more information, visit www.gao.gov.
Published
Nov 28, 2007
Reports: Evergrande Group Makes $83.5M Interest Payment

Faltering Chinese development firm fends off default with payment to international bondholders.

Industry News
Oct 22, 2021
FAR Establishes Borrower Engagement Division

Finance of America Reverse LLC announced its formally established Borrower Engagement Division.

Industry News
Oct 22, 2021
Automating Appraisals No Panacea For Removing Bias

With racism 'grandfathered in' to housing prices in minority neighborhoods, a solution to 'unconscious bias' is difficult to find

Industry News
Oct 21, 2021
Reports: Evergrande Group Arranges Bond Extension

Reuters, REDD say company's billionaire chairman has agreed to provide additional collateral to ensure a construction project tied to a $260M bond is completed.

Industry News
Oct 21, 2021
New American Funding Hires Regional Manager

Mark Tribuna will lead effort to expand company's partnership with affordable nonprofit builders in mid-Pacific region

Industry News
Oct 21, 2021
Rocket Pro Announces Initiatives To Boost Brokers

Company brings Rocket Tech, the Rocket Network and Rocket Marketing to mortgage brokers across the country

Industry News
Oct 19, 2021