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» IN THE NEWS Fed's Duke Addresses Concerns for Borrowers with Low Credit Scores As the housing market experiences a burgeoning recovery with rising prices, an uptick in sales, and an increase in housing starts, Federal Reserve Governor Elizabeth A. Duke points out purchase-originations remain "subdued," especially among individuals with less than stellar credit scores. While originations are down across the board, "[t]he drop in originations has been most pronounced among borrowers with lower credit scores," Duke said in a speech to the Housing Policy Executive Council in Washington, D.C. From 2007 to 2012, purchase originations among borrowers with credit scores higher than 780 declined by 30 percent. In contrast, purchase originations for borrowers with credit scores between 620 and 680 declined by 90 percent, and originations among borrowers with credit scores below 620 were "virtually nonexistent," according to Duke. Duke reasoned some lower-credit score households may not be seeking mortgages as they may have "suffered disproportionately from the sharp rise in unemployment during the recession." However, she also points to tight credit conditions as a major contributor to the drastic decline in originations for borrowers with lower credit scores. A few conditions leading to tighter lending standards, such as capacity constraints and apprehension toward the future of the economy and the housing market, "are likely to unwind through normal cyclical forces," according to Duke. Other sources of tight credit may persist or have less predictable outcomes, Duke says. Many of these sources stem from regulatory changes in the industry. "New mortgage regulations will provide important protections to borrowers but may also lead to a permanent increase in the cost of originating loans to borrowers with lower credit scores," Duke said. For example, servicing standards are now more stringent, especially for defaulting loans, but servicer compensation remains the same. Servicing a delinquent loan is more costly, more time-consuming, and earns a servicer no additional compensation. As such, banks may continue to shy away from loans that demonstrate any likelihood of default, Duke said. Additionally, the qualified mortgage (QM) rules from the Consumer Financial Protection Bureau could deter lenders from making loans to borrowers with lower credit scores, according to Duke. A QM requires a borrower's total debts to equal less than 43 percent of his or her income, which will exclude some "lessadvantaged borrowers," Duke said. The QM also restricts the amount and method through which servicers may charge risky borrowers. If a borrower has a greater likelihood of default, a lender may wish to charge a higher interest rate to compensate for the risk. The QM does not allow servicers to charge more than 150 basis points more to any one borrower than what they charge their highest-quality borrowers. In order to fall under the QM, a mortgage also cannot have points or fees exceeding three percent of the loan amount. "The extent to which these rules regarding rates, points, and fees will damp lender willingness to originate mortgages to borrowers with lower credit scores is still unclear," Duke said. ALTA Awards 3 Designations, Achieves Record Membership The American Land Title Association (ALTA) awarded three National Title Professional (NTP) designations during its annual Federal Conference in Washington, D.C. The NTP designation recognizes land title professionals "who demonstrate the knowledge, experience, and dedication essential to the safe and efficient transfer of real property," according to a release from ALTA. The designation has several elements including industry and compliance prerequisites and training requirements. The honor was awarded to Marianne Mathieu of Fidelity National Title Group in Mineola, New York; Sarah Sutton with Cleveland, Ohio's Fidelity National Title Group; and David Townsend of Agents National Title Insurance Company in Columbia, Missouri. "I congratulate this extremely talent[ed] group of land title insurance industry professionals," said ALTA president Frank Pellegrini. "Their experience, dedication, and VISIT US ONLINE @ DSNEWS.COM knowledge is more than deserving of this prestigious designation. I appreciate their hard work and encourage all members of the land title industry to apply for the NTP designation today." ALTA also announced it has achieved all-time record membership for the fourth consecutive year. To date, ALTA has 4,271 member companies, beating last year's membership record by more than 200. The roster of members includes title insurance companies, title agents, abstracters, and real estate attorneys. The majority of members are small business owners who rely on the variety of services and benefits offered to them. "We are very excited that we have more than 875 new member companies this year," said ALTA CEO Michelle Korsmo. "In addition to recruiting large numbers of new member companies, we continue to increase the number of our existing members who renew their membership annually. We are confident 2013 will continue to broaden the reach of our association within the land title insurance industry." The Washington, D.C.-based association expects membership to grow even further throughout the remainder of this year. "Each day the voice of our industry gets stronger because of the new members we gain," said ALTA president Frank Pellegrini. "By continually growing, the association can better serve an industry that protects the 'American dream' for millions of consumers each year." In addition, ALTA announced it will continue to offer and develop enhanced benefits, assisting current members and drawing in more. "In the past year we have launched several new programs, overhauled many existing programs to best serve our members, and developed industry Best Practices that highlight procedures the industry exercises to protect consumers and lenders, while ensuring a positive and compliant real estate settlement experience," Korsmo said. NeighborWorks Announces $70.1M Award for Foreclosure Counseling Housing organizations across the country will be able to receive funds through a $70.1 million award through the 83

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