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Despite Ease of Credit Standards, Lenders Expect Slower Mortgage Application Activity

Friday, December 19, 2014 - Article by: Lender411 Member

Fannie Mae reported despite the easing of credit standards across the board, lenders expect a decrease in the demand for mortgage applications for the first quarter of 2015. Recent updates to guidelines by Fannie Mae and Freddie Mac, which provide a more concrete picture of representations and warranties, may have contributed to this easing.

Doug Duncan, VP at Fannie Mae said: Overall, lenders growing concerns with purchase mortgage demand is broadly in line with major industry indicators and supports our views of a modest housing expansion going into 2015... While government regulatory compliance remains the top driver of declining profit margin expectations across all lenders, more lenders, and in particular larger lenders, are increasingly concerned with consumer demand risk.... We believe that some combination of easing of credit standards, relatively low mortgage rates, and ongoing labor market improvements will help the housing market to grow steadily, albeit modestly, in 2015.

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