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'Risk Layering' Called Overblown.
Arlington, VA -- While regulators and industry watchdogs have been highlighting the "layering" of risk in interest-only loan products, analysts at Friedman Billings Ramsey & Co. say the threat is overblown.
With regard to subprime credit-quality loans that have been securitized, FBR said its research finds that "a very small proportion" of loans are affected by risk layering that compounds the possibility of default. Furthermore, FBR says the loans that are affected by risk layering are not concentrated in any particular metropolitan area.
FBR, defining "risk layering" as the combination of two or more loan characteristics that could increase default risk, focuses on the layering of risk factors such as loan-to-value ratios in excess of 80%, debt to income ratios exceeding 39%, credit scores below 620, cash-out refinancing, simultaneously originated second-lien loans, teaser rates and alternative documentation among interest-only, subprime loans.
In the securitized interest-only market, FBR found that 16.6% of interest-only loans had two or more risk factors "layered" on ...
- ClubLink Announces New 6.194% $65 Million 20 Year Fully Amortizing Mortgage and...
- Press release article from: Business Wire February 8, 2006 700+ words
...completed a Canadian $65 million mortgage with Pacific Life Insurance Company. The facility bears interest at 6.194%, is fully amortizing over its 20 year term and is secured by the assets of three of ClubLink's unencumbered golf clubs. ClubLink also announced...
- Regulators Warn Lenders Of Risk Layering At NCUA Summit.
- News wire article from: Banking Wire Roberts, Ed January 29, 2007 700+ words
...loan products, a practice known as risk-layering. Federal Reserve Governor Susan Bies...non-traditional mortgage loans with risk layering practices, such as by not evaluating...Governor. "The greater prevalence of risk-layering practices and sales of non-traditional...
- Regulators Warn Lenders Of Risk Layering At NCUA Summit.(National Credit Union...
- Magazine article from: Credit Union Journal Roberts, Ed January 15, 2007 700+ words
...loan products, a practice known as risk-layering. Federal Reserve Governor Susan Bies...non-traditional mortgage loans with risk layering practices, such as by not evaluating...Governor. "The greater prevalence of risk-layering practices and sales of non-traditional...
- Risk Layering Blurs Analysis: 'The layering of risk characteristics can...
- Magazine article from: National Mortgage News Sinnock, Bonnie January 29, 2007 700+ words
...NEW YORK -- There has been a lot of talk about the risk layering seen in the underwriting of loan originations in recent...markedly bad" performance seen in the 2006 vintage, risk layering has created a need for increased attention to and...
- Regulators Ready Guidance on 'Exotic' Loans: The new guidance frowns on 'risk...
- News wire article from: Mortgage Line Collins, Brian October 12, 2006 700+ words
...Fannie Mae and Freddie Mac because lenders might be forced back into the conventional market. The new guidance also frowns on risk layering and piggyback mortgages, "especially when the second [lien] is layered into a high- risk mortgage product," she said...
- Regulators Wary of 'Risk Layering' on Alternative Products.
- News wire article from: Mortgage Line Collins, Brian December 19, 2006 700+ words
WASHINGTON -- Federal regulators stuck to their guns in issuing tough final guidance on interest-only and payment-option lending, but opinions are divided over the impact it will have. But few think the new guidance will cause volumes to plummet. The Mortgage Bankers Association accused the
- Tough Guidance Coming for IOs?
- Magazine article from: Origination News Collins, Brian January 1, 2006 700+ words
...or more when a loan converts to a fully amortizing loan. In the proposal, the regulators...expected, the regulators warn about "risk-layering," such as reduced documentation of...may be acceptable in prime loans, risk layering on subprime loans "may significantly...
- 2/28 Targeted For Fed Crackdown.
- Magazine article from: National Mortgage News March 12, 2007 700+ words
...required to underwrite subprime ARMs at the fully indexed and fully amortizing rate. The federal banking regulators also want lenders...to adhere the nontraditional mortgage guidance and avoid risk layering, such as combining 100% financing on loans with reduced...