An isolated boom: The U.S. housing market dragged the economy into a deep recession nearly eight years ago. Could it now insulate the domestic expansion during a fragile period of global growth? As The Wall Street Journal reports, recent numbers look promising, but several obstacles—including shifts in where young households want to live, their capacity to take on debt and rising costs for home builders—suggest the sector won’t soon offer breakout growth. Housing still isn’t contributing much to overall economic growth because new construction of single-family homes, which packs an outsize economic punch, is stuck near levels hit during the early 1990s recession. Read the full story.
It’s a family affair: Fannie Mae is overhauling its mortgage program for low- to moderate-income households to better accommodate today’s financial and familial realities, The New York Times reports. Renamed HomeReady (formerly known as MyCommunityMortgage) and set to start in December, the program has revised guidelines to acknowledge that many borrowers share homes—and finances—with extended family. That’s the situation for about 19% of African-American households and 24% of Hispanic households, according to Jonathan Lawless, Fannie Mae’s vice president for underwriting and pricing analytics. Lenders will now be able to qualify borrowers by including income generated by non-borrowers living in the household. Read the full story.
Back to the future: Years after the great American housing bust, mortgages akin to so-called liar loans—which were made without verifying people’s finances—are creeping back into the market, Bloomberg reports. And, like last time, they’re spreading risks far and wide via Wall Street. Today’s versions bear only passing resemblance to the ones that proliferated in the mid-2000s, and they’re by no means as widespread. Still, they reflect how the business is starting to join in the frenzy that’s been creating booms in everything from subprime car loans to junk-rated company bonds. Read the full story.
