Managing Risk in High LTV Loans

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Posted To: MND NewsWire

In addition to its usual recap of economic and housing indicators and future projections this week's edition of Freddie Mac's Insights and Outlook sought to put any potential risk of its the new 97 percent mortgages in context. The mortgages, a program Freddie Mac calls Home Possible Advantage, were rolled out last spring and a similar program was introduced by Fannie Mae the previous autumn. The new mortgages have safeguards to limit the credit risks associated with the low down payments including solid FICO scores and require private mortgage insurance. A key element of the program is the elimination of layered risks; a combination of multiple risky features has been found to magnify the total risk of a loan. It was layered risk that presented a significant vulnerability to loss in loans...(read more)

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Source: http://www.mortgagenewsdaily.com/09022015_low_downpayment_loans_risk.asp

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