Morning Report: Fannie Mae broadens credit considerations

Vital Statistics:

  Last Change
S&P futures 4,439 -1.2
Oil (WTI) 69.04 -0.65
10 year government bond yield   1.37%
30 year fixed rate mortgage   3.09%

Stocks are flat after the Producer Price Index came in higher than expected. Bonds and MBS are flat as well.


Prices at the wholesale level increased 1% MOM and 7.8% YOY. Ex-food and energy, prices rose 1% MOM and 6.2% YOY. Autos accounted for about 20% of the increase, while travel-related services also added a bit. I sound like a broken record here, but keep in mind that the year-over-year comparisons have a lot of noise in them due to the lockdowns of a year ago. We are still a ways away from putting Whip Inflation Now bumper stickers on the backs of our cars.

The COVID-related supply bottlenecks are reversing and returning to normal. Freight shipping volume is back to pre-pandemic levels, however costs are way higher than before. Shipping costs are 44% higher than a year ago, and 23% higher than two years ago. That said, they are falling on a MOM basis.


Despite an extremely tight labor market, initial jobless claims remain elevated, coming in at 375k last week. Initial Jobless Claims remain a puzzle, as they are much higher than the Great Recession. Take a look at the chart below, which compares the Great Recession with COVID. It is astounding that COVID claims remain so persistently high when it seems every store has a “help wanted” sign in front.


Mortgage Credit increased slightly in July, according to the MBA. “Even as the economic recovery is underway, overall credit supply has remained close to its lowest levels since 2014,” Kan said. “Some borrowers are still in pandemic-related forbearance status, and servicers continue to work through possible resolutions for these borrowers.”


Fannie Mae introduced a new initiative to help first time homebuyers get access to a loan. It will now allow a borrower’s rental payment history to be included in cases where a limited credit history is insufficient to get an approval out of DU.

“Many renters believe they will never be able to buy their own home because of insufficient credit. We can responsibly expand mortgage eligibility by including positive rent payment history in underwriting risk assessments,” said Hugh R. Frater, Chief Executive Officer, Fannie Mae. “We believe this will be the first time any large-scale automated mortgage underwriting system will leverage electronic bank statement data to consider positive rent payment history. It is but one important step in correcting the housing inequities of the past, creating a more inclusive mortgage credit evaluation process going forward, and encouraging the housing system to develop new ways of safely assessing and determining mortgage eligibility in order to fairly serve all potential homeowners. We look forward to working with our industry partners to do what we can together to address this and other barriers to homeownership.”


19 Responses

  1. “It will now allow a borrower’s rental payment history to be included in cases where a limited credit history is insufficient to get an approval out of DU.”

    That sounds uncharacteristically intelligent for the government.


  2. This will be ugly:


  3. Worth noting:


  4. Weaponization of immigration & asylum. You almost have to admire it.

    “Belarus’s weaponization of migration is a desperate ‘attack on the democratic world,’ Lithuanian president says

    Belarusian strongman Aleksander Lukashenko is increasingly desperate, Nauseda said, warning that, as new sanctions pile up against his regime, Lukashenko will only intensify his “hybrid attack on the democratic world.”

    According to the account of the Lithuanian government, this offensive involves facilitating the travel of thousands of mostly Iraqi migrants to Minsk, where they are then ushered over the border and into one of three E.U. member states that neighbor Belarus. The number of undocumented migrants entering Lithuania rose sharply for weeks, until sustained diplomatic efforts and an aggressive border patrol strategy led to a recent decline. But now, Latvia and Poland are reporting significant increases.”


  5. Worth a read:

    “Mr. Cogley began attacking the bureau’s effort to count a small share of known households that evade the best efforts of census takers. In these cases — 1.2 million people in 2010, but probably many more in pandemic-scarred 2020 — the bureau has long used a statistical method called imputation, looking at nearby households to make educated guesses about who lives in the places the census field operation missed.”

    My understanding was that “imputation” (aka making shit up), had been ruled unconstitutional for reapportionment purposes, but they could still do it just for money allocation.


    • Saw George’s reference to it.

      I will assume HB is a drug addled slimeball until a better definition for him is provided, but that was my assumption without this allegation.


      • Mark:

        Saw George’s reference to it.

        So only here…no mention of it in any of the news sources you use to inform yourself? If the person in that video was named Donald Trump Jr instead of Hunter Biden, do you think you would have heard about it from somewhere outside of ATiM?


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