According to the MBA, higher costs and concerns about buybacks are driving the decline in mortgages for home purchases. It will slow to $635 billion this year, a 13 percent drop from 2013.
Banks have constrained home lending to many borrowers deemed creditworthy by mortgage finance companies Fannie Mae (FNMA)
and Freddie Mac. Applicants approved for mortgages to purchase homes
had an average FICO credit score of 755 in August, according to Ellie
Mae, a company that makes software used to process mortgage
applications. In contrast, Fannie Mae and Freddie Mac guidelines allow
for credit scores as low as 620 for fixed-rate mortgages in some cases.
Lenders reported a 30 percent median increase in compliance costs this year from 2013, according to a survey
by Fannie Mae released this month. And 72 percent of lenders surveyed
said they spent more on compliance this year compared with last year