I thought that I knew what a bank was, until those clever folks at the internet gave me something else to contemplate.
http://uncyclopedia.wikia.com/wiki/Banker
Happy Groundhog Day. Few offices outside of Punxsutawney, PA use this as a holiday, whereby since 1887 if the groundhog (Punxsutawney Phil) sees his shadow we have six more weeks of winter. If he doesn’t see his shadow, we will have an early spring. (Never to be outdone, the Great State of Texas chose its state mammal, an armadillo, to predict the weather for their first Armadillo Day.) The National Climatic Data Center reports that Phil’s predictions have been correct only 39% of the time. Worse than a coin toss!
Do we really need, in the United States, a return to more lenient credit? Self-employed borrowers aside, probably not, as many believe that it helped contribute to the credit issues we have now. Yet the press makes a big deal out of banks in the United States not loosening the flow of credit to consumers and businesses. It is truly a “supply and demand thing”, the credit markets are, and a recent report by the Federal Reserve shows banks aren’t tightening credit standards as much as they were a year or two ago, but they haven’t yet loosened the flow of credit to consumers or businesses. “The net percentage of banks that were tightening standards was close to zero but positive for most types of loans,” the Fed said in its quarterly survey of senior loan officers at 55 U.S. banks and 23 foreign banks doing business in the country. In the January survey, most banks reported that demand for most types of loans is still weakening further, the Fed reported.
For prime mortgages, 17.0% of banks reported tighter lending standards, down versus 21.5% reporting the same last quarter. Non-traditional mortgages were worse, and had a higher amount of tightening with 29% of banks tightening standards, and 27% of banks are continuing to tighten lending standards for commercial real estate.
It appears that the folks at Fannie Mae appreciate the work that Freddie Mac has done on its Imminent Default Indicator (IDI) statistical model. (The IDI predicts the likelihood of default or serious delinquency for mortgage loans that are less than 60 days past due.) Fannie announced the introduction of the use of IDI through Fannie Mae’s HomeSaver Solutions Network (HSSN). Their HSSN requires the use of verified income documentation before entering the borrower into a trial period plan, and Fannie “is changing the requirement for the imminent default screen to require an imminent default evaluation for all borrowers that are either current or in default but less than 60 days delinquent. This policy change achieves consistency in the treatment of Fannie Mae loans with the treatment of non-GSE loans under the Treasury Department’s Supplemental Directive 09-01.” This will be effective March 1 for servicers of conventional mortgage loans held in Fannie Mae’s portfolio that are part of an MBS pool. “Fannie Mae servicers who are required to use IDI by March 1, 2010 by other investors must implement the use of IDI for mortgage loans owned or securitized by Fannie Mae on the same date. All other servicers must implement the use of IDI as soon as possible but no later than June 1, 2010.”