tsts What Happened to
the Mortgage Market?
Elizabeth Lamoureux, New Hampshire Housing Finance Authority
Managing Director, Home Ownership Division
New Hampshire Housing Finance Authority
• Master of Business Administration Degree
• Certified Public Accountant and Certified Mortgage Professional
• Prior to joining the Authority, was Vice-President of NH
Business Development Corporation and State Director of the
NH Small Business Development Center.
• Active Board member and Treasurer for the Mortgage Bankers
and Brokers Association of New Hampshire.
• Serves on the Audit Committee for NeighborWorks Greater
• Formally served on the Boards of the New Hampshire Society
of CPAs and the NH Rural Development Council.
Who is New Hampshire Housing?
• New Hampshire Housing Finance Authority is a self
funded, tax exempt public benefit corporation
established by the state legislature.
• Although established by statute as a public
instrumentality, we are not a state agency and
receive no operating funds from the state
• The Authority administers a broad range of programs
designed to assist low and moderate income persons
and families to obtain decent, safe and affordable
Mortgages in the old days…..
• 20% down
• Solid underwriting
• Fixed rates
• HOME for a lifetime!
• Raise families
• Sign of achievement
Market began to change……
• Smaller down payments
• Automated Underwriting
• Government says “Everyone should be
a home owner”
Ok! Sounds like a plan!
• New mortgage
– Adjustable rates
– Low doc
– No doc
– Interest only
Now we’re cooking…
• How about reaching
a few more people:
• No ratio restrictions
• No credit scores
• No money down
• Internet lending
• You WILL get a
Primary mortgage insurance
lots of waivers
easy to get
Everyone is making money!
• Brokers paid at closing – no credit risk
• Mortgage Companies and Banks made up-
front fees and passed loans on to investors
• Investment banks made money securitizing
• No risk. Make the loan and sell it!
• Credit rating agencies thought this was just
Ah, the good life!
• Buyers used their home as a piggy
bank. New car, trips, home equity lines.
• If they ran into trouble they could just
sell and reap the profits.
• But if you took the “bacon” out of the pig
• Your little piggy won’t go to market!!!
• The folks in the 80/20 had an adjustable
second mortgage and the interest rate went
• The folks in the interest only had to start
making principle payments.
• The folks in the adjustable got into the loan
with a low teaser rate and then the rate
adjusted up…way up.
• And the folks who had equity took out equity
lines of credit to pay off credit cards!!!
And down we go…
• Delinquency rates were rising
• Unemployment was rising
• Home values were declining
• Investing in housing became risky
• Investors pulled out
• Stock market crashed
• Mortgage Insurers put restrictions that
made it nearly impossible to buy
• Declining markets
• Property types
• Credit scores
• Large down payments
• Working toward pulling out of the
• Rating Agencies (who thought all this
was just fine) now begin to down grade
• MI companies (now actually looking at
the file) refuse to pay claims.
• Empty properties aren’t selling.
Who do foreclosures affect -
• People are no longer able to refinance
as they have no equity
• Towns with a lot of empty properties are
not getting taxes paid
• Condo’s with a lot of empty units are not
getting condo fees to run the
The Government steps in.
All mortgage insurance is government –
FHA, VA, RD
But lenders were not approved or forgot
how to do government insured loans
Home affordable modification
• Required servicers/investors to forgive
• Easier and cheaper to foreclose
• Took borrowers months to get a mod (if
• Understaffed and under trained
• Encouraged borrowers to get behind on payments
• Negatively impacted credit scores
• Credit card limits decreased and interest rates
• Denied car loans
• Hit to credit score ranged from 30 to 100 points
• Credit scores used by employers and landlords!
• To get a mod or not to get a mod?
• Servicers didn’t have trained staff to
handle the large volume.
• People waited months for a modification
only to be told no.
• Promises had been made to investors.
• Making Home Affordable didn’t work.
• Big banks needed a government
The Economy Suffered
• Housing prices continued to decline
(17% in NH)
• People couldn’t sell to get out of their
• Mortgages were “under water”
• Jobs continued to be lost.
• Incomes were lost or reduced.
• Bank owned properties became 30% of
the market of homes for sale.
• Even “safe” fixed rate mortgages went
• Lenders tightened credit availability.
• Government began subsidizing rates.
• Government took over Fannie Mae and
Let’s find someone to blame…
• How about the brokers?
• Yes, that’s easy. Let’s blame them.
• And let’s protect the consumers from
• Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (SAFE)
• Truth in Lending Act (TILA)
• Real Estate Settlement Procedures Act
• Dodd-Frank Financial Overhaul Legislation
• Department of Labor Administrator’s
Interpretation NO 2010-1
Hiatus to foreclosures
• Short cuts discovered
• Halted in 50 states
• Result – weaker sales
• Slows the economy
• More job loss
New Hampshire Housing
• Lowest rates in our 30+ year history!
• 3.50% 1-point (4.199% APR)
• 3.75% 0-point (4.378% APR)
• 4.25% + grant (4.912% APR)
• APR based on 30 year term, 96.5% LTV, including MI.
Lowest rates in history. Why
aren’t people buying?
• They’re afraid!
• They worry about losing their job
• Tough economy hurt credit scores
• Mortgages hard to get
• Hard to save a down payment
• Waiting for the bottom
• Short sales and bank owned properties not
the bargain they thought
Your future buyers….
• Looking at a home as an investment
• Cautious about entering the market
• Echo boomers
• Talking on facebook
New Hampshire Housing
• “Safe” and affordable mortgages
• Low down payments
• Emergency Home Repair Loan (EHRL)
• Home buyer education
• Down payment assistance
• New program with Fannie Mae
Especially for you….
• New Production Initiative (2007)
• $20,000, non-amortizing second
mortgage at 0% for buyers in approved
• Market approved developments on our
• Bow Highlands, Bow
• Dalton Village, Nashua
• Demetria’s Crossing , Manchester
• Gile Hill, Hanover
• Kinkade Haven, Louden
• Moulton Cove, Laconia
• Prescott Square, Nashua
• East Ridge Village, Manchester
• The Vineyards of Concord, Concord
• Winnisquam Village, Tilton
• East Ridge Village, Manchester
• Wyndbrook at Dover, Dover