After a few weeks of turmoil, U.S. stocks rose Friday on reports of stronger September housing data. The markets have been erratic in response to political conflicts abroad, the impending end of the Federal Reserve's quantitative easing stimulus program, and of course, fear of that "E-word" illness spreading even faster than the virus itself.
Although the housing market gains were not consistent in all areas, new home sales were the highest during the month of September since 2008, keeping housing data on an upward trajectory. Home value gains have finally slowed and interest rates have dropped, making new home purchases more affordable for many borrowers.
Meanwhile, mortgage backer Fannie Mae settled a lawsuit for $170 million for failing to disclose financial info to investors dating back to before the markets crashed in 2008. The missteps by Fannie Mae and Freddie Mac to effectively "manage risk" by taking on subprime credit loans, for example, are what led to much stricter mortgage regulations and standards.
Regulators agree to loosen the belt on mortgage lending rules
Following up on the theme of loosening mortgage standards discussed in last week's blog, U.S. regulators agreed to relax rules for approving new mortgage loans to borrowers. One of the biggest changes includes dropping a minimum 20 percent downpayment requirement of a home's sale price. Regulators want to ensure loans are approved only to credit-worthy borrowers while also encouraging healthy growth in the homeowner's market.