Salient to Investors:

A growing number of companies are offering financing to consumers with irregular incomes, damaged credit or past foreclosures as the housing market recovers and rising interest rates drive down demand for refinancing.

Keith Gumbinger at said at least a few lenders are starting to dig into the nooks and crannies of borrowing.

Experian  said borrowers with sub-prime scores accounted for 6.5 percent of mortgage originations in 2012 versus 26 percent in 2006. Subprime borrowers are usually defined as those with FICO scores below 620 on the scale of 300 to 850.

Jonathan Corr at Ellie Mae said credit quality of loans originated in May continued a slow loosening that started in January.

Freddie Mac said the average rate for a 30-yr fixed rate conventional mortgage is at 4.37 percent.

The Mortgage Bankers Association predicts refinancing will shrink to 36 percent of mortgage origination activity in 2014 versus 76 percent at the start of May 2013.

Ellen Seidman at  Center for Financial Services Innovation it will take longer for financing to open up to the millions of renters locked out of the market – there are many solid potential first-time home buyers who are going to miss out on a very affordable market. Seidman said the housing market is a ladder and  not stepping on the first rung makes it very hard to sell houses and move up.

Roberto Quercia at University of North Carolina expects more of this lending because we are a nation of pragmatists and the industry will find a way to lend to these families in a sustainable manner – regulations will eventually be revised to reflect the realities of the market.

Cameron Findlay at Discover Financial Services said yields on U.S. 10-yr T-notes above 3.5 percent may help revive the market for private mortgage-backed securities that are necessary to fund non-qualified home loans.

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