(Read More: Map: Tracking the US Real Estate Recovery)

Fear and financing have kept the apartment rental market strong for the past several years, with rising rents and falling vacancies. Rents rose yet again in the second quarter of this year, according to a new report from Reis, up more than 2 percent from a year ago. But rents and vacancies have been stabilizing of late, as buyers return to the market.

Mark Sadaka and his wife are looking to buy a home in New Jersey.

“It’s hard to get a mortgage, but now things have apparently lightened up. I don’t know, we’re exploring that now,” said Mark.

Mortgage credit is easing up slightly, according to a new index from the Mortgage Bankers Association. The increase was driven by a small uptick in the number of jumbo, investor and cash-out products as well as those with higher loan-to-value ratios. All those are riskier loans.

But while credit is easing slightly, mortgage rates are rising. The 30-year fixed hit 4.41 percent on the Zillow Mortgage Marketplace, up 24 basis points from a week ago.That’s the highest in two years. Rates could move higher after Wednesday’s release of the Federal Open Market Committee meeting minutes and more clues to the easing of federal stimulus in the mortgage market.

(Read More: Rising Rates Sour Housing Market Plans)

Rising rates have already taken away considerable purchasing power for potential buyers. Fewer consumers now think it’s a good time to buy compared with just a month ago, according to a survey from Fannie Mae.

Article source: http://www.cnbc.com/id/100874193

Yesterday a lot of folks, including myself, were slightly incensed at the announcement by mortgage insurer PMI that it is launching a pilot program offering cash bonuses to borrowers who stay current on their mortgage payments.

I went on a tirade about how ridiculous it is to pay people to meet their legal, contractual obligations, how it enables bad behavior. Don’t get me wrong, I still believe that.

Today, however, I learned something that made me understand a bit more why the mortgage insurers, and the lenders and investors participating in a similar bonus program, are running so scared:

Between 12 and 24 percent of always performing loans, depending on the asset type, exhibit LTVs (loan to value ratios) that are higher and have risen more steeply than those of defaulted loans, raising the specter of a renewed increase in strategic defaults should previous default trends hold true—Moody’s ResiLandscape

Researchers at Moody’s say that a loan’s LTV is a “strong predictor of its propensity to default,” and if history serves as a model, the higher the LTV, the more risk of default.

After the end of the home buyer tax credit, the average home price for always-performing loans originated since 2005 began falling again, according to Moody’s, which consequently turned falling LTVs around, pushing them up as borrowers lost more equity in their homes.

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