Archive for May, 2009
Existing-home sales rose in April with strong activity in lower price ranges, particularly from repeat buyers, according to data released today from the National Association of Realtors.
First-timers, on the other hand, declined to 40% of market sales from 53% in March.
Existing-home sales — including single-family, townhomes, condominiums and co-ops – increased 2.9% to a seasonally adjusted annual rate of 4.68m units in April from a pace of 4.55m units in March, but sat 3.5% below the 4.85m units sold in April 2008.
Single-family home sales climbed 2.5% to a seasonally adjusted 4.18m in April from 4.08m in March, but are 2.8% below the 4.30m-unit pace last year at this time.
Existing condominium and co-op sales jumped 6.4% to 500,000 units in April from 470,000 in March. Condo and co-op sales are 9.4% lower than than the year-ago pace.
A NAR practitioner survey in April shows first-time buyers declined to 40% of transactions, implying more repeat buyers are entering the traditional spring home-buying season, NAR said in a press statement. The survey also shows the number of buyers looking at homes has increased 14% from a year ago.
Regionally, existing-home sales in the West rose 3.5% to an annual rate of 1.17m in April — a significant 19.4% higher than a year ago. Sales in the Northeast jumped 11.6% to 770,000, while sales in the South increased 1.8% and sales in the Midwest slipped 2%.
The national median existing-home price for all housing types came in at $170,200 for the month, which is 15.4% below 2008. NAR says distressed properties, which accounted for 45% of all sales in April, continue to downwardly distort the median price.
But because foreclosed properties will likely be released into the market over the course of 2009, it's critical that distressed homes are quickly cleared from the market, says Lawrence Yunn, NAR chief economist. “Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings…"
Write to Kelly Curran.
Mortgage industry professionals saw a record number of mortgages enter some form of workout plan in April as foreclosure moratoriums at government-sponsored enterprises began to expire.
Prime mortgages now account for more than half of the industry's efforts.
The mortgage industry modified 127,000 mortgages in April, down from 133,910 a month earlier. With another 142,831 mortgages in repayment plans, the industry put a record 269,831 mortgages in workout during the month, according to a survey conducted by HOPE NOW, the alliance of mortgage industry professionals.
The industry's efforts to implement the Administration's Making Home Affordable Modification Program (HAMP) led to a decrease in completed modifications and an influx in repayment plans in April, according to the alliance.
"Under the conventions of the HAMP, loans are subject to a three-month-trial period before a modification can be completed and, therefore, are often classified as repayment plans or trial modifications," HOPE NOW officials said in a release today. "Some of these trial modifications will result in formal reporting of modifications after 90 days. As a result and, as expected, the number of repayment plans increased and the number of modifications decreased from what otherwise might have been recorded."
Prime mortgages continued a growing trend in April. Prime mortgages accounted for 55% of all workouts, up from 48% in March, according to HOPE NOW’s data.
Despite the trend, as HOPE NOW’s data show a slight cooling of workout efforts in the prime category. In April, there were 3.85 prime mortgage workouts to every one prime foreclosure — down from 4.28 prime workouts to each prime foreclosure in March — and 4.63 subprime mortgage workouts to every one one subprime foreclosure in April, down from 5.18 subprime workouts to every subprime foreclosure in March.
Completed foreclosure sales inched up 23% in April after falling 40% the previous month, while repayment plans rose 24% and modifications slipped 5% from last month’s figure. Total prime workout plans increased 26% from March, while the industry placed 7% fewer subprime mortgages into workout plans this month than last month.
Write to Diana Golobay.
Software provider Ellie Mae added appraisal management company, MDA Lending Solutions, to its appraisal services program — a system that helps industry professionals stay in compliance with the Home Valuation Code of Conduct (HVCC).
The HVCC, enacted May 1, drastically altered the appraisal business, essentially requiring that appraisers are selected and assigned to all appraisals on a blind basis via third-party platforms.
Ellie Mae's program, Encompass, leverages technology enhancements, partnerships with appraisal management companies and direct connection via its ePASS technology to facilitate HVCC-compliant ordering and delivery of appraisals.
By adding to their network of approved appraisal management companies, along with providing direct access, the appraisal services program gives clients the freedom of choice and helps them to ensure they don’t incur the additional costs and difficulties that result from violating HVCC guidelines, says Jonathan Corr, chief technology officer for Ellie Mae.
Originators who fail to comply with the HVCC may face penalties, the inability to sell loans or, for brokers, the inability to submit their loan applications to certain wholesale lenders.
Write to Kelly Curran.
A week after Congress passed various legislation aimed to crack down on mortgage fraud and increase transparency in the mortgage lending process, one service provider attempts to help clear the muddy waters ahead of the closing table, at the onset of the application process.
Loan application solution provider Mortgagebot today unveiled the revised version of its consumer-direct Internet-based Mortgage Marvel platform, which delivers real-time, anonymous rate quotes to consumers shopping for mortgages.
The new version of the application includes a credit score feature that factors a borrower's credit score into the rate quote calculation, which is also based on the loan amount desired, the value and the zip code of the property in question. The expansion of the service aims to give consumers a more clear understanding of the cost of homeownership at whatever credit score tier they occupy.
"All quotes are built using live loan-product data; so consumers can have the confidence that they will never get 'bait-and-switch' quotes or 'teaser' rates with Mortgage Marvel," said Mortgagebot CEO Scott Happ in a media statement today.
"[W]e know that a consumer's credit score can directly influence the cost of borrowing," he adds.
Write to Diana Golobay.
On the heels of a record quarter in home price declines, homeowners continue to slip underwater on their mortgages and fall increasingly delinquent on payments.
The trends are not stopping at Q109, with April recording steep delinquencies to start off Q209.
Total mortgage delinquencies rose slightly in April to 8.1%, according to a monthly report published by Lender Processing Services (LPS: 16.78 +1.39%). The figure represents a 2.8% increase from March and is up 43% from the same time last year.
New delinquencies rose again in April, while the volume of loans moving to a more delinquent status has increased in each category: current to 30-days delinquent, 60-days delinquent to 90-days delinquent, and 90-days delinquent to foreclosure. In April, the percentage of loans rolling from current to 30-days delinquent is higher than in the same month during the preceding four years.
The roll rate of loans moving through these delinquency categories is a key indicator of future foreclosure starts. LPS found that foreclosure inventories continue to climb in April as foreclosure moratoriums at the government-sponsored enterprises and private foreclosure freezes expire.
The month closed with a 2.7% foreclosure rate, experiencing a month-over-month increase of 7.3% and a year-over-year increase of 90.5%. Ginnie Mae foreclosure sales spiked in April to the highest level in six months. Vintage delinquency analysis shows loans originated in '09 are performing better in early payment stages than loans originated during the last five years performed during the same time frame.
Seven states — Delaware, Maine, New Mexico, North Carolina, North Dakota, New York and Washington — experienced an increase in foreclosure starts. Foreclosure starts in New York, which represents 4.5% of all loans in the US, increased by 12.5%. Nationwide, foreclosure starts have increased by 35% in the last 12 months, LPS found.
The high delinquency volumes and pending foreclosures likely inspired loss mitigation efforts like the Administration's Making Home Affordable modification and refinance programs. But even these efforts do not solve all of the delinquency problems, as LPS found that nearly 50% of all modifications had re-defaulted after just six months.
Loan modifications involving reductions in interest rates or unpaid principal balances (UPBs) increase in popularity among servicers, as LPS found an influx in that type of modification. Although modifications involving a UPB reduction experience a recidivism rate 25% lower than other modifications six months post-modification, the percentage of balance reductions remains below 5%.
Write to Diana Golobay.
Moody's Investors Service just released a report proffering a mixed bag of performance for Australian nonconforming residential mortgage-backed securities (RMBS).
These type of assets are similar to subprime in the US, with aspects such as high loan-to-value ratios and/or teaser rates.
Moody's reports overall delinquency rate easing, but then 90 days past due arrears are at a record high. Borrowers who are 30 days past due, on the other hand seem to be stabilizing, performance-wise.
Australia, as with the UK, followed in the footsteps of American lending practices and are experiencing knock-on effects from the recession as a result.
90 days past due delinquencies continued to deteriorate in Q109, reaching a record high of 10.17%. Moreover, despite a reduction in the delinquencies pipeline, Moody's does not expect the 90 days past due delinquency bucket to fall in the short term as non-conforming borrowers continue to face difficulties in the credit market, reads the report.
"Ultimate losses for non-conforming RMBS transactions will be largely driven by the geographic distribution and market value of the foreclosed properties," says Ryan Lu, Moody's RMBS analyst in Sydney. "Looking ahead, Moody's expects delinquency levels to remain at recent highs with significant upward pressure in the current economic environment."
In Australia, non conforming loans are typically uninsured against default.
In addition to said factors, non-conforming RMBS mortgage pools may include loans provided to non-residents and borrowers with non-permanent employment or poor savings records and jumbo loans, certain low documentation (self-certified) loans, bridge finance loans and loans that are secured by higher risk properties, such as a house in the middle of the outback.
However, nonconforming loans are not the only asset with strangley behaving performance.
In another report, the rating agency states delinquencies of +30 days past due for prime Australian RMBS fell in Q109 from Q408, adding the decline is possibly an anomaly and delinquencies are unlikely to fall again because of a generally rising unemployment rate.
"In the RMBS space, delinquencies of greater than 30 days past due fell to 1.45% in Q1 from a record high of 1.58% in Q408 to 1.45%, while +30 days past due delinquencies decreased to 1.31%," says Arthur Karabatsos, a Moody's senior analyst. "Meanwhile, portfolios consisting entirely of low-doc loans saw the over 30 days past due delinquencies index decrease slightly to 4.41% from 4.51% in Q408."
Write to Jacob Gaffney.
Freddie Mac (FRE: 0.00 N/A) says it's responding to difficult conditions in the multifamily housing market by finding ways to link affordable rental housing to capital markets.
The agency's latest tactic, launched today, involves its offering of Series K-003 Structured Pass-Through Certificates (K Certificates).
These multifamily mortgage-backed securities aim to provide a new vehicle for Freddie Mac to provide liquidity, stability and affordability in the multifamily market, the agency said.
The certificates — which are backed by about $1bn in multifamily mortgage loans, originated through Freddie Mac's Capital Markets Execution program — will be offered to the market by a network of dealers led by Deutsche Bank Securities.
“K Certificates offer a simple and transparent structure for investors,” says David Brickman, vice president of Multifamily and CMBS Capital Markets.
The securities offer investors credit protection in the form of both Freddie Mac’s guarantee and principal subordination, and they are structured to provide stable, reliable cash flows due to the large, diversified pool of call-protected multifamily mortgages underlying the certificates, according to a press statement.
Write to Kelly Curran.
Solutions provider Loan Score Decisioning Systems embedded its product and pricing engine, PowerPricer, within Ellie Mae's Encompass Mortgage Management Solution.
Power Pricer essentially centralizes pricing for all lending channels and returns instant product eligibility and pricing. But with the new integration, lenders are able to quickly price, run eligibility and select programs both at the point-of-sale and also in the back office from within their management solution.
"Integrating our PPE with Encompass allows users to continue working in the LOS while Loan-Score's rules engine operates behind the scenes," says David Colwell, a VP at Loan-Score.
This feature provides a level of transparency, which is paramount to establishing ease of use and user adoption, says Loan Score.
Write to Kelly Curran.
[Update 1: clarifies PennyMac filed for an IPO; yet to offer shares.]
PennyMac Mortgage Investment Trust, a distressed asset firm founded by former Countrywide Financial Corp. President Stanford Kurland, filed Friday to issue an upcoming initial public offering.
The firm hopes to raise up to $750m with the IPO.
The firm, which is part of the Private National Mortgage Acceptance Company (PennyMac), will be formed as real estate investment trust, with the purpose of investing in distressed home mortgages. It plans to modify loans' terms, and make a profit by selling those loans after their credit quality improves.
"We believe that there are unique, current market opportunities to acquire distressed mortgage loans and mortgage-related assets at significant discounts to their unpaid principal balances," the firm wrote in its filing.
The firm's expected sources of investment opportunities include the Federal Deposit Insurance Corporation’s liquidations of failed bank portfolios, the sale of bank loans through the Public-Private Investment Partnership program and direct purchases of loans from a number of institutions.
PennyMac's IPO will be underwritten by Merrill Lynch, Deutsche Bank and Credit Suisse, according to filed documents. Strategic partners, BlackRock and hedge fund Highfields Capital, also agree to back PennyMac.
The filing did not give details regarding the timing of the IPO or the number of shares that will be offered. And at the time of publishing, PennyMac did not return HousingWire's inquiries regarding this matter.
Kurland left Countrywide in 2006. The lender went under last year and Bank of America took over. PennyMac now services assets similar to those that played a hand in fate of Countrywide and also purchases mortgages from other financial firms.
The firm has requested to be listed on the New York Stock Exchange under the symbol PMT.
Write to Kelly Curran.
Fitch Ratings is joining a growing chorus of voices that say the recent refi deluge will not likely stave off an eventual mortgage re-default for the majority of takers.
Auction companies HousingWire is speaking to for its July 2009 feature on the topic are predicting the same outcome.
Fitch's conclusion is outlined in a just-released report citing "information from servicers" as well as data from First American Loan Performance, which finds that re-defaults, 60 days or more, on U.S. residential mortgage-backed securities (RMBS) may hit 75% after 12 months.
Nonetheless, the rate of loan modification continues to increase with 7% of overall RMBS and 18% of subprime loans being redrafted through the end of last month.
"Loan modifications hold clear value for many homeowners provided the modified payments are sustainable, but more often than not reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses," says Fitch managing director Diane Pendley. "With continued home value declines in many markets, there is growing evidence that some homeowners are voluntarily walking away from their homes even if they can financially afford to stay."
The rating agency list six clear scenarios where re-defaults are likely to occur, including simple events, such as moving town for a new job and just leaving the property unoccupied to more shady instances where borrowers misrepresent owner-occuapncy status in onder to meet criteria for the Home Affordable Modification Program.
Fitch is also predicting a decline in the number of homes in REO status through Q309.
Write to Jacob Gaffney.
