Archive for July, 2009
Waltham, Mass.-based Lewtan Technologies, Inc. will expand the reach of its ABSNet and ABSNet Loan software, thanks to a an alliance with the New York-based 1010data.
The partnership will make Lewtan’s asset-backed securities surveillance data and analytics available to investors and other securitization market players through 1010data’s Web-based data analytics and warehousing services.
“The flexibility and data processing power that 1010data provides allows us to reach the most sophisticated analysts,” said Ned Myers, Lewtan’s chief marketing officer, in a release. “With the continued instability of both the housing and securitization markets, making loan-level data available through as many avenues as possible was very important to us.”
1010data has provided business intelligence service for nearly a decade, and the company said it strives to continually expand the quantity of its data.
“We are pleased to offer ABSNet loan level data for our mutual customers,” said 1010data vice president Greg Munves. “Lewtan's recently launched loan product provides investors with another source of data for more robust quantitative analysis. Providing our customers the most complete U.S. RMBS data available during these challenging market times just made great sense.”
Write to Austin Kilgore.
Financial institutions are constantly looking to streamline and accelerate their documentation processes, and the market for these software solutions is a competitive one.
Mequon, Wis.-based Mortgagebot recently expanded its PowerSite line of software products. Lake Mary, Fla.-based software and services supplier Harland Financial Solutions announced Tuesday it will expand its preferred referral partnership with Mortgagebot to include those new products.
Mortgagebot's original software targets borrowers that want a self-serve, Web-based mortgage application. The two new products are intended for professional loan officers, bank branches and call centers.
MortgageBot said its products’ automated systems streamline the application process and helps institutions facilitate higher application volumes. When a firm uses all three products, the software trio creates an “integrated point of sale,” or IPOS, said Mortgagebot’s chief marketing officer, Dan Welbaum, in a company release.
“The IPOS approach to automating the mortgage-application process enables lenders to empower every consumer-facing associate to take complete, error-free applications in minutes,” Welbaum said. “By automating every POS channel — the branch, call center, or the loan officer's desk — lenders may never need to turn away mortgage applicants due to staffing limitations. Plus, they can handle spikes in volume without adding staff.”
Write to Austin Kilgore.
Suspicious Activity Reports (SARs) including fraud accounts filed by depository institutions in 2008 increased by 13% from 2007, according to the SAR activity review released by the Financial Crimes Enforcement Network (FinCEN).
All seven categories of fraud including mortgage loans rose by double digits. Last year, 64,816 accounts of mortgage loan fraud were filed, rising 23% from 2007. The reports have increased every year since 2003. The fraud categories make up just one-third of all possible violation types, but in 2008, accounted for half of the total SAR filings.
The increase in fraud reports may be the result of combined filings for the same suspect, according to the report by FinCEN. A single report can contain several suspected crimes, including fraud. For example, 35% of all reports of identity thefts contained reports of credit card fraud or other violations such as check or consumer loan fraud.
FinCEN also indicated the increase in reports might be a sign that SAR filers are more suspicious.
“While increases in reporting of suspected fraudulent activity could mean that there is an increase in fraud, it also reflects an increase in awareness within financial institutions detecting such activity," said James Freis Jr., director of FinCEN, in a corporate release.
Write to Jon Prior.
The financial crisis felt so keenly in the US housing market and broader economy has become a global ailment — and necessitates a global remedy — according to a report on the British government's plans for financial market reform.
"The world economy has been hit by a severe financial crisis, resulting in the worst global economic downturn for over 60 years," writes the Chancellor of the Exchequer Alistair Darling in an executive summary of the paper.
"Triggered by difficulties in the US housing market that exposed the way that banks and other lenders had been underestimating real risks for too long," the report continues, "the crisis spread so quickly throughout global financial markets that banking systems around the world were severely destabilised. As a result, the impact has spread beyond the financial system, hitting economic growth, prosperity and jobs throughout the world."
The paper explores actions to reform financial market regulation, including strengthening the UK's regulatory institutional framework to manage systemic, globally interconnected markets and firms. It also turns attention to the UK's part in dealing with firms seen as "too big to fail," identifying and managing systemic risk and working internationally to deliver global action on the current financial crisis.
“Our central objective must be to ensure that — as we come through the downturn — we reform and strengthen our financial system and rebuild it for the future," Darling said, according to a statement from the HM Treasury. "With consumers that are better informed, financial institutions that are better managed, and markets that are better regulated.”
In a testament to the interconnectedness and similarities between global powers, the UK report (available to download here) outlines various failures of UK regulators in managing the risks associated with an innovative financial sector. US regulators have come under fire in recent months for the same failings, which spurred long-reaching effects in the global financial markets.
But brighter growth prospects in the US helped to drive a global gross domestic product forecast by Banc of America Securities-Merrill Lynch researchers. The BofA research team raised its global GDP forecast for 2010 to 3.7% from the previous 3.2% estimate.
“Concerted government and central bank actions to pump money into key economies like the US and China are starting to show signs of bearing fruit. The US and China are expected to be the main forces behind a global recovery in 2010,” said Riccardo Barbieri, head of Banc of America Securities-Merrill Lynch international economics, global currencies and rates research.
The US economy alone looks to post a larger growth next year than originally estimated, with BofA economists Lori Helwing and Drew Matus expecting a 2.6% growth, up substantially from a previous forecast of 1.8% on the heels of fiscal spending projects and a slight pick-up in the US housing market.
Chinese growth, however, is expected to dwarf the US forecast, with BofA researchers expecting 9.6% growth next year, up from a previous estimate of 8.3%.
Write to Diana Golobay.
After a two-year downturn, California home sales have increased 27% through the end of 2008 and beginning of 2009, spurred by low home prices, mortgage rates and a belief that rates will increase in the near future, according to a survey by the California Association of Realtors (CAR).
Lower home prices encouraged 68% of the survey’s respondents, while 39% said low interest rates put them in the market for a new home. An additional 23% named the belief that mortgage rates will increase in the near future as a motivating factor in their decision to buy a home.
Distressed sales made up more than half of California’s home sales. The 38% percent of homebuyers that purchased real-estate-owned (REO) properties reported they had the most difficulty securing financing, on averaging rating their experience an 8.9 on a scale of 10. While short-sale properties only accounted for 13% of California sales, buyers rated their financing experience the easiest, a 7.6 on average. The 49% of home buyers involved in a traditional transaction rated their financing experience a 7.7 on average.
The glut of bank-owned properties on the market has kept California’s housing inventory stocked, giving buyers many options.
“In contrast to peak years when inventory levels were at record lows, inventory levels over the past several months have been in the range of the long-run average,” CAR chief economist Leslie Appleton-Young said in a release. “With many homes available on the market at more affordable prices in the past year, home buyers have been devoting more time to considering and carefully selecting their home during the researching and buying process.”
The average home buyer spent 8.4 weeks considering their purchase in 2009, up from 7.2 weeks in 2008. Buyers spent 10.3 weeks searching for a home with their real estate agent, compared to 8.7 weeks in 2008.
Nearly one-third of respondents who purchased in a traditional market sale said they either did not know or were not sure they knew the terms of their loan. A smaller percentage, 12%, of REO buyers and 7% of short-sale buyers indicated the same response.
Write to Austin Kilgore.
Distressed assets are moving as the extent of the real estate crisis unwinds and investors see opportunity in reduced prices — and the trend is not isolated to residential properties.
The Los Angeles office of the Carlton Group will auction a portfolio of sub- and nonperforming commercial real estate, condominium and land development loans totaling $47m on behalf on an undisclosed financial institution based on the west coast.
Howard Michaels, chairman of Carlton Advisory Services, said opportunistic loan buyers, developers and targeted land buyers will likely represent the bidding parties.
“This loan sale continues to provide investors with an opportunity to acquire loan assets for significant discounts to value as financial institutions continue to deleverage their balance sheets providing investors with an excellent financial opportunity,” he said in a release.
In addition to six single-family homes in Los Angeles, the portfolio's assets include a 20-unit condominium building with excess residential land, 20,000 square feet of commercial land and a 29-unit motel located on the Pacific Coast Highway; 40,000 square feet of vacant commercial land located in a urban infill location in Los Angeles and six living/work lofts, 54% complete, located north of Los Angeles.
Of the 14 loans in the portfolio, 12 are secured by collateral in California. The remaining assets are in Nevada and Georgia.
The auction will be conducted by sealed bid, and bids are due July 15. The portfolio is in addition to more than $300m in loan and real-estate-owned (REO) sales Carlton Group is marketing.
Write to Austin Kilgore.
Total mortgage applications submitted in the week ending July 3 showed a holiday-adjusted 10.9% increase from the previous week's applications, according to an application survey by the Mortgage Bankers Association.
The MBA found the volume of applications for refinancing rose 15.2% as refinance applications accounted for 48.4% of total application activity, from 46.4% a week earlier but still well below recent highs.
A separate mortgage application survey conducted by Mortgage Maxx found household activity rose virtually on-par with the MBA's survey.
The Mortgage Application Index — or MAX — adjusts total application data to count multiple submissions from a single household as one applicant. The MAX found household activity rose 10.6% in the week ending July 3.
Even with an adjustment for the shortened holiday week, however, MAX publisher Paul Descloux warned against too much optimism on the weekly rise. The household index, after all, slid 30% from highs in May and is still below its year-ago level, he said.
"Overall," Descloux added, "the green shoots theory appears to be losing steam for housing as quantitative easing shows little alpha for hard pressed mortgagors while savers face negative real returns."
Write to Diana Golobay.
Regulators in Maine ordered 15 so-called “mortgage rescue” companies to stop doing business in the state because they took advanced fees from homeowners but did nothing to help their clients.
According to Will Lund, superintendent of Maine’s Bureau of Consumer Credit Protection, the 15 companies – all of them located out-of-state – collected a combined $36,000 from 30 Maine homeowners and have ignored all communication from state regulators.
“Many debt management companies comply with the law and become licensed and bonded for the protection of consumers,” Lund said in a release. “These 15 companies, on the other hand, made false promises and then took money from desperate folks who could least afford to lose those funds.”
Many of these companies have names that imply they are related to the federal government’s foreclosure aversion programs and the stimulus legislation and use deceptive advertising to dupe consumers, said David Stolt, the bureau’s chief field investigator.
“It’s heartbreaking to talk to consumers who have sent their last $495, $995 or $1,495 to a company that does nothing to help them,” Stolt said in the release. “These companies prey on desperate people that are already facing severe economic hardship.”
Maine publishes a roster of the 39 licensed and bonded debt management companies allowed to do business in the state.
The 15 companies ordered to cease operations in Maine are:
Federal Loan Modification Law Center; Irvine, CA
United Hope Alliance Corp.; Jacksonville, FL
National Foreclosure Counseling Services; Jacksonville, FL
Hope Now Modifications; Cherry Hill, NJ
Pathway Financial Management; Stanton, CA
Law Offices of Joel L. Schwartz; Northfield, NJ
BillsMadeSimple.com, Inc; San Diego, CA
Lewis Foreclosure Mediation Services, LLC; Phoenix, AZ
Apply 2 Save, Inc.; Coeur d’Alene, ID
HelpModifyNow.com; Newport Beach, CA
Ocean View Investment Services Co.; Ft. Lauderdale, FL
FHA All Day; Boca Raton, FL
Mason Capital Group, LLC; Encino, CA
The Hall Firm; New York City, NY
Fresh Start Mortgage Assistance Solutions; Beverly Hills, CA and Clearwater, FL
Maine isn’t the only state going after companies allegedly defrauding distressed homeowners. In Kansas, Attorney General Steve Six has filed lawsuits against five businesses he claims are running redemption rights and loan modification scams.
In the suits against Kansas-based Apple Asset, LLC, in Overland Park, and Rush Properties, LLC, in Olathe, Six claimed the companies would buy a borrower’s redemption rights and lease back the home to them. When the borrower couldn’t repurchase their property, the companies sell the homes to someone else.
The other three defendants announced Tuesday – Florida-based Kirkland Young, Georgia-based ABS Saveco, and California-based Helping Hands Support Services – allegedly ran loan modification scams. The companies charged homeowners to assist in negotiating loan modifications, but only mailed documents on behalf of the borrower.
The lawsuits are part of the attorney general office’s greater “Operation Homestead,” a plan that includes assisting some of Countrywide’s mortgage customers and new online resources to increase consumer education about mortgage fraud and their rights in foreclosure.
Write to Austin Kilgore.
Cash flow in commercial real estate reached a record high level of volatility in 2008, according to a report by Fitch Ratings.
In its latest annual US Property Market Metric (PMM) update report, the rating agency noted higher regional market volatility across all major sector types. In 2008, Fitch saw the highest average cash flow volatility score and the largest year-over year increase since the inception of the PMM scores in 2000.
Fitch assigned commercial real estate a new average cash flow volatility score of 3.62 in 2008 from 2.98 in 2007.
"While the increase in cash flow volatility was expected, what is noteworthy is the size of the increase since historic changes in PMM scores are generally small," said managing director Bob Vrchota. "With over 50% of the PMM scores showing greater volatility compared to just 10% in previous years, the magnitude of change reflects challenging forecasts for all commercial real estate property types across all US markets."
The ratings agency noted that 47.1% of the commercial real estate volatility scores remained unchanged in 2008, while 0.4% improved and 52.5% showed greater volatilit. In 2007, by comparison, 82% of the scores had not changed while 8% improved and only 10% showed greater volatility.
While higher PMM scores do not herald immediate rating actions on commercial mortgage-backed securities, they indicate a particular property type's volatility in a specific market.
The multifamily sector worsened for the second consecutive year, with the average volatility score rising to 3.15 from 2.5 a year earlier as rising multifamily loan defaults represented 33% of all 2008 loan defaults in Fitch-rated deals.
"On the positive side, US CMBS multi-borrower transactions benefit from property type and geographic diversity so more volatile PMM scores in and of themselves will not result in rating actions," Vrchota said. "However, the rise in volatility is another indicator of the challenges facing commercial real estate."
Write to Diana Golobay.
MRG Document Technologies, a technology vendor to mortgage originators, released document packages for lenders that comply with the Home Affordable Modification Program (HAMP) launched March 4.
HAMP is part of the Homeowner Affordability and Stability Plan (HASP), designed to aid at-risk US homeowners in modifying or refinancing mortgages originated on or before Jan. 1, 2009.
“It has been our experience that the program has evolved over the last few months, and lenders need to continuously update their documents to maintain compliance,” said Laura LaRaia, director of customer service at MRG, in a corporate statement.
HAMP requires a 90-day trial period for borrowers before the modification can take effect. Lenders lead borrowers through a two-step document process. The first outlines the terms of the trial period, when borrowers must make three monthly payments at the adjusted amount and remain current up to the 90th day. The second process defines the terms of the actual modification.
Write to Jon Prior.
