Archive for July, 2009
For the tenth straight month, more than 50% of 30-day delinquent commercial mortgages moved to 60-days delinquent, according to Fitch Ratings' update for US commercial mortgage-backed securities (CMBS).
From June to July, 54% of 30-day delinquent loans fell into the 60-day delinquent bucket.
"As commercial real estate fundamentals continue to deteriorate, 30-day roll rates have become an important precursor in helping to anticipate future performance for CMBS delinquencies," says, Mary MacNeill, managing director at Fitch Ratings, in a corporate release.
Most of Fitch’s so-called "Loans of Concern" are performing, making up 14.8% in multi-borrower fixed-rate deals and 28.8% in floating-rate deals. But as the economy weakens, Fitch analysts said both loans of concern and delinquencies are on the rise.
For example, the loans of concern within the fixed-rate 2004 through 2007 vintages are up an average 5% from June to July, and Fitch anticipates both 30 and 60-day delinquencies to rise in these vintages.
Write to Jon Prior.
Urban Settlement Services tapped Mortgage Cadence to replace their primary analytic and document solution.
The partnership will allow Urban Settlement to bulk import upwards of 50,000 loans at a time, validate data, and deliver the required loan modification documents for servicer approval and fulfillment, according to a corporate release.
Urban Settlement, based in Pittsburgh, Penn., aids families at risk for foreclosure through their Home Retention work, processing more than 600,000 loan renegotiations in 2008.
Mortgage Cadence provides a processing software package, Orchestrator, which automates workflow for the financial services industry.
Write to Jon Prior.
While home prices are still lower than they were last year, the rate of decline has lessened, according to the Standard & Poor’s (S&P)/Case-Shiller Home Price Index, released Tuesday.
The 10-city and 20-city composites were 16.8% and 17.1% lower, respectively, in May 2009 compared with May 2008. That’s a slight improvement from April, when the 10-city composite was 16.8% and the 20-city was 18.1% lower than a year earlier.
While prices are still down, it’s the fourth consecutive month that the S&P/Case-Shiller report has shown improvement in the rate of year-over-year decline.
“To put it in perspective, these [four months of improvement] are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing,” S&P index committee chairman David Blitzer said in the report. “While many indicators are showing signs of life in the US housing market…we likely do have a way to go before we see sustained home price appreciation.”
After peaking in Q206, home prices have dropped to their mid-2003 level. In 16 of the 20 cities studied for the index, prices are in double-digit decline from last year.
The report said Dallas and Denver have both experienced three consecutive months of improved prices, while Atlanta, Boston, Cleveland, San Francisco and Washington, DC are in their second consecutive month of improved prices.
Write to Austin Kilgore.
Bayview Mortgage Capital, a new Maryland-based entity, is seeking up to $500m in private capital through an initial public offering, according to a Securities and Exchange Commission (SEC) filing Monday.
Under management of Bayview Fund Management, a subsidiary of Bayview Asset Management, the new corporation will follow the tax structure of a real estate investment trust (REIT). It plans to use the funds it raises to purchase and manage residential and commercial mortgage loans, and mortgage-backed securities and other real estate-related securities.
Bayview Mortgage Capital, which plans to trade on the New York Stock Exchange under the symbol "BAY," noted the market for non- and sub-performing loans is likely to grow, with the Federal Reserve's latest flow of funds report tracking more than $4trn in US residential mortgages outstanding as of year-end 2008.
"We believe that the current market creates unique opportunities to acquire mortgage loans and mortgage-related assets at significant discounts to their unpaid principal balances," the company said in the filing. "We believe that the decline in the prices of mortgage loans during the current economic downturn is, in large part, due to increasing default rates and declining values of real estate collateral."
In the SEC filing, it said it will provide risk-adjusted returns to investors by purchasing assets at a discount and maximizing their value through servicing capabilities and loss mitigation strategies. In particular, the company mentioned that Bayview Loan Servicing on July 1 signed on to participate in the US Treasury Department's Home Affordable Modification Program, which allocates incentive funds for use as interest rate subsidies or payments to lenders/servicers and borrowers that participate.
The company's parent is partially owned by The Blackstone Group (BX: 15.57 -0.19%), which purchased a 46% interest in Bayview Asset Management.
Write to Diana Golobay.
Disclaimer: the author held no relevant investments at the time of publication.
The origination market in the Las Vegas region swelled in June as home sales in the area climbed to the highest monthly level since December 2006.
A total 5,519 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area (or Clark County) in June, up 21.7% from may and up 44.1% from a year ago, according to real estate data provider MDA DataQuick. It's the highest sales volume recorded there since 5,780 units sold in December 2006.
The news is mixed for those looking to spot the bottom, however, with foreclosure sales accounting for more than two-thirds of the resale market there as buyers continue to work through the area's foreclosure inventory. Around 70% of the Las Vegas-area houses and condominiums that resold in June were foreclosure resales, up from 59% in the year-ago period, but the lowest so far this year since the 68.9% mark seen in December.
The median sales price held steady despite the high volume of distressed sales, marking the second consecutive month of stability after 16 months of decline, DataQuick said. The median price paid in the metro area was $135,000, unchanged from May but down 41.3% from a year ago.
The median price paid for resale single-family detached houses — one of the best gauges of overall price trends, according to DataQuick — held steady last month at $140,000 but came in 37.9% lower than last year. The median price paid per square foot in resale detached homes similarly held at $77, down 35.3% from the year-ago period.
"The time of year is adding some upward pressure to the median price," the information provider noted in its regional report. "This is when most traditional home buying occurs, when more individuals and families move because of a job or to re-situate before school starts in late summer. More people are looking for the right house in the right area, sometimes moving up to larger homes or homes in more desirable neighborhoods."
"There's more driving the market," DataQuick's report added, "than hardcore bargain hunting by investors and first-time home buyers."
The information provider noted the region may continue to rely on first-time home buyers and investors to work through its foreclosure inventory. And there's more to come, as DataQuick pointed out that lender repossessions spiked in June as nearly 3,600 houses and condos went into foreclosure in Clark County, up 54% from May and 34% from a year ago.
Write to Diana Golobay.
Realtors and bankers are gearing up for a battle over Arizona legislation that would allow lenders to sue homeowners for losses incurred from a foreclosure.
The change to the state’s so-called “deficiency judgment” law requires a borrower to live in the home for six months to be eligible for protection from lender-initiated lawsuits to recoup the full outstanding principal of a mortgage.
Proponents of the law, including bankers that lobbied for the change, believe it will discourage investors from walking away from properties when they can’t make a profit.
Tanya Wheeless, president of the Arizona Bankers Association, said unscrupulous speculators and investors have ravaged the state’s housing market and this law will force them to be responsible for their obligations.
But the Arizona Association of Realtors (AAR), in an open letter to the state’s governor, said the law will unfairly target owners of second or vacation homes and could cause even more damage to consumers’ credit and financial well being.
Wheeless said she believes second or vacation homes are investments and lawmakers didn’t intend to protect them in the original protection was created. However, Wheeless pointed out the language of the law does not require constant habitation of the property, just regular use, and some second homes will be protected under the law.
The Realtors have asked Governor Jan Brewer to reevaluate the law in an upcoming special session.
The law “dramatically alters well settled Arizona law on the relationship between Arizona residential real estate owners and their lenders,” the open letter, signed by AAR president Tom Farley, said. “The bill has far reaching effects…[and] none of those effects are positive or helpful to restart the Arizona economy.”
The bill was signed into law on July 10, but won’t apply for foreclosures started before September 30.
Write to Austin Kilgore.
Countrywide Financial will send $7.46m in restitution to eligible Texans who lost their homes to foreclosure, according to a statement from the Texas attorney general.
The restitution program, first announced by Attorney General Greg Abbott in February, disperses the funds to Countrywide's Texas customers whose loans originated between Jan. 1, 2004 and Dec. 31, 2007.
In 2008, the state attorney general investigated Countrywide for encouraging borrowers to sign loans they could not afford, not disclosing risky loan terms and writing loans for unqualified borrowers, according to the release.
The program was part of a $345m settlement between the attorney general’s office and Countrywide, which also provides $335m in loan modifications for 30,000 Texans.
Countrywide mailed claim forms to foreclosed customers or those 120 days behind on their payments as of Oct. 6, 2008, according to the release.
Only those who receive the letters will be eligible for restitution. The total amount per customer will depend on how many respond, but each claimant could receive a minimum of $1,400, according to projections.
And roughly 1,400 Texans who are in or approaching default and voluntarily relinquish their residence to the Relocation Assistance Program could receive $2,000.
The Relocation Assistance Program plans to send $2.8m in benefits to Texas homeowners.
Write to Jon Prior.
The UK subsidiary of securities and investment banking firm Jeffries Group (JEF: 15.81 -2.41%) expanded its US equity sales team into Europe with the addition of five industry veterans.
Bernal Vargas joins as managing director and head of US equity sales into Europe. He comes to the role from Merrill Lynch, where he served as director of the US equities division.
Cameron Kissel joins as senior vice president of US equity sales into Europe. He previously served as a portfolio manager of a North American multi-strategy fund at Henderson Global Investors.
Owen Jacob joins as senior vice president and European cash equities trader, while James Grzinic joins as senior vice president and head of European retail equity research and Charlotte Andrews joins as vice president and marketing analyst covering the consumer and retail sector.
"The addition of these senior professionals is a step further in the strengthening of our Global Sales & Trading platform," said David Weaver, president of UK subsidiary Jeffries International. "Their strong expertise and extensive customer relationships will bring immediate value to Jefferies' global equities franchise."
Write to Diana Golobay.
Disclaimer: The author held no relevant investments at the time of publication.
Black Hills Community Bank selected Southfield, Michigan-based Mortgage Builder Software's loan origination platform to facilitate the loan process at its growing mortgage division.
The Michigan-based bank recently hired Lori Lynass to head up real estate loans as it expands its mortgage business. Lynass brings 20 years of mortgage experience to the bank and chose Mortgage Builder to automate the loan process at the bank.
The pay-per-loan software delivers pre-qualification tools, processing and underwriting services, as well as post-closing and document-tracking services.
Black Hills Community Bank said it has yet to use the product's full range of functions, including the interface with FHA Connection, which allows users to perform FHA origination functions like ordering case numbers and submitting for insurance.
"We’ll work into them over time as we expand our lending volume and requirements,” Lynass said.
Write to Diana Golobay.
It is a match made in bailout heaven: The struggling housing market and the dying automotive industry. The long-lost lovers found each other in…Winter Park, Florida?
The developer of The Sage at Winter Park, a community in the suburbs of Orlando, plays matchmaker to the two industries by offering a free 2009 Chevrolet Cobalt to anyone who purchases a town home. A typical two-bedroom, two-bath model at The Sage — called the "Basil" (throw some oregano in there and you've got an herb garden, too) — goes for about $199,900, according to a corporate release.
“So we're giving away a new car free. Now our buyers will have a brand new, energy efficient car to put in their brand new garage at their new green certified town home condominium," says Ian McCook, president of Nvision, the development manager of The Sage at Winter Park.
You mean, we get a brand new car with our brand new home and we’re saving the planet? This calls for a Walt Disney musical.
So, put on your glass slippers and wrestle away the bouquet before the clock strikes twelve. This marriage just might have a happy ending.
Write to Jon Prior.
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