Archive for September, 2009
Ross Kari joins Freddie Mac (FRE: 0.00 N/A) as chief financial officer (CFO), effective Oct. 12, 2009.
Kari will oversee the company’s financial controls, accounting, investor relations, financial planning and reporting, tax, capital oversight, and compliance with various accounting legislation, as well as serve as a member of Freddie’s senior executive leadership team. He will report directly to CEO Charles Haldeman Jr.
Kari enjoyed a nearly 20-year-long career at Wells Fargo (WFC: 29.60 +1.89%), where he served first as senior financial analyst and then as executive vice president and chief financial officer.
Most recently he has served as CFO of the Cincinnati, Ohio-based Fifth Third Bancorp (FITB: 13.23 +1.15%), a position he held since 2008. From 2002 to 2006, Kari was executive vice president and chief operating officer for the Federal Home Loan Bank of San Francisco.
“I’m delighted to complete Freddie Mac’s senior executive team by adding a CFO with an impressive background and broad experience in the mortgage business and financial services industry,” Haldeman said in a statement. “Ross will be leading a proven group of finance executives who continue to strengthen our financial controls. When I came to Freddie Mac I said that building out our senior executive team was near the top of my agenda, and with a new CFO and COO both now on board, we’ve met that goal.”
Kari is an alumnus of the University of Oregon, where he earned a bachelor of science in mathematics and a MBA in finance.
Write to Austin Kilgore.
Wells Fargo Ventures and mortgage brokerage firm Prudential Douglas Elliman Real Estate have partnered to create a new wholesale lending operation.
DE Capital Mortgage will replace Prudential Douglas Elliman’s Preferred Empire Mortgage Company, its previous wholesale lending unit. Co-owner Wells Fargo Ventures is the venture capital subsidiary of Wells Fargo (WFC: 29.60 +1.89%).
The new business unit will serve as the financing component of Prudential Douglas Elliman, which also provides mortgage, title and property management services in New York City.
The partnership will provide Prudential Douglas Elliman home buying customers with Wells Fargo Home Mortgage's underwriting, processing and servicing services.
“With this joint venture, our clients will enjoy the ability to obtain a mortgage directly from our affiliate, DE Capital Mortgage — with competitive rates, high-touch service, a broad product line and convenience,” said Dottie Herman, the president and CEO of Prudential Douglas Elliman, in a statement.
Write to Austin Kilgore.
The number of mortgage applications submitted last week increased as the deadline for the first-time homebuyer tax credit nears, according to two weekly surveys.
The Mortgage Bankers Association (MBA) said its index measuring gross application volume increased 12.8% from the seasonally- and holiday-adjusted week prior.
Mortgage Maxx’s index, which adjusts gross data to count multiple applications from a single household as one applicant, experienced a 2.4% increase on the same basis.
“The Max largely maintains last week’s pace as rates remain historically attractive and the window for the first time home buyer incentive is poised to officially close,” Mortgage Max said.
The MBA’s refinance index increased 17.4% from the previous week. The association’s purchase index increased 5.6%.
The index of applications for government-insured loans surged to its highest level recorded in the MBA’s survey. Government-insured loan applications took a 45.7% share of all purchase applications, the highest since November 1990.
The MBA also reported that mortgages for refinancing comprised 63.8% of the application pool, up from 61% a week ago. Adjustable-rate mortgages (ARMs) took a 6.7% share of total applications.
Mortgage Max predicts the rate of applications will continue to be on the upswing for the next few weeks, as homebuyers take advantage of the first-time homebuyer tax credit before it expires. But, after that, the group predicts a sharp decline, “absent federal heroics.”
Write to Austin Kilgore.
Of the more than 113m occupied homes covered in the US Census Bureau’s 2008 American Community Survey, 15.6% have more than $2,000 in monthly housing costs.
The survey provides a statistical snapshot of the characteristics of the US population in 2008, including the finances of housing consumers. The data collected by Census Bureau officials determines where more than $400bn goes to state and local governements each year. The Census surveyed roughly 250,000 addresses for the foundation of the data.
The total number of family households increased from 2007 by approximately 72,000 units, according to the survey.
California homeowners had the highest monthly median housing costs in the country at $2,384. New Jersey narrowly trailed with $2,360. Hawaii, with $2,265, and the District of Columbia, at $2,218, followed.
California led all states with 53.3% of the state’s mortgage owners spending 30% of their household’s monthly income on housing costs. Hawaii came in second with 49.3% and Florida was third with 49.1%.
Minnesota led the nation with 74.7% of its occupied housing units that are owner-occupied. Michigan and West Virginia rounded out the top three with 74% and 73.7%, respectively. At the bottom was the District of Columbia with 43.4%, New York with 53.3% and California with 57%.
Write to Jon Prior.
Delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report.
The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March.
Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report.
Compared to last year, the rate of growth for delinquent borrowers is lower for home equity revolving and mortgage.
The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated, a spokesperson for Equifax said. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime.
Definitions of “sub-prime” continue to vary from one source to the next, or, in some cases, from one state to the next. A bill that takes effect Oct. 1, 2009 in Connecticut defines a “nonprime home loan” as any loan or extended line of credit for the primary use personal family or household purposes.
The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009.
Write to Jon Prior.
Former executives from PMI Group, Fannie Mae (FNM: 0.00 N/A) and Countrywide started an organization that represents the interests of independent mortgage banking companies and the group is already halfway past its initial goal of recruiting 50 member institutions.
The Community Mortgage Banking Project is led by co-founder Glen Corso, a former PMI Group executive in public and government relations. Corso said the group’s focus is to provide “a voice for and represent the views of independent mortgage banking companies,” through analysis of regulation and legislative changes, lobbying, policy work and public relations on the behalf of its members institutions. On Monday, the 27th lender joined the project. The annual origination volume of the groups ranges from $300m to $10bn.
Corso estimated the sector is responsible for nearly 40% of the nation’s mortgage origination volume and approximately 55% of all Federal Housing Administration (FHA)-insured loans.
Corso is working with Robert Engelstad, whose held executive positions most recently at Fannie Mae and previously at the FHA during his more than 20 years in the mortgage industry, and lobbyist Pete Mills, who ran Countrywide’s Washington DC office, and previously lobbied for the state Realtor and mortgage banker associations in California.
What separates this new group from other larger industry groups is that the Community Mortgage Banking Project has a niche target of regional independent lenders and mortgage origination units of small community banks it looks to serve.
“We’re trying to maintain a homogenous membership so that the views we take will reflect the views of that industry,” Corso said. “We’re not looking for a broad or diverse kind of membership the way you might find at some other organizations.”
One of the group’s first legislative priorities is the proposed Consumer Financial Protection Agency (CFPA) that if approved, would change how financial institutions large and small are regulated. Corso said the CFPA’s oversight should not allow for “federal preemption” of state banking laws and that all banks should be required to comply with the laws of the states where they do business to create a level playing field.
“If there’s going to be a dual system of state and federal regulation, that should apply to everybody, whether you’re a large bank holding company or a small in-state company like many of our members,” Corso said.
The group is also concerned about how future legislative changes will affect the “originate to sell” business. The group members’ business model revolves are originating loans and selling them in the secondary market, but Corso said this model is receiving too much blame for the current housing crisis.
“There’s a lot of concern among these members that it’s not very well understood on Capital Hill,” he said. “The basic business model itself our members feel is still a very sound one and it’s producing very good mortgages today and they want to make sure that point of view is understood and accepted by Congress as it starts to work on things.”
Write to Austin Kilgore.
The National Association of Home Builders (NAHB) on Monday hosted a summit focused on residential real estate appraisals.
Despite conflicting viewpoints among industry players when it comes to appraisals and the role of a sweeping new code, major trade groups at the NAHB's summit agreed on the need for reform in the appraisal process.
Participants at the summit discussed several issues involved in appraising in today's market, including the use of foreclosed or distressed properties as a comparison without proper adjustments, according to a NAHB statement.
Another major discussion focused on the Home Valuation Code of Conduct (HVCC), which took effect May 1 and which changed the way the industry orders appraisals.
The NAMB's statements urging reform on the appraisal process come after Lender Processing Services (LPS: 16.78 +1.39%) deputy general counselor and chief compliance officer Donald Blanchard sat down with HousingWire in an attempt to dispel some HVCC "myths."
NAHB's statements seemed ready to defend at least one report circulating the industry — that the HVCC slowed the appraisal process.
The HVCC impedes the "ability to obtain appraisals of the quality required in today's distressed markets," according to NAHB. Some appraisers are working in areas outside of their geographic familiarity, NAHB said, which may pull down home values and impacts sales where inaccurate appraisals come in below the contract sales price.
"This is causing unwarranted downward pressure on home prices at a time when housing and the economy are struggling to emerge from the worst downturn in decades," NAHB said in a statement late Monday.
The NAHB, along with the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA), called for clarification of the HVCC and establishment of "best practices" for the appraisal process. The groups also called for the adoption and enforcement of a clear regulatory framework for the use of distressed and foreclosed properties in the appraisal process. Such regulatory guidance will allow appraisers to form "realistic" valuations based on comparable sales.
"An accurate appraisal is an important part of any real estate transaction, and reforming the appraisal process is critical to the nation's housing recovery," said NAR president Charles McMillan. "Quality appraisals are threatened by unintended HVCC consequences and an inconsistency among the various federal regulators."
McMillan added the government should establish consistent appraisal rules for both the government-sponsored entities (GSEs) — to which the HVCC officially applies — as well as the Federal Housing Administration (FHA) lending program — which FHA commissioner David Stevens recently said would adopt language from the HVCC to align FHA and GSE policies.
"Ensuring that appraisals are fair and accurate is the lynchpin of our secured lending system," said MBA incoming chairman Robert Story, Jr. "As a lender, it is crucial that I can count on the fact that an appraisal is correct and that the appraiser has not been subject to pressure from any interested party to the transaction. We want to work with appraisers and regulators to ensure that every appraisal results in an honest, truthful evaluation of a property's value."
The industry response comes as a handful of HousingWire readers recently voiced frustrations over both the clarity and purpose of the HVCC. Some argue the Code was formed for political gain while pushing the middleman out.
Write to Diana Golobay.
Hudson & Marshall, the foreclosure auction firm, partnered with APD Solutions (APDS) to drive property sales and reach more owner-occupant buyers, according a corporate release.
Their community outreach initiative, the Alliance Network Program, is designed to revitalize the debilitated housing markets and increase occupancy.
APDS is a national firm that offers a range of services to municipalities, lenders, institutional investors and community stakeholders to help revitalize communities. As part of the new partnership, APDS identifies new community organizations.
The Alliance Network also includes hosting buyer preparation seminars to guide first-time homebuyers through the auction process and matches them with helpful resources. Property managers and contractors also attend auctions as resources for investors who need to make improvements.
Also, a variety of lenders provide information booths at the auctions to offer finance options to the potential buyers and answer questions about home loans.
Write to Jon Prior.
1,100 housing professionals gathered round their computers today to watch and listen to real estate lawyers from K&L Gates answer questions and offer interpretations during a Webinar Tuesday afternoon on the new Department of Housing and Urban Development (HUD)-mandated good faith estimate (GFE) and HUD-1 forms.
These forms are an origination requirement, beginning next year, as part of changes to the Real Estate Settlement Procedures Act (RESPA).
K&L Gates partner Phillip Schulman said despite numerous attempts by the mortgage industry to delay or repeal the new RESPA rules, it is generally believed the rules will take affect on January 1, 2010, as scheduled.
Either the lender or the mortgage broker can issue the new GFE form, but if a lender allows a broker to issue the estimate to the borrower, it is contractually bound by the estimate, Schulman said. He added all borrower costs must be disclosed on the GFE, even if the seller or another party is paying the costs.
The new rules mandate that the entity that issues the GFE is also required to supply the borrower with a written list of third-party providers for any settlement services that the borrower has the option to shop around.
While services like appraisals and credit reports don’t generally fall into this category, services like homeowners insurance, title insurance, and pest inspection are eligible to be on the list.
Furthermore, the list has to include estimates for the providers costs within a 10% accuracy tolerance. This can become tricky for the lender or broker providing the list because they are responsible for the list’s accuracy, Schulman said. He recommended contacting potential companies before adding them to the list to ensure an open line of communication on fees as a condition for inclusion.
While the RESPA legislation does not include penalties for non-compliance, Schulman said violating the rules potentially exposes lenders to liability with unfair and deceptive trade practice claims.
During the Webinar K&L Gates associate Holly Bunting explained the two new forms to the program’s participants, detailing what was new and how the forms should be filled out. One nuance to the new HUD-1 form is that title-related fees won’t be detailed individually, but rather bundled.
One outstanding question on the new rules is their impact on reverse mortgages. Schulman said he expects HUD to release an updated frequently asked questions (FAQ) document addressing the topic.
Write to Austin Kilgore.
IKEA is braving a new frontier in best practices, offering free furniture and "design expertise" to the buyers of New York City's skinniest house.
The residence at 75 1/2 Bedford in Greenwich Village, squished between 75 and 77 Bedford St., presents a definite design challenge for the eventual buyers. With an interior only 8.5 feet wide (the exterior measures a deceptive 9.5 feet) and 42 feet long, the house bears a history of maximized space use — dating back to its establishment in 1873 — including a custom stove with a single row of four burners, built to fit, compared with the usual two rows of two.
The townhouse with its 990 square feet and three floors (plus a basement) was originally listed at $2.75m in late August, according to an article at NYDailyNews.com.
Despite the hugemongous sticker price (the house went for $270,000 in 1994, according to records), the future owners of the house will receive $10,000 of new IKEA furnishings at the cost of a big, fat zero.
"We know that space is at a premium in most homes and especially in this particular home," said IKEA spokesperson Janice Simonsen in a statement. "We're so in love with small spaces that we're putting an offer on the table, albeit a skinny table — free furniture and design expertise to the eventual buyers."
The constricted space not only presents a challenge to future owners as furnishings are chosen, but also as furnishings are assembled. IKEA furniture may be easy on the wallet, but the savings come at a cost of time spent in at-home assembly.
The home's new buyers may have to assemble $10,000 worth of free IKEA furniture to fill the skinniest house in New York City, but at least they won't have to assemble the house itself, unlike Top Gear's James May, who built (with, like, the help of 1,000 volunteers) a full-sized Lego house on an English wine estate using 3.3m of the plastic building bricks only to have it demolished recently when the estate needed the land back and no buyer was found to purchase, and remove, the Lego structure.
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