Archive for October, 2009
Vasrue Capital Investments launched its asset management program that allows the company to acquire and revitalize troubled assets.
Vasrue is now fully funded to invest in asset pools valued up to $50m of the Unpaid Principal Balance (UPB) and relieve burdened banks, residential home sellers and hard money lenders. The company bypasses brokers and cuts right to the mortgage sellers to identify, research, appraise and purchase select performing and nonperforming loans, according to a release.
The investors find commercial and single-family residential REO assets in Chicago, Indiana, Pennsylvania, Tennessee, Kentucky, Georgia, Arizona, Texas, Nevada and California.
“In purchasing and rehabilitating troubled assets, we're pleased to play a key role in revitalizing communities across the nation that have been negatively impacted by the current global economic crisis,” explains Clinton Douglas, asset manager of Vasrue Capital Investments.
Vasrue’s senior underwriters begin with a preliminary review of the property. If interested, the seller receives a notice and three business days to complete all the necessary loan paperwork. During that time, Vasrue works with the seller to find an agreeable price, and the company guides the seller through pre-closing, closing and post-close activities.
The process usually takes less than 20 days to complete.
Write to Jon Prior.
US home prices fell 0.3% on a seasonally adjusted basis from July to August, erasing the 0.3% gain between June and July, according to the Federal Housing Finance Agency’s (FHFA) monthly house price index.
For the 12 months ending in August, U.S. prices fell 3.6% and the index is 10.7% below its April 2007 peak.
Regionally, the Pacific Census Division — Alaska, California, Hawaii, Oregon and Washington — experienced a 1.2% increase in seasonally adjusted prices from July to August, the greatest of the nine divisions. The South Atlantic division — Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia — experienced a 1.6% decrease in prices during the same period, the biggest loss in the country.
The Mountain division — Arizona, Colorado, Idaho, Nevada, New Mexico, Montana, Utah and Wyoming — experienced the greatest annual decrease in prices, 7.8% on a seasonally adjusted basis. The West South division — Arkansas, Louisiana, Oklahoma and Texas — experienced a 0.4% increase year-over-year, the only division to have an annual increase in prices.
The FHFA monthly index is calculated using purchase prices of houses backed by mortgages sold to or guaranteed by Fannie Mae (FNM: 0.00 N/A) or Freddie Mac (FRE: 0.00 N/A).
Write to Austin Kilgore.
As the economic crisis spurred by the liquidity crunch and sweeping delinquencies in asset-backed securitizations (ABS) becomes more and more of a global condition, regulation of the financial industry is also taking on an increasingly global dimension.
A new trade body formed by the London Investment Banking Association (LIBA) and the Securities Industry and Financial Markets Association (SIFMA) will focus on global participants in the European wholesale financial markets. The umbrella organization — the Association for Financial Markets in Europe (AFME) — covers policy, advocacy and business policy issues.
AFME seeks to build public trust and confidence in financial markets through a focus on transparency and stability, to develop a harmonized and open pan-European market by cooperating with stakeholders and policymakers, and to play a role in developing a "globally coherent" regulatory framework. The group will also aim to lead the industry in forming and adopting market solutions, standards and practices that contribute to well-functioning financial markets.
"AFME will participate in a global alliance with SIFMA in the US, and the Asian Securities Industry and Financial Markets Association through the Global Financial Markets Association (GFMA)," according to a statement. "The GFMA will provide a framework for each of these organizations to stay abreast of regional developments and to consider their collective global impact, and will give financial markets participants a global voice and profile."
Write to Diana Golobay.
Home prices declined on a year-over-year basis by 11.6% and 10.1% in July and August, respectively, according to a new house price index compiled by First American CoreLogic.
Excluding distressed sales, year-over-year prices declined 6.8% in July and 6.2% in August.
Despite the year-over-year declines, the index has continued to show increased home prices on a month-over-month basis since March, although First American CoreLogic said some of the increases may be contributed to seasonal patterns.
The new index is calculated from a revised methodology and is drawn from an expanded transaction database. New features also include the ability to differentiate the difference in distressed and non-distressed sales and a 12-month forecast.
The new forecast projects price declines will continue throughout the remainder of 2009 before hitting bottom in March 2010, based primarily on the impending expiration of the first-time homebuyer tax credit and the potential shadow inventory of foreclosed homes expected to hit the market soon.
“While the tax credit has given a short-term boost to both home sales and volume, its termination, combined with projected increases in foreclosure inventories, will place additional downward pressure on house prices this winter,” First American CoreLogic said.
By spring 2010, the national housing market should experience positive appreciation, the real estate metric firm said. Cumulative peak-to-through declines are expected to be 37% by March 2010. By August 2010, First American CoreLogic projects 12-month appreciation for national home prices will be 4.6% and that California and Florida, two states hit hardest by the housing downturn, will see gains in excess of 7%.
The five worst states in terms of annual depreciation, including distressed sales were Nevada (24.4%), Arizona (19.5%), Florida (16.8%), California (12.9%) and Oregon (12.5%). Excluding distressed sales, the worst performing states were Nevada (19.8%), Florida (14.9%), Arizona (14.8%), Idaho (10.6%), and Washington (10.5%).
Write to Austin Kilgore.
Freddie Mac (FRE: 0.00 N/A) purchased fewer refinanced loans in September as the mortgage giant’s single-family delinquency rate continued its steady climb.
Freddie issuance totaled $32.9bn in September, down from $47.8bn in August and up from $27.2bn in September 2008, according to the agency’s monthly volume summary.
The total mortgage portfolio increased at an annualized rate of 0.8% in September. Refinance mortgage purchases totaled $21.4bn in the same month, dropping nearly 40% from $35.6bn in August.
The net amount of mortgage purchases or sales agreements made for Freddie’s mortgage-related investments portfolio reached $4.6bn, falling from $12.1bn in August.
The 90-day single-family delinquencies increased again in September to 3.33% from 3.13% in August. Delinquencies swelled from 1.22% in September 2008 and have increased every month since by an average of 17 basis points.
Write to Jon Prior.
European homeowners are missing fewer mortgage payments as the growth of arrears in European residential mortgage-backed securities (RMBS) is slowing, according to Standard & Poor's Ratings Services.
A report this week by S&P indicates the possible improvement of a trend that began with the onset of the financial market disruption in 2007, when European borrowers pressured by financial distress began missing payments at a significant rate.
When high interest rates rose across Europe pushed mortgage payments higher in 2008, homeowners found their budgets squeezed even tighter, S&P said.
"In our opinion, this was initially a major factor spurring higher arrears and, ultimately, defaults on mortgages," the ratings agency said. "Furthermore, the disruption in capital markets raised banks' funding costs and led to significantly restricted access to credit for many borrowers, especially those in financial difficulty looking to refinance."
Policy rate cuts by the Bank of England and the European Central Bank finally trickled down to borrowers, S&P said, moderating arrears among borrowers with floating-rate loans. As rates decrease, borrowers' monthly payments decrease, improving affordability and narrowing the gain in arrears in European RMBS.
This improvement in arrears growth also improves the prospects for credit ratings on outstanding European RMBS transactions. Unemployment, however, will continue to play a key role in determining borrower payment behavior, arrears growth and RMBS transaction outlooks.
"Even though interest rates are currently low, unemployment generally continues to rise in most European countries," S&P said. "Arrears could therefore start to climb again if employment deteriorates significantly."
Write to Diana Golobay.
The commercial real estate (CRE) market will not likely post signs of recovery until mid-2010 and faces key challenges ahead, according to RBS Securities.
Commercial real estate is faced with deteriorating fundamentals, the RBS analysts say, as well as high vacancy rates and upcoming refinancing needs, RBS Securities said in market commentary Thursday.
The firm said rising vacancy rates within properties secured by loans within various types of commercial mortgage-backed securities (CMBS) indicates a lack of improvement in the market over the first half of 2009. RBS Securities said a wave of post- holiday retail bankruptcies may arrive after stressed retailers put off bankruptcy in hopes of catching a spike in sales before closing.
But the CMBS market will also face pressure as loans require financing in coming years.
"CMBS often have balloon payments on fixed schedules, from 5 to 10 years and need to be refinanced into a new loan at the end of that period or paid off completely," RBS said. "Although the improvement in securitized markets has been material to be sure, it hasn't returned to a state where issuance can keep up with these refinancing needs. In any event, pressure on this market seems far from abating and the post-Christmas hangover for CMBS this year could be quite severe."
The pain in the US financial sector is making an impact on the US Government, which faces huge deficits in the midst of multi-trillion-dollar bank bailout and economic stimulus efforts. RBS Securities noted Moody's warned Thursday the US may lose its sovereign triple-A rating if it does not reduce its budget deficit to more manageable levels over the next few years.
The firm added that an imminent change in the US rating remains unlikely as long as Moody's outlook for the US rating remains stable. RBS Securities expects a record net Treasury issuance of $10bn for the coming week.
Write to Diana Golobay.
BB&T Corporation (BBT: 26.95 -0.33%) renewed its commitment to warehouse lending by naming Jeff Ellison president of its mortgage warehouse lending division that provides short-term financing to mortgage companies.
Working from BB&T’s Orlando offices, Ellison will oversee daily operations and nearly 60 employees. Ellison, 47, began his career at BB&T through its management development program in 1984 and most recently served as senior credit officer in the bank’s Orlando-based East Florida region.
BB&T acquired $22bn in assets and assumed $20bn in deposits from Colonial Bank, creating the nation’s eighth largest financial holding company by deposits, the company said. Colonial operated 354 banking offices in Florida, Alabama, Georgia, Texas and Nevada, all of which are now branches of BB&T.
With its expanded presence, BB&T will step up its warehouse lending, BB&T commercial finance president Robert Fentress said.
“Jeff’s experience in corporate lending and knowledge of our sales management method gives him the perspective and expertise needed to combine the best of BB&T’s warehouse lending operations with the best of what we recently gained through the Colonial acquisition,” he said. “This is a commercial product that dovetails nicely with our retail mortgage business."
Fentress added: "After evaluating the business model, we plan to continue in the mortgage warehouse lending business. We feel it offers excellent growth opportunities given our client relationship model.”
Write to Austin Kilgore.
PNC Financial Services Group (PNC: 59.08 +0.31%) earned net income of $559m, $1 per share, for Q309, compared with net income of $207m, $0.14 per share, in Q209. Mortgage banking revenue stayed even from the previous quarter, but originations plummeted from the year-ago period.
Year-to-date net income through Q3 was $1.3bn, up from net income of $1.16bn during the same nine-month period of 2008.
The deterioration of credit quality eased during the quarter, and the bank strengthened its loan loss reserves, PNC said. The provision for credit losses exceeded net charge-offs by $264m.
The average loan balance decreased $371m compared to Q209, as increases in education loans were offset by declines in commercial, floor plan, residential mortgage and home equity loans. Consumer and commercial loan demand is being outpaced by refinances, paydowns and charge-offs, PNC said.
PNC’s residential mortgage banking earned $91m in the Q309, relatively steady from $92m in the Q209. Total loan originations were $3.6bn, down from $6.4bn in Q308. PNC said it originated loans primarily through direct channels and under guidelines of Federal Housing Administration (FHA) and Veterans Administration (VA) government insurance programs and of agencies Fannie Mae (FNM: 0.00 N/A) and Freddie Mac (FRE: 0.00 N/A).
Noninterest income was down from $245m in Q209 to $209m in Q309 due to lower loan sales revenue. Net interest income was also down from $87m in Q209 to $83m in Q309.
PNC’s commercial mortgage servicing portfolio was $275bn at the end of Q309, up from $269bn at the end of Q209 and $247bn at the end of Q308.
Write to Austin Kilgore.
The HOPE NOW Unemployment Committee collaborated with the Obama Administration to develop a new tool to help identify the eligibility of unemployed homeowners to for the Home Affordable Modification Program (HAMP).
The US Treasury Department allocates capped incentives to servicers participating in HAMP to modify loans on the verge of foreclosure. Servicers lower the debt-to-income ratio of a qualified borrower to 31% with a HAMP modification.
With the new tool, homeowners with nine months of unemployment benefits may use their unemployment income in determining HAMP qualification, according to a statement from Faith Schwartz, executive director of HOPE NOW, the private sector alliance of mortgage servicers, investors, insurers and non-profit counselors..
The web-based unemployment verification tool informs mortgage companies, housing counselors and homeowners of the correct amount of unemployment income and the duration of the payments.
“This is a highly useful tool for all parties as it really streamlines the process for unemployed borrowers to a faster resolution,” Schwartz said.
Write to Jon Prior.
