Archive for November, 2009
Mortgage giant Fannie Mae (FNM: 0.00 N/A) released details Thursday of a deed-for-lease program designed to offer borrowers an alternative to foreclosure.
The Deed-for-Lease (D4L) Program aims to minimize neighborhood blight and encourage house price stabilization by cutting down on foreclosures, real estate-owned (REO) and vacant properties, and distressed home sales.
Beginning immediately with the announcement of the program, servicers of Fannie mortgages are expected to follow regular procedures in considering whether borrowers qualify for a deed-in-lieu of foreclosure. At that time, servicers will notify Fannie that the borrower may also qualify for the D4L program.
Once Fannie or its designee verifies property and borrower eligibility, the rental rate will be determined and the lease agreement executed. The property's occupant must be able to pay market rent within 31% of monthly gross income, and the lease agreement will not be completed unless the deed-in-lieu is successfully completed.
The program applies to first liens secured by a one- to four-unity property.
Write to Diana Golobay.
The US Department of Housing and Urban Development (HUD) is pushing forward with plans to speed up the management and marketing (M&M) of properties in order to create a more orderly return of the property to livability and, subsequently, sale-ability.
The new and multi-faceted approach will aid servicers to quickly reclaim expenses from Federal Housing Administration (FHA)-insured properties in the event of short sale, foreclosure, etc. The changes will also apply to properties where there is still an occupant, protected by the Tenant Act, which states that, even if a borrower defaults, the servicers must honor the leaseholders' agreement in non-owner occupied scenarios.
Under the new M&M guidelines, representatives from HUD said at a three-hour panel at the Safeguard Properties' National Property Preservation Conference underway in Washington DC, that servicers should take the risk and get any necessary work done on the property, without submitting a bid for approval first. HUD will then verify that claim and repay the servicer for the expense.
HUD is also releasing a massive computer program, the P260, created by property management software provider, Yardi, and using the Marshal and Swift database for approvals, that will make expense submissions entirely electronic. This is opposed to the current method of "by phone, by fax, by postal courier," as one panelist put it.
"Go ahead and do what you have to do," said James McGee, a single family housing program policy specialist for HUD. M&M Contractors market and manage single-family properties owned by, or in the custody of the Department. HUD also noted that its P260 reps will be trained by day one, with the launch coming sometime in 2010 and expects the transition to be relatively easy.
Safeguard Properties CEO Robert Klein applauded the move of HUD to modernize its operations, though Michelle Stevens-Schultz, a mortgage officer at JP Morgan Chase (JPM: 37.21 -0.75%) worries that bids currently being considered may be sidelined without recompense once the new submission process goes online.
"We are still working on the transition," said McGee.
Write to Jacob Gaffney.
Freddie Mac’s (FRE: 0.00 N/A) survey of mortgage rates saw a key long-term fixed rate dip back below 5% this week.
Freddie Mac said the average rate for a 30-year fixed-rate mortgage (FRM) was 4.98% with an average 0.7 point, down from an average 5.03% the previous week. One year ago, the average rate for a 30-year FRM was 5.88%, Freddie said.
Bankrate.com’s survey of major US banks and thrifts put the 30-year FRM 5.35% with a 0.31 point, even from the previous week. A year ago, Bankrate.com’s survey was 6.44%.
Freddie Mac said the average rate for a 15-year FRM was 4.4% with an average 0.6 point, down from 4.46% the previous week. A year ago, the rate was 5.88%.
Bankrate.com said the 15-year FRM was 4.72%, down from $4.74% in the previous week.
Freddie said the five-year Treasury-indexed adjustable-rate mortgage (ARM) was 4.35% this week, with an average 0.6 point, down from last week’s 4.42%. Freddie put the one-year Treasury-indexed ARM averaged 4.47% with an average 0.5 point, down from last week when it averaged 4.57%. At this time last year, the 1-year ARM averaged 5.25%.
Bankrate.com put the five-year ARM 4.64% this week, even from the previous week.
Write to Austin Kilgore.
Listings of single-family homes and condominiums declined an average 2.82% across 27 major US metropolitan markets in October, according to data compiled by Web-based real estate brokerage ZipRealty (ZIPR: 1.08 0.00%).
The 593,794 total homes for sale in the 27 markets in October 2009 are down from 611,026 in September and represent an inventory 28.65% lower than that in October 2008.
National inventory has declined month-over-month for 16 straight months, ZipRealty said. Locally, Phoenix and Tucson experienced 4% and 2% increases in inventory, respectively, on a month-over-month basis. Markets that experienced declines include Las Vegas (5.8%), Minneapolis (5.3%) and Chicago and Seattle (5% each).
West coast markets experienced the largest year-over-year declines in home inventory. Los Angeles led the way with a 56.3% decline, followed by San Diego (55.1%), San Francisco Bay Area (51.1%) and Las Vegas (50.7%).
Write to Austin Kilgore.
Citizens Financial Group (CFG) implemented the loan modification software suite of Lender Processing Services (LPS: 16.78 +1.39%).
The software provides loan modification and loss mitigation tools to streamline the process, LPS said.
“LPS has woven its Strategic Consulting practice into each step of the modification process, and this, in conjunction with LPS' proven solutions included in RediMod, is what made LPS the right partner,” said Brad Conner, vice chairman of Consumer Finance at CFG. “We have leveraged LPS' solutions for more than 20 years and are excited to further expand our relationship.”
Citizens Financial Group is a $153bn commercial bank holding company based in Providence, R.I.
LPS is a developer of numerous mortgage software technology products and is based in Jacksonville, Fla.
Write to Austin Kilgore.
Standard & Poor's approved Opus Capital Markets Consultants (Opus CMC) as a third-party due diligence provider for residential mortgage-backed securities (RMBS) transactions.
S&P's approval of the third-party consultant firm is the latest step toward improved quality and transparency of MBS, Opus CMC said.
The approval of due diligence providers for MBS transactions will ultimately give investors greater confidence that the underlying collateral received adequate analysis, according to Opus CMC principal Jennifer LaBud.
“We have witnessed a shift in the way people view due diligence,” LaBud said, adding that issuers and investors alike are placing greater value on loan-level and operational reviews as part of the risk mitigation process.
Opus CMC, which acquired the due diligence unit of Mortgage Data Management Co. in June, provides operational and loan-level consulting to investment banks, hedge funds, originators, servicers and insurance providers.
Write to Diana Golobay.
Bond insurer Ambac Financial Group (ABK: 0.00 N/A) posted net income of $2.2bn, or $7.58 per share, in Q309, compared with a net loss of $2.4bn in the year-ago quarter.
Quarterly results were impacted by unrealized mark-to-market gains in the New York City-based financial services and insurance firm’s credit derivatives portfolio and gains from Q309 reinsurance cancellations.
The firm experienced a positive $2.1bn change in fair value of credit derivatives, driven by the adjustment made under Financial Accounting Standard (FAS) 157 relating to Ambac's widening credit spread.
Net investment income increased 7% from $123.3m in Q308 to $132.3m in Q309. But that gain was offset by an overall decrease in the firm’s asset base, as claim payments on insured residential mortgage-backed securities (RMBS) transactions, along with commutations and settlements of collateralized debt obligations (CDOs) of asset-backed securities (ABS) transactions were greater than cash inflows.
“We continue to make progress in de-risking the balance sheet via negotiated reinsurance buy-backs, CDO of ABS commutations, settlements related to defaulted RMBS transactions as well as expanded analysis of expected recoveries relating to RMBS representation and warranty breaches,” said president and CEO David Wallis.
Total net claims paid in Q309 was $315.1m compared to claims in Q308 of $182.4m, primarily related to RMBS transactions.
Other than temporary impairment losses totaled $32.5m, including an unspecified loss on the sale of Alt-A-backed RMBS that were downgraded below investment grade.
Write to Austin Kilgore.
[Update 1: Clarifies relationship between BMS and Zeacom]
Irvine, Calif.-based Bankruptcy Management Solutions (BMS), a provider of case management software for Chapter 7 and bankruptcy administrators integrated into its call center software from Zeacom, an Irvine, Calif.-based provider of communications and contact center software for small-to-medium-sized enterprises.
Through the partnership, BMS will have the ability to handle higher call volumes through its use of Zeacom software.
“There has been a significant increase in bankruptcy filings, resulting in a considerable workload for our customers,” said Adrienne Smit, BMS director of customer service and support.
“We felt it was imperative to provide our service team with the most advanced, proven, yet easy-to-use tools to help us more quickly respond to customer requests,” Smit added.
Write to Austin Kilgore.
While real estate prices are down as a whole for the first three days of November, prices in the foreclosure market grew over the same period, according to data from ForeclosureDataOnline.com.
Prices for real-estate owned (REO) property in Arizona jumped 15.51% to $285,257 for the first three days of November, compared to October’s average of $246,944. California’s average price for REO properties increased 1.83% to $363,133; Nevada’s grew 1.45% to $310,943; Texas’ average REO price increased 1.27% to $134,125; and Florida had a 1.05% increase to $230,995.
REO prices dropped in only three states so far in November, according to the data. Maine’s average REO price dropped 1.88% to $114,547; West Virginia saw a 0.72% decrease to $108,022; and the state of Washington’s average REO price fell 0.6% to $283,037.
As moratoria, modifications and other factors slow foreclosures, a smaller number of properties in these markets have boosted prices, according to ForeclosureDataonline.com.
“Foreclosure sales also appear to be an excellent investment as prices are still below fair market value and are climbing every month,” according to the report.
Write to Jon Prior.
National home prices increased 3.7% in Q309 compared to Q209 while the year-over-year price decline improved, according to real estate data provider Clear Capital. The yearly price decline was 8.4% in Q309, 1.5 percentage points narrower than the yearly decline seen in Q209.
A decline in the percentage of real estate-owned (REO) sales in major markets fueled the improved prices, Clear Capital said.
“Nationally, both the top and bottom performing markets are converging to modest quarterly changes, indicating a return to stable markets,” said Alex Villacorta Sr., a Clear Capital statistician. “As we've seen since the spring season, many markets have returned to traditional seasonal fluctuations and the strong summer gains are showing signs of slowing.”
The greatest quarter over quarter improvement was in the Midwest, which experienced a 7.5% increase in prices from Q209, followed by the South, which experienced a 3% quarter-over-quarter increase. The Northeast had a 2.3% increase, followed by a 2.1% increase in the West.
Year-over-year declines were the lowest in the South, which had a 6.5% decrease, followed by the Northwest (7.2% decline), Midwest (7.7% decline) and the West (14% decline).
The national REO saturation rate, or the proportion of homes on the market that are REO was 28%, a 5.1% improvement from Q209.
“The continued decline in REO saturation rates, as well as an increase in the proportion of cash buyers in both distressed and fair market sales, are an encouraging sign of investor optimism coming into the traditionally slow months,” Villacorta said. “If the home buyer tax credit is extended and possibly expanded, it could add even more momentum through the slow months to build up to a very strong spring in 2010 as more buyers are sensing that home prices truly have hit the bottom of the current cycle.”
Write to Austin Kilgore.
