Archive for December, 2009
While gross house listings in major US markets continued its run of month-over-month decreases, listings in some of the markets hit hardest by the housing downturn saw an increase, according to Emeryville, Calif.-based real estate brokerage ZipRealty’s (ZIPR: 1.08 0.00%) survey of housing inventory.
The number of listings in 27 major US markets declined 2.42% from October to November. The 579,413 multiple listing service (MLS) listings in the markets is down 27.64% from November 2008. It’s the 17th straight month that gross listings for all markets declined month-over-month.
Boston experienced the greatest month-over-month decrease at 8.5%, followed by Minneapolis-St. Paul (6%), Washington, D.C. (5%), Denver (4.4%) and Chicago (4%).
San Diego led all markets with a 53.7% year-over-year inventory decline, followed by Los Angeles (53.7%), San Francisco Bay area (51.8%), Las Vegas (51%) and Phoenix (40.7%).
But some distressed markets experienced month-over-month listing increases in November, including Tucson (2.6%), Las Vegas (1.3%) and Orlando (0.6%). It was the first inventory increase in Las Vegas in 12 months, when listings increased 1.86% month-over-month between October and November 2008.
Write to Austin Kilgore.
[Update 1: adds pricing details.]
Renewed interest from foreign central banks brought in the highest share of non-domestic investors for a new 3-year Federal Home Loan Bank Global since August 2008, according to a FHLB System spokesperson.
The FHLB System earlier this week announced a new $3bn 3-year Global, which priced on Wednesday and settled Thursday. The Global has a maturity date of Jan. 16, 2013 with interest payments on January 16th and July 16th, beginning July 16, 2010. The Global was priced at 1.215% Treasury yield, a spread of +31.5 and a 1.5% coupon.
Bank of America (BAC: 7.29 -0.14%), Citigroup (C: 30.87 +1.61%) and Goldman Sachs (GS: 111.77 +2.96%) served as lead managers on the issue, and RBC served as senior co-manager.
The issue is oversold, with preliminary distribution focused 55% in the US, 20% in Asia, 6% in Europe and 19% in "other" geographic categories — which could include South America, Canada, Africa, Australia and others.
Investment advisors or fund managers accounted for 47% of investors, while central banks made up another 32%. Financial institutions accounted for 8% of investors, while insurance and pension funds took another 7%, state and local governments took 1% and the remaining 5% of investors were considered "other/unknown."
Write to Diana Golobay.
HousingWire looks into the FHLB System's role in mortgage finance in an upcoming magazine issue.
Of the 1m homeowners who have been offered three-month trial modification under the Home Affordable Modification Program (HAMP), 31,382 have received a permanent modification, according to a report from the US Treasury Department.
Under HAMP, the Treasury allocates capped incentives to participating servicers for the modification of loans on the verge of foreclosure. Currently, 76 servicers participate in the program and could collect a potential of $27bn in capped incentives.
Servicers have started 759,058 trials since the program launched in March 2009, and 697,026 trials are currently active.
How many trials have converted to a permanent modification has been the subject many debates. The Treasury has recently pressed servicers to convert more trials and expects 375,000 permanent modifications by the end of the year.
GMAC Mortgage converted 7,111 trial modifications into permanency, the most of any servicer on a gross-volume basis. Active trials and permanent modifications accounted for 39% of GMAC’s eligible portfolio of 67,539 loans – the third highest percentage of all servicers.
JPMorgan Chase (JPM: 37.21 -0.75%) had the second highest amount with 4,302 permanent modifications. Active trials and permanent modifications made up 31% of the 448,815 eligible loans in its portfolio – sixth among servicers.
In third, on a gross volume basis, was Ocwen Financial Corp.’s 4,252 permanent modifications. Active and converted trials made up 15% of the 66,351 loans in its portfolio. An executive at Ocwen told HousingWire the company had converted 66% of its HAMP trials into permanency through October. According to the Treasury report, permanent modifications made up 77% of its active trials and 43% of the total amount of trials Ocwen started through November.
Saxon Mortgage Services led all servicers on a percentage basis by holding active trials and permanent modifications on 44% of the 80,309 eligible loans in its portfolio. However, Saxon has converted 42 trial modifications into permanency.
For the 233,924 eligible loans in CitiMortgage’s portfolio, 43% are either active trials or permanent modifications, the second highest by percentage. Of those, 271 are permanent modifications.
Other notable performances include:
Bank of America (BAC: 7.29 -0.14%) has 98 permanent modifications. BofA holds more than 1m loans in its eligible portfolio, the most of any other participating servicer, and 15% of them are active trials or permanent modifications.
Wells Fargo (WFC: 29.60 +1.89%) converted 3,537 trials into a permanent status. It holds 334,949 loans in its eligible portfolio. Of those, 30% are in active trials or are permanent modifications.
Wednesday, Congress heard testimony on the health of the program the possibilities of its success. Key among the reasons for HAMP’s small amount of permanent modifications is a lack of documentation.
Write to Jon Prior.
Mortgage origination volume will decline next year compared to 2009 levels, but the use of software-as-a-service (SAAS) applications will rise, San Mateo, Calif.-based SAAS developer Dorado Corporation said in its projections for next year.
Dorado projects more than 30% of mortgages created next year will be originated with SAAS applications, which generally work as Web-based tools a developer hosts on its own servers and distributes access through subscription licenses.
“We believe 2010 will be a year in which both growth-oriented lenders and the leading banks will continue to differentiate themselves based on the adoption of software-as-a-service and other cloud computing processes to improve workflow efficiency and enhance customer service,” said Dorado CEO Dain Ehring.
The company said a reduction in Federal Housing Administration (FHA) originations and refinance loans will decrease total mortgage volume next year, and borrowers who do purchase mortgages will have access to low interest rates. The firm said it believes unemployment rates will improve and employment will stabilize. Potential borrowers will benefit from advances in mortgage technologies like Google’s new mortgage search feature.
Mortgage originators who successfully adapt to next year’s new compliance regulations will have a competitive advantage over competitors. In addition, lenders will continue to put more emphasis on maintaining underwriting standards and reducing errors in the origination process.
“The unprecedented turmoil of the last two years is giving way to a period of tremendous innovation in the mortgage industry,” Ehring said. “The outline of what the not-so-distant future industry will look like is now starting to emerge.
Look for additional commentary from Dorado Corporation in an upcoming 2010 edition of HousingWire magazine.
Write to Austin Kilgore.
The US Treasury Department’s report summarizing its activities for the fiscal year 2009 showed lower projected costs and higher anticipated returns of the Troubled Asset Relief Program (TARP).
While the Emergency Economic Stabilization Act (EESA) gave Treasury Secretary Timothy Geithner the authority to use $700bn to meet the objectives of the Act, the report shows that TARP will not cost taxpayers the full amount.
The Treasury Office of Financial Stability (OFS) used $364bn of the $700bn available funds, mostly in investments according to the report, and $73bn of the TARP funds have already been repaid. Bank of America last week committed to repaying the $45bn it received through the program.
In a letter to Speaker Nancy Pelosi (D-Calif.) and Senator Harry Reid (D-Nev.), Geithner wrote that half of the taxpayer dollars received would be repaid through TARP. He also extended the program to Oct. 3, 2010 and wrote that he did not expect to spend more than $550bn of the $700bn potential.
The report also showed some cash coming back to the Treasury through interest, dividends and proceeds from the sale of warrants. Through Sept. 30, 2009, the investments generated $12.7bn for the Treasury. Despite the proceeds, the OFS reported $41.6bn in administrative expenses for the TARP disbursements. The total costs are expected to mount, according to the report, but will remain “substantially below” the $341bn estimated in President Obama’s mid-session budget in August 2009.
As the Treasury makes more disbursements in 2010, TARP costs are expected to rise because of programs not designed to recoup funds, such as the $50bn allocated for the Home Affordable Modification Program (HAMP).
“The ultimate cost of TARP will not be known for some time. The combination of lower spending and higher expected returns has already significantly lowered the estimated cost from our earlier estimates,” Herb Allison, assistant secretary of the OFS, wrote in the report. “However, as additional funds are distributed, particularly for the housing initiative, the total cost is likely to rise.”
Write to Jon Prior.
After reaching record lows last week, mortgage rates increased in two weekly surveys.
Freddie Mac’s (FRE: 0.00 N/A) survey put the 30-year fixed-rate mortgage (FRM) at 4.81% with an average 0.7 point for the week ending Dec. 10, up from the previous week when it was a record low average of 4.71%. A year ago, Freddie Mac put the 30-year FRM at 5.47%.
Bankrate.com’s survey of major banks and thrifts put the 30-year FRM at 5.04% with a 0.43 point, up from 5.01% the previous week.
Freddie said the 15-year FRM also increased, from 4.27% last week to 4.32% with a 0.6 point this week. A year ago, it was 5.2%. Bankrate.com put the 15-year FRM average rate at 4.47%, up from last week’s 4.46%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.26% with an average 0.5 point, up from last week’s rate of 4.19%, Freddie Mac said. The one-year Treasury-indexed ARM averaged 4.24 percent this week with an average 0.7 point, down slightly from last week when it averaged 4.25%.
Bankrate.com put the five-year ARM at 4.55%, up from 4.52% a week ago.
“Following an upbeat employment report, long-term bond yields rose slightly and fixed mortgage rates followed,” said Freddie Mac vice president and chief economist Frank Nothaft. “[R]ates on 30-year fixed mortgages are almost 0.7 percentage points below those at the same time last year. This translates into an $81 lower monthly payment on a $200,000 conventional mortgage.”
Write to Austin Kilgore.
Mortgage software developer Byte Software released an update to its loan origination software so it will meet next year’s new Real Estate Settlement Procedures Act (RESPA) compliance requirements.
The update captures and tracks the fee amounts that are disclosed on the good faith estimate (GFE) when it is first delivered to the borrower, enabling the software to monitor for tolerance violations. The update also includes new RESPA forms.
Other new features include an automated process for identifying higher priced mortgages and new maximum mortgage amount calculations for FHA streamlined refinancings.
“From tracking tolerance violations to identifying Higher Priced Mortgage Loans, BytePro demonstrates how technology can be employed to help companies comply with recent regulatory changes,” said Byte Software general manager Joe Herb.
Write to Austin Kilgore.
On December 16, HousingWire and Wolters Kluwer Financial Services will host a Webinar, “RESPA: The Final Lap” from 11 a.m. to noon Central Time.
Simon Property Group (SPG) will acquire Prime Outlets Acquisition Co. and certain affiliated entities from the Lightstone Group.
In a transaction valued at more than $2.32bn, Simon will pay equity consideration for the owners' interests in Prime Outlets composed of 80% cash and 20% SPG common operating partnership units. Nearly all of the interests in Prime Outlets are owned by the Lightstone Group and Lightstone Value Plus REIT.
“The complementary fit of our two businesses and Simon’s skills in property management offer a significant value creation opportunity,” said David Lichtenstein, CEO and founder of the Lightstone Group.
Prime Outlets owns, manages, operates and develops US outlet centers. The Prime Outlets portfolio includes 22 high-quality outlet centers located in major metropolitan markets like Washington DC, Baltimore, San Antonio, Orlando and Williamsburg, Va. The centers overseen by Prime Outlets boasted 92% occupancy as of June 30 and generated $370 in annual sales per square foot.
Lightstone did not immediately provide the dollar amount paid by Simon Property in the acquisition, and a Lightstone spokesperson could not provide further comment on the deal.
Write to Diana Golobay.
The US Department of Housing and Urban Development (HUD) on Wednesday unveiled two measures to collaborate with the Treasury Department in establishing more transparency in financial markets.
It's part of the Treasury's open government plan to publish more accessible data on tax returns, transaction reports of stimulus programs and quarterly bank trading and derivatives information.
"Better government begins when citizens can understand and engage with their government," said HUD secretary Shaun Donovan. "President Obama and I recognize that it's important to give the public a better understanding of how we work and to give them a real voice in how we do business."
HUD will begin publishing an online database of historical data on the physical condition of public housing and multifamily units. HUD will also allow citizens access to an interactive "suggestion box" that will be considered in HUD's long-term six-year strategic plan.
"By engaging stakeholders through an open and participatory process, HUD will enable the American public to engage with HUD directly and provide input to create the most effective possible plan," HUD said in a statement.
The Treasury is doing its part to increase public access to data and information on government initiatives. The Treasury will provide more user-friendly data on tax returns, which will show migration patterns of tax filers moving across country and state lines.
The Treasury will also introduce a new XML format for transaction reports of activity under the Troubled Asset Relief Program (TARP), which was recently extended through October 2010.
The Treasury also said a quarterly report on bank trading and derivatives will be made available by the Office of the Comptroller of Currency. The report provides information on the government's supervision of banks, as well as financial institutions' investment activities.
The news comes as banks may face as much as tens of billions of dollars in lost revenue in part due to new derivatives rules cost financial institutions revenue from over-the-counter business, according to JP Morgan (JPM: 37.21 -0.75%) estimates obtained by International Financing Review. Proposed legislation to require trades made through exchanges and central clearinghouses could cost JP Morgan from $2bn to $3bn.
Write to Diana Golobay.
A widow is suing her mortgage servicer, claiming harassing debt collection calls exaggerated her husband's heart problems, added to his level of stress and eventually led to his death.
A recent CNN story (view below) details the circumstances that led to the suit.
Dianne McLeod's husband had a heart condition and was airlifted to a hospital after having a heart attack. He went on disability. The McLeods fell three months behind on payments. The harassing phone calls added up, sometimes 10 times a day, until Stanley McLeod's death in 2005.
Now Dianne wants the servicer, Green Tree Servicing LLC, to take responsibility for her husband's wrongful death. But the servicer denies any connection between its collection practices and Stanley's death.
"The collection activity did not lead to his death," Brian Corey, senior vice president/genereal counsel of Green Tree, told CNN. "The claim is meritless. We deny that the content, the number, or the timing of the calls, had anything to do with him dying in 2005."
But CNN uncovered other cases of threatening, mafia-style calls like, "When I see you, I'm going to f**** you up. I want my money and I want it now."
Write to Diana Golobay.
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