Archive for December, 2009
Mortgage giant Freddie Mac (FRE: 0.00 N/A) reported $27.9bn in mortgage purchases and issuances in November, a 13% drop from $32.1bn in October, according to a monthly summary of the agency’s portfolio.
November’s purchases and issuances total is the lowest since January’s $21.7bn and well below the peak of 2009, June’s $63.1bn. For the year, the total increased to $504.3bn with the latest addition.
Freddie’s purchase and guarantee volume of refinance loans increased to $19.3bn in November, a 7% gain from the $18bn in October.
The total mortgage portfolio dropped at an annualized rate of 2.2% in November. The aggregate unpaid principal balance of its mortgage-related investments portfolio also dropped to $761.8bn in November from $770.1bn in October.
Freddie’s single-family delinquency rate climbed 18 basis points to 3.72% in November, compared to multi-family delinquencies, which rose 2bps to 0.14% in November.
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The author holds no relevant investments.
The Department of Housing and Urban Development (HUD) postponed implementation of new rules meant to promote objectivity for appraisers and minimize interference from lenders of Federal Housing Administration (FHA)-backed mortgages.
According to an FHA memo obtained by HousingWire, the January 1, 2010 implementation of Mortgagee Letter (ML) 2009-28 (download here) won’t take affect until February 15, 2010. The new FHA regulations are similar to those implemented by the government-sponsored enterprises (GSEs) to ensure appraiser independence with the Home Valuation Code of Conduct (HVCC).
Prior to the new rule, FHA-approved lenders could not accept appraisal reports selected, retained or compensated, in any manner by real estate agents. According to ML-28, FHA-approved lenders will be prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.
The second part of ML-28 makes lenders responsible for ensuring the appraiser who actually conducted the appraisal is correctly identified in FHA Connection, the Web site lenders and appraisers use to facilitate transactions with the FHA.
The extension will provide FHA and lenders additional time to adjust systems to accommodate the changes and additional guidance about changes to FHA Connections will come in a later ML, HUD said.
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NewBridge Bank will acquire Bradford Mortgage Company in a deal expected to close Dec. 31, 2009.
NewBridge Bank, a community bank based in North Carolina with roughly $2bn in assets, is a subsidiary of NewBridge Bancorp. Bradford Mortgage Company also operates out of the North Carolina as a subsidiary of ACM Financial Trust, a private mortgage real estate investment trust (REIT).
The sale follows another REIT’s quest for capital. NorthStar recently sold its holdings in an assisted living portfolio.
NewBridge will acquire select assets from the transaction and the brand name “Bradford Mortgage.” After the sale is finalized, Bradford Mortgage’s management team will take leadership positions for the bank’s mortgage division.
NewBridge anticipates all employees of Bradford to be offered a transfer to the bank.
“This acquisition will more than triple the size of NewBridge Bank’s residential mortgage activities, resulting in added efficiency, products and services,” said Pressley Ridgill, president and CEO of NewBridge.
Write to Jon Prior.
The author holds no relevant investments.
Origination of new home equity lines of credit (HELOC) accounts is down 36% from year-ago levels, Equifax (EFX: 39.32 +0.15%) said.
There were 75,600 HELOC accounts originated in September 2009, down from 117,800 in September 2008, according to the Atlanta-based credit bureau’s most recent monthly credit trend report, derived from Equifax's nearly 200m US consumer credit files.
Year-to-date HELOC accounts opened through September totaled 761,000, a 47% decline from the same period of 2008, when 1.5m accounts were originated. For all of 2008, 1.7m lines opened, 41% below the total in 2007, 2.9m. Equifax said the drop in origination is due to both a decline in property values and an consumer mentality evolving away from taking on more debt.
“The contraction in home equity lines is a reflection of the credit crunch both consumers and small businesses are facing,” said Dann Adams, president of Equifax's US Consumer Information Solutions subsidiary. “Restrictions in this traditional source of financing make finding credit harder than ever.”
Lenders are limiting HELOC accounts to low-risk borrowers. An overwhelming majority — 81% — of consumers that opened HELOC accounts had credit scores of 740 or above, a jump from 66% in September 2007. However, delinquency rates increased from 3.39% in October to 3.43% in November, higher than the 2.95% rate in November 2008 and the 1.92% rate in November 2007.
Equifax estimates there were 13.65m open HELOC accounts in September, a decline of 855,000 from one year ago and a loss of $68bn in available credit to borrowers. In addition, HELOC limits declined 25% over the past two years from an average $105,000 to $79,000.
“The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios,” Adams said.
Originations declined even further in states were property values have plunged, particularly in California and Florida. California homeowners accounted for nearly 20% of HELOC originations during the first nine months of 2007, with 38,000 new accounts. But during the same period in 2009, only 5,182 HELOC accounts opened, 7% of total industry volume. Florida once ranked second in total HELOC originations, but now sits ninth.
Other results from the monthly report indicate a record 7.91% of US mortgages are 30 or more days late in November, up from 7.76% in October and 7.65% in September. In November 2008, 5.83% of mortgages were 30 or more days late. In November 2007, 3.93% of mortgages were 30 or more days late.
Write to Austin Kilgore.
The author held no relevant investments.
Marshall & Ilsley Corp. (MI: 0.00 N/A) extended its foreclosure moratorium for another 90 days through March 31, 2010, according to a company statement.
Based in Milwaukee, Wisc., M&I is a financial services company with $58.5bn in assets and is Wisconsin’s largest bank.
As part of M&I’s Homeowner’s Assistance Program, the initial moratorium began Dec. 18, 2008 and covers all owner-occupied residential loans for customers who agree to workout a new repayment plan. M&I extended its moratorium twice before, once at the end of June 2009 and again in September.
The program also features assistance for potentially distressed borrowers. M&I identifies them in advance to workout a new payment agreement. The program includes a foreclosure abatement initiative that includes refinancing options such as term extensions and reduced rates. The rates can be used to reduce monthly payments when necessary.
On its financing front, M&I continues to extend lines of credit. Since the US Treasury Department provided capital to the bank from November 2008 through October 31, 2009, M&I has provided $5.5bn in new credit, according to the statement. This includes renewals of existing credit where a new promissory note was executed.
Write to Jon Prior.
The author holds no relevant investments.
New York City-based real estate investment trust (REIT) NorthStar Realty Finance (NRF: 5.03 +1.62%) completed the sale of 18 assisted living facilities.
NorthStar said the buyer, a private investor group, paid $95m in the transaction. Combined, the facilities contain approximately 1,300 beds. The facilities are all located in North Carolina.
The sale is projected to generate approximately $36m in cash, along with $56m in mortgage debt and interest repayment. The deal is an $11m premium to Northstar’s undepreciated cost basis and an approximate $17m premium to NorthStar's carrying value at September 30, 2009.
Northstar originates and invests in commercial real estate debt, real estate securities and net lease properties. Last week, the internally managed REIT increased its board to seven members and appointed Stephen Cummings as an independent director, according to a Securities and Exchange Commission filing.
Cummings is a former Wachovia executive, most recently servicing as senior executive vice president and head of corporate and investment banking.
Write to Austin Kilgore.
The author held no relevant investments.
As 2009 winds down, mortgage applications took a double-digit slide in two weekly surveys.
The Mortgage Bankers Association (MBA) index of gross mortgage applications declined 10.7% on a seasonally adjusted basis for the week ending December 18 compared to the previous week.
The Mortgage Maxx index that’s adjusted to reflect the number of households applying for mortgages decreased 12.2% on a seasonally adjusted basis for the week ending December 18 compared to one week prior.
MBA’s refinance and purchase indices decreased 10.1% and 11.6%, respectively. The refinance share of mortgage activity increased to 75.9% of all applications, MBA said, adding the adjustable-rate mortgage (ARM) share of activity decreased to 3.8%, from 4.1% one week ago.
Mortgage Maxx said the decline in activity is a normal lull experienced at the end of the year around the winter holiday time.
“Look for further real declines over the next two week’s as the Christmas and New Year’s holidays shear 2009’s available remaining business days,” the firm said in its report, adding a rebound could come in early January as the “holiday effect” fades.
Write to Austin Kilgore.
Investors are lining up for a shot at acquiring the servicing rights portfolio from the bankrupt ultra-prime jumbo mortgage lender Thornburg Mortgage, according to the firm selling the servicing portfolio.
“We’ve had approximately 60 interested parties, and after we sent e-mail offerings out, we got another 10 offerings. So we have approximately 70 guys interested at this time,” Chris John, a member at Interactive Mortgage Advisors (IMA), told HousingWire.
Up for grabs is an $11.1bn residential loan servicing rights portfolio offered by IMA. In this case, the event was expected to be oversubscribed because of the high underwriting standards Thornburg employed for the portfolio.
IMA is marketing the portfolio at a 2.0 to 2.5 multiple of the service fee, which is at 24.03 basis points (bps). The servicing fee would then land within a range of 48bps to 60bps, and when taken as a percentage from the $11.1bn it translates to $50m to $60m to service the loans.
John said IMA is receiving interest from standard mortgage companies, banks, hedge funds and other Wall Street players.
The offering went out on Dec. 21, 2009 and IMA will be looking for potential bidders throughout the month. IMA will finish qualifying bidders no later than Jan. 4, 2010. Bidders are required to have a $50m net worth, have good standing with the mortgage giants Fannie Mae (FNM: 0.00 N/A) and Freddie Mac (FRE: 0.00 N/A), and avoided any downgrading from the credit rating agencies.
Due diligence on the qualified bidders begins Jan. 5, 2010 and continues until the end of the month. Jan. 28, 2010 is the bid date, John told HousingWire.
Write to Jon Prior.
The author holds no relevant investments.
The amount of American Recovery and Reinvestment Act funds distributed to state agencies to promote affordable housing is running at nearly $4.1bn after the latest round of payouts, the Treasury Department said.
Treasury launched the program in May to provide cash payments in lieu of tax credits to state housing agencies to spend on the development or renovation of qualified affordable housing. The state agencies then distribute the funds to developers through a competitive bidding process.
“By uniting with state housing authorities, Treasury has made available more than $4bn to jump start housing development in communities around the country,” said Treasury deputy secretary Neal Wolin. “That investment has already resulted in hundreds of new construction jobs and new housing units for families in need of affordable alternatives.”
The latest round of funds went to Arizona, Delaware, Georgia, Hawaii, Indiana, Michigan, Minnesota, New Mexico, Ohio, Pennsylvania, Texas and Utah. It marks the first time the Texas Department of Housing and Community Affairs received funds.
So far, 50 state and territorial (District of Columbia, Puerto Rico and Virgin Islands) housing authorities received funds. Mississippi, New York and Wyoming are the only states that have not participated in the program.
Write to Austin Kilgore.
The two-year slide in US housing prices ended in Q309 and increased 0.2% over the previous quarter, according to a quarterly report form IHS Global Insight, a provider of economic and financial analysis.
Although prices increased on a national average, 161 of the top 330 metropolitan areas had declines in prices, but it’s still an improvement from Q408 when prices dropped in 317 metro areas. For the first time since the study began in 2005, no metro areas were “extremely overvalued.”
However, the firm warns against extrapolating the results of the report into wider trends: “While the rate of decline has decreased throughout the year as the market began to stabilize, it's not at all clear that the market is on a recovery path,” said James Diffley, group managing director of IHS Global Insight’s regional services group.
The increase is the first since Q207 when the slide began, but prices remain 10.7% below the peak that same year.
The Federal Housing Finance Agency’s (FHFA) monthly house price index also showed improvement as prices increased 0.6% on a seasonally adjusted basis from September to October.
The largest declines from the previous quarter came from Bend, Oregon’s 5.6% drop, and Las Vegas’ 5% depreciation. Both metros are 33.5% and 56% below their peaks in 2006, respectively. Of the 330 metro areas studied, eight dropped below 50% of their peaks. Merced, Calif. is 66% below its highest point.
Since the cycle began, only 16 MSAs have avoided a net home pricing decline. Six are in Texas, and all but Pittsburgh are in the center of the country.
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