Archive for April, 2010
As a writer who has covered the mortgage business for many years, I like to think that I bring the industry a lot of what executives here need to know about some aspects of their business. When it comes to technology, for instance, I usually have a lot to say. But as fast as things are changing today, it helps if companies can get their executives out to interact with those from other firms that are also working hard to make sense of a rapidly evolving environment.
For that, nothing beats a live conference.
For a short period after 9/11, and then for the last two years or so, companies have found it more difficult to send people out to industry shows. For a while, there was a lot of chatter about virtual conferences. As a multi-media producer who is fond of podcasting, I saw a lot of promise in getting people together to discuss important industry issues over a distance.
Indeed, over the past 12 months or so a number of publications have begun actively promoting podcasts, webinars and web-based video. A few companies have also stepped into the pool and produced some content. Interthinx, for instance, a company I work with, recently won a national award for its edutainment-based web video content. I wasn't involved in the production. Leonard Ryan of QuestSoft, a man I don't work for but really like, has been producing enjoyable video content during the holidays for years.
But for all the advances I've been happy to see in social networking, online audio and video and general creativity in corporate communication, I don't believe it will ever take the place of the face-to-face meeting. While attendance at industry events have been quite depressed over the last two years or so, I think that may be turning around now, as I'm hearing that this spring's conferences have been better attended.
This week, I'm in Chicago for the Mortgage Bankers Association's Technology in Mortgage Banking conference. This year, the show is co-located with the organization's National Fraud Issues Conference. The buzz around the show is that about 900 men and women who make a living in the industry are on-site. That's not bad for a show the organization was thinking about putting to sleep.
I'm working on another piece for HousingWire where I'll go into the good, bad and not so pretty, so I won't waste time on that here. But I will share with you a couple of reasons that I think live events will always be important in our industry.
The sessions are the first reason to attend. Having planned conferences in the past, I can tell you that some speakers can hear you tell them not to turn the podium into a sales tool and completely forget it by the time their session starts. Selling during a conference session never works and yet that's one of the most common complaints I hear from conference attendees. But that doesn't make the session less valuable, in my mind.
If speakers aren't good enough to provide the information attendees need and instead fall back on more familiar marketing speak, it's up the attendees to ask the questions that will get them the information they need. By attending a conference that features sessions on a topic of interest, an attendee who is not afraid to ask questions can often get the information they are seeking. Sometimes, it doesn't come from the speakers, but from someone in the audience who approaches the attendee with a better answer in the hallway outside.
The other reason to attend live events is the exhibit hall floor. While lenders can often feel like they've been dropped into a shark tank, vendors will find a room full of competitive intelligence. The only drawback is that it might take a bit of creativity to get beyond the booth graphics because the industry isn't big enough for an experienced executive to move about unrecognized.
Most vendors don't have to make a frontal assault on a competitor's booth as there's usually enough talk going on around the show to find out the details about everyone's offerings. Getting this much information about a range of competitors outside of a conference would be extremely time consuming.
My favorite reason for attending these shows might be surprising to someone who hasn't worked in this industry before. Despite the trillions of dollars that flow through the home finance industry, the leaders are part of a fairly small group, most of whom seem to genuinely like each other. On the vendor side, at least, this group has proven, through efforts like MISMO, that they can work together to get things done. It makes for a pleasant industry gathering and one that seems unlikely to be replaced by virtual meetings any time soon.
The change in home prices from February 2009 to February 2010 was positive in the latest edition of the Standard & Poor’s (S&P)/Case-Shiller Home Price Indices.
While the results mark the first time since December 2006 that home prices improved year-over-year, it is very likely the results are due to a surge in home buying leading up to this week’s expiration of the homebuyer tax credit.
“The homebuyer tax credit, available until the end of April, is the likely cause for recent, encouraging housing statistics and this may also flow through to some of our home price data in the next few months,” said David Blitzer, chairman of the S&P index committee.
“It is too early to say that the housing market is recovering,” Blitzer added.
Compared to one year ago, the 10-city home price composite increased 1.4% and the 20-city composite increased 0.6% in February. In January, year-over-year prices in the 10-city composite were level, while the 20-city composite declined 0.7%.
As shown in the chart above, home prices are now at levels equal to late summer/early autumn 2003. Since peaking in the summer of 2006 through the trough in April 2009, the 10-city composite is down 33.5% and the 20-city composite is down 32.6%. From summer 2006 to February 2010, the 10-city composite is down 30.7% and the 20-city composite is down 30.3%.
The results echo another home price index released Monday from First American CoreLogic, which showed a 0.3% year-over-year increase in February, the first annual increase in three years.
In 11 of the 20 markets surveyed, prices were down year-over-year. The largest decline, 14.6% in Las Vegas, was the only double-digit decrease. In six markets — Charlotte, Las Vegas, New York, Portland, Seattle and Tampa — prices reached new price lows in the housing cycle.
“Beginning last November, each report showed gains as fewer cities reported year-over-year declines than in the previous month; those gains ended with this report,” Blitzer said. “These data point to a risk that home prices could decline further before experiencing any sustained gains.”
In every market except San Diego, prices declined from January levels and 14 markets have fallen for at least four consecutive months. San Diego saw a 0.6 percent increase from January.
“This simply confirms that the pace of decline is less severe than a year ago,” Blitzer said. “We should also pay heed to foreclosure activity, which have reached their highest level in at least the last five years. As these homes are put up for sales, we may see some further dampening in home prices.”
Write to Austin Kilgore.
The Mortgage Asset Research Institute (MARI), whose subscribers represent 70% of the mortgage finance space, reports today appraisal fraud is taking a larger proportion of trickery alleged in suspicious activity reports (SARs) filed with the Financial Crimes Enforcement Network (FinCEN).
In 2008, suspected appraisal/valuation fraud stood at 22% of mortgage fraud reports. In 2009, that jumped to 33%, said MARI in a conference call on its yearly results.
"It is not surprising given the current state of the housing market," said Darius Bozorgi, CEO of Veros, an appraisal software provider to mortgage lenders and the secondary market. Veros, along with Lender Processing Services (LPS: 16.78 +1.39%) provide support to MARI in its yearly report on fraud.
"Appraisal fraud was masked in the past by rapidly appreciating housing market," added Bozorgi. "In a rapidly depreciating market, appraisal fraud is more apparent."
The report added that the states of Arizona, New Jersey and Virginia are new to the top ten list of states with the highest amount of SARs. The amount of SARs filed rose to 67,190 in 2009, from 63,713 in 2008 and 46,717 in 2007.
The below graph is from today's presentation and is reproduced with permission from LexisNexis Risk Solutions, the global information provider that operates MARI:
Tax return and financial statement reporting continued to hold a top spot in fraud reports, going to 26% from 28% in 2008. This comes as no surprise to Denise James, the director of Mortgage Solutions at Lexis Nexis, considering the state of the economy.
"Consumers are becoming a little more desperate for credit," she said, adding that the documents itself are not fraud proof, thereby underscoring the growing importance of due diligence when originating loans.
Write to Jacob Gaffney.
The author holds no relevant investments.
Prices ticked up 0.3% in February compared to one year earlier, marking the first annual increase in more than three years, according to the First American CoreLogic LoanPerformance house price index (HPI).
Despite the slight gain over last year, the expiration of federal stimulus programs looks likely to drag down the fragile recovery seen so far in the housing sector, First American said.
Annual price declines were concentrated in western states, with Idaho falling the sharpest — down 13.7% — from last year. Nevada followed with the second-highest — 12.9% — decline from last year:
February marked an improvement over January's 0.5% yearly price decline. The yearly appreciation in prices doubled to 0.6% in First American's February non-distressed HPI, which measures price changes excluding distressed sales.
The national average house price fell 2% from January, First American said, although seasonal weakness may account for the one-month change.
“February’s year-over-year increase in the HPI breaks through an important psychological barrier,” said Mark Fleming, chief economist for First American CoreLogic. “While the increase in the HPI is encouraging, expectations for increased inventory as federal housing stimulus expires moderates our forecast for 2010. Prices will continue to bounce along the bottom while inventory levels remain elevated.”
The company's forecasts for the inventory of homes for sale rose as interest rates are expected to rise, tax credits are set to expire and lingering winter weather continues to drag on February prices. The forecast illustrates what First American called a "sluggish" recovery.
After an expected "modest" growth in spring and summer, the national single-family combined HPI is forecast by First American to decline by 3.4% from February 2010 to February 2011. The company based this expectation on the expiration of current federal housing stimulus programs, including the first-time homebuyer tax credit.
Write to Diana Golobay.
