Archive for July, 2010
The level of foreclosures starts in mortgages owned by Fannie Mae and Freddie Mac, the government sponsored enterprises (GSE), is at its highest point ever in 2010 as the rate of new foreclosures continues to increase.
The June 2010 Mortgage Monitor data provided by Lender Processing Services (LPS) Applied Analytics shows that the spike in foreclosure starts is greatest at 6+ months of delinquency. Analysts have suggested that this may be occurring due to the recent increase in HAMP cancellations. Total foreclosure starts for 2010 are at 1.46m, compared to 1.68m for the same period in 2009 and 1.25m in 2008, to be sure, but the rate at which the starts increase during 1H10 is at the fastest pace LPS Applied Analytics has seen.
In a conversation about the findings, vice president Herb Blecher said that "HAMP trials originally were meant to last three months, but almost 1.3m mortgages were trialed in a short period and so we know that some trials run four, five or six months before they are either converted or cancelled."
To be sure, the official HAMP default rates are different, standing a 1.7% after six months — a claim that's hotly disputed.
However, LPS finds that the foreclosure trend is not bleeding over into the market-at-large. Delinquencies and foreclosures remain stable, though elevated, with seasonal trends somewhat muted. Foreclosure starts on non-agency mortgages have also been relatively stable over the last several months, as have the rates on 90+ days default.
In short, for every mortgage performing, the mortgage data analytics firm finds two are deteriorating. At a loss mitigation conference last week, Edward DeMarco, acting director of the Federal Housing Finance Agency, said that banks should consider foreclosing when borrowers are not being rehabilitated.
Additionally, today's numbers show that the six-month moving average deterioration ratio has been steadily declining over the last five months after reversing seasonal trends during late 2009.
Especially positive, LPS finds that the rate of default among loans held by private investors continues to fall to below 60,000 after peaking in April 2009 at 140,000.
Write to Jacob Gaffney.
The author holds no relevant investments.
Economists worry that the end of the home buyers' tax credit will curtail housing demand, pulling prices down with it.
The focus on the credit, however, may miss key points about the outlook for home demand and prices. The future of home buying will rely less on real-estate fundamentals and more on how consumers view job prospects. Until the labor market perks up, lifting paychecks along with it, households will remain reluctant or unable to take on a long-term mortgage.
US apartment landlords are seeing a surge in rentals as mounting foreclosures reduce homeownership and an improving job market for young adults encourages them to find their own places to live.
The number of occupied apartments increased by 215,000 in the 64 largest US markets in the first half, according to MPF Research.
Americans might be counting on the day when home and retirement-fund values start to rise again, but anyone expecting to benefit from a future boom in prices should take note: Economic policymakers around the world are looking for ways to make sure that doesn't happen, or at least not with such intensity that it risks the kind of bust that usually follows.
In studying how to respond to the recent crisis and create a more stable system, central bankers, international officials and others have been focusing on a concept known as "systemic risk."
Elizabeth Warren, clad in cardigans and pearls, has become Wall Street's public enemy No. 1, but it's that very vitriol that could earn her a post heading the government's new consumer watchdog agency.
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Warren, a Harvard law professor and outspoken consumer rights advocate, is currently a top monitor of the government's $700bn bailout of the financial system.
Now she is one of the main contenders to head the Consumer Financial Protection Bureau, an agency to regulate financial products ranging from credit cards to mortgages.
David Jones, the former chief financial officer of Northern Rock, was Tuesday fined £320,000 (US$498,228) and barred from working in finance after the Financial Services Authority found he misled investors about the bank's bad loans in the lead-up to the bank's eventual collapse.
Jones most recently was CFO at Northern Rock Asset Management, the "bad bank" of the nationalized lender after a restructuring of its operations. He left the company in April because of the FSA investigation, a week after two former colleagues were fined and banned for their roles in making the bank's 2006 bad-loan figures appear better than they were.
