Archive for September, 2010
First Preston Housing Solutions today named Michele John Kelaart president.
“Michele brings a global investment perspective to First Preston’s operations and will deliver the portfolio strategies and solutions our clients need to make a positive difference in their performance,” said Nancy T. Richards, CEO of First Preston, a nationwide REO marketing, management and real estate advisory services company.
For more than 18 years, Kelaart served as the managing director of CarVal Investors. CarVal is a privately owned investment management company in which Kelaart was responsible for the U.S. residential strategy — including distressed residential mortgages, REO inventories and residential development.
Kelaart founded FourSquare Real Estate Services and served as president from June 2009 until September 2010. FourSquare is an investment management company aimed at providing a high level of REO management by minimizing holding times and maximizing net returns.
First Preston recently received two Pinnacle Awards for Best Outsourcer and Best Listing Practices. Kellart said that her decision to lead First Preston is based on the company’s “record of accomplishment over the past 22 years and the innovative technology and strategies that simplify the short sale process and maximize the value of their client’s REO inventories.”
Ariana Garza is an editorial assistant at HousingWire.
In its report titled "One Recession, Two Americas," the Pew Research Center reports that 55% of Americans lost ground during the recent recession while 45% said they "held their own."
Although the recession began in December 2007 and purportedly ended in June 2009, the report collects its data from 2,967 participants who were interviewed in May of 2010. Information gathered from the two groups, referred to as either the "Held their Own" or the "Lost Ground" group, reported drastically different results in most areas.
While 35% of the Lost Ground group reported that they struggled to pay their rent or to pay the mortgage, the other group did not report any trouble in doing so. More than half (53%) of the Lost Ground group are homeowners and 42% of those homeowners said they have not paid half of what they owe on their home. 30% the of Held their Own homeowners (75%) agree.
Overall, 13% of homeowners said they experienced an increase in home value, while more than half of each group reported a decrease (see chart):
Some homeowners believe they owe more for their house than it is actually worth. 29% of those who Lost Ground say they're underwater on the mortgage, while only 14% of the Held their Own feel this way.
Despite the previous statistics, 77% of those who Lost Ground and 83% of those who Held their Own still consider homeownership “the best investment that an average person can make,” according to the Pew Research Center.
Ariana Garza is an editorial assistant at HousingWire.
Testimony Wednesday at the House Financial Services Committee called together a nice range of mortgage finance players. From the big-time originators and secondary market players, to academics and finally the trade groups, the industry was fairly represented.
It is something HousingWire follows very closely, especially in determining the future of the government-sponsored entities — those institutions charged with keeping housing affordable.
Lately, keeping housing affordable is equated to keeping mortgage rates low.
But there is little policy basis to this. The star of the show so far is undoubtedly Ed Pinto, the former chief credit officer of Fannie Mae, someone whom most readers of this column may know.
Pinto's comments proved to be some of the more valuable information being presented: "Rates go up and down all the time. Over my career, mortgage rates have gone from 9% in 1974 to 18% in 1981 to near 4% today," he said.
Demand for homes in 1974 and 1981 was not as low as it is currently — though granted prices were.
Additionally, keeping rates low may keep housing more affordable, but it's clearly to the detriment to the private-label secondary market.
Consistently maintaining low costs to the borrower is not encouraging home sales, as an article in USA Today notes. But keeping mortgage rates low does reduce any chance of profitability in the RMBS market.
Further, Dodd-Frank prohibits pre-payment penalties. However, these penalties serve as a risk hedge in private label RMBS. Pinto also suggested that these fees should be reinstated to help ensure the 30-year mortgages take 30-years to amortize.
Let's not forget the big four in all of this. They would like nothing more than to restart their RMBS series from years back. As far as they are concerned, mortgages originated during the homebuyer tax credit do not carry nearly the same risk as loans from the housing boom.
They are no doubt looking to monetize those loans, in order to free up private liquidity to perhaps originate more loans. But at some point interest rates will have to show a clear profit — an incentive to bundle into securitzation.
After all, as seen with the recent UK RMBS RBS master trust Arran, a single deal can help to respark an industry.
But there needs to be clear support for this. When asked if the GSEs should be dissolved tomorrow – and told to answer 'yes' or 'no' – Pinto responded that he would be in favor of that as long as "Congress' feet are held to the fire so that you won't back down from your commitments."
But in a healthy private securitization market, with a foundation of higher interest rates and more stable performance, we won't need to hold Congress, or anyone else's, feet to the fire.
Jacob Gaffney is the editor of HousingWire.
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