Archive for September, 2010
The two largest mortgage originators in the US, Bank of America (BAC: 7.29 -0.14%) and Wells Fargo (WF: 29.65 +4.59%), were both among the top 25 most recognized brands by women in a new monthly index compiled by NBC Universal. No other financial institutions made the list.
The index is part of a new NBC female-targeted ad sales and marketing research initiative. NBCU collected their data from a compilation of online search data from ComScore, social media buzz data from New Media Strategies and person-to-person conversations tracked by Keller Faye.
The index found that 16 of the top 25 most recognized brands were in product categories typically thought to be male-dominated, finance included.
President of NBC's Women & Lifestyle Entertainment networks, Lauren Zalaznick, said the index is important because it displays female trends nationwide.
"In addition to being responsible for 85% of today’s consumer purchases, women are also the biggest brand ambassadors. Research shows that 96% of women will recommend a product to a friend if she likes it," said Zalaznick. "On iVillage alone, there are 20,000 brand recommendations each month."
The Word of Mouth study tracked by Keller Faye found that women talk about brands incessantly — about 92 times a week. Sixty-two percent of women said what they heard from other was credible and believable, and 51% said they would purchase something based on a conversation.
Wal-mart was the No. 1 most recognized brand, followed by Target, Verizon, EBay and AT&T. Gap and Kohl's were also in the top 25.
Write to Christine Ricciardi.
Disclosure: the author holds no relevant investments.
Posted in Origination/Lending, Top Stories | No Comments »
The House Financial Services Committee is preparing for a day of expert testimony on the Future of Housing Finance, beginning now.
Today's meeting is being billed as "a Review of Proposals to Address Market Structure and Transition," which the industry is translating as "finally getting around to address the GSEs." The committee will not meet again until November.
Dodd-Frank is comprehensive regulatory reform, touching almost every aspect of housing finance – except for the government sponsored-entities of Fannie Mae and Freddie Mac.
Written testimony started to be released yesterday evening, with Michael Heid, Co-President of Wells Fargo Home Mortgage and Michael Farrell, CEO of Annaly Capital Management providing previews of their written testimony. Both will argue for a highly diminished role of the GSEs in the secondary markets.
Tom Deutsch, the executive director of the American Securitization Forum will largely come out in support of this, but will say that caution must be taken in the new environment of heightened and multitudinous regulations.
Over the last year and a half, the securitization market has been confronted with a wave of legislative and regulatory action, for example, including the securitization-related provisions of the Dodd-Frank Act, the FDIC’s final rule relating to its securitization legal isolation safe harbor, new SEC disclosure rules under Regulation AB, further changes in regulatory capital requirements, changes in generally accepted accounting principles – and not to mention international initiatives such as “Basel III.”
"The regulatory challenges are further exacerbated when you consider that the market will in many cases not be able to tap the unregistered private placement market in situations where new regulations or disclosure requirements will be difficult or impossible to meet," Deutsch will say.
Ken Bentsen, VP for public policy and advocacy at the Securities Industry and Financial Markets Association, the other trade group testifying today, will argue for a simpler starting point.
"The first policy question that members of Congress and the Administration face: should the government provide material support to mortgage lending? Only Congress can define what the goals of national housing finance policy should be," his written testimony states.
Bentsen, however, is somewhat critical of Heid's suggestion that the creation of private bond insurers, what he calls the Mortgage Securities Insurance Companies, will provide an adequate backstop in the absence of an implied US government guarantee on MBS.
"Many insurers have ceased underwriting new business, have entered a wind-down mode, and/or have ceased paying claims on their insurance policies," Bentsen will testify. "Clearly private sector solutions were not, and likely will not be, resilient in times of stress."
Write to Jacob Gaffney.
Posted in Secondary Market/Investors, Slider, Top Stories | 4 Comments »
Mortgage loan applications dropped for the fourth week in a row, down 0.8% for the week ending Sept 24, according to the Mortgage Bankers Association weekly applications survey.
Last week, the MBA reported a 1.4% decline in applications.
The refinance index decreased 1.6% from the previous week, the fifth consecutive week of declines. The seasonally adjusted purchase index did increase 2.4% from last week, driven by government purchase applications.
The unadjusted purchase index remained 32.4% lower than last year.
The four-week rolling average for the seasonally adjusted market index dropped 3.3%. For the purchase index, the four-week average increased 1.1%, and it fell 4.2% for the four-week average on the refinance index.
Refinanced mortgage activity decreased to 80.7% of the total applications, down from 81.1% last week.
According to the MBA, interest rates for a 30-year fixed and the 15-year fixed rate mortgages fell again toward record lows. The 30-year FRM dropped to 4.38% from 4.44% last week, and the 15-year FRM decreased to 3.77% from 3.88%.
The Mortgage Maxx weekly index, which adjusts data to reflect the number of households applying for a mortgage, fell 2.6% to 166.6 for the week ending Sept. 24. The index has averaged 173.9 the past four weeks.
"[I]f post Election Day some sort of major plan emerges to push rates even lower, the MAX could indeed break from its recent trend. But as stated many times before, simply changing the tax benefit to make the mortgage deductions more valuable could accomplish the same thing with a lot less locomotion," according to the Maxx.
Write to Jon Prior.
Posted in Origination/Lending, Top Stories | 11 Comments »
The Ohio Attorney General Richard Cordray and Colorado AG John Suthers joined five other states in a review of the GMAC Mortgage, now Ally Financial, foreclosure issue.
Cordray sent a letter to Ohio judges this week requesting state courts make a special review of all foreclosure cases involving GMAC Mortgage, and Suthers sent a letter directly to GMAC, requesting an explanation of what went wrong and any new procedures that have been put in place since.
Early last week, GMAC suspended evictions and REO sales in 23 states where faulty foreclosure affidavits were detected. The servicer of nearly $380 billion in mortgages admitted some documents were signed without direct knowledge of them or a notary present.
Moody's Investors Service has put the GMAC servicer rating and $7.6 billion worth of residential mortgage-backed securities up for review because of the issue.
Suthers wrote in his letter that GMAC initiated more than 1,000 foreclosure actions in Colorado since Jan. 1.
"In particular, I would like to learn what steps are taken to insure that GMAC is indeed the holder of the evidence of debt being foreclosed upon, that the loan question in default, that efforts have been undertaken to mitigate the foreclosure through loan modification, forbearance, or other steps, and that outstanding loan balances are as represented," according to Suthers' letter.
Write to Jon Prior.
Posted in Servicing/Default, Slider, Top Stories | 6 Comments »
Michael Heid, Wells Fargo Home Mortgage co-president, will say in written testimony tomorrow before the House Committee on Financial Services that privately capitalized firms could guarantee securitized mortgages in the future, not the government-sponsored enterprises Fannie Mae and Freddie Mac.
Heid is also the chairman of the Housing Policy Council of the Financial Services Roundtable, which represents 30 national mortgage finance companies. The HPC, he said, drew a proposal for the future of Fannie and Freddie that would involve creating at least four private mortgage securities insurance companies.
Michael Farrell, CEO of Annaly Capital Management (NLY: 16.81 -0.41%), will testify tomorrow as well agreeing that the government should leave the mortgage industry for private companies to fill the void and make securitization profitable again.
These MSICs, according to Heid, would purchase mortgages from originators, package them into securities and guarantee the payment of interest and principal on them for a fee.
According to Heid's proposal, the Federal government would charter, supervise, and ultimately back the MSICs either explicitly or implicitly.
"The greater the number of MSICs, the better insulated the housing finance market would be from the failure of any one MSIC," Heid said. "On the other hand, too many MSICs — with different underwriting systems and procedures — could be overly burdensome to lenders, particularly smaller lenders."
The Treasury Department has recorded losses of $148 billion attributable to the bailout of Fannie and Freddie so far. Edward DeMarco, the acting director of the Federal Housing Finance Agency, the conservator of the GSEs, said the bailout could eventually cost taxpayers $400 billion.
While the Dodd-Frank Act passed in July did not address the future of Fannie and Freddie, it did set a deadline for a proposal to be drafted by the end of the year.
"The challenge we face is designing a secondary market system that ensures a steady flow of reasonably priced mortgages to borrowers while limiting the exposure of taxpayers," Heid said.
Write to Jon Prior.
Posted in Secondary Market/Investors, Top Stories | 1 Comment »
The Department of Housing and Urban Development today hosted a webinar to guide lenders through changes in data requirements associated with originating a loan backed by the Federal Housing Administration through a sponsored originator.
A sponsored originator is a third party underwriter, outsourced by a lender to specifically take care of the origination process. Sponsored originators are not FHA-approved individuals, but instead work with lenders who are approved by the FHA. Although they originate FHA-backed loans, they are not granted access to any FHA non-public systems, including the FHA Connection for example.
HUD updated its many of its online systems to incorporate features regarding sponsored originators. For example, there is now a maintenance page with a list of active sponsored originators that lenders can use as an outsourcing tool. Originators on that list have no jurisdiction and can therefore be ordered to a case anywhere in the country.
If an originator that a lender wants to use is not on the list, they can add him. Information such as the originator's nine-digits employer identification number, contact information and their company name are required to register. The originator's National Multiple Listing Service number can be entered, but is not required.
Originators must be registered on the maintenance page to be eligible for work as a sponsored originator for an FHA loan. An originator is ineligible if their status has been terminated by HUD.
HUD revised form 92900A by adding additional fields with respect to sponsored originators. If a lender is using a sponsored originator, they must use the revised form which includes additional fields to specify the originator's company, identification numbers and name.
The FHA Connection, a government website that connects FHA-approved lenders directly and securely with business partners, has also adapted to the use of sponsored originators. In building a loan case file, lenders must provide the above listed information. If the case is already made, the information fields will automatically be filled in upon reopening the case file.
If a lender wants to switch to or from employing a sponsored originator, they must use the 'case transfer' option. They cannot make that change from within the case file.
The HUD scorecard is now updated to version 2.3, which scores loan requests based on new mitigation factors. The webinar gave no other details about the score requirements, except that loans that need to be reevaluated will be scored according to the new guidelines.
All policy changes are set to go into effect Oct. 4 and apply to loans originated on or after that date. The webinar spokespeople made an important note that rules to loan correspondent and the loan agent programs will not changed. After Jan. 1, 2011, the loan correspondent program will no longer be available. Sponsored origination will become the replacement system.
Write to Christine Ricciardi.
Posted in Origination/Lending, Top Stories | 3 Comments »
The chief executive of Annaly Capital Management (NLY: 16.81 -0.41%) expects the secondary market will adapt to any changes that come to the structure of the housing-finance market by repricing it.
Michael Farrell, who will appear tomorrow before the House Committee on Financial Services, said the majority of the capital in the $11 trillion mortgage market comes from the secondary market.
"If the new system has significantly different risk, uncertainty and friction than the housing-finance system we have now, the consequences may be that our housing-finance system is smaller with lower housing values and less flexibility and reduced mobility for borrowers," Farrell plans to tell members of the committee at a hearing on the future of housing finance.
Farrell will also say that he wants to see the portfolio activities of Fannie Mae and Freddie Mac eliminated.
"The private market would expand its investment activity to fill this role," according to Farrell. "But it is important for the committee to understand that the majority of agency MBS investors finance their positions, using financing that is available and priced where it is because of the government guarantee on the assets."
Farrell believes the current system, at least, "the one that prevailed until underwriting standards started to slip around 2004, is the most efficient credit delivery system the world has ever seen."
But there isn’t enough capital for credit-sensitive, private-label MBS investors to supplant the installed base of rates buyers at the current price, according to Farrell.
He also wants the guarantee on agency mortgage-backed securities and the 'to-be-announced' market of the current system to remain in place.
Annaly, combined with its subsidiaries and affiliates, owns or manages more than $90 billion of primarily agency and private-label MBS, according to Farrell. The New York-based firm also provides securitization, structuring, financing, pricing and advisory services.
Write to Jason Philyaw.
Posted in Secondary Market/Investors, Top Stories | 2 Comments »
Clark Street Capital's Bank Asset Network will sell a portfolio of loans originated by a financial institution in Chicago with an unpaid principal balance of $26.7 million.
The 29 whole loans secured by mortgages on real property range in size from $89,065 to $2.3 million. Of the those loans, 54% are nonperforming, 40% are performing, and the remaining 6% are sub-performing.
Properties in the portfolio are single-family residential houses, improved lots and residential land. Jon Winick, a spokesman for Clark Street Capital told HousingWire the value of distressed loans are on the rise.
"There's been an increase in the value of distressed assets since October 2009. The banks have written assets down, maybe not to a point where they don't have future losses, but they're a lot further a long than they were a year ago," Winick said.
According to the Standard & Poor's/Case-Shiller index out today, Chicago home prices increased 1% in July, one of the 12 cities in the 20-city composite index to see an increase.
Initial bids are due on the portfolio Oct. 14, and the final bids are due Oct. 28. The closing date on the sale is scheduled for Nov. 4.
"It's very homogenous portfolio of like-minded assets," Winick said.
Write to Jon Prior.
Posted in Servicing/Default, Top Stories | No Comments »
Investment bank JPMorgan finds that the level of mortgages more than 60-days overdue continued to increase in the prime space, while generally decreasing for other products.
The analysts for the August remittance report said the data indicate delinquencies on prime mortgages have yet to peak. The report tracks the performance of several indices that monitor securitizations.
Month-on-month, the numbers do not vary greatly with 60-day delinquencies up to 11.2% across prime indices, 30.9% across Alt-A, 42.7% for option ARM, and 41.5% for subprime.
"Modifications and short sales are now keeping a lid on delinquencies in lower credit products," according to the analysts.
Overall, remit figures were similar to the past few months, with some positive signs, including higher voluntary prepays from prime- and stable-loss severities in Pay Option ARMs and subprime.
Mortgage modifications continued at roughly the same pace in August as the prior month, the report adds. Overall, there were 4,817 mods across the 307 deals in indices that reported mods this month compared to 4,660 mods last month. The average reduction for principal mods was $64,000, while the average rate reduction was 3.07% for rate mods.
Cumulatively, approximately 44% of outstanding subprime loans have been modified, POA have reached 15% to 20%, Alt A is at 7% to 15%, and prime is 5% or less.
Write to Jacob Gaffney.
Posted in Secondary Market/Investors, Top Stories | No Comments »
Of the 148,129 Home Affordable Modification Program trials Bank of America has canceled through August, more than 63,000, or 43%, still await additional loss mitigation action, according to Treasury Department data.
Alan White, a Valparaiso University Law School professor wrote on his blog Tuesday that BofA has offered alternative modifications to just 24% of borrowers with failed HAMP trials, "woefully short of even the poor performance of servicers as a whole." (The Huffington Post followed the blog here.)
The Treasury published the outcomes of failed HAMP trials that were canceled because of insufficient documents, another default during that three-month trial, or for ineligibility for the program. The data includes the top-eight servicers in the program (found on page five here).
White did not include the amount of actions pending for these top-eight servicers. BofA's 63,000-plus is more than three times the amount of CitiMortgage (20,264), more than four times the amount held by JPMorgan Chase (14,631), and more than seven times more that of Wells Fargo (8,720).
Other servicers, on average, offer an alternative modification on 44.5% of the trial mods canceled, compared to the 24% from BofA.
Richard Simon, a spokesman for BofA, told HousingWire that actions have been taken on the bank's higher percentage of canceled trial modifications, and results will begin showing up in future Treasury reports.
"Bank of America expects its other percentages, including alternative modifications, will be more in line with industry averages," Simon said.
The Treasury also included data on the amount of foreclosure starts for these canceled trials. BofA has started the foreclosure process on 8,062 of its 148,000 canceled trials, or 5.4%, half of the industry average of 11%. Wells Fargo has started 17,882 foreclosures, and JPMorgan Chase started 16,089 foreclosures on these canceled trials. Citi started 6,351 foreclosures on its canceled trials.
BofA holds 383,482 mortgages that are eligible for a HAMP trial, according to the Treasury, nearly double the 201,771 held by JPMorgan Chase, the next highest.
BofA serviced $2.1 trillion in mortgages in 2009 overall, a 5% increase from the year before. Of the other "big-four" lenders, only Wells had a yearly increase at 0.9%. Both Chase and Citi saw decreases.
Borrowers have voiced frustration with how servicers are handling HAMP, and recent issues with the GMAC foreclosure process has raised even more ire for the servicing industry.
The Obama Administration set an early goal for 3 million to 4 million borrowers to receive aid under HAMP. After 17 months, servicers have reached more than 15% of that mark, up from slightly higher than 14% in July.
If servicers gain an average of 1 basis point every month, they would not reach 3 million permanent modifications for another 85 months, or another seven years. HAMP is set to expire at the end of 2012.
"While HAMP certainly has design flaws that hamper its ability to turn around the foreclosure crisis, servicer performance is a serious issue, and some banks are either unwilling or unable to honor their program contracts," White wrote on his blog.
But Simon said Bank of America is working through the backlog of its HAMP trials that are still awaiting action.
"Progress has been made by Bank of America as we have focused on getting through the backlog of aged trial modifications over the past three months and completing actions on the ineligible mortgages will begin to show up in coming reports," Simon said. "Until then, any conclusions seem premature."
But HAMP may only be a microcosm of the issues in loss mitigation. Lender Processing Services’ Applied Analytics division reported in August that more than 2.6 million mortgage loans are 90+ days delinquent and not yet in foreclosure, the heart of the shadow inventory of homes waiting to hit a troubled market.
Write to Jon Prior.
Posted in Servicing/Default, Top Stories | 4 Comments »
