Archive for February, 2011
The entire Chicago metropolitan area is at a very high risk of mortgage fraud, as localized risk is spreading rapidly.
Chicago zip code 60621 remains the riskiest area in the nation, according to a quarterly mortgage fraud report from Interthinx. This trend is driving the Chicago area up from a "moderate risk" zone to "very high risk." In addition, the Illinois fraud index jumped 26 points in the fourth quarter, the biggest increase of any state.
Interthinx reported the risk index for the fourth quarter of 2010 at 140, down 2.8% from the third quarter and 3% from the same time last year.
The index is calculated based on the frequency that indicators of fraudulent activity, such as property misvaluation, employment misrepresentation or concurrent closing schemes, are detected in mortgage applications processed by Interthinx. A value of 100 on any given index represents the normal level of fraud risk. Chicago is 568. Glendale, Arizona is next at 547.
Nevada and Arizona, at the state level, continue to have the highest exposure to risk at indices of 255 and 210, respectively. Florida came in at 181, followed by California at 180. California contains six of the top 10 most risky MSAs, according to Interthinx.
The states with the lowest mortgage fraud risk indices are, in descending order, Montana, Wyoming, West Virginia, Mississippi and Kansas. The five lowest ranking states have an index less than half the national average. (Click on chart to expand.)
Interthinx tracks four type-specific fraud risk indices. The identity fraud and employment/income fraud risk indices both spiked at the end of 2010 compared to a year ago, up 27% and 28%, respectively.
The identity fraud increased to 190 in the fourth quarter, up 0.4% from the third quarter. The Cleveland metropolitan statistical area topped out the index at 606, a 53.5% increase from last quarter and a 260.9% increase from last year. Trenton-Ewing, N.J.; Akron, Ohio; Fayetteville-Springdale-Rogers, Ark.-Mo. and New York et al, N.Y.-N.J.-Pa. rounded out the five MSAs with the most identity fraud.
The employment/income fraud risk index increased to 101, up 7.5% from the preceding quarter and up 28.1% from a year prior. The Burlington-South Burlington, Vt. metro area came in first on the index at 221. That number is up 42.6% from the previous quarter and up 187.1% from the same period last year.
The Property Valuation Index as well as the Occupancy Fraud Index declined both on a quarterly basis and on an annual basis. Property Valuation fraud risk, which aims at incorrectly valuing home equity, dropped to a 254 index, while Occupancy fraud risk dropped to an index of 64. This type of fraud is a favored vehicle of professional real estate investors who falsely claim the intent to occupy the purchased property to obtain lower interest rates or down payments on a mortgage.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
A fourth-quarter drop in the nation's mortgage delinquency rate spells good news for the economy even as the foreclosure inventory level hit a record high on procedural issues, the Mortgage Bankers Association said Thursday.
The delinquency rate for U.S. mortgages fell 91 basis points in the fourth quarter with 8.22% of mortgages classified as delinquent, or at least one payment past due but not in foreclosure, the Mortgage Bankers Association reported.
That's a drop from a delinquency rate of 9.13% in third quarter and a 25-basis point decline from the 9.47% delinquency rate recorded in year earlier quarter. By the end of the quarter, the non-seasonally adjusted foreclosure start rate hovered at 1.27%, down seven basis points from the third quarter.
While this slowing in foreclosure starts was highlighted by MBA analysts as a possible thawing in the economy, the number of mortgages moving through the actual foreclosure process went up on a non-seasonally adjusted basis, hitting an all-time high, suggesting that procedural issues surrounding foreclosures have created a bottleneck, making it harder for loans to make it through the entire process.
The MBA said the percentage of loans in foreclosure during the fourth quarter rose to 4.63% from 4.39% in the prior quarter.
"While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high," said Mike Fratantoni, the MBA's vice president for single family research. "The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois." (see chart below)
The MBA did have some good news: The fourth-quarter seriously delinquent rate — a measure of the percentage of loans 90 days or more delinquent on a non-seasonally adjusted basis or in foreclosure — fell from the prior quarter and year earlier. For the recent quarter, this measurement decreased to 8.57% of all loans classified as seriously delinquent from 8.7% for the third quarter. On a year-over-year basis, the seriously delinquent rate fell 110 basis points from 9.67% in the fourth quarter of 2009.
The MBA said Thursday it will keep its eye on Federal Housing Administration loans since mortgages insured by the FHA were the only loan type to experience an increase in the seriously delinquent rate. Holders of subprime and prime loans saw the seriously delinquent rate drop at least 18 basis points between the third quarter and fourth quarter on a seasonally adjusted basis, while the seriously delinquent rate on FHA-insured loans increased 21 basis points to 8.46% in final quarter of 2010. The seriously delinquent rate on VA loans fell one basis point in the fourth quarter.
Write to Kerri Panchuk.
Abandoned houses! Blighted neighborhoods! It all sounds so sexy thanks to a revitalization initiative put in place by Detroit Mayor Dave Bing, who's incentivizing prospective buyers with $150K in renovation money, should they choose to scoop one of these properties off the market. As part of Bing's program, police officers willing to move to Detroit only have to put $1,000 down, and college grads get $2,500 in rental money and a $20,000 forgivable loan if they do indeed buy something (that may or may not be an upgrade from the frat house). There are 100 houses in total, and they've all been documented by terrific photographer Kevin Bauman. Turns out you don't need Eminem to make Motor City look beautiful.
A Barclays Capital analyst expects banks to continue supporting the agency mortgage basis this year after adding nearly $87 billion of agency MBS during the second half of 2010.
Matthew Seltzer, who tracks the securities from the firm's New York office, said "valuations remain attractive and other lending is still reasonably difficult," which points to banks adding more agency MBS.
Most of the additions in the latter part of 2010 came in the form of Fannie Mae and Freddie Mac pass-throughs and agency collateralized mortgage obligations. Seltzer said banks mostly reduced Ginnie Mae pass-through holdings in the fourth quarter for an aggregate loss of $1.2 billion.
Barclays Capital said the top 50 banks added $38.4 billion of agency MBS in the fourth quarter, which was on top of $48.5 billion in the third quarter. Meanwhile, the banks lowered non-agency MBS holdings by $9 billion, or 5.1%, during the final quarter of 2010. Treasuries holdings also decreased, as did the level of agency debt held at the banks.
Seltzer said the data from the National Information Center aren't as comprehensive as the coming quarterly banking profile from the Federal Deposit Insurance Corp. but still a good gauge of bank assets and liabilities.
Write to Jason Philyaw.
