Archive for April, 2011
Data collected by the Federal Reserve suggests the foreclosure crisis is impacting cities nationwide, but the solutions to the cities problems are likely to vary.
In other words, a one-size-fits-all strategy will not sort out the foreclosure crisis plaguing Cleveland, Phoenix and Detroit, according to Federal Reserve Governor Elizabeth Duke, who shared some of the Fed's findings on the crisis Thursday.
According to Duke, while foreclosures in Cleveland and Detroit are the result of an overall declining economy and job losses in the region, both cities have benefited from initiatives spawned by nonprofits, public officials and private sector parties working together to target and revitalize troubled neighborhoods.
"While the problem touches every community, it doesn't look the same in each because it's shaped by the circumstances that prevailed in those neighborhoods before the crisis hit," Duke said.
She added that Phoenix — unlike Cleveland and Detroit — is facing a problem that has more to do with an influx of new home inventory than job losses. Duke blames an oversupply of fairly new homes for bringing the foreclosure crisis into new, middle-class neighborhoods that are generally shielded from the crisis.
In Phoenix, "public-private partnerships have reached out to real estate professionals to help connect eligible families with affordable homes," Duke said. "The challenge for those trying to revitalize neighborhoods is to ensure that qualified homeowners and nonprofits are in a position to compete with investors for these now affordable homes, and the city and private sector have come together to achieve this goal."
Write to Kerri Panchuk.
Tags: Cleveland, Detroit, Elizabeth Duke, Federal Reserve, foreclosure crisis, foreclosures, nonprofit, Phoenix
Posted in Servicing/Default, Top Stories | 1 Comment »
Initial jobless claims climbed 6% last week to the highest level since the end of January.
The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended April 23 rose by 25,000 to 429,000. Initial claims for the prior week were 404,000, which was revised upward a by 1,000. The Labor Department said unadjusted claims normally fall by about 18,500 during the week that includes the Good Friday holiday, when markets are closed. But unadjusted claims rose by 3,500 last week, according to Bloomberg.
Analysts surveyed by Econoday expected 390,000 new jobless claims last week with a range of estimates between 280,000 to 410,000. A Briefing.com survey projected new claims of 390,000 for last week.
New claims remained higher than 400,000 for the third consecutive week. Most economists believe claims lower than that indicate the economy is expanding and jobs growth is strengthening.
The four-week moving average, which is considered a less volatile indicator than weekly claims, rose by 9,250 to 408,500 from a slightly revised average of 399,250 the prior week. The seasonally adjusted insured unemployment rate remained slid to 2.9% for the week ended April 16 from 3%, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 9 fell to about 8.19 million from nearly 8.3 million the prior week.
Write to Jason Philyaw.
Tags: jobless claims, labor department
Posted in Secondary Market/Investors, Top Stories | No Comments »
First American Financial Corp. (FAF: 15.07 +0.67%) posted a first-quarter loss of $15.3 million, or 15 cents per share, on Thursday as the title insurer was forced to pay $45.3 million to strengthen reserves covering a guaranteed valuation product sold in Canada.
That compares to a first-quarter profit of $13.8 million, or 13 cents per share, for the same quarter a year earlier. At the same time, the Santa Ana, Calif.-based title insurer increased its revenue to $931.7 million, up from $908.4 million.
"We are disappointed that our first quarter results were impacted by a reserve strengthening charge we took in connection with a guaranteed valuation product we sell exclusively in Canada," said Dennis Gilmore, chief executive officer at First American Financial Corporation. "We are cancelling the product in its current form and are looking to reinsure a modified version. If we cannot reinsure all or most of the risk, we will terminate the product."
The company also experienced the negative impact of increased claims in its American title operations.
Gilmore said, on the other hand, First American is performing well when it comes to its commercial business and national lender operations. "Our specialty insurance segment continued its strong performance in both the home warranty and property and casualty insurance business lines, achieving a pretax margin of 17.8 percent in the quarter," he said.
Write to Kerri Panchuk.
Tags: claims, First American Financial Corp., mortgage, title insurance, title insurer
Posted in Servicing/Default, Top Stories | 1 Comment »
Homebuilder and mortgage lender Ryland Group (RYL: 18.04 -2.91%) posted a first-quarter loss of $19.5 million, or 44 cents per share, as the company continued to grapple with falling home sales and a real estate market flooded with competing foreclosures and existing home sales.
The firm reported a loss of $14.3 million, or 33 cents a share, a year earlier. The builder, which also maintains its own mortgage finance group, failed to meet analyst expectations, with the average analyst expecting a loss of 31 cents a share.
Ryland's loss deepened as sales fell about 30% to $168.6 million for the first quarter, down from $241.9 million a year earlier.
Home sales fell 17.2%, with only 966 new orders reported in the first three months of 2011, compared to 1,167 a year earlier when the homebuyer tax credit was still in play coaxing buyers into the market.
Ryland's results for the quarter were hurt by pretax charges on inventory, valuation adjustments and other write-offs for the period.
The company's deepening loss comes at a time when homebuilders are struggling to attract new buyers.
Moody's Investors Service recently revised the ratings outlook for PulteGroup Inc. (PHM: 7.725 -0.96%) from positive to stable over concerns the homebuilder's operating performance and the industry's return to a more stable environment will take more than a year.
Write to Kerri Panchuk.
Tags: home builder, homes, Moody's Investors Service, mortgage, PulteGroup, Ryland Group
Posted in Origination/Lending, Top Stories | 2 Comments »
Foreclosure filings in Cook County increased 10% from the previous three months after a pause from mortgage servicers and the Sheriff's ban on enforcement lifted.
Lenders made 11,201 filings in the first quarter for the entire county, with more than 5,000 occurring in the Chicago city limits. Banks repossessed 2,800 homes in the first quarter, according to the Woodstock Institute a nonprofit research group based in the area.
The highest increase occurred in Chicago's East Side community, where filings more than doubled from the same quarter in 2010. Filings also increased 76% in Archer Heights, 60% in Lakeview and 57% in North Center.
Woodstock researchers said the jump was likely caused by the resumption activity by mortgage servicers. These companies froze operations late in 2010 to check affidavits filed in judicial foreclosure states, including Illinois.
But Cook County Sheriff Thomas Dart also installed a moratorium of his own in October. Foreclosures restarted in late November when the state attorney general's office notified him he must enforce evictions signed by a judge.
The pause is still being felt at the far end of the foreclosure process. Woodstock found 54% fewer properties in the first quarter completed foreclosure auctions in Cook County than one year ago. These "significant" declines occurred in all sub-areas of the county and in nearly every Chicago neighborhood.
Woodstock said it is likely that the vast majority of these properties now sit vacant.
"It is likely that a steady increase in auctions quarter to quarter will continue to be observed in 2011 as the bottleneck created by the robo-signing scandal is resolved," researchers said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: auction, Chicago, Cook County, foreclosure, REO, robo-signing, Woodstock Insititute
Posted in Servicing/Default, Slider, Top Stories | 3 Comments »
Flagstar Bancorp (FBC: 0.6738 +2.09%) narrowed losses in the first quarter to $31.7 million, or 6 cents per share, from $81.9 million loss one year ago.
Losses in the fourth quarter totaled $192.1 million. For the first part of the last decade, Flagstar routinely landed among the top 20 mortgage originators in the country. The housing crash pushed the bank to the brink of failure, but it has since begun turning it around by unloading troubled loans.
In the first quarter, Flagstar sold $80.3 million in nonperforming mortgages. These assets totaled $546.9 million at the end of the quarter, roughly half of the $1.3 billion reported the same time last year but up from the $498 million in the previous quarter.
In November, the bank sold $474 million in nonperforming loans.
Flagstar decreased the amount loan-loss provisions in the first quarter to $271 million from $538 million one year ago and $274 million in the previous quarter.
The bank also holds a reserve for probable losses for loans it sold on the secondary market. That account totaled $79.4 million at the end of the quarter, up from $76 million a year earlier.
"As reflected in our allowance for loan losses, the increase in residential (nonperforming assets) is consistent with our expectations, as well as seasonal experience in prior years and reflects the continuing consumer credit issues facing the financial services industry," Flagstar CEO Joseph Campanelli said.
However, income from the mortgage origination department remains down. Gains on loan sales totaled $50.2 million in the first quarter, down from $76.9 million a year ago and $52.6 million in the previous quarter.
"This reflects the decrease in interest rate lock commitments, a decrease in loan originations and a decline in margin," Flagstar said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: earnings, first quarter, Flagstar, housing, mortgages, nonperforming, Origination/Lending
Posted in Origination/Lending, Top Stories | No Comments »
A new Pennsylvania law gives cities the power to extradite out-of-state property owners and file criminal charges against owners who fail to address property code violations.
The Neighborhood Blight Reclamation and Revitalization Act, formerly Senate Bill 900, was signed into law in October and took effect April 25 in the Keystone State.
The act addresses properties with serious code violations that are determined to be public nuisances. It provides several remedies to address decaying properties.
For example, beside the extradition option and potential criminal charges, cities can place a lien on an owner's assets, such as on a car, boat or bank account, for serious property code violations.
Municipalities may also deny permits, such as building and zoning permits, to property owners for unremediated code violations and for delinquent payments on taxes, utilities or other city services, according to the law.
Kim Venzie, with the West Chester, Pa., law firm Unruh Turner Burke & Frees, said she was surprised to see the criminal penalty option in the law and said it will be interesting to see if any cities opt to use the remedy.
"I don't know if municipalities will want to get into that game," said Venzie, whose practice involves representing local governments. "It's got to be expensive to bring someone in from out of state."
Still, she said the new law provides "some teeth" to those townships and boroughs to tackle blighted properties with a more vigorous set of remedies.
The city of Hazelton, Pa., recently said it planned to tap the ability to place liens on assets of property owners who fail to keep their properties up to code. The law applies to residential, commercial and industrial buildings.
The law also allows a municipality to recover the costs required to remediate a case under the act.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: National Blight Reclamation and Revitalization Act, neighborhood blight, Pennsylvania, property code violations, REO, Unruh Turner Burke & Frees
Posted in Servicing/Default, Top Stories | No Comments »
Chase will add 500 to 1,000 mortgage servicing jobs to its Central Ohio workforce when it moves into new offices in Gahanna later this year, the banking giant said Wednesday.
Chase, the banking arm of JPMorgan Chase (JPM: 37.27 -0.59%), already is the region's largest private employer with 17,000 workers in the Columbus area.
The additional workers will help homeowners struggling with their monthly mortgage payments, Chase said. New employees will augment Chase's staff at a 495,000-square-foot facility in Easton that Chase uses for mortgage servicing.
"This is part of our extensive efforts to help customers who are facing financial difficulties," said Frank Bisignano, CEO of Chase Home Lending and chief administrative officer of JPMorgan Chase.
In mid-2009, Chase originally announced an initiative to add jobs in Central Ohio by the end of that year.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: Chase, JPMorgan Chase, mortgage, mortgage servicing
Posted in Servicing/Default, Top Stories | No Comments »
While prospects for the housing market are moderate, at best, several markets are showing signs of improvement — even some that endured the brunt of the crisis.
The official website of the National Association of Realtors released a report that found areas generally perceived as in decline, such as Southern California and parts of Florida, are actually on the road to recovery.
" 'All real estate is local' is a truism that applies to this local market recovery we're witnessing because critical factors today restoring life to home sales vary greatly from one locale to another," according to NAR's Realtor.com website. The trade group looked at market data to identify its top turnaround cities for the spring home-buying season.
The Los Angeles-Long Beach metropolitan area, which was the poster child for the subprime mortgage meltdown, is poised for economic turnaround as homes fly off the market at the fifth-most rapid sales pace nationwide, Realtor.com said. Housing inventory between January and March decreased almost 8% and is up 1.17% from March 2010.
Los Angeles was the third-most searched market in the first three months of 2011.
San Diego is also recovering from the housing crisis that enveloped California from north to south, and has been for about a year.
"The median age of inventory for San Diego listings on the market in March was 79 days, about half the national median, and almost 16% lower than in February," NAR said, adding that San Diego was the 15th most popularly searched MSA on Realtor.com in both February and March.
Washington is another improving market. Median listing prices in the nation's capital were up 4.11% in March compared to the year prior, and unemployment remains low. In addition, housing inventory remained stable over the last year rising only 1.08% since March 2010.
In November, Washington created a "quasi-judicial" foreclosure process to slow the influx of foreclosure cases around the area.
Florida is in the top three states with the highest foreclosure rate, and has been since the housing bubble burst. But Realtor.com said the Fort Myers-Cape Coral metro is seeing improvements in both median listing price and inventory supply. According to the site, prices in March spiked more than 24% compared to the year earlier and inventory is beating the national trend, down 2.47%.
"Like much of Florida, Fort Myers-Cape Coral has been plagued by distressed sales and prices have a long way to go to make up for a loss of nearly 60% over the past four years," according to Realtor.com, but that means there is plenty of room for improvement.
Austin, Texas, rounds out the five least-expected markets in recovery. Texas didn't experience the worst of the economic downturn. And the Austin-San Marcos MSA leads the nation in job growth. Demand for housing is also particularly strong. Last year Austin was the No. 1 economy for commercial real estate growth.
Other markets on the rise this home-buying season include Philadelphia, Colorado Springs, Colo., Boston, Dallas, and Buffalo-Niagara Falls, N.Y.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
Tags: Austin-San Marcos, Fort Myers-Cape Coral, Los Angeles-Long Beach, National Association of Realtors, Realtor.com, San Diego, Washington D.C.
Posted in Secondary Market/Investors, Top Stories | 5 Comments »
Federal Reserve Chairman Ben Bernanke said the U.S. economy is slowly digging out of the financial crisis of the past few years and the central bank now expects GDP growth of about 3.1% to 3.3% this year.
Speaking at the first press conference by a Fed chairman following a meeting of the Federal Open Market Committee, Bernanke reiterated much of what the committee announced earlier Wednesday in its monetary policy decision.
He said the central bank expects GDP growth for 2012 and 2013 in the range of 3.5% to 4%. In January, the Fed projected growth of 3.4% to 3.9% for this year and 3.5% to 4.6% the next two years.
Bernanke held the confab with journalists as the Federal Reserve looks to increase transparency.
He said up until 1994 or so the Fed didn't even tell the public when the FOMC voted to change the federal funds rate. Bernanke said some within the Fed previously didn't feel it necessary to speak publicly about its policy decisions.
"But at this point, we think meeting with the press and getting information to the public in this way outweighed some of these risks," he said.
The central bank expects U.S. unemployment rate to remain elevated and finish 2011 between 8.4% and 8.8% — down from a prior view of about 9%. The rate has hovered near 9% this year after nearly reaching 10% last fall.
The Fed now expects unemployment to drop to below 8% next year and further decline to around 7% in 2013. But Bernanke said progress toward a more normal trend of unemployment somewhere around 5% "seems likely to be slow."
"We are digging out of a very large hole," he said. There are still about 7.5 million less jobs now than before the crisis began, Bernanke said, but the Fed hopes to see stronger jobs growth soon.
Write to Jason Philyaw.
Tags: Ben Bernanke, Federal Open Market Committee, Federal Reserve, unemployment rate
Posted in Secondary Market/Investors, Top Stories | 6 Comments »
