Archive for May, 2011
Freddie Mac directed servicers to provide several mortgage relief options to borrowers affected by recent storms in the Midwest.
For borrowers living in major disaster areas, as declared by the President, Freddie will give servicers the ability to reduce or suspend mortgage payments for up to 12 months. Each case will be individually evaluated.
Obama toured Joplin, Mo., this weekend to take in the extent of the damage from tornadoes that leveled more than 8,000 buildings and killed more than 130 people.
JPMorgan Chase (JPM: 37.25 -0.64%) committed $225,000 to relief and recovery efforts in Joplin. Of the money, $100,000 will go to the American Red Cross.
Another $25,000 will go to the Convoy of Hope, a nonprofit based in Springfield, Mo.
Chase will also match employee contributions to the American Red Cross, up to $100,000.
In addition to suspended payments, Freddie could also lift foreclosure and eviction proceedings for up to one year. It may also waive assessments of penalties or late fees against borrowers in damaged homes. Freddie could also elect not to report forbearance or delinquencies caused by the disaster to the nation's credit bureaus.
"In the wake of these astonishing storms, Freddie Mac has authorized the nation's mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Anthony Renzi, executive vice president of single-family operations at Freddie Mac.
Write to Jon Prior.
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Tags: eviction, forbearance, foreclosure, freddie mac, Joplin, major disaster area, Midwest, mortgage, mortgage servicers, obama, storm, tornado
Posted in Servicing/Default, Top Stories | 6 Comments »
Mortgage originations in the first quarter fell 35% to $325 billion, breaking three consecutive periods of growth and threatening to plunge the market back to 2000 levels, according to a report from Inside Mortgage Finance.
The first-quarter drop is the worst experienced since the onset of the recession when mortgage originations plummeted 31.5%, according to a new research report from Federal Reserve Bank of Cleveland researchers Yuliya Demyanyk and Matthew Koepke.
The same report cites Mortgage Bankers Association projections which estimates mortgage originations could fall to $1.05 trillion in 2011, the lowest level in 11 years.
The report blames a decline in refinancings for the dip in originations. Since refinancings generally contribute to higher origination activity, a drop-off in that segment negatively impacts originations as a whole.
The Cleveland Fed Bank report concludes that the only way around declining activity in the refinance segment would be to generate more activity in new home originations—a development the report doesn't foresee when considering the current lull in home starts and the state of the overall housing market.
Write to Kerri Panchuk.
Tags: Federal Reserve Bank of Cleveland, mortgage, mortgage applications, originations, refinancings
Posted in Origination/Lending, Slider, Top Stories | 3 Comments »
As private mortgage insurers continue to fight for a future in the mortgage origination space, the industry is reporting that insurance firms wrote $3.691 billion in primary insurance on newly originated, conventional mortgages during the month of April.
Mortgage Insurance Companies of America — which represents member firms such as Genworth Mortgage Insurance, Mortgage Guaranty Insurance, PMI Mortgage Insurance, Radian Guaranty and Republic Mortgage Insurance — said all of the firms had a total of $615.7 billion of primary insurance in force during the same month.
During the same month-long period, about 17,400 borrowers used private mortgage insurance to buy or refinance a home, according to MICA.
In addition, mortgage insurance companies received 20,733 insurance applications in April and reported 40,875 defaults as well as 43,362 cures.
The mortgage insurance industry has continued to advocate for the proposed 'qualified residential mortgage' standard to include a role for private mortgage insurance. The current proposal does not create an exemption for private mortgage insurance when a borrower falls short of the proposed minimum standard. Instead, QRMs are defined narrowly, requiring a 20% down payment in the current proposed form. Standard & Poor's believes the rule as written will cut into the private mortgage insurers' business.
Standard & Poor's credit analyst Ron Joas, said in a recent report "as the QRM definition is currently written, mortgage insurance is not included as a credit enhancement. Absent the GSE exemption, this would significantly limit the loans on which MIs could write mortgage insurance."
Write to Kerri Panchuk.
Tags: Genworth Mortgage Insurance Corp., Mortgage Insurance Companies of America, mortgage insurers, PMI Mortgage Insurance, Radian Guaranty Inc., Republic Mortgage Insurance Co.
Posted in Origination/Lending, Top Stories | 5 Comments »
Green River Capital will manage commercial and residential REO for Utah-based Mountain America Credit Union through a partnership announced Tuesday.
In March, GRC won a contract to manage REO sales for Freddie Mac. Now, this expansion into the credit union market is a "natural evolution," GRC said, because many asset management systems were not designed to effectively handle their lower volume levels. GRC said it will offer a platform named REOConnex to allow community credit unions such as Mountain America to supervise the status of its properties.
"Mountain America wanted to proactively manage its REO assets and reduce the burden on employees, allowing them to focus on quality member service,” said Brent Taggart, senior vice president of business development and client relations for GRC.
Most of the REO for these smaller lenders will likely be commercial properties. In March, data analytics firm Trepp, showed more than 70% of the nonperforming loans on recently failed small banks were commercial real estate loans.
For the 12 banks that failed in February, nonperforming CRE loans totaled $230 million with $65 million in residential loans.
"As we anticipate continued challenges for the housing market, GRC is meeting the needs of community credit unions by allowing them to merge their REO properties to leverage its technology and benefit from the reduction in time and cost associated with maintaining our non-performing assets," said Gene Erickson, chief operating officer of Mountain America Financial Services.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: foreclosure, freddie mac, GRC, Green River Captial, Mountain America Credit Union, REO, Trepp
Posted in Servicing/Default, Top Stories | 1 Comment »
First Guaranty Mortgage Corp., APD Solutions and Home Depot (HD: 44.60 -0.78%) unveiled a program aimed at getting potential homebuyers to use rehabilitation loans to increase the value and appeal of bank-owned properties.
The companies plan to work with REO asset managers and real estate agents to coordinate the marketing of these homes, and manage the administrative requirements associated with a rehab loan.
The companies want their "Rebuild the Dream" initiative to accelerate the resale of REOs and help rebuild the housing stock by reducing time to sell these properties while boosting prices on homes that otherwise might be marketed in a state of disrepair.
"This initiative will work to smooth the transaction for Realtors who otherwise would have avoided the rehabilitation loan," according to Andrew Peters, senior vice president at First Guaranty, which is a national, full-service mortgage lender. "We believe that many have avoided such products because of a misperception that the 203 (k) loan is time-consuming and difficult to close."
James Cromartie, business development director for APD Solutions, said very few REO properties make it through the foreclosure and repossession process in good condition, making them "far less appealing to potential buyers." APD Solutions, which is a national neighborhood revitalization firm, will partner with Home Depot to coordinate delivery of the renovation services.
Write to Jason Philyaw.
Tags: 203(k), APD Solutions, First Guaranty Mortgage Corp., Home Depot, neighborhood revitalization, neighborhood stabilization, Realtors, Rebuild the Dream, rehabilitation loan, REO, REO asset managers
Posted in Origination/Lending, Servicing/Default, Top Stories | 3 Comments »
Former Treasury Department assistant secretary Michael Barr wants Fannie Mae and Freddie Mac multifamily programs to receive a government guarantee against catastrophe and also be separated from single-family programs.
At the National Multi Housing Council's mid-year apartment strategies conference, Barr said he believes some type of federal backstop for the growing multifamily sector is needed. And growing it is. A new report suggests more than 500 cities are noticing a trend where more homes are becoming rentals. The NMHC is a trade group representing the apartment industry.
Barr advocated having a government guarantee for single-family and multifamily housing for catastrophic situations, but not for first-loss positions.
The focus on multifamily is tied to the predominant belief that renting will be the future for a larger number of Americans in the wake of the housing crisis. Doug Holtz-Eakin, president of the American Action Forum and director of the Congressional Budget Office, said housing subsidies should not be limited to homes that are purchased, but for rental properties, as well. Yet, he said future financing should emphasize equity over debt financing.
Over the next decade, a shift in the rental market is expected. Professionals attending the conference said the vision of neighborhoods will change nationwide, with more apartments built in urban areas for renters who want easy access to entertainment and employment.
Write to Kerri Panchuk.
Tags: American Action Forum, Congressional Budget Office, Fannie Mae, freddie mac, National Multi Housing Council, rental housing, renting, Treasury Department
Posted in Secondary Market/Investors, Top Stories | 3 Comments »
Buying and rehabilitating vacant properties with Neighborhood Stabilization Program funds generated a $3.3 million return for Will County, Ill., allowing officials to double their initial projections for the outreach.
Since July 2008, the Department of Housing and Urban Development disbursed $6 billion in NSP funding through two rounds of grants. Local and state governments, as well as nonprofits, received the money to rehab previously foreclosed properties that now sit vacant in neighborhoods, dragging down local home prices and spawning new areas of crime.
Will County received $5.16 million and began buying up properties in October 2009. The county recruited Dow Realty and Coldwell Banker Residential to acquire and resell them.
Low-income families receive a grant if they commit to inhabiting and maintaining the property for 10 years. If their financial situation changes, the county resells the home, and the grant is paid back from the proceeds of the sale.
Tim Mack, Will County's NSP program manager, said the county acquired 54 properties. To date, it has rehabbed and resold 42 homes. The $3.3 million will be reinvested into the program, he said. By July 2013, the county hopes to acquire, rehab and resell more than 100 homes for a return of $8 million.
"With those two fundamental goals in mind, we made the strategic decision to forge a 'buyer-centric' homeownership program," Mack said on the program's blog. "The idea was that we would not purchase a home unless we had an associated buyer ready to purchase post-rehabilitation."
Russ Weglarz, the broker associate for Coldwell Banker in Bolingbrook, Ill., helped identify properties to buy and found the buyers. The properties are listed on the local Multiple Listing Service and must meet a number of criteria set by HUD before the county can make the investment.
"The whole goal is to help income-challenged homebuyers get into homes," Weglarz told HousingWire Tuesday. "We purchase properties in foreclosure, rehab them for the homeowner. They're thrilled to death. It's a house they otherwise may not be able to buy. And when they're ready to move out, we resell them again at a much higher value. It's a win-win-win for everybody."
Republicans in the House of Representatives, however, voted in March to cut the last $1 billion from NSP through a bill sponsored by Rep. Gary Miller (R-Calif.). His main complaint with the program was that the federal government would see no return on the grants. He even accused some grantees of mishandling the funds and pointed out the program has not prevented any foreclosures.
"They do not have to pay it back. (Grantees) can sell those houses to whomever they want to as long as it is less than what they paid for it," Miller said on the House floor.
But Mack claims the opposite. Because of the county's partnerships with appraisers, housing counselors and other firms, they've been able to minimize risk to the county's investments.
"All of these partners have played a great role in our progress," Mack said. "However, the alliances built with area Realtors has been the most critical driver to our success."
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: Coldwell Banker, crime, Dow Realty, foreclosure, home prices, House, HUD, Illinois, neighborhood blight, neighborhood stabilization, NSP, Republicans, vacancy, vacant homes, Will County
Posted in Servicing/Default, Slider, Top Stories | No Comments »
TMS Funding hired another round of new employees this week, more than doubling its previous staff count. And sources say the firm will continue to hire as big banks continue to contract wholesale lending.
TMS Funding, the wholesale residential lending channel of Total Mortgage Services, brought on Robert Lukowski, Craig Castronovo, Matthew Neeley, Scott Beckwith, and Tracey Ibsen as wholesale account executives. The five attain more than 72 combined years of experience in the industry.
Lukowski comes to TMS Funding from Nationstar Mortgage where he worked in wholesale lending around Illinois. Prior to that tenure, he worked with Wintrust Mortgage, also in the wholesale lending division.
Castronovo, who has 14 years of wholesale and correspondent experience, joins the Milford-Conn.-based firm from Citigroup's consumer lending group. He previously managed sales as well as underwriting, pricing, risk and credit analysis.
Neeley worked with Nationstar Mortgage prior to joining TMS Funding. As a 10-year veteran of the industry, Neeley managed clients in wholesale and retail lending. He also worked for Atlantic Home Loans.
Beckwith joins TMS Funding from Proficio Mortgage Ventures where he served as branch manager and built a new mortgage platform. In his 14 years in the mortgage industry, Beckwith oversaw originations, processing and preunderwriting of residential loan applications.
Ibsen comes to wholesale lender from Home Savings of America where she served as senior community banker with a specialization in wholesale mortgage banking. Ibsen worked in the Northeast the majority of her 15 years in the industry.
The most recent hires bring TMS' wholesale lending division to a total 12 employees working in 10 states. TMS Funding is expanding its operations to accommodate anticipated business growth, according to Lisa Schreiber, executive vice president of wholesale lending.
"There is a void in wholesale lending where the big banks left, we are able to leverage great tools to manage risk and we're enlisting operations help to manage the backbone of all of this," Schreiber told HousingWire. "We're going full force."
Schreiber was hired in January to lead the expansion, or what she calls development, of TMS Funding, which began business about a year and half ago. She added that the lender intends to expand its licensed operations from 22 states by the end of this year and plans to continue hiring, potentially doubling staff again.
Just two weeks ago, the company hired two operations executives from technology firm ISGN. Schreiber said more hires will be announced soon.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
Tags: Atlantic Home Loans, Citigroup, Home Savings of America, ISGN, NationStar Mortgage, Proficio Mortgage Ventures, TMS Funding, Total Mortgage Services, Wintrust Mortgage
Posted in Origination/Lending, Top Stories | 5 Comments »
The latest incarnation of quantitative easing is ending at the end of June. However, economists say the Federal Reserve's $600 billion Treasury debt buying program, called QE2, may not be the last federal liquidity injection into the nation's monetary supply.
Further, they say the removal of QE2 is not necessarily going to be a dramatic turning event.
Economist Roger Meiners, a professor with the University of Texas at Arlington, says the day of reckoning has already come in a sense and some economists believe the government will have to continue buying debt regardless of whether or not it is referred to as quantitative easing. Several market observers say they expect a third round of government debt purchases.
In an interview with HousingWire, Princeton economist Paul Krugman said he believes there should be a QE3, and that it should focus on private market debt purchases. "I'm in the boat the Fed isn't doing remotely enough," Krugman said.
Both Krugman and Meiners expect any new government debt program to likely be much larger than previously seen.
"It may be that the Fed is going to be buying up less than before, but that is doubtful because of government deficits," Meiners said. "I don't think there is going to be any choice but for the Fed to continue buying government debt."
Earlier this month, the Fed released minutes from its latest open market committee meeting, which showed the FOMC beginning to contemplate a move away from expansionary policies like QE2. However, no exact timelines were given for the transition.
After reviewing the minutes, analysts with Capital Economics estimated it will take more than a year before the Fed actually tightens its policies.
Meiners also doesn't see a dramatic shift at the end of the month when it comes to the Fed buying government debt.
"I would guess for the rest of the year, the Federal Reserve will continue to do exactly what they have been doing," he said. "I think the bigger problem is the long-term uncertainty that a lot of people feel — rightly or wrongly — that this is a house of cards, so we see many businesses holding off on making commitments because tax policies are up in the air."
Write to Kerri Panchuk.
Tags: Federal Reserve Bank, Roger Meiners, Treasury, University of Texas at Arlington, US Treasury
Posted in Secondary Market/Investors, Top Stories | 7 Comments »
Mortgage origination technology provider Ellie Mae (ELLI: 5.60 -0.71%) exited the quiet period surrounding its recent initial public offering. And the chief strategy officer has a lot to say.
At first, Ellie Mae lowered pricing expectations. Then, on its first day of trading, the price soared. The stock hasn't moved much since, to be fair.
But how does a company selling technology products in a space that is contracting get so much interest? What are they doing right over there in Pleasanton, Calif.?
The instinct would be that this is a terrible time for a firm in a volatile field to enter into the volatile IPO market. "We were happy to put ourselves in a position to raise capital," said Jonathon Corr, chief strategy officer at Ellie Mae. "The growth in mortgage technology is clearly outpacing origination volumes."
Mortgage originations, by most accounts, are down by one-third.
The conventional wisdom that mortgage originations is a field being dragged kicking and screaming into modernity is being replaced by the regulatory pressures and risk of buybacks. Corr himself predicted as much nearly a year ago. Granted it's not a hard call.
"Folks are pushing back if things aren't done properly with a tight bow on it," Corr said. Ellie Mae recently launched an all-in-one product. Frankly, it seems someone is offering an all-in-one this or that every other day, and Ellie Mae doesn't seem that unique in the space.
Corr disagrees of course, but he did mention something in passing that caught my attention.
"The biggest driver of our growth is success-based pricing," he said.
What's success-based pricing? Corr explained that if a mortgage doesn't close, and the originator doesn't get paid, then neither does Ellie. The model started in the fourth quarter of 2009. By the end of last year, 8,500 clients were using the pricing model. By the end of 1Q 2011, there are 11,000 Ellie Mae clients using success-based pricing.
That translates to $5 million in revenue from success-based pricing last year and $2.4 million in the first quarter of 2011, Corr said.
Write to Jacob Gaffney.
Follow him on Twitter @JacobGaffney.
Tags: Ellie Mae, IPO, mortgage, mortgage technology, originations
Posted in Commentary, Jacob Gaffney, Voices | No Comments »