Archive for May, 2011
Families and individuals living in low- to-moderate income households in the Fed's Eleventh District — which covers Texas and parts of Louisiana and New Mexico — are more confident when it comes to the prospect of new jobs, but access to affordable housing in the region remains uncertain.
So what is causing area residents to be so pessimistic about housing? The Fed survey points to factors such as a general lack of quality and affordable housing in decent neighborhoods and a sharp upswing in housing demand associated with an influx of Mexican immigrants and military personnel in certain communities throughout the district. Support or lack thereof from elected officials is cited as another concern.
The number of survey participants report a decrease in the availability of affordable housing climbed to 26% from 13%.
The Federal Reserve Bank of Dallas released these findings in its Community Outlook Survey, an online survey of 128 service providers working across several industries, who provide feedback on consumers living in the district. Most of the respondents are located in the state of Texas.
The survey compiles the results into an index, where an index score of 50-or-greater signifying a positive attitude among service providers on a particular issue, while any economic indicator rated lower than 50 shows respondents' views are mostly negative.
On the jobs issue, the index shifted slightly upward from 54 to 56, suggesting more families living in the Eleventh District expect some improvement on the jobs front.
However, one-fifth of the survey respondents still reported fewer jobs when comparing the first quarter of 2011 to the fourth quarter of last year.
More respondents also indicate that families in the low-to -moderate income bracket are generally losing faith in their financial well-being, with that index dropping from 43 to 38.
The Dallas Fed also noted the survey showed little improvement in access to credit when studying households in this particular economic range. Low-income households continue to rely on credit to meet their obligations, but access to that credit waned in the first quarter, according to a study from the Federal Reserve Bank of Philadelphia.
Write to: Kerri Panchuk.
Tags: Fed's Eleventh District, Federal Reserve Bank of Dallas
Posted in Origination/Lending, Top Stories | No Comments »
Mortgage delinquencies in the first quarter were down 174 basis points when compared to a year earlier, the Mortgage Bankers Association said Thursday, although the percentage of U.S. mortgages in delinquency increased to a rate of 8.32% on a seasonally adjusted basis at March 31, up 7 bps from the end of 2010.
Overall, the trade association declared national foreclosure and delinquency numbers an improvement, with year-over-year figures showing clear declines in both foreclosures and delinquencies. At the same time, the MBA warned national foreclosure statistics are dependent on local state numbers that are skewed due to state laws and regulations varying the length of the foreclosure process.
The MBA delinquency rate includes mortgages at least one payment past due, while excluding loans already in the foreclosure process.
The MBA noted a decline in foreclosure actions, with the percentage of loans in foreclosure in the first quarter hitting 1.08%, a drop of 19 bps from fourth quarter and down 15 bps from year-ago levels.
About 4.52% of all mortgages were in foreclosure at March 31, a decline of 12 bps from the fourth quarter and an 11 basis point drop from a year earlier, the MBA said.
Meanwhile, the serious delinquency rate — a measure of loans that are 90-plus days past due or in foreclosure — hit 8.1%, a drop of 50 basis points from the fourth quarter and down 144 bps from a year earlier.
When combining the rate of loans in foreclosure with delinquencies, the rate of total loans in distress hit 12.31% on a nonseasonally adjusted basis, down from 13.6% in the previous quarter.
"Most of these numbers continue to point to a mortgage market on the mend," said Jay Brinkmann, the MBA's chief economist. "Short-term delinquencies remain at pre-recession levels. Loans 90 days or more delinquent have now dropped for five straight quarters and are at their lowest level since the beginning of 2009. Foreclosure starts are at the lowest level since the end of 2008 and had the second largest drop ever."
Despite signs of improvement in delinquencies and foreclosures, Brinkmann noted that all national statistics are somewhat skewed when considering local market conditions are the key determinate when people assess housing conditions in the greater economy. For now, areas like Florida remain a clear problem, Brinkmann said.
"Twenty-four percent of all mortgages in the country that are in foreclosure are in Florida and 23% of the loans in Florida are anywhere from one payment past due to in foreclosure," Brinkmann said. "Yet 38 states have foreclosure rates that are below the national average. We have areas of recovery but those numbers are often overwhelmed by the bad numbers still coming out of a few large states."
Brinkmann said foreclosure delays caused by varying state laws are causing distressed loans to hang on the books longer in judicial foreclosure states.
"The states with the largest decreases in loans in foreclosure were California, Arizona and Michigan. Each of these six states had declines in loans 90 days or more past due and in the rate of new foreclosures started," Brinkmann explained. "What differentiated those with increases in the percentage of loans in foreclosure? Florida, New Jersey and Illinois have judicial foreclosure processes that lengthen the foreclosure timeline and increase the number of loans that sit in foreclosure, all other things being equal."
Write to: Kerri Panchuk.
Tags: delinquencies, foreclosure laws, foreclosures, Jay Brinkmann, judicial states, MBA, Mortgage Bankers Association
Posted in Secondary Market/Investors, Slider | 5 Comments »
Fixed-rate mortgages fell for the fifth consecutive week as the financial markets try to anticipate where the economy is heading, according to the Freddie Mac weekly survey.
The 30-year, fixed-rate mortgage averaged 4.61% with an average 0.7 point for the week ending May 19, down from 4.63% last week. One year ago, the 30-year FRM averaged 4.84%.
The 15-year FRM averaged 3.8% with an average 0.7 point, down from 3.82% one week ago. Last year, it averaged 4.24%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.48% at 0.6 point, up from 3.41%. The one-year Treasury-indexed ARM averaged 3.15% with an average 0.6 point.
"Fixed mortgage rates inched down for the fifth consecutive week as financial markets try to ascertain the current strength of the economy," said Freddie's Chief Economist Frank Nothaft.
Industrial production was unchanged, disrupting automobile parts supplies from the earthquake and tsunami in Japan. Retail sales were up, and although they offset high gasoline prices and auto industry struggles, it was the smallest growth since December 2010. Consumer confidence levels, however, rose above the market census in May to the highest reading since February.
Mixed data continued in the housing market. New construction on single-family homes fell, keeping homebuilder confidence pessimistic. However, applications for new mortgages increased each of the past five weeks buoyed by these low rates and stronger refinancing activity, Nothaft said.
Fixed-rate mortgages sipped on the survey conducted by Bankrate as well. It said the 30-year FRM fell to the lowest rate in more than five months to 4.77%.
The lower rates surprised many experts anticipating an increase as the U.S. passed its $14.3 trillion debt ceiling, Bankrate said, adding if the ceiling isn't raised in August, rates will almost certainly spike.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: applications, Bankrate, construction, freddie mac, homebuilders, mortgage rates, Nothaft, week
Posted in Origination/Lending, Top Stories | 1 Comment »
M&T Bank (MTB: 79.885 -0.32%) repaid $700 million in Troubled Asset Relief Program bailouts, including what was owed by Wilmington Trust Corp., which the Buffalo, N.Y.-based bank recently acquired.
The Treasury Department received $370 million in preferred shares from M&T and $330 million in shares from Wilmington through the TARP capital purchase program.
With M&T's repayment, the Treasury has now recovered $252 billion in paybacks. Current estimates show the bank programs included in the TARP capital purchase program will ultimately provide a $20 billion positive return for taxpayers.
However, more than 500 banks still owe the Treasury and investments in distressed firms such as American International Group (AIG: 25.01 -0.52%) remain unpaid, according to the Special Inspector General of the Troubled Asset Relief Program.
And the Congressional Budget Office recently estimated when other initiatives are factored in such as the Making Home Affordable program, TARP will end up costing taxpayers $19 billion, a substantial reduction from earlier estimates.
"Treasury currently expects that TARP investment programs taken as a whole – including financial support for banks, other financial institutions, and the domestic auto industry; as well as targeted initiatives to restart the credit markets – will result in relatively little cost to taxpayers," the Treasury said. "The lifetime cost of TARP is likely to be predominantly limited to funds disbursed for Treasury’s foreclosure prevention programs, which were not intended to be recovered."
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: AIG, foreclosure, HAMP, M&T Bank, MHA, TARP, Treasury, Wilmington Trust
Posted in Origination/Lending, Top Stories | No Comments »
Existing-home sales dipped 0.8% to a seasonally adjusted annual rate of 5.05 million in April and down 12.9% from the 5.8 million pace one year ago, according to the National Association of Realtors.
NAR said home sales were elevated in late spring of last year because of the expiring homebuyer tax credit. NAR Chief Economist Lawrence Yun said home sales should be stronger given affordability, new job creation and pent-up demand.
"Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations," Yun said.
An additional survey of members found 11% reported a contract was canceled in April because an appraisal came in below the price negotiated between the buyer and the seller. Another 10% reported at least a delay, and 14% said they eventually renegotiated to a lower sales price.
"[E]xisting guidelines from Freddie Mac and Fannie Mae must be fully implemented so all appraisals are done by valuators with local expertise," said NAR President Ron Phipps said.
Both Yun and Phipps said the restrictive loan underwriting standards are holding back the market.
"We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores," Phipps said.
The national median home price in April was $163,700, a 5% drop from one year ago. Distressed homes sold for a 20% discount and accounted for 37% of all sales, NAR said.
The total housing inventory stood at 3.87 million existing homes for sale on the market, a 9.9% increase from one month ago. At the end of April, the market held a 9.2-month supply of homes. A normal market usually holds a six-month supply.
Phipps said recent proposals and regulations coming from Washington could further restrain the market already experiencing low sales volumes and rising inventory. He specifically pointed to risk-retention rules, which require lenders to maintain 5% of the credit risk on mortgages sold to the secondary market — unless the loan fits a variety of requirements such as a 20% down payment.
"One of the most damaging proposals would effectively raise down payment requirements to 20%, which would slam the brakes on the housing market," Phipps said. "What we need to do is simply return to the sound standards that were in place before the introduction of risky mortgage products."
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: appraisals, April, credit, existing home sales, Fannie Mae, freddie mac, Lawrence Yun, NAR, risk retention
Posted in Origination/Lending, Top Stories | 6 Comments »
While default rates are down mostly so far this year, borrowers with second mortgages went against trend with their default rate rising in April for the first time in five months, according to data from Standard & Poor's and Experian.
The firms produce the S&P/Experian Consumer Credit Default Indices, which showed the default rate for second mortgages grew to 1.51% in April from 1.42% a month earlier.
At the same time, first mortgages experienced a decline in defaults, with that segment's default rate dropping to 2.16% from 2.33% between March and April.
"We had seen default rates fall across all major categories and most major cities during the prior six months, but given April's data that might be coming to end. The real question is whether April was temporary or are household balance sheets worsening?" said David Blitzer, managing director and chairman of the index committee for S&P Indices.
"In addition, there are some significant differences across credit types and MSAs. Bank card default rates went up in April, after having fallen each of the past 11 months; and the data indicate that the rate of default on credit cards is still 5.9%, more than twice any of the other loan classes," he said.
Write to: Kerri Panchuk.
Tags: borrowers, default rates, experian, S&P/Experian Consumer Credit Default Indices, second mortgages, Standard and Poor's
Posted in Servicing/Default, Slider, Top Stories | 4 Comments »
Home sales in April were unchanged from March as investors remained in the game with the expectation that prices bottomed out, according to the latest RE/MAX National Housing Report.
Last month, investors made up 25% of the market, sparking speculation buyers anticipate higher interest rates and home values in the future. During the same period, inventory levels fell as home prices rose 2.2% from March—the third increase this year.
“The market is holding its own in the absence of any artificial stimulus,” said RE/MAX Chief Executive Margaret Kelly. “We’re encouraged to see that home prices have been rising this year and we are hoping that this will motivate buyers who have been waiting for a bottom.”
RE/MAX remains optimistic that homebuyers expecting a bottom will jump back into the market this summer.
Home sales in March rose by double-digits in nearly all U.S. metropolitan areas, which was an encouraging sign for the housing market as it enters spring buying season.
Write to: Kerri Panchuk.
Tags: home prices, housing inventory, investors, RE/MAX National Housing Report
Posted in Origination/Lending, Top Stories | 3 Comments »
A ring of Sacramento residents alleged to be part of a $16.3 million mortgage fraud was arraigned in federal court in Sacramento Tuesday.
The U.S. Attorney’s office announced eight defendants have been indicted in the ring, which caused losses in excess of $9 million when 14 homes went into foreclosure. The ring allegedly originated more than $16.3 million in mortgages with false documentation and created bogus work orders.
Posted in Around the Web | No Comments »
Initial jobless claims decreased another 6.6% last week on top of a big decline the prior week, after reaching the highest level since August during the first week of May.
The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended May 14 fell by 29,000 to 409,000. Initial claims for the prior week were 438,000, which was revised upward 4,000.
Analysts surveyed by Econoday expected 425,000 new jobless claims last week with a range of estimates between 410,000 and 440,000. A Briefing.com survey projected new claims of 400,000 for last week. Most economists believe weekly new claims lower than 400,000 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 1,250 to 439,000 from a slightly revised average of 437,750 the prior week. The seasonally adjusted insured unemployment rate for the week ended May 7 remained unchanged at 3%, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 30 fell to 7.94 million from 7.98 million the prior week.
Write to Jason Philyaw.
Tags: jobless claims, labor department
Posted in Secondary Market/Investors, Top Stories | 1 Comment »
An arbitrator — not the courts — should decide what, if anything, is owed to former foreclosure attorney David J. Stern, the government-sponsored enterprise Fannie Mae alleges in court filings.
The Law Offices of David J. Stern filed more than 25 lawsuits against servicers in recent months alleging they owe the law firm more than $34 million in unpaid invoices. On Monday, it filed its latest case, a suit against Lender Processing Services (LPS: 16.78 +1.39%), a firm that provides mortgage processing and technology services.
Fannie filed motions to intervene in several of the lawsuits that involve Fannie Mae servicers. It asked the courts to stay the proceedings pending the outcome of an arbitration case between it and the Stern law firm.
The lawsuits were filed after Fannie, Freddie Mac and the nation's largest mortgage servicers unceremoniously dumped the firm last fall in the midst of an attorney's general investigation into foreclosure practices at several Florida default services firms and a national scandal over robo-signing of foreclosure affidavits.
Since then, the Florida AG's investigation began to unravel and the robo-signing controversy faded, but not before Stern's firm was decimated, declining from a high of 1,400 employees last summer to just six attorneys today, according to the attorney representing Stern in his court battles against servicers.
"When the banks and servicers withdrew their files in November 2010, they refused to pay the outstanding invoices," said Stern's attorney, Jeffrey Tew, partner in the Miami law firm of Tew & Cardenas LLP, during an interview with HousingWire last week.
In a followup interview about Fannie Mae's allegations, Tew said the firm opposes Fannie's attempts to intervene and stay cases involving the GSE's servicers.
"The Stern law firm has opposed Fannie's motion on the grounds that Fannie isn't legally entitled to intervene or to stay the court action," Tew told HousingWire.
Tew has filed motions to that effect as well.
"Fannie Mae argues that, somehow, this lawsuit 'interferes with Fannie Mae’s right to arbitrate its claims,' and that Fannie Mae therefore has a significant interest in this lawsuit and satisfies the criteria for intervention. As of the date of the filing of this response, however, this lawsuit has not, in any way, interfered with Fannie Mae’s right to arbitrate its claims," a motion filed May 6 in the Nationstar Mortgage case alleges. "The arbitration is proceeding without interruption."
Fannie claims that Stern shouldn't be allowed to use the courts "to evade its agreement to arbitrate." It made those allegations in a motion to intervene in a case against IBM Lender Business Process Services.
Fannie retained the Law Offices of David J. Stern in some 24,000 foreclosure cases in Florida. About 45 servicers were servicing Fannie Mae cases through the Stern firm, court documents indicate. Fannie's written agreement with the firm required the firm the arbitrate any disputes, according to court filings in the cases.
"The arbitration proceeding will determine whether the Stern firm's services complied with applicable law and professional standards and what, if anything, the Stern firm is owed as a result of the damages that Fannie Mae has suffered — and will continue to suffer — from the Stern firm's conduct," Fannie's motion to intervene in the LBPS case said. "The Stern firm is filing lawsuits — such as this one — against Fannie Mae's servicers involving the exact amounts at issue in the arbitration."
Fannie also noted that its servicing guide required servicers to retain a firm listed in Fannie's "retained attorney network" so when Fannie dropped the firm from the network, the servicers also had to drop the firm.
Under the agreement, attorneys in the network bill the servicers who then seek reimbursement from Fannie. Under the agreement with Stern, Fannie reserved the right to review and audit any invoices, even after payment.
Fannie also noted that its servicers might be inclined to pursue "a quick settlement" with the Stern firm, which might not be in the best interest of Fannie.
Servicers, it claims, will have no knowledge of the arbitration case, which is private, but they know that they have a contractual right to seek reimbursement from Fannie for money paid to the Stern firm, Fannie noted. "As such, (servicers) may be less interested than Fannie Mae in pursuing the forensic accounting to determine the damages cause by the Stern firm's conduct," Fannie said in court documents.
In a statement to HousingWire, Fannie said it has "the right and responsibility to protect the interest of Fannie Mae and taxpayers."
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: David J. Stern, Fannie Mae, foreclosure, freddie mac, IBM Lender Business Process Services, Jeffrey Tew, Lender Processing Services, mortgage, mortgage servicers, NationStar Mortgage, Tew & Cardenas LLP
Posted in Servicing/Default, Top Stories | 3 Comments »
