Archive for June, 2011
The delinquency rate for loans within conduit commercial mortgage-backed securities deals fell to 9.18% in May, a slight dip from a month earlier, Moody's Investors Service said Monday.
During May, the total number of delinquent loans fell to 4,017, compared to 4,047 in April.
"We expect a high single-digit or low double-digit delinquency rate to persist over the near term," said Tad Philipp, director of Moody's commercial real estate research.
When analyzing all delinquent loans in May, the total dollar balance hit $56 billion. At the same time, the number of loans that became newly delinquent last month reached $3.4 billion. Another $4.1 billion in delinquent loans were worked out during the same period.
In May, the volume of specially serviced loans remained at 3.5% or greater, which suggests a general persistence in delinquencies, Moody's asserted.
Moody's uses its delinquency tracker to obtain up-to-date information on all U.S. conduit CMBS deals issued since the beginning of 1998. Analysts Moody's track commercial delinquencies by loan type and found delinquencies on industrial properties rose the most in May, climbing 93 basis points to a delinquency rate of 11.16%.
The second-highest increase in delinquencies occurred with the multifamily segment, which rose 41 basis points to 15.76%.
The sector with the greatest decline in delinquencies was retail, which experienced a delinquency rate that fell 31 basis points to 7.31%.
Write to: Kerri Panchuk.
Tags: commercial mortgage, Moody's Investors Service
Posted in Secondary Market/Investors, Servicing/Default, Top Stories | No Comments »
The Department of Housing and Urban Development launched a long-awaited program to provide interest-free loans to help unemployed borrowers in 27 states with their mortgage payments.
"Through the Emergency Homeowners’ Loan Program the Obama Administration is continuing our strong commitment to help keep families in their homes during tough economic times,” said HUD Secretary Shaun Donovan. "Working with our community partners across the nation through NeighborWorks America, we are pleased to launch this program today in 27 states and Puerto Rico to help families keep their homes while looking for work or recovering from illness."
The program was created under the Dodd-Frank Act, and HUD will provide $1 billion to implement it. Eligible homeowners can qualify for up to $50,000 in interest-free loans. The money will assist with mortgage payments for up to two years.
HUD said borrowers at risk of foreclosure because of involuntary unemployment, underemployment or a medical condition can benefit from the program. The department expects the program to reach up to 30,000 distressed borrowers with an average loan of roughly $35,000.
Since October, consumer advocacy groups began asking for distributions. HUD said previously applications would be accepted this spring. The House of Representatives voted in March to end the program before it began, however, claiming the U.S. government can no longer afford such subsidies. The Senate has not yet taken up the bill.
HUD will offer the program in Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming and Puerto Rico. Five other states Connecticut, Delaware, Idaho, Maryland, and Pennsylvania already began administering similar programs.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: EHLP, foreclosure, HUD, mortgage assistance, NeighborWorks America, unemployed
Posted in Servicing/Default, Slider, Top Stories | 19 Comments »
BlackRock Solutions, the risk management arm of investment bank BlackRock (BLK: 187.55 -0.17%), recently chose a TransUnion technology to further evaluate loans in mortgage-backed securities for BlackRock clients.
TransUnion's Consumer Risk Indicator uses loan-level data and matching algorithms to identify the credit risk for an individual borrower. The product is based on securities data from CoreLogic (CLGX: 14.54 +0.48%) LoanPerformance technology.
Tim Martin, group vice president of TransUnion's capital markets unit, said many mortgages look similar on the surface in terms of loan-to-value ratio, geographic concentration, and credit score, but often perform vastly different over time.
"Our loan-level data starts with the underlying borrowers behind the mortgages and provides a complete, anonymous picture of their full credit profile and performance," Martin said.
BlackRock now receives a borrower's full credit file, which is updated twice a month by TransUnion and includes information about second liens or home equity lines of credit, credit card loans and auto loans. By looking at each individual borrower and the attached risk of default, BlackRock can accurately determine the health of mortgage-backed securities.
"The data provided by TransUnion’s Consumer Risk Indicators allows BlackRock Solutions’ clients to make even more enhanced investment decisions on whole loans and residential mortgage-backed securities," said Robert Goldstein, head of BlackRock Solutions. "The ability to see detailed borrowers profiles behind seemingly comparable securities allows our clients to make the most informed decisions possible."
Write to Christine Ricciardi.
Tags: BlackRock, BlackRock Solutions, Consumer Risk Indicator, CoreLogic, transunion
Posted in Secondary Market/Investors, Top Stories | No Comments »
Fannie Mae economists predict slower economic growth for 2011 as home sales and consumer spending lag, and home prices search for a bottom that's unlikely to appear before the fourth quarter.
The overall economy is now expected to grow at a pace of 2.5% this year, down from a prior forecast of 2.9%, economists with the government-sponsored enterprise's economics and mortgage market analysis group said Monday.
A lackluster housing market is one of the key drivers of the slowdown, the report concluded. The housing slowdown became even more pronounced this year with the home-buyer tax credit long gone and unemployment still soaring above normal levels.
With more housing inventory and higher levels of unemployed citizens, supply currently outweighs demand, according to Fannie, resulting in a projection of steeper price declines in the third quarter before a leveling off in the final three months of the year.
"Ultimately, the labor market holds the key to a housing recovery, but job growth is needed in order to activate housing demand," said Fannie Mae Chief Economist Doug Duncan. "Hiring delays will continue to push out timing for the housing rebound."
Write to: Kerri Panchuk.
Tags: Doug Duncan, Fannie Mae, job growth
Posted in Servicing/Default, Top Stories | 4 Comments »
New statistics show mortgage servicing litigation rose 88% in the first quarter, validating Federal Deposit Insurance Corp. Chairman Sheila Bair when she sounded the alarm on an influx of lawsuits in May.
Bair said last month it's unknown how mortgage servicers will be impacted by a slew of lawsuits challenging the transfer of notes and the handling of loan documents. But, she still found the possibility of more litigation a worthy enough cause to share her thoughts on the subject with the Senate Banking Committee.
According to MortgageDaily.com's latest Mortgage Litigation Index, litigation against servicers rose 88% in the first quarter even as overall mortgage-related litigation remained unchanged from the previous quarter. There were 50 mortgage servicing lawsuits in the first three months of 2011 compared to only a handful a year earlier, MortgageDaily said.
At the same time, litigation filed by investors and lawsuits associated with loan modifications fell in the first quarter when compared to the final quarter of 2010.
Bank of America (BAC: 7.21 -1.23%) reported $940 million in litigation costs during the first quarter, which increased from $588 million one year ago but dipped from $1.5 billion in the previous period.
JPMorgan Chase (JPM: 37.285 -0.55%) reported $1.1 billion in litigation expenses during the first quarter, down from $2.9 billion one year ago.
Write to: Kerri Panchuk.
Tags: Federal Deposit Insurance Corp., investors, mortgage litigation
Posted in Servicing/Default, Slider | 3 Comments »
Judicial Watch, a conservative nonprofit group that investigates matters involving the judiciary, released emails claiming they show Elizabeth Warren was directly involved in shaping the $25 billion mortgage servicer settlement proposed by state attorneys general.
The CFPB had no comment, but they have addressed similar allegations in the past, saying Warren only offered advice. In a letter to the House of Representatives, the CFPB previously described its role in the servicer settlement.
"We have provided advice to federal and state officials regarding a potential servicing settlement," CFBP officials wrote. "In doing so, we have been an active participant in inter-agency discussions, sharing our analysis and recommendations in support of a resolution that would hold accountable any servicers that violated the law."
But Judicial Watch has a different view of emails exchanges between the CFBP and attorneys general. After scouring communications between the two parties, Judicial Watch said CFPB emails show Warren functioning as the de facto director of the agency, playing a key role in settlement talks with mortgage servicers by communicating directly with state attorneys generals.
In one email sent to the New York Attorney General's office, a party claiming to represent Warren, wrote "Professor Warren was wondering if you would have any interest in chatting with her about regulatory reform or if we can be a resource in any way. The state AG offices have been very helpful with [CFPB]-related issues, and we'd love to talk to you about how you might be able to play a role or to see what questions you might have."
In its own statement, Judicial Watch said the emails obtained "seem to contradict Warren's statements before Congress suggesting her office responded to requests for advice, but did not seek to push its views."
While Warren supporters have been asking the president to appoint her director of the CFPB, critics of the bureau continue to look at Warren's present involvement in the agency as one that lacks appropriate regulatory oversight.
Another email from the Iowa AG's office cited by Judicial Watch includes a statement to all recipients saying, "Elizabeth Warren would like to present the CFPB's view on loan modifications to the entire EC."
Judicial Watch also posted an e-mail tied to the New York AG's office in which one party writes, "There is going to be a confidential briefing from the CFPB today. Based on my understanding of the briefing, I am inviting the loss mitigation subgroup to be on this call. The CFPB wanted me to stress the confidential nature of this briefing. I apologize for the short notice."
The CFPB officially launches July 21 and is still without a director. Even as Warren supporters continue to press for her appointment, rumors out of Washington focused on Raj Date, a former banking executive, who now works at the CFPB as Obama's possible top pick for the post.
Write to: Kerri Panchuk.
Tags: CFPB, Elizabeth Warren, House of Representatives, Judicial Watch, New York Attorney General
Posted in Origination/Lending, Servicing/Default, Top Stories | 3 Comments »
Mortgage lender PNC Financial Services Group Inc. agreed to buy RBC Bank, the U.S. banking subsidiary of Royal Bank of Canada (RY: 52.21 -0.70%), for $3.45 billion.
PNC Mortgage, a subsidiary of PNC Financial, is the 20th largest mortgage originator in the United States, originating $10.5 billion in home loans last year alone.
Once the transaction closes in March, the acquisition of RBC Bank will add $25 billion in assets, 424 bank branches, $19 billion in deposits and $16 billion in loan balances to the PNC Financial (PNC: 58.87 -0.05%) network. RBC's current allowance for loan losses is in the $755 million-range, according to PNC.
"The addition of RBC Bank provides PNC a great opportunity to enter attractive southeast markets in a way that will create value for our shareholders," said James Rohr, PNC's chairman and chief executive officer.
RBC Bank has branches in North Carolina, Florida, Alabama, Georgia, Virginia and South Carolina. Combined the two firms will have 2,870 bank branches, making it the fifth largest network in the United States.
Write to: Kerri Panchuk.
Tags: PNC Financial Services Group, RBC Bank, Royal Bank of Canada
Posted in Origination/Lending, Top Stories | No Comments »
A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues:
The Federal Deposit Insurance Corp. is in settlement talks with former Washington Mutual CEO Kerry Killinger and at least one other top former executive after filing suit against the parties for risks they took within WaMu's home lending portfolio before the housing crisis, according to the Sacramento Bee.
The original suit named former Chief Executive Officer Kerry Killinger, former Chief Operating Officer Stephen Rotella and former Home Loans president David Schneider defendants.
The Federal Reserve Open Market Committee will hold a two-day meeting this week to discuss recent economic data and the second half of 2011.
The meeting, which will run from June 21 to 22, will be the first closed discussion of FOMC members since late April and since reports surfaced showing housing prices on a continued downward trajectory. The scheduled meet-up arrives two weeks after Federal Reserve Chairman Ben Bernanke delivered a somber first-half economic update. In the report, Bernanke said high unemployment and anemic housing sales are slowing economic growth.
Looking forward, economists at Moody's Analytics are sticking with their estimate of real GDP growth in the 2% range for the current quarter. They also expect housing prices to remain on the decline for a while, with a bottom expected sometime next year. While the analysts forecast growth for quarters three and four, they also remain wary, citing a sluggish recovery and ongoing concerns over the nation's debt ceiling.
A dispute between big banks, bond insurer MBIA and the New York State Insurance Department continued this past week, with both sides debating the meaning of internal MBIA e-mails released in court documents.
The dispute involves banking plaintiffs — including Bank of America (BAC: 7.21 -1.23%) whom allege the New York Insurance Department and its former superintendent, Eric Dinallo, approved a fraudulent conveyance by permitting MBIA to create a second insurance firm, using $5 billion siphoned from the company's insurance subsidiary. Some of the original plaintiffs, CitiGroup and JPMorgan Chase have already pulled out of the suit, according to sources at MBIA.
The plaintiffs in a brief with an appellate court released e-mails which they believe show MBIA leadership working to influence NYID to approve the deal.
Meanwhile, MBIA responded in a statement saying: "The banks grossly mischaracterize these documents and fail to cite the overwhelming evidence in the record confirming that the NYID received unfettered access to MBIA's records and employees, and conducted a thorough and extensive review of MBIA's financial condition."
"We look forward to responding to all of the banks' misleading arguments and mischaracterizations when MBIA responds to the banks' papers on August 31," the statement said. "We remain confident that after a review of the full record the court will affirm the NYID's approval of MBIA's transformation."
The FDIC closed two banks this past week. First, the agency was appointed receiver after Florida regulators shuttered the doors of First Commercial Bank of Tampa Bay in Tampa. Shortly thereafter, Stonegate Bank of Fort Lauderdale assumed all of the banks deposits.
In addition, regulators closed McIntosh State Bank in Jackson, Ga., with Hamilton State Bank assigned all of the deposits.
Write to: Kerri Panchuk.
Tags: Federal Reserve Open Market Committee, MBIA, moody's analytics, New York State Insurance Department
Posted in Secondary Market/Investors, Top Stories | No Comments »
The Florida Bar filed a complaint against foreclosure attorney David J. Stern Friday afternoon for allegedly violating the bar's rules by failing to produce documents as ordered by the court in February.
One of the stated rules Stern allegedly broke: "A lawyer shall not knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists," the filing states.
The complaint is asking for an investigation to find out why Stern did not file the documents, and is asking for disciplinary action. The document does not suggest what that action should be if Stern is found culpable.
At the beginning of the year, the Law Offices of David J. Stern represented SunTrust Bank in a lawsuit against Mortgage Electronic Registration Systems, according to the complaint. The Florida district court issued Stern's firm an "order to show cause" on Feb. 16, which asked him to prove why sanctions should not be entered against him after he neglected to file certain documents "in a timely manner." Stern allegedly ignored this order, the complaint said.
"Respondent failed to produce the documents and has otherwise failed to respond," the complaint said.
On March 14, the issue was referred to the Florida Bar to figure out why Stern did not abide by the order. Stern attained a mountain of litigation against him and his firm during that period, as investigations into the robo-signing scandal were well underway.
Stern lost Freddie Mac's business in November 2010 over foreclosure documentation issues, and lost Fannie Mae's shortly thereafter. On February 25, the Florida Attorney General launched an investigation into several real estate law firms across the state, including Stern's. In March, the Plantation, Fla.-based company ceased foreclosure work and stopped trading on the Nasdaq.
Stern's attorney Jeff Tew told The Palm Beach Post his client was fired from SunTrust in mid-December 2010, before the Feb. 16 order was issued. Tew also said it was possible Stern missed the notice among 10,000 pieces of incoming mail everyday.
Write to Christine Ricciardi.
Tags: David J. Stern, Law Offices of David J. Stern, Mortgage Electronic Registration Systems, order to show cause, robo-signing scandal, SunTrust Bank, The Florida Bar
Posted in Servicing/Default, Top Stories | No Comments »
HousingWire magazine placed second in a nationwide competition to find the best industry trade publication.
The National Association of Real Estate Editors announced the winners of its 61st annual real estate journalism competition Friday evening at a ceremony during the organization's spring conference in San Antonio.
While HousingWire placed second in the Best Residential Trade Magazine category, several individual reporters were honored as well.
Kerry Curry, executive editor of HousingWire, placed first in the Residential Real Estate Writing category for her work on a piece called "In the rough," published in the October edition of REO Insider magazine.
Jon Prior, news reporter for HousingWire, received second place in the same category for his "No minor obstacle" piece published in the same edition of REO Insider. This was the final issue of that publication before it was acquired by HousingWire.
Congratulations to Kerry and Jon, and thank you HousingWire readers for supporting the best mortgage industry publication in the country.
Write to Christine Ricciardi.
Tags: 61st Annual Real Estate Journalism Competition, National Association of Real Estate Editors
Posted in Commentary | No Comments »