Archive for June, 2011
Borrowers attempting to refinance at record low interest rates rushed the market after the Memorial Holiday weekend, prompting mortgage applications to jump 13% for the week ending June 10, the Mortgage Bankers Association said Wednesday.
Interest rates that wooed borrowers include 4.51% for a 30-year, fixed-rate mortgage, which is down slightly from 4.54% a week earlier, and the 15-year FRM, which remained unchanged at 3.67%.
The trade group noted substantial increases in both its refinance and purchase indices.
The refinance index rose 16.5% last week from the previous week, while the seasonally adjusted purchase index jumped 4.5%.
"Mortgage rates have declined for eight of the past nine weeks," MBA Vice President of Research and Economics said Michael Fratantoni said. "Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November. The volume of refinance applications still remains 28% below levels seen at that time, as borrowers with an incentive to refinance remain constrained from doing so by lack of equity in their homes."
The four-week moving average for the seasonally adjusted market index rose 2.4% with the purchase index up 0.3%. The refinance index increased 3.1% and the refinancings accounted for 70% of all applications, up from 67.3% a week earlier.
Write to Kerri Panchuk.
Tags: 15-year fixed, 15-year FRM, 30-year FRM, borrowers, interest rates, MBA, mortgage applications, Mortgage Bankers Association, Refinancing
Posted in Origination/Lending, Top Stories | 3 Comments »
REO real estate brokers and agents should focus on choosing appropriate comps when preparing broker price opinions for servicers and should explain any anomalies, panelists at HousingWire's REO Expo said.
"If you start out with bad comps, it's garbage in and garbage out," said Jeff Del Rey, senior director at PCV Murcor, while speaking about balancing REO valuations in today's volatile real estate market.
"In BPOs, the most important rule is to explain, explain, explain," he said.
Real estate agents will raise a red flag with their clients, for example, if they submit incomplete listing history for last 12 months for the subject property or the comps.
A property listed at $150,000 six months ago that is now recommended for listing at $175,000 would raise a red flag. While there may be a legitimate reason for the higher recommended price, such things should be explained in the BPO. Likewise, if house prices are declining, for example, by 1% per month and the agent is using a 4-month-old comparable properties — he or she needs to make a valuation adjustment for that, Del Rey said.
Duane Andrews, CEO and co-founder of Clear Capital, said 34% of properties nationwide are bank-owned properties. The level of REO saturation can have an effect on the pricing in a particular neighborhood. If there is a low saturation, the discount on REOs may be small. A lot of REOs in poor condition likely will result in a fairly high discount, but the point is that the discount applied to an REO is unique to the neighborhood that it is in, Andrews said.
Mary Jacque Thompson, senior vice president of operations at eMortgage Logic, said lenders don't want their REOs to be undervalued and advised agents to be sure they are using properties that are similar in age and in style to the subject house for their price comparisons.
"In Texas, everyone has pools. If your subject property has a pool, then your comps should have a pool or you should be making adjustments for that," she said. If an agent needs to go outside the immediate neighborhood to find a comparable property, that should be explained in the BPO report, she said.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: BPO, broker price opinion, clear capital, eMortgage Logic, PCV Mucor, real estate agents, real estate brokers, REO
Posted in Servicing/Default, Top Stories | 1 Comment »
Negotiations between the 50 state attorneys general and major lenders to settle the foreclosure investigation are advancing, especially on new standards for mortgage servicing.
In 2010, servicers froze the foreclosure process to correct mishandled documents. Federal agencies and the 50 state AGs launched investigations.
In April, the Office of the Comptroller of the Currency, along with the Federal Reserve and the Office of Thrift Supervision, signed consent orders with 14 major mortgage servicers. The orders require the servicers develop new processes for working with distressed borrowers ahead of foreclosure, but the OCC delayed the deadline for these requirements.
The AG negotiations remain ongoing and could include stricter servicing standards, principal reduction initiatives and cumulative fines up to $25 billion.
A spokesman for lead investigator Iowa AG Tom Miller told HousingWire the two sides are progressing on a settlement.
"We’ve made a lot of progress, but there’s still a lot we need to do," the spokesman said. "We have made some major inroads on servicing standards, but we’re still working on others."
A group of 12 senators sent a letter to the OCC, urging the regulator work with the 50 state attorneys general on the ongoing settlement negotiations with mortgage servicers.
The letter was signed by Jack Reed (D-R.I.), Richard Blumenthal (D-Conn.), Banking Committee Chairman Tim Johnson (D-S.D.), Judiciary Committee Chairman Patrick Leahy (D-Vt.), Sheldon Whitehouse (D-R.I.), Bob Menendez (D-N.J.), Daniel Akaka (D-Hawaii), Chuck Schumer (D-N.Y.), Sherrod Brown (D-Ohio), Dick Durbin (D-Ill.), Al Franken (D-Minn.), and Jeff Merkley (D-Ore.)
"Ideally, these action plans will not only clarify and improve the roles of mortgage servicers, but will also help homeowners for whom foreclosure can be prevented," the senators said in the letter. "In this regard, we urge you to consider the servicing standards proposed by the state attorneys general, and to incorporate appropriate provisions of introduced legislation that will support the work that must be done to improve the foreclosure process and help homeowners avoid foreclosure."
An OCC spokesman said the enforcement actions were intended to ensure servicers fix the broken parts of the process and provide effective help to borrowers harmed by any improper actions.
"We have always believed that those orders can also provide an effective framework for any remedial steps that state officials believe are necessary, and we were happy to accommodate the Justice Department's request to give banks an additional 30 days to submit their action plans," the spokesman said. "We hope that at the end of the process the concerns of both state and federal agencies will be effectively addressed."
The AGs and the banks recently wrapped meetings in Washington and are scheduling the next round.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: AG, Federal Reserve, foreclosure, investigation, Justice Department, mortgage, OCC, OTS, servicers, short sale, Tom Miller
Posted in Servicing/Default, Top Stories | 1 Comment »
Ethical decisions drive or destroy a real estate agent's business, according to a panel at HousingWire's 2011 REO Expo conference in Fort Worth, Texas, Tuesday.
The housing crisis was a result of unethical behavior due to a high volume of property transactions, the panelists explained. Dealing with ethics in the REO industry isn't a new thing, they said, but the issue is undoubtedly becoming more important as the mortgage industry looks to correct itself.
Stephen Benetz, president of NRT REOExperts, said ethics will be a main driver that helps change the image of the real estate-owned space.
"Ethics is not something you're born with, it's something you learn," said Jim Taylor, leader of national REO sales at Wells Fargo/PAS REO.
"We've been in a cycle for so long and we've gotten into this pattern of complacency," said Eric Pitt, vice president of operations at Vendor Resource Management. "I've been asked how are we as an industry going to recover, and the answer is one asset at a time."
REO agents and brokers face growing scrutiny with regard to ethics, as new rules and regulations take effect in hopes of keeping the housing industry away from the problems of 2007, said Taylor. More scrutiny could lead to reduced credibility as a profession, as well as increased litigation.
Still, defining ethics is not going to get any easier. The panelists named several tactics to avoid an ethical breach, such as avoid using family members for property preservation tasks and live by full disclosure. Ultimately, it comes down to personal choice.
"If you have to ask yourself, 'Is this ethical?' Then it's probably not and you should probably avoid that action," concluded Kelly Oswald, senior vice president of First Preston.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
Tags: First Preston, NRT REOExperts, Vendor Resource Management, Wells Fargo/PAS REO
Posted in Servicing/Default, Top Stories | No Comments »
A common theme emerged during HousingWire's 2011 REO Expo: the need to sustain the value of homeownership by breathing new life into at-risk neighborhoods.
Rebuilding Together, a nonprofit that provides free rehabilitation and repair services for low-income families, continues to pursue the goal of helping families maintain their properties in times of financial stress.
Rebuilding Together partnered with REO Expo to raise funds for homeowner-assistance initiatives through a silent auction at the event in Fort Worth this week. The auction drew large crowds Tuesday afternoon as the bidding activity reached a frenzied pace.
Tags: Rebuilding Together, REO Expo
Posted in Servicing/Default, Top Stories | No Comments »
Bank of America (BAC: 7.22 -1.10%) completed more short sales than it unloaded previously foreclosed homes every month for the last year and a half.
In May, BofA completed roughly 9,000 short sales compared to 7,000 REO, said David Sunlin, the bank's real estate management executive. With the introduction of the Home Affordable Foreclosure Alternatives program in April 2010, lenders received the first guidelines for these transactions.
Since then, banks find it easier to collect necessary documentation and reduce the time it takes to close these transactions. Recent guideline changes to HAFA could push numbers higher in 2011.
BofA completed more than 95,000 short sales in 2010, more than double the prior year, Sunlin said.
"HAFA is dead on. It's a lot easier to qualify now for HAFA than it was in 2010. All I need is a hardship affidavit and one water bill. We're trying to make it as easy as possible," Sunlin said.
Justin Rand, Citigroup (C: 30.44 +0.20%) senior vice president of loss mitigation, said his bank used to take an average 120 days from when the property was listed to when it closed. That since dropped to 83 days.
There remain some setbacks, however. Real estate agents in the audience at HousingWire's REO Expo in Fort Worth, Texas, complained of having an offer from a buyer at what the property listed at, only to lose the deal when the bank's appraisal came in afterward. Sunlin suggested these buyer-side agents send in their own information with the servicer for a better chance of reconciling the appraisal.
"Valuation is an inexact science. The offer may be a full to list, but not to the appraisal. When you submit your own short sale deal, send your own BPO," Sunlin said."If you put your facts out there, you can at least make your case."
Other agents said those working on the other side of the deal do not send in offers or document packages correctly, regardless of any certification. Both Sunlin at BofA and Rand at Citi said their banks are considering recommending agents to the homeowner.
"We would love to get into a system where we're recommending agents for a short sale," Sunlin said. "But (the) homeowner has their rights, they're going to select who they want to select, and that's going to be the biggest constriction."
As lenders continue to tweak imperfections, demand will rise.
Chris Saitta, CEO of Equator, which provides a technology platform to process short sales for the largest lenders, said servicers completed short sales on 4% of their portfolios to 16% today.
"There is a steady but slow increase in REO, which equals a steady, slow increase in short sale," Saitta said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: agents, appraisal, Bank of America, Citigroup, Equator, foreclosure, HAFA, recommendation, REO, short sales
Posted in Servicing/Default, Slider | 16 Comments »
The United States Conference of Mayors and Wells Fargo (WFC: 29.37 +1.10%) recently entered into a strategic partnership to promote homeownership and advocate foreclosure prevention.
The alliance will help the mayors get involved in housing issues and lead a variety of community outreach initiatives to improve the housing market. The alliance will focus of foreclosure prevention, property disposition, homeownership promotion and community development.
"With the challenges facing our nation, it's important that the private and public sectors work together on options that address each city's respective needs," said Tom Cochran, chief executive officer and executive director of the U.S. Conference of Mayors. "Wells Fargo and our members share a deep-rooted commitment to sustainable homeownership. We'll do good work together that will benefit our joint communities."
The alliance is slated to last three years and includes a series of regional forums, where the mayors will meet with Wells Fargo executives to discuss housing issues and address market challenges, Cochran said. There are three regional forums scheduled for every year of the alliance.
The Wells Fargo Way Home program, a national effort to prevent foreclosure and stabilize communities, will be key in achieving the partnership's goals, according to the organizations.
The U.S. Conference of Mayors is a nonpartisan organization involving mayors from more than 1,200 cities with a population of 30,000 or more.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
Tags: United States Conference of Mayors, Way Home program, Wells Fargo
Posted in Servicing/Default, Top Stories | No Comments »
The foreclosure slowdown after the robo-signing scandal surfaced late in 2010 gave investors an advantage over banks when reselling these properties.
Several large mortgage servicers froze the foreclosure process when employees were found to be signing foreclosure documents en masse and without reviewing the documentation, as required by law in some states. Servicers are still correcting these documents affected by "robo-signers," and the foreclosure process remains stalled.
California foreclosures completed in May spent an average 344 days in the process, the longest time on record, according to ForeclosureRadar, which tracks filings on the West Coast.
Notices of default in Oregon fell 52.3% in May after ReconTrust, a Bank of America (BAC: 7.22 -1.10%) subsidiary temporarily increased filings in April.
Foreclosure sales on courthouse steps remained mixed along the West Coast. Only in California, did these sales increase both back to the bank and to third parties in May. In Washington, foreclosure sales to a third party dropped 24.5%, and fell 19.7% in Nevada.
However, third-party investors resold the homes they previously purchased at auction at a faster pace.
"The slowing foreclosure process has left fewer affordable homes available for sale," said ForeclosureRadar CEO Sean O'Toole. "Foreclosure investors may be the only winner so far, benefiting by being able to resell homes purchased at foreclosure auction a little more quickly."
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: California, ForeclosureRadar, foreclosures, investors, Oregon, robo-signing, third parties
Posted in Servicing/Default, Top Stories | 2 Comments »
The HousingWire editorial team sat down with Realtor Leslie Hodge during the 2011 REO Expo to discuss the state of the Kansas housing market.
Posted in Origination/Lending, Top Stories | No Comments »
It will take at least another year to work through the glut of REO inventory in the market and yet to come to market, according to Rick Sharga, senior vice president of RealtyTrac.
Speaking at HousingWire's 2011 REO Expo in Fort Worth, Texas, Sharga said the housing market is years away from full recovery, and he expects 2012 and 2013 to look similar to this year as the industry grapples with levels of distressed properties never seen before.
"It's taking so long to get out of this mess because it took us so long to get into this mess," Sharga said. "We were at the tail end of an unusually long boom time in housing. Unfortunately, we're anything but recovered, we're actually still searching for the bottom."
He said all previous housing busts were precipitated by an economic downtown followed by rising unemployment followed by increased foreclosure activity. Yet in 2006, none of these predictors were in place, according to Sharga.
"Unsustainably high home prices, exacerbated by what we can only euphemistically call 'really, really interesting lending practices,' " led to much of the bubble and subsequent bust, he said.
In 2010, there were 2.9 million foreclosure filings, which was the most ever, and more than 1 million REO sold for the first time ever. Sharga estimates foreclosures would've been 20% higher last year, if not for the freeze that resulted from the robo-signing fiasco of last fall. In March 2010, there were 376,000 foreclosure filings, while there 550,000 in all of 2005.
"Volume is just off the charts," Sharga said. "Yet after the robo-signing scandal of last October, there's lots of foreclosed properties just sitting there. We've heard from clients that they've got thousands and thousands of foreclosure actions backed up because they've been told to hold off."
He said 80% of 1.1 million properties in foreclosure and 75% of 900,000 REO aren't yet listed for sale.
He said a growing backlog of seriously delinquent mortgages, as evidence the industry is about to be hit by a second wave of foreclosures. And a high level of adjustable-rate mortgages getting ready to reset may result in yet a third wave.
Sharga believes lenders and servicers can mitigate the number of foreclosures through potentially extending teaser rates, possibly pushing loan maturities to 40 years, and maybe even principal reductions.
He said many of these homeowners face the tough decision of whether or not to strategically default on their mortgage, as they owe more than the home is worth.
"There is an abundance of uncertainty in the market, as many people are waiting for the other show to drop," Sharga said.
Write to Jason Philyaw.
Tags: foreclosure, Fort Worth, home prices, housing, mortgage, RealtyTrac, REO Expo, Rick Sharga, robo-signing
Posted in Origination/Lending, Slider | 8 Comments »
