Archive for June, 2011
One of every 10 New York City mortgages were 90 days delinquent or in foreclosure as of the end of the first quarter, according to a study released by the New York Federal Reserve.
The NY Fed studied data on roughly 483,000 mortgages. The ratio of seriously delinquent loans did vary by borough. In Manhattan for instance, one in 50 mortgages were in serious delinquency. But in Brooklyn and the Bronx, one in eight loans fell into serious trouble.
New York, a judicial foreclosure state, experienced a backlog of roughly 80,000 foreclosure cases. Each property a bank repossessed in March spent an average 900 days in the system. An October rule change for banking attorneys kept the caseload from ballooning to as high as 100,000 by the end of the summer. By March, though, with the rule in place for about six months, the courts whittled the backlog down to 74,000.
The shadow inventory in the state of New York — properties with mortgage borrowers more than 90 days delinquent — will take around 154 months to clear, according to Standard & Poor's.
The NY Fed study showed more work to come. Half of the serious delinquent loans in New York City have not reached the foreclosure process yet even though the amount of mortgages entering foreclosure continued to rise. Nearly 29,000 mortgages hit the court system in the first quarter, representing 6% of all home loans in the city.
That's more than double the percentage in 2009. (Click on chart to expand.)
The study did show some signs of improvement. The percentage of mortgages in 90-day delinquency dropped to a 3.8% share of all active home loans from 5.4% in February 2010.
The amount of mortgages sliding into serious delinquency also slowed from one year ago. In the first quarter, roughly 0.4% of all mortgages in the city fell into 90-day delinquency, down nearly 30 basis points from one year ago.
Home values, too, increased nearly 5% from one year ago in Manhattan and Brooklyn. Values remained flat on Staten Island and dipped roughly 5% for Queens and the Bronx.
"Mortgage delinquencies and foreclosures remain a serious concern for our region,” said Kausar Hamdani, head of regional and community Outreach at the NY Fed.
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Tom and Patrice Sherhag's foreclosure began with a missed quarterly HOA payment of $75 in October.
The assessment due to the Palmetto Pines Homeowners Association in unincorporated Boca Raton grew to $318 by the end of November, a charge that by then included a $25 late fee, a $35 "processing fee," 18 percent interest and $175 in attorneys' fees.
In January, the association filed a lien for the original $75 on the Sherhags' home and despite subsequent checks written for hundreds of dollars, snowballing court and attorneys costs have since upped the final bill to an estimated $4,605.
The actual debt owed the association: $80.25.
In the past six months, an eerie feeling has settled in the offices of housing counselors and attorneys who confront the foreclosure crisis head-on and help distressed homeowners in New Jersey. The phone hasn’t been ringing any less than it did at the height of the storm, but what is about to hit may be greater than anything the group has seen so far.
Foreclosure filings are down 86 percent so far this year from last, owing in part to a December crackdown by the state’s chief justice that effectively halted proceedings by the country’s biggest mortgage lenders and service companies, according to court data. But lenders are waiting to file an estimated 28,500 foreclosures, and another 55,000 mortgage loans are currently more than 90 days delinquent, according to LPS Applied Analytics, a real estate data firm that tracks mortgage performance.
At the current rate, it would take 49 years for banks to clear the logjam of mortgage loans that are currently in the foreclosure process or are more than 90 days delinquent, LPS found.
The Mortgage Bankers Association proposed a new servicing fee structure that would set aside the cash needed to treat nonperforming loans.
The Federal Housing Finance Agency, Ginnie Mae and the government-sponsored enterprises began considering a new mortgage servicing fee structure in January. As delinquent loans mounted after the subprime meltdown and the foreclosure pipeline jammed, the existing fee structure could no longer fund the extra work needed.
The current model provides a minimum servicing fee of 25 basis points with an assumed guarantee fee of 20 bps and a 5 bps servicing fee the servicer can cash out or hold as a mortgage servicing right. In February, the FHFA released four options under consideration to replace the old system.
One structure allows for the servicer to take an unguaranteed interest in the both the principal and interest in lieu of being paid a fee based on the interest strip.
The other three models assume minimum servicing fees of 12.5 bps, 3 bps and no minimum servicing fee, which the FHFA dropped as an option, according to the MBA. See graph below for details.
Each structure proposed pays servicers based on performing loans with additional fees for nonperforming ones. The agency would pay servicers a flat dollar amount per month based upon which stage in delinquency the loan was in.
But the MBA said the proposals currently under consideration include an increase in the guarantee fees the servicer pays the guarantor. This would cover the separate fee the servicer gets for treating nonperforming mortgages. However, the MBA said under the current proposals, the g-fee would be greater than the actual cost to the agencies.
"Thus, MBA’s members fear that the Ginnie Mae, Fannie Mae and Freddie Mac may realize a windfall profit at the expense of servicers," the trade group said. "MBA believes another option is worth considering."
The MBA proposal would establish a cash reserve to be used for the future servicing fees of nonperforming loans. On a 5% mortgage, a 5 bps strip of the interest rate would be used to fund the account.
If one of the agencies move the servicing rights to another firm, the funds would transfer, too.
"Although not a panacea, this structure could result in realizing the Guarantors’ stated objectives, while addressing major concerns MBA’s members have with respect to the proposals discussed so far," the MBA said in a letter to the agencies.
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