July « 2011 « HousingWire

Archive for July, 2011

Tuesday, July 19th, 2011

Kenneth Robinson lives on Waterford Drive in Flower Mound, Texas, but he doesn't own or rent the home he claims he has a right to live in.

The home was in foreclosure, and the owner abandoned the property. That's when Robinson swooped in and, after submitting a $16 filing fee at the local courthouse, claimed the law of "adverse possession" gave him the right to occupy the home.

Posted in Around the Web | No Comments »

Carrington Mortgage Services gets Ginnie Mae approval

Tuesday, July 19th, 2011

Less than two months after settling a lawsuit with the Ohio Attorney General, Carrington Mortgage Services received approval to pool and service federally insured loans for Ginnie Mae.

Ginnie guarantees timely principal and interest payments on mortgage-backed securities containing loans insured by the Federal Housing Administration and Veterans Affairs. Carrington, based in Santa Ana, Calif., is licensed to lend and broker loans in 37 states. The Ginnie approval provides the company an opportunity to grow by adding FHA loans to its servicing portfolio.

"This approval expands our capabilities as a mortgage originator and servicer, and ultimately allows us to better serve our retail and wholesale customers," said Steve Patton, executive vice president for Carrington's mortgage lending division.

In 2008, then Ohio AG Richard Cordray called the Carrington servicing practices into question. In lieu of legal action, Carrington committed to make efforts to provide more mortgage modifications. But in 2009, Cordray and the Ohio Department of Commerce filed a joint complaint, alleging Carrington did not fulfill its end of the deal.

The two sides settled in May, with Carrington agreeing to provide relief to 60 Ohio homeowners but admitting no wrongdoing.

Cordray has since been nominated to lead the Consumer Financial Protection Bureau, and Patton said Carrington is moving on to continue growing its business with this new approval.

"As others exit the origination sector, particularly in wholesale, Carrington is committed to increasing its presence and providing needed liquidity for qualified borrowers, as well as high quality investments for purchasers of our GNMA securities," Patton said.

Write to Jon Prior.

Follow him on Twitter @JonAPrior.

Tags: Carrington Mortgage Services, CFPB, Cordray, FHA, Ginnie Mae, mortgage, Servicing/Default, VA
Posted in Servicing/Default, Top Stories | 1 Comment »

San Francisco Fed analyst sees GDP growth of 2.6% this year

Tuesday, July 19th, 2011

A confluence of factors, including waning consumer confidence and weak jobs growth, prompted one researcher at the Federal Reserve Bank of San Francisco to conclude the "underlying recovery has lost some momentum" and gross domestic product for 2011 will come in one percentage point lower than previously forecast.

Mary Daly, vice president of the San Francisco Fed, now expects GDP growth of 2.6% this year in a report published on the central bank's website Tuesday.

While she attributed the most recent slowdown in personal spending to temporary factors, including surging commodity prices and supply-chain disruptions, consumer confidence is an ongoing factor that caused Daly to pause when looking ahead.

"The slow growth of private-sector hiring is especially worrisome given expectations of additional cuts in government employment," Daly said. "These cuts are expected at all levels of government. At the federal level, a political consensus has emerged to reduce the budget deficit. At the same time, fiscal stimulus is waning. State and local governments are also shedding jobs as they work to bring expenditures in line with revenues."

While Daly said the Fed expects to gain momentum in 2012, she added "evidence suggests some of the recent weakness is persistent."

Other areas of concern include low wage growth among workers who are still employed, with average hourly earnings rising by less than 2%, slightly above the rate of inflation.

Daly said comparatively "many workers have seen few gains in real wages." She sees a gradual reduction in unemployment and a return to a low level of underlying inflation.

Write to Kerri Panchuk.

Tags: commodity prices, San Francisco Fed, San Francisco Federal Reserve Bank, weak jobs growth
Posted in Origination/Lending, Top Stories | No Comments »

BofA legacy servicing portfolio sheds 151,000 mortgages in 2Q

Tuesday, July 19th, 2011

Bank of America (BAC: 7.22 -1.10%) trimmed roughly 151,000 loans from its portfolio of delinquent and discontinued mortgages in the second quarter through foreclosure or short sales.

However, there are still millions of these loans to go. In February, BofA formed a Legacy Asset Servicing unit to handle loss-mitigation responsibilities along with representation and warranty claims.

At the end of the second quarter, BofA reported more than 4.3 million loans in this portfolio, down 3.3% from the previous quarter. The amount of mortgages in 60-day delinquency or worse declined 5% to 1.2 million.

"As you monitor the progress in this business, we continue to work down the number of loans and reduce the number of delinquent loans. We made very good progress during the quarter," said Chief Financial Officer Bruce Thompson.

However, this work did come with increased costs. Noninterest expense for the new unit totaled $1.9 billion, up $402 million from the previous quarter. Thompson said most of the higher costs came from an increase in staff.

As for the rep and warranty work, the $8.5 billion settlement with a group of investors in June dragged down earnings in the second quarter. The bank also set aside $5.4 billion in additional reserves for other nonagency securities and possible future settlements with the government-sponsored enterprises.

BofA shed more loans and properties already taken through foreclosure. In the second quarter, these loans totaled $17.9 billion, down from $19.5 billion last year and $18.4 billon in the previous quarter.

The banking giant froze the foreclosure process in all 50 states last year to correct mishandled documents. The bank said restarted foreclosures — principally in nonjudicial states — helped reduce the backlog.

However, the bank did not immediately comment on the status of judicial foreclosures.

Write to Jon Prior.

Follow him on Twitter @JonAPrior.

Tags: Bank of America, delinquency, delinquent, expense, foreclosure, legacy, moratorium, mortgages, second quarter, Servicing/Default, short sales
Posted in Servicing/Default, Top Stories | 2 Comments »

Video: FHFA Chief Economist discusses GSE conservatorship and home prices

Tuesday, July 19th, 2011

HousingWire met up with Patrick Lawler, chief economist and associate director of the Federal Housing Finance Agency, after he served as keynote speaker during the Source Media 3rd Annual Best Practices in Loss Mitigation Conference in Dallas.

Lawler discussed the current state of home sale prices and the unusual position FHFA now finds itself in as the agency serves as conservator of Fannie Mae and Freddie Mac.

Click on the video below for more.

Tags: Fannie Mae, Federal Housing Finance Agency, FHFA, freddie mac, Patrick Lawler
Posted in Secondary Market/Investors, Top Stories | No Comments »

Housing starts up 14.6% in June to 629,000

Tuesday, July 19th, 2011

Housing starts rose 14.6% in June, according to Commerce Department data, continuing gains of the prior month and coming in well above most analysts' estimates.

On a seasonally adjusted basis, starts increased to the highest level since January at 629,000, up from a revised 549,000 for May and nearly 17% higher than 539,000 a year earlier.

Analysts polled by Econoday were expecting housing starts to come in at 575,000 with a range of estimates between 550,000 and 600,000. Economists surveyed by MarketWatch projected starts to come in at 580,000 for June.

In a joint release, the Census Bureau and Department of Housing and Urban Development said single-family starts climbed 9.4% in June to a seasonally adjusted rate of 453,000 units, up from a revised 414,000 for May.

June's increase comes on the heels of a 3.5% increase in May. Starts dropped 22.5% in February, which was the largest monthly decline since March 1984.

Building permits in June rose 2.5% to an annual rate of 624,000 from a revised 609,000 for the prior month.

Write to Jason Philyaw.

Follow him on Twitter @jrphilyaw.

Tags: building permits, census bureau, commerce department, Department of Housing and Urban Development, housing starts
Posted in Origination/Lending, Top Stories | 4 Comments »

Wells Fargo earned $3.9 billion in 2Q

Tuesday, July 19th, 2011

Wells Fargo & Co. (WFC: 29.355 +1.05%) posted a second-quarter profit of $3.9 billion, or 70 cents per share, up from $3.8 billion, or 67 cents per share, during the same period a year ago.

The San Francisco-based banking giant attributed its 29% growth in earnings to higher revenue, increased loans and deposits as well as improved credit quality and higher capital levels.

The firm's earnings were in-line with analyst projections, which put earnings in the 69 cent-per-share range.

Revenue rose slightly in the second quarter hitting $20.4 billion, up from $20.3 billion in the first quarter.

The company's overall credit quality improved with Wells recording only $2.8 billion in net loan charge-offs — a measure of debt that is unlikely to be repaid. That is down $372 million from the first quarter and $1.7 billion lower than last year. The company's nonperforming assets fell $2.6 billion to $27.9 billion.

The bank had $751.9 billion in loans at June 30, up from $751.2 billion at the end of the first quarter.

Wells Fargo said it continued to liquidate loan portfolios as part of a planned reduction, but said the decreases were offset by an expansion in the company's commercial loan portfolios.

Write to Kerri Panchuk.

Tags: bank, credit quality, loan charge-offs, Wells Fargo & Co.
Posted in Origination/Lending, Top Stories | 1 Comment »

Goldman Sachs 2Q income $1.05 billion

Tuesday, July 19th, 2011

Goldman Sachs Group (GS: 109.87 +1.21%) nearly doubled second-quarter income despite lower overall revenue, as gains in investment banking and debt underwriting offset a slowdown in institutional client services.

The investment banking giant said earnings for the three months ended June 30 rose to $1.05 billion, or $1.85 a share, from $453 million, or 78 cents a share, a year ago.

Revenue for the quarter decreased 18% to $7.28 billion from $8.84 billion. Institutional client services revenue fell 45% from the first quarter to $3.52 billion and was 29% lower than a year earlier.

"High levels of uncertainty and decreased levels of liquidity during the quarter contributed to difficult market-making conditions, particularly in mortgages and commodities, and prompted the firm to operate at generally lower levels of risk," Goldman Sachs said.

Investment banking revenue rose 54% from a year ago to $1.45 billion and is up 14% from the first three months of 2011.

Underwriting revenue for the second quarter increased 73% from a year ago to $811 million "reflecting an increase in leveraged finance activity."

"During the second quarter, the operating environment was more difficult given global macroeconomic concerns," Chairman and CEO Lloyd Blankfein said. "In addition, certain of our businesses had disappointing results as we reduced our market risk in response to attempting to manage fluctuations in prices and market liquidity."

Goldman ended the second quarter with a Tier 1 capital ratio of 14.7% under Basel I with a Tier 1 common ratio of 12.9%. Both ratios are essentially unchanged from March 31.

The company reported total assets under management of $844 billion as of June 30, up slightly from the end of the first quarter and 5% higher than $802 billion a year ago.

Write to Jason Philyaw.

Follow him on Twitter @jrphilyaw.

Tags: Basel I, Goldman Sachs Group, investment banking, underwriting
Posted in Secondary Market/Investors, Top Stories | 4 Comments »

2Q profit rises for BNY Mellon on increased fee revenue

Tuesday, July 19th, 2011

The Bank of New York Mellon Corp. (BK: 20.08 +0.40%) earned $735 million for the second quarter, or 59 cents per share, beating analysts' estimates as fees and net interest revenue attributed to 9% growth in earnings per share.

The figure compares to net income of $658 million, or 54 cents a share, for the year-ago quarter. Analysts had estimated the bank would earn 56 cents a share, according to Yahoo Finance.

Still, expense growth remained high due in part to legal and regulatory costs, the New York-based bank said, noting that it is taking additional actions to reduce expenses.

"Our balance sheet remains very strong, deposits grew substantially and our capital ratios rose after our dividend increase and stock repurchases," said Robert Kelly, chairman and CEO of BNY Mellon.

The bank had $3.85 billion in revenue for the quarter, up from $3.34 billion in the year-ago period.

The bank reported that total fee revenue was up 18% with investment management fees up 14% and investment services fees up 27%.

Write to Kerry Curry.

Follow her on Twitter @communicatorKLC.

Tags: Bank of New York Mellon Corp., BK, BNY, earnings
Posted in Origination/Lending, Top Stories | 1 Comment »

State Street 2Q earnings rise 19% from year earlier

Tuesday, July 19th, 2011

Institutional investment manager State Street Corp. (STT: 38.89 +0.28%) earned $513 million, or $1 a share, for the second quarter, up from $432 million, or 87 cents a share, a year ago on growth in fee revenue.

Revenue for the three months ended June 30 rose 8% to $2.5 billion from $2.3 billion a year earlier. For the first quarter of 2011, State Street reported earnings of 93 cents a share on revenue of $2.4 billion.

"In the second quarter we achieved strong growth in fee revenue due to continued momentum in servicing and management fee revenues driven by global client demand, and supported by seasonal factors affecting securities finance," State Street CEO Joseph Hooley said.

One positive factor was net interest revenue from discount accretion related to asset-backed commercial paper conduit securities consolidated onto the balance sheet in 2009. The ABCP market, offering short-term funding, has struggled since the middle of 2008 when assets worldwide began to lose value.

State Street expects to record a pretax gain about $1.25 billion in interest over the remaining terms of the former conduit securities.

However, operating expenses and servicing fees are increasing greatly, in some case more than 20% per year.

Write to Jacob Gaffney.

Follow him on Twitter @jacobgaffney.

Tags: abcp, quarterly reports, second quarter, State Street
Posted in Secondary Market/Investors, Top Stories | No Comments »