Archive for July, 2011
Simon Property Group's (SPG: 135.79 -0.54%) second-quarter funds from operations rose 19.5% as higher occupancy rates and rents helped results.
The real estate investment trust reported funds from operations, which exclude depreciation, of $583 million, or $1.65 a share, for the three months ended June 30. Funds from operations for the year ago were $487.7 million, or $1.38 a share.
Simon Property earned $205.1 million, or 70 cents a share, for the second quarter, up from $152.5 million, or 52 cents a share, a year earlier. Revenue rose 11.5% to $1.04 billion from $933.6 million a year ago.
Chairman and CEO David Simon said growth was driven by higher revenue from the company's core portfolio and gains from acquisitions, as well.
Occupancy rates rose to 93.5% from 93.1% a year earlier and total sales per square foot at the company's malls and outlet centers climbed 9.4% to $513 from $469 a year ago. The average rent increased to $39.70 a square foot from $38.62 last year.
Simon Property plans to 37 new anchor/big box stores this year with another 15 set to open in 2012 and 2013.
The company boosted its estimates for 2011 and now expects to report earnings of $2.74 to $2.82 a share with funds from operations between $6.65 to $6.73.
Write to Jason Philyaw.
Tags: 2Q earnings, REIT, Simon Property Group
Posted in Origination/Lending, Secondary Market/Investors, Top Stories | No Comments »
Sterling Bancorp (STL: 9.55 -0.52%) reported net income of $2.5 million in the second quarter, or 8 cents a share, up 8% from one year ago.
The total loan portfolio at the bank set a record high, approaching $1.4 billion, an increase of 10.3% from a year earlier. According to analysts at FBR Capital Markets, second-quarter earnings for the nation's largest banks showed more loans being made across the board.
Meanwhile, second-quarter nonperforming assets at Sterling totaled 0.3% of all assets held by the bank, down from the 0.85% reported last year. This allowed Sterling to reduce the provision for loan losses to $3 million from $5.5 million.
Two common share offerings of Sterling stock in March 2010 and again this March generated more than $100 million in proceeds. Sterling CEO Louis Cappelli said the bank used the funds to push its amount of assets to a record $2.6 billion.
"We expect to see continued strong demand for Sterling's products and services through the balance of this year and beyond, due to the economic resiliency of our market, our unique focus on small-to-midsized businesses, and our dedication to providing exceptional customer service," Cappelli said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: assets, bank, FBR Capital Markets, loans, Sterling Bancorp, stock
Posted in Origination/Lending, Top Stories | No Comments »
Regions Financial Corp. (RF: 5.195 +0.48%) reported second-quarter income of $55 million available to common shareholders, or 4 cents a share, up from a loss of $335 million, or 28 cents a share, in the year-ago quarter as new products and services helped diversify revenue streams.
It was the third-consecutive quarterly profit for the Birmingham, Ala.-based regional bank, which re-entered the credit card business during the quarter and introduced new consumer fee-based services such as on-line person-to-person payments, small cash advances for relationship customers, and identity theft protection.
Analysts had estimated an average loss for the quarter of 1 cent.
Total revenue was $1.65 billion, up from $1.61 billion in the year-ago period.
Pre-tax, pre-provision net revenue on an adjusted basis rose to $500 million, its highest level since third quarter 2008, reflecting the company’s continued growth in commercial and industrial, indirect and direct consumer loans, as well as low-cost deposits.
The company’s credit costs, while still elevated, declined to the lowest level in two years.
Total net charge-offs in the second quarter were $548 million, down from $651 million in the year-ago quarter. Inflows of nonperforming loans declined 24% versus the previous quarter to $555 million — the lowest level in over three years. Nonperforming loans, excluding loans held for sale, declined $303 million or 10%.
The bank held $268 million in mortgage servicing rights for the quarter, up slightly from $220 million a year ago. Mortgage income was $50 million, down from $63 million in the year-ago quarter.
Tags: earnings, mortgage, nonperforming loans, Regions Financial Corp., RF
Posted in Origination/Lending, Top Stories | No Comments »
Freddie Mac posted details about its new Servicing Success Program Monday as the government-sponsored enterprise prepares for the Aug. 1 launch of the initiative.
Through the program, Freddie hopes to offer servicers a more "robust and balanced approach" to setting standards for what the GSE expects from its servicing clients in the field.
The program will not only set performance bars, but will provide a stream of feedback on servicer strengths and weaknesses. It also will allow for open dialogue to give servicers the information they need to improve the performance of their portfolios.
Freddie's Servicing Success Program directly evaluates each servicer's performance when it comes to investor reporting, remitting and default management.
Through the program, Freddie will rank servicers monthly based on points they earned when servicing loans the previous month. The August rankings will be available on each servicer's performance profile Web page starting Oct. 7. This ranking system will replace Freddie's traditional performance-tiered rankings.
"Today's announcement marks the beginning of a significant advance in the scope and sophistication of servicer performance management," said Tracy Mooney, senior vice president of single-family servicing and REO at Freddie Mac. "The robust, balanced approach we are launching in 2011 underscores Freddie Mac's commitment to invest in the future of U.S. homeownership by strengthening servicing practices and enabling servicers to more effectively preserve homeownership."
Write to Kerri Panchuk.
Tags: freddie mac, government-sponsored enterprises, GSE, Servicing Success Program
Posted in Servicing/Default, Top Stories | 4 Comments »
As the debate continues over what should constitute a qualified mortgage in the lending process, the American Land Title Association is urging the Federal Reserve Board to require the inclusion of title insurance in the final draft of the qualified mortgage standard.
The qualified mortgage requirement, which is part of the Dodd-Frank Act signed last year, is the subject of much debate in Washington since the final definition of QM will have a great impact on what type of loans can be originated.
ALTA sent a letter to the Federal Reserve this week saying the history of legal title to the collateral should also be analyzed as part of the qualified mortgage requirement.
"Prudent underwriting of a borrower’s ability to repay would require that a creditor evaluate the title to the collateral to determine what outstanding debts will need to be satisfied before the creditor can obtain the first lien mortgage," said Anne Anastasi, president of ALTA.
"A title search and examination backed by a title insurance policy is a crucial underwriting feature that ensures that the borrower will have the ability to repay the mortgage by verifying their ownership of collateral and identifying any liens superior to the creditor’s mortgage," Anastasi said.
Anastasi explained that not all debts tied to a title can be viewed in credit reports, especially since some of those debts are secured by liens on the property that only show up through title searches and examinations.
Other trade groups and real estate firms voiced opposition to the QM rule's current construction, saying the QM standard and the qualified residential mortgage rule are somewhat redundant and need to be efficiently coordinated and streamlined.
Write to Kerri Panchuk.
Tags: ALTA, American Land Title Association, QM, QRM, qualified mortgage, qualified residential mortgage
Posted in Origination/Lending, Top Stories | No Comments »
Florida’s existing-condo sales rose 8% in June with 7,922 units sold statewide compared to 7,330 sold in June 2010, according to Florida Realtors.
The statewide existing-condo median sales price last month was $94,100, up 2% from $92,300 in June 2010.
"Promising signs continue for a slowly strengthening economy and housing market," said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties. "Mortgage interest rates remain historically low and affordability conditions are strong."
Nine of Florida's metropolitan statistical areas reported higher existing-condo sales in June while six MSAs had higher existing-home sales.
Miami showed one of the biggest gains, with 1,316 existing-condos sold in June, up 54% from 855 in the year-ago period, but prices dipped by 7%. Miami also sold more existing homes, 923 sales, up from 686 single-family existing-home sales in June 2010 for a 35% increase, but prices for existing homes dipped 9% during that time period.
Fort Walton Beach, Fla., saw its existing-condo sales skyrocket 100%, increasing from 81 sales in June 2010 to 162 sales last month. Prices on existing condos there were up by 3%.
In Florida's year-to-year comparison for existing-home sales, 17,597 homes sold last month compared to 18,402 homes sold in June 2010, a 4% decrease. The statewide median sales price for existing homes in June was $138,000, down 2% from a year ago.
Sales of foreclosures and other distressed properties continue to distort the median price because they generally sell at a discount relative to traditional homes.
The National Association of Realtors' latest industry outlook points to the still-sluggish job market and overly restrictive lending requirements as factors constraining housing's recovery. Nationwide, existing homes sales were down 0.8% in June from May and 8.8% below June 2010 levels, which marked the last month of the federal homebuyer tax credit.
Florida Realtors' sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: condo sales, Florida, Florida Realtors, foreclosures, home sales, house prices, Illustrated Properties, mortgage, National Association of Realtors
Posted in Origination/Lending, Top Stories | No Comments »
The larger the issuer of mortgage-backed securities, the better the ratings assigned to the deals, according to a white paper from the National Bureau of Economic Research.
Due to the favorable ratings, the large issuers, which pay ratings agencies for this service, experienced higher yields on MBS products, at lower prices. The practice was particularly widespread from 2004 to 2006, the NBER paper claims.
Consequently, smaller issuers, the NBER report suggests, were placed at a competitive disadvantage. During those three years, commercial banks were the most prevalent MBS issuers, accounting for about 39% of the deals, followed by investment banks at 22%, thrifts with 20%, finance companies 9%, and other firms 10%.
All three major ratings agencies, Moody's Investor Service, Standard & Poor's and Fitch Ratings told HousingWire they needed more time to review the white paper before commenting.
According to the paper, yield spread on MBS was about 10% higher on tranches sold by large issuers than similarly rated tranches issued by small issuers during market boom years.
"For rating agencies, the new fixed-income products emerging out of the growth of structured finance provide substantial revenue potential beyond their traditional market of corporate bonds," the NBER paper claims.
"The total volume of originations of subprime mortgages, for example, rose from $65 billion in the late 1990s to over $600 billion in 2006," the text states. "In the case of Moody’s (Investors Service), profits tripled between 2002 and 2006."
"There is also direct evidence that rating agencies offer price discounts for large and frequent issuers of corporate bonds," the NBER alleges.
But the report does not place all of the responsibility for overly optimistic ratings on the shoulders of credit ratings agencies.
Many sophisticated investors and policymakers systematically underestimated default risk in housing, particularly the risk that the whole U.S. housing market would decline simultaneously, the report said.
Larger issuers are responsible as well, as they likely sought to bargain with the ratings agencies as more funds received triple-A ratings.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
Tags: credit ratings agencies, Fitch, Moody's, Moody's Investors Service, National Bureau of Economic Research, NBER, Standard & Poor's, triple-A
Posted in Secondary Market/Investors, Slider, Top Stories | 2 Comments »
The growing Latino population will significantly impact mortgage lending in the United States, said Rogelio Sáenz, dean of the College of Public Policy at the University of Texas at San Antonio.
While presenting at the 6th Annual Mortgage Lending Industry Strategic Markets and Diversity Conference, Sáenz based his assertion on demographic trends, citing numbers which show one out of every two people added to the U.S. population each year is Latino.
Sáenz said the Latino population could easily triple from 49.7 million in 2010 to 132.8 million by 2050, significantly shifting the makeup of the nation's homebuyers.
Sáenz cited data from the National Association of Hispanic Real Estate Professionals, which suggests Hispanics are now the largest minority group and a significant portion of the age group that is most often involved in home sales — mainly those who are 26 to 46 years old. He added the growing Hispanic population is more likely to have families with children, spurring the need for homeownership.
Mark Calabria, director of financial regulation studies at the Cato Institute, has studied mortgage issues in the United States and agrees that the Latino share of the housing market is growing, Calabria said in an interview with HousingWire.
Yet, Calabria said the demographic shift may also be dependent on the age profile of homebuyers. He said as the age of any population gets older, their homeownership rate tends to rise.
"Part of this story is, Who are the first-time homebuyers going to be tomorrow?" Calabria said. "Those are all determined by the age profile of the population. A big segment of that is going to be Latino buyers."
At the same time, Calabria said knowledge of this transition is not new to the housing market. It's been known for at least a decade that the Latino population would gain significant ground when it comes to demographics.
He said the big question is what does the demographic shift mean for mortgage lending itself. "Are there going to be different products?" he asked.
A significant portion of "the people who are alive today are going to be alive in 10 years," he noted. "What we don't know is whether the Latinos are going to transition into homeownership the way other demographics do."
He added that first-time homebuyers – many of them younger Latinos – may have been part of the recent housing bubble and like other younger buyers walked away with dings on their credit scores.
Sáenz didn't elaborate on whether products would shift or change, but he did suggest this population could end up becoming an area of focus for the Consumer Financial Protection Bureau as they continue to evaluate home loans sold in the mortgage marketplace.
Write to Kerri Panchuk.
Tags: Cato Institute, Hispanic homebuyers, Mark Calabria, mortgage, mortgage lending, National Association of Hispanci Real Estate Professional, Rogelio Sáenz, University of Texas at San Antonio
Posted in Origination/Lending, Top Stories | 1 Comment »
Fidelity National Financial (FNF: 18.25 0.00%) reported a second-quarter profit of $80, or 36 cents a share, down 42.6% from the year-ago period in the absence of a large one-time gain a year ago.
Last year's second-quarter income of $139.6 million, or 61 cents, included approximately a $63 million after-tax gain, or 27 cents per share, from the sale of Sedgwick CMS in May 2010.
Still, the company beat analysts' estimates of 31 cents a share.
Total revenue was $1.32 billion for 2Q, down from $1.5 billion in the year-ago quarter. Cash flow from operations stood at $30.2 million, down from $136 million a year ago.
The title group had revenue of $1.2 billion, down from $1.28 billion a year ago but pre-tax earnings for the period were $140.6 million, up from $124 million in 2Q 2010.
"Despite a continued sluggish real estate environment, we were able to generate an impressive 11.7% pre-tax margin in our title business, a 200 basis-point increase over the prior year and a sequential increase of 240 basis points from the first quarter of this year," said Fidelity National Chairman William Foley II.
"While refinance orders represented 51% of closed order volumes this quarter versus 46% in the prior year, we still produced a 5% increase in the fee per file," he said, adding that much of that is attributable to the strength of Fidelity's commercial business.
Fidelity National generated nearly $94 million in commercial revenue in the second quarter, a 38% increase over the prior year. The commercial business produced a fee per file increase of 26% over both the prior year quarter and the first quarter of this year.
The title insurance firm also said the impact of cost-reduction initiatives contributed to its pre-tax title margin.
Fidelity recently announced the sale of its flood insurance business for approximately $210 million. Capital from that sale will be redeployed into other areas if the company, Foley said.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: 2Q, earnings, Fidelity National Financial, FNF, second quarter, Sedgwick CMS
Posted in Origination/Lending, Top Stories | No Comments »
Lender Processing Services (LPS: 16.78 +1.39%) earned $21.4 million, or 25 cents per share, in the second quarter, a 73% drop from the $80.4 million reported one year earlier.
The technology and financial services provider reported revenue of $72.2 million for the quarter, less than half of the $148.4 million last year. LPS recorded a $7.9 million charge from personnel reductions and a $31.8 million charge for writing down certain investments, including $26.6 million for discontinued operations.
Corporate expenses, which include legal and compliance costs, nearly doubled to $33.9 million in the second quarter from $18 million last year.
In April, LPS signed a consent order with the Federal Reserve to settle a federal investigation into foreclosure practices at the firm and major mortgage servicers. LPS was required to boost oversight of its processes. It also faces a separate investigation from Michigan Attorney General into alleged documentation problems related to the robo-signing scandal that surfaced last year.
The company's CEO resigned in July due to health concerns. Lee Kennedy, the executive chairman of the board at LPS, is serving as the interim chief.
"Our default services and loan facilitation businesses continued to be impacted by lower industry volumes, however, our mortgage processing business had a good quarter while our Other TD&A businesses posted strong growth from continued market share gains," Kennedy said. "While difficult market conditions persist in some of our businesses and the broader economy remains very sluggish, LPS with its strong market presence remains well-positioned."
LPS also plans to restructure its senior, secured credit lines. The financing includes a $400 million revolving credit facility, a $350 million, five-year term loan and a $550 million seven-year term loan.
LPS plans to use proceeds from the loans to refinance existing debt and other general corporate purposes. The company expects the close the funding in August, "subject to market and other customary conditions."
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: CEO, default services, earnings, Federal Reserve, foreclosure, Kennedy, LPS, Michigan AG, mortgage, second quarter, Servicing/Default
Posted in Servicing/Default, Top Stories | 2 Comments »
