Archive for July, 2011
The delinquent unpaid balance on loans within commercial mortgage-backed securities fell by $1.5 billion in June, hitting $60.86 billion, according to the latest Morningstar CMBS delinquency report.
That compares to an unpaid principal balance of $62.37 billion a month earlier, making it a 1.5% decline in unpaid principal balance between the months of May and June.
This is the second consecutive drop in the delinquent unpaid CMBS loan balance when considering the unpaid balance on all CMBS loans fell about $974.6 million the previous month, which was the first decline since January.
Morningstar concluded that "a large majority of the decrease-net change in delinquency can be found within liquidations."
About $1.27 billion in liquidations occurred in June 2011 involving 142 loans. A month earlier, $1.15 billion in liquidations were reported for May across 126 different loans, Morningstar said.
Improvements when it comes to balances and payments on CMBS loans have been noticed since the start of the summer.
The rate of delinquent loans in commercial mortgage-backed securities declined in June but still remains higher than 9%, as it has for all of 2011, according to Moody's Investors Service.
Four new CMBS deals worth more than $6.2 billion offset the roughly $5.7 billion of legacy CMBS that exited the space during June. If not for those four deals that closed last month, the delinquency tracker would have only slid to 9.12% for June, according to Moody's analysts.
Write to Kerri Panchuk.
Tags: CMBS, commercial mortgage-backed securities, Moody's Investors Service, Morningstar CMBS delinquency report
Posted in Secondary Market/Investors, Top Stories | No Comments »
Massachusetts Attorney General Martha Coakley will begin gathering foreclosure documents next week filed by the Mortgage Electronic Registrations Systems in a statewide investigation, according to a letter her office sent to state registers of deeds.
Coakley will send civil investigative demands to the registers, requesting "critical information to our investigation" and vowed not to sign any agreement between lenders and other AGs if MERS is relieved any possible liability.
"We have made clear that Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct," Coakley said. "We strongly believe that these investigations must continue and responsible parties must be held accountable in order to fully protect homeowners and return to a healthy economy."
MERS denied the assertions from Coakley in a statement sent to HousingWire yet a company spokesperson said MERS would cooperate with the investigation.
"The assertions about MERS are without merit," the spokesperson said. "We will cooperate with the investigation and look forward to the opportunity to respond to the Massachusetts Attorney General's request. The use of MERS has been litigated in Massachusetts Courts, and judges have upheld the legality of the MERS business model in the Commonwealth."
When mishandled and faulty foreclosure documents surfaced last year, federal regulators and the 50 state AGs launched investigations. Regulators found signs the problem was widespread and forced major mortgage servicers to hire third-parties for a wider review of loan documents.
A report released by regulators showed MERS, a network created by the banks to simplify the selling of mortgage loans by eliminating the need to prepare and record assignments, did not invest enough resources or staff into the company in order to handle the wave of foreclosures.
The AGs and servicers continue to work toward a negotiation. Registers of deeds in Iowa recently expressed similar concerns to the lead investigator and the state AG Tom Miller.
Coakley will meet with her state registers on August 11th to hear their concerns regarding MERS and other foreclosure issues.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: AG, Coakley, foreclosure, investigation, Iowa, Massachusetts AG, MERS, registers of deeds, Tom Miller
Posted in Servicing/Default, Top Stories | 5 Comments »
The debate over how lawmakers should draft the qualified residential mortgage and qualified mortgage rules proposed under Dodd-Frank picked up momentum this past week with real estate professionals attacking the two rules for being somewhat redundant and unclear in their approaches.
Real estate and relocation services provider Realogy Corp. used the open comment period on the qualified residential mortgage rule (QRM) to suggest replacing the QRM with a set of enhanced disclosure requirements that would force issuers of mortgage-backed securities to highlight all of the risks tied to each securitization deal.
In its current form, the proposed qualified-residential mortgage would give borrowers who put at least 20% down on their mortgages a chance to be exempted from the credit-risk retention rule. The proposed risk-retention rule in its current form requires firms to hold 5% of the risk on securitized loans.
New Jersey-based Realogy submitted a proposal suggesting lawmakers forget about the QRM and instead create an "enhanced disclosure approach."
"We believe the current QRM definition that includes a down-payment requirement of 20% would create unduly tight credit standards and place homeownership out of reach for millions of potential buyers," said Richard Smith, president and CEO of Realogy Corporation. "This was not the intent of Congress when the Dodd-Frank Act was passed, and we remain hopeful that the regulators will make a course correction, wisely choosing not to damage an already fragile housing market."
In a written response to regulators, Realogy said "the focus should be on applying rigorous underwriting standards looking at various factors, not simply on the magnitude of down payment. Further, any minimum down payment percentage as QRM requirement should not exceed the percentage required under FHA rules in effect at any given time."
The Securities Industry and Financial Markets Association also piped in, adding to the viewpoint of the American Securitization Forum by suggesting the drafters of the rules need to establish clearer definitions and standards of conduct when it comes to how real estate professionals meet the provisions of the qualified mortgage standard — which requires lenders to ensure a borrower has the ability to repay a loan — and the QRM, which deals with risk retention during the securitization process.
"The definition of qualified mortgage will also need to work seamlessly with its related construct, that of a qualified residential mortgage," SIFMA said in its response to the QRM and QM. "This will require a high degree of coordination among the various regulatory agencies to ensure that standards are interpreted and applied consistently. To ensure that is the case, SIFMA proposes that any mortgage satisfying the definition of qualified residential mortgage should also automatically satisfy the definition of qualified mortgage."
Tags: qualified mortgage, qualified residential mortgage, Realogy Corp.
Posted in Origination/Lending, Secondary Market/Investors, Top Stories | 2 Comments »
Mortgage lender Total Mortgage Services announced plans Monday to hire 50 retail loan officers in an effort to grow the firm's mortgage retail channel.
The officers will help the firm expand its loan origination output in the 23 states where Total Mortgage is currently licensed and in the five states where additional licenses are pending.
The Milford, Conn.-based mortgage lender said it will be recruiting experienced mortgage production professionals and offering competitive compensation packages.
“Total Mortgage’s vision is to deliver the perfect mortgage, which we believe starts with our advice-driven loan officers establishing a trust-based relationship with a borrower at initial contact and continuing to offer the best advice through closing,” said John Walsh, president of Total Mortgage. “Part of our expansion strategy is to significantly increase our retail production team by adding 50 high quality mortgage sales professionals, who not only have a track record of producing quality loans, but who are technologically savvy, have great communication skills and are aligned with our integrity-based culture and our centralized model.”
Total Mortgage Services offers low mortgage rates on jumbo, FHA-insured, 30-year fixed-rate and adjustable-rate mortgages.
Write to Kerri Panchuk.
Tags: adjustable-rate mortgages, loan officers, mortgage lender, Total Mortgage Services
Posted in Origination/Lending, Top Stories | 1 Comment »
Second-quarter earnings from the nation's big banks show the firms experiencing modest loan growth and higher pre-provision earnings during the period, FBR Capital Markets said in a new report.
Still, total loan balances remained largely flat at the nation's banks, according to the analyst firm's report.
FBR Capital noted that of the 13 covered banks, which hold 68% of U.S. banking assets, loan growth was relatively flat in the quarter even though commercial and industrial loan growth did occur in 11 of the 13 institutions.
"Other loan categories showed continued declines, with banks battling for market share," FBR Capital Markets said.
Meanwhile, the regional players experienced stronger loan growth largely due to smaller run-off portfolios and a greater deal of exposure to commercial and industrial lending as opposed to the residential loans that are slowing down big banks.
Commercial and industrial loans grew 2.2% in the most recent quarter, while residential lending experienced a 0.3% decline, FBR Capital said. Large players like U.S. Bancorp (USB: 27.785 -0.02%), PNC Financial Services (PNC: 58.845 -0.09%), JPMorgan Chase (JPM: 37.24 -0.67%) and Wells Fargo (WFC: 29.35 +1.03%) grew their C&I lending by more than 2%.
"We believe this quarter showed some promise, as core operating pre-provision earnings bounced slightly from their slide over recent quarters, there was modest loan growth at some banks, and credit continues to slowly recover," FBR Capital said in its report.
Overall, the outlook for banks was more optimistic after the release of second-quarter earnings, according to FBR Capital.
SunTrust Banks (STI: 20.39 -0.54%) exemplified this trend, recording a second-quarter profit of $174 million, or 33 cents per share, up from a loss of $56 million, or 11 cents per share, during the second quarter of 2010.
SunTrust attributed its earnings growth to improvements in the overall quality of its assets.
U.S. Bancorp (USB: 27.785 -0.02%) experienced a 57% jump in earnings from year ago levels, with a profit of $1.2 billion, or 60 cents per share, in the second quarter. The firm cut its provision for credit losses more than half to $572 million, down from $1.1 billion a year earlier. In addition, net charge-offs on residential loans fell from $138 million in the second quarter of 2010 to $119 million.
Meanwhile, Wells Fargo & Co. (WFC: 29.35 +1.03%) posted second-quarter earnings of $3.9 billion, or 70 cents per share, up from $3.8 billion, or 67 cents per share, a year earlier. The San Francisco-based bank attributed its higher earnings to increased revenue, loans and deposits as well as improved credit quality and higher capital levels.
PNC Financial Services Group earned $912 million, or $1.67 per share, in the second quarter, as nonperforming assets declined.
JPMorgan Chase & Co. (JPM: 37.24 -0.67%) posted a second-quarter profit of $5.4 billion, or $1.27 a share, even as the banking giant continued to record charge-offs from its mortgage portfolio. CEO Jamie Dimon said JPMorgan's delinquency and net charge-off trends improved modestly over the previous quarter.
Bank of America (BAC: 7.215 -1.16%), on the other hand, reported an $8.8 billion loss for the second quarter on the bank's $8.5 billion settlement with mortgage-backed securities investors.
When analyzing the banks' second-quarter earnings reports, FBR Capital concluded that competition is growing between banks when it comes to rates and that "makes us uneasy as this is not a good environment to grow loans, and competition makes it worse," analysts with FBR said.
Write to Kerri Panchuk.
Tags: bank earnings, Bank of America, bank profits, banking assets, FBR Capital Markets, JPMorgan Chase, JPMorgan Chase & Co., PNC, SunTrust, U.S. Bancorp, Wells Fargo, Wells Fargo & Co.
Posted in Origination/Lending, Secondary Market/Investors, Top Stories | 6 Comments »
The American Land Title Association announced the planned departure of its Chief Executive Officer Kurt Pfotenhauer on Monday.
Pfotenhauer is exiting his position at the trade group to join First American Title Insurance Co. as executive vice president and vice chairman, according to a press release from First American.
First American said, "Pfotenhauer will maintain executive-level relationships with the nation's largest money center banks and assist with political and legislative relations for the corporation."
Pfotenhauer arrived at ALTA in January 2008 after spending five years serving the Mortgage Bankers Association as senior vice president of government affairs. Pfotenhauer also serves on the board of MERSCORP Inc., which owns and operates the MERS national electronic registration system that tracks mortgage servicing rights.
“We are genuinely sorry to see Kurt leave ALTA, but he has built an extremely talented staff that is completely capable of keeping the association on a positive path to future success,” said Anne Anastasi, president of ALTA.
Pfotenhauer was previously the chief lobbyist for the MBA, according to a press release issued by the MBA upon Pfotenhauer's arrival three years ago.
Pfotenhauer previously served as U.S. Senator Gordon Smith's (R-Ore.) chief of staff. He was twice named one of Washington D.C.'s top lobbyists, according to First American.
Write to Kerri Panchuk.
Tags: American Land Title Association, MBA, MERS, Merscorp Inc., Mortgage Bankers Association
Posted in Secondary Market/Investors, Top Stories | No Comments »
Investors are a driving force in the housing market, but their enthusiasm is constrained by limited financing options with more investors forced to pay cash for their homes as debt-driven financing remains restricted. And with housing supply only set to increase, the ability of these investors to absorb the overhang may substantially decrease.
Primary activity in the nation's key housing markets is made up of a significant portion of hard cash buyers operating in the distressed property space. Of this number, only 40% or so are estimated to have access to excess capital.
Seventy-five percent of investor transactions last month were financed with cash, according to researchers who compiled the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. While investors are welcomed into the market for keeping sales flowing, an earlier report from HousingPulse warned investor cash levels would eventually be depleted, leaving the market in the hands of first-time homebuyers — many of whom no longer qualify for credit because of tightened underwriting guidelines.
Looking forward, researchers who compiled the report expect home prices to dip further in 2011 due to limited financing options for investors and a growing gap between the supply of distressed properties and sagging demand from first-time buyers. One market source interviewed by the firm expects price declines of at least another 10%.
"The fact that the recent rebound in existing home sales has been predominantly driven by cash buyers and investors places a question mark over the sustainability of that rebound," said Paul Dales, U.S. housing analyst for Capital Economics, back in March. "The concern is that there may be a limited pool of such buyers and that first-time buyers will not be able to fill any void."
The survey showed the proportion of first-time homebuyers in the housing market dropped to 35.4% in June, compared to 37.3% in May. At the same time, the HousingPulse Distressed Property Index dropped to 44.7% in June from 46.7% in May. Even with distressed properties clearing the market, HousingPulse noted "the gap between first-time homebuyers and distressed property supply was 9.3 percentage points in June," suggesting that housing supply far exceeds demand.
Not to mention, the market remains fearful of the eventual unleashing of the growing shadow inventory of foreclosed and short sale properties.
In the report, Campbell/Inside Mortgage Finance quotes an anonymous California real estate agent as saying "there are tens of thousands of homes that have not even received a notice of default that have not made a mortgage payment in months or years."
The same agent said there will not be a bottom until the "economy turns in earnest and or the default inventory is exhausted."
The study concluded that investors have played a significant role since the end of the homebuyer tax credit by accounting for more than 20% of home purchases on average.
Middle-class Americans seem to believe the dire forecast about home prices and future sales, and remain unlikely to meaningfully get into moving up the property ladder, much less buying second homes.
Sixty-three percent of citizens surveyed for the First Command Financial Behaviors Index believe America is already in a double-dip recession, About 55% of those Americans who see the nation in the grips of a double-dip recession consider the weak housing market to be one of the key causes.
Write to Kerri Panchuk.
Jacob Gaffney contributed to this article.
Tags: first-time homebuyers, foreclosure, middle-class, real estate, shadow inventory
Posted in Secondary Market/Investors, Slider, Top Stories | 8 Comments »
Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.
It was the second ratings agency to warn of a default after euro zone leaders and banks agreed last week that the private sector would shoulder part of the burden of a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.
Posted in Around the Web | No Comments »
Analytics firm CoreLogic (CLGX: 14.55 +0.55%) is touting a new partnership with FICO as a way to enhance lenders' ability to detect mortgage fraud.
Incorporating FICO's Origination Manager 4.0 system into its LoanSafe fraud manager platform will create a more advanced fraud detection system that offers timely alerts, case management tools and increased accessibility to lenders looking for hidden risks on loans going through the origination process, CoreLogic said.
Through the enhanced system, lenders will be able to write their own rules when creating fraud alerts, change steps in the detection process, create the steps analysts need to follow when dealing with risky applications and roll out new processes that can continually be updated to ensure best practices in detecting mortgage fraud.
"By leveraging technology provided by FICO, we are bringing new best-in-class fraud prevention capabilities to lenders more quickly, and continuing to revolutionize the way fraud is prevented in the mortgage industry," said Tim Grace, senior vice president of product management and analytics at CoreLogic. "Lenders can now make better use of CoreLogic data assets to create and modify fraud alerts, which helps lenders speed their response to new and emerging fraud trends and schemes."
Write to Kerri Panchuk.
Tags: CoreLogic, FICO, lenders, mortgage fraud
Posted in Origination/Lending, Top Stories | No Comments »
The apartment vacancy rate in Denver hit a 10-year low in the second quarter as more families and citizens opted to rent rather than buy their next home.
The second-quarter vacancy rate hit 4.8%, the lowest since the first quarter of 2001, according to data from the Apartment Association of Metro Denver and the Colorado Division of Housing.
Apartment vacancy rates in the area fell 21% from a vacancy rate of 6.1% in early 2010. The Colorado Division of Housing noted more families impacted by foreclosures are moving into single-family rental units and, in some cases, apartments.
"Most people who foreclose seem to be mostly moving into single-family rentals, and not into apartments, although some certainly do go back to apartments," said Ryan McMaken, a spokesperson for the Colorado's Division of Housing.
"A vacancy rate below 5% is generally regarded as a sign that the market is tight," said Gordon Von Stroh, a professor of business at the University of Denver and author of the report. "The vacancy numbers haven't been lower than this since before the dot-com bust in Colorado, and that was a period marked by a scarcity of rental housing in many areas."
A rise in demand meant higher rental rates for the area, with the median rent in Denver rising to $863.37 a month, up 2.5% from $842.70 last year.
"On average, rents were very flat in many areas between 2002 and 2010, but we've begun to see some sustained growth in recent quarters," McMaken said. "However, in the year-over-year comparison for the second quarter, rents haven't really kept up with inflation. The CPI is up about 3% over the past year, but the metro Denver median rent increased 2.5%."
The Denver area trend is similar to what's happening around the nation, according to a Housing Market Insights report from Morgan Stanley (MS: 18.06 -0.50%) last week. Morgan Stanley researchers noted consumers shaken by mortgage delinquencies, foreclosures and liquidations are gradually becoming renters in today's marketplace.
Write to Kerri Panchuk.
Tags: Apartment Association of Metro Denver, apartment vacancy rate, Colorado Division of Housing, single-family rentals
Posted in Secondary Market/Investors, Top Stories | 1 Comment »
