Archive for September, 2011
The Federal Reserve Bank of Kansas City appointed Esther George president to succeed Thomas Hoenig, who retires Oct. 1.
George has been with the bank since 1982, most recently as first vice president and chief operating officer.
"Esther is a great leader who possesses an extraordinary depth of knowledge of the financial system and the economy that will enable her to carry out the tradition of excellence at the Kansas City Fed," said Paul DeBruce, chair of the Kansas City Fed's board of directors.
"We are confident that she will uphold the high standards of performance at this Bank and will be a strong voice for Main Street on national policy issues."
George was appointed first vice president in 2009 and previously served the bank as senior vice president in charge of supervision and risk management.
Two years ago, George served as acting director of the central bank's division of bank supervision and regulation in Washington. She held that role in the midst of the financial crisis.
Write to Kerri Panchuk.
Tags: bank examiner, Esther George, Federal Reserve Bank of Kansas City, Thomas Hoenig
Posted in Secondary Market/Investors, Top Stories | 1 Comment »
California home sales posted an increase from both the previous month and previous year, while the median home price rose to its highest level this year, according to data from the California Association of Realtors.
Closed escrow sales of existing, single-family homes rose to a seasonally adjusted 497,390 units in August, up 8.6% from a revised 457,930 in July and up 10.2% from a year ago, according to CAR, which gets its data from more than 90 local real estate associations and multiple listing services statewide.
"August median price marked the highest since December 2010, signifying that prices may be stabilizing in some market segments, as investors and first-time buyers continue to see value and opportunity in the market,” said CAR President Beth Peerce.
The August statewide median price of an existing, single-family detached home sold in California was $297,060, up 1% from a revised $294,050 in July, but down 7.4% from the $320,860 median price for August 2010.
"While the increase in August sales is encouraging, these sales are based on closings that occurred before the debt ceiling debate in early August and subsequent heightened concern about the future direction of the economy," said CAR Vice President and Chief Economist Leslie Appleton-Young. "How these events and the impending reduction in the conforming loan limits will impact home sales and prices in the coming months remains to be seen."
The unsold inventory of existing, single-family homes was five months in August, down from five and a half months in July.
The median number of days it took to sell a single-family home was 52.7 days in August, up from 45.5 days for the same period a year ago.
Write to Kerry Curry.
Follow her on Twitter @communicatorKLC.
Tags: Beth Peerce, California Association of Realtors, California home sales, conforming loan limits, debt ceiling, home prices, real estate
Posted in Origination/Lending, Top Stories | 1 Comment »
A summer-long rally on U.S. subprime credit default swaps ended in August as the American economy lapsed into a period of uncertainty, Fitch Solutions said Friday.
Prices on subprime CDS fell 1.6% in August to 12.11, the lowest level recorded in five months. Credit default swaps are a hedge against default risk, which is higher for subprime mortgages.
The 2007 vintage performed the worst, with prices dropping 18.8%. Still, prices on subprime CDS are still 12.1% above year ago levels.
"Reduced expectations for U.S. economic growth and its implications for U.S. housing may be weighing on subprime prices," said David Austerweil, director of Fitch Solutions. "While newly delinquent loans have risen each of the last four months, delinquencies increased substantially for every vintage in August, possibly indicating renewed strain for homeowners."
Fitch solutions noted the backlog of foreclosed properties rose over the course of the past eight months. The percentage of homes in foreclosures within the 2006 vintage CDS class hit 21.2% in August, up 3.8% from July and 17.1% year-to-date.
The current-to-delinquent roll rate increased by 8.8% month-over-month to reach 8.1%.
"Subprime homes in foreclosure are at their highest levels since deal inception," said Fitch Solutions senior director Alexander Reyngold. "Making matters worse is that subprime loans are not becoming real estate owned and liquidated fast enough to reduce the balance."
Fitch did note one silver lining: the year 2011 brought a significant increase in the balance of loan modifications completed in the nation.
"The percentage of loans with balance modifications that subsequently became 60-days or more delinquent in the 2007 vintage has declined by 24.6% year-to-date," Fitch said.
Write to Kerri Panchuk.
Tags: CDS, delinquent loans, fitch solutions, U.S. subprime credit default swaps
Posted in Secondary Market/Investors, Top Stories | No Comments »
Standard & Poor's raised its outlook for mortgage insurer Old Republic International Corp. (ORI: 9.74 +1.88%) to stable from negative after noting the firm's divisions are likely to maintain solid growth amid difficult market conditions.
"Although ORG has suffered from the soft pricing cycle and recessionary environment, its performance has improved significantly through the first half of 2011," according to S&P credit analyst Ron Joas. "Losses from the consumer credit indemnity business have fallen" since the year-ago second quarter.
S&P rates Old Republic International Corp., at BBB+. In early August, S&P downgraded ratings for two Old Republic subsidiaries to B+ from BB+.
Analysts said the insurer's improved loss ratio and expense management initiatives will let the company "make significant progress toward returning to its historical level of operating performance, with returns on revenue greater than 13% and progressing toward 15% in 2012."
Write to Kerri Panchuk.
Tags: Old Republic International Corp., S&P, Standard & Poor's
Posted in Secondary Market/Investors, Top Stories | No Comments »
Wells Fargo (WFC: 29.39 +1.17%) is jumping deeper into the MBS litigation fray by filing suit against EMC Mortgage, claiming the firm should buy back 800 toxic mortgages sold into the Bear Stearns Trust.
Wells Fargo is suing in its capacity as trustee of the Bear Stearns Mortgage Funding Trust 2007-AR2. EMC Mortgage Corp. is now under the umbrella of JPMorgan Chase (JPM: 37.30 -0.51%), which acquired the firm back in 2008.
JPMorgan declined to comment on the case.
In a suit filed with the Court of Chancery of the State of Delaware, Wells Fargo claims that under terms of a pooling and servicing agreement, EMC is required to buy back 800 of 2,000 loans sold into the Trust that do meet contractual obligations or underwriting standards.
"EMC has rejected the trust's repeated repurchase demands, in violation of its contractual obligation," Wells Fargo wrote in its complaint.
The suit claims 930 loans in the Trust were refinancings on existing mortgages. "For those 930 mortgage loans, the value of the property was based solely on the appraised value rather than a sale price," Wells Fargo claims.
Wells Fargo alleges that data shows 110 of the refinanced properties were sold later at prices far below the appraised values at refinancing.
This is not the first time EMC's underwriting on loans has come under fire.
Earlier this year, a federal judge eased the burden of evidence that Syncora Guarantee (SCA: 0.00 N/A) must meet as it attempts to compel EMC Mortgage Corp. to re-acquire toxic home equity lines of credit that Syncora is insuring under an agreement.
Syncora filed the original suit against EMC Mortgage Corp. in 2009, alleging the mortgage servicer breached representations and warranties made to the insurer on 9,871 HELOCs residential mortgage loans.
Write to Kerri Panchuk.
Tags: Bear Stearns, EMC Mortgage, JPMorgan Chase, refinancings, Wells Fargo
Posted in Secondary Market/Investors, Slider, Top Stories | No Comments »
Home sales are experiencing the equivalent of an Indian summer.
August home sales are up year-on-year, as nationwide house prices continue to fall, according to Denver-based real estate agent network RE/MAX.
August home sales reached a level 18% higher than August 2010, according to the latest RE/MAX national housing report.
Normally, June is the highest sales month for homes. This year both July and August show higher numbers.
"We’re pleased to see transactions pushing higher in August and without any artificial stimulus," said Margaret Kelly, CEO of RE/MAX, in a statement. "Although the housing recovery will continue to be uneven, the market is struggling to return to normal despite uncertainty in the economy and stubborn unemployment rates."
The median sales price for August was $189,831. This is just 0.6% below the price in July and 3.6% below the price in August 2010.
The report shows that in the 53 metro areas surveyed, 47 experienced a rise in home sales from 2010. The top risers are Pittsburgh, up 60%, Minneapolis, up 48.4%; Albuquerque, up 43.0%; Milwaukee, up 37.1%; Seattle, up 29.4%; Phoenix, up 26.4%; and Chicago, up 25.7%.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
Tags: home prices, home sales, RE/MAX, real estate agents
Posted in Origination/Lending, Top Stories | No Comments »
Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, opened an investigation into the reported Fannie Mae purchase of a Bank of America (BAC: 7.2199 -1.10%) mortgage servicing portfolio.
According to The Wall Street Journal, the deal was finalized in August. The portfolio includes 400,000 loans with an unpaid principal balance of $73 billon and a delinquency rate of 13%, twice the national average. Fannie reportedly paid $500 million for it.
"Some commentators have labeled this transaction as a back-door bailout of BofA by permitting the bank to shift part of its risky portfolio to American taxpayers. Under these circumstances, I am unclear why the Federal Housing Finance Agency allowed Fannie to proceed with the transaction," Issa wrote in a letter to FHFA Acting Director Edward DeMarco.
Issa wants DeMarco to give a full explanation of the FHFA decision to approve the deal and provide all financial analyses Fannie conducted before the sale. He also asked in the letter if Fannie considered purchasing servicing rights from other institutions and what Fannie plans to do with those reportedly bought from BofA.
Issa also asked for all documents and communication between Fannie and BofA relating to the portfolio purchase.
"Bank of America periodically sells mortgage servicing rights (MSR) or transfers mortgage-related assets to third party business partners," a BofA spokesman said. "This is a commonly accepted, industry-wide practice that many mortgage loan servicers, including Bank of America, have engaged in for many years."
BofA added that the purchaser in these transactions already holds the loss exposure on the loans, and through the sale of servicing rights, servicing responsibilities for these loans will be transferred to other loan service providers.
Fannie and Freddie owe the Treasury Department roughly $142 billion in bailouts given since the two giants were taken into conservatorship in 2008. The Congressional Budget Office estimates the two firms will need an additional $51 billion between now and 2021.
BofA received $50 billion through the Troubled Asset Relief Program but has paid it back.
"Congress and the American people deserve a full explanation for what appears to be yet another bailout paid for by taxpayers benefitting businesses that made bad business decisions," he said.
Neither Fannie nor the FHFA immediately replied to requests for comment.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: Bank of America, Darrell Issa, deal, delinquency, Fannie Mae, FHFA, foreclosure, mortgage, Servicing/Default
Posted in Servicing/Default, Top Stories | 1 Comment »
Back down into recession or finally up toward recovery, Moody's Analytics Chief Economist Mark Zandi says the inflection point for the economy will likely occur in the coming months and before the 2012 election.
Zandi said Thursday there is a 40% chance the economy will slide back into recession within the next year.
Real GDP during the first half of 2011 increased at nearly 1% annualized rate and job growth slowed from close to 200,000 new positions per month to barely positive at the end of the summer.
"This is not sustainable. Unless spirits improve soon, businesses will ramp up layoffs, consumers will pull back and the economy will fall into another recession," Zandi said in a research note.
In an interview with HousingWire Thursday, Zandi said the problems threatening the economy is a laundry list of outside and articifical forces created by the struggling economies in Europe and the "psychologically debilitating events in Washington," such as the recent debt crisis debacle and subsequent Standard & Poor's downgrade.
But at its core is housing. Before a Senate subcommittee Wednesday, Zandi said the U.S. economy faces an overhang of 1.25 million vacant homes and roughly 3.5 million loans in the foreclosure process or more than 120-days delinquent. Signs of restarting foreclosures in the recent report from RealtyTrac was a good sign of progress, Zandi said.
"Housing generally is a major source of growth early in recovery. Two years into a recovery housing should be a tailwind to growth and of course it's not. It's a drag. Housing is not adding to growth," Zandi said. "It's subtracting."
Some monumental litigation sagas could be resolved in the coming months to help both the banks and the government-sponsored enterprises to address housing going forward. These include the servicing settlement between banks and the 50 state attorneys general and the mortgage securities lawsuits between, again, the banks and the Federal Housing Finance Agency.
With the banks able to put their mortgage woes behind them, the economy might be able to move forward.
"The inflection point will come sooner than later," Zandi said. "The AG, servicer has been slow and arduous, but I think it will be solved well before the next election, hopefully in the next few months. I'm hopeful the FHFA lawsuit will be resolved over the next few months. A few cases may be extended after the election and be ongoing for many, many years. But I'm hopeful that the fallout of the suit is well before then."
The U.S. banking system as a whole is in reasonably good shape, he said. Many small banks will fail, and Bank of America (BAC: 7.2199 -1.10%) continues to shift businesses and executives around, but credit has been made available. Commercial and industrial loans are up as much as 6% from last year. Auto loans and small business loans are also on the rise.
"I don’t think the banking system is a real problem with the economy. There is an issue of writing first mortgages but I don't think it's capital. I think it's more litigation risk and putback risk," Zandi said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
Tags: Bank of America, delinquencies, economy, FHFA, foreclosure, housing, recession, vacancies, zandi
Posted in Lead Story, Servicing/Default, Top Stories | No Comments »
Condominium prices in Manhattan increased the past two years, but remain 8.2% below peak levels reached before the financial crisis, according to Radar Logic's RPX Manhattan Neighborhoods Report.
The company said the average condominium price rose to about $1,073 a square foot in June, up 8.3% from a year ago and 14.8% higher than June 2009, when prices hit new lows established in the wake of the financial crisis.
June prices fell 1% from as month prior because of "statistical noise and does not necessarily reflect a change in the long-term trend," the report said.
Prices for condos grew in six of eight Manhattan neighborhoods, with the largest gain occurring in the Upper West Side where the RPX price index increased 25% per square foot. The price index for the East Village/Lower East Side rose 22.6%, while the Midtown/Clinton and Chelsea/West Village price indices grew 8.1%.
The Financial District and Murray Hill/Gramercy areas saw prices rise 4.5% and 6.3%, respectively, from a year earlies.
Prices in the Upper East Side remained relatively unchanged, while Soho/Tribeca prices declined 5.3% due to changes in sales patterns with consumers swaying towards smaller, less expensive units.
Write to Kerri Panchuk.
Tags: condo prices, Manhattan, Manhattan condo sales, Manhattan condos, Radar Logic, Radar Logic RPX Manhattan
Posted in Origination/Lending, Top Stories | No Comments »
Raj Date, special adviser to the Consumer Financial Protection Bureau, pulled the bureau into a more public role when addressing the National Constitution Center in Philadelphia on Thursday.
Date told the crowd one of the CFPB's chief goals is to oversee the mortgage lending space by fleshing out and enforcing mortgage rules drafted in the Dodd-Frank Act passed in 2010.
Date took over as special adviser to the Treasury secretary on the CFPB and as acting leader in the wake of Elizabeth Warren's departure in August. President Obama nominated Richard Cordray, a former Ohio state attorney general, to serve as the agency's director last month. But with Cordray not yet confirmed by the Senate, Date is the agency's most public leader in the wake of Warren's departure.
"We are the first agency accountable for making sure that consumer finance markets work for American families," Date told the Philadelphia crowd. "To carry out that mission, the law gives us a wide range of tools — from supervision, to rulemaking, to research, to financial education, to enforcement, to the ability to handle consumer complaints." He stressed that the "Know Before You Owe" campaign continues to be deeply entrenched in surveying the marketplace and analyzing feedback on sample mortgage disclosure applications.
Date stressed oversight of the mortgage space remains a top concern.
"The Wall Street Reform Act requires us to tackle some tough problems with tight deadlines," Date said. "In particular, in the first stages of the bureau’s life, the law lays out a specific agenda in a specific market — mortgages. And that makes sense. First, the mortgage market is enormous. At some $10.4 trillion, it’s more than 10 times the size of the next biggest consumer lending market, and more than twice the size of the consumer deposit market."
Date stressed that fixing the mortgage space will be a tough job since excessive home lending became the "epicenter of the global financial crisis."
"The truth is we got into this mess one lousy mortgage at a time," he said.
Write to Kerri Panchuk.
Tags: CFPB, consumer finance, Consumer Financial Protection Bureau, Cordray, Dodd-Frank, Elizabeth Warren, mortgage disclosure, mortgage lending, National Constitution Center, obama, Raj Date
Posted in Origination/Lending, Top Stories | No Comments »
