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Archive for November, 2011

Freddie Mac single-family delinquency rate edges up

Wednesday, November 23rd, 2011

Government-sponsored enterprise Freddie Mac reported Wednesday that its single-family seriously delinquent rate edged up in October, hitting 3.54%, compared to 3.51% in September.

At the same time, the multifamily delinquency rate edged down to 0.31% in October from 0.33% in September.

The company, which is involved in an ongoing shift from a GSE-driven market to a more privatized mortgage finance system, saw its total mortgage portfolio fall at an annualized rate of 5.2% last month.

The single-family, refinance, loan purchase and guarantee volume hit $24.1 billion in October, representing 72% of the GSE's total mortgage portfolio purchases and issuances.

In addition, the mortgage-related securities and other guarantees from the GSE fell at an annualized rate of 6.6% during the month of October.

In October, Freddie Mac modified 6,571 loans, up from 6,465 loans in September, bringing the 10-month total to 96,697 loan mods.

Write to Kerri Panchuk.

Tags: delinquencies, delinquency rate, freddie mac, government-sponsored enterprise, GSE, mortgage finance, multifamily, refinance, single family, total mortgage portfolio
Posted in Secondary Market/Investors, Slider, Top Stories | No Comments »

CMBS loan values rise slightly, again

Wednesday, November 23rd, 2011

The loans used to back commercial mortgage-backed securities increased in value slightly in October, according to DebtX.

Commercial real estate loan values rose to 85.3%, up from an even 85% in September. That is still up 5% when compared to loan values at this time last year. However, it is down from 85.9% of the CRE loan value in August.

DebtX finds the slight movement a positive for the market.

"With little movement in interest rates, improving fundamentals in the CRE market had a noticeably positive impact on loan prices," said DebtX CEO Kingsley Greenland.

Debt Exchange Inc. is a Boston-based company that provides loan analysis, advisory and exchange services. The firm priced 52,806 commercial real estate loans with an aggregate principal balance of $637.4 billion in August. The loans provide collateral for 646 CMBS trusts in the United States.

Write to Jacob Gaffney.

Follow him on Twitter @jacobgaffney.

Tags: CMBS, commercial mortgage-backed securities, CRE, CRE loan value, Debt Exchange Inc., DebtX, real estate
Posted in Secondary Market/Investors, Top Stories | 1 Comment »

Mortgage applications decline 1.2%

Wednesday, November 23rd, 2011

Mortgage applications fell 1.2% this past week as refinancing activity declined, an industry trade group said Wednesday.

The Mortgage Bankers Association said its market composite index – a measure of loan application volume – declined 1.2% on a seasonally adjusted basis from a week earlier.

The drop occurred as the refinance index fell 4% from the previous week, reaching its lowest level since July 29. Meanwhile, the seasonally adjusted purchase index increased 8.2% from the previous week as more home purchases were recorded.

"Purchase applications increased last week, returning to levels from before the Veteran's Day holiday," said Michael Fratantoni, MBA's vice president of research and economics. "However, purchase activity remains almost 5% below last year's level. Overall, refinance activity dropped for the week, but there was an increase in refinance applications for government loan programs."

The refinance share of mortgage activity fell to 75.9% of total applications, compared to 77.3% from the previous week. The adjustable-rate mortgage share of activity fell to 5.7% from 6.1% of total applications from the previous week.

The government share of refinancing activity increased to 12.3% of all refinance applications in October, the highest monthly average since January when the MBA began tracking this trend.

Looking at mortgage rates, the average rate on a 30-year, fixed-rate mortgage with a conforming loan limit of $417,500 sat at 4.23%, while the average 30-year, FRM on a jumbo loan rose to 4.59% from 4.56% last week.

The average rate on a 30-year, FRM backed by the FHA grew to 4.05% from 4.03%.

In addition, the average contract interest rate for the 15-year, FRM increased to 3.58% from 3.54%. In addition, the 5/1 ARM remained mostly unchanged, falling slightly to 3% from 3.01%.

Write to Kerri Panchuk.

Tags: loan application volume, MBA, Mortgage Bankers Association, refinancing activity
Posted in Origination/Lending, Top Stories | 1 Comment »

Jobless claims inch higher to 393,000

Wednesday, November 23rd, 2011

The number of initial jobless claims rose slightly last week, but stayed below 400,000 for the fourth straight week.

The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended Nov. 19 increased to 393,000 from 391,000 the previous week, which was revised upward by 3,000.

Analysts surveyed by Econoday expected 390,000 new jobless claims last week with a range of estimates between 375,000 and 400,000. Most economists believe weekly jobless claims lower than 400,000 indicate the economy is expanding and jobs growth is strengthening.

The four-week moving average, which is considered a less volatile indicator than weekly claims, declined by 3,250 claims to 394,250 from the prior week's slightly revised 397,500.

The seasonally adjusted insured unemployment rate for the week ended Nov. 12 remained unchanged at 2.9%, according to the Labor Department.

The total number of people receiving some sort of federal unemployment benefits for the week ended Nov. 5 declined to about 6.73 million from 6.77 million the prior week.

Write to Jason Philyaw.

Follow him on Twitter: @jrphilyaw.

Tags: jobless claims, labor department, unemployment
Posted in Secondary Market/Investors, Top Stories | No Comments »

S&P: 45 months to clear shadow inventory

Wednesday, November 23rd, 2011

Changing default and liquidation rates in various regions prompted Standard & Poor's Ratings Services to reduce its projection of how many months it will take to clear the nation's shadow inventory.

After reviewing third quarter default and liquidation rates, the agency noted signs of improvement. S&P estimates it will take 45 months to clear the excess stock.

However, with constant changes to the foreclosure process, the number appears ever-shifting. Three months ago, for example, S&P said it would take 47 months to clear the shadow inventory, those properties not yet on market, but facing eventual resale.

Diane Westerback, managing director of Standard & Poor's Global Surveillance Analytics, noted the volume of distressed non-agency residential mortgages remained high at $384 billion in quarter three, but has declined somewhat each quarter since mid-2010.

"We believe this points to a continued drop in the amount of time it will take to clear this 'shadow inventory' over the next year assuming national liquidation rates do not decline abruptly," Westerback said.

Still, industry professionals expect to see shadow inventory in the market for at least the next few years. Rick Sharga, executive vice president at Carrington Mortgage Holdings, recently told HousingWire that the raw data is not telling the whole story. He noted there has not been one quarter since 2005 where the market sold more REOs than the lenders took in.

Write to Kerri Panchuk.

Tags: distressed properties, liquidation rates, shadow inventory, Standard & Poor's Ratings Services
Posted in Top Stories | No Comments »

North Texas annual foreclosure activity hits three-year low

Tuesday, November 22nd, 2011

Residential foreclosure postings in North Texas reached the lowest level in three years, research firm Foreclosure Listing Service said Tuesday.

This year, 56,358 Dallas-Fort Worth homes were posted for foreclosure sales, down 12% from last year when 63,835 homes were posted for foreclosure sales. The data is for the upcoming Dec. 6 foreclosure auctions, which will close out 2011 sheriffs' sales of foreclosed properties in Dallas-Fort Worth.

All four counties within the DFW region experienced a decline in foreclosure posting activity compared to last year's totals.

Among the four counties, Dallas County postings declined the most from a year ago, 14%. It also had the highest volume of home foreclosure filings among the four counties. Collin County ranked second with a 13% fall in foreclosure postings; Denton County came in third at 11%; and Tarrant County felt the smallest decrease at 9%.

On a quarter-to-quarter basis, fourth-quarter foreclosure notices rose 9% to 14,035 from 12,876 in the third quarter.

Year-over-year, fourth quarter residential foreclosure postings on DFW homes fell 11% to 13,978 from 15,754 in the same period a year earlier.

Denton County, experienced the biggest drop, 15%, over the year-ago period, followed by Collin County, down 14%; Dallas County, down 12% and Tarrant County, down 9%..

In each of the last four years, DFW annual home foreclosure postings topped 50,000. In 2008, home postings hit 50,000 for the first time at 50,324. And in 2009, foreclosure posting activity reached 60,000 for the first time at 61,676. The record high occurred in 2010 with 63,835 postings filed on area homes.

Write to Justin T. Hilley.

Follow him on Twitter @JustinHilley.

Tags: collin county, Dallas County, denton county, DFW, foreclosure, foreclosure activity, foreclosure data, Foreclosure Listing Services, Foreclosure notices, foreclosure postings, North Texas, tarrant county
Posted in Servicing/Default, Top Stories | No Comments »

Lawmaker wants original copies of foreclosure review letters

Tuesday, November 22nd, 2011

Rep. Elijah Cummings, D-Md., requested the government oversight committee subpoena mortgage servicers in order to see any previous business completed with the third-party consulting firms responsible for the foreclosure reviews.

The Office of the Comptroller of the Currency approved the third-party firms and released their engagement letters with the servicers Tuesday. Under consent orders signed in April, the 14 largest mortgage servicers had to hire consultants to conduct look-back reviews of nearly 4.5 million foreclosure cases filed in the last two years.

The firms will be looking for any fraudulent or negligent practices on modifications, affidavits and will determine what damages borrowers incurred from the errors.

But the engagement letters released Tuesday redacted pages of information, most of it regarding any previous business completed between a servicer and its consultant. Potential conflicts of interest were also blacked out, though the OCC said it rejected some agreements where it detected a possible problem.

Cummings was not satisfied Tuesday. He is the ranking member of the committee and pressed Chair Darrell Issa, R-Calif., repeatedly in the past months to subpoena the firms in order to ensure there is no conflict of interest.

"Although I am encouraged that some information is being made public today, our Committee should issue subpoenas to obtain full, unredacted copies of these documents so we can ensure that homeowners are being fully and appropriately compensated," Cummings said in a statement.

In May, Cummings asked for full copies of the engagement letters. Regulators told Cummings they could not grant him the full letters unless they were "legally compelled to do so," according to the representative's office.

In July, Issa agreed to investigate possible wrongful foreclosures on military members, but he has yet to decide if the committee will issue subpoenas on the wider foreclosure problems.

His office did not immediately reply to a request for comment.

Write to Jon Prior.

Follow him on Twitter @JonAPrior.

Tags: banks, consent order, foreclosure, modifications, OCC, review, robo-signing, servicers
Posted in Servicing/Default, Top Stories | No Comments »

Freddie Mac adds six more states to REO winter promo

Tuesday, November 22nd, 2011

The real estate sales unit of Freddie Mac is expanding its winter sales promotion.

The HomeSteps initiative will be available in six more states, bringing the total to 33.

Alaska, Kansas, Kentucky, Missouri, Oregon and Washington are now part of the program.

"We're expanding our winter promotion to focus additional incentives to encourage strong sales activity in our 'cold weather' states over the next several months." said HomeSteps executive Chris Bowden.

Under the HomeSteps Winter Sales Promotion, HomeSteps will pay up to 3% of the final sales price toward the buyer's closing costs and a $1,000 selling agent bonus for initial offers received between Nov. 15 and Jan. 31, 2012. Escrow must be closed on or before March 15, 2012.

Freddie added that its properties typically go to owner-occupants and sell for on average 94% of the property's value.

Write to Jacob Gaffney.

Follow him on Twitter @jacobgaffney.

Tags: freddie mac, HomeSteps, real estate, REO, winter sales promotion
Posted in Servicing/Default, Top Stories | No Comments »

Fed issues capital plan rule, plans stress tests on largest banks

Tuesday, November 22nd, 2011

The Federal Reserve issued guidelines on Tuesday for 2012 capital plan reviews and plans a new round of stress tests on the nation's 19 largest bank holding companies.

The Fed adopted the capital plans rule, which takes effect Dec. 30, for bank holding companies with assets greater than $50 billion. The rule requires these large bank holding companies to develop and submit a capital plan to the Federal Reserve on an annual basis and to request prior approval from the Fed under certain circumstances before making a capital distribution. It issued its final rule Tuesday along with guidelines.

Institutions will be required to submit their capital plans by Jan. 9, 2012.

Stress tests, which are a part of the Fed's capital plan reviews, will build on tests conducted earlier this year to ensure that institutions have capital planning processes that account for unique risks and ensure that institutions have sufficient capital to survive economic and financial stress, the Federal Reserve said.

"Institutions will be expected to have credible plans that show they have sufficient capital so that they can continue to lend to households and businesses, even under adverse conditions, and are well prepared to meet regulatory capital standards agreed to by the Basel Committee on Banking Supervision as they are implemented in the United States," the Federal Reserve said in a press statement.

Banks will undergo a hypothetical stress scenario, that while not in the Fed's forecast, would test a bank holding company's ability to withstand a deep recession that includes contraction among other major economies, the Fed said.

The nation's six largest banking firms will be required to estimate potential losses stemming from a hypothetical global market shock. The global market shock will be based on market price movements seen during the second half of 2008, a time of significant volatility.

Adjustments will be made to include sharp movements in European sovereign and financial sectors, the Federal Reserve said.

Write to Kerry Curry.

Follow her on Twitter @communicatorKLC.

Tags: $50 billion, bank holding companies, banks, Basel, capital plans rule, Federal Reserve, stress tests
Posted in Secondary Market/Investors, Top Stories | No Comments »

Banks chip away at REO inventory

Tuesday, November 22nd, 2011

The inventory of foreclosures held by private banks dropped for the fourth straight quarter to $50.4 billion worth of properties at Sept. 30, according to the Federal Deposit Insurance Corp.

The REO level at the end of the third quarter is down 1.5% from $51.3 billion the previous quarter and 5% lower than $53.1 billion in a year earlier.

The amount of loans between 30-days and 90-days delinquent declined for the sixth straight quarter to $100.2 billion in the third quarter. The total is down less than 1% from the previous period but down more than 30% from the first quarter of 2010. The peak for early delinquencies occurred in fourth quarter of 2008 with nearly $160 billion such loans held by FDIC-backed banks.

Loans more than 90-days delinquent increased in the third quarter by less than one percentage point to $121.4 billion. The steady decline measured in other distressed buckets has not been seen on these more troubled loans. The peak occurred in the first quarter of last year at more than $143 billion of loans more than 90-days delinquent.

The uptick in the third quarter reflects similar analysis of mortgage servicer activities.

According to the Mortgage Bankers Association, roughly 1.08% of outstanding mortgages were in foreclosure during the third quarter, an increase from 0.96% in the previous quarter. But the delinquency rate dropped to 7.99% in the third quarter from 8.45% the prior three months.

Taken together, much work remains to clear the shadow inventory of privately held REO and troubled loans, according to the FDIC data. The banks held more than $272 billion loans either already through the foreclosure process, on the verge of entering it or have fallen delinquent.

The bank balance sheets are improving as they work through the backlog. Earnings at the FDIC-backed banks increased 48% from last year, signaling hope to some that restricted lending practices may begin to thaw.

"Banks are aggressively seeking out borrowers with a strong capacity to repay loans" said James Chessen, chief economist for the American Bankers Association. "Slow economic growth and high levels of uncertainty are still restraining lending, but that tide is beginning to turn."

Write to Jon Prior.

Follow him on Twitter @JonAPrior.

Tags: banks, delinquency, Fannie Mae, FDIC, foreclosure, freddie mac, MBA, rate, REO, third quarter
Posted in Servicing/Default, Slider, Top Stories | 1 Comment »