Archive for December, 2011
The Financial Industry Regulatory Authority ordered the payout of $19 million to investors harmed by certain banking practices in 2011.
Some of the harmful financial practices investigated include misrepresentations on subprime securitizations and problems stemming from UBS (UBS: 14.05 +0.50%) short sales. FINRA is an independent regulator that focuses specifically on ensuring investors are protected across the marketplace.
FINRA brought 1,411 disciplinary actions against individuals and firms this year and levied $63 million in fines, while pushing for $19 million in restitution to investors. Issues related to mortgage finance led to millions of dollars in restitution and fines.
Swiss financial services giant Credit Suisse (CS: 26.78 +0.26%) was fined $4.5 million, while Merrill Lynch, which is part of Bank of America (BAC: 7.29 -0.14%), was fined $3 million for mispresentations made on subprime securitizations.
JPMorgan Chase (JPM: 37.21 -0.75%) was ordered to pay $1.7 million and return $1.9 million to customers because of what FINRA deemed "unsuitable sales of certain financial products."
UBS was fined $12 million for violations on short sales and for not maintaining an adequate level of supervision for employees. UBS was fined $2.5 million and ordered to pay $8.25 million to those harmed by those actions. In September, the Swiss bank said it stands to lose $2 billion on unauthorized trades steered by a rogue trader.
Write to: Kerri Panchuk.
Tags: Chase, Credit Suisse, Financial Industry Regulatory Authority, FINRA, Merrill Lynch, UBS
Posted in Secondary Market/Investors, Top Stories | No Comments »
Homebuilder confidence as measured by the December National Association of Home Builders/Wells Fargo Housing Market Index improved for the third month in a row, suggesting gains in certain markets have injected a dose of optimism into the market.
The index rose to 21 in December, up two points from the previous month. A score over 50 suggests that more builders would classify the market as good as opposed to poor. The index now sits at its highest point since May 2010.
In December, builder confidence gained significant strength in the South, with optimism experiencing a four-point gain, bringing that region's score to 25, its highest point since March 2008.
The West achieved a one-point gain and an index score of 16, while the Midwest remained unchanged at 24 as the Northeast fell one point to 15.
"This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend," said NAHB Chief Economist David Crowe.
"While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months," Crowe said.
Write to: Kerri Panchuk.
Tags: home prices, homebuilder, NAHB, National Association of Homebuilders, Wells Fargo
Posted in Origination/Lending, Top Stories | 1 Comment »
The number of delinquent mortgages in November rose to 8.15% from 7.93% the prior month, according to a first look report from Lender Processing Services (LPS: 16.78 +1.39%).
That delinquency rate as a percentage of the LPS database of 40 million mortgages declined nearly 10% from a year earlier. About 4.14 million homes were 30 or more days past due in November, with about 1.81 million properties more than 90 days past due.
LPS considers a mortgage delinquent when it's at least 30 days in arrears but not in foreclosure. The company recorded 6.26 million homes either delinquent or in foreclosure last month.
Foreclosure presale inventory dropped 3% from October, but increased 2% from November 2010.
States with the highest percentage of noncurrent loans include Florida, Mississippi, Nevada, New Jersey and Illinois, according to the LPS report. Montana, South Dakota, Wyoming, Alaska and North Dakota had the lowest noncurrent loan rates.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Tags: delinquency rate, delinquent loans, foreclosure, Lender Processing Services, LPS, mortgages
Posted in Servicing/Default, Top Stories | 1 Comment »
Homebuilder Lennar Corp. (LEN: 22.28 +0.68%) acquired 650 finished home sites in 20 communities located in the Pacific Northwest.
The company purchased the sites from Seattle-based Premier Communities for an undisclosed amount. The transaction is part of a plan to build the firm's operations in the Pacific Northwest and includes properties in Portland, Ore., and Seattle. Home values in the communities where the properties are located range from $150,000 to $460,000.
The move into the Pacific Northwest is Lennar's first new market expansion since the builder entered Atlanta in 2010. Lennar now constructs new homes in 18 states and 44 different markets, and expects the expansion to result in 200 new home deliveries by the second half of 2012.
Lennar's growth comes at a time when some analysts are calling for at least a mild recovery in the homebuilding sector next year. Earlier this month, Barclays Capital (BCS: 14.09 +1.15%) analyst Stephen Kim predicted a housing recovery buoyed by improving job numbers and the potential for some price stabilization.
Lennar earned $20.7 million , or 11 cents per share, during the third quarter, down 31% from $30 million, or 16 cents per share, a year earlier, but the third quarter had a silver lining with an increase in new home orders.
During the same period, the company's gross margin on home sales stood at 21.1%, while its cancellation rate hit 20%. The company's backlog of homes rose to 2,519, up 16% from a year ago, while deliveries dropped 3% from last year to 2,865 homes. New orders grew 11% from the year-ago quarter to 2,914 homes.
Write to Kerri Panchuk.
Tags: Barclays Capital, home price stabilization, homebuilders, housing recovery, Lennar Corp., Premier Communities
Posted in Origination/Lending, Top Stories | No Comments »
Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas, pointed to Washington as the real culprit behind the slowed economic recovery.
Fisher told a crowd in Austin, Texas, Friday that businesses are sitting on cash and currently live in a favorable environment in terms of having access to cheap money.
However, uncertainty caused by the political fighting inside the beltway has given firms pause and companies have delayed hiring. The factors concerning executives include uncertainty about the cost of health insurance, a true understanding of the nation's tax plan and confusion over underfunded liabilities like Medicare and Social Security.
"The brows of economic forecasters and business operators begin to furrow when contemplating the international landscape," Fisher said in his speech. "But the face of both the economist and businessman turn into something akin to Edvard Munch's Scream when contemplating the frightful consequences of indecision and political mischief at both ends of Pennsylvania Avenue in Washington."
Fisher said his push back against the Fed's Operation Twist was the result of a persistent belief that the central bank had already created enough juice for the economy. Fisher suggested to the crowd that without confidence on the part of business leaders, further stimulus is unproductive.
"From my standpoint, resorting to further monetary accommodation to clean out the sink, clogged by the flotsam and jetsam of a jolly, drunken fiscal and financial party that has gone on far too long, is the wrong path to follow," he said.
"It may provide immediate relief but risks destroying the plumbing of the entire house. It is a pyrrhic solution that ultimately comes at a devastating cost. Better that the Congress and the president — the makers of fiscal policy and regulation — roll up their sleeves and get on with the yucky task of cleaning out the clogged drain."
In September, the Federal Open Market Committee announced plans to buy $400 billion of Treasury bonds to lower long-term borrowing costs. Fisher dissented with the launch of the program, saying it could become a confidence and jobs killer. At the time, he said the program could spread more negative sentiment among consumers, making them think the economy is in worse shape than they had previously believed.
Write to Kerri Panchuk.
Tags: central bank, economic stimulus, Fed, Federal Open Market Committee, Federal Reserve Bank of Dallas, inside the beltway, Medicare, quantitative easing, Richard Fisher, Treasury bonds, Washington
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As the fate of the National Flood Insurance Program remains in limbo on Capitol Hill, a new study from the Risk Management and Decision Processes Center at the Wharton School at the University of Pennsylvania claims a private flood insurance option is not only possible, but potentially more affordable for homeowners.
The NFIP, which provides insurance subsidies for homes in flood-prone areas, expired in September. To ease the pain from the program's quick halt, Congress passed a temporary extension set to expire again Friday.
However, a proposal to extend the plan another five years is included in a federal payroll tax bill passed by Congress last week.
The bill passed the House Wednesday and the Senate approved to extend the payroll tax cut through February. The upper house of Congress passed the bill 89-10 in a rare Saturday session as both chambers finish up year-end business. House Majority Leader John Boehner, R-Ohio, opposed the bill and plans to propose another version of the extension Monday.
The idea of reforming NFIP to involve private insurers picked up momentum in the past few months, prompting the Risk Management Decision Processes Center to analyze the concept of allowing private insurers to take an active role in insuring more of the homes.
To date, the NFIP is the primary insurer of at-risk properties in flood plains.
The program covers 5 million households, or roughly $1.25 trillion of property value, the Wharton study concluded. But with the NFIP now $17.8 billion in debt, the economists studied the costs of allowing private flood insurance to pick up the slack in the market.
The sample communities used in the study were Galveston, Texas, and Travis County, Texas. After determining private insurance rates for those areas, the Risk Center compared those rates to the NFIP, and found private insurers in certain parts of the effected counties could provide prices that are actually lower than NFIP premium rates.
The Ivy League university found that in some areas NFIP premiums are too high and in others they are too low.
"This presents opportunities for private insurers to provide coverage in some of those areas, to complement the NFIP," said Erwann Michel-Kerjan, Risk Center managing director and study co-author. "There are several practical barriers that would need to be addressed for private insurers to sell such coverage, but if done, this could significantly increase the number of residents with proper coverage, thus reducing the need for government disaster relief."
Write to Kerri Panchuk.
Tags: National Flood Insurance Program, NFIP, Wharton Risk Management and Decision Processes Center, Wharton School at the University of Pennsylvania
Posted in Secondary Market/Investors, Top Stories | No Comments »
GOP presidential hopeful Newt Gingrich today admits he should have done a better job explaining the consulting work he did for Freddie Mac.
In a wide-ranging interview on CBS' Face the Nation, the GOP front-runner also stood by his immigration plan, played down the Des Moines Register's decision to endorse rival Mitt Romney in Iowa, and talked at length about the dangers of an activist judiciary.
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A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues:
Speaker of the House John Boehner, R-Ohio, said on NBC's "Meet the Press" Sunday that he opposed a bill passed by the Senate to extend the payroll tax cut through February, and would likely propose another version of the extension Monday.
The upper house of Congress passed the bill 89-10 in a rare Saturday session as both chambers finish up year-end business. The Senate version of the bill amends an earlier House bill to prolong the tax cut, along with other benefits, for two months.
The Senate version still includes an increase of guarantee fees charged by Fannie Mae and Freddie Mac, upping the rate by at least 10 basis points in the first two years. Fees last year averaged about 0.25% of the loan amount.
The increase would offset about $35.7 billion in costs through 2021, according to a report from the Congressional Budget Office.
David Stevens, CEO of the Mortgage Bankers Association, wrote on Twitter that the g-fee increase is "not justifiable," and to "never tax homeownership for dysfunctional tax efforts again."
The Senate proposal also leaves in a provision on the Keystone XL pipeline that would run from Canada to the southern United States. The bill would require President Obama to make a decision within 60 days on the project.
White House communications director Dan Pfeiffer said in a statement Sunday that Congress should pass the two-month extension for now, but continue work on a yearlong version.
"If House Republicans refuse to pass this bipartisan bill to extend the payroll tax cut, there will be a significant tax increase on 160 million hardworking Americans in 13 days that would damage the economy and job growth," Pfeiffer said.
The House version of the bill, which passed Tuesday, originally extended the programs through the end of 2012.
The National Association of Realtors will release its November existing home sales figures Wednesday. The trade group, however, will also announce revisions made to its sales figures dating back to 2007.
The expected adjustments come after data firm CoreLogic (CLGX: 14.56 +0.62%) said in February that NAR's 2010 were at least 15% too high. NAR said the "rebenchmarking" is a normal process and not brought on by CoreLogic's belief that NAR overstated the sales numbers.
NAR attributed its overestimation to shifts in population, duplicate listings and a decline in for-sale-by-owner transactions.
In other housing data, the Census Bureau will release its November housing starts figures Tuesday and new home sales Friday. October housing starts increased 17.7% from last year to a seasonally adjusted annual rate of 653,000, while new home sales rose 8.9% from October 2010 to the annual rate of 307,000.
The Commerce Department will release its final third-quarter GDP figure as well Thursday. Last month's second estimate for the third quarter bumped an earlier 2.5% annualized increase down to 2%.
The Senate postponed until next year Obama's nominations for several positions, including Richard Cordray as head of the Consumer Financial Protection Bureau, according to Reuters.
Senate Democrats failed to move Cordray's nomination past a Republican filibuster on a 53-45 vote on Dec. 8.
Other nominees in legislative limbo include Martin Gruenberg as chair and Thomas Hoenig as vice chair of the Federal Deposit Insurance Corp., and Thomas Curry to head the Office of the Comptroller of the Currency.
The Senate said it will hold several "pro forma sessions," or brief meetings, between now and Jan. 23, the expected legislative resume date, in order to block recess appointments by Obama.
Wells Fargo (WFC: 29.60 +1.89%) spent $1.97 million to lobby the federal government in the third quarter, much of it regarding changes coming from the Dodd-Frank Act, according to the Associated Press. That figure increased from $1.18 million a year ago and equaled second-quarter totals.
The figures were disclosed in a report filed Oct. 20 with the House clerk's office. The disclosure also said the company lobbied Congress, the Treasury Department and the Federal Housing Finance Agency, among other agencies. Wells Fargo lobbied the government on debit card fees and new mortgage-related rules, as well as data privacy and small-business lending.
The Federal Deposit Insurance Corp. announced Friday the failures of two banks, Phoenix-based Western National Bank and Premier Community Bank of the Emerald Coast in Crestview, Fla. Washington Federal acquired Western National, and Summit Bank absorbed Premier Community Bank.
Ninety-two banks have failed in 2011.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Tags: Congressional Budget Office, Consumer Financial Protection Bureau, CoreLogic, Dodd-Frank, Dodd-Frank Act, existing home sales, Fannie Mae, FDIC, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, freddie mac, guarantee fees, home sales, John Boehner, MBA, Monday Morning Cup of Coffee, Mortgage Bankers Association, NAR, National Association of Realtors, Office of the Comptroller of the Currency, Richard Cordray, Treasury Department, U.S. Census Bureau, Wells Fargo
Posted in Origination/Lending, Top Stories | 1 Comment »
Mortgage servicers operating in New York state shouldn't charge borrowers when substituting new counsel in foreclosure cases previously handled by the Steven J. Baum P.C. law firm, said the New York State Department of Financial Services.
Baum said last month that the firm would wind down its business and close. The announcement comes in the wake of the firm agreeing to pay $2 million to the federal government and change its foreclosure practices and after Freddie Mac and Fannie Mae removed the law firm from their lists of approved counsel. It was the largest foreclosure law firm in New York.
Financial Services Superintendent Benjamin Lawsky sent a letter to servicers saying they shouldn't apply any penalties, fees, costs or interest accrued to homeowners.
Based in Amherst, N.Y., the Baum firm represented plaintiffs in about 40% of the foreclosure proceedings in New York in 2010. Servicers across the state will now have to hire new counsel, who will have to gather and review case files and ask courts for the approval of new legal representation. As a result, significant delays in pending foreclosure cases are expected.
New York already faces the longest foreclosure timeline in the nation, with a foreclosure there taking an average of 900 days to work through the process. Earlier this year, RealtyTrac estimated that the New York foreclosure backlog would take seven years to clear through the New York court system.
The state's administrative board of judges implemented an affirmation rule in October 2010 that further exacerbated an already long time line. Banking attorneys now have to sign an affidavit vouching for the accuracy of the records in a foreclosure, forcing these lawyers to go back and check documentation before filing a case.
“New Yorkers facing foreclosure should not be penalized in any way because of delays which may arise because many mortgage servicers will now need to find new counsel," Lawsky said. "It adds insult to injury for New Yorkers to suffer further as a result of the shuttering of this abusive and discredited firm."
Mortgage servicer Ocwen Financial Corp. (OCN: 13.96 +1.53%) already signed an agreement with the Department of Financial Services promising to refrain from charging homeowners for such costs.
Ocwen agreed it would not penalize homeowners affected by the Baum closing in an amendment to an agreement reached in September with DFS to adhere to mortgage servicing reforms designed to address troublesome practices in the servicing industry.
In the letter, Lawsky noted that one Baum attorney had asked for a 60- to 90-day continuance for a settlement conference in order to facilitate a change in counsel. Such a delay could cost a homeowner between $1,540 and $2,310 in additional interest charges based on a $150,000 mortgage at a 6.5% interest rate, Lawksy said.
Write to Justin T. Hilley.
Follow him on Twitter @JustinHilley.
Tags: Fannie Mae, freddie mac, New York State Department of Financial Services, NYS DFS, Ocwen, RealtyTrac, robo-signing, Steven J. Baum
Posted in Servicing/Default, Slider | No Comments »
Investment bank Morgan Stanley (MS: 18.56 +2.26%) is the latest financial firm to announce the elimination of hundreds of staff positions.
Morgan Stanley (MS: 18.56 +2.26%) confirmed it's eliminating 1,600 staff positions globally in a reduction that will impact all job levels.
In a statement, the firm said the cuts are coming as the bank conducts its year-end performance and evaluates the appropriate size for the firm in 2012.
Morgan Stanley is following on the heels of other big banks that announced cuts in 2011.
BofA announced 3,500 job cuts in August, and some analysts have put the bank's total cuts long-term at 30,000.
Earlier this year, Brian Charles, a banking analyst with R.W. Pressprich & Co., said while there is speculation BofA will make more cuts, he does not anticipate the bank's mortgage servicing segment — an area of widespread concern — will be impacted. Charles said on the foreclosure side of the business, banks like BofA are still trying to get their arms around the influx of work in that segment, making it unlikely deep cuts will come from those areas.
Write to Kerri Panchuk.
Tags: Bank of America, banks, downsizing, job cuts, lay offs, Morgan Stanley, mortgage, mortgage servicing
Posted in Origination/Lending, Top Stories | 1 Comment »













