Archive for December, 2011
December consumer sentiment rose 2.2 points from its mid-month reading to 69.9, according to the Thomson Reuters/University of Michigan index Thursday.
The December reading also grew from 64.1 in November and marks the fourth-consecutive monthly increase. The index surveys 500 households each month on economic attitudes.
The index also reached its highest level since the 71.1 index score achieved in June. A rating of 100 reflects an exceptionally high level of consumer sentiment. Further, the more positive numbers may not accurately reflect the mentality of the American family going into next year.
"The majority of consumers reported that their finances worsened during 2011, and just one-in-four households anticipated that their financial situation would improve in 2012," the report states. "Only one-in-ten families anticipated an increase in the living standards during 2012. These assessments have been largely unchanged over the past two years."
Econoday said sentiment likely reflected an improvement in the jobs market. Jobless claims fell to the lowest level since April 2008, the Labor Department said Thursday.
Lower gas prices also likely contributed to the consumer sentiment increase, Econoday said.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Tags: consumer sentiment, econoday, labor department, Thomson Reuters/University of Michigan
Posted in Origination/Lending, Top Stories | 1 Comment »
Mortgage rates remain near all-time lows with the 30-year, fixed-rate mortgage setting a new record with an interest rate of 3.91%, Freddie Mac said Thursday. That's down from 3.94% a week ago.
Meanwhile, the 15-year, FRM remained at 3.21%, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.85% this week, down from 2.86% last week.
Freddie Mac also reported that the 1-year Treasury-indexed ARM averaged 2.77%, down from 2.81% last week.
Freddie Mac concluded the 30-year, FRM and adjustable-rate products reached new all-time lows in this week's rate survey.
"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today’s homebuyers are paying over $1,200 less per year on a $200,000 loan," said Frank Nothaft, vice president and chief economist of Freddie Mac. "This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January."
On the same day, the Federal Housing Finance Agency said the national average contract mortgage rate hit 4.22% in November.
In addition, the average interest rate for a conventional, 30-year, FRM on loans of $417,000 or less increased 4-basis points last month to 4.40%. The contract rate on the composite of all mortgages, including fixed and adjustable rate mortgages, hit 4.20% in November, up 3 basis points from 4.17%.
Write to: Kerri Panchuk.
Tags: 30-year, adjustable-rate mortgage, ARM, Federal Housing Finance Agency, FHFA, fixed-rate mortgage, freddie mac
Posted in Origination/Lending, Slider, Top Stories | 1 Comment »
Bank of America's (BAC: 7.225 -1.03%) $335 million fair-lending settlement with the Justice Department drew praise from two groups who applaud the banking giant for resolving inherited issues from Countrywide Financial Corp.
The bank agreed to pay millions in restitution to compensate Hispanic and black borrowers who were steered into subprime mortgages and home loans with higher fees during the origination process.
"To its credit, Bank of America — which was not named in the investigation — immediately shut down Countrywide's harmful practices when it acquired the company in 2008," said the National Council of La Raza in a statement.
The National Association for the Advancement of Colored People also released a statement saying Bank of America "takes one more important step toward creating a fairer lending environment for consumers."
The NAACP went on to say that BofA's acquisition of Countrywide allowed it to rectify what the organization considers Countrywide's "most egregious practices."
"These included ending: no documentation loans, pay option adjustable-rate mortgages and exploding adjustable rate mortgages," the NAACP said. "Additionally, in March 2011, Bank of America became one of the first financial institutions to endorse the NAACP’s responsible mortgage lending principles, which deal directly with the issues in the lawsuit by setting standards of non-discrimination, fairness and transparency in ways that help ensure our nation and all our communities will continue to move forward towards a day of greater shared economic strength and stability."
The lawsuit resolved by Wednesday's settlement is the result of Countrywide lending practices that occurred between 2004 and 2008, impacting more than 200,000 black and Hispanic borrowers.
Write to: Kerri Panchuk.
Tags: Bank of America, Countrywide Financial Corp., Department of Justice, NAACP, National Association for the Advancement of Colored People, National Council of La Raza
Posted in Origination/Lending, Top Stories | No Comments »
Real gross domestic product in the United States grew at an annual rate of 1.8% in the third quarter, according to the Commerce Department's final estimate for the three months ended Sept. 30.
That is down from the prior estimate, which had GDP growth of 2% for the third quarter, but up from the second-quarter GDP growth rate of 1.3%.
Analysts for Econoday said "the downward revision primarily was due to a smaller decline in inventories and also to less robust growth in personal consumption. Economic growth for the third quarter was more sluggish than previously believed and the change in the component mix may nudge down forecasts for the fourth quarter."
Mark Zandi, chief economist for Moody's Analytics, expects U.S. gross domestic product growth of 2.6% for 2012, but said the estimate is contingent on European debt concerns and domestic policy.
Write to: Kerri Panchuk.
Tags: debt concerns, Department of Commerce, econoday, GDP, moody's analytics, personal consumption, real gross domestic product
Posted in Secondary Market/Investors, Top Stories | No Comments »
The number of initial jobless claims fell further last week to the lowest level in more than three years.
The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended Dec. 17 declined by 4,000 to 364,000 from 368,000 the previous week, which was revised upward 2,000.
Analysts surveyed by Econoday expected 380,000 new jobless claims last week with a range of estimates between 365,000 and 390,000. Most economists believe weekly jobless claims lower than 400,000 indicate the economy is expanding and jobs growth is strengthening. Initial claims have come in lower than this threshold for most of the past two months.
The four-week moving average, which is considered a less volatile indicator than weekly claims, declined by 8,000 claims to 380,250 from the prior week's 388,250, which was revised upward 1,000.
The seasonally adjusted insured unemployment rate for the week ended Dec. 10 slid to 2.8% from 2.9% the previous week, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended Dec. 3 declined to 7.15 million from about 7.45 million the prior week.
Write to Jason Philyaw.
Follow him on Twitter: @jrphilyaw.
Tags: jobless claims, labor department
Posted in Secondary Market/Investors, Top Stories | 2 Comments »
Homes in the United States likely lost more than $681 billion in value during 2011, according to analytics released by website Zillow (Z: 26.99 +1.39%).
The number is 35% less than the $1.1 trillion lost in 2010, according to Zillow projections.
Most of the loss, $454 billion, comes from the volatility in housing the first half of the year. From July to December, Zillow projects residential home value losses will be half of that, at $227 billion.
Some markets performed well, but not many. New Orleans metropolitan statistical area (MSA) shows the largest gain in values at $3.5 billion. Pittsburgh is second on the list, with a gain of $2.7 billion.
"While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom," said chief economist at Zillow, Stan Humphries. "This year we saw some organic improvement in home values, in terms of a slowed depreciation rate which resulted in a smaller total value loss for the year."
Humphries is not expecting much improvement in the next two year. Abundant housing supply, lagging consumer confidence, high levels of unemployment and negative equity will continue to put downward pressure on the housing market. This likely pushes any recovery one or two full years down the road.
92% of markets analyzed for this report showed home value losses for 2011.
The leading MSAs losing value are Los Angeles (-$75.5 billion), New York (-$44.8 billion) and Chicago (-$41.7 billion).
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
Tags: home values, mortgages, negative equity, residential, Zillow
Posted in Origination/Lending, Top Stories | 2 Comments »
Despite a 2.6% drop in mortgage applications last week, some small mortgage firms say business is booming as homeowners race to nab low interest rates before year end.
Leif Thomsen, CEO of Mortgage Master in Walpole, Mass., said about 80% of his firm's business is refinancing. However, he said the purchase volume is holding up much better when comparing this time of the year to years past.
As for why parties are still jumping in to refinance now, Thomsen suggested they are racing against uncertainty.
"If you are a current mortgage holder and you have a rate of say five and a half percent … and you can get in near 4% with no cost, why wait?" Thomsen asked.
Still, he acknowledged rates have been going down for several years now.
Mortgage rates last week continued to fall, with the 30-year, fixed-rate mortgage for conforming loan balances of $417,500 or less dropping to 4.08% from 4.12% a week earlier, the Mortgage Bankers Association reported. The 30-year, FRM on jumbo loans valued at $417,500 or greater edged down to 4.44% from 4.47% the previous week.
The average, 15-year FRM fell to 3.39%, its lowest rate all year.
Another change is the way in which borrowers search for loans, according to Kevin Brungardt of RoundPoint Financial. RoundPoint is an internet-based non-bank originator, and one of the smaller, less traditional players that is picking up origination market share and experiencing a year-end boom in business.
"We are experiencing something that is quite different from the overall market," Brungardt said. "If you looked at us in January, we were originating $50 million in a month." However, heading into the end of the year, the firm is originating about $200 million a month and originations are not slowing down.
He said the firm is benefiting from traditional, large-scale lenders finding themselves either unable to write new business or exiting origination, as well as consumer comfort in obtaining mortgages online.
Paul Miller with FBR Capital Markets says smaller players are capturing market share on the origination side of the business while big banks remain hamstrung by servicing issues and repurchase claims
"The most underreported news this year was Bank of America closing its correspondent lending unit," Brungardt said. With BofA and other major players leaving that segment, he says there is room for smaller, newer players to fill the void.
Like Thomsen, he said most of his year-end activity is related to refinancing.
Brungardt believes purchase applications could make a stronger comeback in 2012 if home prices finally bottom out, incentivizing buyers to grab properties at low prices.
Write to: Kerri Panchuk.
Tags: 15-year FRM, 30-year FRM, fixed-rate mortgages, mortgage applications, Mortgage Bankers Association, Mortgage Master Inc., mortgages, originations, RoundPoint Financial
Posted in Origination/Lending, Slider, Top Stories | 1 Comment »
Florida existing single-family home sales rose 11% in November from last year to a total of 12,993, according to Florida Realtors.
November sales, however, declined from 13,755 in October.
The median sales price of existing homes decreased to $130,100 in November, down slightly from October and lower than the $130,600 in November 2010. That price is well below the national median sale price of $164,200 for existing homes.
Existing condo sales increased 2% to 5,590 in November compared to a year earlier, with the median sales price up 4% to $86,700.
The state Realtor group said earlier this month that Florida is already in a mini recovery. John Tuccillo, chief economist for the group, said agents are seeing multiple offers on homes.
In the Miami-Dade County, existing single-family home sales increased 11% in November to 679 from last year, according to the Miami Association of Realtors. Median sales price for Miami-Dade County stayed even from last year at $171,300.
Existing home sales in Broward County, which includes Ft. Lauderdale, rose 22% to 961 last month from November 2010. Condo sales, however, declined 1% from last year to 1,115.
Nationwide, the National Association of Realtors reported earlier Wednesday a 4% increase in November existing home sales from October and a 12.2% jump from last year.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Tags: Broward County, condo sales, condos, Florida, Florida Realtors, Ft. Lauderdale, home sales, Miami, Miami Association of Realtors, single-family home sales
Posted in Origination/Lending, Top Stories | 2 Comments »
Pending home sales in California declined from October to November, but grew over last year, the California Association of Realtors said Wednesday.
The association's pending home sales index hit 109.8 last month, down from an index score of 120.9 in October, but up 11% from last year.
Pending home sales, which is measured by contracts signed, is considered an indicator of future home sales activity, CAR said.
Equity sales made up 55.1% of November home sales in California. That is down from 54.4% last year.
Meanwhile, the total share of distressed properties sold in November fell to 44.9% from 45.6% a year ago.
When evaluating distressed properties sold in November, CAR said 21% were short sales and 23.5% were classified as REO sales.
Write to: Kerri Panchuk.
Tags: California Association of Realtors, California home sales, CAR, home sales
Posted in Origination/Lending, Top Stories | No Comments »
Attorney General Eric Holder announced one of the biggest fair-lending settlements in U.S. history with Bank of America (BAC: 7.225 -1.03%) agreeing to pay $335 million to settle complaints levied against Countrywide Financial Corp. by the Department of Justice.
During a press conference Wednesday, Holder said his office investigated discriminatory lending practices that impacted 200,000 African American and Hispanic homebuyers in 180 geographic markets and 41 states across America.
Holder said his office found qualified minority borrowers were steered by Countrywide, which is now part of BofA, into subprime loans that come with higher penalties, fluctuating interest rates and a higher chance of default.
To settle the dispute, Holder said BofA agreed to pay $335 million in compensation to impacted borrowers.
The claims were brought under the Fair Housing Act and the Equal Credit Opportunity Act. "They were charged higher rates for their loans because of their race or national origin," Holder said Wednesday. "For example, in 2007, a qualified African American customer in Los Angeles paid $1,200 more on a $200,000 loan in fees when compared to a white borrower."
Holder added, "Today's settlement makes clear that the Justice Department will not hesitate to hold lenders accountable for discrimination and lender misconduct."
Dan Frahm, senior vice president of Bank of America, responded to the suit saying the settlement resolved legacy Countrywide practices that occurred before BofA acquired the subprime lender in 2008.
"Bank of America’s practices are not at issue," Frahm said. "We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities. We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues."
Illinois Attorney General Lisa Madigan said the settlement stems from a lawsuit she brought back in June 2010.
Her office said analysis of Countrywide’s loan data found that African-American and Latino borrowers were three times more likely to receive a higher-cost subprime mortgage than white borrowers, and charged higher interest rates and fees.
"Now, African Americans and Latinos are still paying a higher price. No one can dispute that minority communities have been hit hardest by this crisis and will feel its effects longer," said Madigan.
Write to: Kerri Panchuk.
Tags: BofA, Countrywide, Department of Justice, fair lending, Holder, Madigan, settlement
Posted in Origination/Lending, Slider, Top Stories | 2 Comments »
