The Ticker

May 24, 2012 - 4:33pm — BofA could profit on Freddie Mac buybacks —

Bank of America ($7.14 0%) might turn a profit on a repurchase of $330 million in mortgages from Freddie Mac, according to Bloomberg News.

Jody Shenn writes Bank of America could pool the loans again after completes manual appraisals, Freddie could “accept the debt while charging higher guarantee fees” or the bank could sell some of the loans to other companies.

Investors might lose $20 million, according to an analyst with Credit Suisse ($20.13 0%). 

Read more at Bloomberg.

Investments
May 24, 2012 - 3:28pm — Judge OKs ResCap plan to end funding for HELOCs —

A judge said Residential Capital can stop funding home equity lines of credit as the mortgage company goes through bankruptcy, according to Dow Jones Newswires.

ResCap, which filed for Chapter 11 protection May 14, said the maximum availability for borrowers on existing lines of credit exceeds $2 billion. The subsidiary of Ally Financial will honor certain lines held by the bank.

Read more at The Wall Street Journal.

Servicing
May 24, 2012 - 11:24am — CFPB proposes method for supervisory notice —

The Consumer Financial Protection Bureau, as it continues to establish its standing in the regulatory arena, proposed a rule Thursday on how it would notify a nonbank company of possible supervision.

The recently formed agency said the process would apply to a nonbank that the CFPB thinks may pose a risk to consumers and thus require supervision. Entities already under the auspices of the agency, including mortgage, payday and student loan lenders, would not be affected.

The propose rule, not yet open for public comment, also sets out how a nonbank could respond both orally and in writing.

“This is an important step in the development of our nonbank supervision program,” CFPB Director Richard Cordray said in a news release. “This proposal allows us to reach nonbanks that we would not other supervise, while providing industry with a streamlined process that is fair and efficient.”

This would not, the CFPB said, set forth new “substantive consumer protection requirements on any nonbank entity.”

Dodd-Frank Act, which formed the CFPB, doesn’t require a public proposal on these procedures, according to the agency.

Click here for the full text of the proposal.

— Andrew Scoggin

Lending
May 23, 2012 - 5:30pm — Homeowner financing levels shrink in April —

Deleveraging continued in April as homeowners' financing balances shrunk 29% to $71.5 billion from $100.7 billion in the year-ago month, according to analytics firm Equifax ($45.47 0.35%).

Home finance levels are at their lowest since 2008 when they totaled $74.7 billion.

In April, home equity revolving balances neared $560 billion, down $115 billion from April 2009, and down $43.8 billion from April 2011, Equifax reported.

Foreclosures in-process for home equity revolving credit in the month dropped 37% from same time a year ago. At just under $1.25 billion, it is the lowest in two years, the firm said.

— Justin T. Hilley

Lending
May 23, 2012 - 3:00pm — Connecticut allocates settlement money to distressed housing programs —

Connecticut officials expect to spend the state's portion of the $25 billion mortgage foreclosure servicing settlement on programs for distressed homeowners.

The state's Governor Dannel Malloy and Attorney General George Jepsen announced that $119 million in loan modification and refinancing assistance will be spent on Connecticut homeowners. Another $7.3 million will go to foreclosure victims, and $28.1 million in payments will go to state initiatives aimed at trying to end the negative effects of the foreclosure crisis, the AG and governor confirmed in a statement.

"At a time when other states are using money from this settlement to plug holes in their budgets, Connecticut is taking a different path," said Governor Malloy. "We know that many homeowners are still struggling, and until we find a way to bring stability to the housing market, there will continue to be a drag on our recovery. This funding will help assist a critical component of our overall economic goal, to promote economic growth that is sustainable and benefits a majority of our residents."

kpanchuk@housingwire.com

Servicing
May 23, 2012 - 8:04am — Judge dismisses key fraud allegations against former IndyMac CEO —

Michael Perry, former chief executive of the now defunct IndyMac Bancorp, scored a few legal victories in court this week when a federal judge threw out several fraud claims against him, the Los Angeles Times reported.

The claims were filed by the Securities and Exchange Commission.

U.S. District Judge Manuel Real dismissed five of the seven SEC filings, saying the bank records under scrutiny contained no false or misleading statements to IndyMac investors, the Los Angeles Times reported.

In addition, the judge held that Perry could not be compelled to pay on allegedly ill-gotten gains because he remained a buyer, not a seller of bank shares until IndyMac's collapse.

Click here to read more in the Los Angeles Times.

Lending
May 22, 2012 - 1:49pm — Breaking down AG mortgage settlement funds by state —

[Update 1: Corrects Ohio's spending total. An earlier version said the state received $75 million, not $92.8 million.]

ProPublica published a handy map and chart Tuesday to show how the 49 states (sorry, Oklahoma) involved in the mortgage settlement agreement will use their $2.5 billion allotment.

The news outlet breaks it down by categories of whether the money will go to help homeowners, the general fund, investigations or an undetermined purpose. California, for example, has yet to decide what to with its $410.6 million, while Ohio is using much of its $92.8 million to demolish abandoned buildings.

So far roughly just one-fifth of the $2.5 billion is allocated for homeowner aid.

Find the map (and more) at ProPublica.

Servicing
May 22, 2012 - 1:40pm — Housing chief leaves Morgan Stanley to launch buy-to-rent fund —

Reuters exclusive: Oliver Chang, head of U.S. housing strategy at Morgan Stanley, who has written more about foreclosed homes as an investment opportunity than any other Wall Street analyst, is leaving his firm to start his own buy-to-rent housing fund.

Chang announced his decision on Monday in a resignation letter he submitted to Morgan Stanley obtained by Reuters.

"Having followed this market for the past several years, I believe it represents one of the most compelling investment opportunities available across all asset classes today," Chang wrote in a letter to his former Morgan Stanley colleagues.

Investments
May 22, 2012 - 11:37am — Investors reject Simon Property CEO's pay —

Shareholders in Simon Property Group Inc., the country's largest mall owner, rejected an eight-year compensation package awarded to the real estate investment trust's chief executive, which included an annual base salary of $1.25 million and stock awards valued at $132 million over the eight-year term.

The compensation deal was struck in July between Simon's compensation committee and David Simon, who has served since 1995 as chief executive of the family-founded business that owns about 300 malls and outlet centers.

Read the article at The Wall Street Journal.

Investments
May 22, 2012 - 9:53am — Gallup: Economic confidence rises to 2008 levels —

Americans were more positive last week about the economy than at any point since September 2008, though negative attitudes still prevailed.

Gallup’s economic confidence index rose to -16 for the week ended May 20, an improvement from -18 the previous two weeks and -21 in late April. 

The polling firm attributed the index increase to a rise in survey respondents’ outlook on the economy to -9 from -13 a week earlier. Still, 52% of respondents still said the economy is getting worse, compared to 43% who said it's getting better.

Assessment of current conditions, the other portion of the index, remained unchanged from a net reading of -23.

(Click chart to expand.)

The economic confidence index rose in all three party affiliations measured by Gallup to 14 for Democrats, -17 for Independents and -42 for Republicans.

— Andrew Scoggin

The Economy
May 21, 2012 - 3:15pm — FDIC sues on mortgage-backed securities sold to banks —

The Federal Deposit Insurance Corp. sued a group of banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Securities and Deutsche Bank in two actions over mortgage-backed securities.

The FDIC, acting as receiver for two failed banks, filed the suits in New York federal court today seeking $77 million the banks allegedly lost on securities backed by residential mortgages.

The FDIC filed an $11 million claim as receiver for Strategic Capital Bank, a Champaign, Illinois, commercial bank that was closed by regulators in 2009. It filed a separate $66 million claim on behalf of Strategic Capital and Citizens National Bank.

More on Bloomberg.

Investments
May 21, 2012 - 9:03am — JPMorgan Europe Home-Loan Debt Raises Anxiety —

JPMorgan's holdings of home-loan bonds from outside the U.S. soared 35-fold in the past three years. Now, with its chief investment office facing scrutiny after a $2 billion trading loss, investors are raising concern the European market’s biggest buyer will pull back.

The largest U.S. bank by assets accelerated its purchases last quarter, adding $8.5 billion to lift its total to $74.5 billion, according to regulatory filings. The New York-based company’s investments approached 9 percent of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on.

Read more on Bloomberg.

Lending
May 18, 2012 - 2:09pm — Buffett pursued ResCap before bankruptcy filing —

Billionaire Warren Buffett sought to buy Residential Capital from Ally Financial Inc. before the government-owned company put the home lender into bankruptcy, Bloomberg reported.

Buffett assigned former hedge-fund manager Ted Weschler to negotiate an offer with Ally, said the unnamed sources. Buffett’s Berkshire Hathaway Inc. ($120,217.00 0%) would have paid almost nothing upfront for the assets, while taking on potential liabilities.

Ally turned down the proposal, filed for bankruptcy protection and announced a sale to Fortress Investment Group ($3.11 0.04%) and Nationstar Mortgage Holdings Inc. ($16.50 0.26%) for about $2.3 billion. Buffett could still bid on the firm during the bankruptcy process.

Read the full story here.

kcurry@housingwire.com

Investments
May 17, 2012 - 2:46pm — Rental household market set to boom —

Rental households comprise 34% of the housing stock and are growing at the incredible rate of 1.6 million per year, while owned households are actually declining in number, according to John Burns Real Estate Consulting, which called the increase an “incredible surge” in demand.

Only 20% of renters live in large buildings of 20 or more units, and the remaining 80% of renters live in alternative types of housing.

The single-family rental business, which is already larger than the institutional apartment business, is booming. About 55% of new renters are leasing single-family homes, while the remaining 45% are renting apartments. Never before seen levels of distressed home sales, which sit at the lowest home price/rent ratios in decades, are driving the boom, the consultancy said.

Burns said intelligent investors should take advantage of the “temporary disconnect in the market.”

To view the full report, click here.

jhuseman@housingwire.com
@JessicaHuseman

 

 

Real Estate
May 17, 2012 - 11:14am — Geithner cites looming budget battle, Europe as economic risks —

Treasury Secretary Tim Geithner said the U.S. still faces a number of economic challenges despite having “come a long way since 2008.”

Before a Baltimore audience Thursday, Geithner said that Europe’s fate, an irate Iran and a looming fiscal fight at home could derail the economy in the short run, but the country also faces long-term trials in areas like education, health care and income disparity.

But Geithner said solving those problems takes investment as well as budget cuts, rather than just the latter.

“A credible strategy for economic growth requires a willingness to do things, not just cut things,” Geithner said in prepared remarks. “We face some very tough challenges. But they are manageable challenges for the United States.”

Read more at Reuters.

The Economy