Monday Morning Cup of Coffee

A look at HousingWire’s weekend desk, with more coverage to come on bigger issues: Congratulations to all the makers and participants in the film documentary Inside Job. Inside Job won the Oscar for best documentary feature at the 83rd Academy Awards on Sunday night. Inside Job examines the causes of the current financial crisis, centered on the events of 2008. Director Charles Ferguson and Producer Audrey Marrs accepted the Oscar. Thirteen of the 20 largest mortgage servicers participating in the Home Affordable Modification Program have begun principal write-downs, according to Laurie Maggiano, director of policy at the homeowner preservation office inside the Treasury Department. While outlining changes to HAMP at the Mortgage Bankers Association servicing conference last week, Maggiano said several thousand modifications have had the principal written down by an average between $50,000 and $100,000. That number was confirmed by the Treasury late Friday. The Treasury announced the initiative in March 2010. The Treasury said then that the write-downs would apply only to borrowers with 115% or higher loan-to-value (LTV) ratios. Servicers initially forbear some or all of the balance exceeding 100% of the home’s value, down to a 31% debt-to-income ratio. Then, the servicer forgives the forborne amount in three equal installments over three years, contingent on the borrower’s ability to remain current on payments. A spokesperson for the Treasury told HousingWire that the program is still very new and that it will begin reporting on the write-downs in March. “Additionally, each servicer has a plan in place for implementation of the program – so principal reduction is on those loans they have targeted in their portfolio,” the spokesperson said. Despite an increase in existing home sales, analysts at FNC, said home prices continued to decline in December because so many of those sales were foreclosures. “Driven in part by rising sales of distressed properties and higher foreclosure-sales discounts, home prices declined for the seventh straight month in December and suffered their largest one-month drop during the year,” according to FNC. Of the 30 major metro areas tracked by FNC, 23 had price declines in December by an average of 2.2%. FNC’s dim view of house prices is not theirs alone. CoreLogic (CLGX) Chief Economist Mark Fleming expects home prices to decline between 5% and 10% through 2011. Fleming added that stabilization should occur by the end of the year, but the damage has been extensive and the road to recovery will be a long one. “The flooding may have finally stopped,” Fleming said. “But the living room is half underwater.” Reverse mortgages may be growing in popularity, according to analysts at the Royal Bank of Scotland. A reverse or Home Equity Conversion Mortgage allows the borrower, who must be at least 62 years old, to convert a portion of the equity in the home for cash. No repayment is required until the borrower no longer uses the home as a principal residence or does not meet the obligations of the loan. “As the average age of the general U.S. population is increasing and traditional means of income for older people (e.g. social security, savings and retirement plans) may be less robust, HECMs should gain popularity,” analysts said. There was one bank closing over the weekend, bringing total failures to 22 for 2011. The Illinois Department of Financial and Professional Regulation closed Valley Community Bank. Valley Community Bank will assume all $124.2 million in deposits and agreed to purchase essentially all $123.8 million in assets. The Federal Deposit Insurance Corp. estimates the closing will cost the deposit insurance fund $22.8 million. Write to Jon Prior. Follow him on Twitter: @JonAPrior

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