Posts tagged as:

bailout

Highlights as of March 2012

by admin on May 8, 2012

CoreLogic – less than 1% decrease in housing prices

CoreLogic today released its March Home Price Index (HPI) report which shows that nationally home prices, including distressed sales, declined on a year-over-year basis by 0.6% in March 2012 compared to March 2011. On a month-over-month basis, home prices, including distressed sales, increased by 0.6% in March 2012 compared to February 2012, the first month-over-month increase since July 2011.  Excluding distressed sales, month-over-month prices increased for the third month in a row. The CoreLogic HPI also shows that year-over-year prices, excluding distressed sales, rose by 0.9% in March 2012 compared to March 2011. Distressed sales include short sales and real estate owned (REO) transactions.  “This spring the housing market is responding to an improving balance between real estate supply and demand which is causing stabilization in house prices,” said Mark Fleming, chief economist for CoreLogic. “Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”  “While housing prices remain flat nationally, in many markets tighter inventories are beginning to lift home prices,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “This is true in Phoenix, New York and Washington, for example, which all reflect higher home price values than a year ago. A continuation of this trend will be good for our industry across US markets.”

Highlights as of March 2012

Including distressed sales, the five states with the highest appreciation were:  Wyoming (+5.9%), West Virginia (+5.3%), Arizona (+5.1%), North Dakota (+4.7%) and Florida (+4.5%).

-  Including distressed sales, the five states with the greatest depreciation were: Delaware (-10.6%), Illinois (-8.3%), Alabama (-8.0%), Georgia (-7.3%) and Nevada (-5.8%).

-  Excluding distressed sales, the five states with the highest appreciation were: Idaho (+5.4%), North Dakota (+5.1%), South Carolina (+4.7%), Montana (+3.5%) and Kansas (+3.4%).

-  Excluding distressed sales, the five states with the greatest depreciation were: Delaware (-7.6%), Alabama (-4.1%), Nevada (-3.9%), Vermont (-3.9%) and Rhode Island (-2.9%).

-  Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to March 2012) was -33.7%. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.5%.

-  The five states with the largest peak-to-current declines including distressed transactions are Nevada (-59.9%), Arizona (-48.6%), Florida (-48.1%), Michigan (-45.1%) and California (-42.7%).

-  Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 57 are showing year-over-year declines in March, eight fewer than in February.

Business confidence lackluster

While the National Federation of Independent Business’ Small Business Optimism Index rose two points in April to 94.5, the index is back to the same level it had been in February 2011.  “It’s positive from last month,” said NFIB chief economist William Dunkelberg. “But we’re in the same place as a year ago, so a whole year has gone by and we don’t go anywhere.”  In areas like capital outlays, indications are that while things are slowly improving, it’s “nothing to write home about,” said Dunkelberg. The Index now stands at 54%, far above the 44% in August 2010, but below the average rate of 60%.  “In the smallest businesses, we’re seeing improvement,” said Dunkelberg, “but it’s going on under the government’s radar. It will take a while before it registers” in the national picture, he said, pointing to the job creation number in particular. “Hopefully this time they will not deteriorate again.” and that’s pretty much the hope for all 10 categories in the index, many of which have, over the course of the past few years, seen ups and downs.  “We keep getting these head fakes, like last year, and we’re wondering if [the index] will do it again,” said Dunkelberg, referring to March 2011, when the survey took a dip, and then continued a downward trend throughout the spring and summer, only starting to rise again last October. “Last year, it kept getting worse; this time March took a dive, then came back.”

Regulations stifle mortgage market

Rulemakings will dominate the mortgage industry this year as the sector continues its “slow, bumpy road to recovery,” keynote speakers said as the Mortgage Bankers Association’s (MBA) secondary conference got into full swing Monday in New York City.  The rulemaking surrounding the Qualified Mortgage — or QM, repurchase requests, national servicing settlements and government-sponsored enterprise reform will dominate the year, said David Stevens, president and CEO of the MBA. But despite the attention to those four key areas, the MBA is tracking some 100 rulemakings in the Dodd-Frank Act.  Monday’s opening session was part feel-good, part dire warning as speakers struck a balance between the good and the bad in the current marketplace.  An opening video, for example, provided the feel-good atmosphere. It showed an MBA member’s recollections of his immigrant father buying a tract home in the New York burrough of Queens after World World II.

Mitch Kider, with Washington, D.C.-based law firm Weiner Brodsky Sidman Kider PC, recounted the reverence his father felt for the bank that provided the Federal Housing Administration loan that made it all possible.  “The people that work in this industry are working there because their heads and their hearts are in the right place,” he said. “As mortgage bankers, you are doing wonderful things for society.”  Stevens brought things back to earth by voicing borrower trepidation to buy homes, lender concern over burdensome regulations and investor mistrust of the process.  Borrowers, especially those on the margins, could be negatively impacted if the qualified mortgage rule — what he called “the holy grail of who gets access to a mortgage” — is too narrowly defined.  The need for more clarity in the system, for borrowers, lenders, mortgage servicers and investors, was a recurring theme from opening speakers.  On GSE reform, Stevens urged the industry do what it can without Congress, where he predicted a continued logjam.  “We need to take control of our own destiny,” he said.

Lewis Ranieri, chairman and founding partner of Ranieri Parnters, widely considered a pioneer of modern mortgage finance, said the industry must be aware of those would not be content to fix the capital market but who believe the capital markets “are not simply broken … but are profoundly the wrong thing to do.”  If it doesn’t stay aware, the industry may end of with a fundamental rewrite of the way it does business, where everything resides on the balance sheet, he said.  Two mortgage businesses came to him recently about a possible sale due to the tough regulatory environment, Ranieri said.  “I truly believe the future of our industry is decided in the next eight months,” he said. “There is a regulatory movement that isn’t just trying to fix, it’s trying to change.”  Richard Dorfman, managing director of the Securities Industry and Financial Market Association, or SIFMA, said it falls on the industry to define the issues in ways that resonate with consumers.  Instead of complaining that Dodd-Frank is a burden to the banks, regulations should be defined in ways that show how they limit mortgage access to potential homebuyers, for example, he said.  “Consumers must be served, and they can and will be served by this industry,” he said. “There is no doubt in my mind.”

Krugman’s ideas “reckless” and “silly”

The president of the Federal Reserve Bank of Dallas, Richard Fisher, rejected the idea that higher inflation would spur the economy on Monday.  Saying the last thing businesses needed in this economy was uncertainty, Fisher sided with Federal Reserve Chairman Ben Bernanke in his public feud with Paul Krugman, the leftwing economist and New York Times columnist.  Called “The Battle of the Beards” by The Washington Post, the back-and-forth between the two economists began when Krugman called on the Fed to raise inflation targets, a move Bernanke called “reckless.”  “I would say that Ben Bernanke’s guilty of understatement. It would be more than reckless. It’s a silly thing to recommend,” Fisher said.  “I understand the argumentation from Krugman’s standpoint, from his perspective. He’s just trying to broaden the window to try to make things normal if we were to go below the 2% rate. That’s our long-term target. I believe we’re going to stick with it. I personally feel that this is something that is ultra-critical for our credibility.”

Olick – $150,000 off?

“A select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true. Executives at Bank of America say they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.  ‘If people get these things and toss them, they won’t be eligible,’ says Ron Sturzenegger, the Bank of America executive charged with providing solutions to borrowers in need of mortgage assistance.  But the offer is real, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called ‘robo-signing’).  Bank of America, in a deal with state attorneys general and the US Department of Justice, committed $11 billion to mortgage principal reduction, but executives say they will go beyond that if enough borrowers respond to their offer. Five thousand borrowers have already received a collective $700 million in principal reduction through a pilot program for those already in a modification negotiation. The 200,000 borrowers being targeted now may have already exhausted modification options or may have yet to contact the lender.

Executives say borrowers receiving the letters are eligible, but they still have to prove they qualify. In order to be eligible, a borrower must be 60 days late on the mortgage payment as of Jan. 31, 2012. The borrower has to owe more on the mortgage than the home is currently worth, commonly known as being ‘underwater’ on the mortgage, and the borrower’s loan must either be owned by Bank of America or serviced by Bank of America for an investor who is allowing the modifications.  In order to qualify for the modification, the borrower must answer the letter with full documentation of income, showing that under the terms of the modification they can still make the monthly payment. A borrower with no income would therefore not qualify. A borrower’s current monthly payment must be  more than 25% of gross income, and the borrower must show they are unable to afford that.  ‘If you can afford to make your monthly payment and are choosing not to, you will not get this principal modification,’ says Sturzenegger.  If the borrower qualifies, Bank of America will bring the monthly mortgage payment down to 25% of the borrower’s gross income. That could mean principal forgiveness well over $100,000, as there is no limit to the amount of the mortgage. If enough borrowers respond, it could cost Bank of America far more than it committed to in the settlement.  ‘Yes, we have the capability to go well beyond the $11 billion,’ adds Sturzenegger.

If the borrower qualifies, Bank of America will bring the monthly mortgage payment down to 25% of the borrower’s gross income. That could mean principal forgiveness well over $100,000, as there is no limit to the amount of the mortgage. If enough borrowers respond, it could cost Bank of America far more than it committed to in the settlement.  ‘Yes, we have the capability to go well beyond the $11 billion,’ adds Sturzenegger.  Bank executives say that before choosing which borrowers will get the offer, they performed a net present value test on each loan, making sure that the principal reduction modification would net Bank of America or the investor who owns the loan more than foreclosing on the home. ‘It has to be fair to the investor as well,’ says Sturzenegger.  Not all of the 200,000 borrowers who receive the letters are expected to respond. Executives say there is a level of fatigue among delinquent borrowers who have already received several notices or who may have gone through a failed modification process already. Some borrowers simply don’t want to stay in their homes, while others may think the offer is a scam.  ‘They have been contacted by a lot of other people, and this offer may appear too good to be true,’ says Sturzenegger.

That’s why Bank of America is sending the letters by certified mail and trying to make the language as simple as possible. A sample letter obtained by CNBC shows a bring red box in the top corner labeled, ‘IMPORTANT’ and simple language stating, ‘Qualifying customers may reduce their monthly payment by an average of 35%.’  Some 6,500 letters should be arriving in mailboxes across the country this week, with a wave of new letters going out every week until the end of the summer, when all 200,000 should have been mailed. Bank of America is staggering the mailings in order to handle the expected response. The bank has staffed up to handle the task, with 50,000 employees manning servicing desks, but the process will clearly take a lot of time. That’s why Bank of America has suspended any foreclosure actions against these 200,000 borrowers until the process is complete. There are currently 5.59 million US loans that are either delinquent or in the foreclosure process, according to Lender Processing Services. Bank of America services one million of those loans, but many of them are owned by Fannie Mae and Freddie Mac. Their regulator, Edward DeMarco of the Federal Housing Finance Agency, has yet to agree to principal reduction in loan modifications, despite harsh criticism from some lawmakers on Capitol Hill and increasing pressure from the White House.”

Consumer credit on the rise

US consumer credit shot up during March at the fastest rate since late 2001 as credit-card use, and student and car loans ballooned, data from the Federal Reserve showed yesterday.  Total consumer credit grew by $21.36 billion — more than twice the $9.8 billion rise that Wall Street economists surveyed by Reuters had forecast. That followed a revised $9.27 billion increase in outstanding credit February.  It was the largest surge in consumer credit for any month since November 2001, when it climbed by $28 billion, according to the Fed’s statistics.  The increase in March was concentrated in nonrevolving credit, which includes student and car loans. It climbed by $16.17 billion following a revised $11.62-billion gain in February.  Concern about student-loan levels has increased in an environment where newly graduating students face difficulty finding a job and keeping up on payments.  Congress is currently considering how to prevent a low interest rate for student loans from doubling on July 1 and is expected to find a way to do so, if only to avoid irritating young voters ahead of November’s presidential elections.  But so-called revolving, or credit-card debt, also gained strongly in March. It rose $5.18 billion in a sharp reversal from February when this category of credit use contracted by $2.35 billion.

NAHB – 100 markets on the improving list

The list of housing markets showing measurable and sustained improvement held virtually unchanged in May at 100, down from 101 in April, according to the National Association of Home Builders (NAHB)/First American Improving Markets Index (IMI), released yesterday. The number of states represented on the list also held firm from the previous month, at 35 (including the District of Columbia).  The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. While 83 metros held onto their previous places on the IMI and 17 new ones were added to the list in May, 18 metros dropped from the list, for a net loss of one. Metros newly added to the list in May include such geographically diverse places as Phoenix, Ariz.; Bowling Green, Ky.; Bend, Ore.; and Lubbock, Texas.  “The fact that there are 100 markets in 34 states and the District of Columbia represented on the improving list illustrates that all housing markets are local, and that the national headlines often don’t apply to what’s happening in a specific metropolitan area,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In places where employment is firming up along with demand for new homes, the main factors weighing down the housing market continue to be access to credit (for both builders and buyers) and the difficulty of obtaining accurate appraisals on new construction.”

“The overall number of markets on the IMI continued to plateau this month, with more than a quarter of all US metros still showing signs of improvement,” said NAHB Chief Economist David Crowe. “Many of these are relatively small markets in terms of their population and building volume, which is why their improvement is barely registering on the national scale as of yet. Moreover, we are seeing some shifting of markets on and off the list primarily due to small seasonal house price changes in areas that have had flat, stable prices rather than a boom-and-bust cycle.”  “The fact that the number of improving metros continued to hold its own with 100 entries in May shows that there are many places across the country where confidence and consumers are returning to the housing market,” observed Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.  The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the US Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

{ 0 comments }

Understanding the Multifamily Applicant Risk Index (MAR Index)

by admin on April 19, 2012

Foreclosure backlog looms

RealtyStore has completed a new study of the foreclosure status in three major housing markets, finding the amount of pending listings exceeds the amount of active foreclosures listed for sale by a margin of over 2 to 1. This shadow inventory of foreclosed homes illustrates the significant overhang of foreclosure listings that are anticipated to be unleashed on the housing in the wake of resolving the so-called foreclosure robo-signing situation in late 2010. The study was conducted for Cook County, IL (including metro Chicago), Miami-Dade County, FL (including metro Miami) and Maricopa County, AZ (including metro Phoenix).  Foreclosure counts in each location were tabulated by owner, including bank or lender owned homes, foreclosures owned by Fannie Mae or Freddie Mac, and HUD homes. Although Arizona had previously been one of the hardest hit areas for foreclosure activity, Cook County, IL shows a near equal total amount of foreclosed homes. Miami-Dade foreclosures number at roughly half the count of either other market.

The breakdown of active foreclosure listings vs pending, or shadow inventory, foreclosures listings was consistent across each market surveyed. On average, 29% of total foreclosures across the counties are currently listed for sale. Cook County, IL foreclosures were most heavily represented with active listings, with 32% of its foreclosures presently being marketed to buyers, and 68% of foreclosures pending listing. Maricopa County, AZ foreclosure listings for sale represent only 25% of recorded foreclosures in the county, with 75% of local foreclosures yet to be listed for re-sale. Miami-Dade, FL currently offers 29% of its total foreclosures on the market for re-sale, with 71% of its foreclosure inventory awaiting listing on the market.  According to RealtyStore, median list prices of foreclosures for sale in Cook, Maricopa and Miami-Dade counties continue to run below average home prices. Cook County foreclosures are listed at a median price of just $72,650 and an average price of $95,997. Miami-Dade foreclosures list at a median price of $106,900 and average $145,059, while Maricopa lists foreclosed homes slightly higher with a median of $109,900 and the average foreclosure listed at a price of $168,744.

The foreclosure median list prices come in at 56% and 42% below the median sales prices of single-family homes selling in metro-Chicago and Miami, respectively, as reported by the NAR in Q4, 2011. Metro-Phoenix posts a smaller price gap at 7%, suggesting foreclosure saturation may be peaking in Maricopa County.  Individual foreclosure listings continue to cover all portions of the pricing spectrum, ranging from as low as $5,900 for a single family foreclosed home in Chicago, IL to as high as a foreclosed estate in Paradise Valley, AZ listed at $5,700,000.

Jobless claims up

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. But the prior week’s figure was revised up to 388,000 from the previously reported 380,000.  The four-week moving average for new claims, considered a better measure of labor market trends, rose 5,500 to 374,750.  Economists polled by Reuters had forecast claims falling to 370,000 last week.  The claims data covered the week for April’s nonfarm payrolls survey. The four-week average of new applications rose marginally between the March and April survey periods, suggesting not much change in labor market conditions.  Employers added 120,000 new jobs to their payrolls in March, the least since October, after averaging 246,000 jobs per month over the prior three months. Most economists have viewed the pull-back in job growth as payback after the weather-induced gains in the previous months.  The number of people still receiving benefits under regular state programs after an initial week of aid rose 26,000 to 3.30 million in the week ended April 7.  The number of Americans on emergency unemployment benefits fell 19,419 to 2.78 million in the week ended March 31, the latest week for which data is available.  A total of 6.77 million people were claiming unemployment benefits during that period under all programs, down 187,807 from the prior week.

CoreLogic – First Quarter 2012 Multifamily Applicant Risk Index Report

CoreLogic today announced that CoreLogic SafeRent, provider of the nation’s leading suite of screening and risk management services designed for the multifamily housing industry, released its first quarter 2012 multifamily applicant risk (MAR) index report. The first quarter MAR Index value increased one point from the fourth quarter 2011 and three points from a year ago, indicating an increase in national renter credit quality and slightly better applicant pool.  The MAR Index for first quarter 2012 is based exclusively on applicant traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model (Registry ScorePLUS) and is updated quarterly to provide property owners and managers with a benchmark against which to evaluate their applicant credit quality trends against market based MAR Index trends. This comparison indicates the relative strength of their property portfolio to attract and secure applicants with higher credit quality and an increased likelihood of fulfilling lease obligations.

When comparing applicants for one- versus two-bedroom units, the first quarter 2012 MAR Index is slightly higher for one-bedroom units at 102, compared with 101 for two-bedroom units.  Regionally, the South and Midwest reflected the lowest MAR Index, each with values of 98, a one point increase from the fourth quarter 2011. The Northeast continues to maintain the highest MAR Index with a value of 111.  The three Metropolitan Statistical Areas (MSA) with the steepest decreases in the MAR Index were Cincinnati-Middletown, Ohio, Ky., Ind.; Columbus, Ohio; and Birmingham-Hoover, Ala.; each with decreases of three points. The three MSAs with the greatest increases in the MAR Index were Chicago-Naperville-Joliet, Ill., Ind., Wis.; Denver-Aurora, Colo.; and Salt Lake City, Utah; each with increases of four points. 

Understanding the Multifamily Applicant Risk Index (MAR Index)

The MAR Index is published quarterly by CoreLogic SafeRent. It provides trends of national and regional traffic credit quality scores whereby a lower index value indicates an applicant pool with a higher risk of not fulfilling lease obligations. A MAR Index value of 100 indicates that market conditions are equal to the national mean for the index’s base period of 2004. A MAR Index value greater than 100 indicates market conditions with reduced average risk of default relative to the index’s base period mean. A value less than 100 indicates market conditions with increased average risk of default relative to the index’s base period mean. The MAR Index is derived from the statistical screening model from CoreLogic SafeRent, which is the multifamily industry’s only screening model that is both empirically derived and statistically validated. The statistical screening model was developed from historical resident lease performance data to specifically evaluate the potential risk of a resident’s future lease performance. The model generates scores for each applicant indicating the relative risk of the applicant not fulfilling lease obligations. A lower score indicates a more risky applicant.

BOA tops estimates

Bank of America (BOA) reported lower first-quarter profit as the second-largest US bank took accounting charges related to its debt, but results topped analysts’ estimates as credit quality improved.  The bank reported charges of $4.8 billion related to changes in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.  Excluding debt valuation adjustments, it earned 31 cents a share.  First-quarter net income was $653 million, or 3 cents a share, down from $2.05 billion, or 17 cents per share, a year earlier.  Revenue declined to $22.3 billion from $26.9 billion.  The Charlotte, N.C.-based bank took a loan-loss provision of $2.4 billion, compared with $3.8 billion a year ago.  In its capital markets operations, Bank of America reported sales and trading revenue of $3.8 billion, up from $1.5 billion in the fourth quarter but down from $4.6 billion a year ago.

California foreclosure reform moves forward

Seven bills reforming some foreclosure rules passed committees in the California state legislature this week.  The bills were introduced in February. One set of bills extends protections to tenants, giving them 90 days before eviction after the foreclosure sale of the property. Another increases penalties to banks that fail to maintain blighted homes.  Servicers would be required to provide documentation to the borrower establishing its right to foreclose before the filing first step in the process, under other passed bills. Evidence of ownership and chain of title must also be shown to the borrower.  Two other bills charge servicers a $25 fee for every notice of default recording. The money will fund investigations for California AG Kamala Harris. Another piece of legislation passed by committee allows Harris to convene a grand jury to investigate financial crimes in different jurisdictions.  “All Californians have been impacted by the toll the mortgage and foreclosure process has taken on our neighborhoods,” Harris said. “Our California Homeowner Bill of Rights will provide relief for homeowners, tenants and communities. I thank the authors and supporters of these important bills.”

{ 0 comments }

Report slams banks on maintenance

by admin on April 5, 2012

WSJ – report slams banks on maintenance

A consumer-advocate group said in a report Wednesday that a study of foreclosed properties found that banks have higher standards for properties they own in wealthy, predominantly white, neighborhoods than low-income ones, raising a new civil-rights challenge against the mortgage industry.  The report by the National Fair Housing Alliance examined more than 1,000 foreclosed properties in nine cities: Atlanta; Baltimore; Dallas; Dayton, Ohio; Miami; Oakland, Calif., Philadelphia; Phoenix and Washington, D.C.  “This report offers evidence that banks responsible for peddling unsustainable loans to communities of color and triggering our current foreclosure crisis are continuing to damage those communities by failing to properly maintain and market the properties they own,” Shanna L. Smith, the housing alliance’s chief executive, said in a statement. The group said it is planning legal action against two banks, which it didn’t name.  The group and four of its members scrutinized foreclosed properties for problems like broken windows, trash, water damage and unkempt lawns.  The report found that properties in minority neighborhoods were 42% more likely to have shoddy maintenance than those in majority-white neighborhoods. Trash and other debris were 34% more likely to be found in foreclosures in minority neighborhoods than in white ones.

Jobless claims down this week

Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 357,000, the lowest level since April 2008, the Labor Department said today.  The prior week’s figure was revised up to 363,000 from the previously reported 359,000. Economists polled by Reuters had forecast a claims reading of 355,000 for last week.  The four-week moving average for new claims, a measure of labor market trends, declined 4,250 to 361,750.  The number of people still receiving benefits under regular state programs after an initial week of aid fell 16,000 to 3.338 million in the week ended March 24, the lowest since August 2008.  A total of 7.05 million people were claiming unemployment benefits during the week ended March 17 under all programs, down 107,760 from the prior week.

WSJ – ownership gains appeal

Climbing rents for apartments are combining with a continued decline in home prices to push once-reluctant home buyers into finally taking the plunge, say economists and real-estate agents, helping what appears to be a good start to the housing industry’s all-important spring selling season.  Average apartment rents rose by 2.7% last year while the national vacancy rate dropped below 5% for the first time since 2001, according to a quarterly survey to be released Wednesday by Reis Inc., a real-estate research firm.  The broad and sustained growth of the apartment market contrasts sharply with an uneven and tentative housing recovery. During the first quarter, average apartment rents rose and vacancy rates fell in all 82 metropolitan areas tracked by Reis, when compared with a year ago.  The largest rent increases came in San Francisco and San Jose, Calif., which saw increases of 5.9% and 4.9%, respectively. Even boom-to-bust Las Vegas, which has struggled with falling rents in previous quarters, saw average rent rise 1.8% from a year earlier.  Such increases are one reason why analysts at Zelman & Associates believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year. “The equation of renting versus owning is becoming much more favorable for owning,” said Ivy Zelman, the firm’s chief executive. Unless the economy worsens, there is little sign that rent growth will slow until hundreds of thousands of new apartment units currently under construction hit the market over the next few years.

Easier to pay down debt

Timely repayments improved on all 11 of the consumer loan categories tracked by the American Bankers Association (ABA) in the final quarter of last year, the first time that has happened since 2004, according to the organization’s chief economist.  The ABA said delinquency rates still remain high as the economy slowly recovers but the fourth quarter showed a marked improvement from the prior quarter in consumers’ ability to make payments on auto loans, credit cards and other debts.  It does not, however, track delinquency rates for traditional mortgage payments.  The broad delinquency category that tracks eight types of loans fell to 2.49% from 2.59%.  Delinquencies on payments for credit cards provided by a bank fell to 3.17% from 3.25%.  The delinquency rate for home equity loans fell to 4.08% from 4.12%.

FHFA to decide on write downs in April

Federal Housing Finance Agency (FHFA) head Edward DeMarco said the agency will likely make a decision regarding mortgage principal forgiveness sometime in April.  DeMarco, in a speech Wednesday before the Boston Security Analysts Society, said the FHFA continues to evaluate added incentives from the Treasury Department to write down loan principal under the Home Affordable Modification Program.  The Treasury announced in January that it would triple those incentive payments for mortgage investors, and Freddie Mac CEO Charles “Ed” Haldeman signaled the change could push the government-sponsored enterprises to cut mortgage principal.  But DeMarco continued his wary stance toward write-downs Wednesday, and said principal forbearance “produces the same, lower monthly payment.” That’s the main reason to modify a loan, he said.  More than three in four “deeply underwater” borrowers on the GSEs’ books are current on their loans, DeMarco said.  “Indeed, we have found that payment reduction, not loan-to-value, is the key indicator of success in loan modification,” DeMarco said in prepared remarks. “If the borrower remains successful in this modified loan, this approach preserves for taxpayers an ultimate recovery on the debt.”

Others, including many House and Senate Democrats, want DeMarco to go forward with write-downs, while the less patient have called for his ouster.  Thirty senators, in a letter Wednesday, asked DeMarco to revise how the FHFA conducts its principal reduction analysis. The FHFA’s previous report, which said write-downs would cost the GSEs $100 billion, had “several critical flaws,” they said.  “We seek an accurate analysis, but not a particular result,” the senators said in the letter. “Conducting an accurate analysis of this issue is not only part of your responsibility as conservator to conserve taxpayer assets, but also part of your statutory responsibility to maximize assistance for homeowners to minimize foreclosures.”  Sen. Richard Shelby, R-Ala., who is the ranking member of the Senate Banking Committee, came out in defense of DeMarco, questioning Democrats’ own efforts.  “Democrats should stop blaming FHFA for their failure to craft bipartisan legislation to address the housing crisis,” Shelby said in an emailed statement. “FHFA has refinanced over 10 million mortgages since 2009. What have the Senate Democrats accomplished during that same time frame?”

{ 0 comments }

Only 3% of eligible home owners apply for foreclosure review

by admin on April 4, 2012

Corelogic – home prices down

CoreLogic released its February Home Price Index (HPI) report, the most current and comprehensive source of home prices available today. Excluding distressed sales, month-over-month prices increased 0.7% in February from January.  The CoreLogic HPI also showed that year-over-year prices declined by 0.8% in February 2012 compared to February 2011. Distressed sales include short sales and real estate owned (REO) transactions.  The report also shows national home prices, including distressed sales, declined on a year-over-year basis by 2.0% in February 2012 and by 0.8% compared to January 2012, the seventh consecutive monthly decline. 

Highlights as of February 2012:

Including distressed sales, the five states with the highest appreciation were:  West Virginia (+8.6%), Michigan (+5.8%), Florida (+4.7%), Arizona (+4.5%) and South Dakota (+4.1%).

-  Including distressed sales, the five states with the greatest depreciation were: Delaware (-11.2%), Connecticut (-7.9%), Rhode Island (-7.8%), Illinois (-7.1%) and Georgia (-6.6%).

-  Excluding distressed sales, the five states with the highest appreciation were: South Dakota (+5.9%), West Virginia (+5.6%), Maine (+4.5%), Utah (+3.7%) and Montana (+3.6%).

-  Excluding distressed sales, the five states with the greatest depreciation were: Delaware (-8.7%), Connecticut (-4.9%), Nevada (-4.6%), Vermont (-4.0%) and Minnesota (-3.3%).

-  Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to February 2012) was -34.4%.  Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.6%.

-  The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.2%), Arizona (-49.8%), Florida (-48.6%), Michigan (-44.0%) and California (-43.7%).

-  Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 67 are showing year-over-year declines in February, nine fewer than in January.

Private sector adds 209,000 jobs

The private sector created 209,000 jobs in March, continuing the slow but steady rise in employment that has characterized the employment market for months.  Services again led the job creation, according to a report from ADP and Macroeconomic Advisors.  The service sector increased 164,000 in March, though the rate of job creation slowed a big from the upwardly revised 183,000 in February.  Job creation in goods-producing businesses rose 45,000 for the month, while manufacturing rose 23,000 and construction grew 13,000.  The financial sector added 8,000 positions for the month.  Small businesses —defined has having fewer than 50 employees — led the way in job creation, adding 100,000 positions. Medium-sized firms added 87,000, while large businesses with 500 or more employees lagged with 22,000 new positions added.  Financial markets reacted modestly to the report, with stock market futures edging up a bit from their lows of the morning, while Treasurys cut a bit of their price gains. The ADP release traditionally sets the stage for the government’s nonfarm payrolls report to be released Friday. Economists expect the payrolls number to grow by about 207,000 and the unemployment rate to hold steady at 8.3%.  ADP’s numbers were a shade below consensus though unlikely to generate any substantial revisions to the nonfarm number.  The March numbers could be tricky in that unseasonably warm weather this winter may have played havoc with the usual seasonal adjustments government economists use to gauge employment trends.

MBA – mortgage applications up

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 4.8% in the week ended March 30.  The MBA’s seasonally adjusted index of refinancing applications climbed 4%, while the gauge of loan requests for home purchases jumped 7.2%.  “Applications to buy a home picked up last week, and are running more than two% above the level reported at this time last year,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement. “Home purchase applications for conventional loans are now about 10% above last year’s level.”  The refinance share of total mortgage activity slipped to 71.2% of applications from 71.9% the week before.

Paul Ryan strikes back – “we need a new president”

Following a hyperbolic criticism of his federal budget proposal by President Obama, Republican Congressman Paul Ryan lashed back yesterday.  “Disguised as deficit-reduction plans, it is really an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism,” Obama said earlier in the day, calling the Ryan budget “a Trojan horse” that would increase inequality.  “You would think that after the results of this experiment in trickle-down economics, after the results were made painfully clear, that the proponents of this theory might show some humility, might moderate their views a bit,” Obama said. “Instead of moderating their views – even slightly – the Republicans running Congress right now have doubled down and have proposed a budget so far to the right, it makes the Contract With America look like the New Deal.”

On “The Kudlow Report,” Ryan defended against the president’s claims.  “Virtually none of the claims he makes about our budget are actually true,” the Wisconsin Republican said. “He’s distorting the truth, he’s dividing the country, and he’s becoming more bitter and partisan by the day. Frankly, it’s kind of sad to see.”  Ryan took Obama to task for what he characterized as wavering on the Simpson-Bowles plan.  “Our tax reform plan goes in the same exact direction that Simpson-Bowles goes, which is: Broaden the base, lower the rates. Get rid of loopholes and tax shelters so we can lower everybody’s tax rates,” Ryan said.  The congressman also criticized what he saw as a lack of action in the face of an economic cliff that the United States is facing.  “We need somebody in the White House who’ll actually see this problem for what it is and get this debt under our control before it gets out of our control,” he said. “And that’s why I’m just saying we need a new president.”

WSJ – only 3% of eligible home owners apply for foreclosure review

Last April, federal banking regulators cracked down on alleged foreclosure abuses by announcing enforcement actions against 14 major financial companies and promising widespread reforms.  A year later, borrowers haven’t received any compensation from banks, officials haven’t agreed on penalties for errors ranging from incorrect credit-bureau reporting to wrongful foreclosure, and millions of invitations to start foreclosure reviews have received no response.  The Federal Reserve and another federal banking regulator, the Office of the Comptroller of the Currency, also haven’t agreed on whether some of those receiving aid in exchange should relinquish their right to sue the banks, people familiar with the discussions said.  Regulators say they are working to ensure that the review process is rigorous and effective, while banks have said they don’t expect the process to uncover significant evidence of financial harm to borrowers. But the hiccups point to the pitfalls facing government efforts to address alleged foreclosure abuses. In February, five major lenders agreed to a $25 billion foreclosure-abuse settlement with state attorneys general and federal officials.

So far, just 3% of borrowers have applied for the foreclosure reviews specified in last April’s consent orders. The post office has returned the banks’ own foreclosure-related mailings as undeliverable at almost twice that rate. At least one bank is struggling to get systems in place for handling and testing borrower responses.  Some people familiar with the process said the amount being spent on foreclosure reviews could far outweigh the amount provided to consumers in compensation. Three major banks are spending close to $50 million a month each on auditors, attorneys and other costs related to the review process, said one person familiar with the banks’ efforts.  One major consultant, Promontory Financial Group, has assigned more than 1,000 people to reviews for three major US banks, according to documents filed with the OCC. The fees Promontory would collect for this work are blacked out in the documents, and the company declined to say how much it is being paid.  An OCC spokesman acknowledged that the process will be costly but said it is “a necessary expense to determine whether or not there were financial injuries as a result of errors in the foreclosure process.” A Fed spokeswoman declined to comment.

Workers’ confidence up

As the unemployment rate continues to drop, however slowly, employees are feeling more confident about their prospects. That creates a new dynamic for workers and their employers, says Rusty Rueff, a career and workplace expert at Glassdoor, an online job community.  Rueff says that, based on results of Glassdoor’s most recent Employment Confidence survey, there are a number of signals business owners are giving to employees to make them feel that job security is increasing.  Glassdoor has been conducting quarterly surveys since the last quarter of 2008, as the recession was hitting its peak.  “We’ve found that employee confidence is a strong economic indicator,” said Reuff. “Employee confidence is precursor to consumer confidence.” 

The Glassdoor survey, conducted in mid-March and spanning activity in the first quarter of 2012, found that just 13% of employees worked for companies that had initiated furloughs, unpaid leave or mandatory vacations. That is down from 18% in the previous quarter.  More telling numbers: The percentage of employees who said their employers communicated bonus reductions or eliminations was down to 10%, from 17 the previous quarter. And 40% said that health or dental benefits, and pay or perks that previously were cut had been restored. That was up from 38% in the fourth quarter of 2011.  And 43% of employees said they expect a pay raise in the next 12 months, up from 38% at the end of 2011. That’s the highest number since the survey was begun in 2008.  While confidence is up, employees are not entirely convinced the recovery is in full gear. One indication: 26% of employees said that employers had reduced health or dental benefits. That number is up dramatically from 17% last quarter.  Nevertheless, Rueff says that the uncertainty caused by Obama’s Health Act is holding employers back.

CMBS delinquencies spike

Delinquencies on loans backing commercial mortgage bonds jumped 31 basis points to 9.68% in March from the previous month, according to Trepp.  It was the largest monthly increase since a 51 bps spike in July. The rate climbed above the 9.37% level in February and the 9.42% rate one year ago. Roughly $5 billion in these loans turned delinquent in March. Meanwhile, there was $1 billion in CMBS loan resolutions, dropping below levels seen in recent months. The first data for five-year loans originated in 2007 came in during the first quarter of 2012. Only 48% of the $9 billion originated paid off at or before they came due. Some of those were resolved with a loss. Of those that fell out of the CMBS pools, roughly 20% suffered some sort of loss, Trepp said, though in many cases the loss was less than 2%.  The half of that specific vintage are either categorized as nonperforming or placed in foreclosure with a special servicer.  The highest delinquency rate jump occurred in multifamily properties, which increased 74 bps to 15.39% in March.  Delinquencies on offices (9.41%) climbed 37 bps, and retail delinquencies (8.24%) increased by 24 bps from the previous month.

{ 0 comments }

Short sales up in 2011

by admin on April 2, 2012

Short sales up in 2011

Short sale volumes may not have experienced the boom many predicted, but they’re certainly moving up.  Late last week, the Office of the Comptroller of the Currency issued a report on year-end loss mitigation activity for most of the mortgages serviced by the nation’s largest banks.  The 227,570 new short sales completed in 2011 was a 12% increase from one year ago and more than double the 112,000 measured in 2009, according to the report.  As the robo-signing freeze thaws, and new requirements under the attorneys general settlement are enforced, short sales may continue upward in 2012.

Eurozone unemployment hits new record

Unemployment in the 17 nation euro zone rose to 10.8% in February — as expected by economists’ polled by Reuters — and compared to 10.7% in January, the European Union’s statistics office Eurostat said on Monday.  Joblessness last reached February’s levels in May and June 1997 and was only slightly higher in April 1997 at 10.9%.  In February, unemployment was 10.2% of the working population in the wider, 27-nation EU, or some 24.5 million people, rising from 10.1% in January, Eurostat said.  Europe’s debt crisis has forced governments to drastically cut spending, while business confidence collapsed late last year, leaving many Europeans struggling to find work at a time when the euro zone heads into a recession.  The European Commission expects the euro zone’s output to shrink 0.3% in 2012, and data released separately on Monday showed that the bloc’s manufacturing activity contracted for an eighth successive month in March.

Detroit razing houses

More than a quarter of homes in Detroit whose loans failed at the height of the foreclosure crisis in 2006 and 2007 have already been razed or are on the demolition list, becoming a huge obstacle to the city’s rebirth, a Detroit News analysis shows.  In neighborhoods on the far west side and the northeast corner of the city, as many as two-thirds of the properties that went into foreclosure just five years ago are in the city’s crosshairs or already on the ground. The worst-hit areas almost mirror perfectly parts of the city where the most subprime mortgages were issued before they helped trigger the collapse of the banking industry.  And more vacancies could be on the way: Although the rate has slowed, lenders have foreclosed on 28,000 more homes since 2007, according to records from RealtyTrac.  Mayor Dave Bing has made reshaping the city one of his top priorities, and his Detroit Works Project is focusing on fixing targeted neighborhoods. But increasing vacancy squeezes the city’s already feeble tax base, diminishes the quality of life and undercuts the city’s recovery efforts.  In parts of the city least able to absorb abandonment, evictions are almost instantly followed by strippers who can gut properties in days.

Detroit has struggled with abandoned homes for years, and its population fell 25% to 713,777 from 2000 to 2010. But foreclosures from 2006 and 2007 alone have added 7,600 homes to the demolition list. Now, there are an estimated 38,000 homes in some stage of demolition, a number equal to 10% of all housing units in the city.   The city has knocked down 4,200 homes since 2010 and hopes to get to 6,000 more, which could take another three years at its current pace. That doesn’t take into account the 1,800 homes the Detroit City Council has targeted for demolition, or the 26,300 homes that are in the process of being considered for demolition.  If foreclosures continue to increase vacancies, the city will be hard-pressed to keep up with demolitions. City leaders are working with banks and other institutions to find ways to preserve occupancy, said Karla Henderson, Detroit’s group executive of planning and facilities.

Eurozone manufacturing in trouble

The euro zone’s manufacturing sector shrank for an eighth month and at a faster pace in March, adding to signs the bloc is in recession as the downturn spread to core members France and Germany, a survey showed today.  Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.7 last month from 49.0 in February, in line with a preliminary reading.  It has now been below the 50 mark that divides growth from contraction since August.  Earlier data from Germany, Europe’s largest economy, showed its manufacturing sector contracted last month and it was a similar story in neighboring France.  In Spain, struggling to implement swinging austerity measures demanded by the European Union to meet tough deficit targets, the sector contracted for the 11th month.  Manufacturing in Italy shrank for an eighth month.  The economic slump will make it even harder for the 17-nation euro zone to overcome its debt crisis as it will depress tax revenues and hurt consumer spending.  Periphery countries have borne the brunt of the sharp downturn as their own austerity measures continue to hamper a return to growth, particularly Greece where the sharp decline in manufacturing continued last month.

Mortgage insurance slightly up

Members of trade group Mortgage Insurance Companies of America wrote $5.4 billion of primary new insurance in February, up from $5 billion in January and $4.2 billion from February 2011, the group reported on Friday.  The members, who include Genworth Mortgage Insurance CorporationMortgage Guaranty Insurance Corporation, and Radian Guaranty Inc., posted number for primary insurance in force was $397.7 billion, which is down from $399.2 in January and down greatly from $625,764.7 the February before.  February’s cure to default ration was 113.5%, that’s up from January’s 80.9% ratio and slightly up from February of last year, when the rate sat at 112.2%, continuing the trend of February, March and April seeing cure to default ratios of above 100%, which is not so for the rest of the year. 

In April, the Federal Housing Administration (FHA) will increase its insurance premiums.  But already, the FHA insurance premiums have risen significantly over the past 18 months, according to Genworth Financial, increasing a mortgage payment by $95 a month for borrowers at or above 95% loan-to-value ratios.  While many mortgage insurers are operating under state capital ratio waivers, some claim they are ready to take over market share from the FHA.  “Private mortgage insurance is more competitive than ever with FHA, and is well-positioned to take on new risk,” according to statement from Genworth Financial. “By contrast, the FHA is dealing with an unprecedented increase in delinquencies and defaults, and this precarious financial position suggests that FHA may continue to increase costs for FHA loans.”

{ 0 comments }