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?”
