Archive for the 'Mortgage and Loans' Category
More than 18 percent of FHA borrowers are at least one payment behind
November 20th, 2009 Categories: Graphs and Charts, Mortgage and Loans, Pre Foreclosures, Real Estate News, Real Estate Trends
FHA Foreclosures Surge
Did you read that?
FHA foreclosures? Holy cow; that means nearly one in five FHA loans are more than 30 days behind! Most of those FHA borrowers would have bought since the mortgage crash of 2007, since FHA loans were almost extinct before that…
The Mortgage Bankers Association also found recently that 14 percent of all homeowners with any type of mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
As they say; even a dead cat will bounce– The media had it all wrong this summer; calling for a bottom and raising hopes of a housing turn-around… There are still many, many more homes coming through the fore closure pipeline…
Loan modification starts are way up, nearly 700,000 homeowners nationally (about 20% of those who qualify) have started the modification process. However, over 75% of those will default again, recent history shows us. And of the 25% that don’t default, how many of them will re-consider when they finally realize that only 10% of loan modifications have any type of principle reduction… it may take 20 years in some areas to get back to ‘ground zero’ or where folks can sell without going short or bringing money to the closing table.
I am really not a pessimistic person, in fact I am too optimistic usually and it has cost me a lot of money and pain by seeing through “rose colored glasses” in the past. I just really see too many signs of more problems to come and think we are a long way from the bottom
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DRE Takes Aggressive Action Against Scammers
November 16th, 2009 Categories: Mortgage and Loans, Pre Foreclosures, Real Estate News, Sacramento Real Estate
SACRAMENTO, Calif. – (Business Wire) The California State Department of Real Estate (DRE), the state department that issues licenses to real estate professionals and protects consumers in real estate transactions, has intensified its efforts to ensure all consumers receive the protection they deserve.
See the Earth Times Article here
Real Estate Commissioner Jeff Davi said recently “The economic downturn coupled with the unprecedented number of foreclosures has created a rich environment for scammers who have come up with a variety of schemes to take advantage of desperate and financially stressed homeowners, not only must we take aggressive regulatory action against these con artists but we must educate and provide homeowners with the necessary tools to protect themselves against scammers who have charged thousands of dollars in upfront fees and deliver nothing in return.”
Loan modification scams in particular are plaguing of course, California, Nevada and Florida, but also other states as well…
One of the biggest steps that the DRE here in Sacramento has done recently to combat these scams is to re-write the most recent Public Service Announcement in Spanish, the PSA is a comprehensive document warning consumers of loan fraud. Now the DRE has also expanded its Spanish language Website to educate consumers on how to avoid falling victim to a loan scam.
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More Community Banks Closed by FDIC
November 9th, 2009 Categories: Default News, Mortgage and Loans, Real Estate News, Real Estate Trends
FDIC has taken over 120 banks so far this year…
Came across this article in DSNews this morning and thought I’d re-post it…
Bank failures continue to mount, even as the U.S. economy is beginning to show signs of improvement. Regulators on Friday shut down five more institutions – in California, Georgia, Michigan, Minnesota, and Missouri.
These latest closures bring the total number of FDIC-insured failures to 120 for the year so far – the most in a single year since the savings & loan crisis of the last decade. By comparison, 25 U.S. banks were seized by officials in 2008, and only three went under in 2007.
On Friday evening, the FDIC stepped in to help shut down San Francisco-based United Commercial Bank (UCB), the largest institution to be closed last week, whose failure is expected to cost the agency and estimated $1.4 billion. Last year, the Treasury gave $299 million in Troubled Asset Relief Program (TARP) funds to UCB’s holding company. Based on the Department’s most recent TARP transaction report, UCBH Holdings, Inc. has not yet repaid any of the capital injection and it is unclear how the investment of taxpayer dollars will be affected by the collapse.
The FDIC facilitated a deal with East West Bancorp, Inc., the parent company of East West Bank in Pasadena, California, to acquire all the banking operations of UCB. Under the terms of the transaction, East West will receive $10.4 billion in assets, including $7.7 billion in loans, and assume $9.2 billion in liabilities, including $6.5 billion in deposits of UCB. The FDIC and East West have entered into a loss sharing agreement covering substantially all acquired loans.
East West’s presence is concentrated in California, but it also operates several banking offices in Greater China. The Shanghai, China, subsidiary of United Commercial (UCB-China), and a Hong Kong branch of UCB were also part of Friday’s transaction. According to East West, its acquisition of UCB creates the second largest independent bank headquartered in California and the largest bank in the United States focused on serving the Asian American community.
The San Francisco Business Times reported that UCB fell under the weight of its construction loan portfolio. Thomas Wu, UCB’s former chairman, president, and CEO who stepped down just two months ago, told the paper earlier this year, “We’ve been doing construction lending for 20 years, but we’ve never experienced anything like what we have in the last 12 months. It’s unprecedented.”
United Security Bank headquartered in Sparta, Georgia, was also closed Friday. Ameris Bank of Moultrie, Georgia agreed take over United Security’s $150 million in deposits, $157 million in assets, and its two branch offices, including the branch in Woodstock, Georgia that operated as the Bank of Woodstock. The failure is expected to cost the FDIC $58 million. With United Security, 21 Georgia banks have failed this year, more than in any other state.
Home Federal Savings Bank in Detroit, Michigan, was shut down by the Office of Thrift Supervision. The FDIC brokered a deal with Liberty Bank and Trust Company of New Orleans, Louisiana to acquire all of the $12.8 million in deposits of Home Federal Savings Bank, its $14.9 million in assets, and its two branches. The closure will cost the FDIC an estimated $5.4 million.
Prosperan Bank in Oakdale, Minnesota was also seized by regulators. In a deal facilitated by the FDIC, Alerus Financial, N.A. of Grand Forks, North Dakota agreed to take over operations of Prosperan’s three branches, as well as assume $175.6 million in deposits and purchase $173.9 million of the failed bank’s assets. The FDIC expects Prosperan’s collapse to cost its deposit insurance fund $60.1 million.
Gateway Bank of St. Louis in Missouri was taken over by Central Bank of Kansas City. Gateway Bank had only one branch office, total assets of $27.7 million, and total deposits of approximately $27.9 million. Gateway Bank’s failure is expected to cost the FDIC’s insurance fund $9.2 million.
Federal lawmakers last week chastised the nation’s banking regulators for coming down too hard on smaller community banks, such as those shut down last week.
As DSNews.com reported Thursday, House Financial Services Committee Chairman Barney Frank (D-Massachusetts) accused regulatory agencies of punishing the wrong institutions for the financial crisis. He called their stringent oversight of small community banks – which he says are trying to respond to the government’s call to resume lending – an “overreaction” that could easily exacerbate the credit crisis.
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Fannie Mae / California Firm Says Delinquency Rates Up
October 30th, 2009 Categories: Graphs and Charts, Loan Modification, Mortgage and Loans, Pre Foreclosures, Real Estate News, Real Estate Trends
Last Month’ 9129/09 from Calculated Risk;
Fannie Mae reported that the serious delinquency rate for conventional loans in its single-family guarantee business increased to 4.17 percent in July, up from 3.94 percent in June – and up from 1.45% in July 2008.
“Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans. These rates are based on conventional single-family mortgage loans and exclude reverse mortgages and non-Fannie Mae mortgage securities held in our portfolio.”
Just more evidence of some shadow inventory and the next wave of foreclosures.
Update: These stats include loans in trial modifications.
Than today from Chris Mcglaughlin;
According a report from California-based real estate market consulting firm Foresight Analytics, total delinquencies for first-lien residential mortgages grew to an estimated 11% during Q309. The final figures for the third quarter are not due until the end of November, but Foresight’s report bases its data on earnings reports and call report filings from banks. Residential delinquencies increased from 10.2% in Q209 and from 6.4% from the second quarter of 2008, according to the report. The delinquency rate rose approximately 1% every quarter since the Q108, except for a quick blip in Q408. “We have been expecting the rate of increase to slow, but clearly this has not yet occurred,” said the report.
Nonaccrual rates for residential mortgages also jumped to 4.7% in Q309 from 3.8% in the previous quarter, and delinquencies in commercial mortgages also ballooned for the quarter. The rate hiked to 4.7% in Q309 from 4.1% in the previous quarter and more than doubled the 2.1% rate a year ago, according to the report. “The delinquency rate has been increasing at an accelerated rate since Lehman Brothers’ collapse in September 2008 and the ensuing severe credit crunch and economic downturn.” The delinquency rate in commercial loans is still well below the 8% delinquency rate in the third quarter of 1991, but the rate still worries analysts in light of a weak economy, constricted credit availability and a large number of commercial mortgages coming due the next few years.
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New Loan Modification Law May Shut Down Many Sacramento Loan Mod Shops
October 28th, 2009 Categories: Foreclosure Rescue Scams, Loan Modification, Mortgage and Loans, Sacramento Real Estate
Effective immediately, SB 94, which became effective Oct. 11, will ensure anyone selling loan modification services will take money only after they do what they have promised. Also they must advise potential customers that they can actually negotiate a modification with their lender on their own or obtain help free of charge from nonprofit counseling agencies that are pre-approved by the Department of Housing and Urban Development.
The law includes penalties up to $10,000 and up to a year in jail for violation of the law for an individual and a fine of up to $50,000 for a corporation.
Consumer advocates called the law “a step in the right direction,” but say more needs to be done to make loan modifications easier to accomplish in order to reduce the frustration that leads homeowners to hire the unscrupulous.
No Telling exactly how Sacramento areaq Modification shops are dealing with the law… It’s too early to tell.
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Treasury Department Issues Guidelines Reinforcing Compliance with Fair Lending When Modifying Mortgages
October 28th, 2009 Categories: Loan Modification, Mortgage and Loans, National Real Estate Trends, Real Estate News
MINNEAPOLIS–(Business Wire)–
Wolters Kluwer Financial Services announced today the company has expanded its comprehensive Loss Mitigation Service to include fair lending compliance consulting. The company`s experts with strong experience and knowledge in helping financial institutions avoid discriminatory lending practices can now be deployed on-site at mortgage servicers to help them meet all state and federal fair lending requirements when modifying loans for distressed borrowers.
As U.S. mortgage servicers ramp up their loan modification efforts to help slow the exploding number of home foreclosures, the primary focus on doing so is mitigating financial losses for both the financial institution and borrower. However, the Treasury Department recently issued guidelines reinforcing the importance of compliance with fair lending requirements when modifying loans within its Home Affordable Modification Program (HAMP).
Wolters Kluwer Financial Services` compliance consultants can evaluate a
servicer`s loan modification policies and procedures to help determine how they can address fair lending risks more thoroughly and rapidly. Next, they can review a representative sample of loan modifications the servicer has completed and denied to determine if any disparate treatment of borrowers exists. And inally, the consultants can conduct a statistical analysis of all completed modifications and denied applications, identifying certain modification criteria that might lead the servicer to violate fair lending laws.
Wolters Kluwer Financial Services is also offering financial institutions a free
Webinar on how to prevent discrimination in the loan modification process and mitigate associated fair lending risk on Nov. 12.
“While modifying loans at risk of default as quickly as possible is paramount
for servicers and their borrowers, so is making sure everyone is treated fairly and equally in the process,” said Don Morrow, Ph.D., senior consultant and statistician, for Wolters Kluwer Financial Services. “Regulators have put forth notice they`ll intensify their scrutiny of servicers` fair lending compliance.”
“Wolters Kluwer Financial Services` fair lending compliance experts possess
decades of experience analyzing loan data. They have the skills and knowledge necessary to help servicers begin addressing emerging fair lending concerns immediately,” said Kurt Sames, vice president and general manager of Consumer Compliance for the company.
Wolters Kluwer Financial Services Loss Mitigation Service also helps servicers ensure compliance with requirements surrounding various loan modification rograms, including the government`s Home Affordability Refinance Program (HARP), HAMP and HOPE for Homeowners programs, and meet Freddie Mac, Fannie Mae, Treasury and Department of Housing and Urban Development guidelines, through its expansive library of mortgage compliance documents. In addition, the company can help servicers make the settlement process easier and faster through a complete,
online suite of settlement services. And Wolters Kluwer Financial Services can elp servicers record loan modification packages within any U.S. jurisdiction through a partnership with CT Lien Solutions, another Wolters Kluwer company.
For more information on Wolters Kluwer Financial Services` fair lending
consulting services tied to loan modifications, visit ww.pciwiz.com/consulting/loanmodifications.asp. For more information on the company`s comprehensive Loss Mitigation Service, visit it`s Loss Mitigation Resource Center at www.WoltersKluwerFS.com/LossMit.
About Wolters Kluwer Financial Services
Wolters Kluwer Financial Services provides best-in-class compliance, content, and technology solutions and services that help financial organizations manage risk and improve efficiency and effectiveness across their enterprise. The organization`s prominent brands include Bankers Systems, VMP Mortgage Solutions, PCi, AppOne, GainsKeeper, Capital Changes, NILS, AuthenticWeb and Uniform Forms.
Wolters Kluwer Financial Services is part of Wolters Kluwer, a leading global
information services and publishing company with annual revenues of (2008) €3.4
billion ($4.9 billion) and approximately 20,000 employees worldwide. Please
visit our Web site for more information.
Wolters Kluwer Financial Services
Jennifer Marso, 612-852-7912
Director of Corporate Communications
Jennifer.marso@wolterskluwer.com
On Twitter: @JenniferMarso
or
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Charles.miller@wolterskluwer.com
On Twitter: @CharlesWMiller
Copyright Business Wire 2009
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BofA Suffers Huge Loss- More Foreclosures…
October 19th, 2009 Categories: Loan Modification, Mortgage and Loans, Real Estate Trends, Sacramento Real Estate, Sacramento Real Estate Trends
Bank of America (BOA) announced today that it suffered a $2.2 billion loss in the third-quarter quarter. Contributing to that was a $1.2 billion dividend payment to its preferred shareholders, including the U.S. government, credit losses within some of its consumer-related businesses, and $402 million after it agreed to eliminate a loss-sharing agreement it had struck with the government earlier this year. “Obviously, credit costs remain high, and that is our major financial challenge going forward.” Most of this quarter’s losses were in Bank of America’s mortgage and credit card businesses, which together lost more than $1 billion during the July-September period.
BOA funded $95.7 billion in first mortgages, selling purchase or refinance loans to nearly 450,000 borrowers, including $23.3bn in mortgages to 154,000 low- and moderate-income borrowers during the quarter. About 39% of all the first mortgages were for purchases. Year-to-date at the end of Q309, BOA modified the mortgages of approximately 215,000 customers, and an additional 98,000 BOA mortgage customers are in the trial stage of a Making Home Affordable Modification Program (HAMP) workout. The overall results were slightly worse than Wall Street was expecting. Analysts had anticipated that the company would suffer a loss of 21 cents a share, according to Thomson Reuters, but in fact lost 26 cents a share.
Foreclosures up
Since government intervention began in September 2008, foreclosure sales remain stunted, dropping 8.6% from the previous month and 40.6% from a year ago. But the percentage of foreclosures sold to third parties, who are usually investors, grew by 215% from last year and 3.27% from August, according to ForeclosureRadar’s monthly foreclosure report. Arizona leads all states with an increase of filings by 36.1% in September, followed by Florida (29.6%), Texas (24.3%), and Michigan (18.22%). Filings in California increased only 1.08% in September, but the volume has grown by 123% from last year.
Urban areas were hit hardest and spurred the increases. In Arizona, the statewide increase was fueled by a massive 81.3% increase in Phoenix foreclosures. Foreclosures in Las Vegas jumped 47.4%; Atlanta had a 39.9% increase; Chicago’s rates climbed 36.2%; and Houston had a 33.2% spike in foreclosures, according to ForeclosureListings.com. RealtyTrac says foreclosure filings in Q309 increased to a level unseen since it began reporting the figures in January of 2005.
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California Bans Upfront Fees For Loan Mods-
October 14th, 2009 Categories: Mortgage and Loans, Pre Foreclosures, Real Estate News
Schwarzenegger Institutes Nine New Mortgage Laws
Gov. Arnold Schwarzenegger signed nine housing bills into law this week. One in particular, Senate Bill 94, consumer advocacy groups are calling a clear victory for California’s many troubled homeowners facing foreclosure.
The bill, sponsored by Sen. Ron Calderon (D-Montebello) aims to reduce fraud against desperate borrowers looking to save their homes. It bans all foreclosure consultants, including loan modification firms and attorneys who specialize in loan mods, from asking for any fees or compensation before fully completing the services contracted, whether the mod is successful or denied by the servicer.
Because it was labeled an “urgency measure,” the bill is effective immediately. It remains in effect until January 1, 2013. One local paper in Sacramento said the government’s swift action on the issue follows a colossal number of complaints made to the state’s Department of Real Estate by borrowers who said they paid up to $4,000 upfront to firms that abandoned them.
According to the Del Mar-based American Mitigation Law Group, the new law will force many loan modification companies to close their doors, while many others will scramble to come into compliance.
Assembly Bill (AB) 260, by Assemblyman Ted Lieu (D-Torrance), takes effect January 1, 2010, and caps yield spread premiums so mortgage brokers can’t “steer” borrowers into high-risk, high-interest loans. It also outlaws negative-amortization mortgages and limits prepayment penalties to no more than 2 percent of the loan balance.
The governor vetoed similar legislation last year at the urging of several industry trade groups, but Lieu successfully argued this go-around that the measure was now more important than ever to stem the tide of foreclosures in California.
According to Walnut Creek, California’s PMI Mortgage Insurance, a third bill – SB 291 – could provide regulatory relief to residential mortgage insurers in the state, and go a long way to support the market’s housing recovery.
The measure, which takes effect in California January 1, 2010, is similar to legislation enacted by Arizona last month and North Carolina in July 2009. It gives the state’s insurance commissioner added flexibility in assessing the strength of mortgage guaranty insurers, with discretion to permit such companies to continue to transact new business if capital falls below government-prescribed levels. Prior law required mortgage insurers to automatically cease conducting new business if they failed to meet the mandated capital levels.
Other mortgage-related bills signed by Schwarzenegger:
- SB 36, by Calderon, establishes standardized licensing requirements for all residential loan originators.
- SB 237, by Calderon, creates a registration program for appraisal management companies (AMCs).
- SB 239, by Sen. Fran Pavley (D-Agoura Hills), makes it a felony to commit fraud on a mortgage loan application, punishable by up to a year of jail time.
- AB 329, by Assemblyman Mike Feuer (D-Los Angeles), requires lenders to provide seniors with “a clear and informative” written disclosure of the risks and suitability of reverse mortgages.
- AB 957, by Assemblywoman Cathleen Galgiani (D-Livingston), allows buyers of foreclosed homes to choose local escrow officers, rather than being forced to use the company chosen by the seller.
- AB 1160, by Assemblyman Paul Fong (D-Cupertino), requires that mortgage loan documents be translated into the same language used in verbal negotiations.
Courtesy DSNews
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J.P. Morgan Reports Big Profits, but Lobbies for More “Extend and Pretend” Mods
October 14th, 2009 Categories: Mortgage and Loans, Pre Foreclosures, Real Estate News
Another DSNews article–
J.P. Morgan Chase & Co. announced a mixed bag in its third-quarter earnings report Wednesday, just a day after it lobbied the government to permit more so-called “extend and pretend” loans to troubled borrowers.
The bank – the third largest in the U.S. – reported a $3.59 billion profit for the period between July and September. At the same time, however, the firm needed to set aside twice as much case to as before to cover failing mortgages and credit card accounts.
Investors praised the earnings news as a bellwether for the financial sector. Shares of J.P. Morgan rose modestly, 3.3 percent, to $47.17 in mid-day New York Stock Exchange composite trading.
But there are ominous fissures in J.P. Morgan’s portfolio, as well as in its public lobby efforts for a particular class of loan modifications. In its earnings report, the bank warned that its immediate-term path was uncertain, and traditional mortgages had been a serious drag on its ledger. The company raised to $4 billion is loss provision for future defaults of home loans, and rising unemployment means much of that provision may be needed soon.
That’s likely what motivated J.P. Morgan’s public call Tuesday for the White House to expand its mortgage modification program to include interest-only payment periods on changed loans.
The interest-only plan has been controversial. As DS News recently reported, regulators at the Federal Reserve are concerned that such loan modifications are “delay and pray” or “extend and pretend” measures, intended not sincerely to assist homeowners or commercial property buyers but to stall their defaults long enough to make the properties worth more to the banks in foreclosure.
“We’re working with our peers to develop a proposal to present,” J.P. Morgan Senior Vice President in charge of Chase home loans Douglas Potolsky told reporters at the Mortgage Bankers Conference in San Diego. Allowing interest-only periods would spur “a significant pickup in terms of mods being done,” he contended.
That may be, but expanding that type of modification plan “only postpones defaults,” said economist Bill McBride on his blog, Calculated Risk. That’s because, as with option adjustable-rate mortgages, the borrowers’ bottom-line balances won’t decline, and their future bills may jump up. Long term, most of those borrowers modified will redefault.
That’s why J.P. Morgan is barking up the wrong tree, McBride said. They’re simply hoping to delay defaults until they can report a few more successful quarters, as they did today.
“The key numbers to track going forward will be the number of permanent modificatons, and the redefault rate for permanent modifications,” he said. “So far it is ‘a couple thousand’ and too early to say.”
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TARP Watchdogs Say Government’s Not Doing Enough to Stop Foreclosures
October 14th, 2009 Categories: Mortgage and Loans, My Stories, Real Estate News
From DSNews:
The Congressional Oversight Panel, set up to police the U.S. $700 billion bailout of financial markets, said in a report last week that the federal government isn’t doing enough to help homeowners who face foreclosure.
A majority of the panel’s members signed on to the Oct. 9 report, titled “An Assessment of Foreclosure Mitigation Efforts after Six Months.” The panel’s two Republican members distanced themselves from the findings.
The report expressed doubts that the “scale, scope, and permanence” of the Treasury Department’s Making Home Affordable Modification Program would adequately protect U.S. homeowners. The Treasury had previously said HAMP would help prevent as many as 4 million foreclosures with loan modifications through approved servicers and lenders.
“Rising unemployment, weak home prices, and impending mortgage rate resets still threaten to cast millions of Americans out of their homes, with devastating effects on families, local communities, and the broader economy,” the report said, noting that one in eight U.S. mortgages was currently in foreclosure or default, ultimately producing “10 to 12 million foreclosures.”
But panel member Jeb Hensarling – a Republican Texas Congressman who calls himself a “lifelong conservative” on the COP Web site – disagreed with the report. “Instead of focusing its attention on taxpayer protection and oversight,” he wrote in his dissent, “the panel’s majority report implies that the administration should commit additional taxpayer funds in hopes of helping distressed homeowners — both deserving and undeserving — with a taxpayer subsidized rescue.”
The report was the latest in a series of monthly opinions issued by the panel, which is charged with finding ways to improve the $700 billion Troubled Asset Relief Program. Its blistering critique came this week on the heels of an Oct. 6 announcement by officials from the Treasury and the Department of Housing and Urban Development that HAMP had resulted in 500,000 trial modifications for home loans, a month ahead of its self-imposed target date.
As DS News previously reported, the Treasury took that milestone moment as an opportunity to argue for HAMP’s effectiveness, noting that the pace of loan modifications was now greater that the pace of new foreclosures.
But Treasury Secretary Timothy Geithner still acknowledged “a large number of families” were still at risk of foreclosure.
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