Mortgage Delinquencies Drop to 4-Year Low

By Les Christie @CNNMoney May 16, 2012

NEW YORK (CNNMoney) — The percentage of borrowers who have dropped behind on their mortgage payments fell to a four-year low in the first three months of 2012, a bankers‘ group said Wednesday.

The Mortgage Bankers Association said Wednesday that the percentage of loans delinquent or already in the foreclosure process during the first quarter was 11.33%, the lowest level since 2008.  That was a decrease of 1.2 percentage points from a quarter earlier and 0.98 percentage point below the rate 12 months earlier.

“Delinquencies are clearly continuing to improve,” said Michael Fratantoni, the MBA‘s vice president for research and economics.

Another hopeful sign is the falling percentage of borrowers who are just getting into trouble, ones who have missed one payment. That’s useful for predicting the more seriously delinquencies to come.

“Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future,” said Fratantoni.

These new delinquencies represented 3.1% of loans outstanding, according to Jay Brinkmann, the MBA’s chief economist. That matches the long-term historical average of 3.1% going back to the 1990s, he said.

“Basically, we’re back to normal on that count,” he said.

One factor that has slowed the healing is the continued difficulty lenders face moving foreclosures through the pipeline, especially in states that involve the courts in the foreclosure process.

In the so-called judicial states, 6.9% of loans are in foreclosure inventory, loans that the banks have begun the legal process of foreclosing on but have not yet taken control of the property through a foreclosure sale.

In non-judicial states, where foreclosures are handled by trustees such as title companies, only 2.9% of loans are in foreclosure inventory.

The difference is mostly the speed that banks can move defaults through the system, said Brinkmann.

One way banks have started to reduce foreclosures is that they are now encouraging short sales, the deals in which borrowers sell their homes for less than what the owe, leaving the banks to absorb the losses.

That can also move delinquent borrowers out of the homes more quickly.

Banks also know that short sales are less costly to them than foreclosures, in which expenses such as property taxes, insurance and maintenance can mount up. In addition, homes repossessed in foreclosures often come to the bank in poor condition, and they command lower prices, on average, than short sales.

The mortgage lenders now often pay large incentives to borrowers willing to cooperate in getting short sales done.  For instance, Bank of America is offering some struggling homeowners payments of up to $30,000 if they sell their homes in a short sale and avoid ending up in foreclosure.

The Crash Is Over!!!!

Housing Declared Bottoming in U.S. After Six-Year Slump

Bloomberg

By John Gittelsohn and Prashant Gopal – Apr 25, 2012

The U.S. housing market is showing more signs of stabilization as price declines ease and home demand improves, spurring several economists to call a bottom to the worst real estate collapse since the 1930s.

 “The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester,Pennsylvania, said in a telephone interview yesterday. “Home sales — both new and existing — and housing starts are now off the bottom.”

Data released yesterday showing better-than-estimated new- home sales and a slowdown in price declines are bolstering optimism that the market is poised for a sustainable recovery. Economists including Bank of Tokyo-Mitsubishi UFJ’s Chris Rupkey, Bank of America Corp.’s Michelle Meyer and Mark Fleming of CoreLogic Inc. are also predicting prices are close to a trough after a 35 percent slump from a July 2006 peak, even as the threat of more foreclosures loom to boost supply.

New homes sold at an annual pace of 328,000 in March, up 7.5 percent from a year earlier, the Commerce Department said. The median estimate in a Bloomberg News survey forecast a rate of 319,000.  The pace of sales for February was revised upward to 353,000, a two-year high.

‘Healing’ Market

“I characterize 2012 as a year in which the market is healing and the bottoming process is playing out,” Zillow‘s  Chief Economist Stan Humphries said in a telephone interview.

Median prices averaged 5.8 percent higher in March than a year earlier in 53 metro areas surveyed for a monthly housing report by Re/Max LLC, the Denver-based company said in an April 16 report.  It was the second consecutive month that home prices increased year-over-year and the ninth straight month of higher sales volume, according to the report.

“This year’s selling season is shaping up to be the strongest we’ve seen in years,” Margaret Kelly, Re/Max’s chief executive officer, said in a statement. “Although we don’t expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold.”

For the full report, go to http://www.bloomberg.com/news/2012-04-25/housing-declared-bottoming-in-u-s-.html.

Will Others Follow MetLife’s Exit?

Mortgage Daily News,  BY ROB CHRISMAN

Jan 11 2012

Some would say it is grim out there, and no, I am not talking about Hostess Brands, the manufacturer of Twinkies, Ho Hos, and Ding Dongs cake snacks, filing for Chapter 11 bankruptcy.  Is it right that 4,300 of our brethren were notified of losing their jobs, after a potential sale fell through, in a letter to clients with a dancing Snoopy in the letterhead?

“To Our Valued Customers…We have made the decision to wind‐down all MetLife Home Loans’ (MLHL) forward origination business, including the Institutional Lending Group (ILG)… We will continue to honor all of our loan commitments and will maintain the necessary staff in place to ensure each of your loan transactions closes (subject to the loans meeting all investor and MLHL guidelines).  Our sales and support teams will work with each of you to ensure this transition is as transparent to your customers and referral partners as possible.  In return, we ask that you keep your commitment by delivering your locked pipeline in accordance with our agreements…”

The top five wholesale lenders for the 3rd quarter, volume-wise, were in order: Provident Funding, U.S. Bank Home Mortgage, Wells Fargo, Flagstar, and MetLife Home Loans.  The top twelve correspondent lenders for the 3rd quarter, volume-wise, were in order: Wells Fargo, BofA, Chase, GMAC, Citi, Flagstar, PHH, U.S. Bank, BB&T, Franklin American, SunTrust, and MetLife.  And when one adds in retail originations to the other two channels, for the 3rd quarter MetLife clocked in at #10 (per National Mortgage News).

I received this note: “If Fannie and Freddie don’t wake up and expedite their approval process the industry will be gone. Private investors such as Wells are bogged down in operations. Companies aren’t long for this world when they don’t have agency approval – we saw what happened last month to O 2 Funding. Every lender out there is grabbing onto the apron strings of the agencies; the same agencies that many in the government want to shut down! Where will that leave things?”

On top of this, investors in Residential Capital Corp., which does business as GMAC Mortgage, have organized out of concern that the residential lender and loan servicer could be headed toward bankruptcy.  Parent Ally Financial had hoped to take ResCap/GMAC public in 2011 but ultimately scrapped those plans; it has since cited “risk factors” with the unit but has not specifically discussed a possible bankruptcy filing.  And another top investor, PHH, was downgraded by S&P and raised its doubts over continuing as a “going concern” if it failed to improve its liquidity.  PHH is also being investigated by the CFPB regarding its mortgage insurance practices.

One can just hear large lenders talking in their boardrooms.  “Do we really want to be in this business, given the regulatory, legal, financial, and public relations issues? Where the value of servicing has dropped dramatically in the market, and could drop further depending on Basel III?  Where the mortgage insurance tax deductibility has gone away?  Where every week brings a new lawsuit – when will we have more attorneys on staff than originators?”

The shutdown will cost insurer MetLife about $100 million.  “We continue to move forward with our plans to cease being a bank holding company,” the CEO said last month.  Servicing and reverse mortgage origination will continue, at least at this time.  John Calagna, as spokesman for MetLife, noted that most of the 4,300 employees at the unit will lose their jobs, 20% of whom are in Irving, Texas. (Add this to Bank of America’s announced 30,000 job cuts, and Citi’s 4,500, and one really starts to make a dent in financial services.)

The news is not much better elsewhere.  JPMorgan Chase’s mortgage originations in 2011 were the lowest in 10 years.

Lastly, Michael Williams announced his intention to step down as CEO of Fannie Mae after 21 years with the agency.  He’s had that post since April 2009, and is viewed as the leader in guiding Fannie Mae through the transition into conservatorship and in “directing Fannie Mae’s efforts to enhance loss mitigation strategies, including loan modification and refinanceoptions to help struggling homeowners.”  FHFA will work with the Fannie Mae board of directors in searching for a new CEO.