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  • Thu, Jul 7 2011
  • 10:14 AM » Report: $60 Billion Mortgage Servicer Settlement being Discussed
    Published Thu, Jul 07 2011 10:14 AM by Calculated Risk Blog
    In February, the settlement was rumored to be . Then in May the settlement was rumored to be . Now the NY Post is reporting $60 billion! From the NY Post: America's biggest mortgage servicers are closing in on a deal with federal and state officials to settle some of the thorniest foreclosure fiasco problems -- including the robo-signing issue, The Post has learned. The proposed settlement with the Department of Justice and 50 state attorneys general, once thought to be in the neighborhood of $20 billion, could range as high as $60 billion and include a provision for principal reduction, sources close to the discussions said. But what does "$60 billion" really mean? If the final number is in the $60 billion range, it will probably include already completed principal reductions and modifications. If so, the headline number would be meaningless. Update: From Barclays Capital analysts via the WSJ: (ht sum luk)
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:13 AM » Consumer delinquencies tick up in first quarter
    Published Thu, Jul 07 2011 10:13 AM by Reuters
    WASHINGTON (Reuters) - More consumers had trouble making payments on credit cards and other debts during the first three months of the year due to higher food and gas prices, an industry report said on Thursday.
  • 10:12 AM » FDIC sues former Indymac Bank CEO Michael Perry
    Published Thu, Jul 07 2011 10:12 AM by Reuters
    (Reuters) - The Federal Deposit Insurance Corp sued former IndyMac Bank Chief Executive Michael Perry to recover over $600 million in damages and costs related to residential loans made by the lender, according to court documents.
  • 10:11 AM » U.S. Rents Rise, Vacancies Go Down
    Published Thu, Jul 07 2011 10:11 AM by WSJ
    Apartment landlords continue to have the best of all worlds as rents go higher and vacancies fall.
  • 10:10 AM » Bucks: Free Credit Scores Coming to Prospective Borrowers
    Published Thu, Jul 07 2011 10:10 AM by NY Times
    Starting next month, prospective borrowers who are denied loans -- or that don't receive the best terms -- must receive a free copy of the credit score that the lender used.
  • 10:09 AM » Zillow ‘Zestimate’ Shifts, Prompting Howls
    Published Thu, Jul 07 2011 10:09 AM by Google News
    Bloomberg News Zillow says its ‘Zestimate’ is now more accurate in places like Phoenix.. On June 14th, Bill Trumbo, a 68-year-old retired financial analyst in Phoenix, Ariz., logged onto his bank’s online personal financial management account and found that his house in Phoenix had lost nearly $100,000 in value overnight. Huh? The explanation came that same day, when the real-estate website Zillow.com sent out a press release saying it had modified the formula it uses to estimate the value of some 97.3 million American homes, known as the Zestimate, to expand the coverage of its database of homes and improve accuracy. The company had added 25 million new Zestimates, incorporated user-submitted data about improvements and gave greater weight to more recent sales data. For some, the value of their home went up. Others saw dramatic decreases. Overall, Zillow says, most adjustments in valuation were of 10% or less, and the overall margin of error for Zestimates dropped from 12% to 8.5%, not far off the typical 5% margin of error that most home appraisers claim. Zillow says that slightly more Zestimates went down than went up, but declined to provide more specific information about exactly how many home valuations went one way or the other. The company also said that there was little variation by region, except that in some markets, Zestimates by the revision than others. In Denver, for example, the margin of error for home-value estimates went from 12.2% to 5.5%, meaning that Zestimates there are 55% more accurate than they were before, Zillow says. Some markets with more volatile housing markets and lots of homes changing hands in distressed-sale situations, saw more dramatic shifts, Zillow says. This is because the new algorithm for calculating Zestimates gives more weight than before to recent home sales, as a way of catching up with the most current local housing market conditions. Mr. Trumbo, of Phoenix (where Zestimates were made 47% more accurate, according to Zillow...
  • 10:08 AM » Troubled CMBS Loan Count Drops
    Published Thu, Jul 07 2011 10:08 AM by Google News
    Trepp LLC The delinquency rate for commercial mortgage-backed securities fell for the second straight month in June, reversing a long climb that accompanied the economic downturn. The delinquency rate for June stood at 9.37%, down from 9.6% in May and a record high of 9.65% in April, according to loan research service Trepp LLC. The decline comes in large part as special servicers—the firms that work out troubled loans—have been working through a backlog, stepping up the pace at which they sell off mortgages. In all, $1.8 billion CMBS loans were liquidated in June, according to Trepp, the highest in at least 18 months. What explains the pickup? Analysts at Barclays Capital point to the thaw in the lending sector, as banks are once again willing to lend money for a wide array of commercial property, although generally on less liberal terms than they did in 2006 and 2007. “We believe much of the current spurt in liquidations stems from a favorable lending environment coupled with low interest rates and low cap rates,” Barclays analysts wrote. “As a result, many assets that had been sitting on special servicing books for years and were hard to sell even a year ago are now being disposed of.”
  • 10:08 AM » Rebound or Retreat After Mortgage-Cap Declines?
    Published Thu, Jul 07 2011 10:08 AM by Google News
    takes a look at the first real test of the government’s efforts to take a toe out of the mortgage market. Come October, the government will modestly reduce the maximum loan size that government entities can guarantee in certain high-cost housing markets. In 2008, Congress raised the maximum loan amount that mortgage giants Fannie Mae and Freddie Mac and federal agencies could guarantee in certain housing markets. Home buyers in dozens of cities faced a credit squeeze when private lenders pulled back from originating loans that exceeded $417,000, the limit for government-backed loans. The higher limits are pegged to local prices and in the priciest markets rise as high as $729,750. After September, they’ll fall on a sliding scale depending on regional home prices, topping out at $625,500. The decline illustrates the tough balancing act facing policy makers, particularly at a time when housing markets appear to be softer than many had hoped they would be at this point in the recovery. Without government-backed loans, buyers must take out jumbo mortgages that carry higher rates and tougher qualification standards. “It’s a tough call,” says Richard Green, director of the University of Southern California’s Lusk Center for Real Estate. While he says it’s a “good natural experiment” to rollback lending support for higher-priced properties, he adds, “with the housing market as weak as it is, one reasonably wonders whether it’s good to do anything.” The Obama administration supports letting the limits fall in a bid to carve out more room for private capital to compete with Fannie, Freddie and the Federal Housing Administration. Government-related entities stand behind more than nine in 10 new mortgages, and taxpayers have sunk $138 billion into Fannie and Freddie, underscoring lawmakers’ eagerness to dial down the government’s share. “We see these companies just hemorrhaging money, and it’s terrible,” says Matt Battiata, a real-estate agent in Carlsbad, Calif. But most Americans...
  • 10:08 AM » FHA ISSUES CONDOMINIMUM POLICY MORTGAGEE LETTER
    Published Thu, Jul 07 2011 10:08 AM by HUD
    WASHINGTON - The Federal Housing Administration (FHA) today published updated condominium policy guidelines and instructions that clarify the approval and recertification process and policies for condo projects. FHA's mortgagee letter includes a Condominium Policy Guide and Implementation Schedule identifying timelines for lenders to comply with the guidelines.
  • 9:36 AM » Reis: Apartment Vacancy Rate falls to 6% in Q2
    Published Thu, Jul 07 2011 9:36 AM by Calculated Risk Blog
    Reis reported that the apartment vacancy rate (82 markets) fell to 6.0% in Q2 from 6.2% in Q1. The vacancy rate was at 7.8% in Q2 2010 and peaked at 8.0% at the end of 2009. From the WSJ: Vacancies ... fell in 72 of the 82 markets during the second-quarter vacancy rate to 6%, the lowest since 2008 and compared with 7.8% a year earlier, according to Reis. ... The average effective rent, the amount paid after discounting, was $997 in the second quarter of the year, up from $974 a year earlier ... Landlords filled a net 33,000 units in the second quarter, a slowdown from the 45,000 units they filled in the first quarter. ... Meanwhile, supply remains constrained. Roughly 8,700 new apartment units opened during the second quarter, the second-lowest quarterly tally for new completions since Reis began collecting data in 1999. Click on graph for larger image in graph gallery. This graph shows the apartment vacancy rate starting in 2005. Reis is just for large cities, but this decline in vacancy rates is happening just about everywhere. A few key points we've been discussing: • Vacancy rates are falling fast (the excess supply is being absorbed). Note: The excess housing supply includes both apartments and single family homes. • A record low number of multi-family units will be completed this year (2011). Only 8,700 apartments came on the market in Q1 (in the Reis survey area). This is the second lowest quarter since Reis has been tracking completions - the lowest was 6,000 last quarter. • The falling vacancy rate is pushing push up effective rents. This also pulls down the price-to-rent ratio for house prices. • Multi-family starts are increasing, and that will help both GDP and employment growth this year. These new starts will not be completed until 2012 or 2013, so vacancy rates will probably decline all year.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Wed, Jul 6 2011
  • 3:06 PM » Conforming Loan Limit Data
    Published Wed, Jul 06 2011 3:06 PM by Calculated Risk Blog
    Just a data post ... Last night I posted on the new GSE conforming limits and I combined two FHFA spreadsheets to show the change by city. Here is the with the current loan limits and the new loan limits (sorted by largest change in limit). As Tom Lawler back in April, effective Oct 1st "the conforming loan limit will revert back to those established under the Housing and Economic Recovery Act (HERA) of 2008. That act upped the conforming loan limit in many parts of the country, but the HERA hike was trumped by the Economic Stimulus Act (ESA) of 2008 and the Continuing Appropriations Act of 2011." Here is the : 1) : Maximum Loan Limits for Loans Originated between 10/1/2010 and 9/30/2011 (Same as Limits for 1/1/10-9/30/10 Originations) 2) : Maximum Loan Limits that Apply to Loans Acquired in Calendar Year 2011 and Originated after 9/30/2011 or Prior to 7/1/2007
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:16 AM » Reis: Office Vacancy Rate flat in Q2 at 17.5 Percent
    Published Wed, Jul 06 2011 10:16 AM by Calculated Risk Blog
    From Reuters: The U.S. office vacancy rate stood at 17.5 percent at the end of the second quarter, according to Reis. The rate was the same as the first quarter, when vacancies posted the first decline in nearly four years. ... The average asking rent rose 0.2 percent to $27.72 per square foot, according to Reis. Factoring in months of free rent and other concessions landlords offer to attract tenants, the so-called effective rent also rose 0.2 percent in the second quarter, to $22.25 per square feet. Click on graph for larger image in graph gallery. This graph shows the office vacancy rate starting in 1991. Reis is reporting the vacancy rate was at 17.5% in Q2 2011, the same rate as in Q1, and up from 17.4% in Q2 2010. It appears the office vacancy rate might have peaked - and is now moving sideways. It will be a good sign when the vacancy rate starts falling. Reis should release the Mall and Apartment vacancy rates over the next few days.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:15 AM » Changes to Conforming Loan Limit
    Published Wed, Jul 06 2011 10:15 AM by Calculated Risk Blog
    Back in April, economist Tom Lawler previewed the coming changes to the GSE conforming loan limits on October 1st: The FHFA has now released the new limits. Here is a with the current loan limits and the new loan limits (sorted by largest change in limit). The largest changes were for Monterey, CA (decrease of $246,750), Monroe, FL (-$200,750) and Puerto Rico (-$189,250). Maui, HI will see a decrease of $163,250 and San Diego, CA a decrease of $151,250. From Nick Timiraos and Alan Zibel at the WSJ: As an emergency measure three years ago, Congress raised to as high as $729,750 the maximum loan amount that Fannie Mae, Freddie Mac and federal agencies could guarantee. ... Now those limits are set to decline modestly in hundreds of counties across the U.S. as the government attempts to reduce its outsized footprint in the mortgage market and create room for private investors to compete. Had the lower limits been in place last year, Fannie and Freddie would have backed 50,000 fewer loans, according to the Federal Housing Finance Agency. The bulk of the affected loans —about 60%— are in California, with another 20% in Massachusetts, New York and New Jersey. This will not have a significant impact on the housing market. Remember there are about 5 million home sales per year - so even if all these homes fell through, the impact would be very small. As Tom Lawler wrote in April: Letting the conforming loan limits go down on October 1st is not a big deal from the standpoint of the housing market, and the new limits would still leave the VAST bulk of home sales transactions eligible for GSE acquisition. However, it is a “big deal” in terms of it being the first (though very small) step to reduce the government’s/GSE’s “footprint” in the US mortgage market.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:14 AM » Orange County: Construction Employment up Year-over-year
    Published Wed, Jul 06 2011 10:14 AM by Calculated Risk Blog
    There are a few interesting pieces of data in this article ... From Jon Lansner at the O.C. Register: The number of Orange County construction workers in May was 200 jobs higher than a year ago. That’s no hiring spree but it’s the first year-over-year gain since December 2006 . ... This is not the only sign of stability in Orange County construction. Local builders pulled 935 building permits in May. That’s up fourfold in a year — and the most for a May in nine years, according to figures from the Construction Industry Research Board. Cypress Village, an Irvine Co. apartment complex in northern Irvine, accounted for nearly three-fourths of the total permits issued in May and pushed multi-family permits to a 22-year high for May. But it wasn’t all rentals. May’s 250 single-family building permits were the most for that type of Orange County housing in a May in four years . One of my predictions for 2011 was that residential construction employment would increase nationally for the first time since 2005. This table below shows the annual change in construction jobs (total, residential and non-residential) and through May for 2011. Annual Change in Payroll jobs (000s) Year Total Construction Jobs Residential Construction Jobs Non-Residential 2002 -85 88 -173 2003 127 161 -34 2004 290 230 60 2005 416 268 148 2006 152 -62 214 2007 -198 -273 75 2008 -787 -510 -277 2009 -1053 -431 -622 2010 -149 -113 -36 Through May 2011 31 22 9 Not much - but it is a start. Click on graph for larger image in graph gallery. This graph shows the number of construction payroll jobs (blue line), and the number of construction jobs as a percent of total non-farm payroll jobs (red line). Construction employment is down 2.197 million jobs from the peak in April 2006, but up 31 thousand jobs so far this year (through May). Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:13 AM » Fed’s Bullard Criticizes Focus on Core Inflation
    Published Wed, Jul 06 2011 10:13 AM by WSJ
    Federal Reserve Bank of St. Louis President James Bullard is again attacking the idea of setting monetary policy based on measurements of inflation stripped of food and energy factors. Bullard did so in a published by his bank on the Internet on Friday. His comments represented an expansion of a speech he had given May 18 in New York. The policy maker is opposed to the Fed’s long-standing practice of focusing near-term monetary policy in reaction to core prices, which many feel understate the true level of inflation. Proponents of using core inflation argue it sorts through inflation volatility pretty well, and gives a better sense of the underlying state of price movements. “The best the [Federal Open Market Committee] can do is to use headline inflation when looking at the price side of the dual mandate” that the central bank is charged to meet, Bullard wrote. The ideas that motivate the Fed’s long-running focus on so-called core inflation readings have “rotted,” Bullard said. He warned that watching prices stripped of food and energy risks the Fed losing track of the price pressures faced by everyday households. He added, “the U.S. focus on core inflation tends to damage Fed credibility.” Bullard said headline price measures are the best way to read inflation. He argued the Fed should, like other nations’ central banks, adopt a target for inflation, which will show officials “keeping faith with their citizens that they will work to keep headline inflation low and stable.”
  • 10:12 AM » Home Prices: Back to Normal?
    Published Wed, Jul 06 2011 10:12 AM by Google News
    The Journal’s today provided some important perspective to the deep and abiding pain in the housing market. Here is the WSJ’s analysis of the chart from : Home prices are almost back to their long-term trend. Adjusting for inflation, U.S. home prices were 40% lower in the first quarter than at their peak five years earlier. That left them just 7.5% above their average level from the mid 1940s through the 1990s—a period when home prices tended to gain at the same pace as the overall inflation rate. Home prices are difficult to forecast today, however, because foreclosures remain a big wild card. Banks are more likely to cut prices to unload foreclosed homes quickly, and so as the share of distressed sales in a given housing market rises, reported price declines can accelerate. Meanwhile, home buying demand remains weak. That is raising concerns that just as home prices became detached from their historical relationship during the bubble, so too could they “overshoot” during the correction and drop below that historical average.
  • 10:12 AM » Foreign buyers lifting U.S. home sales
    Published Wed, Jul 06 2011 10:12 AM by rssfeeds.usatoday.com
    Much lower prices and a weaker dollar are pulling foreign buyers into the U.S. real estate market.
    Click Here to Read the Full Article

    Source: rssfeeds.usatoday.com
  • 10:12 AM » HUD Secretary on 20% down payment requirement: “We can’t overcorrect”
    Published Wed, Jul 06 2011 10:12 AM by National Housing Conference
    Secretary Donovan appeared on CNN’s “State of the Union” on Sunday to discuss the 20% down payment requirement in the draft qualified residential mortgage (QRM) rule as part of the Dodd-Frank legislation. Mortgage loans that don’t meet the down payment requirement would be subject to risk-retention, potentially raising costs and unduly burdening low- and moderate-income homebuyers with good credit but little upfront capital. Donovan asserts “we can’t overcorrect” the problems that led to housing meltdown and must find ways to provide access to credit that isn’t overly restrictive for Americans who may be successful homeowners. By going so far in the “other direction, we cut off ownership for people,” said Donovan to a CNN correspondent. In addition to QRM, Donovan gave his analysis that home prices will “very unlikely” see decline in the coming years. The bigger question is when housing prices will rise—some analysts say as early as this fall while others think it to be next year. Donovan advised this to be the right time to buy a home due to low housing prices that will likely rise. Watch video of Secretary Donovan on CNN’s “State of the Union” . Also read more on NHC’s position on QRM .
    Click Here to Read the Full Article

    Source: National Housing Conference
  • Tue, Jul 5 2011
  • 8:40 AM » Little Help From Government for ‘Underwater’ Homeowners
    Published Tue, Jul 05 2011 8:40 AM by Google News
    Associated Press Fewer than 5,000 homeowners have taken advantage of an Obama administration program that aids “underwater” homeowners, reflecting banks’ resistance to offer such principal write-downs. The administration in March 2010 unveiled a multi-part effort designed to encourage banks to slash principal balances for borrowers whose homes have plunged in value due to the housing bust. It attracted lots of attention at the time. But the program has failed to gain traction. About 10.9 million U.S. households, or nearly 23% of those with a mortgage, are “underwater” – meaning that they owe more on their properties than their homes are worth, according to CoreLogic Inc. Treasury Department statistics released Friday show that only 4,911 homeowners are participating in the principal-reduction program, which aids borrowers who owe at least 15% more than their properties are worth. But those homeowners who managed to get their loan balances reduced are seeing substantial principal reductions: The median write-down was about $69,500, or a reduction of more than 32%. This program and others are part of Treasury’s Home Affordable Modification Program, or HAMP, which was announced in early 2009, but has fallen far short of initial expectations. As of May, it has helped about 633,500 U.S. homeowners avoid losing their homes through permanent loan modifications, compared with an initial goal of helping 3 million to 4 million borrowers. HAMP mainly provides banks with incentive payments to lower borrowers’ interest rates and extend mortgage terms. The administration announced the additional effort to aid underwater homeowners, under pressure to do more to address the foreclosure crisis. The Treasury’s “principal reduction alternative” became effective in October. Plus, the Federal Housing Administration launched a “short refinance” program with similar goals last September. That program, however, has assisted fewer than 300 homeowners. Banks have largely resisted slicing homeowners...
  • 8:40 AM » Debunking the Foreclosure-to-Apartment Assumption
    Published Tue, Jul 05 2011 8:40 AM by Google News
    By Dawn Wotapka and Robbie Whelan Apartment operators have long been considered big beneficiaries of the housing bust. But one leading industry analyst thinks that rental homes are the post-housing crash world’s real stars. In a lengthy research note, Zelman & Associates argues foreclosures are primarily shifting occupants to single-family rental homes. “The benefit of a changing home-ownership rate may not be as directly beneficial to the multifamily sector as many believe,” the firm writes. Five years into the housing bust, fewer Americans are homeowners, either by choice or by necessity. In the first quarter, 66.5% of Americans owned homes, down from 67.2% a year earlier, according to the Census Bureau. During the heyday, when easy credit made mortgages available with less regard for income or ability to pay, the ownership rate surged to near 70% in 2004. Each percentage point represents about 1 million households. Many people assume that, following a foreclosure, home owners move into apartments. Indeed, the sector has seen occupancies and rents rise in recent quarters and operators expect even better times ahead. That’s put pep in shares of apartment real-estate investment trusts: Equity Residential, the largest apartment player by market capitalization, and AvalonBay Communities Inc. have gained more than 17% since January. Camden Property Trust has spiked 20% this year and nearly 60% in the last 12 months. Apartment owners say the foreclosure crisis is sending tenants to their doors. “We have a significantly higher number of people today living in our apartments who have lost their homes than I ever remember,” says Jeffrey Friedman, chief executive of Associated Estates Realty Corp., an Ohio-based apartment owner. “They don’t put their cars in the garage, they put their belongings in the garage.” The sector has also benefited because fewer residents are moving out and people who downsized with roommates and parents during the downturn are moving into their...
  • 8:40 AM » The Benefits of a Biweekly Mortgage Plan - Mortgages
    Published Tue, Jul 05 2011 8:40 AM by www.nytimes.com
    Borrowers can save thousands of dollars in interest by debiting half a mortgage payment every two weeks.
    Click Here to Read the Full Article

    Source: www.nytimes.com
  • 8:25 AM » Number of the Week: Pursuit of Happiness Gets More Difficult
    Published Tue, Jul 05 2011 8:25 AM by WSJ
    29%: Share of Americans who say they’re “very happy”. The Declaration of Independence enshrined the pursuit of happiness as an inalienable right. Lately, that pursuit appears to have gotten more difficult. The General Social Survey, out of the University of Chicago , polls U.S. residents on everything from how often they attend church to how much they trust one another. In the latest poll, the number of people who said they were “very happy” fell to 29% last year. That is down from 32% in 2006, the year before the recession started, and the lowest level the survey has registered in its 39-year history. Before the recession, the survey’s measure of happiness saw little reaction to the ups and downs of the U.S. economy. The record low speaks to the downturn’s severity. But that it took such a deep recession to move the happiness needle also points to the difficulty of measuring well-being with surveys. You would expect these polls — and their respondents — to be more sensitive to the ups and downs of employment and other important forces in our lives. Yet, no matter how pollsters frame the question, people tend to measure how happy they are not just by the impact of such forces on their lives but also by comparing their circumstances with their neighbors’. Research has also shown that when pollsters ask about happiness after asking about politics, respondents tend to have much glummer assessments of their lives than when political questions are left out. Asking college students about dating, or married couples about their marriage, also colors their assessment of their wellbeing. On the other hand, it may not be a bad idea to ask people about the weather. People are, of course, more upbeat on sunny days and more downbeat on rainy ones, and as a result the weather tends to color how they answer happiness questions. But Norbert Schwarz at the University of Michigan and Fritz Strack at the University of Würzburg in Germany have found that asking “By the way, how’s the weather...
  • 8:24 AM » An Agency Builder, but Not Yet Its Leader
    Published Tue, Jul 05 2011 8:24 AM by NY Times
    Opposition to naming Elizabeth Warren as chief of the new Consumer Financial Protection Bureau has been blunted by concerns that President Obama has yet to name anyone for the post.
  • 8:24 AM » S&P Warns Bank Plan Would Cause Greek Default
    Published Tue, Jul 05 2011 8:24 AM by NY Times
    A leading credit ratings agency warned on Monday that Greece would be considered to be in default if banks rolled over their holdings in the country's debt as proposed recently in a French plan.
  • 8:24 AM » Big Banks Easing Terms on Loans Deemed as Risks
    Published Tue, Jul 05 2011 8:24 AM by NY Times
    Two of the nation’s biggest lenders are quietly modifying loans for tens of thousands of borrowers who have not asked for help but whom the banks deem to be at special risk.
  • 8:09 AM » NY Times: Principal Reductions for some Option ARMs
    Published Tue, Jul 05 2011 8:09 AM by Calculated Risk Blog
    From David Streitfeld at the NY Times: Two of the nation’s biggest lenders, JPMorgan Chase and Bank of America, are quietly modifying loans for tens of thousands of borrowers who have not asked for help but whom the banks deem to be at special risk. Rula Giosmas is one of the beneficiaries. Last year she received a letter from Chase saying it was cutting in half the amount she owed on her condominium. ... Banks are proactively overhauling loans for borrowers like Ms. Giosmas who have so-called pay option adjustable rate mortgages ... Ms. Giosmas bought her two-bedroom, two-bath apartment north of downtown Miami for $359,000 in early 2006, according to real estate records. She made a large down payment, but because each month she paid less than was necessary to pay off the loan, her debt swelled to about $300,000. Meanwhile, the value of the apartment nosedived. By the time Ms. Giosmas got the letter from Chase, the condominium was worth less than half what she paid. “I would not have defaulted,” she said. “But they don’t know that.” The letter, which Ms. Giosmas remembers as brief and “totally vague,” said Chase was cutting her principal by $150,000 while raising her interest rate to about 5 percent. These principal reduction programs are not new. Here was a about a Wells Fargo program last year: Wells Fargo has forgiven an average of $46,000 in principal, or 15 percent, for the 43,500 option-ARM loans it has modified this year through September, said Franklin Codel, chief financial officer at the bank’s home-lending unit. The San Francisco-based lender has cut as much as 30 percent off the loan principal in a few “rare exceptions,” with the ceiling typically capped at 20 percent, Codel said. The banks have kept these programs somewhat quiet - imagine what would happen to Chase or Wells Fargo if their borrowers found out that the banks would substantially reduce their principal if they were 1) underwater (negative equity), and 2) stopped making their payments? The delinquency...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Fri, Jul 1 2011
  • 3:10 PM » U.S. Food Stamp Use on the Rise
    Published Fri, Jul 01 2011 3:10 PM by WSJ
    Growth in the food stamp program continued in the U.S. — with 27 states providing benefits to at least 1 in 7 people. The number of food stamp recipients increased 0.1% in April, the most recent month available, compared to March, with 44.5 million people receiving benefits, according a new report from the U.S. Department of Agriculture . Food stamp numbers aren’t seasonally adjusted though, meaning a variety of factors could influence the monthly tallies. The food stamp program ballooned during the recession as workers lost their jobs or saw their hours and income reduced. The rate of increase has slowed a bit, but enrollment in the program is still high with 10.4% more people tapping benefits in April than the same month a year earlier. Mississippi, New Mexico and Oregon were among the states with the largest share of the population utilizing food stamps in April: At least one in five residents in each state were receiving benefits. Wyoming had the lowest rate of recipients with just 6.5% of the state’s residents using food stamps.
  • 3:09 PM » WaMu Settles Class-Action Suit
    Published Fri, Jul 01 2011 3:09 PM by WSJ
    Washington Mutual agreed to settle a consolidated shareholder class-action lawsuit for $208.5 million, putting behind it one chunk of the failed thrift's litigation issues.
  • 3:08 PM » Builder Lennar Bulldozes Forlorn, Empty Homes
    Published Fri, Jul 01 2011 3:08 PM by Google News
    Lennar Corp. Builder Lennar has demolished eight partially built California homes to make way for replacements. As builders struggle to compete with bargain-priced inventory, particularly foreclosures, they’ve downsized and simplified new homes. They are also tearing them down. Builder Lennar Corp. has demolished eight partially built California homes to make way for replacements. In Visalia’s Eagle Glen subdivision, Lennar plans 70 single–story homes starting at $197,500 and priced as high as $250,000, according to its . (The bulldozing was captured in a series of photos page.) Lennar Corp. The homes were in Visalia’s Eagle Glen subdivision. To be sure, this was not the same as Lennar demolishing homes it had built. Eagle Glen was originally developed by Ennis Homes and Ennis Land Development, but those companies filed for Chapter 11 bankruptcy in 2009, the . The company planned to keep the development as it emerged from bankruptcy—which s to do. Ennis couldn’t be reached for comment and its website says the company is closed. The lots were purchased this year for an undisclosed price, said Charles Schein, a spokesman for Lennar’s Central Valley division. Mr. Schein said Lennar looked into completing the homes, but they were exposed to the elements for too long and couldn’t be salvaged. Miami-based Lennar recycled some of the materials and donated what could reused to Habitat for Humanity, which builds affordable homes for the working class. The demolition reflects consumers’ changing tastes. Some of the razed homes were two stories with multiple gables and defined entryways, designs that commanded hundreds of thousands of dollars during the housing market’s heyday. They were as big as 3,000 square feet, while Lennar says the average home size at the development will be 1,800 square feet. “We’ve adjusted our offerings to fit the needs of the people today,” said Mr. Schein. Visalia is north of Bakersfield, Calif., one of the areas hardest-hit by the housing crash. Overbuilding...
  • 3:07 PM » HUD Final SAFE Act Rule Exempts HFAs
    Published Fri, Jul 01 2011 3:07 PM by National Council of State Housing Agencies
    The published in today’s Federal Register exempts HFAs, government employees, and bona fide nonprofit or
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • 3:05 PM » HUD Issues Steps to Protect Active Military From Foreclosure
    Published Fri, Jul 01 2011 3:05 PM by nationalmortgageprofessional.com
    The U.S. Department of Housing & Urban Development (HUD) has announced a revised Notice of Disclosure form that emphasizes the rights of the active duty military and their dependents who are protected under the Servicemembers Civil Relief Act (SCRA). The Act mandates that personnel on active duty in wartime are entitled to mortgage relief, including a lower interest rate (not more than six percent) on their mortgages and foreclosure protection.
    Click Here to Read the Full Article

    Source: nationalmortgageprofessional.com
  • 3:04 PM » Down Payment Rule Drowning in Opposition
    Published Fri, Jul 01 2011 3:04 PM by www.appraisalinstitute.org
    The 20 percent down payment rule for qualified residential mortgages has more opposition now than ever. According to a June 20 article on HousingWire.com, 240 members of Congress have signed letters advocating a reduction of the down payment qualification. Originally, 150 lawmakers signed a letter in May opposing a 20 percent down payment. When the comment period on the rule was extended to Aug.1, Rep. John Campbell, R-Calif., and Rep. Brad Sherman, D-Calif., circulated a second letter obtaining about 90 new signatures.
    Click Here to Read the Full Article

    Source: www.appraisalinstitute.org
  • 3:03 PM » Houses Tell All With BuildFax Report
    Published Fri, Jul 01 2011 3:03 PM by Google News
    If a home could talk, what would it tell you? An Asheville, NC, company is acting as the tell-all for homes across the country. The firm created a database that contains building and permitting information from U.S. cities and counties.
  • 3:03 PM » Second Homes: Who's Buying and Why
    Published Fri, Jul 01 2011 3:03 PM by Google News
    Join us July 6 to find out what the latest Investment and Vacation Home Buyers Survey says about buyer and property characteristics, financing and much more.
  • 3:03 PM » Government Mortgage Bailout Numbers Still Weak
    Published Fri, Jul 01 2011 3:03 PM by CNBC
    The US Treasury just released its latest "scorecard" on the state of the government's housing bailout. The numbers are still weak, compared to the overall picture.
  • 9:45 AM » Fannie Mae and Freddie Mac Serious Delinquency Rates decline in May
    Published Fri, Jul 01 2011 9:45 AM by Calculated Risk Blog
    Fannie Mae that the serious delinquency rate decreased to 4.14% in May, down from 4.19% in April. This is down from 5.15% in May of 2010. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. Freddie Mac that the Single-Family serious delinquency rate decreased to 3.53% in May from 3.57% in April. This is down from 4.06% in May 2010. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. These are loans that are "three monthly payments or more past due or in foreclosure". Click on graph for larger image in graph gallery. Some of the rapid increase in 2009 was probably because of foreclosure moratoriums, and also because loans in trial mods were considered delinquent until the modifications were made permanent. Now the serious delinquency rate is falling as Fannie and Freddie work through the backlog of loans and either modify the loan, foreclose, short sale, or the loan cures. The normal serious delinquency rate is under 1%, so this is still very high. At the current pace of improvement, it will take 3 or 4 years to get back to "normal". Earlier today ... • Kansas City Manufacturing Survey: • • CoreLogic:
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:44 AM » Geithner mulls departing Treasury post: sources
    Published Fri, Jul 01 2011 9:44 AM by Reuters
    WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner is considering stepping down later this year, but will not make a decision until contentious negotiations over the U.S. debt ceiling are completed, people familiar with his thinking said on Thursday.
  • 9:43 AM » Consumer Income Only Kept Afloat by Government Payments
    Published Fri, Jul 01 2011 9:43 AM by WSJ
    U.S. households are worried, worried, worried about their future paychecks, consumer surveys show. Shrinking incomes will be a problem for the economic outlook, creating a headwind that could become more dire if fiscal conservatives have their way and pull the rug out from under the unemployed. Steve Blitz , senior economist at ITG Investment Research , looked at the performance of personal income during this business cycle. Wage and salary disbursements peaked in March 2008 — three months after the recession started — and cratered until early 2009. Even by May 2011, paychecks are still shy of where they were at the 2008 peak, Blitz says. The paycheck gap is the result of job losses, loss of overtime and wage cuts put in place during the recession. So, what allowed consumer spending to surpass its 2008 peak more than a year ago? In large part, cash paid by the government, especially the money that kicks in when economic troubles hit. These automatic stabilizers — such as jobless benefits and family assistance — “mollify the impact from a recession,” says Blitz. Blitz added government transfer payments — excluding Social Security, Medicare and Medicaid — to wages and salaries. This combination of incomes returned to its March 2008 level in January 2010, right before consumer spending recovered. Since then, it has grown $332 billion, providing money to keep consumer spending rising, if only weakly, so far this year. “If not for transfer payments, the household sector and, in turn, consumption would have fared much worse,” says Blitz. “Something for the fiscal negotiators to keep in mind as the debt ceiling confabs go on and on and on.” Fiscal conservatives, however, don’t want to recognize the importance of government help when it comes to the unemployed. Some spending critics even question the efficacy of fiscal stimulus and whether government action did anything to alleviate the pain of the recession. When it comes to consumer incomes, the answer is yes. Without transfer...
  • 9:42 AM » Citi in Talks to Sell Consumer Finance Unit
    Published Fri, Jul 01 2011 9:42 AM by WSJ
    Citigroup has entered into exclusive talks with one bidding group for the long-delayed sale of its OneMain consumer financial-services business formerly known as CitiFinancial.
  • 9:41 AM » BofA Hopes Mortgage-Security Loss Estimate Is on the Mark
    Published Fri, Jul 01 2011 9:41 AM by WSJ
    Bank of America this week said it had finally fenced off its losses from the now-toxic, mortgage-bond deals. However, it is not the first time the bank has claimed to have the losses penned in.
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