Obsolete Certainty

Today RealtyTrac® released its February U.S. Foreclosure Market Report. The RealtyTrac report shows that foreclosure filings, which include default notices, scheduled auctions, and bank repossessions declined 2 percent from January. A total of 308,524 properties in the United States received one of the listed notices during the month. This equates to 1 house in every 418 units. Compare that to January's ratio of 1 in every 409. That works out to a 10% month over month improvement. However, when comparing data from one year ago (Feb 2009), the ratio is still 6% worse. James J. Saccacio, chief executive officer of RealtyTrac says, "The 6 percent year-over-year increase we saw in February was the smallest annual increase we've seen since January 2006 , when we began calculating…(read more)

American consumers are now defaulting on their mortgages in even greater numbers than they are walking away from credit card debt. According to FICO's® Score Trends Service, this is a phenomenon that is historically unique. FICO said the mortgage default risk for consumers with high FICO scores now exceeds their credit card default risk, even though most credit cards are unsecured credit and mortgages are secured by real estate. There is a parallel rise in mortgage delinquencies for these high scoring consumers. The company said that their analysis of trends in FICO scoring shows that recent repayment behavior has shifted significantly from what has historically been expected. In 2005 bankcard accounts were more than 3 times more likely to become seriously delinquent, that is 90+ days…(read more)

Commercial and multifamily mortgages continue to have the lowest rates of charge-offs of any loan types at banks and thrifts and perform better than the overall loan portfolios at those institutions according to the Mortgage Bankers Association (MBA). In response to what it referred to as a great deal of discussion and conjecture about those loans in recent months, MBA updated an earlier " DataNote " analysis of commercial and multifamily mortgage data from the 4th quarter of 2008 with data from the same period in 2009. The report states that 56 percent of the assets held by banks and thrifts at the end of 2009 consisted of loans and leases, a category that includes 1-4 family mortgages, home equity loans, credit cards and other consumer loans, commercial mortgages, multifamily mortgages…(read more)

The Mortgage Bankers Association (MBA), American Bankers Association (ABA), and the American Financial Services Association (AFSA) joined with 11 state and local mortgage lending groups on Friday to send a letter to the U.S. Department of Housing and Urban Development expressing concerns about the way in which HUD is proposing to implement the 2008 SAFE Act. The SAFE Act (Secure and Fair Enforcement for Mortgage Licensing), was passed in July 2008 as part of the Housing and Economic Recovery Act. It directs states to adopt licensing and registration requirements for loan originators that meet minimum standards established by the act in lieu of HUD establishing nationwide standards. It also encourages the Conference of State Bank Supervisors (CSBS) and the American Association of Residential…(read more)

Via email, I recieved the following guidance from the FHA this morning: Subject: Guidance for Currently FHA-Approved Loan Correspondents Regarding Renewal of FHA Lender Approval for 2010 As proposed in a November 30, 2009 via 74 FR 62521 , HUD is seeking to eliminate FHA approval for loan correspondents. Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010. For loan correspondents with a fiscal year end of December 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial…(read more)

The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the week ending March 3, 2010, the Federal Reserve purchased a net total of $10.00 billion agency MBS. This represents a $1 billion decline from the previous reporting period and breaks a three week streak of $11 billion net total purchases. The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. (NY Fed MBS FAQs) Since the inception…(read more)

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 26, 2010. The survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt. From the release : The Market Composite Index, a measure…(read more)

Relative to how busy this week is, Tuesday’s economic calendar is pretty slow. Aside from the weekly retail sales surveys, no major economic data will be released, but the afternoon features two speeches from the Federal Reserve. 90 minutes before the opening bell, equity markets are clearly looking for a positive open. The Dow looks to open 53 points higher at 10,438 and futures on the S&P 500 are up 6.30 points to 1,120.90. NYMEX crude oil futures contracts are up 63 cents to $79.33 and Gold is up $5.20 to $1,123.50. Key Events Today: 1:00 ? Eric Rosengren , president of the Boston Fed, speaks at a conference on post-crisis capital markets in Philadelphia. 2:00 ? Naranyana Kocherlakota (non-voter) , president of the Minneapolis Fed, speaks to the Allied Executives Business &…(read more)

Homeowners who hope to refinance existing mortgages that are "underwater" just got a reprieve that will allow them another year to do so. The Federal Home Financing Agency announced Monday that its Home Affordable Refinance Program (HARP), which was originally set to expire on June 30, 2010, will be extended to June 30, 2011. HARP, part of the Making Home Affordable Program, is designed to expand access to refinancing for otherwise qualified borrowers who cannot move into more affordable mortgages because of a lack of equity in their homes. Unlike other homeownership assistance programs, HARP guidelines are designed for borrowers who are current on their mortgages. The program was originally designed to help homeowners with a loan-to-value (LTV) ratio up to 105 percent including those…(read more)

If I was selling loans at the moment and I wanted to reduce secondary marketing ' leakage ', I would take special note of the changes, updates, and guidance's offered by Fannie Mae's QC department in Lender Letter 2010-03 below. THE LOAN QUALITY INITIATIVE! (aka loan repurchase world!) The only thing I might add before you read on is FNs loan purchasing systems/work flow are tedious and usually time consuming. Historically, many issues related to compliance with Fannie Mae selling policies are not detected until after loans are delinquent or through the foreclosure process. Loan repurchase requests to lenders have increased in the past three years, highlighting the need for an improved approach for working with lenders to deliver loans that meet Fannie Mae’s underwriting…(read more)