Archive for November, 2009
Existing-Home Sales Record Another Big Gain, Inventories Continue to Shrink
Washington, November 23, 2009
Driven by the first-time buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, while inventories continue to decline, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1 percent to a seasonally adjusted annual rate1 of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.
Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”
Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through – there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.
Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington, D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said.
“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a Realtor® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.
Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply2 at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.
“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” Yun said. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.
The national median existing-home price3 for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.
“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Yun said.
He added that low home prices also are contributing to extremely favorable affordability conditions. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.”
Single-family home sales rose 9.7 percent to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4 percent above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago.
Existing condominium and co-op sales surged 13.2 percent to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8 percent above the 547,000-unit level a year ago. The median existing condo price4 was $172,900 in October, which is 10.4 percent below October 2008.
Regionally, existing-home sales in the Northeast rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.
Existing-home sales in the Midwest surged 14.4 percent in October to a pace of 1.43 million and are 28.8 percent above a year ago. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008.
In the South, existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.
Existing-home sales in the West increased 1.6 percent to an annual rate of 1.31 million in October and are 12.0 percent above a year ago. The median price in the West was $220,200, which is 14.7 percent below October 2008.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #
NOTE: NAR also reports monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, and is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors®.
1The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982.
3The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.
4Because there is a concentration of condos in high-cost metro areas, the national median condo price generally is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
Existing-home sales for November will be released December 22. The next Pending Home Sales Index is scheduled for December 1; release times are 10 a.m. EST.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.
With housing affordability hitting near-record highs, now is the time to buy.
A combination of low interest rates and reasonable housing prices ensured that nationwide housing affordability lingered near record high levels for the third consecutive quarter, according to the National Association of Home Builders (NAHB)/ Wells Fargo Housing Opportunity Index (HOI) released Thursday.
“At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its November 30 deadline and expanding it to a wider group of eligible homebuyers,” said Joe Robson, NAHB chairman and home builder from Tulsa, Oklahoma. “With interest rates now lower than last quarter, the tax credit will encourage even more homebuyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories, and stabilizing home prices.”
After reviewing all new and existing homes sold in the third quarter of 2009, the HOI showed that 70.1 percent were affordable to families earning the national median income of $64,000. While this showed a slight decrease from the 72.3 percent affordability rate during the second quarter of 2009, it was notably higher than the 56.1 percent during the same period last year.
Holding steady for 17 consecutive quarters, Indianapolis remained the most affordable major housing market. According to the HOI, almost 95 percent of homes in this area were considered affordable to households earning the area’s median income of $68,100.
While affordability in Indianapolis was impressive, five smaller housing markets earned even higher affordability scores. Kokomo, Indiana posted the highest score, with 96.7 percent of homes sold during the third quarter considered affordable. Springfield, Ohio; Bay City, Michigan; Mansfield, Ohio; and Elkhart-Goshen, Indiana rounded out the top five.
Some markets, though, saw extremely low affordability scores. According to the HOI, the nation’s least affordable major housing market during the third quarter of 2009 was New York-White Plains-Wayne, New York/New Jersey, resulting in the area’s sixth consecutive appearance at the bottom of the affordability list. Homes in this vicinity were only affordable to about 19 percent of median-income earning residents. The least affordable of the smaller metro housing markets during the third quarter was San Luis Obispo-Paso Robles, California.
By: Brittany Dunn
Published: November 21, 2009
As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.
J. Emilio Flores for The New York Times
Steven and Marisela Alva were grateful for new loan terms on their home in Pico Rivera, Calif.
Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.
But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.
While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.
For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the F.H.A. and then sold to an agency like Ginnie Mae. The trick is to persuade the homeowners to refinance those mortgages, by offering to reduce the amounts the homeowners owe.
The profit comes when the refinancings reach more than the $40 million that the fund paid for the block of loans.
The strategy has created an unusual alliance between Wall Street funds that specialize in troubled investments — the industry calls them “vulture” funds — and American homeowners.
But the transactions also add to the potential burden on government agencies, particularly the F.H.A., which has lately taken on an outsize role in the housing market and, some fear, may eventually need to be bailed out at taxpayer expense.
These new mortgage investors thrive in the shadows. Typically, the funds employ intermediaries to contact homeowners and arrange for mortgages to be refinanced.
Homeowners often have no idea who their Wall Street benefactors are. Federal housing officials, too, are in the dark.
Policymakers have encouraged investors and banks to put more consumers into government-backed loans. The total value of these transactions from hedge funds is small compared with the overall housing market.
Housing experts warn that the financial players involved — the investment funds, their intermediaries and certain F.H.A. approved lenders — have a financial incentive to put as many loans as possible into the government’s hands.
“From the borrower’s point of view, landing in a hedge fund or private equity fund that’s willing to write down principal is a gift,” said Howard Glaser, a financial industry consultant and former official at the Department of Housing and Urban Development.
He went on: “From the systemic point of view, there is something disturbing about investors that had substantial short-term profit in backing toxic loans now swooping down to make another profit on cleaning up that mess.”
Steven and Marisela Alva say they do not know who helped them with their mortgage. All they know is that they feel blessed.
Last December, the couple got a letter saying that a firm had purchased the mortgage on their home in Pico Rivera, Calif., from Chase Home Finance for less than its original value. “We want to share this discount with you,” the letter said.
“I couldn’t believe it,” said Mr. Alva, a 62-year-old janitor and father of three. “I kept thinking to myself, ‘Something is wrong, something is wrong. This sounds too good.’ ”
But it was true. The balance on the Alvas’ mortgage was ultimately reduced to $314,000 from $440,000.
The firm behind the reduction remains a mystery. The Alvas’ new loan, backed by the F.H.A., was made by Primary Residential Mortgage, a lender based in Utah. But the letter came from a company called MCM Capital Partners.
In the letter, MCM said the couple’s loan was owned by something called MCMCap Homeowners’ Advantage Trust III. But MCM’s co-founders said in an interview that MCM does not own any mortgages. They would not reveal the investor that owned the Alvas’ loan because they had agreed to keep that client’s identity confidential.
Michael Niccolini, an MCM founder, said, “We are changing people’s lives.”
In Washington, mortgage funds are lobbying for policies that favor their investments, particularly mortgages held in securitized bundles. They want more mortgage balances to be lowered, which might help mortgage bonds perform better. Big banks generally oppose such reductions, which lock in banks’ losses on the loans.
In April, about a dozen investment firms formed a group called the Mortgage Investors Coalition to press their case. One investor who is speaking out is Wilbur L. Ross, who runs a fund that buys mortgages and owns a large mortgage servicing company.
Mr. Ross said modifications that simply lower interest rates or lengthen the duration of a loan, as is typical in the government modification program, do not work well.
“They make a payment or two, but then one night the husband and wife will sit down at the table and say, ‘Do we really want to make 140 monthly payments into a rat hole?’ ” Mr. Ross said.
The Fortress Investment Group, a hedge fund in New York, is one of the firms at the forefront of picking through mortgages. Fortress created a $3 billion credit fund in 2008 partly to buy loans from banks like Citigroup, which were under pressure to purge loans to raise cash.
“They’re going ahead and they are refinancing them and getting their money out right away,” said Roger Smith, an analyst at Fox-Pitt Kelton. “What Fortress is doing is actually good for the borrower.” Congress, however, may not be happy that hedge funds are making money this way, Mr. Smith said.
Fortress, which declined to comment, typically buys batches of loans and works with other companies to evaluate which ones might qualify for F.H.A., Fannie Mae or Freddie Mac refinancing.
Sometimes Fortress works with Nationstar, a mortgage servicer and originator that it owns. Other times, Fortress uses an outside partner like Meridias Capital, a lender in Henderson, Nev., that once originated Alt-A loans, which are just above subprime.
After the mortgage market imploded, Meridias began dissecting portfolios of troubled loans for investment funds.
Because firms like Fortress purchase blocks of mortgages at distressed prices, they are able to reduce the principal amount of the loans. Nick Florez, president of Meridias, calls such transactions an “incentive refinance.” He said he would not agree to take a loan unless he could help the homeowner. He said he was able to reduce the loan amount by 11 percent on average.
“I’m giving money away,” said Mr. Florez, who is a 35-year-old Las Vegas native. “It’s really a feel-good business.”
It is too early to know how the new loans will work.
David H. Stevens, the new commissioner of the F.H.A., said he was monitoring F.H.A. lenders but did not have thorough information about which ones work with distressed investors. So far he has not seen a problem from loans coming from hedge funds.
“They’re helping to protect people in their homes and they’re refinancing people from a distressed situation,” he said.
But he acknowledged that funds have an incentive to aggressively push homeowners into federally guaranteed loans, since the investors get their money back as soon as they complete the refinancing.
Seth Wheeler, a senior adviser in the Treasury Department who specializes in housing policy, declined to say whether the investment firms that are lowering principal for homeowners are altruistic or not.
“Investors are doing it where it both benefits the investor and the borrower,” he said.
Part of the risk may be determined by how the funds compensate the F.H.A. lenders and whether the lenders are beholden to the funds for business.
David Zitting, the chief executive of Primary Residential Mortgage, the company that refinanced the Alva family’s loan, said his company did not receive fees from the hedge funds.
“They have all sorts of motivations that, frankly, we don’t understand,” he said. “We don’t do anything special for them because that’s not fair lending.”
The Alvas had to dip into their savings to qualify for their new federally insured loan, since the biggest F.H.A. mortgage they could get was for $285,000, they said. They paid off $21,000 in credit-card and car loans, and put up an additional $29,000 for their new mortgage, depleting their already meager savings.
Brian Chappelle, a mortgage consultant, said loans to people like the Alvas, with modest incomes and scant savings, could turn out to be risky.
“It does raise risk concerns for F.H.A.,” he said.
The Alvas are grateful for the help. Their home is, Marisela said, a dream come true. “I’m very happy,” she said. “We never thought this was possible.”
Former Stripper Gets 12 Years in DC-Area Rescue Scam
November 17, 2009
National Mortgage News
A former Washington area stripper who ran a foreclosure rescue scam in and around the nation’s capitol has been sentenced to 12 years in prison after being convicted of stealing millions from struggling homeowners. Joy Jenise Jackson, former president of Lanham, Md.-based Metropolitan Money Store, also was ordered to pay $16.9 million in restitution. MMS operated as a loan brokerage firm, using table funding from such subprime lenders and New Century Financial Corp. and Argent Mortgage, both of which are no longer in business. According to Rod J. Rosenstein, U.S. attorney for the District of Maryland, Jackson co-founded MMS, which offered foreclosure consultation and credit services to financially distressed homeowners. From September 2004 to June 2007, Jackson and others fraudulently promised to help homeowners avoid foreclosure and repair their damaged credit. But instead they took title to their victims’ homes, and engaged in an equity skimming scheme that resulted in foreclosure for many. To date, ten defendants have pleaded guilty in the MMS case.
First-Time Buyers Generate 50% of 09 Home Sales
November 19, 2009
Given the success of the first-time homebuyer tax credit and its extension into next year, the National Association of Realtors is forecasting that existing home sales will jump 13.6% in 2010 after a 2% increase in 2009. First-time buyers will account for a record 47% of homes sales in 2009, according to NAR chief economist Lawrence Yun. “In fact the credit is working better than first projected — it now looks like we’ll have 2.3 million to 2.4 million first-time buyers this year,” he said. The National Association of Home Builders estimates the tax credit has generated 200,000 extra sales. Mr. Yun expects sales of previous owned homes will hit 5.7 million in 2010, up from 5.0 million in the previous year. Congress recently extended the $8,000 first-time homebuyer tax credit to April 30 and it gives buyers with a binding sales contract an extra 60 days to close. The lawmakers also created a new $6,500 tax credit for repeat or move-up buyers. Bernard Markstein, NAHB director of economic forecasting, expects the extended/expanded tax credit, which goes into effect Dec. 1, will generate 180,000 extra sales, including 40,000 new home sales.
CALIFORNIA MAN ARRESTED FOR REAL ESTATE PONZI SCHEME
William Arthur Sassman II, 41, Sacramento, California, who “looted” the life savings of dozens of investors to bankroll his lavish lifestyle and prop up a multi-million dollar real estate and business Ponzi scheme, has been arrested.
Sassman was arrested at his residence on a total of 100 counts: 43 counts of grand theft, 40 counts of misrepresentation or omission in the sale of a security, 16 counts of first-degree burglary and 1 count of use of a device, scheme, or artifice to defraud in the sale of a security. If convicted, Sassman faces up to 52 years in prison. Sassman is being held in the Sacramento County Jail and bail has been set at $3.2 million.
Over the past decade, Sassman used four companies – InTex, LLC; Formulating Insurance Agency (FIA); Formulating Investments (FI); and Systematic Management Services (SMS)-to solicit investments ranging from approximately $10,000 to $500,000 from more than 50 individuals across Northern California and beyond.
Sassman, a licensed insurance agent, convinced investors, many of whom were senior citizens, to shift their savings from IRAs, annuities, life insurance accounts, 401(k)s and certificates of deposit to “high return” investments with his companies. These investments included foreclosed properties and real estate in Georgia, Mare Island and Vallejo, California; a strip mall in Folsom, California; commercial property in El Dorado Hills, California; the production of a laptop computer stand called the “Notefloat” and annuity, stock and foreign currency investments.
However, Sassman made few, if any, of these investments and rarely paid the double to triple digit returns he promised. Instead, Sassman spent investors’ millions financing his lavish lifestyle, including $1.1 million on his American Express card, $300,000 on automobiles, $75,000 at Polo Ralph Lauren and three homes.
The limited funds Sassman invested were channeled into other illegal operations including a “stock trading program” run by a group indicted in federal court earlier this year for running a Ponzi scheme and a European investment scam that promised a 200 percent profit in 45 days or 800 percent annually.
As Sassman burned through investor funds, he paid returns to early investors by using funds from new ones. Investors are still owed close to $4.4 million, and additional losses could reach $3 million.
In September 2009, Sassman and his companies filed for bankruptcy.
Some of Sassman’s Victims
In January 2007, a Sacramento couple invested more than $80,000 with Sassman’s company SMS to be invested into real estate and to earn interest. Sassman informed the couple that their money had been used to purchase property, which was undergoing renovation. The couple was unaware that their entire investment had been used to pay other investors.
In October 2004, a Sacramento resident invested more than $250,000 in FIA. Sassman promised her a seven percent annual return. Her money was combined with money from other investors for a total of more than $700,000. Of that money, approximately $400,000 was spent on Sassman’s personal expenses, more than $50,000 went to Sassman’s wife, and more than $34,000 was paid in returns to other investors. The victim lost $170,000 of her investment.
In late 2005, Sassman promised a Rancho Cordova woman that if she closed her $78,000 life insurance policy and invested the funds with him, she would receive an 8 percent return on her investment. In early 2009, the victim was diagnosed with cancer and her son took over her finances. Her son contacted Sassman and requested $7,000 from his mother’s investment to help pay for her medical expenses. Sassman promised to send a check, which never arrived. Soon after, the victim’s son contacted Sassman and asked him to return the entire balance of the $78,000 investment. Sassman sent a check for $14,000 that bounced. The victim’s investment was never returned.
Sacramento-Attorney General Edmund G. Brown Jr. announced the arrest.
“William Arthur Sassman solicited millions of dollars from California investors with promises of high returns on business and real estate investments,” Brown said. “In reality, Sassman looted their savings to prop up a Ponzi scheme, so he could buy homes and Ferraris.”
Nov. 12 (Bloomberg) — The Federal Reserve will prohibit banks from charging overdraft fees on automated teller machines or debit cards, unless a customer has agreed to pay extra charges for exceeding account balances.
Financial companies will have to explain overdraft programs and fees, as well as choices available to consumers, the Fed said today in a statement announcing a rule that takes effect next year. Lenders collected almost $37 billion in overdraft fees last year, according to research firm Moebs Services Inc.
“The final overdraft rules represent an important step forward in consumer protection,” Federal Reserve Chairman Ben S. Bernanke said in the statement. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”
House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd have separately introduced legislation that would restrict banks’ ability to charge overdraft fees. Both bills would permit one overdraft fee a month or six in a year.
Giving consumers a choice is important, “but we need to do far more to protect customers from abusive bank products,” Dodd said today in a statement. “We still need to stop the excessive fees, repeated charges, lax notifications and processing manipulation” in overdraft-protection programs.
Dodd introduced legislation Nov. 10 to strip the Fed of authority for regulating banks and give Congress a greater voice in naming the central bank officials who set interest rates. Dodd’s plan would create a Consumer Financial Protection Agency, which would assume the Fed’s role on consumer issues.
‘Consistency, Clarity’
The Fed’s overdraft rule will “bring consistency and clarity” for banks, said Edward Yingling, president of the Washington-based American Bankers Association. “We will work hard to balance enhanced consumer protections while retaining the benefits of processing important payment such as utilities, rent and mortgage payments.”
The final Fed rules will require banks to provide the same terms, including prices, for consumers who decline overdraft protection. The rules take effect July 1. Consumers who decline to join a program may be denied access to cash at an ATM or have their debit-card transactions rejected, the Fed said.
Fed consumer research shows “most consumers prefer not to be enrolled in overdraft services for ATM and one-time debit- card transactions unless they affirmatively consent,” the board said in its statement.
Checks Excluded
The rules won’t apply to printed checks or regularly recurring debits from checking accounts, a Federal Reserve official said in a background briefing conference call today. Those transactions will be handled differently because people want those payments, which might include rent or utilities, to go through without delay, the Fed official said.
For online transactions, those using a debit-card number would be covered under the rules, the Fed officials said. Payments using a checking account number wouldn’t be covered, the officials said.
The rules may fail to produce the desired result of avoiding costs for customers, because consumer protection steps often have unintended consequences, said Bob Meara, senior analyst with Celent, a Boston-based financial research and consulting firm.
“The majority of account holders who don’t overdraft their accounts will be paying monthly service fees rather than the free checking enjoyed for the last decade,” Meara said.
Banks, credit unions and savings-and-loans must comply with the rules. They will have to design disclosure statements to make the programs easier to understand, the officials said. Fed research showed that many consumers weren’t aware their accounts automatically enrolled them in overdraft programs, subjecting them to fees, they said.
Fees related to overdrawn U.S. accounts may rise to $38.5 billion this year from $36.7 billion in 2008, according to Moebs Services in Lake Bluff, Illinois.
To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net.
FHA Suspended Eight Over Past Few Months
It has come to the attention of the real estate professionals who take advantage of the benefits of FHA insured financing that due diligence is required when selecting a lender. Many borrowers request the assistance of a professional mortgage broker rather than a bank employee who does double duty taking mortgage loan applications. One reason is the relationships that a broker has built up over the years to give the borrower the best possible service by selecting an honest reputable lender diligence based on his or her experience. This will eliminate the uncertainty that dealings with a lender that has been suspended from submitting FHA loans because of possible misconduct or a breech of regulations. The results could be catastrophic to the real estate agent and the borrowers, such as alender withdrawing the loan which would cause already funded purchase money funds to be recalled. Here are some examples which show the solid reasons that realtors have to submit their mortgage applications to a seasoned professional mortgage broker.
Categories
, according to Assistant Housing Secretary David Stevens. Mr. Stevens told reporters at a press conference that the eight firms — which were not identified — “were originating a poor quality book of business.” He noted that mortgage banking firms that were approved to do business with the agency between 2005 to 2009 account for just 5% of its overall business. “A vast majority” of FHA’s $685 billion book of business consists of what Mr. Stevens called “long tendered institutions.” One mortgage banking source told National Mortgage News that the government is now looking into a large number of early payment defaults at a New Jersey-based FHA lender. No further details were available. On Thursday HUD released an audit showing that at the end of September the FHA’s Mutual Mortgage Insurance fund had a razor thin capital cushion of just $3.6 billion, or 0.53% of its entire coverage universe. HUD is considering raising premiums to bolster the fund. HUD officials say that despite the thin capital base of the MMI, the fund is constantly bringing in new cash through premiums and that almost 30% of borrowers using the program in fiscal 2009 had a credit score of 720 or better, an all-time high. Four years ago just 12.6% of FHA borrowers had a credit score that high. what some unprofessional bank employees have caused lenders to deal with.
Over the past two months the Federal Housing Administration has suspended or “eliminated” at least eight mortgage banking firms from using its insurance program, according to Assistant Housing Secretary David Stevens. Mr. Stevens told reporters at a press conference that the eight firms — which were not identified — “were originating a poor quality book of business.” He noted that mortgage banking firms that were approved to do business with the agency between 2005 to 2009 account for just 5% of its overall business. “A vast majority” of FHA’s $685 billion book of business consists of what Mr. Stevens called “long tendered institutions.” One mortgage banking source told National Mortgage News that the government is now looking into a large number of early payment defaults at a New Jersey-based FHA lender. No further details were available. On Thursday HUD released an audit showing that at the end of September the FHA’s Mutual Mortgage Insurance fund had a razor thin capital cushion of just $3.6 billion, or 0.53% of its entire coverage universe. HUD is considering raising premiums to bolster the fund. HUD officials say that despite the thin capital base of the MMI, the fund is constantly bringing in new cash through premiums and that almost 30% of borrowers using the program in fiscal 2009 had a credit score of 720 or better, an all-time high. Four years ago just 12.6% of FHA borrowers had a credit score that high.
Over the past two months the Federal Housing Administration has suspended or “eliminated” at least eight mortgage banking firms from using its insurance program, according to Assistant Housing Secretary David Stevens. Mr. Stevens told reporters at a press conference that the eight firms — which were not identified — “were originating a poor quality book of business.” He noted that mortgage banking firms that were approved to do business with the agency between 2005 to 2009 account for just 5% of its overall business. “A vast majority” of FHA’s $685 billion book of business consists of what Mr. Stevens called “long tendered institutions.” One mortgage banking source told National Mortgage News that the government is now looking into a large number of early payment defaults at a New Jersey-based FHA lender. No further details were available. On Thursday HUD released an audit showing that at the end of September the FHA’s Mutual Mortgage Insurance fund had a razor thin capital cushion of just $3.6 billion, or 0.53% of its entire coverage universe. HUD is considering raising premiums to bolster the fund. HUD officials say that despite the thin capital base of the MMI, the fund is constantly bringing in new cash through premiums and that almost 30% of borrowers using the program in fiscal 2009 had a credit score of 720 or better, an all-time high. Four years ago just 12.6% of FHA borrowers had a credit score that high.
FHA Suspended Eight Over Past Few Months
Over the past two months the Federal Housing Administration has suspended or “eliminated” at least eight mortgage banking firms from using its insurance program, according to Assistant Housing Secretary David Stevens. Mr. Stevens told reporters at a press conference that the eight firms — which were not identified — “were originating a poor quality book of business.” He noted that mortgage banking firms that were approved to do business with the agency between 2005 to 2009 account for just 5% of its overall business. “A vast majority” of FHA’s $685 billion book of business consists of what Mr. Stevens called “long tendered institutions.” One mortgage banking source told National Mortgage News that the government is now looking into a large number of early payment defaults at a New Jersey-based FHA lender. No further details were available. On Thursday HUD released an audit showing that at the end of September the FHA’s Mutual Mortgage Insurance fund had a razor thin capital cushion of just $3.6 billion, or 0.53% of its entire coverage universe. HUD is considering raising premiums to bolster the fund. HUD officials say that despite the thin capital base of the MMI, the fund is constantly bringing in new cash through premiums and that almost 30% of borrowers using the program in fiscal 2009 had a credit score of 720 or better, an all-time high. Four years ago just 12.6% of FHA borrowers had a credit score that high.
Over the past two months the Federal Housing Administration has suspended or “eliminated” at least eight mortgage banking firms from using its insurance program, according to Assistant Housing Secretary David Stevens. Mr. Stevens told reporters at a press conference that the eight firms — which were not identified — “were originating a poor quality book of business.” He noted that mortgage banking firms that were approved to do business with the agency between 2005 to 2009 account for just 5% of its overall business. “A vast majority” of FHA’s $685 billion book of business consists of what Mr. Stevens called “long tendered institutions.” One mortgage banking source told National Mortgage News that the government is now looking into a large number of early payment defaults at a New Jersey-based FHA lender. No further details were available. On Thursday HUD released an audit showing that at the end of September the FHA’s Mutual Mortgage Insurance fund had a razor thin capital cushion of just $3.6 billion, or 0.53% of its entire coverage universe. HUD is considering raising premiums to bolster the fund. HUD officials say that despite the thin capital base of the MMI, the fund is constantly bringing in new cash through premiums and that almost 30% of borrowers using the program in fiscal 2009 had a credit score of 720 or better, an all-time high. Four years ago just 12.6% of FHA borrowers had a credit score that high.
50 ways to leave your Banker
We aren’t doing any fraud, Todd
Make a new plan, Fran
Prove your income in, Lynn
Just get yourself free
Get on the fax, Jacks
with a low interest rate Nate
pick up a great REO Joe
And get yourself free
Deal with an LO you can trust GUS
You don’t need to discuss much
Pick up the new key Lee
And get yourself free.
(apologies to Paul Simon)
Flagstar Posts Huge Loss, Offers Hints at Its Future
November 3, 2009
Flagstar Bancorp, the largest thrift player in mortgages, posted a $299 million loss in the third quarter, but vowed to continue investing in what it called its “position as one of the leading residential mortgage originators in the country.” Its new CEO Joseph Campanelli added, “We anticipate a significant level of industry consolidation and want to be active in that process. But in the near term, we will have to bring expenses into better alignment and make prudent operating decisions as we seek to broaden our earnings streams beyond our traditional mortgage activity.” Its third quarter loss was almost triple the loss it suffered in the same period a year ago. The company stressed that its thrift unit remained “well-capitalized” for regulatory purposes, with capital ratios of 6.39% for Tier 1 capital. According to its earnings statement, the Michigan-based Flagstar funded $6.6 billion in residential loans during the quarter, a slight drop from the same period last year, but a 29% decline from the second quarter. Despite the loss, there was some good news in the numbers: its gain-on-sale of loans grew to 137 basis points compared to just 33 bps a year ago. At the end of September Flagstar serviced $53.2 billion in loans, which paid a weighted average service fee of 32.6 basis points. Non-performing residential real estate loans grew to $606 million at the end of the third quarter, up from $588 million at the end of the second quarter. A year ago it held $305 million of delinquent loans. Its non-performing commercial real estate loans climbed to $420 million. According to the Quarterly Data Report, Flagstar is the nation’s 11th largest residential funder and ranks 18th among servicers.
Graphic