Mortgage-servicer faces allegations of foreclosure fraud

CORDOVA, TN (WMC) -

A Shelby County Circuit Court lawsuit and government records revealed a pattern of fraud allegations against mortgage-servicing company Nationstar Mortgage.

The WMC Action News 5 Investigators launched an investigation of the Dallas-based mortgage-servicer after it foreclosed on the Cordova, Tennessee, home of Linda Howard. Howard and her husband had owned the home since 1998. Her attorney Kevin Snider produced records that proved Howard never missed a payment since Nationstar Mortgage started servicing her mortgage in 2011.

Also according to the records, Nationstar Mortgage suddenly started refusing her monthly payments in February of this year. From February to May, the company sent her payments back with statements posting thousands of dollars in unexplained fees like "property inspections" and "disbursement insurance."

"I wrote them. I called them. And I got no response," Howard said. 

Snider said Nationstar Mortgage kept returning Howard's payments and kept ignoring her requests for explanation of the fees until it foreclosed on her house in May, then sold it at auction. "Nationstar improperly foreclosed on the property," Snider said. 

Snider filed a lawsuit on Howard's behalf in Shelby County Circuit Court. The suit alleges Nationstar Mortgage committed negligence, fraud, breach of contract, breach of the implied consent of good faith and fair dealing, violations of the Tennessee Consumer Protection Act and unjust enrichment based on "...improper, inaccurate and fraudulent representations" of "...improper or excessive late fees" designed to force the Howards into foreclosure "...so that (Nationstar Mortgage) could acquire the property with its large equity at a bargain basement price."

"I don't understand it. I never missed a payment," Howard said. "I don't have a house anymore."

"The Howards made their payment every month. How are these payments being applied? What are the extra charges for?" asked Snider. "They have never been given an explanation. This is a way to garner, if you will, extra fees, extra charges, extra expenses to essentially force them into foreclosure so that Nationstar Mortgage can sell their home."

According to the federal Consumer Financial Protection Bureau, Nationstar Mortgage has registered 14,013 mortgage servicing-related complaints, the fifth most behind Bank of America, Wells Fargo, Ocwen and JPMorgan Chase. Spokesperson Sam Gilford said the bureau neither comments on nor confirms federal investigations of mortgage-servicing companies.

Tennessee Department of Commerce & Insurance spokesperson Kevin Walters said the agency has logged 24 mortgage-servicing complaints against Nationstar Mortgage since 2014. Narratives from the complaints include the following allegations:

"...consumer claims (Nationstar Mortgage) will not give an explanation of refused payment, nor do they show the money they are holding in suspension..."

"...consumer claims (Nationstar Mortgage) used deceptive tactics to steer consumer into foreclosure..."

"...consumer claims (Nationstar Mortgage) never released the lien when consumer purchased the home four years ago and said it would respond within 6 days (and did not respond)"

Kevin Solodar of Dallas, Texas, unsuccessfully filed a petition on Change.org in an attempt to encourage the Federal Trade Commission to "investigate Nationstar Mortgage for abusive servicing practices." He produced financial documents that indicated Nationstar Mortgage may have misapplied his mortgage escrow refund to his mortgage interest during a bankruptcy. "They are a foreclosure mill," Solodar said. "They buy risky mortgages --  people who are unemployed, people who are in bankruptcy -- and do what they can to get the house and sell it."

Kelly Ann Doherty, senior vice president of corporate communications for Nationstar Mortgage, issued this statement:

"We work hard to impress our customers through caring service. We are not perfect, but we have made tremendous progress on our journey to deliver radical service for our nearly 2.5 million customers. For example, customer complaints are down over 50% over the last two years, our current Better Business Bureau rating is an A+ and we have earned Fannie Mae's highest servicing rating for the second year in a row. We also have a legacy of assisting homeowners in the midst of the financial crisis. Since 2010, we have helped more than 600,000 customers stay in their homes through workout solutions. While it is our policy not to comment on pending litigation, I can share that integrity is core to our business and essential to every service we perform. When we collect a payment on behalf of the owner of the loan, our team follows a comprehensive compliance and risk management system, which includes adhering to state and federal regulations."

In 2014, Nationstar Mortgage settled a New York lawsuit, alleging the company illegally sold mortgage loans without notifying investors.The settlement's terms were kept secret.

Howard and her husband must vacate their home by September 30. She said she realizes there's no way to get her home of 18 years back, but she wants Nationstar Mortgage held accountable. "I'm not going to sit back and watch them do this because there's other people out there who are probably going through the same thing," she said.

Complaints concerning Nationstar Mortgage can be forwarded to Andy Wise at awise@wmctv.com. They should also be filed with your state consumer affairs office:

* Tennessee Department of Commerce & Insurance

* Mississippi Attorney General's Consumer Protection Division

* Arkansas Attorney General's Consumer Protection Division

Copyright 2016 WMC Action News 5. All rights reserved.

Mortgage Market Updates

You might remember the subprime mortgage crisis that began around 2007 and might be wondering to yourself if that could ever happen again. I have been reading and researching lately about mortgage default rates and trends which leaves me wondering if the United States could ever have a mortgage crisis like the one that occurred in the early/mid 2000s. 

It's no secret that foreclosures are still occurring throughout the United States. Bankrate.com publishes these rates periodically. According to Bankrate.com, “Foreclosure Filings increased 5.3 percent nationally from April to May 2017.” The national average for May was 1 in every 1,636 housing units is in foreclosure. The Top 10 states are as follows:

Rank State Total housing units Ratio of homes in foreclosure*
(1 in every …)
1 New Jersey 3,577,942 515
2 Delaware 414,416 753
3 Maryland 2,410,256 1,006
4 Illinois 5,303,675 1,057
5 Oklahoma 1,689,427 1,081
6 Nevada 1,192,083 1,108
7 Florida 9,094,999 1,140
8 New Mexico 909,565 1,168
9 Ohio 5,140,902 1,176
10 South Carolina 2,174,319 1,186

In a recent article in USA Today, ‘A Bad Idea’: More New Mortgages are Risky Ones’ indicated that trends are toward home loans guaranteed by the Federal Housing Administration that typically require down payments of just 3-5%. These FHA-backed loans are increasingly being offered by non-bank lenders with more lenient credit standards than most major banks. In addition, the article goes on to say that there are early signs of trouble in the mortgage market which add to concerns generated by recent “increases in delinquent subprime auto loans, personal loans and credit card debt.”

FHA loans comprised 22% of all mortgages for single-family purchases in 2016. The nations biggest banks have largely pulled out of the FHA market leaving non-banks like Quicken Loans and Freedom Mortgage to fill the void. According to the article, the worry is that if home prices peak and then dip, homeowners who put down just 3-5% will owe more on their mortgages than their homes are worth, increasing the incentive to default. The article presents other insights including one the publisher of Inside Mortgage Finance who basically says the fears of another housing crisis are unfounded, ‘noting Federal Reserve officials have complained that FDA loan standards have been too rigorous.’

In another article posted on CNN.com entitled, “Are we Heading Toward Another Subprime Mortgage Crisis,” Mr. William Poole (former president and CEO of the Federal Reserve Bank of St Louis) provided commentary and opinions on the current mortgage market.

“According to Freddie’s 2016 annual report, Expanding access to affordable mortgage credit will continue to be a top priority in 2017. Fannie/Freddie have redefined ‘subprime’ to a credit rating of below 620; previously these firms and banking regulators had used 660 as the dividing line that define a subprime borrower. Now by using the lower number, they may be buying even weaker mortgages than before the financial crises.”

Mr. Poole is concerned that we are headed to another housing crisis.

While the increase in defaults, delinquencies and foreclosures may alarm some, as note investors, this presents us with an opportunity to help. As we invest in non-performing notes, we can help home owners stay in their homes and work with the borrower who wants to make payments, but may not have been able to work with the bank or the bank may not be willing to work with the borrower. By helping the borrowers stay in their home and getting them to re-perform on their note, we are helping our communities stay healthy and free of blighted properties.

US economy doing poorly

Monday’s weak US retail sales showed that the world’s biggest
economy is slowing very quickly, leading one economist to claim
America has gone from “first half hero to second quarter
zero.”  The 0.5% fall for June was far worse than expected and
the third monthly drop, the longest run of falling sales since
2008 when the Lehman crisis led America into recession.  “Given
how rapid the slowdown in job growth has been, it is hard to
blame consumers for their increased caution,” said Capital
Economics chief US economist Paul Ashworth.  Arguing that the
data showed just how quickly the US recovery has gone “from
first-quarter hero to second-quarter zero.” Ashworth believes
the slowdown echoes what we saw in the second quarter of 2010.
That slowdown ultimately led the Federal Reserve to launch a
second round of quantitative easing later that year, but Ashworth
believes Federal Reserve Chairman Ben Bernanke will need more
evidence before pulling the trigger on another round of easing.
“The bar to QE3 is higher than for QE2, if only because there
is considerable skepticism that balance sheet expansion will
accomplish much,” said Ashworth.

Really?? We have NO inventory !!

Home prices are finally turning around

Single-family home prices picked up for a third month in a
row in April, suggesting the recovery in the housing market
is gaining traction, a closely watched survey showed on
Tuesday.  The S&P/Case Shiller composite index of 20
metropolitan areas gained 0.7 percent on a seasonally
adjusted basis, topping economists' expectations of 0.4
percent. On a non-seasonally adjusted basis, prices fared
even better, rising 1.3 percent. Just three out of the 20
cities in the index saw declines in April on a seasonally
adjusted basis. "It has been a long time since we enjoyed
such broadbased gains," David Blitzer, chairman of the index
committee at Standard & Poor's, said in a statement. "While
one month does not make a trend, particularly during
seasonally strong buying months, the combination of rising
positive monthly index levels and improving annual returns
is a good sign." Compared to a year ago, prices were down
1.9 percent, beating expectations for a decline of 2.5
percent, and an improvement from the 2.6 percent annual
decline seen in March.

Inventory shortages stabilize home prices

The average home price for non-distressed properties
increased 1.7% from April to May, suggesting that a decline
in overall inventory is now pushing up prices, according to
the latest Campbell/Inside Mortgage Finance HousingPulse
Tracking Survey. The average price for a short-sale still
slipped 0.7%, while the price on damaged REO properties
increased to 1.8% and 1.5% for move-in ready REOs. In its
latest HousingPulse Tracking Survey, Campbell Surveys cited
declines in home inventory levels as one of the principal
reasons for home price stabilization, especially in areas
that have experienced large price declines in the past six
years. Multiple factors are causing the shortages—namely
homeowners keeping their houses off the market while prices
are still low. In addition, those who are underwater are
staying in place and cannot move until more of the debt is
paid down. The survey also says appraisals are keeping
prices down. The survey cites at least one real estate agent
in Florida as saying appraisals are keeping prices from
going up because appraisals that come in under the contract
price are stopping "natural valid appreciation."

Recession or not?

A summer of modest economic growth is helping dispel lingering fears that another recession might be near. Whether the strength can be sustained is less certain. The economy grew at an annual rate of 2.5% in the July-September quarter, the Commerce Department said Thursday. But the growth was fueled by Americans who spent more while earning less and by businesses that invested in machines and computers, not workers. The expansion, the best quarterly growth in a year, came as a relief after anemic growth in the first half of the year, weeks of wild stock market shifts and the weakest consumer confidence since the height of the Great Recession. The economy would have to grow at nearly double the third-quarter pace to make a dent in the unemployment rate, which has stayed near 9% since the recession officially ended more than two years ago. For the more than 14 million Americans who are out of work and want a job, that's discouraging news. And for President Barack Obama and incumbent members of Congress, it means they'll be facing voters with unemployment near 9%. "It is still a very weak economy out there," said David Wyss, former chief economist at Standard & Poor's. For now, the report on US gross domestic product, or GDP, sketched a more optimistic picture for an economy that only two months ago seemed at risk of another recession.

Some economists doubt the economy can maintain its modest third-quarter pace. US lawmakers are debating deep cuts in federal spending next year that would drag on growth. And state and local governments have been slashing budgets for more than a year. Obama's $447 billion jobs plan was blocked by Republicans, meaning that a Social Security tax cut that put an extra $1,000 to $2,000 this year in most American's pockets could expire in January. So could extended unemployment benefits. They have been a key source of income for many people out of work for more than six months. Nor is the economy likely to get a lift from the depressed housing market. Typically, home construction drives growth during an economic recovery. But builders have been contributing much less to the economy this time. Wyss said that the collapse of housing had probably depressed annual growth by as much as 1.5 percentage points in the past two years. Paul Ashworth, chief US economist for Capital Economics, predicts that growth will cool in the fourth quarter and next year. "While our baseline forecast does not include an outright contraction, we expect GDP growth to average a very lackluster 1.5% next year," Ashworth said in a note to clients.

California pulls out of foreclosure talks

The state of California pulled out of multi-state mortgage negotiations with large US banks, dealing a sharp blow to long-running efforts to secure a broad settlement over allegations of lending abuses. California Attorney General Kamala Harris wrote in a letter on Friday that she will pursue her own investigation. "California was being asked for a broader release of claims than we can accept and ... the relief contemplated would allow too few California homeowners to stay in their homes," Harris said in the letter to government officials leading the talks. New York had exited the talks in August over a disagreement about how much legal immunity the banks should receive in any settlement. Representatives of the banks met with Harris last week in an attempt to keep California on board. The state has faced some of the worst default rates in the country, with an unemployment rate of 12.1% and two million residents who owe more on their mortgage than their home is worth. Eight of the 10 hardest hit US cities in terms of foreclosure rates are in California, Harris said. State and federal officials have discussed penalties totaling roughly $20 billion from institutions that include Bank of America,
JP Morgan Chase, Wells Fargo and Citigroup.

friction in Obama's refi proposal

"The response to President Obama's recent proposal to refinance more borrowers into lower interest rate mortgages was at best underwhelming and at worst scathing. The plan would expand the government's so-far disappointing, Home Affordable Refinance Program (HARP), which helps current but underwater borrowers with Fannie Mae and Freddie Mac loans to refinance. 'Mr. President, the housing market is the foundation of the US economy. It is cracked and chipping away,' writes Florida real estate consultant Jack McCabe in an editorial in the Herald-Tribune. 'The walls are beginning to cave. Your answer, anecdotally, seems to be put a new roof on it.' McCabe is calling for principal write-down for troubled mortgages, not refinances for borrowers who are current on their monthly payments. The argument so far against principal write-down is that it would cost banks and investors (including Fannie Mae and Freddie Mac) too much.

Unfortunately the plan, which could allow borrowers with more than 25% in negative equity to refinance, is being deemed too costly as well. While the Congressional Budget Office estimated it would cost investors in the original mortgages between $13
and $15 billion (while potentially saving 111,000 borrowers from defaulting), analysts at JP Morgan Chase say it would cost more: If such a policy were successful on a large scale, it would clearly devalue higher coupons, and would threaten lower coupons
with incremental gross supply. A more modest HARP overhaul, while less disruptive, still forces investors to require more conservative valuations until details emerge.

All these arguments, however, may be moot, as the overseer of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA), which would have to approve the refinance effort, is sounding wildly cautious. In a statement following the President's speech, Director Ed DeMarco states, 'If there are frictions associated with the origination of HARP loans that can be eased while still achieving the program's intent of assisting borrowers and reducing credit risk for the Enterprises, we will seek to do so.' He goes on to say, however, that there are 'several challenging issues to work through,' and then he uses the word 'uncertain' twice in characterizing any outcome. While DeMarco doesn't detail said 'frictions,' they are vast and not limited to investor cost. First of all, too many borrowers probably still wouldn't qualify if they just did away with the loan to value ratio of 125%. Of the 838,400 HARP refinancings done so far, only 62,432 had LTVs above 105%, according to Jaret Seiberg at MF Global. 'We believe lenders are reluctant to HARP a loan if they fear the borrower is so underwater that they might default anyway,' writes Seiberg. Then there are issues of loan origination dates, put-backs on loans that default and borrower qualifications. Frictions. Beyond the friction, however, is the simple fact that a refinance program, while potentially an economic stimulus, is not a housing stimulus and shouldn't be characterized as such. The HARP program is and always was for current borrowers and does nothing to address the millions of non-current borrowers, bank-owned foreclosed homes and falling home prices."

US to sue banks

The Federal Housing Finance Agency, which oversees the mortgage giants Fannie Mae and Freddie Mac, is set to file suits against more than a dozen big banks, accusing them f misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others. The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers. In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

Delinquencies Rise, Foreclosures Fall in Latest MBA Mortgage

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.44 percent of all loans outstanding as of the end of the second quarter of 2011, an increase of 12 basis points from the first
quarter of 2011, and a decrease of 141 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 32 basis points to 8.11 percent this
quarter from 7.79 percent last quarter. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent, down 12 basis points from last quarter and down 15 basis points from one year ago.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 4.43 percent, down 9 basis
points from the first quarter and 14 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.85 percent, a decrease of 25 basis points from last quarter, and a decrease of 126 basis points from the second quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 12.54 percent on a non-seasonally adjusted basis, a 23 basis point increase from last quarter, but was 143 basis points lower than a year ago.

Mortgage delinquencies are no longer improving and are now showing some signs of worsening," said Jay Brinkmann, MBA's Chief Economist. Foreclosure inventory rates also fell, to their lowest level since the third quarter of 2010. While some have
argued that this drop in foreclosures is a temporary drop which does not reflect the problems yet to come, this does not appear to be the case, at least at the national level.

Shadow inventory improves but still threatens housing recovery

Despite all those millions of distressed properties out on sale, depressing home prices even further, there is one glimmer of hope according Standard & Poor. According to the report the time it would take for banks to purge all of this so-called "shadow inventory" from the market (through foreclosure sales, mortgage modifications and other measures) shrunk to 47 months during the second quarter, a significant drop from the 52 months it estimated for the first quarter of this year. The report also found that the total dollar value of the loans on these properties -- known as non-agency loans because they are not backed by Fannie Mae, Freddie Mac or the Federal Housing Administration -- also fell to $405 billion at the end of June from $433 billion three months earlier. S&P said the decline was helped by stabilizing liquidation rates and by fewer borrowers falling behind on their mortgage payments as the economy slowly recovered during the quarter.

S&P estimates that there are still a total of between 4 million and 5 million homes, including those with agency-backed loans, in shadow inventory, an amount that continues to jeopardize the housing market's recovery. Nevertheless, Fannie and Freddie are looking to rid themselves of a large percentage the shadow inventory they do have -- and quickly. Earlier this month, the Federal Housing Finance Agency (FHFA), the Treasury Department and the U.S. Department of Housing and Urban Development were
seeking suggestions on how to dispose all the repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration in a way that would benefit local communities.

Home Builders Face New Hurdles

Builders are on track to construct the fewest single family homes in history this year. Total housing starts in July were down 1.7 percent, month to month, which may not sound like a lot, but when you break the number down, you see the problem. Single family starts were down 4.9 percent, while Multi-family starts rose 6.3 percent. Rental demand continues to rise, as consumer confidence in homeownership was decimated yet again by the recent debt turmoil in the economy. I am reporting these numbers today from a construction site. Mid-Atlantic Builders of Rockville, MD is putting up the last phase of a large single family development out in Bowie, MD, which is about 15 minutes outside the DC Beltway. According to executive VP Stephen Paul, "We started what we call the spring market in February. We started out very strong, we had a good February, March, even into April. What started to cause consumer confidence to wane was the escalation of gas prices, the debt issue with the government, and what's going on in Europe." In other words: Confidence. "We see people not sure what to do at this moment and a little unsure," adds Paul, though he is confident that things will pick up this Fall, but housing analysts aren't so sure. "The market is continuing to adjust to a reduction in the national home ownership rate at the same time the supply of existing single family homes remain excessive," writes Peter Boockvar at Miller Tabak. Builder Stephen Paul told me of a new trend I'd heard of only anecdotally: We're seeing more multi-generational families moving into our homes, so we're selling in-law suites, with the regular part of the house, and the parents are moving in and actually helping pay, funding the mortgage, so that's helping with the affordability." That's precisely why we are seeing a drop in household formation. Add that to the surge in renting and it's pretty clear why the nation's home builders are in for a long
haul back to recovery.

NAR - existing home sales down

Existing-home sales eased in June as contract cancellations spiked unexpectedly, although prices were up slightly, according to the National Association of Realtors (NAR). Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable while the condo sector weakened. Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 0.8% to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8% below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit. The national median existing-home price for all housing types was $184,300 in June, up 0.8% from June 2010. Distressed homes – foreclosures and short sales generally sold at deep discounts – accounted for 30% of sales in June, compared with 31% in May and 32% in June 2010. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.51% in June, down from 4.64% in May; the rate was 4.74% in June 2010.

Total housing inventory at the end of June rose 3.3% to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, up from a 9.1-month supply in May. All-cash transactions accounted for 29% of sales in June; they were 30% in May and 24% in June 2010; investors account for the bulk of cash purchases. First-time buyers purchased 31% of homes in June, down from 36% in May; they were 43% in June 2010 when the tax credit was in place. Investors accounted for 19% of purchase activity in June, unchanged from May; they were 13% in June 2010. The balance of sales was to repeat buyers, which were a 50% market share in June, up from 45% in May, which appears to be a normal seasonal gain.

Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June, but are 7.4% below a 4.58 million pace in June 2010. The median existing single-family home price was $184,600 in June, up 0.6% from a year ago. Existing condominium and co-op sales fell 7.0% to a seasonally adjusted annual rate of 530,000 in June from 570,000 in May, and are 18.0% below the 646,000-unit level a year ago. The median existing condo price5 was $182,300 in June, up 1.8% from June 2010.

Regionally, existing-home sales in the Northeast fell 5.2% to anannual pace of 730,000 in June and are 17.0% below June 2010. Themedian price in the Northeast was $261,000, up 3.1% from a yearago. Existing-home sales in the Midwest rose 1.0% in June to a pace of 1.04 million but are 14.0% below a year ago. The medianprice in the Midwest was $147,700, down 5.3% from June 2010. Inthe South, existing-home sales increased 0.5% to an annual level of 1.86 million in June but are 5.6% below June 2010. The medianprice in the South was $159,100, down 0.1% from a year ago.Existing-home sales in the West declined 1.7% to an annual paceof 1.14 million in June and are 2.6% below a year ago. The median price in the West was $240,400, up 9.5% from June 2010.

Home prices trending up

Home prices and inventory levels are trending upward in many US cities tracked by Altos Research, according to the firm's latest Housing Market Update. The median national home price for all 26 markets covered by Altos hit $450,358 in June, up from $444,273 in May. Meanwhile, in the past three months, listing prices rose 2.31% and inventory levels grew 3.52%. The only city to report a drop in home prices in June was Las Vegas and even that was amere 0.86% decline when compared to the month before. When analyzing home price data for the past three months, both New York and Las Vegas experienced falling prices, reporting drops of 2.2% and 1.61%, respectively, Altos said.

Inventory rose in 12 of the major markets tracked by Altos last month, while falling in the remaining 14 composite cities. The biggest inventory jump occurred in Boston, with the city's inventory level rising to 5.8%. Phoenix, on the other hand, experienced the largest inventory level drop, falling 7.93%. Even though the 90-day home price trends rose somewhat, Altos said a weekly sample taken from the month of June still shows a "slight flattening" in home prices. Comparatively, the latest S&P/Case Shiller report said the average price of a single-family home rose for the first time in eight months during the month of April. Altos suspects the S&P/Case-Shiller will be reporting a few positive trends through September. At the same time when looking forward, Altos foresees a slowing or plateau of home prices in the fourth quarter.

MBA - mortgage applications decrease

Mortgage applications decreased 5.1% from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending July 8, 2011. This week's results include an adjustment to account for the Fourth of July holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 24.0% compared with the previous week. The seasonally adjusted Purchase Index decreased 2.6% from one week earlier. The unadjusted Purchase Index decreased 21.9% compared with the previous week and was 0.2% lower than the same week one year ago. The Refinance Index decreased 6.2% from the previous week, and was 42.1% lower than a year ago. The Refinance Index has decreased the past four consecutive weeks, reaching its lowest level since April 29, 2011. The Refinance Index is not seasonally adjusted but is adjusted for the holiday.

The four week moving average for the seasonally adjusted Market Index is down 4.7%. The four week moving average is down 1.0% for the seasonally adjusted Purchase Index, while this average is down 6.3% for the Refinance Index. The refinance share of mortgage activity decreased to 65.6% of total applications from 66.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.5% from 6.1% of total applications from the previous week.

household shifts could affect recovery

"Every now and then you need to take a step back and put the housing market into perspective, take a break from all the monthly motions and commotions, stress and distress. Today I read a report that did just that. It takes a big-picture snapshot of how housing has fundamentally changed over the past several decades, which could have a big impact on its future as the industry rebuilds itself, literally and economically.

The report, from John Burns Real Estate Consulting's Chris Porter, is titled simply, Tremendous Demographic Shift.' And the numbers are pretty tremendous. 'The number of non-family households—people living alone or households that do not have any members related to the householder—has increased nearly five times in the last 50 years, from 7.9 million to 39.2 million. At the same time, the number of family households has increased by just 1.7 times, from 45.1 million to 77.5 million,' according to Porter. In addition, married couples have dropped to less than half of all US households from 75% in 1960. So let's think about the current housing stock, much of which is more than 50 years old. We've recently seen a downsizing trend for several reasons, namely the weak economy and builders constructing cheaper homes to meet the demand but also the environmental movement and the high cost of energy.

But this comes right after the 'McMansion' era when oversized homes were all the rage. Those homes, of course, still exist in vast quantities, despite the fact that there are, according to this report, fewer big family households and therefore less need for large square footage. We've also talked a lot about the surge in renting; we've blamed it on the housing crash, fear of buying into a depreciating market and the tight credit conditions that are pricing many potential buyers out. Perhaps there's more to it than that as well. Perhaps with fewer large family households and less desire for a big space, smaller, full-service rental apartments are more desirable to a growing segment of the population. 'Family households are more likely to stretch for size over location. Non-family households are more likely to value location—proximity to work, entertainment,etc.—and then size. They are less willing to commute than a family household,' noted Porter. We also have to look at the growing population of Americans who intend to 'age in place,' that is, the baby boomers who are moving out of the big family homes but not into what we used to call 'retirement homes.' Now they're 'active adult communities,' with smaller one-story homes. That demographic, though, plays against a growing demographic of Hispanic Americans. The average Hispanic household is statistically larger than the national average.

So what should home builders and housing watchers take from all this?

Obviously there are and always will be large families in the suburbs who want to live in big houses. There will always be wealthy Americans who desire to live in spaces that far exceed their needs. But the shift in household size cannot simply be considered anecdotal. When you couple that shift with a much-changed mortgage market, one that prices so many more Americans out of larger, move-up homes, you have to be concerned about what happens to the stock of larger homes, old and new. Do we see huge price reductions as demand falters?"

Retailers have strong June sales

American consumers that were enticed by warmer weather and deep discounts of up to 80% on summer merchandise went on a buying binge in June, helping many retailers deliver robust revenue gains for what is typically the second-biggest shopping month of the year. Big merchants Target Corp., Costco Wholesale Corp., Limited Brands Inc. as well as teen retailers such as The Buckle were among the companies that posted June results that beat Wall Street estimates. The few stragglers included Destination Maternity Corp. and Bon Ton Stores, which reported declines. The figures are based on revenue at stores opened at least a year. This measure is considered a key indicator of a retailer's health because it excludes results from stores opened or closed during the year. June is the second most important month on a retailers' sales calendar behind December. During the month, stores typically clear out summer merchandise to make room for fall goods. But this time, it took deep discounts of up to 80% to get shoppers to buy amid worries about the economy.

Analysts fear that retailers have not quite turned a corner. After all, gas prices are still 35% higher than last year at this time. Moreover, prices in the food aisle remain high and this fall, shoppers will be seeing the price tags of fashion and accessories rise as retailers try to offset higher labor costs in China and soaring prices of raw materials like cotton. Shoppers' biggest concerns remain a weak job recovery and stagnant wages. These worries sent consumer confidence to a seven-year low in June, according to the Conference Board's survey released last
week. In fact, consumer confidence has never been this low in the 24th month of a recovery, according to David A. Rosenberg, chief economist and investment strategist at the Toronto-based money management firm Gluskin Sheff. Historically at the two-year mark, confidence is at 94, not 58.5, which was recorded by The Conference Board's June survey.

Wells Fargo modification outnumber Obama's 5 to 1

Wells Fargo completed or started trials on roughly 585,000 mortgage modifications through its private programs since the beginning of 2009, more than five times the 101,000 initiated through the Home Affordable Modification Program (HAMP). HAMP launched in March 2009 but almost immediately drew criticism. Treasury officials admit the more than 3 million modifications initially promised was over estimated. Through May, servicers started roughly 731,000 permanent loan modifications and have been averaging between 25,000 and 30,000 per month this year. According to a recent poll of housing counselors, only 9% of borrowers who entered the program described it as a "positive" experience. Homeowners continually blame servicers for mishandling documentation. Overwhelmed servicers point out many borrowers are simply out of reach. "Avoiding foreclosure is a top priority for us and when customers work with us, we can help seven of every 10 to stay out of foreclosure," said Teri Schrettenbrunner, senior vice president, Wells Fargo Home Mortgage.

The Treasury points out most of the private programs built since the foreclosure crisis use HAMP as a model. But since mishandled foreclosure and modification processes came to light late last year, new standards were put in place, including a single point of contact that servicers are required to provide throughout the loss-mitigation process. The Treasury began to clamp down on poorly performing servicers — at least to the extent their contracts with these firms allow. In June, the Treasury announced it was withholding HAMP payments from Bank of America, JPMorgan Chase and Wells. Schrettenbrunner said the bank continues to build on its primary contact model it established last summer, and the bank has met with 58,000 borrowers at 31 home preservation workshops. Half of those received a decision on the spot or shortly after the event. Schrettenbrunner said the department continues to "aggressively reach out" to borrowers behind on payments to bridge the communication gap as quickly as possible. "We also continue to aggressively reach out to customers 60 or more days behind on their home loans via mail and telephone in an effort to engage them," Schrettenbrunner said.

NAR - existing home sales decline

According to the National Association of Realtors (NAR), Existing-home sales, (completed transactions that include single-family, townhomes, condominiums and co-ops), fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April, and are 15.3% below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit. There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Lawrence Yun, NAR chief economist, explained.

The national median existing-home price for all housing types was $166,500 in May, down 4.6% from May 2010. Distressed homes3 – typically sold at a discount of about 20% – accounted for 31% of sales in May, down from 37% in April; they were 31% in May 2010. NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20%,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”

WSJ - tighter lending hurts housing

The percentage of mortgage applications rejected by the nation's largest lenders increased last year, spotlighting how banks' cautious lending practices are hampering the nascent housing market recovery. In all, the nation's 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009, according to an analysis by The Wall Street Journal of mortgage data filed with banking regulators. Although lenders were expected to pull back from the freewheeling conditions that helped inflate the housing bubble, some economists argue they are now too conservative, and say that with the US economy still wobbly, mortgages need to be easier to obtain for qualified borrowers, not harder. "As the noose on credit availability tightens, credit is being choked off at a time when the housing market is extremely fragile," says Laurie Goodman, senior managing director at Amherst Securities Group LP.

Christopher Thornberg, a housing economist at Beacon Economics in Los Angeles, counters that "banks are doing what they need to do" to change lending standards in the wake of a "crazy bubble.” He adds, "You had decades where credit standards were tougher than they are even now."

Among the would-be borrowers having a harder time are those who have seen their incomes fall or interrupted by a period of unemployment, scenarios that have become increasingly common in recent years. Some self-employed applicants are also hitting barriers to loans—hurdles they didn't face in the past. Lending standards are still tight in part because government entities Fannie Mae, Freddie Mac, and the Federal Housing Administration, which collectively account for more than nine in 10 loans being made today, are under heavy pressure to avoid any losses. Those firms don't make loans directly but instead purchase or guarantee mortgages that meet their standards, and so have significant influence over which loans banks are willing to approve.