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.
Showing posts with label FICO scores. Show all posts
Showing posts with label FICO scores. Show all posts
Wednesday, September 7, 2011
Tuesday, July 12, 2011
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.
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?
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?"
Thursday, July 7, 2011
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.
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.
Wednesday, July 6, 2011
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.
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.
Friday, June 17, 2011
Housing starts up
The number of permits for future housing construction jumped to a
seasonally adjusted annual rate of 612,000 last month, up 8.7%
from the revised rate of 563,000 in April, the Commerce
Department said. It was the highest monthly rate since December
and was much higher than expected, with economists surveyed by
Briefing.com looking for a 548,000 permit rate. Permits for
single-family homes, viewed as a more stable indicator of new
homebuilding activity than permits for multi-family home
construction, ticked up 2.5% from April to a rate of 405,000.
Housing starts, the number of new homes being built, rose 3.5% in
May to an annual rate of 560,000 units from a revised 541,000 in
April, the Commerce Department said. Economists had expected an
annual rate of 540,000 units, according to consensus estimates
from Briefing.com. Construction of single-family homes rose 3.7%
to a rate of 419,000.
While permits are typically viewed as an indication of builders'
confidence in the housing market, the big jump in permits could
have had a lot to do with seasonality, even allowing for the
government's adjustment, said Doug Roberts, chief investment
strategist for Channel Capital Research. Roberts said that this
is the prime time of year to begin construction, given the better
weather. And given the flooding and bad weather in April, many
builders may have gotten off to a late start -- leading to a jump
in permits and housing starts last month. "These are the months
where the most construction occurs, so this increase could be
more of a seasonal blip," he said.
seasonally adjusted annual rate of 612,000 last month, up 8.7%
from the revised rate of 563,000 in April, the Commerce
Department said. It was the highest monthly rate since December
and was much higher than expected, with economists surveyed by
Briefing.com looking for a 548,000 permit rate. Permits for
single-family homes, viewed as a more stable indicator of new
homebuilding activity than permits for multi-family home
construction, ticked up 2.5% from April to a rate of 405,000.
Housing starts, the number of new homes being built, rose 3.5% in
May to an annual rate of 560,000 units from a revised 541,000 in
April, the Commerce Department said. Economists had expected an
annual rate of 540,000 units, according to consensus estimates
from Briefing.com. Construction of single-family homes rose 3.7%
to a rate of 419,000.
While permits are typically viewed as an indication of builders'
confidence in the housing market, the big jump in permits could
have had a lot to do with seasonality, even allowing for the
government's adjustment, said Doug Roberts, chief investment
strategist for Channel Capital Research. Roberts said that this
is the prime time of year to begin construction, given the better
weather. And given the flooding and bad weather in April, many
builders may have gotten off to a late start -- leading to a jump
in permits and housing starts last month. "These are the months
where the most construction occurs, so this increase could be
more of a seasonal blip," he said.
Wednesday, June 15, 2011
Retail sales down
Total retail sales slipped 0.2% last month, the Commerce
Department reported. The decline broke a winning streak of
consecutive monthly gains going back to June 2010. But from a
year ago, sales were up 8%. Economists had expected a 0.7% drop,
according to consensus estimates from Briefing.com. Declines
were led by a 2.9% slide in sales at motor vehicle and parts
dealers. This drop overshadowed stronger sales at building
material companies and restaurants, which came in the face of
higher gas prices last month. Sales excluding autos and auto
parts were 0.3% higher, beating forecasts for a 0.2% rise.
"The numbers we've been seeing from retailers lately have been
running better than expected, and the number today excluding
autos is better than expected," said Ken Perkins, an analyst at
Retail Metrics. "But there's still definitely a soft patch
unfolding here in terms of economic growth, which I think was
reflected in sales of autos." Perkins said the widespread supply
chain disruptions sparked by the earthquake in Japan were mainly
to blame for the big decline in auto sales last month. But even
taking auto sales out of the mix, many big areas like consumer
electronics and appliances were disappointing, partly due to high
gas prices.
Department reported. The decline broke a winning streak of
consecutive monthly gains going back to June 2010. But from a
year ago, sales were up 8%. Economists had expected a 0.7% drop,
according to consensus estimates from Briefing.com. Declines
were led by a 2.9% slide in sales at motor vehicle and parts
dealers. This drop overshadowed stronger sales at building
material companies and restaurants, which came in the face of
higher gas prices last month. Sales excluding autos and auto
parts were 0.3% higher, beating forecasts for a 0.2% rise.
"The numbers we've been seeing from retailers lately have been
running better than expected, and the number today excluding
autos is better than expected," said Ken Perkins, an analyst at
Retail Metrics. "But there's still definitely a soft patch
unfolding here in terms of economic growth, which I think was
reflected in sales of autos." Perkins said the widespread supply
chain disruptions sparked by the earthquake in Japan were mainly
to blame for the big decline in auto sales last month. But even
taking auto sales out of the mix, many big areas like consumer
electronics and appliances were disappointing, partly due to high
gas prices.
Monday, February 7, 2011
Bank of America splits mortgage department
Bank of America splits mortgage department
Bank of America (BOA) created a separate mortgage servicing unit that will handle loans in default, while performing ones will stay in the bank's home loan division, the company said Friday. Regulators, lawmakers consumer advocates and even some players within the industry have been calling for mortgage servicing companies to divide their departments into performing and nonperforming sections as they work toward a new national servicing standard due out in 2012, according to the Federal Housing Finance Agency. BOA's announcement could be the first step in that process. Proponents of a new system have also called on servicers to provide a single point of contact at the bank and develop new servicing fees where companies are paid more for the extra work required in working out delinquent loans.
The bank appointed Terry Laughlin as the head of the "Legacy Asset Servicing" unit. In this role, Laughlin will oversee the company's mortgage modification and foreclosure programs. Barbara Desoer will continue to manage the company's home loan division, which will service performing loans and hold the bank's origination department, which wrote $306 billion in new loans during 2010. Laughlin will also be in charge of sorting out the bank's mortgage representation and warranties repurchase claims. Fannie Mae, Freddie Mac and private investors have put major lenders under pressure to buy back defaulted loans they say were not originated to standard. BOA settled with the GSEs late in December to pay $3 billion for their claims. "This alignment allows two strong executives and their teams to continue to lead the strongest home loans business in the industry, while providing greater focus on resolving legacy mortgage issues," BofA CEO Brian Moynihan said. "We believe this will
best serve customers — both those seeking homeownership and those who face mortgage challenges — as well as our shareholders and the communities we serve."
In 2010, BOA completed 285,000 modifications through both its private programs and the government's Home Affordable Modification program. It has boosted its default servicing staff to 30,000, and it said it will hold 400 events this year to put borrowers in touch with those employees.
MBA - 2010 ranking of servicers
The Mortgage Bankers Association's (MBA) year-end ranking of commercial and multifamily mortgage servicers as of the end of December 31, 2010 was released yesterday. On top of the list of firms is Wells Fargo with $451.1 billion in US master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.4 billion, Berkadia Commercial Mortgage with $194.9 billion, Bank of America Merrill Lynch with $126.6 billion, and KeyBank Real Estate Capital with $118.9 billion. Specific breakouts in the report include:
- Total US Master and Primary Servicing Volume
- US Commercial Mortgage-backed Securities (CMBS), Collateralized Debt Obligations (CDOs) and Other Asset-Backed Securities (ABS) Master and Primary Servicing Volume
- US Commercial Banks and Savings Institution Volume
- US Credit Company, Pension Funds, REITs, and Investment Funds Volume
- Fannie Mae and Freddie Mac Servicing Volume
- Federal Housing Administration (FHA) Servicing Volume
- US Life Company Servicing Volume
- US Warehouse Volume
- US Other Investor Volume
- US CMBS Named Special Servicing Volume
- Total Non-US Master and Primary Servicing Volume
A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not double-count loans for which a single servicer performs multiple roles.
Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in US CMBS, CDO and other ABS; PNC/Midland, GEMSA Loan Services, Prudential Asset Resources, Northwestern Mutual, and Northmarq Capital are the largest servicers for life companies; PNC/Midland, Wells Fargo, Berkadia, Deutsche Bank Commercial Real Estate and Prudential Asset Resources are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans.
Bank of America (BOA) created a separate mortgage servicing unit that will handle loans in default, while performing ones will stay in the bank's home loan division, the company said Friday. Regulators, lawmakers consumer advocates and even some players within the industry have been calling for mortgage servicing companies to divide their departments into performing and nonperforming sections as they work toward a new national servicing standard due out in 2012, according to the Federal Housing Finance Agency. BOA's announcement could be the first step in that process. Proponents of a new system have also called on servicers to provide a single point of contact at the bank and develop new servicing fees where companies are paid more for the extra work required in working out delinquent loans.
The bank appointed Terry Laughlin as the head of the "Legacy Asset Servicing" unit. In this role, Laughlin will oversee the company's mortgage modification and foreclosure programs. Barbara Desoer will continue to manage the company's home loan division, which will service performing loans and hold the bank's origination department, which wrote $306 billion in new loans during 2010. Laughlin will also be in charge of sorting out the bank's mortgage representation and warranties repurchase claims. Fannie Mae, Freddie Mac and private investors have put major lenders under pressure to buy back defaulted loans they say were not originated to standard. BOA settled with the GSEs late in December to pay $3 billion for their claims. "This alignment allows two strong executives and their teams to continue to lead the strongest home loans business in the industry, while providing greater focus on resolving legacy mortgage issues," BofA CEO Brian Moynihan said. "We believe this will
best serve customers — both those seeking homeownership and those who face mortgage challenges — as well as our shareholders and the communities we serve."
In 2010, BOA completed 285,000 modifications through both its private programs and the government's Home Affordable Modification program. It has boosted its default servicing staff to 30,000, and it said it will hold 400 events this year to put borrowers in touch with those employees.
MBA - 2010 ranking of servicers
The Mortgage Bankers Association's (MBA) year-end ranking of commercial and multifamily mortgage servicers as of the end of December 31, 2010 was released yesterday. On top of the list of firms is Wells Fargo with $451.1 billion in US master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.4 billion, Berkadia Commercial Mortgage with $194.9 billion, Bank of America Merrill Lynch with $126.6 billion, and KeyBank Real Estate Capital with $118.9 billion. Specific breakouts in the report include:
- Total US Master and Primary Servicing Volume
- US Commercial Mortgage-backed Securities (CMBS), Collateralized Debt Obligations (CDOs) and Other Asset-Backed Securities (ABS) Master and Primary Servicing Volume
- US Commercial Banks and Savings Institution Volume
- US Credit Company, Pension Funds, REITs, and Investment Funds Volume
- Fannie Mae and Freddie Mac Servicing Volume
- Federal Housing Administration (FHA) Servicing Volume
- US Life Company Servicing Volume
- US Warehouse Volume
- US Other Investor Volume
- US CMBS Named Special Servicing Volume
- Total Non-US Master and Primary Servicing Volume
A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not double-count loans for which a single servicer performs multiple roles.
Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in US CMBS, CDO and other ABS; PNC/Midland, GEMSA Loan Services, Prudential Asset Resources, Northwestern Mutual, and Northmarq Capital are the largest servicers for life companies; PNC/Midland, Wells Fargo, Berkadia, Deutsche Bank Commercial Real Estate and Prudential Asset Resources are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans.
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