Consumers Remain Uncertain About Economy

Consumers Remain Uncertain About Economy


After taking a sharp dive in October, consumer confidence continued to decline at a more moderate pace in November, indicating the level of uncertainty that still grips the country.

The Conference Board’s Consumer Confidence Index dropped two points to 70.4 in the most recent reading, the company reported. The decline follows a more substantial decrease in October stemming from the partial federal government shutdown.

Both index subcomponents took a hit as consumers presented mixed responses on the economy. The Present Situation Index, a measure of Americans’ perceptions of current economic conditions, edged down to 72.0 from October’s 72.6. Meanwhile, the Expectations Index, a measure gauging projections six months from now, decreased more significantly to 69.3 from 72.2.

“Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed,” explained Lynn Franco, director of economic indicators at the Conference Board. “However, these sentiments did not carry over into the short-term outlook. When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions.”

According to the Conference Board’s survey, the share of consumers claiming current business conditions are “good” increased slightly to 19.9 percent from October’s 19.5 percent, while those claiming conditions are “bad” increased to 25.2 percent from 23.0 percent.

Appraisals of the job market were little changed from October. Those saying jobs are “plentiful” ticked up to 11.8 percent from 11.6 percent, and those saying jobs are “hard to get” decreased to 34.0 percent from 34.9 percent.

For the next six months, those expecting business conditions to improve increased slightly to 16.6 percent, while those expecting conditions to worsen decreased to 16.8 percent.

The consumer outlook for the labor market was more pessimistic. The number of consumers anticipating more jobs in the coming months fell more than 3 percentage points to 12.7 percent, while those anticipating fewer jobs decreased slightly to 21.7 percent. At the same time, fewer consumers expect their incomes to increase (14.9 percent), while more anticipate a decline in income (15.9 percent)


Foreclosure Inventory Plunges Nearly 30%

Foreclosure Inventory Plunges Nearly 30%


The nation’s foreclosure inventory has contracted for 18 consecutive months and is now at its lowest point since the end of 2008, totaling 1.28 million loans, or just 2.54 percent of today’s active mortgages, according to Lender Processing Services (LPS).

The company’s latest report assessing loan-level data on the performance of mortgage assets through the end of October shows the industry’s foreclosure inventory rate is down 29.61 percent from last year. Through the first 10 months of 2013, the foreclosure inventory rate has plummeted 26 percent.

Delinquencies dropped 2.8 percent month-over-month in October to come in at a rate of 6.28 percent. LPS says while that’s not as low as the delinquency rates recorded

earlier this year—in August the rate was 6.20 percent and in May it settled in at 6.08 percent—it’s still headed in the right direction. Compared to last year, the rate of mortgages 30-plus days delinquent is down 10.69 percent.

Nationwide, there are 3,152,000 properties with mortgages 30 or more days past due; 1,283,000 of those are 90 or more days delinquent but not in foreclosure. Add to that the 1,276,000 loans that are part of the pre-sale foreclosure inventory, and there are 4,427,000 non-current home mortgages in the United States, by LPS’ assessment.

According to the company’s state-by-state breakdown, Mississippi has overtaken Florida as having the nation’s largest population of non-current loans, totaling 15.1 percent. Mississippi’s foreclosure inventory rate through October is just 2.1 percent, but it’s delinquency rate is 13 percent—the highest in the nation, by far.

Florida took the top spot on LPS’ list of states with the most non-current loans in 2008, displacing Mississippi. Since then, Florida held that spot, reining as the nation’s nonperformance leader for more than five years, up until last month.

Excluding the last five years, Mississippi has held the dubious distinction of having the highest non-current inventory as far back as LPS’ historical data goes. So, unfortunately for Mississippians, the company says, this is more indication that things are getting back to “normal.”


New Network Launches to Connect Secondary Market Traders

New Network Launches to Connect Secondary Market Traders


Secondary market professionals have a new way to connect with potential buyers and sellers: LendTrade, a recently launched community for trading professionals designed to cut out the middleman and save costs.

Upon joining LendTrade, new members set up a profile and indicate the types of deals they’re seeking. Once the process is complete, they are able to immediately start connecting with other members, receiving notifications whenever opportunities that meet their criteria are posted.

Steve Schipper, founder and CEO of the Des Moines, Iowa-based firm, describes the network as “ meets LinkedIn for traders.”

“Some secondary market loan professionals need assistance negotiating and closing deals, and for that, advisors are valuable resources. However, many professionals know how to do their own deals, they just need the right buyer or seller,” he said. “That’s where LendTrade comes in.”

U.S. Bank Executive Pleads Guilty to Bribery

U.S. Bank Executive Pleads Guilty to Bribery


A former U.S. Bank executive plead guilty Friday to receiving bribes from Oxford Collection Agency over the course of several years in exchange for business, according to an announcement from the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Monday.

Wilbur Tate III, 49, from Dacula, Georgia, served as the assistant VP at U.S. Bank from January 2004 through February 2011. He allegedly accepted bribed from Oxford Collection Agency starting in 2008.

“Tate took bribes which began with expensive cigars and escalated to cash payments of as much as $5,000 per month disguised in cigar boxes,” said Christy Romero, special inspector general for TARP.

Oxford Collection allegedly sent cigar boxes filled with cash to Tate’s home in Mason, Ohio.

“While the country struggled through the financial crisis, rather than collect the debt of TARP banks, executives at Oxford ripped off TARP banks in a $12 million debt fraud scheme, and Tate shared in their spoils,” Romero said.

Tate was arrested in February, plead guilty to one count of conspiracy to commit bank bribery Friday, and awaits sentencing in February 2014, according to the announcement from SIGTARP.

“With today’s guilty plea, Tate, an officer at TARP recipient U.S. Bank, admitted to taking $24,000 in kickbacks from debt collectors at Oxford Collection Agency in exchange for U.S. Bank’s collections business,” Romero said.

Conspiracy to commit bank bribery could earn Tate up to five years in prison.

Rate of Appreciation Slows but Unseasonal Gains Remain Elevated

Rate of Appreciation Slows but Unseasonal Gains Remain Elevated


Home prices continued to advance in September, bringing third-quarter growth to 3.2 percent, according to the S&P/Case-Shiller Home Price Indices released Tuesday.

Both the 10- and 20-city composite indices rose 0.7 percent month-over-month and 13.3 percent year-over-year in September. Since bottoming out in March 2012, the 10- and 20-city composites have recovered 22.9 percent and 23.6 percent, respectively; compared to their June/July 2006 peaks, both indices are down about 20 percent.

Price gains decelerated on a monthly basis in 19 cities in September. Las Vegas and Tampa saw the greatest slowdown, with growth rates dropping 1.6 percentage

points compared to August. Miami was the only city where growth kept its pace at 0.8 percent.

Detroit was the strongest city in September, seeing a monthly price increase of 1.5 percent—though it remains the only market still below its January 2000 level. Meanwhile, Charlotte was the weakest, reporting a decline of 0.2 percent—the first drop for that city since November 2012.

Looking at annual changes, all 20 cities reported growth, and 13 fared better than they did in August. Cleveland posted the strongest acceleration (moving from 3.7 percent annual appreciation in August to 5.0 percent in September), though it remains the second-worst performing city, beating only New York.

Las Vegas, Los Angeles, San Diego, and San Francisco had the strongest year-over-year price improvements, each posting gains of over 20 percent. Las Vegas topped the rest with a year-over-year price increase of 29.1 percent.

David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said September’s numbers are proof that housing is making its way out of the rubble of the financial crisis.

“The longer run question is whether household formation continues to recover and if homeownership will return to the peak levels seen in 2004,” he said.


FDIC Institutions Report First Loss in More Than Four Years

FDIC Institutions Report First Loss in More Than Four Years


For the first time in more than four years, banks insured by the Federal Deposit Insurance Corporation reported an annual loss, according to the FDIC’s Quarterly Banking Profile released Tuesday.

At $36 million, the net income of FDIC-insured banks in the third quarter is $1.5 million below earnings reported in the third quarter of last year.

The drop in earnings is “mainly attributable to a $4 billion increase in litigation expenses in one institution,” said FDIC Chairman Martin J. Gruenberg during a press conference Tuesday.

“Had it not been for that, the upward trend in earnings would have continued for the industry,” Gruenberg continued.

Gruenberg also pointed out a secondary source of the decline: “a reduction in mortgage lending activity,” which led to a decline in net operating revenue.

Mortgage originations were declined 30 percent from the second quarter, and mortgage sales declined 24 percent.

The FDIC reported a $4 billion decline in quarterly noninterest income from the sale, securitization, and servicing of one- to four-family residential mortgage loans.

Balances of one- to four- family residential mortgages declined 0.7 percent to $13.7 billion over the quarter. Home equity lines of credit decreased 2.1 percent to $10.9 billion.

All other loan types increased over the quarter, according to the FDIC’s report.

Delinquent loans 90 or more days past due declined 7.7 percent at FDIC-insured banks in the third quarter, and a decline was evident across all loan categories.

Among one-to-four-family residential real estate loans, delinquent loans fell 7.9 percent over the quarter.

Net operating revenue and net interest income were both down over the year in the third quarter, falling $6.1 billion and $1.3 billion, respectively.

“The one significant positive contribution to third-quarter earnings came from lower loan-loss provisions,” the FDIC stated in its report.

Banks contributed $5.8 billion to their loan loss provisions in the third quarter, down 60.4 percent from last year.

This is the smallest loan loss provision the FDIC has reported since the third quarter of 1999, and it is also the 14th consecutive quarter of declining loan loss provisions.

The FDIC also reported declines in failing and problem institutions in the third quarter. Six institutions failed in the third quarter, and 515 were considered “problem” banks, down from 553 in the previous quarter.

“Overall, most of the positive trends we’ve been seeing in industry performance continued in the third quarter,” Gruenberg said.

Nationstar Shifts Focus to Servicing

Nationstar Shifts Focus to Servicing

11/26/2013 BY: SANDRA LANE

Just as the seasons change, so does the effectiveness of certain segments in the mortgage industry. Mortgage originators and servicing companies are facing the reality of decreasing new loan volumes and the entrance of new players to the industry, forcing them to reassess where the best sources of revenue can be found.

Recently, Nationstar Mortgage led a slump in stock prices among mortgage-related companies when its stock fell 17 percent on November 6.

“Nationstar is going to have to do some restructuring,” said Brent Nyitray, director of capital markets for iServe Residential Lending. He explained in a segment on the Mortgage Markets Today radio show that this has always been a bit of a momentum stock that attracts growth investors who sell when there is a decline in earnings. “The market is going from a momentum/growth story to a basic financial investor story,” he added.

Following its recent stock decline, Nationstar announced the sale of its wholesale channel, Stonegate Mortgage, which generated $3.26 billion in the first six months of this year.

Some analysts are saying that when the bulk of a company’s revenue comes from origination and they sell what seems to be an effective channel of origination, it indicates a coming slowdown in the mortgage market in the next several months.

Nyitray agrees with that prognosis and said that by this action, Nationstar is indicating the one part of its business that is working and will continue to work is servicing. “In the past, origination and servicing have both been equally profitable,” Nyitray explained. “Now they are going to focus for the most part on servicing.”

One important reason origination has deteriorated is that refi loans have declined drastically. “The Mortgage Bankers Association Refi Index peaked at 5229 in early May and now has actually declined to 1500,” Nyitray said.

“When you consider that refis are approximately 65 percent of origination, that’s a really big hit. This explains why everyone is experiencing big downturns and why for Nationstar, there doesn’t seem to be enough profitability in the wholesale business anymore,” he said.

Another company affected by the decline is Ocwen Financial, although this company was not so severely impacted because it is mostly a servicer. Originally viewed as a fast growth company, Ocwen recently announced a $500 million buyback, a signal the company is not experiencing much organic growth. “Growth investors will now hesitate to buy that stock when they hear about the offer of a $5 million buyback,” Nyitray said.

In the midst of these declines, there are two recent IPOs, Stonegate and CherryHill, whose stock prices since going public are relatively flat. Some wonder if their timing was a bit off.

“Stonegate could not have gone public last year because they were not big enough,” Nyitray said. “However, one advantage Stonegate has is that it is really the only pure originator out there. Some investors don’t want to invest in servicing.”

Stonegate priced its stock at $16 and it went up to $18. On the other hand, Nyitray believes that CherryHill’s stock was overpriced. “They started out at $20 per share, and now their stock is trading at $17.”

Another reason behind declining originations may be that a lot of people are choosing to rent. “American homes for rent saw a 9 percent increase in the same time period that all of this decrease occurred–actually the same day,” Nyitray said. He also predicts rentals will continue to increase, even if interest rates go up.

“The story of the past year will probably be the story going forward,” Nyitray predicted, “and that is one of an improving economy.” In terms of origination, he said there is still plenty of opportunity. “Although home sales have declined in recent years, that number should be going up because of demographics,” he explained. He believes new construction will make a comeback as the economy improves. “There is a lot of pent-up demand, and that is going to produce a lot of demand for mortgages,” he said.

“This is a cyclical business, and although the low-hanging fruit of the refi market is gone, there is still a lot of opportunity with traditional growth and the normal building and selling of homes,” Nyitray said. “All in all, that’s good for the market.”

The Five Star Institute and Capital Markets Today have partnered to create Mortgage Markets Today, an in-depth, formal talk radio resource featuring expert guests, quality topics, and timely insights. The show delves into a vast array of topics ranging from the secondary market to federal compliance standards and real estate and mortgage lending. Investors, lenders, service providers, and all those interested in and affected by mortgage and housing markets can tune in on the web ( or download on iTunes .

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