Report: October Cool Down in Temperature Only

Report: October Cool Down in Temperature Only

BY: ASHLEY R. HARRIS

Cooler temperatures didn’t necessarily mean a cool down in October activity, according to recent data. Despite a seasonal slowdown in activity, the housing market continued to post some positive metrics in October, reports the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which aggregates approximately 2,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

“There were signs of continued resilience in the housing market last month. Most of the metrics tracked by HousingPulse were positive for October and the few negative metrics appear to be seasonal,” said Thomas Popik, research director for the HousingPulse survey.

Investors had a solid showing of home purchase activity during October according to the data. In February, when the home purchase market hit 23.1 percent, investor participation took a tumble hitting a three-year low of just 16.6 percent in August. The monthly rate is based on a three-month moving average. But, during the past two months, the investor share has risen, climbing to 16.9 percent in September and then 17.4 percent in October. The two-month rise in investor activity is significant given that it occurred at the same time the proportion of distressed properties in the housing market has continued to fall.

The HousingPulse Distressed Properties Index, which reflects the share of home purchases involving real estate owned or short sales, fell to a four-year low of 24.1 percent in October based on a three-month moving average. This was down from 24.6 percent in September and 35.1 percent in October of 2012.

Homes stayed on the market for shorter periods of time with increasing numbers of offers on those non-distressed properties. The national average-time-on-market for non-distressed properties was 8.9 weeks in October, while the national average number of offers on non-distressed properties last month was 2.1.

Still, the October data revealed a slowdown in homebuyer traffic and a three-month slide in the sales-to-list price ratio for non-distressed properties. Both of these trends were seen last fall and appear to be seasonal developments.

 

Foreclosure Auction and REO Sales Picked up Pace in October

Foreclosure Auction and REO Sales Picked up Pace in October

11/26/2013 BY: ASHLEY R. HARRIS

RealtyTrac released its October 2013 U.S. Residential and Foreclosure Sales Report, which shows that U.S. residential properties, including single-family homes, condominiums and townhomes, sold at an estimated annualized pace of 5,649,965—a 2 percent increase from the previous month and up 13 percent from October 2012.

Home sales continued to dip on an annualized basis in three bellwether western states despite the nationwide increase for the third consecutive month. California home sales were down 15 percent from a year ago, Arizona fell 13 percent year-over-year, and Nevada was down 5 percent.

The national median sales price of all residential properties—including both distressed and non-distressed sales—was $170,000, unchanged from September but up 6 percent from October 2012. It was the 18th consecutive month median home prices have increased on an annualized basis.

The median price of a distressed residential property—in foreclosure or bank-owned—was $110,000 in October, 41 percent below the median price of $185,000 for a non-distressed property.

“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” said Daren Blomquist, vice president at RealtyTrac. “The combination of rapidly rising home prices—along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home—means short sales are becoming less favorable for lenders.”

The report also found that short sales represented 5.3 percent of all sales, down from 6.3 percent in the previous month and down from 11.2 percent in October 2012.

Nevada led the country in short sales with 14.2 percent in October. Florida followed with 13.6 percent, Maryland with 8.2 percent, Michigan with 6.7 percent, and Illinois with 6.2 percent.

Foreclosure auction sales to third parties—a new category separated out in the report for the first time in October—represented 2.5 percent of all sales, down from 2.8 percent in the previous month but nearly twice the 1.3 percent in October 2012.

REO sales accounted for 9.6 percent of all sales, up from 8.9 percent in September and up from 9.4 percent in October 2012.

 

GSEs Update Short Sale Policies

GSEs Update Short Sale Policies

11/25/2013 BY: CARRIE BAY

Fannie Mae and Freddie Mac announced changes to their Servicing Guides Monday aimed at helping more borrowers avoid foreclosure through short sales and deeds-in-lieu of foreclosure (DILs).

Some of the changes are to align with certain Consumer Financial Protection Bureau (CFPB) rules and regulations that implement the mortgage servicing provisions of the Dodd-Frank Act, and some are simply to ease eligibility requirements for liquidation workout options. The newGSE requirements also become effective January 10, the same effective date as the CFPB’s new mortgage servicing standards.

Documentation Exceptions. Eligibility for a short sale or DIL with borrower documentation exceptions has been expanded to include borrowers whose mortgage debts have been discharged in a Chapter 7 bankruptcy, regardless of the borrower’s FICO score. Additionally, mortgages that were originated as investment properties are no longer eligible for the exception to borrower documentation. Servicers must now review a complete Borrower Response Package (BRP) to evaluate these borrowers for a short sale or DIL.

Cash Reserves. Servicers must now submit a short sale or DIL recommendation to Freddie Mac for approval when the borrower’s cash reserves exceed $50,000.

Foreclosure Delays. Servicers and their counsel must delay the next legal action in the foreclosure process when the first complete BRP is received more than 37 days prior to the scheduled foreclosure sale date and evaluation of the package results in an offer to proceed with a short sale or DIL.

Expedited Reviews. Servicers are no longer required to conduct an expedited review when a completed BRP with a short sale purchase offer is received greater than 37 days prior to a scheduled foreclosure sale date. However, servicers must continue to expedite review of a completeBRP received between 37 days and 15 days prior to a scheduled foreclosure sale date.

Trial Period Plans. If a borrower remains eligible for the original Trial Period Plan (TPP) offer after receiving an appeal decision and accepts the original offer, servicers must reissue the original offer with a new TPP due date. Any delinquent amounts accrued during the appeal review process should be included in the modified principal balance.

LoanLogics Unveils MERS Monitoring and Review Service

LoanLogics Unveils MERS Monitoring and Review Service

11/25/2013 BY: TORY BARRINGER

LoanLogics, a provider of loan quality management and performance analytics, announced the unveiling of its MERS Independent Third Party Performance Monitoring and Annual Review service.

The specialty audit practice reviews and tests MERS controls and processes so servicers can ensure they are compliant with MERS regulations and avoid scrutiny.

“Lenders have long recognized the importance MERS plays in helping save time, money and improving accuracy. At the same time, however, there is an extensive procedures manual that services have to familiarize themselves with, and that can prove to be a daunting task for many of them,” said Gary Vandeventer, who recently joined Fort Washington, Pennsylvania-based LoanLogics as VP of loan servicing consulting after serving as VP of MERS’ product division.

In addition to checking for the presence or absence of certain processes, the service evaluates how a client runs its MERS operations and examines if they can meet their required timeframes.

“We make sure the rules covering MERS have been implemented and test, and that allows our clients to feel confident that they can pass a MERS audit without any issues,” Vandeventer said. “That’s a critical consideration in the wake of everything that has happened to the mortgage industry over the past few years.”

 

Report: October Cool Down in Temperature Only

Report: October Cool Down in Temperature Only

11/25/2013 BY: ASHLEY R. HARRIS

Cooler temperatures didn’t necessarily mean a cool down in October activity, according to recent data. Despite a seasonal slowdown in activity, the housing market continued to post some positive metrics in October, reports the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which aggregates approximately 2,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

“There were signs of continued resilience in the housing market last month. Most of the metrics tracked by HousingPulse were positive for October and the few negative metrics appear to be seasonal,” said Thomas Popik, research director for the HousingPulse survey.

Investors had a solid showing of home purchase activity during October according to the data. In February, when the home purchase market hit 23.1 percent, investor participation took a tumble hitting a three-year low of just 16.6 percent in August. The monthly rate is based on a three-month moving average. But, during the past two months, the investor share has risen, climbing to 16.9 percent in September and then 17.4 percent in October. The two-month rise in investor activity is significant given that it occurred at the same time the proportion of distressed properties in the housing market has continued to fall.

The HousingPulse Distressed Properties Index, which reflects the share of home purchases involving real estate owned or short sales, fell to a four-year low of 24.1 percent in October based on a three-month moving average. This was down from 24.6 percent in September and 35.1 percent in October of 2012.

Homes stayed on the market for shorter periods of time with increasing numbers of offers on those non-distressed properties. The national average-time-on-market for non-distressed properties was 8.9 weeks in October, while the national average number of offers on non-distressed properties last month was 2.1.

Still, the October data revealed a slowdown in homebuyer traffic and a three-month slide in the sales-to-list price ratio for non-distressed properties. Both of these trends were seen last fall and appear to be seasonal developments.

 

New Head of FHFA Expected

New Head of FHFA Expected

11/25/2013 BY: CARRIE BAY

Analysts expect to see a new face at the helm of the agency overseeing Fannie Mae and Freddie Mac now that Democrats in the Senate have changed the rules, eliminating the use of the filibuster to block presidential appointments.

The Senate majority’s instatement of the so-called nuclear option “has cleared the path for Mel Watt’s confirmation” as director of the Federal Housing Finance Agency (FHFA), according to secondary market analysts at Barclays.

Under the chamber’s new rules, the president’s nominees for all positions except Supreme Court judge can be approved with a simple majority vote, rather than the previous requirement of 60 “yay” votes.

Rep. Mel Watt (D-North Carolina) received 56 votes in favor of his confirmation on October 31st, just 4 votes shy of the number needed under the old rules but enough to be confirmed under the new simple-majority requirement.

“[H]e has the required votes and should be confirmed as the new FHFA director. In our view, this raises the level of policy risk,” Barclays said, “as we would generally expect him to be more supportive of the administration’s policies. … [K]ey areas of concern would be principal forgiveness for the GSEs and potential expansion of the HARP [Home Affordable Refinance Program] eligibility date.”

Watt and the administration have previously expressed support for using principal forgiveness as part of the Home Affordable Modification Program (HAMP) waterfall for GSE loans, Barclays notes. While Acting Director Edward DeMarco has resisted its implementation to date on the argument that the taxpayer benefits would be too small, under Watt’s direction, Barclays expects the FHFA to “take a fresh look at the administration’s proposal and be more amenable to implement it.”

In addition, with Watt’s confirmation, Barclays says the administration may renew its push to expand the HARPcut-off date by a year. An extension of the HARP eligibility date would significantly increase the pool of HARP-eligible loans from the 2009 and 2010 vintages carrying interest rates above the 4.5 to 5 percent range, according to Barclays’ analysts.

“We estimate that these cohorts would likely see as much as a 50 percent increase in borrower eligibility,” they said.

While the immediate attention upon Watt’s confirmation will be on potential changes to HARP or decisions surrounding principal forgiveness and will likely spark some near-term uncertainty, analysts with FBR Capital Markets & Co. believe Watt will be “very beneficial to mortgage credit availability.”

“As director, we expect him to focus on removing barriers for well-qualified homeowners from receiving mortgage credit on loans securitized by Fannie and Freddie, and he is unlikely to lower loan limits, increase g-fees [guarantee fees], or implement new limits on multifamily lending,” according to FBR.

Though his confirmation will probably further complicate housing finance reform, it makes it more likely there will be a continued government backstop, FBR said, adding, “We view this confirmation as positive for mortgage originators, homebuilders, and mortgage insurers and as a negative for private-label securitizers and REITS [real estate investment trusts].”

“It should be noted there is some chance his confirmation will not take place until after the Thanksgiving recess, but that is not a reflection of his lacking the necessary votes,” Barclays said.

Is Tighter Credit for the Better?

Is Tighter Credit for the Better?

BY: KRISTA FRANKS BROCK

It’s no secret underwriting standards have tightened in recent years, and while many decry the heightened standards for making homeownership less accessible to some Americans, CoreLogic economist Sam Khater pointed out in a report released Wednesday that heightened standards are undoubtedly impacting delinquency rates for the better.

“While there has been much consternation about underwriting being too tight in the context of forthcoming mortgage regulations, one underappreciated outcome has been the very good performance of mortgages during the last few years,” Khater said in an article titled “Tight Credit Results in Flawless Performance,” which was part of CoreLogic’s most recent MarketPulse.

“Tighter credit results in flawless performance,” Khater said.

The serious delinquency rate, which includes mortgages 90 or more days past due, in foreclosure or REO, stands at 5.4 percent as of July, according to CoreLogic.

While still significantly higher than the historical norm of 1 percent, the current rate has come a long way since its peak of 8.5 percent in January 2010, according to CoreLogic data.

Taking an even closer look, Khater examines 2013 vintage loans and compares them to vintages from years past.

Over the first half of this year, the serious delinquency rate for loans originated this year was six basis points, according to Khater.

This is down drastically from the 108 basis points for loans originated in 2007, which is the worst year in the 2000s, Khater noted.

The current rate is also better than the rate recorded for 2003, a year when home prices were rapidly increasing. Serious delinquencies for 2003 vintage loans was 15 basis points, according to Khater.

Serious delinquencies for 2013 loans are also down from 10 basis points among loans originated last year.

“This clearly indicates that the most recent mortgage vintages are pristine relative to even the good performing years of the early 2000s,” Khater said.

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