Fannie Mae issuance drops to lowest level since January 2009

Fannie Mae issued $34.5 billion in guaranteed mortgage-backed securities in April, down from $54 billion one month ago and the lowest level since January 2009, when the government-sponsored enterprise issued $21 billion.

The highest level since then was at $130 billion in June 2009. Not only did the secondary market see a slower pace in April, but pending home sales on the origination side showed a significant drop as well.

Fannie also cut its mortgage portfolio for the 10th straight month in April, as its gross mortgage portfolio declined at a compound annualized rate of 15.8% in April.

Under the conservatorship agreements issued in September 2008, Fannie and Freddie Mac must cut their mortgage portfolios to less than $729 billion by Dec. 31. Freddie Mac is already there, dropping to $692 billion early in 2011.

Although Fannie has been making cuts since July, it remains above the threshold at $748.8 billion as of April. Federal Housing Finance Agency Acting Director Edward DeMarco, the chief regulator for the GSEs, said in a House subcommittee hearing Wednesday that Fannie is expected to be below the limit by the end of the year.

The last time Fannie added to the portfolio was in June when the gross mortgage portfolio increased to $817.8 billion.

In April, the serious delinquency rate on Fannie Mae mortgages dropped to 4.27%, down 17 basis points and the lowest level since July 2009. In February 2010, the serious delinquency rate increased to 5.59% and has dropped every month since.

by JON PRIOR

Friday, May 27th, 2011, 11:54 am

 

www.KetronPropertyManagement.com

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Foreclosure Supply Drags Market Down

According to a report from RealtyTrac, the online marketer of foreclosed properties. Las Vegas has so many foreclosures that 53% of all the homes sold in Nevada are in some stage of foreclosure.  Foreclosures represent 45% of sales in California and Arizona, and 28% of all existing home sales during the first three months of 2011.  What’s more, the homes are selling at steep discounts, especially so-called REOs, bank-owned homes that have been taken in foreclosure procedures.  The average REO cost on average about 35% less than comparable properties, according to RealtyTrac.  But in some areas, the discounts were ever greater: In New York State, the discount for REOs was 53% during the first quarter. And it was nearly 50% in Illinois, Ohio, and Wisconsin.  Short sales sold at an average 9% discount.  Including both REOs and short sales, Ohio had the biggest discount of any state, at 41%.

There were 158,000 deals involving distressed properties nationwide during the first quarter, less than half the nearly 350,000 during the same period two years earlier.  With the slowed sales pace, it will take three years to burn through the inventory of 1.9 million distressed properties, according to Rick Sharga, a spokesman for RealtyTrac.  “Even if you look at REOs alone, it will take 24 months to clear them and that’s without any new foreclosures at all coming into the system,” said Sharga.

As Lenders Hold Homes in Foreclosure, Sales Are Hurt

New York Times

EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

Multimedia
A Backlog in the Housing Market

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.

The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.

But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.

Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.

“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”

The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.

“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”

The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.

Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.

Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.

The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.

“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”

By ERIC DASH
Published: May 22, 2011

To Prevent Foreclosure in Knoxville, TN visit www.TNHouseRelief.com

Deliquencies and Foreclosures

MBA – delinquencies and foreclosures down

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.32% of all loans outstanding as of the end of the first quarter of 2011, an increase of seven basis points from the fourth quarter of 2010, and a decrease of 174 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 117 basis points to 7.79% this quarter from 8.96% last quarter.  The percentage of loans on which foreclosure actions were started during the first quarter was 1.08%, down 19 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 first quarter was 4.52%, down 12 basis points from the fourth quarter of 2010 and 11 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 8.10%, a decrease of 50 basis points from last quarter, and a decrease of 144 basis points from the first quarter of last year.  The combined percentage of loans in foreclosure or at least one payment past due was 12.31% on a non-seasonally adjusted basis, a 129 basis point decline from 13.60% last quarter.

On a seasonally adjusted basis, the overall delinquency rate increased for all but FHA loans, with the biggest increases coming in the subprime categories. The seasonally adjusted delinquency rate stood at 4.59% for prime fixed loans, 11.25% for prime ARM loans, 22.04% for subprime fixed loans, 26.31% for subprime ARM loans, 12.03% for FHA loans, and 6.93% for VA loans.  The percentage of loans in foreclosure, also known as the foreclosure inventory rate, decreased 12 basis points overall to 4.52. The foreclosure inventory rate for prime fixed loans, which make up the largest portion of the survey (accounting for 63% of all loans outstanding), decreased eight basis points to 2.59%. The rate for prime ARM loans decreased 69 basis points from last quarter to 9.53%. Subprime fixed loans saw an increase of 67 basis points to 10.53%, which is a new record high in the survey. The rate for subprime ARM loans increased 26 basis points to 22.26%, while the rate for FHA loans increased five basis points to 3.35% and the rate for VA loans increased four basis points to 2.39%.  The foreclosure starts rate decreased 16 basis points for prime fixed loans to 0.68%, 42 basis points for prime ARM loans to 2.38%, 19 basis points for subprime fixed to 2.56% and 57 basis points for subprime ARMs to 3.67%. The foreclosure starts rate also decreased nine basis points for FHA loans to 0.93% and 15 basis points for VA loans to 1.02%.

The non-seasonally adjusted foreclosure starts rate decreased one basis point for prime fixed loans, 33 basis points for prime ARM loans, eight basis points for subprime fixed loans, 65 basis points for subprime ARM loans, 53 basis points for FHA loans, and 16 basis points for VA loans.

Do Not Be Fooled by Scam Artists!!

FTC Issues Final Rule to Protect Struggling Homeowners from Mortgage Relief Scams
Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures

Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.

“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,” FTC Chairman Jon Leibowitz said. “By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”

The FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. Bogus operations falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure. Many of these operations pretend to be affiliated with the government and government housing assistance programs. The FTC has brought more than 30 cases against operations like these, and state and federal law enforcement partners have brought hundreds more.

Advance fee ban

The most significant consumer protection under the FTC’s new rule is the advance fee ban. Under this provision, mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The companies also must remind consumers of their right to reject the offer without any charge.

Disclosures

The Rule requires mortgage relief companies to disclose key information to consumers to protect them from being misled and to help them make better informed purchasing decisions. In their advertising and in communications directed at individual consumers (such as telemarketing calls), the companies must disclose that:

* they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
* the lender may not agree to change the consumer’s loan; and
* if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

Companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.

Prohibited claims

The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

* the likelihood of consumers getting the results they seek;
* the company’s affiliation with government or private entities;
* the consumer’s payment and other mortgage obligations;
* the company’s refund and cancellation policies;
* whether the company has performed the services it promised;
* whether the company will provide legal representation to consumers;
* the availability or cost of any alternative to for-profit mortgage assistance relief services;
* the amount of money a consumer will save by using their services; or
* the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Attorney exemption

Attorneys are generally exempt from the rule if they meet three conditions: they are engaged in the practice of law, they are licensed in the state where the consumer or the dwelling is located, and they are complying with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must meet a fourth requirement – they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.

All provisions of the rule except the advance-fee ban will become effective December 29, 2010. The advance-fee ban provisions will become effective January 31, 2011.

The FTC rulemaking proceeding was conducted pursuant to Congressional legislation sponsored in 2009 by Senators Jay Rockefeller and Byron Dorgan. The Final Rule applies only to entities within the FTC’s jurisdiction under the Federal Trade Commission Act, which excludes, among others, banks, savings and loans, federal credit unions, common carriers, and entities engaged in the business of insurance. In June 2009, the FTC issued an Advance Notice of Proposed Rulemaking seeking comment on the practices of for-profit mortgage relief companies. In February 2010, the FTC announced a Notice of Proposed Rulemaking and sought comments from interested persons, including advocates for consumers, the business community, and the legal profession.

Click here for facts about mortgage consumers’ rights.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

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