March 31, 2008
Filed under: Foreclosure, Mortgage Industry Trends — admin @ 8:56 pm
Ruth Lee
Frankly while not the most conservative amongst my friends in the mortgage world, I could not help but cringe when I saw the proposed legislation for FHA to purchase and refinance “underwater” mortgage loans. This legislation would essentially make FHA the largest scratch and dent lender in the market.
Articles I have been reading note that lenders would have to mark down the principal balance to a 90% CLTV under this program. Writing down this loss is actually considerably better than most can get in scratch and dent market at 40-60 cents on the dollar. What a deal!
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March 25, 2008
Filed under: Credit Tinkering, False Equity — admin @ 3:33 pm
Ruth Lee
This isn’t going to be a quick fix.
“The real estate slump will persist as a glut of houses on the market depresses property values and lenders toughen mortgage requirements to stem credit losses. The Federal Reserve last week said the outlook had worsened and pledged to do whatever was needed to keep the economy growing. (full story)”
Throughout this financial crisis, there have been many industry “insiders” who have opted to take the route of eternal optimism. The declining value of the dollar, enormous deficits, increases in the cost of goods, declines in real income and a fundamental distrust in the American mortgage market are all contributing to a potentially difficult recession/depression for the economy. To make matters worse, every time home prices slide, there is a corresponding loss of wealth through equity.
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Filed under: Mortgage Industry Trends, Real Estate Industry — admin @ 12:49 pm
Mary Kladde
This kind of news demonstrates the symbiotic relationship between the mortgage industry and the real estate industry - what affects one affects both - and strongly suggests if not demands that our two industries collaborate more closely on everything from supply/demand forecasting, collateral valuation methodologies and signals of fraud.
“March 24 (Bloomberg) — Sales of existing houses in the U.S. probably fell in February to the lowest level in at least nine years, economists said ahead of a private report today. Purchases dropped 0.8 percent to an annual rate of 4.85 million, according to the median of 63 forecasts in a Bloomberg News survey. That would be the fewest since the National Association of Realtors began keeping records in 1999. The real estate slump will persist as a glut of houses on the market depresses property values and lenders toughen mortgage requirements to stem credit losses. The Federal Reserve last week said the outlook had worsened and pledged to do whatever was needed to keep the economy growing.
“We expect both purchasing activity and pricing to fall for the remainder of the year,” said Joseph Brusuelas, chief U.S. economist at IDEAglobal Inc. in New York.
The National Association of Realtors is scheduled to issue its report at 10 a.m. in Washington. Estimates in the Bloomberg News survey showed sales rates ranging from 4.69 million to 4.9 million.”
Click here to read the full story at Bloomberg: U.S. Home Resales Probably Fell as Prices Slid, Credit Shrank.
March 20, 2008
March 12, 2008
Filed under: Cover Your Assets — admin @ 9:50 am
Mary Kladde
Not interested in managing the kind of operational detailed previously mentioned (in the CYA series here)? Want to focus on originations – your front end income generator? There are service providers such as Titan Lenders Corp. that can manage these pieces, as well as many other details not mentioned, which can help provide the risk mitigation you seek.
Click here for more information.
March 11, 2008
Filed under: Foreclosure, Subprime Crash — admin @ 3:37 pm
Ruth Lee
Here is another great article outlining the extending effects of the subprime crash. (As my colleague put it, “Ripple effects that will end up hitting responsible borrowers in their pocketbooks and their lifestyle.”)
From the National League of Cities:
“In addition to the after-effects of foreclosure on families, NLC is educating federal lawmakers about the unexpected consequences the current mortgage crisis is having on local governments. Foreclosed houses, which often sit vacant for long stretches of time, are contributing to the blight long-associated with abandoned properties. Local governments must bear at least the short-term costs of maintaining these vacant properties until they can track down the owner. This can be difficult since mortgages are resold among lenders and investors.
Additionally, since vacant properties all too often become havens for crime, local governments are bearing increased costs for greater police presence in those areas where foreclosed vacant properties are concentrated. At the same time, cities are forecasting that there will be decreased property tax revenues due to declining assessed valuations.”
To read the full article, click here.
Filed under: Compliance, Cover Your Assets — admin @ 12:30 pm
Mary Kladde
Compliance checks…know what they are? Know what they do? Most investors conduct them prior to funding or purchasing a loan. It’s a good idea be conducting them and have them in place. It’s even better if you know the purchasing investor’s vendor preference. This way you are already ahead of the game in meeting required purchasing standards.
More to come…
Filed under: Subprime Crash — admin @ 11:00 am
Ruth Lee
In follow up to my post Ratings Agencies and the Subprime Crash, this story ran yesterday in Marketwatch:
“In the latest salvo in a now highly public war of words, rating agency Fitch accused bond insurer MBIA Inc. of asking it to destroy information used to come up with ratings and said it will continue to rate the firm’s subsidiaries without charge…”
Click here to read the full story.
March 10, 2008
Filed under: Foreclosure, Subprime Crash, Suburban Foreclosure Epidemic — admin @ 2:10 pm
Ruth Lee
“The subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.”
Christopher B. Leinberger, The Atlantic Monthly, March 2008
Talk about a fascinating article. How far will the effects of foreclosures and the subprime crash really go? Stories about the suburban foreclosure epidemic are rampant, like this one and this one and this one - and that’s just a start.
I guess building and building and building on land reserve is not the best move after all for communities. It makes you wonder how much tax incentives and building subsidies many of these builders were offered for rampant housing production cost the taxpayer.
Click here to read the full article.
March 7, 2008
Filed under: Secondary Market, Subprime Crash — admin @ 3:55 pm
Mary Kladde
Interesting article on how ratings agencies have come under fire over the U.S. subprime crisis:
“Ratings agencies like Standard & Poor’s have come under criticism over the subprime housing crisis. Critics have said that the agencies acted too slowly in downgrading highly-rated securities linked to subprime mortgages…”
Click here to read the full article.
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