Delinquencies Rise, Foreclosures Fall in Latest MBA Mortgage

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.44 percent of all loans outstanding as of the end of the second quarter of 2011, an increase of 12 basis points from the first
quarter of 2011, and a decrease of 141 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 32 basis points to 8.11 percent this
quarter from 7.79 percent last quarter. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent, down 12 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 second quarter was 4.43 percent, down 9 basis
points from the first quarter and 14 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 7.85 percent, a decrease of 25 basis points from last quarter, and a decrease of 126 basis points from the second quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 12.54 percent on a non-seasonally adjusted basis, a 23 basis point increase from last quarter, but was 143 basis points lower than a year ago.

Mortgage delinquencies are no longer improving and are now showing some signs of worsening," said Jay Brinkmann, MBA's Chief Economist. Foreclosure inventory rates also fell, to their lowest level since the third quarter of 2010. While some have
argued that this drop in foreclosures is a temporary drop which does not reflect the problems yet to come, this does not appear to be the case, at least at the national level.

Shadow inventory improves but still threatens housing recovery

Despite all those millions of distressed properties out on sale, depressing home prices even further, there is one glimmer of hope according Standard & Poor. According to the report the time it would take for banks to purge all of this so-called "shadow inventory" from the market (through foreclosure sales, mortgage modifications and other measures) shrunk to 47 months during the second quarter, a significant drop from the 52 months it estimated for the first quarter of this year. The report also found that the total dollar value of the loans on these properties -- known as non-agency loans because they are not backed by Fannie Mae, Freddie Mac or the Federal Housing Administration -- also fell to $405 billion at the end of June from $433 billion three months earlier. S&P said the decline was helped by stabilizing liquidation rates and by fewer borrowers falling behind on their mortgage payments as the economy slowly recovered during the quarter.

S&P estimates that there are still a total of between 4 million and 5 million homes, including those with agency-backed loans, in shadow inventory, an amount that continues to jeopardize the housing market's recovery. Nevertheless, Fannie and Freddie are looking to rid themselves of a large percentage the shadow inventory they do have -- and quickly. Earlier this month, the Federal Housing Finance Agency (FHFA), the Treasury Department and the U.S. Department of Housing and Urban Development were seeking suggestions on how to dispose all the repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration in a way that would benefit local communities.

Refinance Applications Increase

Mortgage applications increased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 12, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was 13.5 percent lower than a year ago. The Refinance Index increased 8.0 percent from the previous week, but was 16.3 percent lower than the same week last year. The seasonally adjusted Purchase Index decreased 9.1 percent from one week earlier. The unadjusted Purchase Index decreased 10.1 percent compared with the previous week and was 1.1 percent lower than the same week one year ago.

“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate teaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President
of Research and Economics. Fratantoni continued, “The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines.” The four week moving average for the seasonally adjusted Market Index is up 6.9 percent. The four week moving average is down 2.2 percent for the seasonally adjusted Purchase Index, while this average is up 10.1 percent for the Refinance Index. The adjustable-rate mortgage
(ARM) share of activity decreased to 5.8 percent from 6.1 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.37 percent. The 30-year fixed contract rate has decreased for three straight weeks and is at a new low
for this year.

Will you sell your house after 2012?

YOU SELL YOUR HOUSE AFTER 2012? This Is True… Will you ever sell your house after 2012? Call your Democratic Senator’s Office to confirm this hidden fact about the ObamaCare regulation. Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home, etc. When did this happen? It’s in the health care bill. Just thought you should know. SALES TAX GOES INTO EFFECT 2013 (Part of HC Bill). Why 2013? Could it be to come to light AFTER the 2012 elections? REAL ESTATE SALES TAX So, this is “change you can believe in”? Under the new health care bill all real estate transactions will be subject to a 3.8% Sales Tax. The bulk of these new taxes don’t kick in until 2013
If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Does this stuff make your November and 2012 vote more important? Oh, you weren’t aware this was in the obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home I hope you forward this to every single person in your address book. VOTERS NEED TO KNOW.

BEREL Sunday International Investing Edition: Wells Fargo Turns to Ireland for Loan Portfolios

Posted by Carole VanSickle on Sunday, August 14th 2011

In a $1.4 billion deal, Wells Fargo has won the Bank of Ireland’s U.S. commercial-real-estate loan portfolio as the Irish bank attempts to deleverage its assets. The portfolio consists of 25 loans sold at close to face value and backed primarily by properties in New York, Boston and Washington[1]. The Bank of Ireland was ordered by Ireland’s financial regulator to deleverage by cutting the lender’s loan portfolio by $43 billion by the end of 2013. Wells Fargo also purchased an additional $1 billion in loans from Allied Irish Banks earlier this year and is now taking aim at a $9.5 billion portfolio of loans in the offing from the Anglo Irish Bank Corporation. The latter includes commercial “trophy properties” in New York City and Chicago.

JPMorgan Chase and Bank of America are also after the Anglo Irish Bank portfolio and have submitted bids on it[2]. Most of the loans are expected to perform through maturity. The sale will also be the first of its kind, since “this is the first foreign bank to sell its entire U.S. loan portfolio, and it will be good test of the market,” said head of global real estate practice at law firm Greenberg Traurig, Robert Ivanhoe.

Do you think it’s a good thing that American lenders are buying back American loans, or should they be doing other things with these billions of dollars?

Mortgage markets in the U.S., which remain on government life support, could be rattled by the downgrade of the U.S. credit rating, potentially raising borrowing costs for consumers. Given the "sufficiently perilous" state of the U.S. mortgage market, a downgrade "can do nothing but harm the market," says Karen Shaw Petrou, managing partner of Federal Financial Analytics, a research firm in Washington. "The question is how much?" To be sure, no one knows for certain the impact of the unprecedented downgrade on the mortgage market, even if that market is fundamentally intertwined with the federal government.

One concern is that downgrades may trigger forced selling by mutual funds or foreign investors to comply with investor-specific capital requirements restricting them to assets rated triple-A. But analysts said that most institutional investors' rules for investing in government-backed mortgage debt aren't contingent on ratings. And with investors seeking traditional safe-haven assets such as Treasury and government-backed mortgage securities, "there just doesn't seem to be much else to invest in," says Andrew Davidson, a mortgage-industry consultant in New York. "What would people put
their money in if they sold their agency mortgages? It's hard to see what the trade is."

Mortgage rates are closely tied to yields on the 10-year Treasury note. Rising demand for Treasurys pushed down yields over the past two weeks, even as the threat of a U.S. default from the debt-ceiling debate in Washington dragged on, because investors looked for less risky assets amid concerns over the European debt crisis and the sluggish U.S. economy. Mortgage rates dropped to an eight-month low last week, with 30-year fixed-rate mortgages averaging 4.39% for the week ended Thursday, according to a survey by Freddie Mac. Still, the uncertainty created by the downgrade has nvestors on edge. The interplay of a downgrade, on top of the euro-zone crisis and renewed fears over a double-dip recession in the U.S., could lead to increased volatility in mortgage markets. "There are so many moving parts to this that no one really knows how it will go," says Mr.Simon.

Home ownership at 1998 levels

The U.S. homeownership rate in the second quarter dropped to its lowest level in 13 years, according to the Census Bureau, with analysts expecting even more drops ahead. The homeownership rate fell to 65.9%, down one percentage point from a year ago. It's the lowest level measured since the first quarter of 1998. Analysts at Capital Economics said this means the homeownership rate built during the housing boom has been "completely wiped out" by its bust. "The poor economic climate, the double dip in house prices, the high number of foreclosures and tight credit conditions are all reasons why the homeownership rate will continue to fall," analysts said.

The rate remained highest in the Midwest at 70%, followed by 68.2% in the South, 63% in the Northeast and 60.3% in the West. Since the second quarter of 2007, the homeownership rate in the West has dropped more than four full percentage points.
Homeownership for younger consumers has become even more sparse. According to the Census Bureau, the rate among Americans younger than 35 years old dropped to 37.5% from 39% one year ago. This, analysts said, is a sign credit has tightened for younger consumers. With unemployment elevated for this cohort, as well, the rate could continue to fall in coming quarters. "With another 3 million foreclosures in the pipeline and no sign of a major improvement in credit conditions or the labor market, demand for owner-occupied housing is likely to remain weak for some years yet," Capital Economics analysts said.