OREGON REAL ESTATE ROUND TABLE

Tag: Business

  • Inside Lending Newsletter From Geoffrey Boyd, Prime Lending


    Ben Bernanke (lower-right), Chairman of the Fe...
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    INFO THAT HITS US WHERE WE LIVE  Last week’s housing market data centered on Standard & Poor’s S&P/Case-Shiller Home Price Index. This showed home prices UP in July for the fourth month in a row, but the pace of their gain had slowed from prior months. With the expiration of the government’s home buyer tax incentives, some observers wonder if the S&P/Case-Shiller will keep moving up. The composite 20-city index, a broad measure of U.S. home prices, showed a 3.2% increase year over year, the sixth month in a row it posted an annual gain.

    Nonetheless, home price gains did slow in the waning days of the tax credits. In July, only 12 of the 20 cities surveyed showed price gains, compared to 17 cities reporting rising prices in June. Analysts pointed out that these results underscore the fact that the spring/early summer months are the best for home sales. Most experts feel the next few months should give us a better idea of the true strength of the housing market.

    >> Review of Last Week

    A BIT OF A BREATHER… Investors on Wall Street took a rest last week from bidding stock prices up the way they had earlier in the month. Performance of the major market indexes was uninspiring, though slippages were all less than a half a percent. But performance for the month was impressive. The broad-based S&P 500 index, favored by professional investors, shot up 8.8% for September, its best monthly gain since April 2009 and its best September reading in over 70 years.

    Perhaps investors took the week off because they remain cautious about the near-term economic recovery. Consumers seem to agree, as the week began with a surprise drop in September’s Consumer Confidence Index, which hit a seven-month low, falling far short of consensus expectations. The ISM Manufacturing Index also slid a bit from August to September, missing estimates, but remaining in expansion territory.

    Upside economic data included better than forecast weekly initial jobless claims, although 453,000 is still not a good number. Continuing claims dropped by 83,000 for the week, but that number remains well above 4 million. Personal income and spending (PCE) for August were up better than expected and Core PCE was up just 0.1%, so inflation is still in check.

    For the week, the Dow ended down 0.3%, to 10829.68; the S&P 500 was down 0.2%, to 1146.24; and the Nasdaq was off 0.4%, to 2370.75.

    The bond market ended the week with investor interest helping prices in some areas. One was the FNMA 30-year 4.0% bond we watch, which ended UP 10 basis points for the week, closing at $102.27. According to Freddie Mac‘s weekly survey, national average mortgage rates for fixed-rate mortgages dropped a tad, remaining at historically low levels.

    >> This Week’s Forecast

    WHERE WE’RE GOING WITH HOMES AND JOBS… The week begins with August Pending Home Sales, which count signed contracts and therefore tell us what will be happening with closings a few months out. Unfortunately, the consensus expects the August reading to be down a bit from July. But September ISM Services is expected to show the non-manufacturing sector still indicating expansion, with a reading just over 50.

    The week ends with the September Employment Report and the forecast is for no increase in payrolls overall, although 70,000 jobs are expected to be added to the private sector. However, population growth outpaces this rate of job creation, so unemployment is predicted to tick up to 9.7%.

    >> The Week’s Economic Indicator Calendar

    Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

    Economic Calendar for the Week of October 4 – October 8

    Date Time (ET) Release For Consensus Prior Impact
    M
    Oct 4    		 10:00 Pending Home Sales Aug 1.0% 5.2% Moderate
    Tu
    Oct 5    		 10:00 ISM Services Sep 51.8 51.5 Moderate
    W
    Oct 6    		 10:30 Crude Inventories 10/2 NA –0.475M Moderate
    Th
    Oct 7    		 08:30 Initial Unemployment Claims 10/2 455K 453K Moderate
    Th
    Oct 7    		 08:30 Continuing Unemployment Claims 9/25 4.450M 4.457M Moderate
    F
    Oct 8    		 08:30 Average Workweek Sep 34.2 34.2 HIGH
    F
    Oct 8    		 08:30 Hourly Earnings Sep 0.1% 0.3% HIGH
    F
    Oct 8    		 08:30 Nonfarm Payrolls Sep 0K –54K HIGH
    F
    Oct 8    		 08:30 Nonfarm Private Payrolls Sep 70K 67K HIGH
    F
    Oct 8    		 08:30 Unemployment Rate Sep 9.7% 9.6% HIGH

    >> Federal Reserve Watch

    Forecasting Federal Reserve policy changes in coming months  There’s been a lot of talk about the Fed’s readiness to provide a second round of quantitative easing (QE-2) if needed. This has led economists to believe that the Fed Funds Rate will remain at its rock bottom levels for quite some time. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

    Current Fed Funds Rate: 0%–0.25%

    After FOMC meeting on: Consensus
    Nov 3 0%–0.25%
    Dec 14 0%–0.25%
    Jan 26 0%–0.25%

    Probability of change from current policy:

    After FOMC meeting on: Consensus
    Nov 3 <1%
    Dec 14 <1%
    Jan 26 <1%
    Geoffrey Boyd
    Area Manager/Mortgage Consultant
    10135 SE Sunnyside Road, Suite 120
    Clackamas, OR 97015
    Phone: 503.462.0413
    Fax: 877.874.4649
    Mobile: 503.819.2462
    Main: 503.786.7092
    Related Articles

  • Let’s Use Fannie And Freddie To Bail Ourselves Out By Refinancing Everyone’s Mortgage — Says Glenn Hubbard, by Daniel Gross, Yahoo!


    Glenn Hubbard, Harvard-trained economist, former Bush administration official, dean of the Columbia Business School, is a mild-mannered, buttoned-down guy. But his proposal to bolster the housing market and provide some stimulus to America’s long-suffering homeowners is a bit radical.

    In a recent New York Times op-ed article, Hubbard and Columbia Business senior vice dean Chris Mayer urged a simple solution: Fannie Mae and Freddie Mac, the government-controlled housing giants, should just refinance homowners at today’s low interest rates.

    Hubbard joined Aaron and me to discuss this proposal, as well as other prescriptions he lays out for reforming America’s housing finance

    system in his new book, Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity, co-authored with Peter Navarro.

    Hubbard noted that the government and the Federal Reserve have already made significant efforts to shore up housing. “The Fed’s purchase of mortgage-backed securities really helped the housing market a lot,” by helping to narrow the spread between Treasuries and mortgages, Hubbard said. But falling house prices have made it difficult for people with under water mortgages to take advantage of lower rates. “Even with low interest rates, it’s hard to see a lot of refinancings because loan to value ratios are high,” he says.

    A Sensible, Low-Cost Solution

    His suggestion is that Fannie and Freddie could simply refinance existing mortgages at lower rates, at no additional cost to taxpayers. With Fannie Mae and Freddie Mac under U.S. conservatorship, the taxpayers already guarantee most mortgages through them. Hubbard believes this refi boom would ultimately save taxpayers money, since borrowers would be more likely to stay current on new mortgages with lower interest rates.

    “More to the point for stimulus, this would be the equivalent of a $50 billion to $60 billion per year long-term tax cut for middle-income families, with no cost to the Treasury,” he says. “It seems pretty sensible.”

    A bonus: this plan wouldn’t require passing legislation through a gridlocked Congress.

    Of course, there are obstacles. Even at today’s much lower volumes, the home-lending system is having difficulty processing mortgage documents efficiently. Many critics are calling for Fannie and Freddie to reduce their scope of activities, not to increase them. And then there’s the question of moral hazard: Wouldn’t this just be another example of taxpayers bailing out borrowers who made what turned out to be poor decisions?

    Not so much, says Hubbard. Many of the borrowers who now have loan-to-value (LTV) ratios that preclude them from refinancing are in the situation not because they borrowed so much to buy a home, but because the property supporting the mortgage has declined in value by 30 percent. “The whole thrust is to keep people in their homes and provide a tax cut that they would have gotten if their LTVs weren’t so high,” said Hubbard.

    More Housing Solutions

    In Seeds of Destruction, Hubbard and co-author Peter Navarro offer some other provocative thoughts on how to reform housing finance and avoid another debacle. Among the suggestions:

    • Both homeowners and lenders should be required to have some “skin in the game” on mortgages.
    • Prohibitions or restrictions on funky lending practices such as interest-only and adjustable-rate products, especially if they’re going to be securitized.
    • Greater disclosure on the information that goes into creating credit ratings for mortgage-backed products.

    Perhaps most controversially, Hubbard calls for a rethinking of the home mortgage deduction, which allows homeowners to deduct interest on loans up to $1 million from their taxable income. The home mortgage deduction is an inefficient and expensive means of subsidizing housing and benefits higher-income Americans disproportionately.

    “I’m not saying repeal it this afternoon, but we should take a hard look at our subsidies for housing and ask if they really make sense,” he tells Aaron and me in the accompanying clip.

    If there’s a need to subsidize homeownership for lower and middle-income Americans, policy should focus subsdies on those sectors, Hubbard says. “But the very expensive subsidy system we have now really helped get us in trouble.”

  • Wells Fargo Curtailing Short Sale Extensions, by Kate Berry, Americanbanker.com


    In a move that will expedite some foreclosures, Wells Fargo & Co. has stopped granting extensions for certain distressed homeowners to complete short sales.

    The change last month preceded recent revelations of faulty documentation at two major mortgage servicers — JPMorgan Chase & Co. and Ally Financial Inc. — that suspended thousands of foreclosure actions to review their processes. Wells said it does not have the same problems as those servicers.

    The company said it changed its policy on short sales at the behest of investors for whom it services mortgages, including the government-sponsored enterprises.

    Early last month, Fannie Mae told its servicers to stop unnecessarily delaying foreclosures. The GSE said it would hold servicers responsible for unexplained delays to foreclosures with fines and on-site reviews.

    In a memo e-mailed to short sale vendors last month and obtained by American Banker, Wells said it will no longer postpone foreclosure sales for those who do not close short sales by the date in their approval letter from the company. Only extension letters dated Sept. 14 or earlier would be honored, Wells said.

    Mary Berg, a spokeswoman for Wells, confirmed that the memo was genuine. But she said it had “caused confusion,” and stressed that Wells still grants extensions on loans in its own portfolio (including those it acquired with Wachovia Corp.) and in cases where investors allow it. For those two categories, Berg said, Wells allows one foreclosure postponement, provided these conditions are met: a short sale has been approved by Wells, by junior lienholders and by mortgage insurers; the buyer has proof of funds or approved financing; and the short sale can close within 30 days of the scheduled foreclosure sale.

    Berg would not say how often Wells’ investors allow extensions.

    The new policy on short sales was put in place “over the past couple of months … in response to various investor changes,” Berg said. Those investors “would include the GSEs, HUD and those investing in private-label” mortgage-backed securities.

    In a short sale, a home is sold for less than the amount owed on the mortgage and the lender accepts a discounted payoff. The transactions are often less costly to the lender than seizing and liquidating the home.

    “As long as there is a short sale possibility, the loss will always be less,” said Rayman Mathoda, the president and chief executive of AssetPlan USA, a Long Beach, Calif., provider of short sale training and education. “Basically foreclosure sales should be delayed for any responsible homeowner that has a real buyer available.”

    Wells’ decision also follows efforts by the Obama administration to encourage short sales for borrowers who do not qualify for loan modifications.

    “It makes no business sense why they are doing this, since it’s wrong for the borrowers and for the government,” said Eli Tene, the CEO of IShortSale Inc., a Woodland Hills, Calif., firm that advises distressed borrowers.

    But experts on short sales said that in recent months servicers have been reluctant to approve the transactions out of concern that they will fall through, further prolonging the process.

    “There is also a growing issue with the new buyer and financing issues, either losing their jobs ahead of closing or the new lender not being ready to close, which then gives rise to the buyer running out of patience and walking,” said Jim Satterwhite, executive vice president and chief operating officer of Infusion Technologies LLC, a Jacksonville, Fla., provider of short sale services.

    Satterwhite said many servicers have reached the point where they know which borrowers do not qualify for a modification and are moving those borrowers through to foreclosure to deal with the backlog of inventory. “A lot of servicers are just falling in line with Fannie,” he said.

    Moreover, the expectation that housing prices will fall further is forcing servicers — and the GSEs — to push for a quicker resolution through foreclosure, since short sales can involve further delays. “Values are dropping faster and that also means the losses on short sales are going up,” Satterwhite said.

    Of course, the recent reports of “robo-signing” at Ally Financial’s GMAC Mortgage and at JPMorgan Chase could gum up the foreclosure works again. For example, on Friday, Connecticut Attorney General Richard Blumenthal asked state courts to freeze all home foreclosures for 60 days to “stop a foreclosure steamroller based on defective documents.” The day before, Acting Comptroller of the Currency John Walsh said he had told seven major servicers, including Wells, to review their foreclosure processes.

    Another Wells spokeswoman, Vickee J. Adams, said the company’s “policies, procedures and practices satisfy us that the affidavits we sign are accurate.”

  • Prices rise for homes in foreclosure or sold by banks, by Alejandro Lazo, Los Angeles Times (Latimes.com)


    The increase underscores the degree to which the mortgage crisis has spread to more affluent neighborhoods.

    Prices for homes either in foreclosure or sold by banks rose in the second quarter, according to a real estate group, underscoring competition in the market for distressed properties and the degree to which the mortgage crisis has spread to more affluent neighborhoods.

    FOR THE RECORD:
    Homes in foreclosure: A chart accompanying an article in some editions of the Sept. 30 Business section contained errors in illustrating the rise in the average price of homes sold during or after foreclosure in Southern California, the state and the nation. The chart listed prices for 2009 and 2010 but failed to note that the time frame was the second quarter of each year. The data, credited to Bloomberg, were compiled by RealtyTrac of Irvine. And the numbers presented for 2009 were incorrectly transcribed from RealtyTrac’s original data. A corrected version of the chart appears on Page B2 of the Business section. —

    In the second quarter, 248,534 U.S. properties were sold by banks or by owners who had fallen into foreclosure, RealtyTrac of Irvine said. That was an increase of 4.9% from the previous quarter, but a 20.1% decline from the same quarter last year, when discounted bank-owned homes flooded the market.

    The average price for these properties was $174,198, RealtyTrac said, up 1.6% from the previous quarter and 6.1% from the same quarter last year.

    “We are seeing the tail end of the foreclosure crisis caused by bad loans,” said Rick Sharga, senior vice president of RealtyTrac. “We are seeing the beginning of the wave of foreclosures caused by unemployment, which means you are seeing, in a lot of cases, a more expensive property in foreclosure than you would see, say, based on a subprime loan.”

    The price increase was more pronounced in California, according to RealtyTrac. The average price was $256,833 for homes sold by banks or by homeowners who had at least received a notice of default from their lenders. That was an increase of 4.2% from the previous quarter and 17.5% from the same quarter last year.

    The sales tracked by RealtyTrac included only properties sold to third parties, either investors or consumers, and not sales of properties sold back to lenders at trustee sales or through other transactions.

    Overall home sales during the three-month period captured by the report were boosted by a popular federal tax credit for buyers. Since then, sales of U.S. homes have weakened considerably, and many experts are predicting a decline in home valuations.

    “It is tempered a little bit by the fact that it covers the period of the tax credit, and everything looked fine, and since then the market has dropped off,” said Gerd-Ulf Krueger, principal economist at Housingecon.com. “We need to watch this a little more and what it shows under the slower market conditions.”

    Banks have been repossessing homes at a record clip this year, pushing properties through foreclosure that had been delayed by several moratoriums last year as well as the Obama administration’s efforts to help troubled borrowers. In recent weeks, the practices of banks taking back homes through foreclosure have increasingly become a concern.

    Wall Street titan JPMorgan Chase said Wednesday that it was delaying foreclosure proceedings after it discovered that some employees signed affidavits about loan documents on the basis of file reviews done by other people instead of personally reviewing those files.

    The New York bank said it was working with independent counsel to review documents in foreclosure proceedings and has requested that the courts not enter judgments in pending matters until it has completed the review. Those foreclosures only apply to properties in so-called judicial foreclosure states, which require a court order for a foreclosure. The vast majority of foreclosures in California are conducted without a court order.

    The JPMorgan Chase foreclosure delay follows a similar move by Ally Financial Inc. last week, when its GMAC Mortgage unit suspended evictions and foreclosures in 23 states while it conducted a review of its processes.

    The Detroit company, formerly known as GMAC Inc., didn’t suspend evictions in California because almost all foreclosures in the state by it and other lenders don’t require a court order. Nevertheless, Atty. Gen. Jerry Brown has told the company to halt foreclosures unless it could prove it was observing the state’s laws.

    alejandro.lazo@latimes.com

  • Conforming Jumbo Loan Limits Extended, Thetruthaboutmortgage.com


    The conforming jumbo loan limits, which allow homeowners in certain areas of the country to get government-backed loans of up to $729,750, have been extended for another year, according to the Mortgage Bankers Association.

    Last night, H.R. 3081 passed the Senate and House – it contains provisions that extend the existing loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration (including FHA loans and reverse mortgage products, or HECMs) through September 30, 2011.

    Additionally, it provides $20 billion in loan commitment authority for FHA’s General and Special Risk Insurance Fund.

    “Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” said Robert E. Story, Jr., Chairman of the Mortgage Bankers Association, in a release.

    “The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage.

    Without such an extension, larger loans would have fall into the jumbo loan category, resulting in interest rates a percentage point or more higher than conforming loans.

    The traditional conforming loan limit is currently set at $417,000 for one-unit residential mortgages.

    Conforming jumbo loan amounts ($417,001 to $729,750) price at a slight premium to conforming loan amounts, but well below jumbo loans amounts.

  • Chase Halts Foreclosures In Process, by Thetruthaboutmortgage.com


    JP Morgan Chase has halted foreclosures until a review of its document-filing process is completed, according to the WSJ.

    The New York City-based bank said the move affects roughly 56,000 home loans in some stage of the foreclosure process.

    Chase spokesman Tom Kelly announced that there were cases where employees may have signed affidavits about loan documents on the basis of file reviews done by other personnel.

    As a result, the bank and mortgage lender must now re-examine documents tied to loans already in foreclosure to verify if they “meet the standard of personal knowledge or review” where required.

    Back in May, law firm Ice Legal LP dropped Chase document-signer Beth Ann Cottrell after it became known that she signed off on roughly 18,000 foreclosure affidavits and other documents each month without actually reviewing the files.

    And last week, GMAC Mortgage told brokers and agents to immediately stop evictions, cash-for-keys transactions, and lockouts in 23 states after the company warned it could need to take corrective action in connection with some foreclosures.

    Sign of the times…a year ago it was all about foreclosure moratoriums to help borrowers in need, and now it’s all about lenders making sure they don’t get into hot water over their suspect loss mitigation activities.

  • Loan Modifications Are Getting Better, thetruthaboutmortgage.com


    It appears as if more recently completed loan modifications are performing better than their predecessors, according to the latest Mortgage Metrics Report from the OCC.

    More than 90 percent of loan modifications implemented during the second quarter of 2010 reduced borrowers’ monthly principal and interest payments, while 56 percent reduced payments by more than 20 percent.

    And that focus on sustainable and affordable monthly mortgage payments resulted in lower post-modification delinquency rates (much lower than that 75 percent re-default rate we we’re worried about).

    Six months after modification, roughly 32 percent of the modifications made in 2009 were seriously delinquent or in somewhere in the foreclosure process, compared with more than 45 percent of loan mods made in 2008.

    And the performance of modifications made this year suggests the trend is continuing.

    At three months after modification, just 11 percent of the 2010 modifications were seriously delinquent, compared with 20 percent of modifications made last year and 32 percent of 2008 modifications.

    HAMP Modifications Outperforming Other Loan Mods

    Nearly all modifications made under the Making Home Affordable program (HAMP) reduced borrower principal and interest payments, and 78.9 percent reduced monthly payments by 20 percent or more

    HAMP modifications made during the quarter reduced monthly mortgage payments by an average of $608, while other loan mods reduced payments by just $307 on average.

    As a result, HAMP modifications implemented through the first quarter of 2010 had fewer re-default rates than other modifications implemented during the same period.

    At six months after modification, 10.8 percent of HAMP modifications made in the fourth quarter of 2009 were 60 or more days delinquent, compared with 22.4 percent of other modifications made during that quarter.

    Similarly, 10.5 percent of HAMP modifications made in the first quarter of 2010 were 60 or more days delinquent three months after modification, compared with 11.6 percent of other modifications.

    So perhaps HAMP ain’t so bad after all…and maybe loan modifications actually do work.

  • Fannie mae to provide mortgage payment forbearance for certain military homeowners, Thetruthaboutmortgage.com


    Government mortgage financier Fannie Mae announced today new measures to help those serving in the military avoid foreclosure.

    The company said it will provide mortgage payment forbearance for up to six months where the death or injury of a service member on active duty leads to a hardship for military families with a mortgage obligation.

    Fannie has also created a hotline, 877-MIL-4566, available to all service members looking to receive guidance about their mortgage options and subsequent assistance.

    “The men and women of our Armed Forces have shown extraordinary commitment to our country while facing unique challenges as a result of their service,” said Jeff Hayward, Senior Vice President of Fannie Mae’s National Servicing Organization, in a release.

    “No family impacted by a death or injury in the line of duty should have to face the additional burden of foreclosure as a result of the hardship. We want to do all that we can to provide support to these families at a time of need as we honor their sacrifices and service to our country.”

    Service members or surviving spouses who may be eligible for the special forbearance should contact their bank or mortgage lender.

    Any forbearance will be granted under Fannie Mae’s “Unique Hardships” guidelines with Fannie Mae’s approval.

    Under forbearance, the bank or lender may reduce or suspend the borrower’s monthly mortgage payments for the specified period.

    Credit bureau reporting will also be suspended during the forbearance period to minimize any negative credit scoring impact.

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • Wealthbridge Mortgage Corp. – Retail – Agency, FHA/VA


    The Portland Business Journalyesterday reported thatWealthbridge Mortgage Corp.(view snapshot) had let go of 16 workers and would “lay off the remainder of its 109-member staff” as of 2010-10-15 based on a recent filing with Oregon under the Worker Adjustment and Retraining Notification Act.

    “Wealthbridge Mortgage Corp. intends to close its business and permanently lay off employees due to unforeseen circumstances outside of the company’s control and its inability to obtain the necessary capital to remain in business,” President Scott Everett said in a letter to local and state officials.

    Based in Beaverton, OR, the company had changed its name to Wealthbridge Mortgage from Gateway Financial Services at the beginning of 2008. Information given to us at the time implied the company had been hit with a lot of repurchases due to first payment defaults, although we did not see any evidence to support the allegation. An inside source reported a large number of LO’s and telemarketing staff were let go in the early months of 2008 as a result of the alleged buybacks, along with a handful of managers.

    The company originated an average of $16.62 million per month in residential mortgage loans during 2008, down from the previous year’s average volume of nearly $20 million per month.

    Cited most recently as the reason for the company’s “collapse” was the failure by Delaware investment firm Venn Capital Group Holdings LLC to close a deal to purchase the company on 2010-09-20. Branch offices in MN and NV will also be closed.

    If you have additional information to add, please post your comments below or send us an email.

    http://www.bizjournals.com/portland/stories/2010/09/20/daily45.html

  • The Art of the ReFi, by Jason Hillard, Home Loan Ninjas Blog


    I was asked by Portland Realtor Fred Stewart recently if I wanted to write an article on refinancing for his blog, Oregon Real Estate Round Table. This became a challenge that I was not expecting.

    I set out to see what the competition is “blogging” about the topic of refinancing. What I found is more of the same: advertisements disguising themselves as blog posts. I guess I should keep in mind that my blood pressure usually skyrockets when I read other mortgage blogs.

    So let me walk you through how/why to refinance in the current mortgage environment. The first step is admission, and is perhaps the hardest thing to come to grips with:

    You do not own your home.

    If you have a home loan, then the bank owns your home. You own the equity. You may not have equity. You may just own a mortgage. This idea may sound counter-intuitive, but once you accept it and move on, your view on refinancing may change. You should now be thinking, “how can I leverage the portion of my home’s worth that I actually own?”

    If you’re still having trouble, consider this. You are thinking about your “home”. I am talking about your “house”, and the debt instrument against it, which is owned by a bank. Separate your emotions from this exercise.

    Now, I am a firm believer in the concept of Mortgage Planning, which has at its core a very simple concept:

    Untapped equity does you no good.

    Let me give you an example. If you own $60,000 in home equity, well then let’s start by saying that you are in much better shape than most. However, if you choose to leave that equity in the “untapped ether”, it is nothing more than the theoretical result of a process that you may or may not engage in. In other words, if you are not selling your home in the next 3 years, who cares how much equity you have? Who knows what your home will be worth in 3 years?

    Now let’s take it one step further: what if you lose your job? What if you could really use that $60,000 while you look for a new job? Well, good luck qualifying for a refinance without any income. It won’t happen. So, having $60,000 in untapped equity, which is the percentage of the house you ACTUALLY own, is completely useless. Had you taken that equity out when it was readily available, you would have a $60,000 slush fund for a rainy day.

    This method of managing equity requires restraint and discipline, but you can see that it illustrates the outdated concept of homeownership. We are all for people “owning” homes, but you have to understand that while you may be a home “owner”, the bank actually owns the lion’s share of the four walls that comprise your house.

    So, when I hear some mortgage agent saying “rates are at historic lows” and “now is a great opportunity”, my stomach does a backflip. We agree, rates are low. But that is an awfully generic statement. And yes, now is a great opportunity, but for who? The fact is that when it comes to refinancing, the circumstances which need to be considered are highly individualized. What if you can’t get the “lowest rate” because of credit score?

    Well, maybe you shouldn’t be so hung up on the rate.

    Well, now what in the world would I say that for? Let’s break it down. Say you have a rate of 5.5% on your current mortgage and $40,000 in equity available (“equity available” in this case refers to the portion of your equity which you could actually pull out by refinancing, not the total amount of equity). You also happen to have about $800 a month in credit card payments.

    You call up a mortgage professional to inquire about a refinance. Your credit score and LTV (loan-to-value) conspire against you though. The rate you would qualify for is less than .375 lower than your current rate. You ask yourself, “why would I pay $6000 in closing costs for what is essentially the same rate I have now?”

    The answer is that by doing so, you have leveraged your available equity to save something like $600 a month on your total monthly “out-go”. This is the equivalent of getting a $600/mo raise in your salary. Also, you have transferred all of the interest from your credit cards to your mortgage, which is tax deductible. This saves you more money. The lesson: don’t get so hung up on the rate. Focus on the outcome.

    Time for disclosure: I have avoided using “exact numbers” and precise monthly payments because that requires all kinds of math and figures, which people hate reading and would only serve to muddy the point. You can get exact numbers for your situation by contacting us, or any other mortgage professional.

    Let’s review one more situation; one which is much more common for the current market. You have a pretty good rate from a couple years ago, but don’t want to miss out on this “historic opportunity” because it’s all you have heard on the radio for the last 2 years. Of course, since your last refinance was a couple of years ago, you probably don’t have a lot of available equity. So you aren’t looking for any cash out, just a simple rate & term refinance.

    Let’s say that your loan amount is such that lowering your rate about .75% on a new refinance only saves you about $120 a month. The old school mentality says “why pay $6275 in closing costs to only save $120 a month?”

    After all, that would mean that it would take 52.29 months to pay off your refinancing costs. ($6275/$120 = 52.29)

    You’re probably thinking you are losing $6275 in future earnings, which seems like a lot to trade for $120 a month now. However, what if you don’t sell your home? What if the value drops further, and that $6275 isn’t there in the future? What if your salary gets cut at your job? The $6275 is theoretical. The $120 a month savings is tangible. You need to frame the question this way:

    Which is more valuable to me? The tangible savings now, or the possibility of return in the future?

    We are not recommending you tap yourself out just to save a few bucks every month. That’s the point. The answer to this question should be as unique as the person asking it.

    However, you do need to start thinking about your mortgage in this way. It’s a brave new world, and it is likely here to stay.

    http://www.homeloanninjas.com/2010/09/23/mortgageblog-the-art-of-the-refi/

  • MIT Economist Sees Housing Market Roaring Back, by Dakota, curbed.com


    Picking up on the news that housing starts–ie, the start of construction of new buildings and homes–picked up in August, rising to the biggest levels seen November, Fortune says the housing market “is still far from recovery” but also points out its on “bullish take on the housing market,” a piece centered largely around a 2009 paper by economist Bill Wheaton at the Massachusetts Institute of Technology‘s Center for Real Estate. Yes, stop all those stories about how the days of seeing our homes as money-generating nest eggs are over. In short, Wheaton thinks the market will come roaring back, partly because so little construction is going on. Via Fortune: “The crux of Wheaton’s argument lies in the rate of residential construction today. It’s been historically low – so low that he believes demand is actually exceeding the level of building going on. This helps set the grooves for a relatively large comeback in residential investment. Here’s how Wheaton backs the imbalance of demand for housing units and residential construction. He estimates that housing demand in 2009 was at about 1.1 million units – more than twice construction at the time. At this rate, the excess inventory will eventually be absorbed. “It’s going to be a long time before construction picks up with demand,” Wheaton says, adding that this should help housing prices.”
    · Housing market shows glimmer of hope [Fortune]
    · A housing rebound? Yes, it’s possible [Fortune]

    http://la.curbed.com/archives/2010/09/mit_economist_sees_housing_market.php

  • Reverse Mortgage Applications Rise to Highest Level Since September 2009, Reversemortgagedaily.com


    The number of reverse mortgage applications increased 8.1% to 9,686 in August according to the latest report from the Federal Housing Administration.

    While down 12.4% from the same period last year, the application totals for August are the highest since September 2009.
    The run up in applications before the end of FHA’s fiscal year is normal and is likely to increase as reverse mortgage borrowers rush to complete the process before the Department of Housing and Urban Development lowers the principal limit factors in October.

    The total amount of FHA applications for the month was 200,907 with a significant rise in prior FHA refinance cases. This included 86,569 purchase transactions, 104,652 refinance cases and 9,686 reverse mortgage cases. Included in the refinance count were 55,103 prior FHA’s (46.9% over last month), and 49,549 conventional conversions. In addition, 39 H4H cases were included in the refinance total.

    There were also 6,645 HECM’s insured in August and 6,175 were the traditional reverse mortgage type.

    As of the end of August, FHA has 558,316 mortgages in a serious delinquency category, yielding a seriously default rate of 8.5 percent. This includes all mortgages in bankruptcy, in foreclosure and 90 days or more delinquencies.

    So far this fiscal year 270,964 claims have been paid. The bulk of these were for loss mitigation retention (164,744) and property conveyance (87,807).

  • HUD announces new REO purchase program, Hud.gov


    U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan has announced an agreement with the nation’s top mortgage lenders to offer selected state and local governments, and non-profit organizations a “first look” or right of first refusal to purchase foreclosed homes before making these properties available to private investors. The National First Look Program is a first-ever public-private partnership agreement between HUD and the National Community Stabilization Trust (Stabilization Trust). In collaboration with national servicers, Fannie Mae, and Freddie Mac, the First Look program is intended to give communities participating in HUD’s Neighborhood Stabilization Program (NSP) a brief exclusive opportunity to purchase bank-owned properties in certain neighborhoods so these homes can either be rehabilitated, rented, resold or demolished.

    “This groundbreaking agreement will help rebuild neighborhoods that have been struggling with blight and declining home values due to foreclosures,” said HUD Secretary Donovan. “Local communities will now get an exclusive option to buy foreclosed properties in targeted neighborhoods so they can turn the homes into affordable housing or, in some cases, tear them down. This agreement helps us level the playing field to give communities a better chance to stabilize these neighborhoods.”

    “The Stabilization Trust is delighted to be working with HUD Secretary Donovan on the National First Look Program,” said Craig Nickerson, President of the NCST. “By serving as the operations ‘engine’ behind the First Look Program, the Stabilization Trust can facilitate the transfer of more foreclosed property for participating financial institutions to local community buyers, thereby accelerating the road to neighborhood recovery.”

    HUD’s NSP grantees, which include state and local governments and non-profit organizations, often find themselves competing with private investors for real estate-owned (REO) properties, which can hinder their efforts to stabilize neighborhoods with high foreclosure activity. With today’s announcement, HUD and the Stabilization Trust, working with national servicers, Fannie Mae, and Freddie Mac, will standardize the acquisition process for NSP grantees, giving them an exclusive option to purchase foreclosed upon homes in certain targeted neighborhoods.

    The Stabilization Trust pioneered the ‘First Look’ model to create a transparent and streamlined process to facilitate the transfer of foreclosed and abandoned properties from key financial institutions to local government housing providers. First piloted in 2008, the model has gained recognition as a critical tool for positively tipping the scale in neighborhoods hard hit by foreclosures.

    NSP grantees will also be aided by REOMatch, a Web-based mapping and acquisition management tool developed by the Stabilization Trust. REOMatch will assist NSP grantees easily identify REO properties and make more strategic decisions about which properties to acquire, based on real-time data on an interactive mapping platform.

    The nation’s leading financial institutions are participating in the National First Look Program, representing approximately 75 percent of the REO marketplace. Participating institutions include: Bank of America, Chase, Citi, Deutsche Bank, GMAC, Nationstar Mortgage, Ocwen Financial Corporation, Saxon Mortgage Services, U.S. Bank, Wells Fargo, Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

    ►The National First Look Program will allow NSP grantees the exclusive opportunity to purchase available REO properties located within the defined boundaries of NSP target areas. NSP grantees will be immediately notified when a property becomes available and will have 24-48 hours to express interest in pursuing a specific property. Furthermore, these institutions will provide NSP purchasers with the opportunity to purchase REO properties at a discount their appraised value, reflecting the cost savings of a quick sale. NSP grantees may acquire these properties with the assistance of NSP funds for any eligible use.

    ►After expressing interest in a property, the First Look Period will last approximately five to 12 business days during which the NSP Grantee will conduct inspections and establish costs to repair in anticipation of the financial institution’s price offer. In the event that no NSP grantee exercises its preference to purchase an REO property during the First Look period, the financial institution will follow its normal process to sell the home on the open market.

    ►Currently, the Federal Housing Administration (FHA) offers a complementary pilot program in which NSP grantees receive an exclusive option to purchase so-called ‘HUD Homes’ at a discount prior to those homes being made available to the investor community. The FHA pilot, alongside today’s agreement expands the opportunity for NSP grantees to gain access to REO properties through a national first-look standard option.

    HUD’s Neighborhood Stabilization Program was created to address the housing crisis, create jobs, and grow local economies by providing communities with the resources to purchase and rehabilitate vacant homes. NSP grants are helping state and local governments, as well as non-profit developers, acquire land and property; demolish or rehabilitate abandoned properties; and/or offer downpayment and closing cost assistance to low- to middle-income homebuyers. Grantees can also stabilize neighborhoods by creating “land banks” to assemble, temporarily manage, and dispose of foreclosed homes. To date, HUD has allocated nearly $6 billion in funding to state and local governments and non-profit housing developments. In the coming weeks, HUD will allocate an additional $1 billion in NSP funding, which was provided through the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    For more information, visit www.hud.gov.

  • Procrastination on Foreclosures, Now ‘Blatant,’ May Backfire, by Jeff Horwitz and Kate Berry, American Banker


    Ever since the housing collapse began, market seers have warned of a coming wave of foreclosures that would make the already heightened activity look like a trickle.

    The dam would break when moratoriums ended, teaser rates expired, modifications failed and banks finally trained the army of specialists needed to process the volume.

    But the flood hasn’t happened. The simple reason is that servicers are not initiating or processing foreclosures at the pace they could be.

    By postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that “the first loss is the best loss” — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.

    It is becoming harder to blame legal or logistical bottlenecks, foreclosure analysts said.

    “All the excuses have been used up. This is blatant,” said Sean O’Toole, CEO of ForeclosureRadar.com, a Discovery Bay, Calif., company that has been documenting the slowdown in Western markets.

    Banks have filed fewer notices of default so far this year in California, the nation’s biggest real estate market, than they did 2009 or 2008, according to data gathered by the company. Foreclosure default notices are now at their lowest level since the second quarter of 2007, when the percentage of seriously delinquent loans in the state was one-sixth what it is now.

    New data from LPS Applied Analytics in Jacksonville, Fla., suggests that the backlog is no longer worsening nationally — but foreclosures are not at the levels needed to clear existing inventory.

    The simple explanation is that banks are averse to realizing losses on foreclosures, experts said.

    “We can’t have 11% of Californians delinquent and so few foreclosures if regulators are actually forcing banks to clean assets off their books,” O’Toole said.

    Officially, of course, this problem shouldn’t exist. Accounting rules mandate that banks set aside reserves covering the full amount of their anticipated losses on nonperforming loans, so sales should do no additional harm to balance sheets.

    Within the last two quarters, many companies have even begun taking reserve releases based on more bullish assumptions about the value of distressed properties.

    Now there is widespread reluctance to test those valuations, an indication that banks either fear they have insufficient or are gambling for a broad housing recovery that experts increasingly say is not coming.

    Banks did not choose the strategy on their own.

    With the exception of a spike in foreclosure activity that peaked in early-to-mid 2009, after various industry and government moratoriums ended and the Treasury Department released guidelines for the Home Affordable Modification Program, no stage of the process has returned to pre-September 2008 levels. That is when the Treasury unveiled the Troubled Asset Relief Program and promised to help financial institutions avoid liquidating assets at panic-driven prices. The Financial Accounting Standards Board and other authorities followed suit with fair-value dispensations.

    These changes made it easier to avoid fire-sale marks — and less attractive to foreclose on bad assets and unload them at market clearing prices. In California, ForeclosureRadar data shows, the volume of foreclosure filings has never returned to the levels they had reached before government intervention gave servicers breathing room.

    Some servicing executives acknowledged that stalling on foreclosures will cause worse pain in the future — and that the reckoning may be almost here.

    “The industry as a whole got into a panic mode and was worried about all these loans going into foreclosure and driving prices down, so they got all these programs, started Hamp and internal mods and short sales,” said John Marecki, vice president of East Coast foreclosure operations for Prommis Solutions, an Atlanta company that provides foreclosure processing services. Until recently, he was senior vice president of default administration at Flagstar Bank in Troy, Mich. “Now they’re looking at this, how they held off and they’re getting to the point where maybe they made a mistake in that realm.”

    Moreover, Fannie Mae and Freddie Mac have increased foreclosures in the past two months on borrowers that failed to get permanent loan modifications from the government, according to data from LPS. If the government-sponsored enterprises’ share of foreclosures is increasing, that implies foreclosure activity by other market participants is even less robust than the aggregate.

    “The math doesn’t bode well for what is ultimately going to occur on the real estate market,” said Herb Blecher, a vice president at LPS. “You start asking yourself the question when you look at these numbers whether we are fixing the problem or delaying the inevitable.”

    Blecher said the increase in foreclosure starts by the GSEs “is nowhere near” what is needed to clear through the shadow inventory of 4.5 million loans that were 90 days delinquent or in foreclosure as of July 31.

    LPS nationwide data on foreclosure starts reflects the holdup: Though the GSEs have gotten faster since the first quarter, portfolio and private investors have actually slowed.

    “What we’re seeing is things are starting to move through the system but the inflows and outflows are not clearing the inventory yet,” he said.

    Delayed foreclosures might be good news for delinquent borrowers, but it comes at a high price.

    Stagnant foreclosures likely contributed to the abysmal July home sales, since banks are putting fewer homes for sale at market-clearing prices.

    Moreover, Freddie says a good 14% of homes that are seriously delinquent are vacant. In such circumstances, eventual recovery values rapidly deteriorate.

    Defaulted borrowers were spending an average of 469 days in their home after ceasing to make payments as of July 31, so the financial attraction of strategic defaults increases.

    One possible way banks are dealing with that last threat is through what O’Toole calls “foreclosure roulette,” in which banks maintain a large pool of borrowers in foreclosure but foreclose on a small number at random.

    O’Toole said the resulting confusion would make it harder for borrowers to evaluate the costs and benefits of defaulting and fan fears that foreclosure was imminent.

    http://www.americanbanker.com/issues/175_165/foreclosures-modifications-california-1024663-1.html

  • MultnomahForeclosures.com Update: New Notice of Default Lists Posted


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back over 2 years. Multnomahforeclosures.com documents the fall of the great real estate bust of the 21st centry. The lists are of the raw data taken from county records.

    It is not a bad idea for investors and people that are seeking a home of their own to keep an eye on the Notice of Default lists. Many of the homes listed are on the market or will be.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures

    http://multnomahforeclosures.com

  • Short Sale vs Foreclosure – EFFECT ON CREDIT, By Paul Dean, Evergreen Ohana Group


    I thought this information would be beneficial to know, when you are dealing with sellers on a Short Sale basis. Many consumer don’t realize the impact of a short sale on their credit. Read the attached article and commentary from our credit agency below. There are a couple KEY pieces:

    1. Foreclosure – lenders won’t do another loan for 4 yrs. (Bankruptcy is now 4yrs also)

    2. Short sale – if they keep payments current and their credit is relatively intact, and they do due diligence with the lender to determine how they will report the Short sale on their credit report (ie. “settled” is the best, Deed in Lieu is the same effect as a “foreclosure”) this will result is the least amount of damage to their credit rating. That also goes for a Notice of Default (NOD), even though a foreclosure process was started and the seller is able to sell the home prior to it actually going to foreclosure sale, this will be reported as “foreclosure in process” on their credit, which is treated as a “foreclosure” for credit scoring purposes.

    3. Oregon is not a deficiency State. Meaning that Oregon does not pursue the seller for any deficiency. The banks just take the loss, the seller’s credit is damaged, and that’s the end of it.

    4. The biggest advantage to sellers in a Short Sale is keeping payments as current as possible and getting the lender to reflect the account as “settled”. That will allow this borrower to secure another home loan sooner (maybe 2yrs), rather than if a foreclosure or NOD (4yrs) is reported on their credit.

    I think this is valuable information to share with your sellers.

    To Your Success,

    Paul Dean
    Principal
    Evergreen Ohana Group
    5331 SW Macadam Ave, Suite 287
    Portland, OR 97239

    Office: (503) 892-2800 Ext.11
    Fax: (503) 892-2803
    Email: pauld@evergreenohana.com
    Website: http://www.evergreenohana.com
    OR ML-21,WA 510-LO-33391, WA:520-CL-50385

  • Minimum Credit Score


    It seems my industry (mortgage) continues to see changes weekly, if not daily. I received this message from one the lenders we do business with (Suntrust Mortgage).

    IMPORTANT UPDATE REGARDING REVISED MINIMUM CREDIT SCORE REQUIREMENT FOR ALL LOAN PRODUCTS – Effective for Locks and/or Credit Packages Received on or After Monday, March 23, 2009

    Effective for locks and/or credit packages received on or after Monday, March 23, 2009, a minimum credit score of 660 will be required for ALL borrowers on ALL loan products (traditionally underwritten and AUS processed), regardless of the AUS approval.

    This is concerning conventional loans (less than $417K) fannie & freddie. FHA still allows a min. credit score of 620.

    Now, while this is only one lender, it is likely other lenders will follow suit. Just another sign of the times, that the credit markets continue to “tighten” and credit scores are becoming more important when buying a home.

    Have a good weekend.
    Thank you for the opportunity to serve you,

    Paul Dean
    Principal
    Evergreen Ohana Group
    5331 SW Macadam Ave, Suite 287
    Portland, OR 97239

    Toll Free: (800) 387-7355
    Office: (503) 892-2800 Ext.11
    Fax: (503) 892-2803

    Website: http://www.evergreenohana.com
    Email: pauld@evergreenohana.com

    OR ML-21, WA510-LO-33391, WA WA:520-CL-50385

    PS. Your business and loyalty are truly valued. I strive to provide all my clients with the very best professional service possible. If a friend or family member would appreciate this level of service, please don’t keep me a secret!

  • Land Sales Contract Solution: Down Payment Installment


    SG_Logo_150x150

     

    What is most attractive about Land Sales Contracts or seller financing in general is the buyer and the seller can develop agreements that will fit each others needs. Recently a buyer and seller came to an agreement on the selling price of a home. The buyer had very little for a down payment. The seller proposed that the buyer make down payment installments during the term of the agreement. In this case the buyer and seller had to agree on a couple things. First they had to agree how much the down payment would be. Second they had to agree on how many installment payments the buyer could make. In this case, the contract for for 60 months and the seller and buyer agreed on a 48 month down payment installment plan.

    The Deal:

    Sales Price………$250,000
    Down Payment…….10% ($25,000)
    Buyer will pay 50% ($12,500) at closing and will pay the rest of down payment over 48 months at $260.42 per month.
    Interest Rate…….7%
    Payment………….$1496.93
    Payments Amortised over 30 years
    Buyer to pay Property Taxes ($1953 per year) and Insurance ($258) during term of contract.
    Contract Term…….60 Months (Balloon payment of balance due month 61)

    Monthly Payment Break Down

    Contract……….$1468
    Down Payment..$260.42
    Taxes…………..$162.75
    Insurance………$21.50
    Total……………$1912.92

    If the seller and buyer had agreed that the buyer was to make interest only payments instead of a 30 year amortization then the payment would be a little smaller.