One of the nation’s leading subprime mortgage servicers reports that delinquencies on the subprime mortgages it handles flattened or declined this summer, in large measure due to its technology-enhanced loan modification program.
The finding represents a ray of hope in the subprime crisis and suggests a practical approach to keeping homeowners in their homes and protecting lenders’ and investors’ income.
According to Ocwen Financial Corp., a leading servicer of subprime mortgage loans, delinquency rates in every category (60, 90 and 90+ days) have either declined or remained flat over the last three months. This is the first sign of stability in Ocwen-serviced loans since the inception of the subprime crisis in 2007. Ocwen’s portfolio covers a significant portion of the subprime market - through its subsidiary, Ocwen Loan Servicing, LLC, the company services approximately 350,000 mortgages, about 85% of which are subprime.
Friday, September 5, 2008
Mortgage Applications are up and interest rates are down
Weekly Mortgage Applications Survey for the week ending August 29, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 453.1, an increase of 7.5 percent on a seasonally adjusted basis from 421.6 one week earlier. On an unadjusted basis, the Index increased 5.8 percent compared with the previous week and was down 27.0 percent compared with the same week one year earlier.
The Refinance Index increased 2.1 percent to 1059.7 from the previous week and the seasonally adjusted Purchase Index increased 10.5 percent to 349.0 from one week earlier. The Conventional Purchase Index increased 6.1 percent while the Government Purchase Index (largely FHA) increased 19.9 percent.
The four week moving average for the seasonally adjusted Market Index is up 1.2 percent. The four week moving average for the seasonally adjusted Purchase index is up 2.7 percent, while this average is down 1.5 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 34.0 percent of total applications from 35.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 from 7.9 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.39 percent from 6.44 percent, with points decreasing to 1.0 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.96 percent from 5.94 percent, with points decreasing to 1.03 from 1.13 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.11 percent from 7.15 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent LTV loans.
The Refinance Index increased 2.1 percent to 1059.7 from the previous week and the seasonally adjusted Purchase Index increased 10.5 percent to 349.0 from one week earlier. The Conventional Purchase Index increased 6.1 percent while the Government Purchase Index (largely FHA) increased 19.9 percent.
The four week moving average for the seasonally adjusted Market Index is up 1.2 percent. The four week moving average for the seasonally adjusted Purchase index is up 2.7 percent, while this average is down 1.5 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 34.0 percent of total applications from 35.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 from 7.9 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.39 percent from 6.44 percent, with points decreasing to 1.0 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.96 percent from 5.94 percent, with points decreasing to 1.03 from 1.13 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.11 percent from 7.15 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent LTV loans.
Thursday, September 4, 2008
bottom of the real estate market
Sales of distressed Miami properties have begun, signaling a bottom for south Florida's real estate market and the end of waiting for vulture funds armed with about $30 billion to spend.
The sale of 120 condominiums last month to a Philadelphia private equity firm and Related Group of Florida, a development company led by Jorge Perez, ``broke the logjam'' for investors targeting the oversupply of condos in downtown Miami, said Peter Zalewski, owner of the Condo Vultures LLC consulting firm in Bal Harbour, Florida.
Regional and community lenders are starting to market properties in Miami, where the median condo price in July fell 19 percent from a year earlier, according to the Florida Association of Realtors in Orlando. Banks that were reluctant to take real estate-related writedowns may be forced by regulators to sell homes that sit empty and mortgage notes that aren't being paid, said Jack McCabe, founder of McCabe Research & Consulting LLC in Deerfield Beach, Florida.
``There's a purging going on,'' McCabe said. ``It's my belief that the vulture buyers would form the bottom of the real estate market, and we're almost there. That bottom may last for three years as foreclosure sales go on.''
McCabe estimates that at least $30 billion has been earmarked by funds to buy distressed Florida real estate. Some investors have been waiting almost three years to buy, he said.
The sale of 120 condominiums last month to a Philadelphia private equity firm and Related Group of Florida, a development company led by Jorge Perez, ``broke the logjam'' for investors targeting the oversupply of condos in downtown Miami, said Peter Zalewski, owner of the Condo Vultures LLC consulting firm in Bal Harbour, Florida.
Regional and community lenders are starting to market properties in Miami, where the median condo price in July fell 19 percent from a year earlier, according to the Florida Association of Realtors in Orlando. Banks that were reluctant to take real estate-related writedowns may be forced by regulators to sell homes that sit empty and mortgage notes that aren't being paid, said Jack McCabe, founder of McCabe Research & Consulting LLC in Deerfield Beach, Florida.
``There's a purging going on,'' McCabe said. ``It's my belief that the vulture buyers would form the bottom of the real estate market, and we're almost there. That bottom may last for three years as foreclosure sales go on.''
McCabe estimates that at least $30 billion has been earmarked by funds to buy distressed Florida real estate. Some investors have been waiting almost three years to buy, he said.
SC coastal insurance market
The coastal insurance market has loosened up in the past two years as more companies write policies here and prices on some coverage has fallen, insurance experts told a crowd of homebuilders and real estate professionals on Hilton Head Island on Thursday night.
State Insurance Commissioner Scott Richardson, a former state senator from the island, said 12 new insurance companies have entered the state since he took over as commissioner in 2007. Another three are expected to enter in the next 90 days, he said.
Insurance prices for condominium buildings have fallen as much as 50 to 60 percent along the coast in that time, Richardson said.
But that trend could come to a crashing halt if a powerful storm makes landfall this year -- a storm like Tropical Storm Gustav might become.
"We are rated (for cost) based on our (state) experience," Richardson said, "but don't think the big picture isn't part of it."
That means a significant strike anywhere would bring higher rates here, especially through increases in the cost of reinsurance -- insurance for insurance companies.
"If Gustav gets all whipped up and hits Louisiana for another $40 billion, don't think your condo premiums aren't going up, because they are," Richardson said.
But, barring Gustav or Hanna, which formed in the Atlantic on Thursday, storming ashore, things are getting better for coastal homeowners, although prices aren't likely to return to pre-Katrina levels.
For one thing, insurance companies have modernized in the past decade so they know exactly what and where they are insuring.
In the 1990s, Peter Sparks, one of the panelists and a professor emeritus of civil engineering at Clemson University, worked with an insurance company that thought it was grossly overexposed in a single Miami zip code.
It turned out that zip code was a bank of post office boxes. The insurance company didn't even know where all the insured property was, Sparks said.
Today, that lack of basic knowledge is long gone, he said.
When asked the best way to hurricane-proof a home, Sparks offered some pragmatic advice.
"The best thing I can tell you in terms of mitigation is move inland," Sparks said to the crowd at the Country Club of Hilton Head.
For those unwilling to forego ocean views, Sparks urged sealing up the exterior of the home with improved windows, doors, shutters, shingles and the like.
Those improvements are among the most affordable and effective, he said. They also can earn savings on insurance premiums.
In terms of new insurers doing business in South Carolina, they're needed because some of the biggest insurers in the state still aren't writing policies in coastal areas, said Bill Fuge, property and casualty manager of Kinghorn Insurance Services' Hilton Head office.
"Allstate has not written a new piece of business in two years (in Bluffton)," Fuge said. "They feel it's too close to the coast."
Allstate isn't alone in that decision.
Many of the brand-name insurance carriers have stopped writing wind and hail coverage in Bluffton, something that used to be automatic, Fuge said.
But, some of the newer companies like Universal Insurance Holdings are writing coverage for wind and hail damage at "phenomenal rates," Fuge said.
Although insurance costs can surprise some potential real estate buyers here, it isn't stopping individual sales.
"I can't specifically say I've seen the cost of insurance kill a deal," said Gerry Prud'homme, a broker with a Realty Group and a panelist.
State Insurance Commissioner Scott Richardson, a former state senator from the island, said 12 new insurance companies have entered the state since he took over as commissioner in 2007. Another three are expected to enter in the next 90 days, he said.
Insurance prices for condominium buildings have fallen as much as 50 to 60 percent along the coast in that time, Richardson said.
But that trend could come to a crashing halt if a powerful storm makes landfall this year -- a storm like Tropical Storm Gustav might become.
"We are rated (for cost) based on our (state) experience," Richardson said, "but don't think the big picture isn't part of it."
That means a significant strike anywhere would bring higher rates here, especially through increases in the cost of reinsurance -- insurance for insurance companies.
"If Gustav gets all whipped up and hits Louisiana for another $40 billion, don't think your condo premiums aren't going up, because they are," Richardson said.
But, barring Gustav or Hanna, which formed in the Atlantic on Thursday, storming ashore, things are getting better for coastal homeowners, although prices aren't likely to return to pre-Katrina levels.
For one thing, insurance companies have modernized in the past decade so they know exactly what and where they are insuring.
In the 1990s, Peter Sparks, one of the panelists and a professor emeritus of civil engineering at Clemson University, worked with an insurance company that thought it was grossly overexposed in a single Miami zip code.
It turned out that zip code was a bank of post office boxes. The insurance company didn't even know where all the insured property was, Sparks said.
Today, that lack of basic knowledge is long gone, he said.
When asked the best way to hurricane-proof a home, Sparks offered some pragmatic advice.
"The best thing I can tell you in terms of mitigation is move inland," Sparks said to the crowd at the Country Club of Hilton Head.
For those unwilling to forego ocean views, Sparks urged sealing up the exterior of the home with improved windows, doors, shutters, shingles and the like.
Those improvements are among the most affordable and effective, he said. They also can earn savings on insurance premiums.
In terms of new insurers doing business in South Carolina, they're needed because some of the biggest insurers in the state still aren't writing policies in coastal areas, said Bill Fuge, property and casualty manager of Kinghorn Insurance Services' Hilton Head office.
"Allstate has not written a new piece of business in two years (in Bluffton)," Fuge said. "They feel it's too close to the coast."
Allstate isn't alone in that decision.
Many of the brand-name insurance carriers have stopped writing wind and hail coverage in Bluffton, something that used to be automatic, Fuge said.
But, some of the newer companies like Universal Insurance Holdings are writing coverage for wind and hail damage at "phenomenal rates," Fuge said.
Although insurance costs can surprise some potential real estate buyers here, it isn't stopping individual sales.
"I can't specifically say I've seen the cost of insurance kill a deal," said Gerry Prud'homme, a broker with a Realty Group and a panelist.
Monday, September 1, 2008
September and October a more robust market
Once the long Labor Day weekend is over, Silicon Valley residents who want to buy homes will start hitting the open-house circuit in earnest, real estate agents say, eager to make purchases before the holiday season begins.
"August is always the dog days of the stock market, but also the real estate market to a certain extent," said Fred Hibbert.
"September and October are really the more robust market for folks who want to get something done by the end of the year."
That's the conventional wisdom about autumn. But with local foreclosures at record highs, and mortgage availability continually changing, it's hardly been a conventional year for home buyers and sellers. What will happen this fall is still anyone's guess.
It's clear that with prices declining in many parts of the Country, sales generally accelerated this summer, especially among less expensive homes.
James Nichols, a manager with a California realty firm in San Jose, thinks that momentum will continue. Many bank-owned foreclosures are selling quickly, and he's seen a small flurry of lower-priced condos sell lately.
"Some are under $250,000. There are great opportunities out there," he said.
Nichols said he thinks transactions will increase in September compared with August - if nothing drastic happens to upset buyers' ability to obtain mortgages.
"Is the financial sector going to be able to feed the demands of the home buyers, moving forward? That's really the big unknown right now," he said.
"August is always the dog days of the stock market, but also the real estate market to a certain extent," said Fred Hibbert.
"September and October are really the more robust market for folks who want to get something done by the end of the year."
That's the conventional wisdom about autumn. But with local foreclosures at record highs, and mortgage availability continually changing, it's hardly been a conventional year for home buyers and sellers. What will happen this fall is still anyone's guess.
It's clear that with prices declining in many parts of the Country, sales generally accelerated this summer, especially among less expensive homes.
James Nichols, a manager with a California realty firm in San Jose, thinks that momentum will continue. Many bank-owned foreclosures are selling quickly, and he's seen a small flurry of lower-priced condos sell lately.
"Some are under $250,000. There are great opportunities out there," he said.
Nichols said he thinks transactions will increase in September compared with August - if nothing drastic happens to upset buyers' ability to obtain mortgages.
"Is the financial sector going to be able to feed the demands of the home buyers, moving forward? That's really the big unknown right now," he said.
Sunday, August 31, 2008
That's back to 2003-04 prices
Metropolitan Phoenix was the home-builder capital of the country a few years ago, with more big national home builders working in this market than any other metro area. But the industry has shrunk with the housing market's downturn.
A few home builders, some Valley-based, have filed for bankruptcy. Some smaller home builders have closed their doors. And other builders, including a few large ones, have walked away from empty lots, model homes and entire subdivisions.
But most home builders aren't deserting the Valley. They are regrouping for current housing market conditions.
"The Valley's new-home market is in transition, and we are probably only halfway through that transition," said real-estate analyst RL Brown, publisher of the Phoenix Housing Market Letter. "Now, home builders are re-evaluating where and for what price range they can sell homes."
Brown estimates the median price of a new home will drop to about $195,000 when metro Phoenix's housing market is done correcting. That's back to 2003-04 prices.
What's hurting builders is the same thing that's hampering home buying for some: the credit crisis. Brown said it's much more difficult for builders to get the financing they need to buy land. Home buyers, of course, are facing the same dilemma in trying to get mortgages.
Last week, Woodside Homes was forced into bankruptcy by its creditors. But the trek to bankruptcy by home builders started late last year. In November, Engle Homes' Florida parent TOUSA filed for bankruptcy. Then early this year, Valley builder Trend Homes filed for Chapter 11 reorganization. It was purchased by Phoenix-based Najafi Cos. More recently, several Arizona subsidiaries of New York-based Stratland Enterprise filed for bankruptcy, as did Scottsdale-based Charlevoix Homes. A few home-builder land bankers, including Taro Properties of Arizona, also have gone into bankruptcy.
Several Valley subdivisions have been foreclosed upon, including four being developed by Phoenix-based builder Randall Martin Homes.
"Rumors abound about this builder and that builder," Brown said. "Subs aren't paid by a handful of builders. Contracts are renegotiated, layoffs occur. Divisions are consolidated. Management changed. Mortgage brokers close and a bank or two fail. Investigations into unlawful practices grow by the day."
But amid the "confusion, new and resale homes sell, appraisals are made, loans are approved and new families arrive in the region, just as they have for decades."
A few home builders, some Valley-based, have filed for bankruptcy. Some smaller home builders have closed their doors. And other builders, including a few large ones, have walked away from empty lots, model homes and entire subdivisions.
But most home builders aren't deserting the Valley. They are regrouping for current housing market conditions.
"The Valley's new-home market is in transition, and we are probably only halfway through that transition," said real-estate analyst RL Brown, publisher of the Phoenix Housing Market Letter. "Now, home builders are re-evaluating where and for what price range they can sell homes."
Brown estimates the median price of a new home will drop to about $195,000 when metro Phoenix's housing market is done correcting. That's back to 2003-04 prices.
What's hurting builders is the same thing that's hampering home buying for some: the credit crisis. Brown said it's much more difficult for builders to get the financing they need to buy land. Home buyers, of course, are facing the same dilemma in trying to get mortgages.
Last week, Woodside Homes was forced into bankruptcy by its creditors. But the trek to bankruptcy by home builders started late last year. In November, Engle Homes' Florida parent TOUSA filed for bankruptcy. Then early this year, Valley builder Trend Homes filed for Chapter 11 reorganization. It was purchased by Phoenix-based Najafi Cos. More recently, several Arizona subsidiaries of New York-based Stratland Enterprise filed for bankruptcy, as did Scottsdale-based Charlevoix Homes. A few home-builder land bankers, including Taro Properties of Arizona, also have gone into bankruptcy.
Several Valley subdivisions have been foreclosed upon, including four being developed by Phoenix-based builder Randall Martin Homes.
"Rumors abound about this builder and that builder," Brown said. "Subs aren't paid by a handful of builders. Contracts are renegotiated, layoffs occur. Divisions are consolidated. Management changed. Mortgage brokers close and a bank or two fail. Investigations into unlawful practices grow by the day."
But amid the "confusion, new and resale homes sell, appraisals are made, loans are approved and new families arrive in the region, just as they have for decades."
Subscribe to:
Posts (Atom)