Mortgage settlement: The irresponsible are rewarded – baltimoresun.com
Once again, the responsible borrowers who didn’t gamble on real estate values, who acted responsibly, who didn’t speculate get the shaft, and the irresponsible, the speculators and the greedy get rewarded (“Md. joins national mortgage settlement,” Feb. 9).
And how are the banks going to recover this money? They will pass the cost onto the responsible customers and borrowers. The furor about robo-signing is a joke. Has anyone said that the “victims” did not owe the money? How is it that someone who owes money all of a sudden doesn’t owe it because of paperwork irregularities?
Every individual and every family that has lived within its means, honored its debts and lived within its budget should be infuriated by what is nothing more than transfer payments to the irresponsible, the ignorant and the greedy.
Thomas F. McDonough, Towson
I agree with this guy.
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Freddie Mac’s Regulator ‘Completely Puzzled’ By Allegations Of Conflict : The Two-Way : NPR
Saying he is “completely puzzled by the notion that there was something immoral that went on here,” the man at the top of the agency that regulates Freddie Mac has explained why he believes the taxpayer-owned mortgage company did nothing wrong when one of its arms, as NPR and ProPublica have reported, “placed multibillion-dollar bets against American homeowners being able to refinance to cheaper mortgages.”
Edward DeMarco told Morning Edition co-host Steve Inskeep in an interview broadcast on today’s show that Freddie Mac’s actions were “in the class of ordinary business transactions.” The “reverse floaters” in Freddie Mac’s investment portfolio, which as NPR has reported “brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing,” did not affect the agency’s efforts to stabilize the mortgage market, DeMarco said.
Instead, DeMarco characterized the investments as part of Freddie Mac’s effort to make sure it doesn’t lose money. And he said one of his major responsibilities, is to “make sure Fannie Mae and Freddie Mac undertake activities that don’t cause further losses to the American taxpayer.”
DeMarco is acting director of the Federal Housing Finance Agency (FHFA) — the agency that regulates Freddie Mac and Fannie Mae.
As we reported Thursday, two key senators “who have taken the lead on legislation aimed to help homeowners refinance at historically low interest rates,” are critical of FHFA’s oversight of Freddie Mac. One of them, Democratic Sen. Barbara Boxer of California, laid much of the blame on DeMarco and accused him of not looking out for American homeowners who want to refinance at today’s historically low interest rates.
DeMarco told Steve, though, that “not only I, but my staff think of the average homeowner on a daily basis” and believe that their efforts to stabilize the mortgage market and prevent losses at Freddie Mac and Fannie Mae are good for all Americans in the long run.
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Fannie Mae: Don’t Expect ‘Normal’ Housing Market Until 2015 – The Home Front (usnews.com)
Americans will have to wait a few more years for the housing market to return to “normal,” an industry expert said Thursday.
“We’re five years through a 10-year adjustment cycle,” said Doug Duncan, vice president and chief economist at government mortgage giant Fannie Mae, who expects the housing market to stabilize sometime around 2015.
The path to stabilization, however, will be fragmented regionally, Duncan said, primarily along foreclosure and delinquency fault lines. “Two-thirds of households underwater are in 5 states,” Duncan said, states which likely face more pain before any gains. “It’s a very regional issue going forward.”
As the impact of the housing crisis continues to reverberate through the country, the picture has changed. Where local and national housing markets were once virtually identical, they’ve now begun to diverge as employment prospects have changed in certain parts of the country.
While an oversupply of housing remains an obstacle for a housing market recovery, the lack of demand will be the more immediate issue going forward, Duncan says.
“There’s been a focus on the supply side, but no one wants to buy. The level of application activity has been flat,” he said. “From our perspective, it’s really a demand problem going forward.”
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The incremental improvement the market has seen is largely thanks to investors, Duncan said, who can circumvent the mortgage minefield and pay for properties in cash.
Only a significant improvement in the jobs picture—to the tune of 300,000 jobs a month—will help drive lagging household formation, which has been on the decline for decades now, and drum up demand for housing. “We’re expecting 150,000 [jobs added] tomorrow,” Duncan said of the Labor Department’s jobs report. “That’s not robust enough to dramatically improve the employment picture.”
How will we know we have a “normal” housing market again?
“I define it when construction returns to the level that would see additions to the housing stock to accommodate [demographic] growth,” Duncan said.
Until then, the United States will likely remain plagued by too much supply and too little demand for housing.
“The headline on housing is [there will be] a little bit of improvement, but this is not the year in which housing is going to break out,” Duncan added.
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Distressed Home Sale Prices Drop 4.7 Percent in 2011 | Mortgage News | Daily National and State Headlines
CoreLogic has released its December Home Price Index (HPI) report showing that distressed sales home prices in the U.S. decreased 4.7 percent in 2011 (compared with December 2010). This year-end report shows that home prices continued the trend of year-end decreases, the fifth consecutive year with a decrease in the HPI. The HPI, excluding distressed sales, showed that home prices decreased by 0.9 percent in 2011, giving an indication of the impact of distressed sales on home prices in 2011.
The report also shows that national home prices including distressed sales decreased 1.4 percent on a month-over-month basis, the fifth consecutive monthly decline. However, the HPI excluding distressed sales posted its first month-over-month gain since July 2011, rising 0.2 percent.
The December drop in home prices follows a decline of 4.3 percent in November 2011, compared to November 2010. Excluding distressed sales, year-over-year prices declined by two percent in November 2011 compared to November 2010. Distressed sales include short sales and real estate-owned (REO) transactions.
“While overall prices declined by almost five percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.
Highlights of the HPI include:
►Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).
►Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).
►Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).
►Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).
►Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.
►The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).
►Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 81 are showing year-over-year declines in December, one more than in November.
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October Research has published there 2012 “State of the Industry”. It is available for free at http://www.thetitlereport.com/TTR/IndustryReport2012.aspx . It contains sections about:
Real Estate
Gradual housing recovery expected, but sleeper issues creeping up
Title Insurance
Distressed market to define title insurance business in 2012
Homebuilders
Homebuilders in 2011: Bubble states hold down housing starts
Mortgage
Consumer confidence improves, but mortgage markets remain constricted
Appraisal
Appraisal industry battles continue into 2012
Settlement Services Law
Business-changing issues loom in 2012
RESPA
RESPA in 2012: The evolution of a titan
The Dodd-Frank Act
Dodd-Frank in 2012: big issues, little certainty
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The U.S. economy is projected to grow 2.3 percent for the year, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.
Growth will be affected by “fiscal policy issues and political economic uncertainty,” according to Fannie Mae.
The upcoming presidential election, the healthcare debate, and the sovereign debt crisis in the euro zone are three wild cards causing concern for Americans.
Recent improvements in employment have elevated consumers from their “summer rut,” and the housing market is showing some positive indicators, though movement is slow.
“We’re entering 2012 with decent momentum, especially on the employment side,” said Doug Duncan, Fannie Mae’s chief economist.
However, Duncan suggests this momentum will fade over the first half of this year amid “policy changes and challenges that involve the global economy, the domestic economy, and the housing sector.”
Duncan predicts “a year of moderate growth edging away from the 2011 threat of a double dip.”
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From ALTA Advocacy Update by Michelle Korsmo, ALTA CEO (1/17/12) | Property Records Education Partners (PREP)
Housing Policy & Data
Rates for 30-year fixed-rate conventional mortgages fell 2 basis points to a new record low of 3.89% last week. The latest Beige Book from the Federal Reserve Banks continues to show a growing economic recovery led by consumer spending. However, the news was not all bright, as continued weakness in the housing market holds back a robust economic recovery. In the latest round in the Federal Reserve’s push for a broader mortgage refinancing program, a new study from the Federal Reserve Bank of New York shows that the economic benefit of home-loan refinancing to consumers far exceeds the effect of lost returns to investors who provide the residential financing. In the paper, the New York Fed argues that government or foreign investor (who own about 47% of securities backed by residential mortgages) spending on U.S. goods and services doesn’t depend “to any significant degree” on the income from their bonds. Meanwhile, another 8.3% of MBS are held by insurance and pension funds whose spending would spread out over a long period of time. However for distressed homeowners, 50 cents of every dollar saved in a mortgage payment is recycled back through the economy as additional spending.
In December banks filed their lowest number of foreclosures since November 2007. Foreclosures were down 35% in 2011, due to significant delays related to documentation and legal issues. However, these low numbers may only be temporary since there is a backlog of 3.5 million seriously delinquent mortgages. If banks get more aggressive on foreclosures, it could have a further dampening effect on home values. Analysts continue to get more bullish on home builders as evidence points to a resurgence in new construction in 2012. On Wednesday, Lennar Corp. reported that its fourth-quarter orders surged 20% from a year earlier, far surpassing analysts’ expectations. (Some analysts admitted they thought orders would decline.) Meanwhile, the latest National Association of Home Builders/First American Improving Markets Index shows that the number of areas showing improving market conditions jumped to 76 in January, up from 41 a month earlier. Could the market’s appetite for private label mortgage securities be returning? Redwood Trust Inc., the only company to issue so-called private label mortgage bonds since the housing market collapsed three years ago, sure hopes so as it prepares for its fourth such deal since 2008. The new issue of at least $405 million is larger than the two it sold in 2011. The market for privately issued residential mortgage-backed securities, which during the boom funded most of the U.S. housing market, has shrunk to $1.1 trillion outstanding from $2.4 trillion in 2007. Despite extremely stringent underwriting criteria (the mortgages have an average loan-to-value ratio of 62.8%, and average credit scores of 770), Redwood is adding large credit enhancements to warrant the necessary AAA rating.
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NEW YORK (MarketWatch) — U.S. stocks rose Wednesday, sending the S&P 500 Index to a close above 1,300 for the first time since July 28, on improved sentiment in housing and as Goldman Sachs Group Inc.’s earnings beat expectations.
“We started off on a positive footing because certain financial earnings weren’t as bad as investors had feared, but most of the uptick came from home-builders’ confidence reaching a level not seen since 2007,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Newmark: Curb your enthusiasm
Mean Street host Evan Newmark urges bankers and traders on Wall Street to lower their expectations when it comes to earnings and prosperity. (Photo: AP)
“Now we have two areas, jobs and housing, which are critical foundations, and both are seeing signs of improvement. Plus, the euro /quotes/zigman/4867933/sampled EURUSD +0.01% is back above $1.28 — if you’re going to use a barometer for progress in the EU, the euro is as good as any,” Ablin added.
The Dow Jones Industrial Average /quotes/zigman/627449 DJIA +0.78% rose 96.88 points, or 0.8%, to 12,578.95.
The S&P 500 /quotes/zigman/3870025 SPX +1.11% added 14.37 points, or 1.1%, to 1,308.04, with the technology sector, and chip manufacturers in particular, gaining after circuit maker Linear Technology Corp. /quotes/zigman/74810/quotes/nls/lltc LLTC -0.06% said it expects revenue to rise as much as 8% in its third quarter. Read more on Linear Tech’s results leading rally in chip stocks.
Web portal Yahoo Inc. /quotes/zigman/59898/quotes/nls/yhoo YHOO -0.38% 3.2% rose on news that co-founder Jerry Yang is severing all ties to the company he co-founded. Read more about Yahoo.
Microsoft Corp. /quotes/zigman/20493/quotes/nls/msft MSFT +0.32% , International Business Machines Corp. /quotes/zigman/230066/quotes/nls/ibm IBM +0.59% , Intel Corp. /quotes/zigman/20392/quotes/nls/intc INTC +0.12% and General Electric Co. /quotes/zigman/227468/quotes/nls/ge GE +0.05% are among the heavyweights still on tap to report this week, and results from any “could give the market a lift or dampen it,” according to Fred Dickson, chief investment strategist at Davidson Cos. in Lake Oswego, Ore.
The Nasdaq Composite Index /quotes/zigman/123127 COMP +1.53% climbed 41.63 points, or 1.5%, to 2,769.71.
For every stock losing ground about four gained, with less than 800 million shares trading hands on the New York Stock Exchange. NYSE composite volume was about 4 billion.
Building blocks
Investor sentiment and the euro /quotes/zigman/4867933/sampled EURUSD +0.01% were bolstered by reports the Greek government might reach a deal with its private creditors over a debt swap in coming days. Also, the International Monetary Fund is proposing hiking its lending capability by as much as $500 billion. Read more on the IMF and also read WSJ article on Greek debt talks resuming.
Goldman Sachs /quotes/zigman/188479/quotes/nls/gs GS +0.18% shares jumped 6.8% after the investment bank reported results that beat Wall Street’s expectations, while Bank of New York Mellon Corp. /quotes/zigman/445224/quotes/nls/bk BK -0.05% shares slid after its earnings fell 26% Read analysis of Goldman earnings.
“Goldman Sachs broke a trend” of earnings disappointments from the banking sector, said Dickson.
Stock-index futures had retained modest gains after the government reported wholesale prices unexpectedly fell last month, data supportive of the Federal Reserve’s benign view on inflation. Read more on wholesale prices.
A measure of builder confidence in the housing sector rose for a fourth consecutive month in January to hit its highest level since mid-2007, with builder-related shares including PulteGroup Inc. /quotes/zigman/129784/quotes/nls/phm PHM -0.38% and Lennar Corp. /quotes/zigman/232035/quotes/nls/len LEN +0.22% advancing more than 4%. Read more on home builders.
Separately, figures from the Federal Reserve had U.S. industrial production rebounding last month, climbing 0.4% after a revised 0.3% drop in November. Read more on industrial output.
“Investors are weighing a combination of some reasonable economic data, and data we saw from overseas looked OK, so no bad European news,” remarked Davidson’s Dickson.
Add EURUSD to portfolio 
Kate Gibson is a reporter for MarketWatch, based in New York.
Nice to see some good news
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A group convened on the steps of the South Carolina State House Thursday to express their support of homeownership and their opposition to policy changes that might threaten American homeownership.
The group – consisting of Realtors, housing industry professionals, politicians, business leaders, and community leaders – assembled to encourage elected officials “to protect homeownership from threats including scaling back or eliminating the mortgage interest deduction, reducing access to affordable mortgages and loans for home buyers and small businesses, and the foreclosure crisis,” according to an announcement on the National Association of Home Builders’ (NAHB) website.
The outlook expressed at the rally mirrors widespread sentiment uncovered in a recent NAHB survey conducted earlier this month.
About three-fourths of American voters said it is “appropriate and reasonable” for the federal government to promote homeownership through tax incentives.
This view was shared by Democrats (84 percent), Republicans (71 percent), and Independents (71 percent) alike.
“Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to homeownership,” said Bob Nielson, president of NAHB.
In fact, while 73 percent of voters object to an elimination of the mortgage interest deduction, 68 percent claim they are less likely to vote for a candidate who proposes an elimination of the deduction, according to the NAHB survey. This assertion was consistent across party lines.
The majority of survey respondents also opposed revisions that would limit the reach of the mortgage interest tax deduction, including a reduction in the deduction amount, deduction limits for households earning more than $250,000 per year, exclusion of second homes and home equity loans, and reductions for homeowners with mortgages loans greater than $500,000.
“With the 2012 election season in full swing, candidates running for the White House and Congress would be wise to heed the will of the American voters, who have expressed broad support for government policies that encourage homeownership and oppose efforts to make it more difficult to get a home loan and to tamper with the mortgage interest deduction,” said Celinda Lake, president of Lake Research Partners, one of the firms that conducted the survey on behalf of NAHB.
While Americans continue to harbor concern for the mortgage interest tax deduction, another mortgage-related tax deduction recently slipped out of existence.
A mortgage insurance premium tax deduction expired at the start of the year, according to Bloomberg Businessweek.
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A group convened on the steps of the South Carolina State House Thursday to express their support of homeownership and their opposition to policy changes that might threaten American homeownership.
The group – consisting of Realtors, housing industry professionals, politicians, business leaders, and community leaders – assembled to encourage elected officials “to protect homeownership from threats including scaling back or eliminating the mortgage interest deduction, reducing access to affordable mortgages and loans for home buyers and small businesses, and the foreclosure crisis,” according to an announcement on the National Association of Home Builders’ (NAHB) website.
The outlook expressed at the rally mirrors widespread sentiment uncovered in a recent NAHB survey conducted earlier this month.
About three-fourths of American voters said it is “appropriate and reasonable” for the federal government to promote homeownership through tax incentives.
This view was shared by Democrats (84 percent), Republicans (71 percent), and Independents (71 percent) alike.
“Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to homeownership,” said Bob Nielson, president of NAHB.
In fact, while 73 percent of voters object to an elimination of the mortgage interest deduction, 68 percent claim they are less likely to vote for a candidate who proposes an elimination of the deduction, according to the NAHB survey. This assertion was consistent across party lines.
The majority of survey respondents also opposed revisions that would limit the reach of the mortgage interest tax deduction, including a reduction in the deduction amount, deduction limits for households earning more than $250,000 per year, exclusion of second homes and home equity loans, and reductions for homeowners with mortgages loans greater than $500,000.
“With the 2012 election season in full swing, candidates running for the White House and Congress would be wise to heed the will of the American voters, who have expressed broad support for government policies that encourage homeownership and oppose efforts to make it more difficult to get a home loan and to tamper with the mortgage interest deduction,” said Celinda Lake, president of Lake Research Partners, one of the firms that conducted the survey on behalf of NAHB.
While Americans continue to harbor concern for the mortgage interest tax deduction, another mortgage-related tax deduction recently slipped out of existence.
A mortgage insurance premium tax deduction expired at the start of the year, according to Bloomberg Businessweek.
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