LPS - foreclosures stagnant
The November Mortgage Monitor report released by Lender
Processing Services, Inc. (NYSE: LPS) shows that while mortgage
delinquencies at the end of November 2011 were nearly 25% less
than the January 2010 peak, the trend toward fewer loans
becoming delinquent, which dominated 2010 and the first quarter
of 2011, appears to have halted. At the same time, new problem
loans – those loans seriously delinquent as of the end of
November that were current six months prior – have not improved
significantly in the last year. This degree of stagnation
indicates that while the situation is not getting markedly worse,
it is not improving either, and inventories of troubled loans
remain significantly higher than pre-crisis levels across the
board. The November mortgage performance data also showed both
new and repeat foreclosure starts dropped sharply in November,
down nearly 30% from the month prior. As late-stage delinquencies
in the pipeline still number close to 2 million, the sharp drop
is more indicative of the impact of ongoing document reviews,
additional state legislation and new regulatory requirements
rather than a shift in trend.
Prepayment activity – a key indicator of refinances –
remained strong after several consecutive months of growth;
however the October origination data showed a month-over-month
drop of nearly 12%. While still the second highest level for the
year, originations through October 2011 were down 21% vs. the
same period in 2010 and down almost 30% vs. 2009.
Other key results from LPS' latest Mortgage Monitor report
include:
Total US loan delinquency rate: 8.15%
Month-over-month change in delinquency rate: 2.7%
Total US foreclosure pre-sale inventory rate: 4.16%
Month-over-month change in foreclosure pre-sale inventory rate:-
3.0%
States with highest percentage of non-current* loans:- FL, MS,
NV, NJ, IL
States with the lowest percentage of non-current* loans: ND, AK,
WY, SD, MT
*Non-current totals combine foreclosures and delinquencies as a%
of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics'
loan-level database of mortgage assets.
(2) All whole numbers are rounded to the nearest thousand.
Service sector up
The services sector—long the engine of the US economic growth
but an unusual drag in the recovery this time around—is finally
showing signs of sustained strength, from job creation to overall
output. The trend has been underscored in nonfarm payroll data
over the past few months, including the better-than-forecast
December data released Friday, which showed healthy gains again
in retail trade and leisure and hospitality. The jobs recovery
in the service sector — long overdue and anxiously expected —
is most pronounced over the past six months, during which time
private sector service employment rose some 850,000 to almost 92
million. Over the past 12 months, payrolls are up more 1.5
million. The pickup is in stark contrast to the first year of
the recovery, when services payrolls were essentially flat,
following a deep decline during the 2007-2009 recession. In the
four recessions prior to the recent one, the number of services
jobs held steady or rose slightly. In the Great Recession, some
3.4 million were lost. During the 1990-2000 period—the longest
peacetime expansion in US history—services counted for some 80%
of net private sector payroll growth. In the previous US
expansion, the economy added more than 6 million service jobs in
the 2003-2007 period, but lost 2.5 million manufacturing ones
during that time.
WSJ - mortgage rates hold near lows
Average fixed mortgage rates in the US over the past week kicked
off the new year at or near record lows, according to Freddie
Mac's weekly survey of mortgage rates. The firm noted the rate
for a 30-year fixed-rate mortgage during the period matched its
all-time low, making it the fifth straight week the rate has
averaged below 4%. The 30-year fixed-rate mortgage averaged
3.91% for the week ended Thursday, down from 3.95% the previous
week and 4.77% a year ago. Rates on 15-year fixed-rate mortgages
averaged 3.23%, down from 3.24% last week and 4.13% a year
earlier. The five-year Treasury-indexed hybrid adjustable-rate
mortgage, or ARM, averaged 2.86%, down from 2.88% last week and
3.75% a year ago. One-year Treasury-indexed ARM rates averaged
2.8%, up from 2.78% the prior week, though below 3.24% last year.
To obtain the rates, 30-year and 15-year fixed-rate mortgages
required an average payment of 0.8 percentage point. Five-year
and one-year adjustable-rate mortgages required an average 0.7
percentage point and 0.6 percentage point payment, respectively.
A point is 1% of the mortgage amount, charged as prepaid
interest.
Job crisis to last years
Despite an upswing in hiring during 2011, the jobs crisis could
last many more years as millions of Americans struggle to find
work. The US Labor department said employers added 200,000 jobs
during December, many more than expected by Wall Street. In 2011
as a whole, 1.64 million jobs were created, well above the
940,000 in 2010 and the best showing since 2006. But the number
of jobs in the economy is still about 6.1 million lower than
before the brutal 2007-2009 recession. At December's pace of
gains, it would take about 2 1/2 years just to get back to
pre-recession levels of employment. That means many people will
be in for an agonizing wait. In December, 5.6 million of the
nation's unemployed had been out of work for at least six months,
the Labor Department data showed, only slightly lower than the
previous month. While job creation certainly picked up in the
United States during the end of the year, economists point out
that even a gain of 200,000 is underwhelming considering constant
growth in the population and the still-high 8.5% unemployment
rate. In December, the construction industry added 17,000 jobs.
But that sector, devastated by a burst housing bubble that helped
trigger the last recession, has even farther to go than the rest
of the economy before it can recover. There were still almost a
third fewer construction jobs in December than at the industry's
pre-recession peak in August 2006.
Olick - selling foreclosures in bulk
"The Obama Administration, in conjunction with federal regulators
and led by the overseer of Fannie Mae and Freddie Mac, are very
close to announcing a pilot program to sell government-owned
foreclosures in bulk to investors as rentals, according to
administration officials. There are currently about a quarter of
a million foreclosed properties on the books of Fannie Mae,
Freddie Mac and the Federal Housing Administration (FHA) and
millions more are coming. The foreclosure processing delays of
last year created a mammoth backlog of properties yet to be
processed, which are just now being re-started. One of the
initiatives of this program is for the federal government to be
in the position to mitigate and manage any new wave of
foreclosures, sources say. Late stage delinquencies still in the
pipeline number close to two million, according to a new report
from Lender Processing Services. Foreclosure starts outnumber
foreclosure sales by two to one, and, 'the trend toward fewer
loans becoming delinquent, which dominated 2010 and the first
quarter of 2011, appears to have halted,' according to LPS.
Knowing this all too well, the Treasury Department, Federal
Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their
conservator, the Federal Housing Finance Agency (FHFA) at the
helm, are engaged in a collaborative effort to face this new wave
of foreclosures head on and figure out a way to keep these
properties from sitting heavily on the books of the government
and sitting empty in the nation's neighborhoods.
As the Federal Reserve alluded to in its white paper on housing
last week, 'A government-facilitated REO-to-rental program has
the potential to help the housing market and improve loss
recoveries on reo portfolios.' REO's (Real Estate Owned) are
bank-owned properties, or, in this case, properties owned by the
GSE's and the FHA. Three Fed governors pushed for similar plans
in speeches last week as well. A pilot sales program will be
starting in the very near future, according to administration
officials. They are working on what the market potential is, what
pricing would be, how government can partner with private
investors, and who has the operational experience to manage so
many properties. 'I think there is a fair amount of money in the
wings waiting to buy, investors doing cash raises to buy
properties on a large scale,' says Laurie Goodman of Amherst
Securities. 'But that means they have to build out a rental
organization; it means they build out a management company
because if you're accumulating a hundred homes in Dallas that's
very different than running a multi-family building.' A number
of institutional investors have shown appetite and interest in
bulk REO deals, according to officials, but the plan has to
incorporate ways to help facilitate financing. That has been one
of the biggest roadblocks to deals already in the works between
hedge funds and the major banks. Sources close to these private
bank negotiations say there is plenty of cash to buy properties,
but building out a management structure for the rentals is
pricey, and some investors are finding the math doesn't add up to
make it worth their while.
Larger investors want to be able to get real scale in any
government program, in the range of 50, 100, 500 properties per
deal, or one billion plus in assets, say officials close to the
plan. That's why the government is looking to test a combination
of different approaches. Fannie Mae did a fifty million dollar
sale last June, but that was on the small side. Officials are
evaluating at what larger asset sales beyond that would look
like. 'We expect several pilots that will involve both local
investors and institutional investors. The goal here is to reduce
supply by converting foreclosed homes into rental units,' says
Jaret Seiberg of Guggenheim Securities. 'Less supply – even
less fear about a flood of foreclosed homes hitting the market
– could stabilize [home] prices.' While much of this program
will focus on local areas of distress, largely in the sand
states, officials say they are looking at where the assets are
today but are really more focused on where all the foreclosures
will be in the future. It's not about the stock of foreclosures
currently, it's about the flow of them over time and alternative
ways to manage that flow. Officials say they want to bring back
private capital and help support rental opportunities for
households, particularly when rent rates are up at the same time
home prices are down."
The November Mortgage Monitor report released by Lender
Processing Services, Inc. (NYSE: LPS) shows that while mortgage
delinquencies at the end of November 2011 were nearly 25% less
than the January 2010 peak, the trend toward fewer loans
becoming delinquent, which dominated 2010 and the first quarter
of 2011, appears to have halted. At the same time, new problem
loans – those loans seriously delinquent as of the end of
November that were current six months prior – have not improved
significantly in the last year. This degree of stagnation
indicates that while the situation is not getting markedly worse,
it is not improving either, and inventories of troubled loans
remain significantly higher than pre-crisis levels across the
board. The November mortgage performance data also showed both
new and repeat foreclosure starts dropped sharply in November,
down nearly 30% from the month prior. As late-stage delinquencies
in the pipeline still number close to 2 million, the sharp drop
is more indicative of the impact of ongoing document reviews,
additional state legislation and new regulatory requirements
rather than a shift in trend.
Prepayment activity – a key indicator of refinances –
remained strong after several consecutive months of growth;
however the October origination data showed a month-over-month
drop of nearly 12%. While still the second highest level for the
year, originations through October 2011 were down 21% vs. the
same period in 2010 and down almost 30% vs. 2009.
Other key results from LPS' latest Mortgage Monitor report
include:
Total US loan delinquency rate: 8.15%
Month-over-month change in delinquency rate: 2.7%
Total US foreclosure pre-sale inventory rate: 4.16%
Month-over-month change in foreclosure pre-sale inventory rate:-
3.0%
States with highest percentage of non-current* loans:- FL, MS,
NV, NJ, IL
States with the lowest percentage of non-current* loans: ND, AK,
WY, SD, MT
*Non-current totals combine foreclosures and delinquencies as a%
of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics'
loan-level database of mortgage assets.
(2) All whole numbers are rounded to the nearest thousand.
Service sector up
The services sector—long the engine of the US economic growth
but an unusual drag in the recovery this time around—is finally
showing signs of sustained strength, from job creation to overall
output. The trend has been underscored in nonfarm payroll data
over the past few months, including the better-than-forecast
December data released Friday, which showed healthy gains again
in retail trade and leisure and hospitality. The jobs recovery
in the service sector — long overdue and anxiously expected —
is most pronounced over the past six months, during which time
private sector service employment rose some 850,000 to almost 92
million. Over the past 12 months, payrolls are up more 1.5
million. The pickup is in stark contrast to the first year of
the recovery, when services payrolls were essentially flat,
following a deep decline during the 2007-2009 recession. In the
four recessions prior to the recent one, the number of services
jobs held steady or rose slightly. In the Great Recession, some
3.4 million were lost. During the 1990-2000 period—the longest
peacetime expansion in US history—services counted for some 80%
of net private sector payroll growth. In the previous US
expansion, the economy added more than 6 million service jobs in
the 2003-2007 period, but lost 2.5 million manufacturing ones
during that time.
WSJ - mortgage rates hold near lows
Average fixed mortgage rates in the US over the past week kicked
off the new year at or near record lows, according to Freddie
Mac's weekly survey of mortgage rates. The firm noted the rate
for a 30-year fixed-rate mortgage during the period matched its
all-time low, making it the fifth straight week the rate has
averaged below 4%. The 30-year fixed-rate mortgage averaged
3.91% for the week ended Thursday, down from 3.95% the previous
week and 4.77% a year ago. Rates on 15-year fixed-rate mortgages
averaged 3.23%, down from 3.24% last week and 4.13% a year
earlier. The five-year Treasury-indexed hybrid adjustable-rate
mortgage, or ARM, averaged 2.86%, down from 2.88% last week and
3.75% a year ago. One-year Treasury-indexed ARM rates averaged
2.8%, up from 2.78% the prior week, though below 3.24% last year.
To obtain the rates, 30-year and 15-year fixed-rate mortgages
required an average payment of 0.8 percentage point. Five-year
and one-year adjustable-rate mortgages required an average 0.7
percentage point and 0.6 percentage point payment, respectively.
A point is 1% of the mortgage amount, charged as prepaid
interest.
Job crisis to last years
Despite an upswing in hiring during 2011, the jobs crisis could
last many more years as millions of Americans struggle to find
work. The US Labor department said employers added 200,000 jobs
during December, many more than expected by Wall Street. In 2011
as a whole, 1.64 million jobs were created, well above the
940,000 in 2010 and the best showing since 2006. But the number
of jobs in the economy is still about 6.1 million lower than
before the brutal 2007-2009 recession. At December's pace of
gains, it would take about 2 1/2 years just to get back to
pre-recession levels of employment. That means many people will
be in for an agonizing wait. In December, 5.6 million of the
nation's unemployed had been out of work for at least six months,
the Labor Department data showed, only slightly lower than the
previous month. While job creation certainly picked up in the
United States during the end of the year, economists point out
that even a gain of 200,000 is underwhelming considering constant
growth in the population and the still-high 8.5% unemployment
rate. In December, the construction industry added 17,000 jobs.
But that sector, devastated by a burst housing bubble that helped
trigger the last recession, has even farther to go than the rest
of the economy before it can recover. There were still almost a
third fewer construction jobs in December than at the industry's
pre-recession peak in August 2006.
Olick - selling foreclosures in bulk
"The Obama Administration, in conjunction with federal regulators
and led by the overseer of Fannie Mae and Freddie Mac, are very
close to announcing a pilot program to sell government-owned
foreclosures in bulk to investors as rentals, according to
administration officials. There are currently about a quarter of
a million foreclosed properties on the books of Fannie Mae,
Freddie Mac and the Federal Housing Administration (FHA) and
millions more are coming. The foreclosure processing delays of
last year created a mammoth backlog of properties yet to be
processed, which are just now being re-started. One of the
initiatives of this program is for the federal government to be
in the position to mitigate and manage any new wave of
foreclosures, sources say. Late stage delinquencies still in the
pipeline number close to two million, according to a new report
from Lender Processing Services. Foreclosure starts outnumber
foreclosure sales by two to one, and, 'the trend toward fewer
loans becoming delinquent, which dominated 2010 and the first
quarter of 2011, appears to have halted,' according to LPS.
Knowing this all too well, the Treasury Department, Federal
Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their
conservator, the Federal Housing Finance Agency (FHFA) at the
helm, are engaged in a collaborative effort to face this new wave
of foreclosures head on and figure out a way to keep these
properties from sitting heavily on the books of the government
and sitting empty in the nation's neighborhoods.
As the Federal Reserve alluded to in its white paper on housing
last week, 'A government-facilitated REO-to-rental program has
the potential to help the housing market and improve loss
recoveries on reo portfolios.' REO's (Real Estate Owned) are
bank-owned properties, or, in this case, properties owned by the
GSE's and the FHA. Three Fed governors pushed for similar plans
in speeches last week as well. A pilot sales program will be
starting in the very near future, according to administration
officials. They are working on what the market potential is, what
pricing would be, how government can partner with private
investors, and who has the operational experience to manage so
many properties. 'I think there is a fair amount of money in the
wings waiting to buy, investors doing cash raises to buy
properties on a large scale,' says Laurie Goodman of Amherst
Securities. 'But that means they have to build out a rental
organization; it means they build out a management company
because if you're accumulating a hundred homes in Dallas that's
very different than running a multi-family building.' A number
of institutional investors have shown appetite and interest in
bulk REO deals, according to officials, but the plan has to
incorporate ways to help facilitate financing. That has been one
of the biggest roadblocks to deals already in the works between
hedge funds and the major banks. Sources close to these private
bank negotiations say there is plenty of cash to buy properties,
but building out a management structure for the rentals is
pricey, and some investors are finding the math doesn't add up to
make it worth their while.
Larger investors want to be able to get real scale in any
government program, in the range of 50, 100, 500 properties per
deal, or one billion plus in assets, say officials close to the
plan. That's why the government is looking to test a combination
of different approaches. Fannie Mae did a fifty million dollar
sale last June, but that was on the small side. Officials are
evaluating at what larger asset sales beyond that would look
like. 'We expect several pilots that will involve both local
investors and institutional investors. The goal here is to reduce
supply by converting foreclosed homes into rental units,' says
Jaret Seiberg of Guggenheim Securities. 'Less supply – even
less fear about a flood of foreclosed homes hitting the market
– could stabilize [home] prices.' While much of this program
will focus on local areas of distress, largely in the sand
states, officials say they are looking at where the assets are
today but are really more focused on where all the foreclosures
will be in the future. It's not about the stock of foreclosures
currently, it's about the flow of them over time and alternative
ways to manage that flow. Officials say they want to bring back
private capital and help support rental opportunities for
households, particularly when rent rates are up at the same time
home prices are down."
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