Category Archives: Modification
Boom-Era Property Speculators to Get Foreclosure Aid
By Prashant Gopal – Mar 5, 2012 12:00 AM ET
The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded, helping some speculators who drove up prices and inflated the housing bubble.
Landlords can qualify for up to four federally-subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury’s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.
Investors are central to the federal government’s strategy for reviving real estate with home prices down 34 percent since July 2006 and as foreclosures deplete the pool of buyers who can qualify for a mortgage. Photo: Tim Rue/Bloomberg
The government’s need to protect neighborhoods from blight and renters from eviction by keeping the current owners in place is outweighing concern that taxpayers will end up bailing out real-estate investors. The program is being enlarged after less than 1 million borrowers modified loans through HAMP, compared with the administration’s stated goal in 2009 of helping 3 million to 4 million homeowners.
“When we started the program we focused on owner-occupied houses because the need was so great and we wanted to target the efforts to that group,” said Massad. “Given where we are today, more and more people recognize that vacant properties are a problem no matter how they became vacant.”
Homeownership Rate
Investors are central to the federal government’s strategy for reviving real estate with home prices down 34 percent since July 2006 and as foreclosures deplete the pool of buyers who can qualify for a mortgage. Federal Reserve Chairman Ben S. Bernanke told homebuilders in Orlando, Florida last month that the U.S. economic recovery has been “frustratingly slow,” in part because weak housing markets are holding back consumer spending.
The homeownership rate, which peaked at 69.2 percent in June 2004, fell to 66 percent in the fourth quarter of 2011, according to the U.S. Census Bureau. A new Fannie Mae program designed to reduce the overhang of foreclosed homes is encouraging potential buyers, including private-equity firms, to purchase properties in bulk and convert them to rentals. Almost one in four home purchases in January was made by an investor, according to the National Association of Realtors. And investment and vacation properties made up 21 percent of houses in the foreclosure process in January, according to Irvine, California-based RealtyTrac Inc.
‘Huge Change’
The Obama administration announced last month that it would triple incentives to owners of mortgages that reduce home-loan debt and expand eligibility to borrowers struggling under the weight of other liabilities, such as medical bills
More Time Allowed for Foreclosure Review Requests
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Homeowners who think they may have been financially injured due to the actions of mortgage servicers during a foreclosure have additional time to request a review of their cases. The deadline for the Independent Foreclosure Review authorized by the Office of the Comptroller of the Currency and the Federal Reserve originally schedule for April 30 has been extended to July 31.
To be eligible for a review a borrower had a mortgage on the primary residence serviced by a participating company which was in active foreclosure between January 1, 2009 and December 31, 2010. There are no costs associated with the review.
More information and a list of participating servicers can be found at: www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm or www.occ.gov/independentforeclosurereview.
Related articles
- Borrowers have until July for foreclosure review (marketwatch.com)
- Judge orders Wells Fargo to face claims of improper disclosure of foreclosure practices (alialawgroupforeclosurenews.com)
- Feds to help borrowers prove foreclosure errors (marketwatch.com)
Administration Revamps HAMP to Reach More Borrowers
The Obama administration has announced changes to its flagship foreclosure prevention initiative – the Home Affordable Modification Program (HAMP) – which officials say will expand its reach to more distressed homeowners.
Among the changes, borrowers who are struggling because of debt beyond their mortgage will be eligible for a secondary evaluation with more flexible debt-to-income criteria, and eligibility will be extended to investor-owned homes that are used as rental properties.
The administration is also giving principal reductions a bigger role within the program, tripling incentives for investors that agree to write down an underwater borrower’s principal and offering these same incentives to the nation’s two biggest mortgage investors – Fannie Mae and Freddie Mac.
The deadline for HAMP will be extended for an additional year through December 31, 2013.
(developing story)
*Additional details have been provided in a blog post by Tim Massad, assistant secretary for financial stability.
Related articles
- Reduce amount due on mortgage, or grant a short sale? (besthouses2go.wordpress.com)
- Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite (mainstreetresolutions.com)
- What went wrong with mortgage aid? (georgegmiller.wordpress.com)
- Fixing the Housing Market: The Principal of the Matter (avidlawblog.wordpress.com)
- Obama loan modification program moving slowly (marketwatch.com)
Overall Mortgage Performance Stable, Delinquencies Remained Elevated in Third Quarter 2011
FOR IMMEDIATE RELEASE
December 21, 2011Contact: Bryan Hubbard
(202) 874-5770
Overall Mortgage Performance Stable, Delinquencies Remained Elevated in Third Quarter 2011
WASHINGTON—The performance of first-lien mortgages serviced by large national banks and federal savings association was stable, but delinquencies remained elevated during the third quarter of 2011, according to a report released today by the Office of the Comptroller of the Currency (OCC).
The quarterly OCC Mortgage Metrics Report showed delinquencies remained elevated but stable during the third quarter of 2011 but have declined from a year earlier. However, the number of new foreclosures increased by 21.1 percent during the quarter as servicers lifted voluntary moratoria implemented in late 2010 and exhausted alternatives to foreclosure for the large inventory of seriously delinquent mortgages working through the loss mitigation process. The increase in new foreclosures and the increase in average time required to complete foreclosures sales has resulted in the number of foreclosures in process increasing to 4.1 percent of the overall portfolio, or 1,327,077 loans, at the end of the third quarter of 2011.
At the end of the third quarter of 2011, 88 percent of the 32.4 million loans in the portfolio were current and performing at the end of the third quarter, almost unchanged from the previous quarter. The percentages of mortgages that were 30-to-59 days delinquent and mortgages that were seriously delinquent (loans 60 or more days delinquent or delinquent mortgages to bankrupt borrowers) did not change from the previous quarter. However, both categories of delinquencies have declined from a year earlier.
Other key findings of the report included:
On average, the modifications implemented in the third quarter of 2011 reduced borrowers’ monthly principal and interest payments by 24.4 percent, or $382. Modifications made under the Home Affordable Modification Program (HAMP) reduced payments by 35.1 percent on average, or $567.
Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less. At the end of the third quarter of 2011, 58.8 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current and performing, compared with 36.4 percent of modifications made during that time that reduced payments by less than 10 percent.
Since the beginning of 2008, servicers have modified 2,258,026 mortgages through the end of the second quarter of 2011. At the end of the third quarter of 2011, 50.8 percent of those modifications remained current or had been paid off. Another 8.8 percent were 30-to-59 days delinquent, and 17.8 percent were seriously delinquent. Eleven percent were in the process of foreclosure and 5.8 percent had completed the foreclosure process.
The report covers about 62 percent of all first-lien mortgages in the United States, worth $5.6 trillion in outstanding balances. The complete report can be downloaded from the OCC Web site, www.occ.gov.
Related Link:
Source: OCC Mortgage Metrics Report for the Third Quarter of 2011 (PDF)
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MBA: Outstanding Commercial Debt at $2.4 Trillion for Q1
The level of commercial/multifamily mortgage debt outstanding remained essentially unchanged at $2.4 trillion in the first quarter of 2011, decreasing by 0.1 percent from fourth quarter 2010, according to the Mortgage Bankers Association‘s (MBA) analysis of the Federal Reserve Board (FRB) Flow of Funds data. The MBA’s analysis was changed in the fourth quarter of 2010 to more accurately reflect the true level of mortgages backed by income-producing commercial and multifamily properties. The changes are detailed in Appendix A of the report.
The $2.4 trillion in commercial/multifamily mortgage debt outstanding was $3 billion lower than the Q4 2010 figure. Multifamily mortgage debt outstanding rose to $800 billion, an increase of $3 billion or 0.4 percent from the fourth quarter.
“New commercial and multifamily mortgage lending offset the amount of debt paid-off and paid-down during the first quarter, leaving the outstanding balance essentially unchanged,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Five of the seven largest investor groups increased their holdings of commercial and multifamily mortgages during the quarter. Banks and thrifts and finance companies saw declines in the balances of commercial and multifamily mortgages they hold.”
The Federal Reserve Flow of Funds data summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset-backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issuers).
The MBA recently improved its reporting of commercial and multifamily mortgage debt outstanding. The new reporting excludes two categories of loans that had formerly been included—loans for acquisition, development and construction and loans collateralized by owner-occupied commercial properties. By excluding these loan types, the analysis here more accurately reflects the balance of loans supported by office buildings, retail centers, apartment buildings and other income-producing properties that rely on rents and leases to make their payments.
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $794 billion, or 33 percent of the total. CMBS, CDO and other ABS issues are the second largest holders of commercial/multifamily mortgages, holding $626 billion, or 26 percent of the total. Agency and government-sponsored enterprise (GSE) portfolios and MBS hold $327 billion, or 14 percent of the total, and life insurance companies hold $299 billion, or 13 percent of the total. Many life insurance companies, banks and the GSEs purchase and hold a large number of CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS categories.
Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of multifamily mortgages, with $327 billion or 41 percent of the total multifamily debt outstanding. They are followed by banks and thrifts with $214 billion, or 27 percent of the total. CMBS, CDO and other ABS issuers hold $98 billion, or 12 percent of the total; state and local governments hold $75 billion, or nine percent of the total; life insurance companies hold $47 billion, or six percent of the total; and the federal government holds $14 billion, or two percent of the total.
In the first quarter of 2011, commercial banks saw the largest decrease in dollar terms in their holdings of commercial/multifamily mortgage debt—a decrease of $8 billion or one percent. Finance companies decreased their holdings of commercial/multifamily mortgages by $3 billion or four percent. Agency and GSE portfolios and MBS; CMBS, CDO, and other ABS issuers; life insurance companies; the federal government; and state and local governments all increased their holdings.
In percentage terms, the household sector saw the largest decrease in their holdings of commercial/multifamily mortgages, a drop of five percent. Agency and GSE portfolios and MBS saw their holdings increase one percent.
The $3 billion increase in multifamily mortgage debt outstanding between the fourth quarter 2010 and first quarter 2011 represents a 0.4 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $4 billion, or one percent. State and local government increased their holdings of multifamily mortgage debt by $805 million, or one percent. Life insurance companies increased by $140 million, or 0.3 percent. CMBS, CDO, and other ABS issues saw the biggest decrease in their holdings of multifamily mortgage debt, by $688 million or 0.7 percent.
In percentage terms, agency and GSE portfolios and MBS recorded the biggest increase in their holdings of multifamily mortgages at one percent. Non-financial corporate business saw the biggest decrease at 40 percent.
