5% of US Mortgages Seriously Delinquent: OCC, OTC Report

Serious delinquencies — mortgages 60 or more days past due and those delinquent but in bankruptcy — rose to 5% of US residential mortgages at the end of the first quarter 2009, up almost double from the 2.7% rate seen in the year-ago period, according to a joint report by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).

Memo to NAR: Are you getting this- not in recovery mode yet.

Beazer to Pay $53 Million in Mortgage Settlement

For builder Beazer Homes USA (BZH: 1.87 +2.19%), news Wednesday of a costly settlement was not the first sign of trouble out of its mortgage lending division. Beazer Homes and its mortgage origination arm Beazer Mortgage agreed to pay $5m to the US and up to $48m in contingency payments to homeowners affected by allegedly fraudulent mortgage practices.
The settlement resolves allegations that when Beazer Mortgage originated Federal Housing Administration-insured mortgage loans for buyers of Beazer-built homes, the companies fraudulently charged “interest discount points” at closing but failed to reduce the borrowers’ interest rates and instead kept the cash.

The allegations also state Beazer funded improper cash “gifts” through charities to be used as the required down payment and as a result inflated home purchase prices. Beazer Mortgage allegedly obscured default information to avoid FHA scrutiny and ignored “stated income” requirements and made loans to unqualified purchasers.

The combined effect, the allegations claim, was a high concentration of unqualified borrowers defaulting on FHA-insured mortgages with inflated values. And the FHA program within the US Department of Housing and Urban Development (HUD) was left to foot the bill.

See memo to Angelo:Honesty is the best policy !!

Freddie Draws $6.1 Billion to Cover Liabilities

Mortgage giant Freddie Mac (FRE: 0.6432 +0.50%) this week drew $6.1bn from the preferred stock purchase agreement between the company and the US Treasury Department.
The Treasury on Tuesday distributed the funds, which were requested by Freddie’s conservator, the Federal Housing Finance Agency, in a May 12 Securities and Exchange Commission (SEC) filing.

FHFA submitted the request on Freddie’s behalf after the government-sponsored enterprise reported in its first quarter earnings statement that its liabilities exceeded its assets by $6.01bn as of March 31.

The $6.1bn from the Treasury covers that disparity. After the draw, the remaining amount under Freddie’s funding agreement with the Treasury is $149.3bn, according to an SEC filing Wednesday.

$ 6.1 B - wow!

Builders Raise Own Appraisal Concerns

Appraisal practices have taken center stage lately with the roll out of the new Home Valuation Code of Conduct (HVCC) by the GSEs. And now, the National Association of Home Builders (NAHB) has raised its own concerns over valuations of foreclosures, REOs, and short sales.

NAHB says federal regulators need to write new guidelines for appraising distressed properties. The association claims that appraisers are using foreclosed and distressed sales as comparables with appraisals on newly constructed homes without adequately reflecting the differences in property conditions, driving down new home values.

So it only makes sense that an appraiser should be required to consider the overall condition of a property and the specific factors related to a foreclosure or distressed property sale when selecting and adjusting the value of comparables.”

NAHB points out that appraisers are often only required to conduct exterior inspections of properties that are being used as comparables because they are unable to enter these homes and examine their interiors. Too often, the association says, properties that have been subject to foreclosure or distressed sales have issues related to deferred maintenance or internal damage that an external inspection simply cannot reveal.

The new system sucks and will only hurt recovery. Why would an investor buy and REO to re-sell, it they can’t get it to be fairly appraised ?

Foreigners Want Their Piece of the American Dream

According to the National Association of Realtors (NAR), California, Florida, Texas and Arizona are the top four destinations for international investment. “Many international buyers recognize that real estate is an excellent investment and are drawn today by abundant inventory, low interest rates and favorable foreign exchange rates. These conditions allow them to own their piece of the American dream,” said NAR President Richard Gaylord.

Canada, the UK, Mexico, China, India and Germany are the strongest international investors in U.S. real estate. In a survey of 200 members of the Association of Foreign Real Estate Investors (AFIRE) conducted in October of 2008, 53% stated that the U.S. continues to provide the most stable and secure real estate investment environment, as well as the best opportunity for capital appreciation. Respondents overwhelmingly pointed to the U.S. as the primary target for their real estate investment dollars and said that, on an average, 45 percent of their portfolio is invested in U.S. real estate.

Recession is losing steam, Conference Board reports

The U.S. recession is “losing steam” and a slow recovery should begin by the end of the year, the Conference Board said Thursday as it announced that the index of leading economic indicators rose 1.2% in May, the second straight increase.

The increase was in line with the MarketWatch consensus forecast of 1.1% increase. Seven of the 10 indicators improved in May, the private research organization said. The leading index is up 1.2% in the past six months, the first increase since April 2007. The coincident index fell 0.2% in May, “but the declines are less intense,” said Ken Goldstein, an economist for the organization. - (MarketWatch)

Oh really ?

CA Mortgage moratorium clicks into place

A state law imposing a 90-day moratorium on some California home foreclosures takes effect today.

But it’s not all-inclusive. The law lets state regulators grant loan servicers and lenders exemptions if they have a mortgage modification program in place that meets state requirements of reducing mortgage payments to no more than 38 percent of a borrower’s income.
Other requirements include:
• The loan was recorded between Jan. 1, 2003 to Jan. 1, 2008;
• The loan is the first mortgage or deed of trust;
• The borrower occupies the property as their principal residence when the loan becomes delinquent; and,
• The Notice of Default (NOD) has been recorded on the property.

Loans that are exempted under the moratorium include: loans purchased, serviced, or used as collateral by CalHFA; loans where the borrower has surrendered the property, contracted with an organization regarding how to extend the foreclosure process, or filed bankruptcy and the case has not been closed or dismissed.

California foreclosures still climbing

California foreclosures sales jumped 31.9 percent in May, following a 35 percent increase the prior month, according to a report Tuesday from ForeclosureRadar, a Discovery Bay-based company that tracks the daily movements of foreclosures in the state.

“Notices of Trustee” sales, which set the auction date and time, rose 42 percent from April, indicating that foreclosure sales are likely to continue to rise in the weeks and months ahead, the report says. Despite these increases, and a record number of foreclosures scheduled for auction, lenders continue to voluntarily postpone the majority of foreclosure sales, the report says.

The majority of foreclosure sales continue to be taken back by the lender, with 87.9 percent, or 15,599 sales, with a total loan value of $6.98 Billion, taken back by the lender in May.

PS- Sean from FC Radar will be our speaker in September at the Capital City Wealth Builders monthly meeting (Plse. See: CCWealthbuilders.com)

Number of jobless men doubles to 7.5 million

The recession has been particularly hard on men. The latest data from the Bureau of Labor Statistics show that the number of unemployed men aged 20 and older has doubled in the last year alone, increasing from 3.7 million in May 2008 to 7.5 million last month, according to outplacement firm Challenger, Gray & Christmas Inc.

The ranks of unemployed women have also grown during that time, but not nearly as fast. Last month, the BLS counted about 5.6 million out-of-work women aged 20 and over, up from 3.6 million in May 2008.

“Some have dubbed this recession the ‘man-cession’ because of the heavy impact that the downturn has had on construction, manufacturing and financial services; industries heavily occupied by men,” says John Challenger, chief executive officer of Challenger, Gray & Christmas.
“Meanwhile, health care and education, sectors dominated by women, are doing relatively better,” he says.

Very Simple: High Unemployment = Bad RE market

U.S. May housing starts jump 17.2% to 532,000 rate

U.S. housing starts bounced back with a vengeance in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April to a postwar low, the Commerce Department estimated Tuesday. The surprising increase was led by a 62% gain in new construction of multifamily dwellings.

Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November. Economists surveyed by MarketWatch expected an increase to 485,000. Building permits rose 4% in May to a seasonally adjusted annual rate of 518,000. Permits for single-family homes rose 7.9% to a 408,000 annual rate, the highest since November- WASHINGTON (MarketWatch

Note the increase in muti-family- we are turning into renters for now.