Homes with serious negative equity numbers have now declined to the lowest point in at least two years RealtyTrac said today. The company, which began tracking so-called underwater properties in the first quarter of 2012, estimates that in the first quarter of 2014 9.1 million U.S. homes had loan balances at least 25 percent higher than the properties market value or a loan-to-value ratio (LTV) of 125 percent. This is 17 percent of all U.S. properties with a mortgage.
In the fourth quarter of 2013 RealtyTrac said there were 9.3 million properties or 19 percent of mortgaged homes that were that seriously underwater and in the first quarter 2013 there were 10.9 million or 26 percent. The recent peak in negative equity was the second quarter of 2012, when 12.8 million U.S. residential properties representing 29 percent of all properties with a mortgage were seriously underwater.
With the rapid growth of home values in 2013 another 8.5 million homes were close emerging into positive territory in the first quarter with between 90 percent and 110 percent loan-to-value ratios. That near-equity group represented 16 percent of mortgaged homes and had grown from 8.3 million properties in the fourth quarter of 2013....(read more)
Ellie Mae's Origination Insight Report said today that 40 percent of mortgage loans closed in March were originated for refinancing and 60 percent for home purchases. In February the split was 43/57 percent. The March figure was the lowest share for refinancing since Ellie Mae began reporting the data in late 2012. Ellie Mae gathers data from a sample representing the approximately 57 percent of all mortgage applications that pass through its management software and systems.
Jonathan Corr, president and COO of Ellie Mae said, "We continue to see the resurgence of a purchase-centric market as numbers inch closer to historical levels. Purchases increased another three percentage points in March 2014 to represent 60 percent of loans, quite the difference from March 2013 when purchases represented only 38 percent of loans."...(read more)
Two of the three measures of residential construction activity used by the Census Bureau fell slightly in March. Fewer permits were issued and fewer homes reached completion than in February while housing starts rose slightly.
The Bureau and the U.S. Department of Housing and Urban Development report that residential building permits were issued in March at a seasonally adjusted annual rate of 990,000 units. This is 2.4 percent below the revised February rate of 1,014,000 units and 11.2 percent higher than the rate of 890,000 units issued in March 2013.
Permits for single family houses were issued at a rate of 592,000, 0.5 percent above the February estimate of 589,000. Permits for construction of units in buildings with five or more units were at the rate of 370,000 units compared to 402,000 in February....(read more)
Use of secured loans or advances from the 12 Federal Home Loan Banks (FHLBanks) by their four largest members has surged over the last two years. The primary mission of the FHLBanks is to support housing finance and they do so by providing advances to their 7,500 member institutions which include banks, thrifts, credit unions, and insurance companies. By law the members can use these advances to originate mortgages or for other purposes.
Use of these advances had declined by about 62 percent from a 2008 peak of about $1 trillion to $381 billion in March 2012. Then advances began to increase, reaching $500 billion by December 2013. The growth was driven primarily by a 158 percent increase in advances to JP Morgan Chase, Bank of America, Citigroup, and Wells Fargo to a group total of $135.11 billion....(read more)
Mortgage applications reversed a five week slide during the week ended April 11 as applications for both purchasing and refinancing increased from levels the previous week. The Mortgage Bankers Association (MBA) reported this morning that its Market Composite Index, a measure of application volume, increased 4.3 percent on a seasonally adjusted basis from the volume reported during the week ended April 4 and was 5 percent higher on an unadjusted basis.
The Refinance Index increased 7 percent from the previous week and the share of applications that were designated for refinancing ticked up for the first time since the week ended January 24, rising from 51 percent last week to 52 percent this week....(read more)
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose to 47 this month, indicating a slight improvement in the confidence of home builders in the market for new single family homes. At the same time the March HMI was revised down to 46 from 47.
NAHB constructs the HMI from results of a survey it conducts monthly among its homebuilder-members. Respondents are asked to give their perceptions of current single-family home sales and expectations for those sales over the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Each set of responses as well as the composite are used to calculate seasonally adjusted indices where any number over 50 indicates that more builders view conditions as good than poor....(read more)
The Mortgage Bankers Association (MBA) estimated today that there was a 15 percent increase in applications for new home purchases in March compared to February even as the annual pace of new home sales eased. MBA's Builder Application Survey (BAS) which tracks mortgage application volume from mortgage subsidiaries of home builders, indicated that sales of new single-family homes were running at a seasonally adjusted annual rate of 479,000 units in March, a decrease of 10.1 percent from the February estimate of 533,000 units.
On a non-seasonally adjusted basis MBA estimates sales for the month at 46,000 units. This is an increase of 7.0 percent from the estimated 43,000 sales reported in February....(read more)
Another survey has found a slight overall improvement in consumer attitudes toward the economy. The New York Federal Reserve Bank said that its monthly Survey of Consumer Expectations (SEC) for March showed increasingly positive attitudes toward income growth, employment, and access to credit. At the same time consumers appear more wary about the possibility of inflation and have moderated their outlook toward the growth of home prices.
Consumers' expectations about median earnings growth over the next six months had remained flat from the survey's inception in June 2013 but began to climb at the beginning of this year and rose to 2.4 percent in March, the survey's highest point, from 2.26 percent in February. The Fed said the expectation of higher wages increased among consumers everywhere but in the Midwest....(read more)
HOPE Now, founded in 2007 as an early response to the growing threat of foreclosures, continues to negotiate loan modifications in double-digit numbers for distressed homeowners. The voluntary, private sector alliance made up of loan servicers, loan investors, mortgage insurers, and non-profit housing counselors arranged for 42,000 homeowners to receive permanent loan modifications in February vs. 44,000 in January. That number includes 30,000 proprietary modifications and an additional 12,445 done through the Home Affordable Modification Program (HAMP).
While the program continues to respond to the need for foreclosure prevention, administrators note steady declines in both foreclosure starts, which fell to 69,000 during the month from 75,000 in January and foreclosure sales which numbered 36,000, down from 48,000 the previous month. Both totals were the lowest since HOPE NOW began reporting seven years ago.
HOPE Now has completed approximately 6.93 million modifications over that period. About 5.6 million were proprietary modifications and 1.34 million were done through HAMP which started two years later....(read more)
Health care costs aren't rising fast enough for the Fed's liking, and that may help keep interest rates lower for longer. But is the problem one of persistent 'under-inflation' or simply the result of a bloated system falling in line with other countries' health care spending per capita? If the Fed is really concerned that health care costs aren't rising fast enough, the unpleasant conclusion is that when those costs finally do rise, it might coincide with rising rates--eventually. Rising costs and rising rates... just what an economic recovery needs, right? Confused and angry? Read on...
Bloomberg is reporting that the apparent success of the Patient Protection and Affordable Care Act (ACA) in bending the cost curve of health care may not be a complete blessing. Despite the concern that has been expressed in recent years over skyrocketing medical and prescription costs, it appears that we need at least some of those costs increases....(read more)
Two of the nation's largest banks released their first quarter earnings on Thursday. The results of one outpaced analysts' expectations while the other posted disappointing results. Wells Fargo continued its 2013 winning streak with a 14 percent increase in first quarter earnings while J P Morgan Chase missed estimates by .13 per share, a shortfall of nearly 10 percent.
Wells Fargo reported first quarter net income of $5.89 billion or $1.05 per share compared to earnings in the same period in 2013 of $5.17 billion or .92 cents and fourth quarter figures of $5.6 billion or $1.00 per share. The profits came despite slightly lower revenues than both the previous quarter and a year earlier, $20.6 billion compared to $20.7 billion and $21.3 billion.
The bank said its 12th consecutive record quarter was due in part to continued improvement in credit quality. Net charge-offs were down to $825 million, a reduction of $594 million from the first quarter of 2013. This was a rate of 0.41 annualized compared to 0.72 percent. Non-performing assets were reduced by $4.1 billion or 18 percent. The company released $500 million in reserves because of the continued strong credit performance and improved economic conditions....(read more)
RealtyTrac reported today that an uptick in foreclosure starts last month drove an overall increase in the nation's foreclosure activity. There was a 7 percent jump in the filings of initial public notice - Notice of Default (NOD) or Lis Pendens (LIS), part of a total of 117,485 foreclosure related filings during the month. March filings, which also included Notice of Scheduled Auctions and Bank Repossessions (REO) were up 4 percent from February but were 23 percent lower than in March 2013. Scheduled Auctions were also up, rising 6 percent from the previous month.
There were 28,840 bank repossessions in March, down 5 percent from February and 34 percent from a year earlier. It was the lowest number of repossessions since July 2007, an 80 month low.
RealtyTrac said that March was the 42nd month in which foreclosure activity was lower than during the same period a year before and foreclosure activity in the first quarter was the lowest since the second quarter of 2007. In the first quarter there were 341,670 properties nationwide that received some type of foreclosure notice, down 3 percent from the fourth quarter of 2013 and 23 percent below one year earlier. Foreclosure notices were filed on one in every 385 U.S. housing units during the quarter....(read more)
Although the second home mortgage market experienced a severe decline during the housing downturn, Americans still aspire to buy second homes and have contributed to the growth of the market consistently since it hit its bottom in 2009 Fannie Mae said today. While most mortgages are still originated to purchase or refinance owner-occupied primary residences, there is a significant market for mortgages to purchase second homes, those that are neither investment properties nor primary residences. Fannie Mae's new report issued today, Second Homes: Recovery Post Financial Crisis, is part of its Housing Insights series.
Second home mortgages have accounted for an average of 4.76 percent of the purchase mortgage market since 1998 and the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have been significant players, acquiring on average about 64 percent of the second home purchase mortgages by volume over that time period....(read more)
Friday we can look forward to Chase and Wells' earnings. Although their market share has been slipping, given their collective place in the industry they always bellwethers for general conditions in the mortgage industry. We did, however, have Radian release its monthly operating statistics for March. New default notices decreased 7.8% from February and the ending delinquent inventory declined 5.0%. The delinquent inventory was down 12.8% from 4Q. March new insurance written (NIW) was up 30% M/M at $6.8 billion for the quarter. And MGIC came out with its numbers as well. MTG reported monthly operating statistics for March. Credit trends were strong with the cure ratio reaching 150% vs. 143% in March 2013. New default notices were down 11.1% M/M and 14.5% Y/Y. NIW came in stronger M/M at $2.0 billion. This brought total 1Q NIW to $5.2 billion vs. $6.7 billion in 4Q13 and $6.5 billion in 1Q13.
What is more important, being profitable, or doing a lot of volume? The old adage, "you can't go broke making a profit" is true. Not to be confused with "The Dark Knight", Black Knight's February mortgage data, although a couple months old, showed that monthly loan originations dropped to their lowest levels in over 14 years. Every originator worth their salt knows that January is usually bad, and February worse, and most companies have seen a nice pick up in March and into April....(read more)
The Mortgage Bankers Association's Market Composite Index, a measure of mortgage application activity, inched down again during the week ended April 4, decreasing 1.6 percent on a seasonally adjusted basis compared to the week ended March 28. On a non-seasonally adjusted basis the index was down 1 percent. Applications have been on a losing streak since the last week in February when there was a 9.8 percent jump.
Refinancing volume also fell again, with that MBA index decreasing 5 percent to its lowest level since the end of 2013. Refinancing as a share of all application activity dropped to 51 percent from 53 percent, the lowest portion since July 2009.
One bright spot from MBA's Weekly Mortgage Application Survey was its report on applications for purchase mortgages. These increased by 3.0 percent on a seasonally adjusted basis from a week earlier and were also up 3 percent on an unadjusted basis. The unadjusted Purchase Index however was down 14 percent from the same week in 2013....(read more)