Mortgage News

Late FHA loans spike 62% - but it's not as bad as it sounds
By Les Christie
CNN Money
February 19, 2010

The recent spike in the number of delinquent Federal Housing Administration-insured loans has some people worried that taxpayers will eventually have to bail the agency out.

Seriously delinquent FHA loans, those 90 days or more late, jumped 62.1% in the past year to 558,944, or 9.4% of FHA loans, as of the end of January, according to agency statistics released on Friday.

The FHA, however, insists its finances are sound. Its loan portfolio actually performed better than most mortgage products, according to David Stevens, the agency's commissioner.

"The FHA default rates are increasing at a slower rate than even prime mortgages," he said.

Lennar Looks to Unlikely Helper: Bad Loans
By Dawn Wotapka and James R. Hagerty
The Wall Street Journal
February 12, 2010

The recovery of the home-building market promises to be slow and rocky, but builder Lennar Corp. has found what it thinks will be a way to juice its earnings: buying distressed real estate loans.

The Miami builder's shares surged nearly 9% on Thursday after it announced late Wednesday winning an auction for a portfolio of about 5,500 residential and commercial real estate loans from 22 failed banks. Lennar agreed to pay $243 million for a 40% stake in the portfolio. The rest will be held by the Federal Deposit Insurance Corp.

TARP Panel: Small Banks Are Facing Loan Woes
By Carrick Mollenkamp and Maurice Tamman
The Wall Street Journal
February 11, 2010

Nearly 3,000 small U.S. banks could be forced to dramatically curtail their lending because of losses on commercial real-estate loans, a congressional inquiry concluded.

The findings, set to be released Thursday by the Congressional Oversight Panel as part of its scrutiny of the Troubled Asset Relief Program, point to yet another obstacle for the slow-moving economic recovery. The small banks being threatened by loans they made for shopping centers, offices, hotels and apartments represent a major cog in the U.S. credit system, especially to entrepreneurs.

Mortgage Rate Back Above 5%
By Nathan Becker
The Wall Street Journal
February 5, 2010

Home-mortgage rates generally rose slightly this past week, with the average on 30-year fixed-rate mortgages edging back above 5%, according to Freddie Mac's weekly survey of mortgage loans.

Rates remained "relatively stable" for a second week amid "news of a strengthening housing market," said Freddie Chief Economist Frank Nothaft. Pending existing-home sales rebounded 1% in December from a record drop in November that was due, in part, to the original expiration of home-buyer tax credit, according to the National Association of Realtors. They have since been extended.

How Banks Can Win From Being Second
By Peter Eavis
The Wall Street Journal
February 4, 2010

If you thought all the bank bailouts were over, take a look at what is happening with lenders' large holdings of junior, or "second-lien," mortgages.

These loans stand behind the first mortgage and, in theory, should take a loss before first mortgages in any workout aimed at keeping a borrower in a house. However, government programs aimed at making first mortgages less burdensome have left the junior loans largely unmodified, meaning in some cases the junior lender is basically getting bailed out for free.

Regulator to Block New Loan Products from Fannie, Freddie
By Nick Timiraos
The Wall Street Journal
February 2, 2010

Mortgage-finance giants Fannie Mae and Freddie Mac will not be allowed to introduce new loan products in the mortgage market while they are under the control of the U.S. government, the companies' federal regulator announced Tuesday in a letter to Congress.

Since last summer, Fannie and Freddie had been allowed to submit new loan products for review through a process established by the companies' federal regulator, the Federal Housing Finance Agency. While no new products have been submitted yet, the regulator cited the companies' massive losses and looming challenges in making his decision to block future product submissions.

Fannie, Freddie Chase Bad Mortgages
Lenders Like BofA, J.P. Morgan Repurchase Billions in Faulty Loans; Just a Drop in the Default Pool
By Nick Timiraos
The Wall Street Journal
January 30, 2010

It is payback time for Fannie Mae and Freddie Mac on some mortgages sold to the finance companies by lenders.

Stuck with about $300 billion in loans to borrowers at least 90 days behind on payments, Fannie and Freddie have unleashed armies of auditors and other employees to sift through mortgage files for proof of underwriting flaws. The two mortgage-finance companies are flexing their muscles to force banks to repurchase loans found to contain improper documentation about a borrower's income or outright lies.

Regulators close 6 more banks
The Associated Press
By Marcy Gordon
January 29, 2010

Regulators shut down a big bank in California on Friday, along with two banks in Georgia and one each in Florida, Minnesota and Washington. That brought to 15 the number of bank failures so far in 2010 atop the 140 shuttered last year in the punishing economic climate.

The failure of Los Angeles-based First Regional Bank, with nearly $2.2 billion in assets and $1.9 billion in deposits, is expected to cost the federal deposit insurance fund $825.5 million.

Mortgage Rates Edge Further Below 5%
The Wall Street Journal
January 29, 2010

Mortgage rates fell slightly this week, with the average rate on 30-year fixed-rate mortgages inching further below 5%, according to Freddie Mac's weekly survey.

Rates edged lower as the market awaited the outcome of the Federal Reserve's policy-setting committee meeting Wednesday, according to Frank Northaft, Freddie's chief economist. The Fed voted to keep interest rates near zero.

Mortgage Bulls Bid Fed Adieu
Say Rates Won't Soar When Central-Bank Buying Ends; 'People Will Jump In'
By Mark Gongloff
The Wall Street Journal
January 28, 2010

Conventional wisdom holds that the end of the Federal Reserve's $1.25 trillion mortgage-buying spree will be catastrophic for housing. But a growing number of investors are betting that the fears are overstated and mortgage rates won't soar when the Fed leaves the market in just over two months.

Following a two-day policy meeting, the Fed on Wednesday reiterated its plan to end the program on schedule. The policy makers ignored weak home-sales data that had some observers, worried the market wouldn't be able to wean itself from Fed support, expecting an extension.