Home loans taken out at the peak of the housing boom continue to comprise the majority of problem loans. In the first quarter, some 60 percent of all mortgages past due 90 days or more, or in foreclosure, were originated between 2005 and 2007, the MBA said.

Article source: http://www.boston.com/business/personal-finance/2012/05/18/report-fewer-homes-foreclosed-upon-april/mUG6NprRh1hlADyXUJ4MYN/story.html

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National mortgage-foreclosure activity in April decreased 5 percent from March and was down 14 percent from April 2011, according to a report by RealtyTrac released yesterday. One in every 698 U.S. housing units had a foreclosure filing during the month.

RealtyTrac chief executive Brandon Moore attributed the drop in part to an increase in short sales, which are becoming a more common alternative to foreclosure among distressed properties. In a short sale, the bank agrees to accept less than what the seller owes on their mortgage.

“More distressed loans are being diverted into short sales rather than becoming completed foreclosures,” Moore said in a statement. “Our preliminary first-quarter sales data shows that pre-foreclosure sales — typically short sales — are on pace to outnumber sales of bank-owned properties during the quarter in California, Arizona and 10 other states.”

After three straight monthly increases, U.S. foreclosure starts — which include default notices or scheduled foreclosure auctions, depending on the state — decreased 4 percent from March to April.

A total of 97,665 properties started the foreclosure process for the first time during the month, down 2 percent from April 2011.

“It is surprising the numbers are staying as low as they have this year,” said Daren Blomquist, vice president of RealtyTrac, noting that many analysts expected a wave of new foreclosures in the wake of a landmark settlement between the government and big banks over fraudulent foreclosure practices.

That wave hasn’t come, at least on a national level, for several reasons, Blomquist said. For starters, the numbers are down in California, which represents about 20 percent of the foreclosure activity in the entire country.

Still, he said the overall decrease is “masking” the fact that foreclosures actually are up in places such as Florida, New Jersey and Indiana, among other states.

Despite the overall decrease in foreclosure starts, 26 states posted monthly increases in foreclosure starts.

Despite the lower-than-expected activity, Blomquist said he thinks the number of foreclosures will still rise this year.

“At the end of the day, 2012 is going to be bigger than 2011,” he said, adding he did not expect “normal” levels of foreclosures to return until at least 2014.

Eleven of the nation’s 20 largest metro areas documented annual increases in foreclosure activity, led by the Florida cities of Tampa (59 percent) and Miami (38 percent), RealtyTrac reported.

Among the 20 largest metro areas, cities posting the biggest annual drops in foreclosure activity included Seattle (54 percent), Phoenix (44 percent), San Francisco (34 percent), Washington (30 percent), Riverside-San Bernardino, Calif. (30 percent) and Los Angeles (28 percent).

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Article source: http://www.columbiatribune.com/news/2012/may/18/foreclosure-drop-seen-nationwide/

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3.

Article source: http://www.marketwatch.com/story/first-american-financial-to-present-at-keefe-bruyette-woods-mortgage-finance-conference-2012-05-18

Wall Street dealers are selling
commercial-mortgage bonds with the widest spread this year as
the European debt crisis and JPMorgan Chase Co.’s trading loss
rattles markets.

Goldman Sachs Group Inc. (GS), Citigroup Inc. (C) and Jefferies
Group Inc. (JEF) plan to sell top-ranked debt that matures in 9.19
years to yield 140 basis points more than the benchmark swap
rate, according to a person familiar with the transaction who
declined to be identified because terms aren’t public. That
compares with 120 basis points on similar securities issued by
UBS AG and Barclays Plc last month, according to data compiled
by Bloomberg. The three New York-based banks initially marketed
the securities to yield 115 basis points more than swaps.

Investors are demanding higher yields on bonds tied to
shopping malls, skyscrapers and hotels as Europe’s worsening
fiscal turmoil and possible regulatory fallout from JPMorgan’s
trading loss, potentially constraining lending. Volatile
spreads, which erode banks’ profit margins on new deals, may
inhibit originations, Wells Fargo Co. analysts said in a
report yesterday.

“The upside case for CMBS issuance in 2012 likely was
taken out in the past week,” said analysts led by Marielle Jan de Beur, who is based in New York. “Increased caution about
pricing a deal in a shaky market, an intensified skepticism
toward synthetic hedging instruments and a reinvigorated push
for market regulation,” may hinder issuance, the analysts said.

Wells Fargo forecasts $25 billion of commercial-mortgage
bond issuance this year, with $9.6 billion issued to date.
Deutsche Bank AG and Cantor Fitzgerald LP plan to sell about
$933 million of the debt today with a top-rated class maturing
in about 9.73 years expected to pay a 135 basis-point spread, a
person familiar with that sale said.

The Federal Reserve Bank of New York and UBS auctioned $9
billion of commercial-mortgage bonds created during the boom
years in the past month, creating an additional drag on values,
Credit Suisse Group AG said in a report yesterday.

To contact the reporter on this story:
Sarah Mulholland in New York at
smulholland3@bloomberg.net

To contact the editor responsible for this story:
Alan Goldstein at
agoldstein5@bloomberg.net

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Article source: http://www.bloomberg.com/news/2012-05-18/commercial-mortgage-securities-spreads-soar-to-widest-of-2012.html

Edward DeMarco, the temporary
director of the Federal Housing Finance Agency, continues to
endure blistering criticism for refusing to allow Fannie Mae and
Freddie Mac to pay for large-scale principal reductions for
underwater borrowers (those who owe more than their homes are
worth) or to facilitate refinancings for those stuck with high
interest rate mortgages.

The embattled regulator says he is merely trying to prevent
Fannie and Freddie from adding to the more than $190 billion in
losses that taxpayers have covered since September 2008. But
Representative Elijah Cummings has labeled him “the biggest
hurdle standing between our nation and the recovery of the
housing market.” House Democrats have accused him of hiding data
purportedly proving that principal reductions would save money
and reduce foreclosures. And Representative Barney Frank has
called for his resignation.

Beating up DeMarco may prove cathartic for policy makers
looking to assign blame for economic doldrums. The proposed
remedy, however — having taxpayers pay for principal writedowns
and mass refinancings — would do little to solve the nation’s
housing woes.

Consider the math on principal reductions. There are 11.1
million residential properties with underwater mortgages, only
about 3 million of which are backed by Fannie and Freddie.
Almost 80 percent of those 3 million borrowers, however, are
current on their mortgage, demonstrating their commitment and
ability to make payments without a principal reduction.
Consequently, principal writedowns for them would simply
transfer money from taxpayers to the borrowers — with minimal
effect on foreclosure prevention.

Targeted Federal Help

Targeting principal reduction to the 20 percent of
underwater borrowers with delinquent Fannie and Freddie loans
(approximately 600,000 in total) does have the potential to
prevent some foreclosures, but at far too high a price. It is
extremely difficult to target federal help to a select group of
borrowers without providing an incentive for other borrowers to
stop paying their mortgages. Indeed, research by Christopher Mayer, Edward Morrison, Tomasz Piskorski, and Arpit Gupta of
Columbia University found a statistically significant increase
in such strategic behavior in response to principal reduction
announcements.

President Barack Obama has proposed using unspent money
from the Troubled Asset Relief Program to offset prospective
Fannie and Freddie losses from principal reductions. Taxpayers
would still pay, but the Federal Housing Finance Agency could
meet its legal mandate to avoid losses at the two firms
themselves.

Even this would offer scant benefit. Principal reduction is
seldom appropriate for underwater borrowers who have not made a
mortgage payment in more than six months; it’s too late for most
of them to avoid foreclosure. For that reason, the president’s
proposal focuses on underwater borrowers who have made a
mortgage payment in the past six months. But only about 10
percent of Fannie and Freddie loans meet that criterion. Thus
such a targeted policy would assist only about 60,000 underwater
borrowers.

A similar logic undermines proposals for government-backed
refinancing of underwater and delinquent homeowners to enable
them to take advantage of today’s low interest rates. Those who
are current on their loans would benefit from a lower interest
rate — but since their payments are current their homes are not
at risk of foreclosure. (Most homeowners who are already
delinquent won’t be able to pay their loans even at a lower
interest rate.)

A stronger economy and more robust job growth are
ultimately needed to boost housing demand, spur prices and
construction, and finally end the foreclosure crisis.

Downward Pressure

Meanwhile, regulators can encourage programs to turn
foreclosures into rentals, which will help ease the downward
pressure on home prices. It would also help to remove some of
the uncertainties that deter potential lenders from taking on
housing-related risks, including the difficulty of taking back a
home from a delinquent borrower and the threat of lawsuits
resulting from loans that go bad through no fault of the lender,
such as a borrower losing a job.

The federal government could also reduce uncertainties over
the validity of the Mortgage Electronic Registration Systems
used to keep title information, which is essential for mortgages
to be packaged and sold to investors. Standard formats for title
data would preserve local control while facilitating large-scale
housing investments. Similarly, better coordination of
information regarding second liens would facilitate some
modifications that are dependent on bargaining between owners of
the primary mortgage and second lien.

As the housing adjustment continues, we should avoid taking
actions that accomplish little while providing incentives for
borrowers to renege on obligations. Such efforts will only
prolong the problem. Proponents of mass writedowns and
refinancings are better off having DeMarco to kick around than
having him accede to yet another costly, counterproductive
program.

(Ted Gayer is the co-director of economic studies and a
senior fellow at the Brookings Institution and served as deputy
assistant secretary for economic policy at the Treasury
Department from 2007 to 2008. Phillip Swagel is a professor at
the University of Maryland School of Public Policy, and served
as assistant secretary for economic policy at the Treasury
Department from 2006 to 2009.)

Read more opinion online from Bloomberg View.

Today’s highlights: the View editors on job polarization and
ways to save Syria; William Pesek on China’s declining soft
power; Andrew Razeghi on jump-starting startups; Vali Nasr on
Europe and Iran; Rachelle Bergstein on corporate pumps; Mark
Taylor on competing colleges.

To contact the writers of this article:
Ted Gayer at tgayer@brookings.edu
Phillip Swagel at pswagel@umd.edu

To contact the editor responsible for this article:
Mary Duenwald at mduenwald@bloomberg.net

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Article source: http://www.bloomberg.com/news/2012-05-17/principal-reductions-won-t-solve-u-s-mortgage-mess.html

Foreclosure activity in Utah has fallen sharply over the past year, a new report shows.

The number of foreclosure-related filings — ranging from notices that a homeowner is behind on a mortgage to repossession by a bank — fell by 21 percent from April 2011 to last month, foreclosure listing firm RealtyTrac Inc. said Thursday.

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Nationally, foreclosure activity was down by 13.9 percent, with both the number of properties entering the foreclosure process and those seized by banks declining.

Although the figures suggest foreclosure trends are improving nationally, many states remained mired in a crisis that has yet to ebb. “You absolutely have a tale of two different types of foreclosure trends,” said RealtyTrac’s Daren Blomquist.

The divide comes down roughly between the 26 states where courts play a role in the foreclosure process and 23 other states (including Utah and California) where the process generally moves quicker because judges are not required to sign off on foreclosures.

Last year, foreclosure activity slowed sharply as lenders grappled with allegations that they had been processing foreclosures without verifying documents. A $25 billion settlement reached in February between the nation’s biggest mortgage lenders and state officials has since cleared the way for banks to take action on a logjam of unpaid mortgages.

In Utah, California, Arizona, Nevada and many other so-called non-judicial foreclosure states, foreclosure activity has been declining because they didn’t build a huge backlog of pending foreclosure cases.

As a result, foreclosure activity in all the judicial foreclosure states combined jumped 15 percent versus April last year. Taken together, non-judicial states saw foreclosure activity fall 29 percent, RealtyTrac said.

In a separate report, the Mortgage Bankers Association said that in the first quarter, 6 percent of loans in Utah were in default — with a borrower at least 30 days behind on payments. That’s below the national average of 6.9 percent. At the end of the first quarter, 2.5 percent of mortgage loans in Utah were in the foreclosure process, compared with 4.4 percent nationally.

Copyright 2012 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Article source: http://www.sltrib.com/sltrib/money/54133115-79/foreclosure-percent-states-utah.html.csp