Say It's So ......

Housing Prices Pick Up in California As the biggest residential property market in the United States, California often serves as a bellwether for the nation's economic health. And new research from that state suggests that housing prices nationally could start to rebound relatively soon.The latest data, including two consecutive monthly gains in the median price of existing homes, has some industry officials hopeful that the state housing market has finally reached a bottom and is poised to recover from a prolonged period of declining residential values. In April, California's single-family median home price rose 1.4 percent to $256,700. While that is still off by more than 36 percent from April 2008, the 540,360 homes sales on a seasonally adjusted annual basis reflect an increase of almost 50 percent over the same period, according to the state’s REALTORS® group.

1972

Foreclosure actions were initiated on 1.37 percent of first mortgages during the first quarter of 2009, according to the Mortgage Bankers Association. This was a 29 basis point increase over the fourth quarter of 2008 and a 36 basis point increase from one year ago. Both the level of foreclosures started and the size of the quarter over quarter increase are record highs.
According the MBA’s National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties was 8.22 percent on a non-seasonally adjusted basis, down 41 basis points from 8.63 percent in the fourth quarter of 2008. Delinquency rates always decline in the first quarter of the year due to a variety of seasonal factors. After accounting for these factors, the seasonally adjusted delinquency rate was 9.12 percent of all loans outstanding as of the end of the first quarter of 2009, up 124 basis points from the fourth quarter of 2008, and up 277 basis points from one year ago. The seasonally adjusted rate is the highest in the MBA’s records going back to 1972 and the unadjusted rate is the highest recorded in the first quarter of any year back to 1972. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 3.85 percent, an increase of 55 basis points from the fourth quarter of 2008 and up 138 basis points from one year ago. Both the foreclosure inventory percentage and the quarter to quarter increase are record highs.
The combined percentage of loans in foreclosure and at least one payment past due, meaning the percentage of mortgage holders not current on their mortgages, was 12.07 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.
“The increase in the foreclosure number is sobering but not unexpected. The rate of foreclosure starts remained essentially flat for the last three quarters of 2008 and we suspected that the numbers were artificially low due to various state and local moratoria, the Fannie Mae and Freddie Mac halt on foreclosures, and various company-level moratoria,” said Jay Brinkmann, MBA’s chief economist. “Now that the guidelines of the administration’s loan modification programs are known, combined with the large number of vacant homes with past due mortgages, the pace of foreclosures has stepped up considerably.”
“In looking at these numbers, it is important to focus on what has changed as well what continue to be the key drivers of foreclosures. What has changed is the shifting of the problem somewhat away from the subprime and option ARM/Alt-A loans to the prime fixed-rate loans. The foreclosure rate on prime fixed-rate loans has doubled in the last year, and, for the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures. In addition, almost half of the overall increase in foreclosure starts we saw in the first quarter was due to the increase in prime fixed-rate loans. More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults.
“What has not changed, however, is the oversized impact of California, Florida, Arizona and Nevada in driving up the national numbers. Those states continue to account for about 46 percent of the foreclosure starts in the country, and represented 56 percent of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts.
“It is difficult to overstate the severe impact home price declines have had on mortgage performance in those four states. 10.6 percent of the mortgages in Florida are now somewhere in the process of foreclosure. In Nevada it is 7.8 percent, Arizona 5.6 percent and California 5.2 percent.
“In the first three months of this year, foreclosure actions were started on 3.4 percent of the mortgages in Nevada, 2.8 percent of the mortgages in Florida, 2.5 percent of the mortgages in Arizona and 2.2 percent of the loans in California. In comparison, the states with the highest foreclosure rates in the hard hit Midwest were Michigan and Illinois at 1.5 percent and Indiana and Ohio at 1.3 percent.
“While the national foreclosure start rate was 1.37 percent in the first quarter, in California, Florida, Nevada and Arizona it was 2.45 percent. Absent those four states, the national rate would have been 1.01 percent.
“Looking forward, it does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve. MBA’s forecast, a view now shared by the Federal Reserve and others, is that the unemployment rate will not hit its peak until mid-2010. Since changes in mortgage performance lag changes in the level of employment, it is unlikely we will see much of an improvement until after that,” said Brinkmann.
Change from last quarter (fourth quarter of 2008)
The seasonally adjusted delinquency rate increased 100 basis points to 6.06 percent for prime loans, increased 307 basis points to 24.95 percent for subprime loans, increased 11 basis points to 13.84 percent for FHA loans, and increased 69 basis points to 8.21 percent for VA loans. Seasonally adjusted rates should be viewed with a degree of caution because the statistical models behind the adjustments were estimated based on a much more benign environment. Since the current levels of delinquencies are far outside the range of most of the values used to build the models, the seasonally adjusted numbers may considerably overestimate or even underestimate the true long-term trends.
The percentage of loans in the foreclosure process increased 61 basis points to 2.49 percent for prime loans, and increased 63 basis points for subprime loans to 14.34 percent. FHA loans saw a 33 basis point increase in the foreclosure inventory rate to 2.76 percent, while the foreclosure inventory rate for VA loans increased 27 basis points to 1.93 percent.
The non-seasonally adjusted foreclosure starts rate increased 26 basis points to 0.94 percent for prime loans and increased 69 basis points for subprime loans to 4.65 percent. The rate increased 15 basis points for FHA loans to 1.10 percent and increased seven basis points for VA loans to 0.72 percent.
The seriously delinquent rate, the non-seasonally adjusted percentage of loans that are 90 days or more delinquent, or in the process of foreclosure, was up from both last quarter and from last year. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.
Compared with last quarter, the seriously delinquent rate increased for all loan types. The rate increased 96 basis points for prime loans to 4.70 percent, increased 177 basis points for subprime loans to 24.88 percent, increased 39 basis points for FHA loans to 7.37 percent, and increased 30 basis points for VA loans percent to 4.42 percent.
Change from last year (first quarter of 2008)
On a year-over-year basis, the seasonally adjusted delinquency rate increased for all loan types. The delinquency rate increased 235 basis points for prime loans, increased 616 basis points for subprime loans, increased 112 basis points for FHA loans, and increased 99 basis points for VA loans.
The percentage of loans in the foreclosure process increased 127 basis points for prime loans and 360 basis points for subprime loans. The rate increased 36 basis points for FHA loans and 69 basis points for VA loans.
The non-seasonally adjusted foreclosure starts rate increased 39 basis points for prime loans, 57 basis points for subprime loans, 14 basis points for FHA loans, and 21 basis points for VA loans.
The seriously delinquent rate was 271 basis points higher for prime loans and 846 basis points higher for subprime loans. The rate also increased 178 basis points for FHA loans and 154 basis points for VA loans.

Have A Great Memorial Day

Born down in a dead mans town

The first kick I took was when I hit the ground

You end up like a dog thats been beat too much

Till you spend half your life just covering up

Born in the u.s.a.,

[I] was born in the u.s.a.

[I] was born in the u.s.a., born in the u.s.a.

Got in a little hometown jam

So they put a rifle in my handSent me off to a foreign land

To go and kill the yellow man

Born in the u.s..a....

Come back home to the refineryHiring man

said son if it was up to me

Went down to see my v.a. man

He said son, dont you understand

I had a brother at khe sahn

Fighting off the viet cong

Theyre still there, hes all gone

He had a woman he loved in saigon

I got a picture of him in her arms

nowDown in the shadow of the penitentiary

Out by the gas fires of the refineryIm ten years burning down the road

Nowhere to run aint got nowhere to go

Born in the u.s.a.,

[ I ]was born in the u.s.a.Born in the u.s.a.,

Im a long gone daddy in the u.s.a.B

orn in the u.s.a., born in the u.s.a.Born in the u.s.a.,

Im a cool rocking daddy in the u.s.a.


"Born in the U.S.A." is a 1984 song written and performed by Bruce Springsteen. Taken from the album of the same name, it is one of his best-known singles. Rolling Stone ranked the song 275th on their list of the 500 Greatest Songs of All Time. In 2001, the RIAA's Songs of the Century placed the song 59th (out of 365). Lyrically, the song deals with the effects of the Vietnam War on Americans although it is widely misinterpreted as a patriotic anthem.

At this time....? - Whatever happen to - ALL THE TIME?

HUD ANNOUNCES SANCTIONS AGAINST MORE THAN 120 FHA-APPROVED LENDERSResulting in More Than $1.5 Million in Payments to HUD.
The U.S. Department of Housing and Urban Development's Mortgagee Review Board today announced actions against more than 120 lenders for violating FHA requirements. Violations range from failure to conduct sufficient quality control, to failure to continue to meet FHA recertification requirements, to falsifying loan documents.
The entire list of Board actions is posted as a Notice in the Federal Register and may be accessed through the HUD website.
Yesterday, President Barack Obama signed the Helping Families Save Their Homes Act that grants FHA more authority to keep bad actors out of the FHA programs and provided additional enforcement tools to police those lenders who employ false or misleading marketing tactics (see attached). Meanwhile, the Administration's FY 2010 budget proposal seeks additional investments in FHA to curb fraud and abuse including enhanced investments in technology, staffing and training to enable FHA to cope with the rising volume of mortgage business, detect fraud, and monitor the practices of lenders and appraisers.
"At this time [?] of uncertainty in the mortgage market, FHA needs to be especially vigilant in making sure that its approved lenders meet the highest standards of conduct," said HUD Secretary Shaun Donovan. "We expect, and more importantly American homebuyers deserve, that when they deal with an FHA-approved lender, they're dealing with a lender they can trust. "The provisions in the Helping Families Save Their Homes Act will expand our enforcement and help keep bad actors out of our program."
Sanctions the Board may impose include issuing letters of reprimand, suspension of FHA lending approval, probation, withdrawal of FHA approval, and payment of civil money penalties. Among the actions announced today, 102 lenders had their FHA approval withdrawn, five lenders agreed to make indemnification payments to FHA totaling more than $500,000, and 24 lenders were accessed fines or administrative costs totaling more than $1.2 million.
HUD's actions resulted from standard compliance reviews of FHA-approved lenders. HUD's four Home Ownership Centers - in Atlanta, Denver, Philadelphia and Santa Ana, California - conduct a majority of the reviews. The most serious violations of FHA requirements are referred to the Mortgagee Review Board. Board actions are reported quarterly in the Federal Register.
The lenders noted below had their FHA approval withdrawn and were assessed substantial civil money penalties:
Gatewood Mortgage Corporation, Houston, TX
Gatewood Mortgage Corporation (Gatewood) is a Direct Endorsement lender. This matter came before the Board as a result of multiple violations including the submission of false information and documentation, and violations of FHA approval and underwriting requirements.
Among other things, the Board found that Gatewood submitted false information with respect to its initial approval application, Yearly Reverification Report and multiple notifications to HUD. Gatewood also used the identity of individuals without their knowledge. Further, Gatewood submitted financial statements to HUD that were falsified and not audited by a licensed certified public accountant. Gatewood also violated HUD eligibility requirements by employing and retaining a debarred individual as an employee. Gatewood improperly permitted third parties to originate FHA insured mortgage loans. Finally, Gatewood failed to provide proper documentation in connection with the source of funds required for closing. Based upon the numerous and serious violations of HUD requirements and the submission of false information to the Department, Gatewood's FHA approval was permanently withdrawn on January 16, 2009, and a Civil Money Penalty of $492,500 was imposed.
Hogar Mortgage and Financial Services, Inc., Montvale, NJ
Hogar Mortgage and Financial Services, Inc., (Hogar) is a Direct Endorsement lender. In this case, the Board determined that Hogar committed serious violations of HUD underwriting requirements. Specifically, it found that Hogar failed to resolve discrepancies and conflicting information when originating loans and/or obtaining mortgage insurance; failed to document the source and/or adequacy of funds for the downpayment, closing costs and/or cash reserves; and failed to maintain and implement a Quality Control Plan in compliance with HUD/FHA requirements. Based upon the seriousness of the violations and the lender's response, Hogar's FHA approval was withdrawn on January 27, 2009, for five years and a civil money penalty was imposed in the amount of $151,500.
HUD's Mortgagee Review Board was established in 1989 and exercises all of the functions of the Secretary with respect to administrative actions against lenders. The Board is the only entity in the Department that has the authority to impose civil money penalties and administrative sanctions against HUD/FHA-approved lenders who knowingly and materially violate HUD/FHA program statutes, regulations and handbook requirements. The Board also acts to enforce the provisions of the Fair Housing Act, the Equal Credit Opportunity Act, and Executive Order 11063, as they apply to the origination and servicing of HUD/FHA-insured single family and multifamily mortgages and loans.

The Helping Families Save Their Homes Act contains numerous provisions that help FHA better ensure that predatory lending entities and individuals are not allowed to participate in the FHA home mortgage insurance program. Specifically, the Act would:
Require HUD approval of all parties participating in the FHA single family mortgage origination process.
Allow HUD to impose a civil money penalty against loan originators who are not HUD-approved and yet participate in FHA mortgage originations.
Make clear that an applicant is ineligible for approval if the entity or any officer, partner, director, principal, or employee of the entity is: a) suspended or debarred by any Federal agency; b) under indictment for, or has been convicted of, an offense that reflects adversely upon the applicant's integrity, competence or fitness to meet the responsibilities of an approved mortgagee; c) subject to unresolved findings contained in a HUD or other governmental audit, investigation, or review; d) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees; e) convicted of a felony related to participation in the real estate or mortgage loan industry; or f) in violation of provisions of the S.A.F.E. Mortgage Licensing Act.
Require that HUD receives notice of the debarment and any change in licensing status of a FHA-approved mortgagee.
Require HUD to expand the existing FHA process of reviewing new applicants for FHA approval for the purpose of identifying those representing a high risk to the Mutual Mortgage Insurance Fund and implement procedures that expand the number of loans reviewed by FHA for lenders approved within the last 12 months, and include a process for random reviews that is based on loan volume by newly approved participants.
Require FHA-approved mortgagees to use their HUD registered company names in all advertizing and to keep copies of all advertisements. FHA has witnessed a significant increase in deceptive advertising practices over the last 18 months. This provision will provide for better oversight of the advertising practices of approved lenders by requiring that the lenders use the same corporate name as is on file with FHA.

Top Of The Pops -

The April 2009 Senior Loan Officer Opinion Survey

The April 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, loans to businesses and households over the previous three months. The survey also included two sets of special questions: The first set asked banks about their expectations for delinquencies and charge-offs on existing loans to business and households; the second set queried banks about international trade finance. This article is based on responses from 53 domestic banks and 23 U.S. branches and agencies of foreign banks.1
In the April survey, the net percentages of respondents that reported having tightened their business lending policies over the previous three months, although continuing to be very elevated, edged down for the second consecutive survey. In contrast, somewhat larger net percentages of domestic banks than in the January survey reported having tightened credit standards on residential mortgages. The net percentage of domestic respondents that reported having tightened their lending policies on credit card loans remained about unchanged from the January survey, whereas the net percentage that reported having tightened their policies on other consumer loans fell. Respondents indicated that demand for loans from both businesses and households continued to weaken for nearly all types of loans over the survey period, an exception being demand for prime mortgages, a category of loans that registered an increase in demand for the first time since the survey began to track prime mortgages separately in April 2007.
In response to the special questions on the outlook for loan quality, a significant majority of banks reported that credit quality for all types of loans is likely to deteriorate over the year if the economy progresses according to consensus forecasts. In response to the special questions on international trade finance, the majority of domestic institutions that provide such credit and a substantial fraction of foreign institutions reported having tightened standards over the previous six months.
Questions on Lending to Businesses
(Table 1, questions 1-8; Table 2, questions 1-8)
Commercial and industrial lending. On net, about 40 percent of domestic respondents, compared with around 65 percent in the January survey, reported having tightened their credit standards on commercial and industrial (C&I) loans to firms of all sizes over the previous three months. On balance, domestic banks have reported tightening their credit standards on C&I loans to large and middle-market firms for eight consecutive surveys and to small firms for ten consecutive surveys. Although 40 percent is still very elevated, the April survey marks the first time since January 2008 that the proportion of banks reporting such tightening fell below 50 percent. Similarly, the net percentages of domestic respondents that reported tightening various terms on C&I loans over the previous three months remained elevated but were slightly lower than those reported in the January survey. Specifically, about 80 percent of domestic banks, on balance, indicated that they had increased spreads of loan rates over their cost of funds for C&I loans to large and middle-market firms, compared with around 95 percent in January. About 75 percent of domestic respondents, compared with about 90 percent in January, indicated that they had increased such spreads for C&I loans to small firms. A significant majority of banks reported having charged higher premiums on riskier loans and having increased the costs of credit lines over the survey period.
U.S. branches and agencies of foreign banks also tightened their business lending stance further over the previous three months. On net, about 30 percent of foreign banks, compared with 65 percent in Janaury, reported tightening credit standards for C&I loans. As with their domestic counterparts, significant percentages of foreign banks further tightened various terms on C&I loans, although these percentages were somewhat lower than those in January. On balance, over 65 percent of foreign respondents reported an increase in premiums charged on riskier loans and in the cost of credit lines, and about 60 percent of foreign banks reported an increase in spreads of loan rates over their cost of funds.
Large majorities of both domestic and foreign banks reported a less favorable or more uncertain economic outlook, a worsening of industry-specific problems, and a reduced tolerance for risk as important reasons for tightening credit standards and terms on C&I loans. A substantial majority of foreign respondents also indicated that an increase in defaults by borrowers in public debt markets, decreased liquidity in the secondary market for business loans, and deterioration in their banks' expected capital position were important reasons for the change in C&I lending policies over the survey period.
On balance, about 60 percent of domestic banks reported a further weakening of demand for C&I loans from firms of all sizes over the previous three months, a proportion similar to that reported in the January survey. In contrast, foreign banks, on net, saw little change in demand over the survey period, compared with about 25 percent that reported weaker demand in the January survey.
All foreign respondents and 37 of the 38 domestic banks that saw weaker demand for C&I loans over the previous three months indicated that a decrease in their customers' needs to finance investment in plant or equipment was an important reason for the change in loan demand. Substantial majorities of the domestic institutions that had experienced such weaker demand also pointed to decreases in their customers' needs to finance inventories, accounts receivable, and mergers and acquisitions. In addition, about 35 percent of domestic respondents, on net, reported that inquiries from potential business borrowers had decreased during the survey period, a percentage similar to that in the January survey. In contrast, only about 5 percent of foreign respondents, on net, reported a decrease in such inquiries.
Commercial real estate lending. About 65 percent of domestic banks, on net, reported tightening their lending standards on commercial real estate (CRE) loans over the previous three months, compared with about 80 percent in the January survey. On balance, domestic banks have been tightening credit standards on CRE loans for 14 consecutive surveys, and the April survey marks the first time since October 2007 that the net proportion of banks reporting such tightening fell below 70 percent. About 35 percent of foreign branches and agencies also reported tightening their lending standards on CRE loans over the survey period. The demand for CRE loans weakened further at survey respondents over the previous three months. About 65 percent of domestic banks, on balance, reported weaker demand for CRE loans, the highest net percentage so reporting since the survey began tracking demand for CRE loans in April 1995. In contrast, the net proportion of foreign banks that reported a decrease in demand for CRE loans--about 35 percent--was somewhat smaller than that in the January survey.
Questions on Lending to Households
(Table 1, questions 9-18)
Residential real estate lending. In the April survey, somewhat larger fractions of domestic respondents than in the January survey reported having tightened their lending standards on prime and nontraditional residential mortgages. About 50 percent of domestic respondents indicated that they had tightened their lending standards on prime mortgages over the previous three months, and about 65 percent of the 25 banks that originated nontraditional residential mortgage loans over the survey period reported having tightened their lending standards on such loans. About 35 percent of domestic respondents saw stronger demand, on net, for prime residential mortgage loans over the previous three months, a substantial change from the roughly 10 percent that reported weaker demand in the January survey. About 10 percent of respondents reported having experienced weaker demand for nontraditional mortgage loans over the previous three months-a substantially lower proportion than in the January survey. Only two banks reported making subprime mortgage loans over the same period.
On net, about 50 percent of domestic respondents, down from roughly 60 percent in the January survey noted that they had tightened their lending standards for approving applications for revolving home equity lines of credit (HELOCs) over the previous three months. Regarding demand, about 30 percent of domestic banks, on net, reported weaker demand for HELOCs over the previous three months, slightly more than the proportion that had reported weaker demand in the January survey.
Consumer lending. Large percentages of domestic banks again reported a tightening of standards and terms on both credit card loans and other consumer loans over the previous three months. Nearly 60 percent of respondents indicated that they had tightened lending standards on credit card loans, about the same proportion as in the January survey. About 50 percent of respondents, down from 60 percent in the January survey, reported tightening standards on other consumer loans. About 50 percent of respondents reported having reduced the extent to which credit card accounts were granted to customers who did not meet their bank's credit-scoring thresholds, and a similar fraction reported pulling back from granting other kinds of consumer loans to such customers. Roughly 55 percent of the respondents, a somewhat higher proportion than in the January survey, reported having raised minimum required credit scores on credit card accounts over the previous three months. About 45 percent of respondents reported having raised minimum scores on consumer loans other than credit cards, and about 65 percent of banks, compared with 45 percent in the January survey, indicated that they had lowered credit limits to either new or existing credit card customers. In contrast to the substantial net tightening reported for consumer loan standards and terms, only about 5 percent of domestic banks, on net, indicated that they had become less willing to make consumer installment loans over the previous three months; this proportion is down from 15 percent in the January survey and 45 percent late last year. Regarding demand, about 20 percent of respondents, on net, indicated that they had experienced weaker demand for consumer loans of all types over the previous three months-substantially less that the percentage so reporting in the January survey.