HAMP Mods Increase 11% in July, Treasury Updates Canceled Trials

Obama Administration Scorecard Rates Housing Market as "Stabilizing"

Housing prices are finally stabilizing but the market remains fragile as foreclosure rates climb and serious delinquencies work through the pipeline, according to the Obama Administrations third monthly housing scorecard, which records housing activity through August. July housing prices remained flat after 30 months of declines but foreclosures rose slightly from June, placing additional stress on the market, according to the Department of Housing and Urban Development (HUD) and the Treasury Department.

Fewer Homeowners Qualify For HAMP Relief

Mortgage servicers completed 36,700 permanent HAMP modifications in July, down from 51,200 in the previous month, according to the Treasury Department. The new report shows the number of distressed borrowers entering the Home Affordable Modification Program also slowed to 24,600 in July from 38,700 in June. Treasury officials said the slowdown is due to servicers verifying borrowers' incomes and debt-to-income ratios before allowing them to enter the 90-day HAMP payment trials. Before June, borrowers could start the trials without document verification. The effort to quickly enroll struggling homeowners when the HAMP program was launched in the spring of 2009 led to a very high number failing to get a permanent modification. Treasury reported that another 95,750 borrowers dropped off the HAMP payment trials in July and didn't qualify for a permanent mod. "Servicers reported that more than half of homeowners in cancelled trials received alternative modifications, became current or paid off the loan completely," the July HAMP report says. Since the start of the HAMP program, 1.3 million homeowners have started the payment trials and nearly half (616,800) have dropped out or were cancelled - mainly due to insufficient documentation, missed payments or mortgage payments already less than 31% of income. (HAMP is designed to reduce mortgage payments to 31% of income.) HAMP servicers have approved 434,700 permanent modifications and 421,800 are still active as of July 31. In the June report, Treasury provided HAMP re-default data for the first time. But within a week the promising data had to be corrected. The corrected June data showed the re-default rate (loans 90-days or more past due) on HAMP modifications completed in the third quarter of 2009 is 9.7% after six months, not 2.3% as originally reported. After nine months, the HAMP re-default rate is 14.9%. Treasury did not include re-default data in the July report.

Oil Spill's Negative Effect On Housing Felt Beyond Gulf Coast

Some 23.8% of 1,000 local real estate brokers, agents and appraisers in the Gulf Coast area surveyed by Clear Capital reported a negative impact on their markets from the disastrous oil spill. The Truckee, Calif., company reports over 50% of those reporting a negative impact also reported a decrease in housing values by anywhere from 5% to 15%. The analysis shows the number of sales has dropped dramatically year-over-year in many markets, even those that have not experienced a decrease in price or physical oil damage. Markets inland from the coast whose industries rely heavily on the Gulf are also reporting a slowdown in real estate activity. So much so that 41% of respondents in unaffected areas are unsure about what the future holds for their area while 15.3% anticipate a decline in housing prices. Nearly one-in-four real estate professionals polled report a negative effect even in markets with no physical damage. For example, markets inland from the coast with industries that rely heavily on the Gulf are also reporting a slowdown in real estate activity because of related job losses. Physical property damage from the spill was reported by 3.2% of survey respondents. The southern coastal area of Alabama and the Florida Panhandle reported the greatest concentration of physically affected areas. All of these areas estimated at least a 5% to 15% decrease in property values. In Mobile, Ala. the number of home sales fell 25% in June from one year ago. Other areas along the coast of Alabama and along the Florida panhandle also reported decreased sales and property values as a result of the spill.

- National Mortgage News

GFE's Separate Listing of Some Estimates May Add to Costs

One aspect of the new good faith estimate disclosure that may be adding to closing costs is that it requires each closing cost component to be listed separately. The separate listing may come at the literal expense of being able to offer an "all inclusive" discount for all closing costs combined, according to David Leoncavallo, president of GFEazy, a company that works with a partner to help mortgage production firms produce accurate closing cost estimates required on certain parts of the GFE. This is a concern specifically for block/section 6 on the GFE form, which requires for example, costs for a pest inspection and home inspection to be listed separately. "A lot of times home inspectors will charge hardly anything for a pest inspection," he said. Because the GFE form requires costs of providers suggested by the lender—should the borrowers choose to use them—to be estimated separately before closing and for the lender to essentially guarantee those estimates within a 10% tolerance, it is challenging to state a bundled price. Regulators have acknowledged that to some extent the increased work the industry has to do for the GFE does create some additional costs and they do allow those costs to be passed on to the borrower within reason, Leoncavallo said.

Census Bureau Reports 59% Rise in Reverse Mortgages as Overall Ownership Falls

The nation's homeowners paid a median of $1,000 in monthly housing costs in 2009, while renters paid a median of $808 per month, according to the 2009 American Housing Survey released Thursday by the US Census Bureau and the US Department of Housing and Urban Development (HUD). And while the number of Americans who own homes are falling, the number getting into reverse mortgages is gaining considerably. Compared to 2007, the number of homeowners that owned their home free and clear decreased 1.3% to 24.2m in 2009 from 24.9m. The amount of regular and home-equity mortgages increased 1.4% to 50.3m from 48.7 in 2007. Reverse mortgages increased 59% to 252,000 from 159,000 while line of credit options decreased to 1.7m from 1.8m.

Industry Vet Lederman Leading SoCal MB

Jess Lederman, who a few months ago left Kinecta Federal Credit Union, is now heading up Great Western, a mortgage affiliate of Frontier Bank FSB, Park City, Utah. In a brief interview Lederman confirmed that he is president of the privately held Great Western, working out of its offices in Manhattan Beach, Calif. (Kinecta is also based in Manhattan Beach.) Lederman, who helped pioneer the MBS market back in the 1980s when he was at Bear Stearns & Co., noted that Great Western is currently funding home mortgages but said he could not talk about its operations further at this time. "We're trying to keep everything quiet right now," he said. However, industry sources note that Frontier is controlled by California savings and loan executive James Montgomery, who years ago was CEO of Great Western Financial, once of the largest thrifts in nation. In the late 1990s, Washington Mutual of Seattle bought Great Western. While at Kinecta, Lederman ran the CU's mortgage business, concentrating on jumbo loan production and working with loan brokers. During his career, Lederman also has worked at Ohio Savings and Loan.

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