Category Archives: Commercial

Industrial Property Loans Lead 1Q Increase in Commercial Volume: MBA

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Commercial and multifamily mortgage loan originations in the first quarter were up 49% year over year, according to the Mortgage Bankers Association. Originations decreased 26% from the fourth quarter of 2014.

The overall growth of commercial and multifamily lending volume in the first quarter, compared to the same time last year, was largely driven by the rise in originations for industrial and multifamily properties.

That growth included an increase in the dollar volume of loans for industrial properties of 269%; in multifamily properties, 71%; in office properties, 53%; hotel properties, 51%; and in retail property loans, 5%. Health care property loans were effectively unchanged year-over-year.

The dollar volume of loans originated for the government-sponsored enterprises increased by 306% from the first quarter in 2014.

Loans used in commercial mortgage-backed securities increased 113% and life insurance companies saw a 51% increase in loans. There was a 1% decrease in dollar volume for commercial bank portfolio loans.

First quarter 2015 originations for health care properties fell 62% compared to the fourth quarter 2014.

There was a 57% decrease in originations for retail properties from the fourth quarter 2014; 33% for hotel properties; 31% for multifamily properties; 25% decrease for office properties; and a 127% increase for industrial properties.

The dollar volume of loans for commercial bank portfolios decreased 23% from the fourth quarter of 2014 to the first quarter of 2015; loans for life insurance companies were down 18%; originations for CMBS were down 14% and loans for the GSEs were down by 13%.

Article source: http://www.nationalmortgagenews.com/news/origination/industrial-property-loans-lead-1q-increase-in-commercial-volume-mba-1050340-1.html

Title Agents Will Be Prepared for TRID: ALTA

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Most title professionals will be prepared when the Consumer Financial Protection Bureau implements its TILA-RESPA Integrated Disclosure rule on Aug. 1, according to the American Land Title Association.

TRID integrates forms required under the Truth-in-Lending Act and Real Estate Settlement Procedures Act.

A survey conducted last month by ALTA concluded that 92% of the title agents, underwriters, real estate attorneys and abstracters will be ready to implement the forms and comply with the regulation, ALTA CEO Michelle Korsmo said in a statement.

“For nearly two years, we have encouraged our members to initiate conversations with their Realtor and mortgage-lender partners to ensure the implementation of the new forms is seamless for consumers beginning Aug. 1,” she said.

“All stakeholders that participate in the transaction share the CFPB’s goal that these new disclosures help consumers better understand their terms when they buy a home or refinance their mortgage.”

For most consumer mortgages, the current Good Faith Estimate and early TIL disclosure will be replaced by a three-page Loan Estimate; the HUD-1 and final TIL disclosure by a five-page Closing Disclosure.

Among the biggest concerns of title professionals preparing for the forthcoming disclosures are collaborating with lenders and real estate agents and potential closing delays, the survey says.

A majority (87%) indicated they believe the mortgage disclosures will cause delays for estate closings for consumers due to changes at the closing table, walk-through issues, and lender and real estate agent collaboration issues, among other reasons. Only 5% don’t believe TRID will affect closings and 8% are unsure.

More than 65% of those surveyed believe the new disclosures will not progress the CFPB’s goal of helping prepare and educate consumers on the costs of buying a home. This they owe to potentially inaccurate disclosure of title insurance premiums, new forms highlighting the costs but failing to explain them and being overwhelmed by details.

Article source: http://www.nationalmortgagenews.com/news/origination/title-professionals-will-be-prepared-for-trid-alta-1050358-1.html

Mortgage Rates Climb Due to German Bund Selloff

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Conforming loan rates hit their highest levels in two months during the first week of May, according to the Freddie Mac Primary Mortgage Market Survey.

“Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2%,” said Freddie Mac deputy chief economist Len Kiefer in a released statement.

Thirty-year fixed-rate mortgages rose 12 basis points from last week, to 3.8%. Rates were still down 41 basis points from last year. Fifteen-year fixed-rate mortgages averaged 3.02%, up eight points from last week and down 30 points from last year.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 2.9%, up five points from last week but down 15 from last year, while one-year Treasury-indexed adjustable-rate mortgages dipped three points, to 2.46%, from last week but up three points from the same time last year.

Article source: http://www.nationalmortgagenews.com/news/origination/mortgage-rates-climb-due-to-german-bund-selloff-1050239-1.html

Tech Company Raises $60M to Enter Mortgage Industry

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Appraisal management company Solidifi has acquired national loan settlement services provider Southwest Financial Services.

Solidifi used its existing cash resources to settle the transaction. Its Toronto-based parent company, Real Matters, also raised $60 million in financing that it said would help advance this acquisition as well as others it seeks to help further the reach of its software-as-a-service throughout the North American mortgage industry.

“Southwest Financial Services allows us to add new mortgage lenders that can take advantage of our next generation appraisal services, and to offer and enhance Southwest Financial Services solutions for our customers,” said Real Matters president and chief executive Jason Smith. “It’s an exciting time for Real Matters as we continue to drive innovation in the lending industry.”

Real Matters declined to disclose any further details of the acquisition.

Solidifi is a privately held company headquartered in Buffalo, N.Y., that provides residential real estate appraisals to lenders across the U.S.

Southwest Financial is based in Cincinnati and is one of the largest providers of outsourced title, valuation and flood determination services for home equity lenders nationwide.

Article source: http://www.nationalmortgagenews.com/news/technology/tech-company-raises-60m-to-enter-mortgage-industry-1050218-1.html

Freddie Mac Earns $524M in the First Quarter

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Freddie Mac will return $746 million to the Treasury Department next month after reporting first-quarter net income of $524 million, according to a regulatory filing Tuesday.

The new payment by Freddie Mac, which has been under conservatorship since 2008, will bring total returns to $92.6 billion, far beyond what the company received in federal aid to stay afloat during the credit crisis.

“Our strong business momentum from last year carried into the first quarter, enabling us to again produce earnings despite a continued declining rate environment, so we can return further dividends to taxpayers,” Donald Layton, the company’s chief executive officer, said in a statement.

Freddie Mac and larger rival Fannie Mae are required to pay Treasury all profits above a minimum net worth under terms established after they were seized by regulators amid losses that pushed them to the brink of collapse. The money counts as a return on the U.S. investment and not as repayment, leaving no existing mechanism for them to exit government control.

Article source: http://www.nationalmortgagenews.com/news/secondary/freddie-mac-earns-524m-in-the-first-quarter-1050216-1.html

Fortress Revs Up Mortgage Machine as Its Big Buyout Funds Stall

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Wes Edens, a co-owner of the Milwaukee Bucks, has shot his share of air balls at his private-equity firm Fortress Investment Group. With mortgage assets, Edens has found his mark.

Shares of the mortgage real estate investment trust that Fortress manages soared 50% including dividends in the past year. The REIT, New Residential Investment Corp., alone accounts for more than a quarter of all of Fortress’s private-equity fees.

Edens saw an opening after the housing crash to take advantage of regulatory changes and drive into the mortgage servicing business. Fortress built Nationstar Mortgage Holdings Inc. into a firm that’s now poised to become the No. 1 nonbank servicer. He accomplished that with financing from the REIT and a private-equity fund that’s also earning robust returns.

“It’s a great strength of his: The application of creativity towards very large market opportunities,” said Bill Miller, who runs the $2.3 billion Legg Mason Opportunity Trust, which invests in Nationstar. “He’s looking for structural change that he can exploit.”

Fortress’s $3.3 billion in mortgage assets are a small piece of the firm’s $75 billion in managed capital. Lackluster returns of three big private-equity funds Edens raised in the mid-2000s have contributed to a 55% slump in Fortress shares since it went public in 2007. They have risen 12% in the past year.

16% Returns

The firm’s mortgage servicing fund raised in 2012 has performed much better. The $608 million MSR fund is two-thirds deployed, while a follow-on pool of $1.1 billion gathered the next year is just starting to put out money. The 2012 fund has produced yearly returns of about 16% after fees, according to Fortress.

Fortress moved into the mortgage business at the worst possible time, buying Nationstar’s predecessor, a subprime lender, for about $425 million in 2006. A year later, after the mortgage crisis struck, Fortress tripled its investment to buttress the company’s finances and rebuilt it into a servicer called Nationstar.

Edens anticipated that banks would be compelled by new regulations to sell their servicing rights to nonbanks. In the last four years, nonbanks have increased their share of the $10 trillion servicing market to 26% in 2014 from 11%. The expected rise in interest rates this year makes MSRs more appealing because it reduces the risk of refinancings, which pull mortgages and their monthly cash flow out of portfolios.

‘Terrific Time’

“I’ve been around the fixed-income market for 30 years, and I don’t know another asset that goes up in value as rates rise,” said Edens from Fortress’s New York headquarters. “It is a terrific time” to buy servicing rights.

Edens was the first to use a REIT to provide capital to purchase mortgage assets for a servicer. In 2011, the Internal Revenue Service approved his request for REITs to own servicing rights and not just mortgages and properties.

Fortress’s model, which rivals Ocwen Financial Corp. and PennyMac Financial Services Inc. have embraced, takes advantage of the tax-free status of REITs. They can raise money more cheaply than an operating company like Nationstar, which collects loan payments and handles foreclosures.

Excess Rights

“We had the foresight to go to the IRS and get the ruling,” Edens said. “But this is a strategy that has been used in virtually every other asset class in real estate.”

In a typical deal, Nationstar buys the servicing rights jointly with New Residential and Fortress’s private-equity funds. In exchange for managing the loan payments, they receive about a 4% cut of the interest payments.

Nationstar, which does all the servicing, gets about a fifth of the fee to cover expenses. The rest of the income stream, called excess servicing rights, is shared equally among Nationstar, New Residential and the funds.

The arrangement has boosted Nationstar’s return on equity, or earnings as a percentage of stockholders’ capital. The ROE is “roughly double” what it would be if Nationstar did the deals alone, Edens said.

Fortress has bought 25 servicing-rights pools from 2011 to 2014, investing a total of $1.8 billion. Edens said Fortress is keenly aware of the conflicts inherent in divvying up deals among his different vehicles. To avoid the appearance of favoritism, Nationstar, New Residential and the funds split each MSR investment almost equally.

“We wanted to allocate these things on a pro-rata basis, so people don’t feel there’s any kind of cherry picking,” he said.

Incentive Fees

On April 6, New Residential’s $1.2 billion purchase of the assets of Home Loan Servicing Solutions departed from the practice of dividing investments. Because HLSS, like New Residential, owned hundreds of millions of dollars of mortgage loans as well as servicing rights, the deal didn’t lend itself to a three-way split, Edens said.

The acquisition more than doubled New Residential’s servicing portfolio to $381 billion. On top of an annual management fee of 1.5% of raised equity, the REIT pays Fortress 25% of gains it makes each year above a 10% return.

Many mortgage REITs pay no incentive fees while others provide their manager less than a 25%. All have minimum return thresholds below 10%, making it easier for managers to get a cut.

Permanent Capital

Fortress’s $74 million take from New Residential in 2014 amounted to a third of the dividends the REIT paid to stockholders. That compared with fee-to-dividend ratios of 19% for rival Blackstone Mortgage Trust Inc. and 22% for Starwood Property Trust Inc.

“The Fortress fees are pretty high,” said REIT analyst Jason Stewart of Compass Point Research Trading. “But some of that is justified, because their strategy is more active and esoteric than other REITs.”

Edens defends the incentive charge, pointing to the REIT’s 29% average annual return before fees on its mortgage servicing.

“If we are taking more out, it’s because we are making more money for investors,” said Edens, the REIT’s chairman.

Edens is banking on New Residential and other publicly traded businesses to revive Fortress’s stock. Fortress has five permanent-capital vehicles that are public or that it plans to take to market. Unlike private-equity funds, they don’t have to return capital to investors on a certain date, relieving Fortress of the need to raise new funds.

Compelling Math

Article source: http://www.nationalmortgagenews.com/news/servicing/fortress-revs-up-mortgage-machine-as-its-big-buyout-funds-stall-1050210-1.html

HUD Delays Implementation of FHA Handbook

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The Federal Housing Administration Single Family Housing Policy Handbook will now come into effect on Sept. 14, the Department of Housing and Urban Development announced Friday.

The decision comes as a response to concerns expressed by some of its stakeholders.

“It’s become clear over the last few months that some of our industry partners require additional time to prepare to implement the handbook,” said Kathleen Zadareky, deputy assistant secretary for single-family housing, in a statement.

“We want to accommodate these requests as we believe everyone benefits from having the necessary time to thoughtfully integrate this new handbook into their business operations.”

Article source: http://www.nationalmortgagenews.com/news/regulation/hud-delays-implementation-of-fha-handbook-1050075-1.html

Consumers Think They Know About Mortgages, But Most Have No Idea

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Affordability and competition in the current housing market are the most worrying factors for otherwise confident consumers, but a recent survey indicates nearly third-quarters of prospective homebuyers really don’t understand the mortgage process

In a recent survey conducted by JPMorgan Chase, 42% of self-identified prospective homebuyers said they weren’t concerned about lacking understanding of what it takes to obtain a mortgage. But later in the survey, only 25% of respondents correctly answered a series of questions about how annual percentage rates work, down payments and lenders.

While 70% of respondents worry that rising home prices mean they may have already missed the boat for buying at the best time, 62% said now is a better time to purchase a home compared to last year. Potential homebuyers are getting off the sidelines thanks to rising rental costs and low interest rates, the study says.

“Buyers are clearly concerned about housing inventory and rising prices, especially during the competitive spring buying season,” Cecelia Barbieri, a senior vice president at Chase Mortgage, said in a press release. “But the research shows that interested buyers are optimistic and ready to act on their goals.”

The survey also revealed that 32% of interested buyers want to take advantage of low rates, with 35% indicated that interest rates on 30-year fixed-rate loans rising above 4% would delay their decision to buy.

Three in 10 potential homebuyers indicated they’re ready to purchase a home sometime in the next 18 months, with 20% attributing that sentiment to the rising cost of rent and a desire to upgrade from their current homes.

Article source: http://www.nationalmortgagenews.com/news/origination/consumers-think-they-know-about-mortgages-but-most-have-no-idea-1049980-1.html

Home Prices Rise; Achieve New Highs in Three States

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Home prices have risen 4.6% over the last year, according to new data from Black Knight Financial Services, and experienced the largest monthly climb in prices since June 2014.

Home prices in three of the 20 largest states Colorado, New York and Texas hit their all-time highs, as well as in nine of the 40 largest metro areas.

Those nine cities are Austin, Texas; Columbus, Ohio; Dallas; Denver; Honolulu; Houston; Nashville, Tenn.; San Antonio; and San Jose, Calif.

At $242,000, Black Knight’s home price index is only 9.5% off its all-time peak of $268,000, achieved in June 2006.

Colorado was the strongest growing state for home values, with a year-over-year rise of 9.4%.

Article source: http://www.nationalmortgagenews.com/news/origination/home-prices-rise-achieve-new-highs-in-three-states-1049715-1.html

HUD to Delay Foreclosures in Loan-Sale Changes to Aid Homeowners

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The Department of Housing and Urban Development will revise its auctions of nonperforming mortgages to address concerns that the sales aren’t doing enough to help homeowners in communities hurt by foreclosures.

After winning a bid, buyers will be barred from seizing properties for at least a year and HUD will begin designating some small loan pools for purchase by nonprofit groups under a set of changes to be announced by the agency on Friday.

The new requirements will take effect for HUDs next loan auctions, which the agency plans to hold in June and July. The sales will include large pools of loans from around the country as well as one with mortgages concentrated in Detroit, restricted for sale to community groups and local government bidders.

“These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers,” Genger Charles, acting general deputy assistant secretary of HUD’s Federal Housing Administration, said in a statement.

Previously, all pools were open to all qualified bidders and foreclosures were barred for only six months. Nonprofits will get a first chance to buy homes that end up going through foreclosure.

HUD is also setting a minimum standard for mortgage modifications offered to borrowers by requiring investors to evaluate whether borrowers are eligible for aid under the governments Home Affordable Modification Program.

The agency, which has sold $3.7 billion of soured loans since late 2012 under a program designed to aid neighborhoods, has faced complaints from nonprofit organizations that its sale terms favored large investors backed by firms such as Oaktree Capital Management and Blackstone Group. While the FHA’s mortgage-insurance fund has benefited from the sales, there are few signs the program has helped areas laden with vacant homes.

Borrowers resumed payments on fewer than 13% of the mortgages sold as of February, according to a HUD report. Almost half the loans were still in “interim status” because many borrowers, whove failed to make payments for an average of three years, have abandoned their properties.

Winning bidders have four years to get at least half the loans in a portfolio into repayment or another approved outcome, such as holding the property for rental or selling to an owner-occupant.

Performance reports by winners of the first three HUD auctions, in which a total of $1.57 billion in debt was sold, show a wide range of outcomes, according to reports obtained by Bloomberg through a Freedom of Information Act request.

HUD has auctioned more than 98,000 nonperforming loans with unpaid balances totaling $16.7 billion since 2010. The majority of the loans about $13 billion worth were sold in national pools outside the neighborhood-stabilization program. They came with few requirements aimed at improving communities or helping delinquent borrowers.

The loan-auction program was established by HUD as it faced mounting losses to the FHA’s insurance fund stemming from the housing crash. The fund needed a $1.7 billion infusion from the Treasury Department in 2013, the first in the agency’s 80-year history.

Demand for soured mortgages has been increasing as Wall Street firms compete to buy loans at a discount after a real estate market rebound. Freddie Mac has auctioned about $2 billion in defaulted debt in three separate sales since last year. Fannie Mae announced its first bulk sale this month of 3,200 loans with an unpaid balance of $786 million.

Article source: http://www.nationalmortgagenews.com/news/distressed/hud-to-delay-foreclosures-in-loan-sale-changes-to-aid-homeowners-1049549-1.html

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