Category Archives: Warehouse

Ocwen Auditor May Issue ‘Going Concern’ Warning: CEO

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Ocwen Financial’s first-quarter profit fell 43%, and the Atlanta mortgage servicer said that its auditor is questioning its long-term viability.

Chief Executive Ron Faris told analysts Thursday that Ocwen’s independent auditor has again delayed its 2014 financial results and has raised questions about the firm’s ability to operate as a going concern because of liquidity problems and the strict regulatory environment. Its 2014 results are expected to be finalized by May 29.

Ocwen also said it will sell a significant portion of nonperforming loans backed by Fannie Mae and Freddie Mac at a loss of between $75 million to $90 million. Doing so will improve its operating margins and liquidity and reduce servicing advances that cannot be financed, Faris said. The company also expects to recover more than $150 million in servicing advances.

The auditor has an array of concerns, and no single issue is driving them, Faris told analysts on a conference call.

Ocwen’s auditor could sign off on its financials with no qualification, indicating they have questions about the company’s ability to remain financial viable as a going concern over the next 12 months.

The primary focus is on Ocwen’s residential-servicer rankings. Standard Poor’s Ratings Services ranks Ocwen Loan Servicing as average with a negative outlook. On April 21 SP placed Ocwen’s credit rating on CreditWatch with negative implications.

“Mounting negative pressure including the potential for a ‘going concern’ opinion, and servicing ranking outlooks currently on negative with the potential for downgrades, could have a significant impact on the company’s ability to retain a portion of mortgage servicing contracts, negatively impacting revenue,” wrote Richard Zell, SP’s credit analyst.

The auditor is deciding between a going-concern opinion or a milder warning, Faris said Thursday. “We are looking at all available information including the impact of the regulatory environment, the status and impact of our servicer rating and our liquidity,” he said.

“A going-concern explanatory paragraph, if that were to be the result, will not cause a default on any of our debt agreements,” Faris continued. “While we are aware of the negative public perception, we believe we will be able to refinance all outstanding debt and maintain liquidity going forward.”

The big drop in quarterly earnings to $34.4 million, or 27 cents a share, came after revenue fell 7%, to $510.4 million, and special items dealt a blow. Those items included a $17.8 million impairment charge to devalue mortgage-servicing rights after the Federal Housing Administration cut insurance premiums 50 basis points.

Ocwen took a $9 million charge in the first quarter for expenses related to the monitor of the national mortgage settlement and $8.4 million for strategic-advisory expenses.

At the same time the company also reported a $26.9 million gain on the sale of $9 billion in unpaid principal on performing loans backed by Freddie Mac.

Ocwen estimates it will have $50 million of expenses in 2015 to pay for various settlement monitors, but it is “not aware of any fines, penalties or settlements from any state agencies that would have a material impact,” Faris said.

On the call, Faris thanked Ocwen’s 11,000 employees for their “tireless efforts over recent months” and cited their “tremendous commitment and a passion to persevere.”

Ocwen said it is not exiting the servicing or lending of loans backed by Fannie, Freddie or the FHA. It even plans to expand its lending segment, which generated $16 million in first-quarter earnings.

Article source: http://www.nationalmortgagenews.com/news/servicing/ocwen-auditor-may-issue-going-concern-warning-ceo-1050010-1.html

Investors Should Shift Focus to Residential Real Estate: William Blair

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

With the housing market and fundamentals showing signs of health, investors may want to begin turning their focus from commercial to residential real estate, according to analysts at William Blair.

The analysts said in an April 27 research note that they have shifted their expectations toward the levels of growth forecast by the National Association of Realtors, based on discussions at the CoreLogic Real Estate Symposium last week. Currently, the NAR predicts 5.6% in price growth for 2015, which is higher than the forecasts from the Mortgage Bankers Association and Fannie Mae.

“We have been more bullish on the commercial real estate stocks than residential within our coverage for more than three years now due to superior fundamentals and visibility on growth (and the cycle),” Brandon Dobell and Keane McCarthy, real estate analysts with William Blair, said in the note. “As the valuations for our commercial coverage have continued to inch higher, the relative opportunity in residential now looks increasingly attractive, especially in the context of the market outlook described at the symposium.”

Beyond the mere attractiveness from comparison, the residential real estate industry should experience tailwinds from the expected rise in interest rates and general strengthening of the economy.

Nevertheless, the William Blair analysts did not downplay potential roadblocks to residential real estate’s comeback. They noted that inventory shortages, underwriting standards and negative equity all remain concerns. Additionally, they found that student debt could prove to lower the demand among millennials.

Furthermore, the analysts highlighted another industrywide trend: the rising frequency of private capital firms purchasing mortgage-servicing rights.

The research note reported that the level at which nonbanks, including hedge funds and private equity, has been obtaining MSRs is “unprecedented.” The researchers said monitoring these transactions between banks and private capital could help to illuminate the demand for origination activity.

Finally, looking at the government-sponsored enterprises, the researchers said the CoreLogic event made it clear that they are here to stay. Most of the symposium’s participants said they expected private capital to avoid this area for at least the next decade due to Washington’s commitment and the fact that the marketplace gives high value to their loans.

Article source: http://www.nationalmortgagenews.com/news/secondary/investors-should-shift-focus-to-residential-real-estate-william-blair-1049863-1.html

Home Prices in 20 U.S. Cities Rose at Faster Pace in February

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Home prices in 20 U.S. cities climbed at a faster pace than forecast in the year ended February, a sign the housing industry may be gaining momentum amid low borrowing costs and continued job growth.

The SP/Case-Shiller index of property values increased 5% from February 2014, the biggest year-to-year gain since August, after rising 4.5% in the year ended in January, the group said today in New York. The median projection of 28 economists surveyed by Bloomberg called for a 4.7% year-over-year advance. Nationally, prices rose 4.2%.

Higher real estate prices may persuade more homeowners to put their properties on the market, boosting the limited inventory that’s been holding some prospective buyers back. More supply, in addition to continued gains in the labor market and looser lending standards, will be needed to help the housing market accelerate after showing inconsistent progress.

“It’s a matter of constrained supply thats pushing the home prices up,” Millan Mulraine, deputy head of U.S. research and strategy TD Securities USA in New York, said before the report. “They’re in a bit of a sweet spot right now.”

Economists’ estimates in the Bloomberg survey ranged from gains of 4.4% to 5.3%. The SP/Case-Shiller index is based on a three-month average, which means the February figure was also influenced by transactions in January and December.

Home prices in the 20-city index adjusted for seasonal variations increased 0.9% in February for a third consecutive month. The Bloomberg survey median called for a 0.7% gain.

All 20 cities in the index showed a year-over-year increase, led by gains of 10% in Denver and 9.8% in San Francisco. Washington showed the smallest increase of 1.4%.

The year-over-year gauge, which uses records dating back to 2001, provides better indications of trends in prices, according to the SP/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Property values accelerated in 17 cities in February from the prior month, while San Diego, Las Vegas and Portland, Ore., decelerated. Prices in two cities, Denver and Dallas, have surpassed their pre-recession peaks.

“Home prices continue to rise and outpace both inflation and wage gains,” David Blitzer, chairman of the SP index committee, said in a statement. “If a complete recovery means new highs all around, we’re not there yet.”

Property prices rose in all 20 cities in February from a month earlier, according to the seasonally adjusted data, led by a 3.3% jump in San Francisco. Cleveland showed the smallest increase at 0.4%.

A tight supply of homes may be responsible for some of the firming in home prices. At the current pace, it would take 4.6 months to sell the 2 million existing homes for sale in March, compared with 4.7 months at the end of February, according to the National Association of Realtors. A five- to six-month supply is considered more normal, the group has said.

Purchases of previously owned homes climbed in March by the most in four years, with houses snapped up in 52 days on average, according to the Realtors group. Meanwhile sales of new homes are still choppy, with purchases slumping 11.4% to a four-month low in March, Commerce Department figures showed last week.

Continued low borrowing costs will be needed to make buying a home an affordable option for many households. The average rate on a 30-year fixed mortgage was 3.65% in the week ended April 23, the lowest in more than two months, according to Freddie Mac data. That compares to a peak of 4.53% in 2014.

At the same time, continued gains in the labor market will give Americans the means to buy, while a sense of job security may make them more comfortable taking the plunge. While payrolls grew by just 126,000 in March, the weakest since December 2013, that followed 12 straight months of job gains of more than 200,000. Meanwhile the number of Americans getting fired is hovering near the lowest levels in almost 15 years.

A pickup in wages is needed to further shore up the finances of Americans and make it “easier for would-be homebuyers to afford a mortgage,” said Richard Dugas, chief executive officer of homebuilder PulteGroup Inc. said in an April 23 earnings call.

“Given the acceleration in U.S. housing demand in the early stage of the spring selling season, our expectations are that the strengthening of demand is sustainable and should drive better new home sales for all of 2015,” he said.

Article source: http://www.nationalmortgagenews.com/news/origination/home-prices-in-20-us-cities-rose-at-faster-pace-in-february-1049776-1.html

Repeat Violations Cost Cornerstone Home Lending’s Georgia License

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Cornerstone Home Lending surrendered its license to originate loans in the state of Georgia and will pay $33,500 under the terms of a consent order reached with state banking regulators.

Cornerstone is a repeated offender of the Georgia Residential Mortgage Act, including violating a previous consent order issued in July 2011, the state Department of Banking and Finance alleged in an August 2014 action against the Houston-based nonbank lender.

Under the terms of the April 23 consent order, Cornerstone neither admits or denies wrongdoing, and is “voluntarily” surrendering its state license. In addition, Cornerstone shall pay $28,500 to the state banking department and $5,000 to State Regulatory Registry, the Conference of State Bank Supervisors’ subsidiary that operates the Nationwide Mortgage Licensing System Registry.

Cornerstone’s owners, Judith Belanger and Marcus Laird, are also prohibited from “directing the affairs” or otherwise serving as an executive or owner of a mortgage broker or lender licensed by the state for five years, the consent order stipulates.

Cornerstone and its two owners also agreed to withdraw their request to contest the Georgia department’s findings. The lender previously closed its branch office in Georgia in 2014, said Jennifer Weber, Cornerstone Home Lending director of marketing, in an emailed response to a request for comment.

“Since CHL conducts no lending operations in the state, it decided to settle the matter which will save considerable time and money,” Weber added.

Cornerstone, which previously operated in Georgia under the name Brayden Capital Home Loans, employed two unlicensed loan officers, including one individual who was denied a license, according to the allegations of a July 2011 consent order with the Georgia Department of Banking. Both men were subsequently hired to work as mortgage loan officers by depository institutions in the state, though neither is currently employed as mortgage originators.

Cornerstone has previously faced regulatory scrutiny from the Department of Housing and Urban Development, which reached a settlement with the lender over allegations that it denied mortgages to women on maternity leave. In that case, Cornerstone paid one woman $15,000, and set up a $750,000 victims’ fund to compensate other individuals who might have been discriminated against because they were pregnant or on maternity leave at the time they applied for a loan.

Article source: http://www.nationalmortgagenews.com/news/compliance/repeat-violations-cost-cornerstone-home-lendings-georgia-license-1049724-1.html

Delinquencies Hit Nine-Year Low: Black Knight

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Mortgage delinquencies hit their lowest point in nine years during the month of March, according to Black Knight Financial Services.

Nationwide, loans that were 30 days past due but not in foreclosure hit a low of 4.7%, a month-over-month decline of 12.18% and a year-over-year drop of 14.72%. However, foreclosure starts rose 18.07% from February, and 6.81% from the year before.

The states with the highest percentages of loans 90-plus days delinquent were Mississippi at 4.68%, Rhode Island at 3.37%, Louisiana at 3.19%, Alabama at 3.09% and New Jersey at 2.84%.

Article source: http://www.nationalmortgagenews.com/news/distressed/delinquencies-hit-nine-year-low-black-knight-1049580-1.html

DOJ’s Pursuit of FHA Lenders is ‘Chilling’ Market, Quicken CEO Says

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

WASHINGTON — The Department of Justice has “hijacked” the Federal Housing Administration home loan program in efforts to punish lenders that don’t make perfect loans, Quicken Loans chief executive Bill Emerson said at a forum this week.

Emerson’s comments came on the heels of his company’s filing a lawsuit against the government to preemptively stop a DOJ probe into Quicken’s FHA lending program. The DOJ is demanding that the lender admit to making defective loans and violating the False Claims Act.

But Emerson noted that the government is not singling out the bad actors in the FHA program, which “takes a lot of time and a lot of work and a lot of effort.” Rather, he said, DOJ is just going after the largest FHA lenders. Both the DOJ and Department of Housing and Urban Development have recovered billions in recent settlements from banks including Bank of America, Citigroup and JPMorgan Chase.

“They wanted us to admit to things that were blatantly false,” Emerson said Tuesday at the housing forum held by the National Association of Realtors. “They just want us to write a check.”

Emerson said the DOJ’s pursuits of FHA-related claims against industry leaders are having a “chilling effect on the market.”

“We have seen a lot of large institutions back away from that program,” he said. “The risks associated with doing a FHA loan today are just too high.” (Quicken Loans is one of the largest originators of FHA-insured loans.)

Emerson also said the FHA needs to make more progress in providing guidance on policy toward loan repurchases. He said by comparison the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, has worked hard to “bring some clarity to rules of the road.”

He said the industry needs more clarity from the FHA on what is material in the loan repurchase process and how loan repurchases are to be certified. Currently, “when you sign the certification you are saying the loan is perfect and has no defects, which is not possible.”

Article source: http://www.nationalmortgagenews.com/news/compliance/dojs-pursuit-of-fha-lenders-is-chilling-market-quicken-ceo-says-1049468-1.html

FHFA Walks Careful Line in Keeping GSE Fees Steady

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

WASHINGTON – Federal Housing Finance Agency Director Mel Watt just made one of the biggest policy decisions of his 14-month tenure – but so far it has hardly caused a ripple on Capitol Hill.

In December, his decision to capitalize the housing trust fund drew an immediate backlash from Republicans. But the reaction to his move last week to make only modest adjustments to the loan fees that Fannie Mae and Freddie Mac charge borrowers has been muted so far.

The FHFA opted to keep guarantee fees at current levels and tinkered with other loan fees, effectively leaving the status quo.

To be sure, Senate Banking Committee Chairman Richard Shelby, R-Ala., contends that Watt should have increased G-fees in order to encourage private capital back into the market.

“FHFA should take steps to protect American taxpayers instead of steps that expose them to further risk,” Shelby said in a statement issued Monday.

But beyond that, there was little reaction by lawmakers. House Financial Services Committee Jeb Hensarling, who often chides his former Democratic colleague after a significant decision, did not release a statement and a spokesman did not return calls seeking comment.

Beyond Washington, however, the reaction was more critical, particularly among housing advocates who want to see a reduction in the G-fees, which currently add between 50 to 60 basis points to the cost of loans guaranteed by Fannie and Freddie.

“The FHFA has taken some modest steps in the right direction, but they do not go nearly far enough,” said Jesse Van Tol, the chief of membership and policy at the National Community Reinvestment Coalition. “We are disappointed that FHFA did not take this opportunity to substantially reduce guarantee fees. A significant reduction in guarantee fees would stimulate the housing market and help to increase access to home loans for low- and moderate-income borrowers.”

The National Association of Realtors, meanwhile, was at least pleased with the FHFA’s elimination of the 25-basis point adverse market delivery imposed on borrowers in 2008 when housing prices began rapidly falling.

But the group criticized FHFA for also raising fees on certain jumbo loans with principal balances above $417,000.

“These increased fees are questionable and unnecessary to protect against risk… during a time of historically low homeownership rates,” said Chris Polychron, the president of NAR, in a press release.

Increasing these fees “only maintains the status quo without creating incentives for more private sector lending.”

FHFA adjusted fees on other loans to make up for the loss of revenue due to the elimination of the adverse market fee.

FHFA will impose a 37.5-basis point fee on cash-out refinances, investment properties and loans with simultaneous secondary financing (piggy-back loans).

However, the new loan fee schedule favors first-time homebuyers. FHFA did not impose new fees on first-time and other borrowers with down payments of less than 20% and credit scores below 700. They are the only borrowers that will get the full benefit of the elimination of the adverse market fee.

Overall, Watt made a “balanced decision,” according to David Stevens, the president and CEO of the Mortgage Bankers Association.

Many lenders are disappointed that FHFA didn’t reduce the G-fees, but Stevens said they should instead be “thankful” that a 10-basis point increase in the fee was also rejected.

“The best news is it gives certainty to the lending community and the investment analysts by keeping fees level and not putting through the increase that had been originally proposed,” Stevens said.

Julia Gordon, senior director of the Center for American Progress, called the FHFA’s decision a “missed opportunity.” She expressed disappointment that the agency did not make further reductions in the loan level pricing adjustments as well as about new capital rules for private mortgage insurance.

“If you combine the failure to reduce the LLPAs with the new capital requirements for PMIs, you are kind of cementing the status quo and we see how well that is working for this broad chunk of the population.” Gordon said Tuesday at a National Association of Realtors forum on the state of the U.S. housing market.

But other industry representatives saw the capital rules as a positive.

The new standards have put the PMI industry in a “great position to protect the taxpayers and Fannie and Freddie,” said Brad Shuster, the chairman and chief executive of National MI, who also spoke at the NAR event.

He noted that the government-sponsored enterprises are experimenting with risk-sharing transactions that could reduce financing costs for borrowers.

Currently, private mortgage insurance reduces Fannie and Freddie credit loss exposure down to a 65% loan-to-value ratio.  In risk sharing deals, the PMI companies could take it deeper to a 50% LTV and reduce the LLPAs accordingly.

“You can actually offer the borrower a lower coupon on the mortgage,” Shuster said. “So you can increase the availability of mortgage finance.”

Article source: http://www.nationalmortgagenews.com/news/secondary/fhfa-walks-careful-line-in-keeping-gse-fees-steady-1049362-1.html

Green Tree Servicing Hit with $63M Enforcement Action

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Federal regulators fined mortgage servicer Green Tree Servicing $63 million in penalties and restitution on Tuesday, alleging that it mistreated borrowers at risk of foreclosure and failed to honor modifications of loans transferred from other servicers.

The Consumer Financial Protection Bureau and Federal Trade Commission claimed Green Tree “demanded payments before providing loss mitigation options,” and “harassed and threatened overdue borrowers,” among other things.

“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” CFPB Director Richard Cordray said in a press release. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”

The St. Paul, Minn.-based company put out a statement that said it believes “this resolution is in the best interest of Green Tree, our consumers, our clients and our shareholders.”

“With this settlement, the company and our employees will maintain our focus on the continuous improvement of our procedures and practices which will benefit all consumers and all stakeholders,” said Mark O’Brien, the chairman and chief executive of Green Tree.

According to the CFPB and FTC, Green Tree allegedly delayed decisions on short sales and illegally revealed debts to third parties, including employers, between 2010 and 2014.

Green Tree will pay $48 million in restitution to borrowers whose loan modifications were not honored, had to pay what the CFPB terms as “deceptively charged convenience fees,” or whose short sale decisions were delayed. Those borrowers who receive payments will not be forbidden from pursuing further legal action against the company. The company will also pay a $15 million settlement to the CFPB’s Civil Penalty Fund.

The mortgage servicer will also be barred from foreclosing on homes until it has contacted all distressed borrowers to offer loss mitigation. The CFPB has ordered Green Tree to reach out to customers via both phone and mail to make them aware of all foreclosure prevention options before it can repossess a home.

Article source: http://www.nationalmortgagenews.com/news/servicing/green-tree-servicing-hit-with-63m-enforcement-action-1049280-1.html

Few Who Lost Homes in U.S. Will Buy Again Soon: Study

Print

Email

Reprints

Comment (1)

Twitter

LinkedIn

Facebook

Google+

Only about one in four former homeowners who lost property during the housing crash will soon become buyers again as tight credit keeps many out of the U.S. real estate market, according to a National Association of Realtors study.

Of the 9.3 million owners who went through foreclosure or were forced to sell at a loss, about 950,000 already have bought again and 1.5 million more are likely to make a purchase in the next five years, the trade group said today.

“They won’t be a significant factor to the housing market going forward,” Lawrence Yun, chief economist at the National Association of Realtors, said in a telephone interview. “The majority of the 9.3 million won’t be coming back.”

The U.S. homeownership rate fell to 64 percent at the end of last year, a two-decade low and down from a high of 69.2 percent in 2004, according to Census Bureau data. The ownership rate will drop to 63.5 percent by 2016 and plateau for years, according to report last week by Goldman Sachs Group Inc. analysts led by Hui Shan.

The 9.3 million homeowners the Realtors group studied gave up their homes through more than 5 million foreclosures and 4 million other distressed transactions since early 2007, including short sales and deeds in lieu of foreclosure, Yun said.

The estimate that 950,000 buyers have returned to date is based on surveys showing they accounted for about 7 percent of existing-home sales since 2012, when those who lost property to foreclosure became eligible again for Federal Housing Administration financing, Yun said.

California, Florida and Arizona, which had the highest numbers of foreclosures early in the housing crisis, will see the biggest share of return buyers over the next five years, Yun said. Many who’ve repaired their credit and hope to purchase again will face challenges in areas where home prices have recovered and affordability is out of reach, such as coastal California, he said.

From 2009 to 2013, tight credit stymied about 4 million potential homeowners, including both first-time buyers and so- called boomerang buyers who are coming back from losing property during the crash, according to a report issued earlier this month by Urban Institute researchers Laurie Goodman, Jun Zhu and Taz George.

While strict mortgage underwriting is keeping many from re- entering the market, the loose lending that fueled the housing bubble and ensuing crash enabled unqualified people to become owners, Yun said.

“Many of them should not have gotten a mortgage to begin with,” he said.

Article source: http://www.nationalmortgagenews.com/news/distressed/few-who-lost-homes-in-us-will-buy-again-soon-study-1049182-1.html

Quicken Files Preemptive Suit Against DOJ, HUD

Print

Email

Reprints

Comment

Twitter

LinkedIn

Facebook

Google+

Quicken Loans filed a lawsuit late Friday against the U.S. departments of Justice and Housing and Urban Development.

The suit comes in response to an investigation by the government into Quicken’s Federal Housing Administration mortgage origination business. According to the lender, the Justice Department has obtained more than 85,000 documents from Quicken and now threatens its own lawsuit, “based on faulty analysis of a miniscule number of cherry-picked mortgages from the nearly 250,000 FHA loans the company has closed since 2007,” the Detroit-based company said.

The preemptive move is a new approach for mortgage companies, who have been scrutinized heavily since the subprime failures that led to the 2008 financial crisis and subsequent recession.

“It’s a shame the DOJ would choose to attack the country’s largest and highest-quality FHA lender providing government lending for homebuyers and home owners across all 50 states at the very time our nation needs expanded access to credit for middle-class Americans who benefit most from the FHA program,” Quicken Loans CEO Bill Emerson said in a release.

The Department of Justice generally does not comment on ongoing investigations, a spokesperson said via email.

Quicken’s statement also said that the government has interviewed “numerous” employees for “hundreds of hours of depositions” over the course of three years.

“The company was left with no alternative but to take this action after the DOJ demanded Quicken Loans make public admissions that were blatantly false, as well as pay an inexplicable penalty or face legal action,” Quicken said in its release.

Quicken is one of the largest originators of FHA loans in the country.

Article source: http://www.nationalmortgagenews.com/news/origination/quicken-files-preemptive-suit-against-doj-hud-1049183-1.html

WP Facebook Auto Publish Powered By : XYZScripts.com
Bunk Beds