Bank Failure List
Foreclosure Activity Drops 2%: RealtyTrac
Foreclosure filings issued to U.S. homeowners have fallen for the second straight month. According to new data released by RealtyTrac Thursday, default notices, scheduled auctions, and bank repossessions were reportedn 308,524 properties in February, or one in every 418 homes. That’s a 2 percent decrease from January, when foreclosure activity dropped by 10 percent.
But RealtyTrac’s CEO James J. Saccacio cautions against reading too much into the brief reprieve. “This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure,” Saccacio said, “but rather that foreclosure prevention programs, legislation, and other processing delays are in effect capping monthly foreclosure activity – albeit at a historically high level that will likely continue for an extended period.”
February’s numbers are still 6 percent above the level reported one year earlier. But while it marked the 50th consecutive month of year-over-year increases in foreclosure activity, Saccacio said it’s the smallest annual increase his company has seen since January 2006.
According to RealtyTrac’s February 2010 U.S. Foreclosure Market Report, 78,683 properties became REOs during the month, a 10 percent decrease from the previous month. Bank repossessions were down nearly 15 percent from their peak of more than 92,000 in December 2009.
Looking at RealtyTrac’s rundown of the states with the highest foreclosure rates in the nation, the same usual suspects sat at the top of the list. For the 38th month in a row, Nevada ranked the highest, despite a 7 percent decrease in activity for the month and a 30 percent drop compared to February 2009. One in every 102 Nevada housing units received a foreclosure filing in February – still more than four times the national average.
Arizona and Florida documented nearly identical foreclosure rates, with one in every 163 housing units receiving a foreclosure filing in both states. Despite a nearly 21 percent decrease in foreclosure activity from the previous month, Arizona’s rate was statistically slightly higher than Florida’s rate and ranked second highest among the states.
California came in at No. 4, with one in every 195 homes in the state in some stage of foreclosure last month. Michigan’s foreclosure rate ranked fifth highest, with one in every 226 housing units receiving a foreclosure filing.
Other states with foreclosure rates among the nation’s 10 highest were Utah (one in every 275 housing units), Idaho (one in 296), Illinois (one in 305), Georgia (one in 331) and Maryland (one in 407).
Metro areas in the Sun Belt states of Nevada, Florida, California, and Arizona continued to dominate the top 10 highest metropolitan foreclosure rates, with Las Vegas taking the top spot.
Economic Fallout Propels Commercial, Multifamily Delinquency Rates
The commercial real estate market continues to be negatively impacted by the economic fallout, and as a result, delinquency rates increased for most commercial/multifamily mortgage investor groups in the fourth quarter of 2009, the Mortgage Bankers Association (MBA) reported Thursday.
According to MBA’s Commercial/Multifamily Delinquency Report, the 30-plus day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) jumped 1.63 percentage points to 5.69 percent between the third and fourth quarters of last year.
During the same period, the 60-plus day delinquency rate on loans held in life company portfolios decreased 0.04 percentage points to 0.19 percent, but the 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01 percentage points to 0.63 percent.
In addition, the 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac inched up 0.04 percentage points to 0.15 percent, and the 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts increased 0.49 percentage points to 3.92 percent.
“The ongoing impact of the economic fallout on commercial real estate markets continued to drive up commercial and multifamily mortgage delinquencies for most investor groups in the fourth quarter,” said Jamie Woodwell, MBA’s VP of commercial real estate research. “Continued job losses, consumer restraint, and a lack of household growth all sustained the pressure on commercial real estate operations and mortgages during the fourth quarter.”
Although delinquencies continue to increase, MBA said earlier this week that commercial and multifamily mortgages are performing better than all other types of loans. As DSNews.com reported, the findings from MBA’s latest Commercial/Multifamily DataNote show that the rate of deterioration for these loans is notably slower than residential mortgages and single-family construction loans.
To create its delinquency report, MBA analyzes commercial and multifamily delinquency rates for five of the largest investor groups, including commercial banks and thrifts, CMBS, life insurance companies, Fannie Mae, and Freddie Mac. Together, these groups hold more than 80 percent of outstanding commercial/multifamily mortgage debt.
Lend America and Its VP Barred from Federal Mortgage Market
New York-based Lend America and its senior-level strategist and VP, Michael Ashley, have been permanently banned from doing business for the Federal Housing Administration (FHA), according to recently released court documents.
Lend America was known for its FHA lending, but last October, the company was slapped with a federal lawsuit alleging it falsely certified that borrowers who received over $14 million in loans met FHA’s lending requirements.
In early December, Lend America officially lost its FHA approval and was defaulted by Ginnie Mae, forcing the company to close its doors.
As Reuters explained it, Ashley helped build Lend America into one of the most prolific producers of FHA loans, buoying the company’s growth even as the financial crisis set in, freezing credit for many borrowers who turned to the federal mortgage insurer as their last hope to refinance costly loans.
While Ashley has not admitted any wrongdoing or involvement in Lend America’s questionable practices, in a federal court ruling last week he was barred from ever originating, marketing, or submitting claims for FHA mortgages. The judgment also prohibits Ashley from being employed in any capacity, even as a consultant, for any company that has connections to the FHA.
A U.S. federal attorney last October accused Ashley of violating an earlier industry ban, stemming from a 1993 complaint the he conspired to commit wire fraud related to other cases of mortgage fraud. Ashley pled guilty to those charges.
HUD released a Mortgagee Letter this week announcing the validity period for appraisals used to establish listing prices for the federal agency’s REO properties. Theetter also outlines situations when a second appraisal is permitted for purchasers of REO properties utilizing Federal Housing Administration (FHA) financing.
Beginning April 1, all appraisals used to determine the listing price on an REO property owned by HUD will be valid for 120 days from the effective date of the appraisal. If the buyer is financing the purchase with an FHA-insured mortgage, a HUD REO sales contract must be ratified within 120 days of the appraisal date or the lender must order a new appraisal or an appraisal update.
This policy change will replace the current six-month validity period for REO appraisals, and is likely in response to the up and down fluctuations regional markets are now experiencing in home prices. The new validity period is consistent with the guidance that already governs appraisals used for FHA-insured mortgages – REO or not.
HUD also said that effective immediately, with the exception of 203(k) as-repaired appraisals, when a buyer is using FHA financing to purchase a HUD REO property, the list-price appraisal will remain effective for purposes of obtaining the FHA-insured mortgage.
“A second appraisal may not be ordered simply to support a purchase price that is higher than the value on the current appraisal,” HUD said. “A second appraisal can only be ordered to support a higher sales price if there are material deficiencies with the current appraisal or the current appraisal will not be valid on the date of contract ratification.”
As is the trend throughout the industry, HUD’s inventory of repossessed homes has increased significantly, as defaults and foreclosures on loans insured by FHA have grown with the agency’s expanding market share.
According to FHA’s latest monthly activity report, more than 9 percent of its single-family portfolio are at least 90 days past due.