10 million more mortgages set to default, expert says « HousingWire

[hvactec]

Tuesday, September 20th, 2011, 10:39 am


Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.

At the end of the second quarter, more than 2.7 million long-delinquent loans, others in foreclosure and REO properties sat in the shadow inventory, more than double what it was in the first quarter of 2010 (Click to expand the chart below). With the market averaging roughly 90,000 loan liquidations per month, it would take 32 months, nearly three years, to move through the overhang.

And that number is contingent on no other loans going into default.

“Many analysts looking at the housing problem mistakenly assume it is limited to loans that are currently non-performing (or 60-plus days past due). Such borrowers have a high probability of eventually losing their homes. However, the problem also includes loans with a compromised pay history; these are re-defaulting at a rapid rate,” Goodman told a Senate subcommittee Tuesday.


Under a reasonable estimate, which is calculated with more conservative market conditions than what is currently being experienced, Goodman found nearly 2 million re-performing mortgages would default again and another 3.6 million already troubled loans to default as well.

The rest of the 10.4 million estimate is made of always-performing loans at various stages of negative equity. Of the 2.5 million always-performing mortgages with loan-to-value ratios above 120%, nearly half will default. Even 5% of the always-performing mortgages that have some equity left will default, as well, Goodman said.

In August, the Obama administration asked the housing industry for ideas on how to more efficiently sell or unload this overhang, and the Senate heard testimony from various housing players Tuesday. Each, including Goodman, said the government should target private investors.

Robert Nielsen, chairman of the National Association of Homebuilders, said government programs should be revamped to assist small and local businesses in rehabbing and unloading these properties.

Nielsen said Fannie, Freddie and the FHA should avoid bulk sales to large investors that have no stake in the neighborhoods in which these properties are located.

“Local and small businesses that have a stake in the future of the affected communities should be the driving force behind the disposition of the REO inventory. This will result in the creation of jobs and the stabilization of neighborhoods,” Nielsen said.

NAHB also urged Congress to extend the current conforming loan limits for Fannie Mae, Freddie Mac and the FHA, which are due to be lowered on Oct. 1.

READ MORE 10 million more mortgages set to default, expert says « HousingWire « Heartfelt ! On…..

 

[waltky]

Don't look like the housing market gonna improve any time soon...

Mortgages Won't Recover in 2012
Oct. 12, 2011 - Even though purchase mortgage applications perked up last week, anemic was the word used by the Mortgage Bankers Association to describe the outlook for mortgage originations next year, including purchase originations, which it projects will grow only 3 percent in 2012 after they plunge 15 percent this year.

MBA forecast a decline in purchase originations next year, from about $400 billion this year to $412 billion. Purchase originations were $472 billion last year. As the economy picks up a little more speed in 2013 and home sales and home prices also start to increase, purchase originations are expected to increase to $770 billion for the year," MBA gamely added in the forecast released at its convention in Chicago yesterday.

"Purchase volume will stay low as home sales in 2012 remain little changed from 2011, and as home prices begin to grow by the end of 2012. The gradual increase in mortgage rates will slow refinance volume, but the first half of 2012 will benefit from a spillover of applicants from the end of 2011, and potential changes to the HARP program may also increase refinance volume. A recession would lead to a drop in 2012 origination volume. A faster economic recovery led by the housing market would mean faster home price growth and more sales volume, increasing purchase originations somewhat, but would cut off refinance volume sooner than in our forecast," said Jay Brinkman, MBA's chief economist and senior vice president.

The MBA expects to see all mortgage originations fall from an estimated $1.2 trillion in 2011 to $900 billion in 2012. The drop will be driven by a significant decline in refinance originations, while purchase originations will increase only slightly. The economy will see another year of anemic growth in 2012, and then will grow somewhat faster in 2013. Refinance originations are expected to fall despite low mortgage rates as economic uncertainty lingers and fewer eligible borrowers remain. "In summary, regardless of which path the economy and mortgage rates take, we are predicting another tough year, with origination volumes at their lowest point since 1997. Continued slow economic growth will mean that unemployment will remain elevated through 2012, which could slow the improvement in delinquency and foreclosure volumes, meaning that in addition to lower production volumes for the industry, mortgage servicers will also continue to be under pressure," said Brinkman.

His forecast called for fixed mortgage rates to remain low by historical standards, finishing 2011 at around a 4.5 percent average for the year, falling slightly to 4.4 percent for 2012 and climbing back up to 4.9 by 2013. Total existing home sales will stay around the 4.9 million unit pace for 2011 and 2012, before increasing slightly to 5.2 million units in 2013 as the broader economy recovers. The recovery in the new home sales will have a comparably slow start, and may well be slow for most of 2012, but will show some meaningful increases in 2013. Mortgage application unexpectedly increased this past week as refinance and purchase activity picked up. MBA said that the market composite index – a measure of loan application volume – jumped 1.3 percent on a seasonally adjusted basis from last week. The purchase index grew 1.1 percent over a week ago. The increases in both categories were driven by government loans; the government purchase index alone shot up 2.4 percent last week.

Read more: Mortgages Won't Recover in 2012 - UPI.com

 

[expat_panama]

...Click to expand the chart below...

...Robert Nielsen, chairman of the National Association of Homebuilders, said government programs should be revamped to assist small and local businesses in rehabbing and unloading these properties.

Nielsen said Fannie, Freddie and the FHA should avoid bulk sales to large investors that have no stake in the neighborhoods in which these properties are located.

“Local and small businesses that have a stake in the future of the affected communities should be the driving force behind the disposition of the REO inventory. This will result in the creation of jobs and the stabilization of neighborhoods,” Nielsen said.

NAHB also urged Congress to extend the current conforming loan limits for Fannie Mae, Freddie Mac and the FHA, which are due to be lowered on Oct. 1...

We're hearing the same old 'experts' cooking data to justify more big government tax'n'spending. Reality is that real estate delinquencies have been falling for a couple years now off a crisis peak that was milder than that of the S&L mess:

 

[waltky]

Help for underwater mortgages...

Plan would allow refinancing of some underwater mortgages
October 19, 2011 Washington — Proposal is part of settlement talks between the federal government and major banks

A proposal to allow some creditworthy homeowners to refinance underwater mortgages has become part of settlement talks between government officials and major banks over botched foreclosure paperwork. California would be a major beneficiary of such a plan because it leads the nation with 2.1 million mortgages in which the homeowner owes more than the value of the home, according to Santa Ana industry research firm CoreLogic Inc. The proposal has been floated in hopes of luring state Atty. Gen. Kamala Harris back into the talks, according to a person familiar with the discussions who was not authorized to speak publicly.

Last month, Harris pulled out of settlement talks involving most state attorneys general and federal officials. She said a proposed deal didn't do enough for California and promised to launch a tougher investigation into the paperwork problems caused by so-called robo-signing, the illegal or questionable methods lenders used in signing foreclosure documents. The new proposal would apply to people who are underwater on their homes but making mortgage payments on time. Only mortgages owned by banks — about 20% of all mortgages — would be eligible.

Most mortgages are owned by investors as part of mortgage-backed securities. The plan was first reported Tuesday by the Wall Street Journal. "We have not seen any such proposal," Shum Preston, a spokesman for Harris, said Tuesday. California's participation is seen as crucial to a far-reaching deal with major mortgage servicers to settle allegations of foreclosure abuses. Harris implied when she left the talks that California could rejoin if a settlement did more to address the state's foreclosure problem.

Mortgages; refinance; banks; settlement; robo-signing; Kamala Harris - latimes.com

 

[Political Junky]

Romney and his friends can't wait to buy up cheap housing and rent or sell it.

[ame=http://www.youtube.com/watch?v=xrMWeKZMFmo]Romney 'Don't Try And Stop Foreclosure Crisis' - YouTube[/ame]

 

[cbirch2]

Romney and his friends can't wait to buy up cheap housing and rent or sell it.

Romney 'Don't Try And Stop Foreclosure Crisis' - YouTube

I was becoming furious until he acknowledged that he may be behind large scale mortgage refinance. TARP gave banks money to offset increased foreclosures, when they should have just bailed out home owners to stop the foreclosures in the first place.

 

[waltky]

No more Mcmansion mortgages...

Congress weighs home-loan limits
November 9,`11 - The debate over setting new limits on government support for the housing industry is facing a crucial test in Congress this week as lawmakers decide whether to extend federal guarantees for home loans up to $729,750.

The National Association of Realtors has been pushing hard for the extension and managed to gather 60 votes for an amendment that would accomplish it, sponsored by Sen. Johnny Isakson (R-Ga.). The Realtors, perhaps not coincidentally, have been Isakson’s biggest benefactor, spending $604,000 last year on his reelection and a total of $1.3 million, including for his first run for office in 2004. The support for Isakson is part of an unusual strategy by the trade association to spend large amounts not directly in donations to candidates but rather on independent campaign advertising. The strategy is one that other large trade associations may start to adopt in the wake of the Supreme Court’s Citizens United decision last year, which freed corporate and union spending on campaign advertising.

The Realtors have always had a large political action committee fueled by donations from thousands of members. The donations are capped at $5,000 under federal law, allowing the association to spend $6 million last year helping 11 friendly lawmakers. Those efforts got an extra boost last year with an additional $1.1 million that the association transferred from its general treasury to a super PAC created under the new election rules. Isakson said he pushed to restore the higher limits that expired Sept. 30 because he thinks it is premature to withdraw government support from the recovering housing market. “I was in the single-family housing business for 30 years before I came to Congress,” Isakson said. “I was proud to be a Realtor. I’m proud to have their support.”

The fate of the amendment will be decided in the coming days as a House-Senate conference committee attempts to resolve differences in spending bills passed by the two chambers. The measure never got traction in the House, where Republicans argue that it’s time to let the free market take a bigger share of risk on housing. The provision would increase the maximum size of loans guaranteed by the Federal Housing Administration and the government-controlled mortgage giants Fannie Mae and Freddie Mac. The government limits home loans it supports to 125 percent of the median home price in a region, up to $625,000. The higher limit of $729,750 was first passed in 2008 and had been extended several times until this year. Advocates for low-income home buyers say that keeping the loan limit at the higher level will reduce the ability of the government to help the people who need it most.

“If you expand these loan limits, what’s going to happen to the people at the bottom rung?” said John Taylor, president of the National Community Reinvestment Coalition. The FHA’s limited resources “need to be for those who have no alternative but a government guarantee to become homeowners,” he said. Because homes are more expensive in places such as New York and California, the expiration has had a greater impact in those regions. Rep. Ken Calvert (Calif.) is one of the few Republican lawmakers who signed on to a bill supporting higher loan limits. He’s also one of the biggest recipients of advertising spending by the Realtors association, receiving $606,000 in help during his 2010 campaign. The goal of that spending is “basically helping our friends and making sure the folks who are good on our issues are getting elected and reelected,” said Jamie Gregory, the deputy chief lobbyist for the Realtors association.

Calvert said he has had a consistent record on the issue. “Many people in California are precluded from qualifying for a [government] loan simply because of the high housing prices in many areas, including in my congressional district,” Calvert said. Under federal law, spending by the Realtors or other interest groups cannot be coordinated with candidates or their campaigns. Another top recipient is Rep. Dennis Cardoza (D-Calif.), who received $526,000 in assistance. In a recent speech announcing his retirement, Cardoza excoriated the Obama administration for its housing policies, saying, “The administration’s inaction is infuriating.” Several other top recipients of the Realtors’ spending are members of the powerful House tax-writing committee. Realtors have recently been fighting proposals to cap or eliminate the income tax deduction for mortgage interest.

Source