Default Mode: How Ocwen Skirts California’s Mortgage Laws

Capital and Main  | by  David Dayen
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The following story was reported by Capital and Main and published here in collaboration with The Huffington Post.

Lost documents. Incomplete and confusing information. Mysterious fees. Payments received but not applied. Homeowners waiting for a loan modification and suddenly placed in foreclosure. A nightmare of uncertainty, frustration and fear.

These incidents, described to me by numerous homeowners, mortgage counselors and defense lawyers, were supposed to be a thing of the past in California. After revelations of fraud and abuse throughout the mortgage business, including tens of billions of dollars in corporate penalties, state Attorney General Kamala Harris pushed through the 2012 California Homeowner Bill of Rights (HBOR), designed to standardize conduct by mortgage servicers – those companies that manage day-to-day operations on mortgages by collecting monthly payments and making decisions when homeowners go into default and seek help.

Yet one company allegedly committed all these HBOR violations: Ocwen, the nation’s fourth-largest mortgage servicer. According to the complaints, Ocwen (“New Co.” spelled backwards) either skirts around the edges of California law or simply ignores it, causing headaches for homeowners – and potentially illegal foreclosures. (Ocwen did not respond to a request for comment for this article, but in the past, it has pointed to its track record of assisting homeowners to avoid foreclosure.)

“Ocwen is one of the worst servicers in the state,” says Kevin Stein, Associate Director of the California Reinvestment Coalition, a nonprofit advocate for low-income communities.

Ocwen may not even be aware of the rules of the road. One lawyer, who requested anonymity because his client is currently negotiating with Ocwen on a mortgage, described a conversation with one of the company’s specialized home retention consultants. The lawyer asked the Ocwen representative about the servicer’s HBOR compliance efforts and the representative replied that she had never heard of the statute, had no training for it and knew of no process established to conform to it.

“Ocwen doesn’t give a hoot about the Homeowner Bill of Rights,” the lawyer told me. “They ignore the statute. It’s cheaper for them to ignore than to implement.”

Ocwen’s suspected flaunting of the law could be traced to its aggressive growth strategy. Until the past few years, the largest mortgage servicers were divisions of major banks, such as Bank of America, JPMorgan Chase and Wells Fargo. After being sanctioned for their own misconduct, these banks were forced to adhere to new servicing standards that increased their costs, as well as new, higher capital requirements associated with servicing that came from the Dodd-Frank financial reform law. As a result, banks commenced a fire sale, selling off trillions of dollars in servicing rights to non-bank firms like Ocwen. These non-bank servicers don’t own the loans, only the rights to service them, in exchange for a percentage of the monthly payments.

Ocwen calls itself a “specialty servicer,” with a particular focus on subprime mortgages, loans that often come to them already in trouble. Managing delinquent loans is a “high-touch” business, demanding lots of personnel to work with homeowners to negotiate affordable payments or foreclosure proceedings. Yet Ocwen has claimed to its investors that it can service these loans at 70 percent lower costs than the rest of the industry, raising red flags from regulators.

“I don’t think you can handle subprime mortgages by being efficient, with better computers,” says Benjamin Lawsky, head of New York’s Department of Financial Services. “You’re going to have a lot of people looking for help, and they’re not just a number, they’re real people with real problems who need help in real time, right now.”

What Ocwen calls efficiency has already led to significant misconduct. The Consumer Financial Protection Bureau (CFPB) and 49 states, including California, fined Ocwen $2.1 billion last December for “violating consumer financial laws at every stage of the mortgage servicing process.” Many of the stories from California homeowners mirror the charges in the CFPB settlement – overcharging homeowners, misplacing documents, illegal denials of loan modifications and more. And Ocwen also violates HBOR, the controlling state law for mortgage servicing.

Janice Spraggins of NID Housing Counseling Agency says that Ocwen failed to honor prior agreements that her clients secured with their old mortgage servicers. This is consistent with a recent report from CFPB citing numerous problems with mortgage servicing transfers, including lost documents, unapplied payments and homeowners who, having already started down the road to fixing their problems, have had to start all over again.

“The homeowner goes to the back of the line,” Spraggins says. “For whatever reason they’re not on the same page [as Ocwen].”

Other homeowners complain about how Ocwen satisfies the state requirement for a “single point of contact” — the one individual who is aware of their unique situation and who they can consult for timely updates on the status of their loan. Ocwen designates a “relationship manager” to handle these cases.

But homeowners say they get no specific email or phone number for their relationship manager; they must call the main customer service line, schedule an appointment and wait to hear back. The relationship manager, Ocwen clients allege, doesn’t always call at the designated appointment time, meaning the homeowner must go through the process all over again, dealing with customer service reps who frequently give out contradictory or misleading information.

“It doesn’t appear to be in compliance,” says Lauren Carden of Legal Services of Northern California, when describing Ocwen’s procedures. “They give you a single point of contact, but if you can never reach them, effectively you don’t have one.” Carden cited one client who tried for four months to reach their relationship manager, and only got the person on the phone once.

Saleta Darnell, a Los Angeles County child-support officer who lives in South Los Angeles, criticized Ocwen for adding charges to her loan, which the company took over from GMAC.

“I had a $1,389 monthly payment. When it got to Ocwen, the payment went up to $1,469,” Darnell says, adding that Ocwen had increased the total loan balance by $60,000 without explanation. Darnell immediately requested a loan modification. After several weeks of waiting, Ocwen notified Darnell by mail that she didn’t qualify for anything but an “in-house” modification. The in-house mod lowered the balance to the original amount, but with a significantly higher monthly payment of $2,316, more than half Darnell’s take-home pay.

LaRue Carnes, a Sacramento homemaker, needed a loan modification after her husband lost his job nearly two years ago. OneWest Bank transferred her loan to Ocwen last August. She had trouble getting her relationship manager on the phone, and had to deal with customer service representatives, often located overseas with limited English proficiency, who, Carnes says, never told her the same information twice.

“Dealing with the people answering the Ocwen line has been some of the most frustrating conversations of my life,” Carnes says.

Carnes says Ocwen lost the financial documents she submitted for her loan modification application on four separate occasions, which would violate state HBOR prescriptions for timely responses. Meanwhile, in the months of waiting, the family’s arrears ballooned from $11,000 to $54,000. And Ocwen would not post the payments Carnes did send in on time until as late as the 18th of the month, triggering additional hits to the couple’s credit report.

“How can you not process a check within your own system?” Carnes wondered. “I don’t understand how a company can do business like that.”

One reason is that Ocwen has a captive audience. Homeowners have no say in who services their loan. They get passed around from one company to the next, with the servicer having enormous power to tack on fees, deny loan modifications or pursue foreclosure. Homeowners experiencing difficulties must still work with Ocwen to keep their homes, creating pressure against speaking out. One lawyer had an Ocwen representative respond to a threat of a lawsuit for HBOR violations by asking, “Does your client want a modification or not?”

The homeowner who requested anonymity because of an ongoing negotiation submitted a completed loan modification application to Ocwen, only to find a notice of default taped to his front door. A completed loan application is supposed to freeze the foreclosure process while the servicer decides on eligibility, preventing a practice called “dual tracking,” perhaps the most serious HBOR violation. The homeowner, in this case, said he never received a letter required by California law, confirming receipt of the initial application, and was not assigned a single point of contact for months. In December, while waiting for an answer on a second application, the homeowner received notice of the pending sale of his property at auction. This led to the phone call, where an Ocwen representative claimed to never have heard of HBOR.

Attorney General Harris has urged homeowners to file any HBOR complaints with her office. That information goes to the Mortgage Fraud Strike Force and a state-appointed monitor for foreclosure-related matters, who spots trends and works with servicers on compliance. This can help at the margins but homeowner advocates are seeking stronger measures.

“There have been good reports about the monitor resolving problems on individual cases,” says Kevin Stein of the California Reinvestment Coalition. “But we would love to see the Attorney General more involved.”

In addition, under HBOR homeowners have a “private right of action” to hire legal counsel and sue Ocwen over violations. However, a California State Bar ruling stipulates that lawyers cannot collect fees for their services in loan modification-related cases prior to their completion. While this protects homeowners from foreclosure rescue scams, where lawyers would take money up front and skip town, it has significantly damaged HBOR enforcement. Though the HBOR statute includes provisions for attorney fees, the Bar ruled that HBOR suits are related to loan modifications, meaning that lawyers must for a period of time litigate for free against legal teams working for deep-pocketed servicers.

“I’m aware of many lawyers who have said, I can’t do this,” says one lawyer. “What appears to have been a good idea is now about as dangerous [for Ocwen] as wading into a pond and getting bitten by a guppy.”

The CFPB continues to investigate violations of its federal mortgage servicing laws. And Lawsky, the New York banking regulator, stopped a deal to transfer $39 billion in mortgages from Wells Fargo to Ocwen, citing concerns about Ocwen’s capacity and its relationships with subsidiaries that profit off Ocwen foreclosures, raising the possibility of conflicts of interest. Ocwen executive chairman William Erbey said on an earnings call that this has frozen all servicing transfer deals, stunting the company’s growth. Erbey runs four separate subsidiary corporations, including Altisource, which buys foreclosed properties to turn them into rentals. Critics argue that this gives Ocwen incentive to push homes into foreclosure, so Altisource can profit from them. But without new mortgage servicing rights to purchase, Erbey’s grand scheme will falter. In fact, Ocwen’s first-quarter earnings fell below expectations and the stock has sunk as regulatory scrutiny has increased.

But this doesn’t comfort those homeowners stuck with Ocwen, who have labored for years to get clarity on whether they can keep their homes. Some of these homeowners may yet get the modification they need – one Ocwen client I’ve spoken to is about to start a trial payment plan and another is negotiating terms. Still, the struggle exacts a real toll, both in financial terms with late fees and increased arrears, but also on an emotional level. Waking up day after day without knowing if you’ll have to pack up all your possessions and leave your home creates feelings of humiliation and shame that can’t be measured in dollars.

“We need to start repairing our credit, our good name,” says LaRue Carnes.

Meanwhile, homeowner advocates grumble that Ocwen executives, and their counterparts at other servicers, do not share such worries, because violating the law makes more financial sense to them than following it.

“All the power resides in the servicer,” says the anonymous lawyer. “Plainly they don’t care.”

(David Dayen is a contributing writer to Salon who also writes for The New Republic, The American Prospect, Politico, The Guardian and other publications. He lives in Los Angeles.)

Types of Short Sale Programs

Repost – Types of Short Sale Programs by Jonathan Katz

Types of Short sale programsThere are different types of short sale programs from which you can choose best suited for you. Choosing a short sale program is really critical because selection of wrong program will not only cause the rejection of short sale, but also will waste your time money and resource. There are a number of short sale programs, but keep in mind that you may not be able to choose the specific programs. The selection of program may depend upon the type of loan and investor.

Different Types of Short Sale Programs:

Some of the most common short sale programs are given here to provide you an understanding of the options available to you.

Traditional Short Sale

A traditional short sale is the most common type of short sale program. Some short sale sellers don’t want the delay that can be inherent in government programs, so even though they might qualify for a Bank of America HAFA short sale, they opt for traditional short sale program just to avoid the delayed processing. For traditional short sale you will need to provide the hardship letter along tax returns and other documents. More and more banks will say, “Yes” to a short sale and “No” to a foreclosure.

VA Short Sale and FHA Short Sale

If your current loan is secured by the VA, then you have VA loan and if it is insured by FHA, you have an FHA loan. The best way to know about your loan plan whether it is VA or FHA, is looking at the percentage of original sale price. In the form of VA, your loan balance is 100% of the original sale price. If the original balance was closed to 97% of the sale price then it is probably an FHA loan.

The main things to know about a VA short sale and FHA short sale:

  • Neither type of loan will qualify for the HAFA short sale program, but you can receive a relocation incentive.
  • Due to the additional layer to the approval, your proposal will take more than the normal time required to close the short sale.
  • The government will pay for a full-blown appraisal (no BPO) and expect market value.

HAFA Short Sale Program

In case you have two or more than two lenders then you will need the participation of all lenders in HAFA short sale program to qualify for HAFA short sale. The HAFA is government short sale program that with few limitations can pay you or your bank up to $3,000 to do the short sale. In the starting of HAFA program guidelines were very strict, but with the passage of time these have been made relaxed. You can do a HAFA short sale on investment property now as well. The biggest benefit of HAFA short sale is that your bank has to release you from the personal liability and you don’t have to face deficiency judgment.

Freddie Mac Short Sale

Freddie Mac is also a government sponsored entity. If the Freddie Mac is an investor, then you will need to do a Freddie Mac short sale. This will be adding an extra layer to the approval of the short sale. Freddie Mac will need a long affidavit to be signed. In the case of Freddie Mac home will be sold at “as is” condition. Unlike many short sale investors, Freddie Mac will allow the seller to rent back for a few months.

Fannie Mae Short Sale

Fannie Mae is a government-sponsored entity. If Fannie Mae is the investor, then you will need to do a Fannie Mae short sale and this will be adding and additional layer of approval to the short sale process.

You might have a problem in that short sale if you have a second loan and that second lender demands more money than Fannie Mae would allow you. It may require dealing with second lender before opening the short sale at Fannie Mae. Fannie Mae normally does not postpone auctions. If you are closer to the trustee’s auction than you are to closing the short sale, Fannie Mae may opt to choose the foreclosure.

Fannie Mae HAFA Short Sale

Fannie Mae HAFA short sale program is considered the most complex short sale program. The government has been trying to make the processing of this program easy. It is possible that short sale would be delayed if your Fannie Mae short sale is through the Bank of America. You may have some relaxation if you are the principal resident of your home, but Fannie Mae no longer requires occupancy as a condition of the short sale. It is also no longer a requirement that your loan be delinquent.

Freddie Mac HAFA Short Sale

A Freddie Mac HAFA short sale needs to be preapproved in advance. This is also one of the complex short sale programs. The preapproval in advance itself is a biggest problem for some banks. Every bank does not seem to understand this preapproval requirement for a Freddie Mac HAFA short sale, but if your short sale program is approved by Freddie Mac and your servicer, it moves really quickly. You can expect to get approval within 30 to 60 days.

Cash for Short Sale Programs

Getting the cash for sale is the wish of every short seller, but there are rare chances that debt is forgiven and sellers are released from the personal liability. Consulting your bank is the better way to find out that if you can get cash for sale or not.  The Bank of America cooperative short sale or the Bank of America HIN Incentive programs are considered the most famous cash for short sale programs. There may be sellers who could qualify for both types of Bank of America programs and get paid.

Types of Short Sale Programs by Jonathan Katz

Second Home Market Rebounding Strongly

Apr 7 2014, 11:33AM

Although the second home mortgage market experienced a severe decline during the housing downturn, Americans still aspire to buy second homes and have contributed to the growth of the market consistently since it hit its bottom in 2009 Fannie Mae said today.  While most mortgages are still originated to purchase or refinance owner-occupied primary residences, there is a significant market for mortgages to purchase second homes, those that are neither investment properties nor primary residences.  Fannie Mae’s new report issued today, Second Homes:  Recovery Post Financial Crisis, is part of its Housing Insights series.

Second home mortgages have accounted for an average of 4.76 percent of the purchase mortgage market since 1998 and the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have been significant players, acquiring on average about 64 percent of the second home purchase mortgages by volume over that time period.

Fannie Mae uses information from the National Association of Realtors® (NAR) survey of second home buyers released last week to profile a typical second home buyer who is older, has a higher income, and is more likely to use a larger degree of cash to finance his purchase than the typical primary home buyer.  At the time of purchase 70 percent of second home mortgages had loan to value ratios under 80 percent compared with 44 percent of primary residence mortgages.

 

 

Second home mortgage originations have historically moved in tandem with the boom-bust cycle of the real estate market.  The share of second home mortgages more than tripled between the late 1990s and the peak year of 2006 then declined through 2009.  In every year since however the second home share of the purchase-money market (PMM) has increased.  During this period, however, the GSEs share of the market has decreased as the share of whole loans held by banks and other institutions has grown, suggesting that private lenders are becoming more willing to lend to these borrowers.  Between them the GSEs and bank portfolios now hold nearly 100 percent of the market compared to 77 percent in 2006.  Fannie Mae says one of the major reasons for this increase in market share is the exit of private label security (PLS) competitors from the larger playing field after the market collapse.

 

 

The boom years were good for second home mortgages which peaked at more than 15 times their 1998 volume during the housing bubble compared to around a 400 percent increase for other purchase mortgages.  However, the PLS share of second home originations, which was as high as 17 percent in 2006, has not rebounded as second home sales have recovered.

Fannie Mae says that geography played a role in both the decline and resurgence of the second home market.  Since January 1998, just over 1/3 of all second home mortgages have been originated on properties in Florida, California, and Arizona, three of the four states that then entered a multi-year foreclosure epidemic and witnessed huge price declines of over 40 percent each.  The only state with a larger price drop was Nevada, which was not a popular second home destination, accounting for only 2.5 percent of those mortgage originations from 1998 forward.  Those three Sunbelt states did not lose their popularity among second home buyers and accounted again for 34 percent of the second home mortgages originated in 2013.

While second home mortgages bubbled like all other purchase mortgages in the pre-2006 period, they did not perform as poorly as the others when the crisis hit.  While both first home and second home mortgages saw delinquencies trend upward in the years immediately after the bubble the second home purchase series outperformed the all other purchases series, indicating that second home borrowers have been better able to meet their mortgage obligations.

Fannie Mae noted many factors that will affect the future direction of second home purchases and second home mortgage originations.

  • Many buyers are affluent enough to pay cash and according to the NAR, between 2009 and 2013 an average of 38 percent of second home buyers did so. The remaining 62 percent who rely on a mortgage must have adequate income to qualify for those second home mortgage payments.
  • During the recovery housing wealth appreciation has lagged financial wealth. The recovery in financial markets has allowed many second home buyers, who are typically older and more likely to own financial assets, to sell some of their assets to buy second homes or use income from these assets to cover second home mortgage expenses. As shown in Exhibit E, older age cohorts, who are more likely to buy second homes, tend to own more financial assets.

  • The home price recovery rate in the three popular second home sites of Arizona, California, and Florida is another factor. The Federal Housing Finance Agency price indices comparing these three states to national averages show that two of the three have kept up with the national recovery, regaining about one third of their home price peak to trough losses but Florida lags far behind, having reclaimed only about 18 percent since bottoming out. Given this slow recovery and that Florida has accounted for the largest single share of second mortgage originations since 1998 (17 percent), home buyers have an opportunity to invest in Florida at bargain prices. That financial assets have recovered more quickly than home prices further increases this opportunity.
  • Yet another factor is the aging of the American population. The age group most likely to purchase a second home, those between 45 and 64 years of age, will grow at a slower rate than that of the total adult population between 2015 and 2060. Thus, while demand for second homes will continue to grow, it will likely occupy a smaller portion of the total purchase market. However, assuming that Americans continue existing investment patterns as they age and that aspirations of second home ownership do not wane, second homes should still occupy a significant place in the residential real estate market.

Fannie Mae concludes that although the second home mortgage market was also hit hard by the housing downturn, Americans still want to buy second homes and have contributed to the growth of the market consistently since its bottom in 2009.  The GSEs acquired roughly 60 percent of second home mortgage origination volume in 2013 and, barring rapid resurgence in PLS lending, should continue to be major players in the second home mortgage market.  “As the population continues to age, we expect people to continue to use their savings to buy second homes, thereby contributing to a segment of the mortgage market that will continue to grow in the years to come.”

Refinancing Mortgage: The Secret To Saving Thousands On Your Mortgage |

 

 

Have you conducted a home loan health check lately? You might be surprised if you find out that despite getting a pretty good loan back then, there is still some room for you to save. The solution does not lie on your current home loan. What you might want to do is try to look at what’s out there for you if you wish to find ways to reduce your monthly mortgage costs.

 

Mortgage

 

A lot of people today are actually dealing with higher interest rates, which mean they have to pay bigger interest payments. The situation is the perfect time to find a better deal in the market. And once the opportunity to refinance to a better mortgage product reveals itself, you don’t let it pass. However, you do need to consult with your lender or a separate mortgage expert regarding your situation. Refinancing mortgage, just like other home loan solutions, has advantages and disadvantages. Before you can refinance, you will have to deal with the refinancing costs which will be comprised most likely of exit fees and several other charges your lender might impose.

 

Benefits of Refinancing to a New Loan

 

Refinancing to a new loan has other advantages aside from the obvious fact that of allowing people to lower their mortgage costs. Refinancing loans allows you to use the equity stored in your home as guarantee for a new loan. You can use the loan to fund the renovation and of your property. You can also purchase an investment property if you want using the funds you get from the refinancing home loan. Last but not the least, refinancing allows you to easily consolidate your loans as well as unsecured debts (e.g. credit card and personal loan) into one so you won’t have to pay high interest rates. The best thing about debt consolidation is that it makes debt management easy because you only have to manage a single account.

 

You can take advantage of refinancing when the interest rates are down. Once you have secured a loan, you can lock it in fixed rate for 15 to 30 years in order to preserve the low interest rate. When the rates go up, you’ll be saving a lot compared to those with variable rate loans. However, refinancing to a variable rate loan is the better option if you are not permanently settling in your home.

 

Refinancing mortgage takes you back to step one when you first applied for a mortgage. And if you remember, you need to have a cautious approach because you do not want to defeat the purpose of your refinancing. Simply put it, it’s buying your first all over again, which means you might encounter the same obstacles and procedures.

By  Robert  Charlson

Fallout From Refinancing – NYTimes.com

 

 

Credit The New York Times

 

 

Homeowners who refinanced when fixed mortgage rates dropped below 4 percent will be less inclined to put their homes on the market as interest rates climb. And as a result, the limited property supply already impeding sales in many markets may not ease anytime soon.

A recent survey by Redfin, a national real estate brokerage based in Seattle, suggests that even those beneficiaries of low-refinance rates who do decide to move may want to make money renting out their homes while waiting for prices to rise, rather than sell right away.

Redfin questioned 1,900 people nationwide who said they planned to buy a home within a year; 42 percent said they already owned one, and of those, 39 percent said they planned to rent it out after they moved. The survey also asked buyers about their frustrations with the process, and “low inventory” topped the list.

 

 

Market dynamics are encouraging owners to keep their homes off the market for now, said Anthony Hsieh, the chief executive of loanDepot, a mortgage lender. “The rental market is very, very healthy today because a lot of Americans are locked out of the mortgage market,” he said. “And there is the promise that real estate is going to appreciate, because we’re just coming out of a deep recession.”

Of course, most borrowers can’t afford to buy another home without using equity from their first for a down payment. But Mr. Hsieh says that those who were able to take advantage of low refinance rates tend to be “premium consumers,” with very good credit and stable, above-average incomes.

“These are the folks that will think twice before they pay off that mortgage that is such cheap money,” he said. “They’re going to explore all types of options before they do that.”

They may want to consider a few other factors before taking on tenants, said Jed Kolko, the chief economist of Trulia, an online marketplace for residential real estate. First is the effort involved in managing a rental property. Second is the greater financial risk of owning two homes in the same market should home prices take a dive. And third is the changing nature of what’s driving rents.

“Over the past several years,” Mr. Kolko said, “the strong demand for renting single-family homes has been driven by people who lost homes to foreclosure but still wanted to stay in the same area. But now it is more driven by young people, and they are more urban focused.”

Patric H. Hendershott, a senior research fellow at the Institute for Housing Studies at DePaul University in Chicago, says he has witnessed the current allure of being a landlord firsthand. He lives in a housing community for older people, and he has recently noticed that residents who are moving to larger units are choosing to rent out their smaller ones.

But he views another scenario as more likely for low-rate holders: Those who can’t afford to move on without selling will essentially be “locked into” their homes. As interest rates rise, even buying another home at the same price will result in a higher mortgage payment.

In a recent analysis of the effect of lock-ins, Mr. Hendershott predicted that if rates continue to rise, the result will be substantial declines in housing turnover in strong housing markets, in which large numbers of households refinanced at low rates.

“We had a big episode of this in the 1980s,” he said, recalling when soaring interest rates locked in large numbers of homeowners.

Research cited in his analysis found that during that period, household mobility declined by 15 percent for every 2 percent increase in rates.

 

Full Work Week and Rate Rally Boost Mortgage Apps

 

Mar 5 2014, 8:45AM

The volume of mortgage applications increased during the week ended February 28 for the first time since late January.  This good news was muted slightly by the fact that the previous week had been a holiday for many with government offices and schools closed.

The Mortgage Bankers Association said its Market Composite Index increased 9.4 percent on a seasonally adjusted basis from the week ended February 21 and 11 percent on an unadjusted basis.  The seasonally adjusted Purchase Index was 9 percent higher than the previous week but MBA noted that week was not adjusted to account for the President’s Day holiday.  The seasonally adjusted Purchase Index during the most recent week was 6 percent above the level during the last non-holiday week which ended February 14.  The unadjusted Purchase Index was 19 percent lower than during the same week in 2013.

Purchase Index vs 30 Yr Fixed

The Refinance Index was up 10 percent from the holiday week but was 3 percent lower than two weeks earlier.  Refinancing had a market share of 57.7 percent compared to 58 percent the previous week, the lowest since last September.

Refinance Index vs 30 Yr Fixed

Both average contract and effective rates decreased last week for all mortgage products.  The average contract interest rate for a 30-year fixed-rate mortgage (FRM) with a conforming loan balance of $417,000 or less decreased to 4.47 percent with 0.28 point.  The previous week the rate was 4.53 percent with 0.31 point.

Jumbo 30-year FRM (loan balances in excess of $417,000) had an average rate of 4.37 percent, 10 basis points below the average rate the previous week.  Points increased to 0.20 from 0.13.

Thirty-year FRM carrying FHA guarantees had an average rate of 4.13 percent with 0.13 point.  The previous week the average rate was 4.17 percent with 0.20 point.

The rate for 15-year FRM was 3.52 percent, down 4 basis points from the previous week.  Points decreased to 0.18 from 0.28.

Adjustable rate mortgages (ARM) held at an 8 percent share of mortgage applications for the fifth straight week.  The contract rate for the most widely offered ARM, the 5/1 hybrid, was 3.09 percent with 0.38 point.  The rate the previous week was 3.17 percent with 0.31 point.

MBA’s Weekly Mortgage Application Survey has been conducted since 1990.  It surveys mortgage bankers, commercial banks, and thrifts and covers over 75 percent of U.S. retail residential mortgage applications.  Base period and value for all indexes is March 16, 1990.  Interest rates are quoted for 80 percent loan-to-value ratio loans and points include the origination fee.


Mortgage Rates Continue Higher as Weather Blocks Progress

February 21, 2014
Market Summary

Mortgage rates continued higher this week as weather-related effects on financial markets deprived interest rates of one of their primary sources of support.  This is the second straight week of increases and the 3rd week with no improvement.  Before that, rates had fallen for 5 straight weeks.

In terms of the most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution), both 4.375% and 4.5% were in play this week with 4.5% taking over by Thursday.

Unfortunately, there’s no perfect way to separate weather-related distortions from reality, and this is currently serving to keep the range of movement relatively narrow for mortgage rates and US Treasuries.  Also unfortunate is the fact this weather dynamic creates something of a no-win situation for interest rates because only the negative data (which would help rates) is suspect due to weather, while positive data (which would hurt rates) would be seen as strong enough to overcome any weather-related drag.

That’s not to say rates can’t improve, but gains are limited, and more of a serendipitous by-product of market considerations that are not dependent on economic data.  Strong data, on the other hand, could have a noticeable negative effect.

Matthew Graham, Chief Operating Officer, Mortgage News Daily

Complaints Surging, Modifications Decreasing As Loan Servicers Snap Up Mortgages From Banks – Consumerist

 

(RAWRS)

(RAWRS)

It’s been a rough few years for homeowners. Since the collapse of a housing bubble in 2008, mortgage-holders have been yanked around every which way by the banks that own their loans. Mega-banks like Wells Fargo and Bank of America have earned their reputations for being impenetrable, hostile bureaucracies to their customers. The industry has done everything from issuing loans that borrowers had no chance of repaying, to “losing” paperwork that distressed borrowers endlessly resend, to foreclosing on borrowers who have actually paid, and even discriminating based on race and gender.

But it’s not just the banks making life harder for homeowners anymore. Loan servicers are buying up more mortgages every day, and borrowers are plagued with just as many problems from these third-party companies as they have been from the big banks.

 

As the New York Times reports, loan servicing companies now own about 17% of the mortgages in the country. While that may not sound like a huge number, these servicing companies held only 3% of mortgages in 2010. That’s an enormous change in a very few years.

 

It’s also a change that’s proving difficult for consumers that need help. It’s hard enough for a borrower to request and receive a loan modification from a big bank; getting one from a servicer, when your loan keeps being handed off among them, can be even harder. By the time you finally have someone agreeing you’ve sent the right paperwork, you might have to do it all over again with yet another company.

 

Borrowers with two huge servicing companies, Ocwen and Nationstar, have particularly low chances of seeing a modification approved for their mortgages. While Bank of America has approved roughly 44% of modifications since 2009, the NYT says, Ocwen has approved just 23% and Nationstar, 22%.

 

Meanwhile, complaints against the servicing companies have been increasing. One couple who won a modification from BoA told the Times that it vanished into thin air when Nationstar took over managing their mortgage a few months later. Another homeowner described to the NYT her experience being bounced among three servicers in less than two years: “I either get conflicting answers or no answer at all.”

 

In January, the Consumer Financial Protection Bureau announced new rules requiring mortgage servicers to provide actual service to customers in need. The deputy director of the CFPB, Steve Antonakes, said at a conference on Wednesday that he was “deeply disappointed by the lack of progress the mortgage servicing industry has made” in helping consumers.

 

“There will be no more shell games where the first servicer says the transfer ended all of its responsibility to consumers and the second servicer says it got a data dump missing critical documents,” Antonakes added, saying that situations where servicers refused to honor loan modifications “would not be tolerated,” and that loan handoffs should be “seamless” for consumers.

 

Rep. Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, has also urged regulators to extend greater oversight over mortgage servicers.

 

Loan Complaints By Homeowners Rise Once More [New York Times]
Official ‘Deeply Disappointed’ by Mortgage Servicing Problems [Wall Street Journal]

 

U.S. 30-Year Mortgage Rates Increase for a Second Week – Bloomberg

Mortgage rates for 30-year U.S. loans climbed for a second week, cutting into affordability as the housing recovery shows signs of cooling.

The average rate for a 30-year fixed mortgage was 4.33 percent this week, up from 4.28 percent, Freddie Mac said today. The average 15-year rate rose to 3.35 percent from 3.33 percent, the McLean, Virginia-based mortgage-finance company said.

While the job market is improving, higher prices and borrowing costs are making it more expensive to own a home. Monthly payments on a median-priced three-bedroom home — including mortgage, insurance, taxes and maintenance — rose an average of 21 percent in the fourth quarter from a year earlier, according to an analysis of 325 U.S. counties by RealtyTrac released today. Mortgage rates jumped to a two-year high in August from near-record lows in May, Freddie Mac data show.

“The cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes,” Daren Blomquist, vice president at Irvine, California-based RealtyTrac, said in the report.

Starts for single-family houses slumped in January, in part because of unusually harsh weather in much of the U.S. Builders began work on 573,000 homes at an annualized rate last month, down 15.9 percent from December and the fewest since August 2012, Commerce Department data issued yesterday show.

Confidence among homebuilders dropped in February by the most on record as snowstorms on the East Coast limited prospective buyer traffic, according to the National Association of Home Builders/Wells Fargo sentiment gauge released this week.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

Credit Suisse brings fourth jumbo RMBS to market | 2014-01-31 | HousingWire

Investments

81% of loans come from Shellpoint’s New Penn

Credit ratings agency DBRS assigned mostly triple-A to a prime, jumbo residential mortgage backed securitization issued by Credit Suisse [CS]. The trust is called CSMC Trust 2014-IVR1. The triple-A credit enhancement is 6.85%.

This is the fourth deal issued by CS since the housing recovery began.

The deal is backed by 398 prime residential mortgage loans with a total principal balance of $287 billion.

The originators for the mortgage pool are primarily New Penn Financial at nearly 81%.

The loans will be serviced by Select Portfolio Servicing.

Wells Fargo [WFC] will act as the master servicer.

DBRS notes the deal bears some semblance to pre-crisis jumbo RMBS.

The representations and warranties are backstopped by a wholly owned subsidiary of Credit Suisse.

“DBRS views the representation and warranties features for this transaction to be consistent with recent DBRS-rated CSMC prime jumbo transactions, and of stronger quality than that of two previous Credit Suisse prime jumbo transactions (CSMC 2012-CIM3 & CSMC 2013-TH1),” said DBRS in its presale report.

“However, the relatively weak financial strength of certain originators coupled with the sunset provisions on the backstop by DLJMC still demand additional penalties and credit enhancement protections,” DBRS warned.

Jacob Gaffney
Jacob_gaffney
Jacob Gaffney is the Executive Editor of HousingWire and HousingWire.com. He previously covered securitization for Reuters and Source Media in London before returning to the United States in 2009. While in Europe for nearly a decade, he covered bank loans and the high yield market, in addition to commercial paper, student loan, auto and credit card space(s). At HousingWire, he began focusing his journalism on all aspects of the housing and mortgage markets.
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