Archive for the ‘CMHC’ Category

20
Jan

The number of fixed rate mortgages taken out via intermediaries fell significantly between the third and fourth quarters of 2009.

According to the Financial Adviser Confidence Tracking (FACT) Index complied by mortgage lender Paragon, the proportion of fixed rate cases introduced by mortgage brokers fell from 62% in the third quarter to 46% in the final quarter of the year.

The dip represented the second consecutive quarterly fall in the popularity of fixed rate deals, after two quarterly increases in the first half of 2009.

Paragon attributed the lapse in fixed rate popularity to the perceived decreasing likelihood of a rise in Bank Base Rate.

Conversely, tracker mortgages got far more popular over the period, accounting for 45% of all mortgages arranged by brokers, compared to 33% in the third quarter of the year.

The index recorded that discount rate mortgages made up 6% of all mortgages arranged, with capped rate and cashback cases accounting for less than 3% of mortgage business.

John Heron, Paragon Mortgages’ managing director, said:

“We saw the proportion of fixed rate cases rise substantially in both the first and second quarters of the year, which is understandable as the Bank of England base rate had tumbled and borrowers wanted to lock themselves into attractive deals before the rate started to rise again.

“However, the rates attached to fixed rate deals are currently less attractive and borrowers increasingly opted for tracker deals during the latter half of the year, particularly in the final quarter.”

Interest-only mortgages represented just 18% of all broker-introduced deals, the lowest proportion since the third quarter of 2004.

That is in part down to the decrease in buy-to-let deals being taken out, as there are very few of these mortgages (usually arranged on an interest-only basis) available. Also, as lenders have tightened up their criteria, fewer will allow people to take out interest-only deals on their residential mortgages.

The reduction may also be an indication that borrowers are being more sensible and conservative, and avoiding interest-only deals, which are inherently higher-risk than repayment-type deals.

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13
Aug

A jump in oil prices helped widen the U.S. trade deficit in June, but a sharp fall in manufactured goods exports and imports appears to have stabilized, a Commerce Department report showed on Wednesday.

The monthly trade gap totaled $27.0 billion, up 4.0 percent from May. The shortfall was smaller than many analysts expected because stronger foreign demand for U.S. goods and services offset some of the impact of higher oil prices.

Both U.S. exports and imports remained sharply below records reached in July 2008, just before the global financial crisis began wreaking a savage toll on international trade.

But “the sharp decline in U.S. exports and imports of manufactured goods appears to be stabilizing,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

For the fourth month in a row, U.S. manufactured goods exports totaled roughly $67 billion and manufactured goods imports were roughly $93 billion, Vargo said.

The trade gap for the first six months of 2009 totaled nearly $173 billion, down more than 50 percent from the same period last year. Year-to-date exports were down 19.3 percent from 2008, while imports were off 28.8 percent.

The smaller-than-expected June deficit was, by itself, good news for the U.S. economy, which is beginning to show signs of emerging from a recession that began in December 2007.

“However, other data already released on construction and inventories point to a downward revision” of second quarter GDP growth to -1.6 percent from -1.0 percent,” said Nigel Gault, chief U.S. economist at IHS Global Insight.

Looking ahead, the monthly gap between imports and exports should widen in the second half of the year as producers and retailers restock currently lean inventories.

So, unlike the first half of 2009, “trade will become a drag on growth. But that would be a drag in a context where both exports and imports are growing, as the U.S. and global economies climb out of recession,” Gault said.

OIL PRICE UP

U.S. imports of goods and services rose 2.3 percent in June to $152.8 billion, the highest since January. Higher oil prices accounted for much of the increase, and imports of consumer products fell to the lowest since November 2005.

The average price for imported oil rose for the fourth straight month to $59.17 per barrel, helping to widen the U.S. trade gap with the Organization of Petroleum Exporting Countries to the highest since October 2008.

U.S. exports rose 2.0 percent in June to $125.8 billion, led by stronger foreign demand for industrial supplies and materials and capital goods.

Exports of foods, feeds and beverages were the highest since October 2008.

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13
Aug

U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures, which have severely strained housing and the economy.

Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.

Filings — including notices of default, auction and bank repossession — have escalated with unemployment.

“July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” James J. Saccacio, RealtyTrac’s chief executive, said in a statement.

“Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we’re seeing significant growth in both the initial notices of default and in the bank repossessions.”

More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.

Notices of default, auction or repossession have reached nearly 2.3 million in the first seven months of the year — with more than half a million bank repossessions, the Irvine, California-based company said.

Making timely payments keeps getting harder for borrowers who have lost their jobs or seen their wages cut.

The unemployment rate is 9.4 percent and President Barack Obama has said he expects it will hit 10 percent.

Obama’s housing rescue is gaining traction in altering terms of loans for struggling borrowers, but slowly.

Earlier this month the U.S. Treasury Department detailed the progress of the top servicers in modifying loans and prodded them to step up efforts to stem foreclosures.

SUN BELT STILL SUFFERING

States where sales and prices surged most in the five-year housing boom early this decade remain hardest hit.

California, Florida, Arizona, Nevada accounted for almost 57 percent of total U.S. foreclosure activity in July.

Illinois had the fifth-highest total filings, spiking nearly 35 percent from June, in an example of how moratoriums often delay rather than cure an inevitable loan failure.

Default notices spiked by 86 percent in July, from artificially low levels the prior two months. A state law enacted on April 5 gave delinquent borrowers up to 90 extra days before foreclosure started, RealtyTrac said.

Michigan’s foreclosure activity fell 39 percent in July from June, mostly due to a 66 percent drop in scheduled auctions. A state law that took effect July 6 freezes foreclosure proceedings an extra 90 days for homeowners who commit to work on a loan modification plan.

Other states with the highest foreclosure filing totals last month included Texas, Georgia, Ohio and New Jersey.

Nevada had the highest state foreclosure rate for the 31st straight month, with one in every 56 properties getting a filing, or more than six times the national average.

Initial notices of default fell 18 percent in the month, with a new Nevada law taking effect on July 1 requiring lenders to offer mediation to homeowners facing foreclosure. Scheduled auctions and bank repossessions each jumped more than 20 percent, however, boosting overall foreclosure activity in the state by 4 percent from June.

California, Arizona, Florida, Utah, Idaho, Georgia, Illinois, Colorado and Oregon were the other states with the highest foreclosure rates.

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13
Aug

Banks are pocketing extra cash rather than passing on lower interest rates to mortgage customers, a Daily Mail investigation revealed this week.

Homeowners are paying an average of £1,788 per year more than they should be as banks use the historically low base rate of 0.5% to shore up their ailing coffers.

Twelve months ago mortgage rates were just 0.5% above the Bank of England’s base rate. The margin has now increased to 2.61%.

Alistair Darling expressed “concern” at banks charging “more than is absolutely necessary”.

The Chancellor threatened to refer banks to the Competition Commission if they fail to pass on rate cuts soon.

In related news, mortgage lending in June reached its highest level since December, with £12.3 billion in mortgages granted.

Banks need to pass the profits through to the mortgagees, this kind of greed in the market can only make things worse.

Lets hope things will get better,

Sandy Hutchens

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12
Aug

The Pierpont Morgan Library, one of the world’s foremost centers for research in literature, art and music, is buying the 45-room brownstone mansion just to the north and will roughly double in size, the library announced yesterday.

The mansion, on Madison Avenue at 37th Street in Murray Hill, was once the home of Morgan’s son, J. P. Morgan Jr. It is being bought for $15 million from the Evangelical Lutheran Church of America. It is to be adapted to the library’s needs by Voorsanger & Mills Associates, the New York architectural firm.

The museum, a major repository of illuminated manuscripts, Old Master drawings, printed books from the 15th century to the present and literary and musical manuscripts, is scheduled to begin work on the mansion in about a year. The expanded facility is expected to open in about a year and a half.

Haliburton Fales, president of the library’s board, said yesterday that for the last 10 years the library had been increasingly handicapped by lack of space. ”The collections, staff, public programs and other activities have been growing apace; every square inch of usable space has by now been fully utilized to accommodate this growth. I do not exaggerate when I say that the situation had become critical. The acquisition of this property is an ideal solution to what had seemed for some time an insoluble problem.” Start of Capital Campaign

Less than 1 percent of the Morgan’s collection is on view at a time, according to museum officials. With the new exhibition space, the museum will be able to have a permanent installation of representative materials from all parts of its collections.

The purchase of the mansion coincides with the start of a $40 million capital campaign to cover the cost of the house and adapting it as well as to increase the library’s endowment and make it possible to re-house the library’s collections of books, manuscripts and drawings, provide more office space and put its educational and other services on a secure financial footing.

Betty Wold Johnson, a trustee and fellow of the library, is to be chairman of the campaign. Substantial pledges have already been received from Mr. and Mrs. C. Douglas Dillon, the Robert Woods Johnson Jr. Charitable Trust, Mr. and Mrs. Eugene V. Thaw, the Michel David-Weill Foundation and some anonymous donors.

The library may also share or rent a portion of the new building to nonprofit groups to help meet the purchase and renovation costs, said Charles E. Pierce Jr., the director of the Morgan.

The Morgan library and the mansion are survivors of the time when many of New York’s 400 -the Belmonts, the Rhinelanders, the Tiffanys and the Morgans – lived in Murray Hill. How It Started

J. Pierpont Morgan (1837-1913) was a committed and compulsive collector from the age of 14, when he asked President Millard Fillmore for his autograph and got it in an envelope personally franked by the President. As a schoolboy in Switzerland and Germany he collected fragments of stained glass, some of which are now part of the windows in the Morgan Library West Room.

After his father’s death in 1890, Morgan went on to build ever larger collections of medieval and Renaissance illuminated manuscripts, Old Master drawings, early printed books, fine book bindings and literary and musical manuscripts.

In 1900, Morgan bought property on 36th Street east of Madison Avenue, and asked the celebrated firm of McKim, Mead & White to design a building to house his collection and a study for his private use.

Charles McKim undertook the commission himself and produced a building that is both hospitable and majestic. Well adjusted to works of art of all kinds, it is widely regarded as a treasure house in its own right and one that draws freely and ingeniously upon the civilizations in which Morgan was especially interested. It is still a hospitable place where the guards act more like hosts than bouncers. Collection Continues

When Pierpont Morgan died in 1913, his son J. P. Morgan Jr. continued the collecting with the help of Belle da Costa Greene (1883-1950), who had proved herself a gifted librarian when still young and who was to spend 43 years at the library.

In 1924 J. P. Morgan Jr. transferred the library to a board of trustees in the belief that it was too important a resource to remain in private hands. Not long after that, it was incorporated by the New York State Legislature as a public reference library. Four years later, Pierport Morgan’s original mansion at the corner of 36th and Madison was torn down to make way for the library’s expansion.

Among the strengths of the Morgan Library’s collections are the ninth-century Lindau Gospels with their spectacular jeweled binding, the William S. Glazier collection of illuminated manuscripts dating from the fifth to the 16th centuries, the Farnese Hours by Giulio Clovio (the most famous Italian Renaissance manuscript) and three Gutenberg Bibles.

There are master drawings and prints by artists ranging from Leonardo, Michelangelo, Durer, Mantegna, Claude, Rubens and Rembrandt to Watteau, Cezanne, Degas and Matisse. By 1905 Pierpont Morgan had bought some 700 printed books dated before 1501 from English sources alone. Later holdings of special importance relate to American, English and French literature, together with the Greek and Latin classics. The Musical Treasures

Literary manuscripts include the 39 volumes of Thoreau’s journal, Mark Twain’s ”Life on the Mississippi,” ”Endymion” by John Keats and the Byron manuscripts the poet gave to his mistress Countess Guiccioli.

The library’s musical collections, unrivaled in the United States, include major manuscripts by Bach, Haydn, Mozart, Beethoven, Schubert, Brahms and Stravinsky. Both a museum and a research library, it offers the serious inquirer a range of high-quality material that is unique in its kind.

The mansion to the north was built in 1852 for Anson Phelps Stokes, a banker. With 22 fireplaces and a dozen baths, it at once took rank with the most imposing New York town houses of its period. The brownstone was designed in Renaissance revival style, with graceful balconies and wrought iron grillwork. After the death of its original owner, it was bought in 1904 by J. Pierpont Morgan for his son. Father and son lived as neighbors until the death of Pierpont Morgan in 1913. (The two houses were originally separated by a third brownstone. Pierpont Morgan bought it, razed it and turned the site into a garden he and his son could enjoy). Church Is Moving

The Lutheran Church bought the building in 1944 for $265,000, and it has been the world headquarters for the Lutheran Church in America. The church, recently consolidated as the Evangelical Lutheran Church in America, is moving its headquarters to Chicago.

Bartholomew Voorsanger, of the architectural firm that will renovate the building, said, ”The central challenge is to add useful and harmonious spaces while still maintaining the intimacy of the institution and the integrity of its architecture.”

It was Pierpont Morgan’s wish that the activities of the library be available free to all. But in changing times, with ever mounting costs and collections that grow year by year, that policy has led to an operating deficit. Mr. Hales said yesterday that ”acquiring new space is so critical that we are willing to invest $15 million for the purchase price, despite the library’s annual deficit, which exceeds $200,000.”

During the directorship (1969-87) of Charles Ryskamp, who is now director of the Frick Collection, the library pursued a vigorous and inventive exhibition policy that attracted many thousands of visitors.

Its new director, Mr. Pierce, says he is determined to maintain that atmosphere. ”The Morgan Library will grow,” he said yesterday. ”But it will not grow at the expense of intimacy and human scale. Those are among the qualities that set us apart from many another cultural institution in this city, and they must be preserved. We are not changing our fundamental nature but simply adding the space that we need to allow for the steady and healthy growth of our collections and our services.”

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12
Aug

Posted by Sandy Hutchens

Buying a mansion can be an exciting time in a person’s life, as it typically signifies wealth, success and the feeling of having finally “arrived.” Along with that celebratory attitude, however, also comes a great deal of stress in the form of mortgage payments, homeowners associations and sizable down payments. So think long and hard about if a mansion is the right real estate move for you and, if so, what type property you’re on the market for.

  1. Visit a financial planner or adviser to determine your price range, including how much you’re able to put down, how much a 30-year mortgage would amount to and how much you can expect to pay in property taxes.
  2. Find a real estate broker who specializes in luxury properties and upscale communities. These brokers can be easy to find because they are usually the top brokers or star players within their given company. Another way to find an experienced broker is to talk to residents of the community you are interested in.
  3. Determine why you want to buy a mansion. Do you need a lot of space? Do you yearn for privacy? Do you have a lot of people under one roof? These questions will help you determine what neighborhoods to browse, what type of property to buy and if, in fact, a mansion will really meet your needs.
  4. Set up appointments with your broker to visit some suitable mansions. Ask many questions based on your housing criteria (which will hopefully be established once the above-mentioned questions are fleshed out).
  5. Ask the listing agent or homeowner about any custom or upscale amenities the property may contain. This will both help you realize the property’s value (or lack thereof) and determine if the home is likely to have many costly repairs. You should research the types of weather, acts of God and insurance that are common in those parts, which will also help you determine what incidental expenses you may incur.
  6. Bring your family to view any properties that have met all of your criteria. Take them on an outing after viewing homes in different areas to get a sense of the community, what the neighbors are like, what they do for fun and how they behave to determine if that neighborhood would fit with your family’s lifestyle.
  7. Hire a professional appraiser and handyman to do a walk-through of the house before determining whether it is a good investment. Remember, the property may appear to be everything you want at first glance, but a professional will be able to assess whether major, costly repairs will be necessary in the near future.
  8. Place a bid on the mansion you decide on and play the waiting game with your broker. From here, it is up to you whether you want to enter in any counter offers should you be outbid.

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12
Aug

After an early close on Friday, rates ended slightly higher than where they began the week. The week ahead will be abbreviated as the market remains closed on Monday in observance of President’s Day.  But even though it will be a short week, the economic calendar is still fairly active.  So what’s in store for rates?

Last week, rates edged lower before reversing course and heading higher as the Obama stimulus plan worked its way through congress.  It will be interesting to see if the President’s stimulus package actually stimulates anything as proponents of the plan claim the plan is nothing more than the largest pork spending bill ever.

One thing is for sure, the stimulus package in its current form is the largest sum of money ever spent in the history of the world in an attempt to stimulate the economy – So will it actually work?  Only time will tell, but if history is correct like it so often is, it will likely not accomplish its goal.  Considering to date, a government has never been able to spend its way out of a recession.  The last time it was attempted was a few years ago when Japan passed a massive spending bill to correct their recessionary heading.  But like all other past spending bills including Roosevelt’s “New Deal,”  the only thing Japan gained was moving their economy deeper into a recession and a massive debt for their children and grandchildren to payback.

The abbreviated week ahead boasts several high impact reports that can influence rates, but it will likely be political news that will continue to leave the market volatile as investors try and figure out where the market is heading.

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12
Aug

As the jobless rate continues to rise in response to the recession, servicers are reminded that income and mortgage default levels are inexorably linked. According to NeighborWorks America, nearly 50 percent of mortgage default is income-related. Thirty percent of borrowers cited a reduction in income, and 19 percent a loss of income, as primary reasons for falling behind on their mortgage. Without transparency into a borrower’s current employment and income status, lenders and servicers are unable to proactively reach out to troubled borrowers and offer loan workout options. Insight into current borrower employment and income information enables servicers to make early contact with distressed borrowers, which is essential in successfully executing loan modifications.

Through the recently created “Making Home Affordable Act,” the federal government is planning to help up to 9 million homeowners currently at risk of default. In April 2009, HOPE NOW members and the industry at large modified 127,000 mortgages and completed 143,000 re-payment plans totaling 270,000 interventions, “the largest number in any month” since the alliance started to compile data.

In response to such programs, servicers need better insight into borrower financials in order to manage the level of predicted loan defaults for the remainder of this year. Rather than taking on the significant burden of additional staff, servicers should consider looking to efficient and automated data providers that can verify income and employment instantly and more cost-effectively. And, rather than taking on additional risk with loan modifications, servicers should better position themselves to manage risk through data and information by using providers that offer a deeper insight into the borrower’s employment and income situation, from data sources such as employer payroll or IRS tax transcripts (Form 4506-T).

Historically, the Government Sponsored Enterprises required lenders to obtain a credit score and verbal Verification Of Employment (VOE) to complete a borrower’s loan application. Many lenders were forced to dedicate call center staff to manually contact employers or work directly with the IRS to attempt to verify employment status for the borrower – an inefficient, expensive, and inconsistent process. Compounded upon this, some lenders and servicers managed loan data across multiple business units and service centers, with differing information being provided.

Unfortunately, when unable to reach the employer to verify income and employment, many loan officers chose to rely on the credit score as the sole indicator of a borrower’s financial health and risk. Today, lenders are no longer willing to base lending decisions on the credit score alone – they want an in-depth review of all information on a consumer’s credit file. In addition to credit information, lenders require transparency into other credit bureau information including real-time employment and income verification to predict future loan performance and delinquency.

Help Is On the Way!

Engaging a third-party for proof of documentation provides servicers with a strategic option to effectively streamline their existing workflow when it comes to employment and income verification, while simultaneously improving the quality of data on which lending decisions are made. Specific information servicers can access through a single, secure, third-party provider include: the borrower’s current place of employment, employment status (active or not), the longevity of employment, job title and salary (including pay rate, YTD income, past two years income). Armed with insight, servicers can determine the best course of action for each individual borrower and thereby improve the performance of their portfolio.

Additionally, a compliant and complete third-party provider can provide great comfort to investors, who wants know a lender is tapping the most accurate source of borrower employment and income for greater transparency into borrower financial health. And, through greater data transparency, investors and lenders can improve analytics on a significant percentage of their portfolios to more effectively identify undervalued securities and improve the accuracy of loan-level delinquency, default, and prepayment predictions. Loan-level updated borrower information used in combination with powerful analytics gives investors the information needed to differentiate the “good deals” from the “bad deals” and better correlate risk with default rates.

Servicers tend to focus on debt-to-income ratios in performing loan modifications, but loan modifications have changed the debt-to-income requirements. How can servicers calculate debt-to-income ratio without an accurate view of the income portion? Servicers that rely on the stated income from a borrower’s loan application to calculate debt-to-income, in an economy where salary reductions and unemployment numbers are continuing to rise are simply exposing themselves to greater risk.

There are several viable solutions available today. Outsourcing employment and income verification to a trusted third-party allows servicers to focus on their core competencies of evaluating and modifying loans. Streamlining this step enables servicers to process more loan modifications in a timelier manner, which puts us on the path to a housing recovery.

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11
Aug


In an article published today on its website, the Association of Certified Fraud Examiners’ chairman questions what the best way to prevent fraud is, and whether our society can do more to prevent fraud than it is doing currently.

Joseph T. Wells is a former FBI agent and CPA who specialized in fraud cases before he founded the Association of Fraud Examiners (ACFE) and developed the rigorous training program that can result in professionals earning the CFE – Certified Fraud Examiner certification.

Published on the ACFE’s website today, Wells’ article first reviews how Bernard Madoff created the largest Ponzi scheme ever recorded, then describes the mathematical impossibility of Madoff’s scheme and that it was bound to unravel. All Ponzi schemes depend on earlier groups of investors being paid off by later, larger groups. Eventually it becomes exhausting for the person operating the Ponzi scheme to keep the fraud going; we all know the rest.

All that being the case, what is most surprising is that ten years ago, a CFE named Harry Markopolos, hired by a Madoff rival to reverse-engineer Madoff’s successful strategy, determined that Madoff was most likely operating a Ponzi scheme, yet Markopolos’ verbal and written reports to authorities such as the SEC (Securities and Exchange Commission) were rebuffed. All those early investors were laughing all the way to the bank and future wannabe investors plus Madoff’s many friends in the federal government, had their collective ears and eyes wide shut.

Joseph Wells argues that in addition to the prison sentence handed out to Bernard Madoff, Madoff also should be required to educate consumers from the confines of his prison cell about how he conceived and carried out his Ponzi scheme for so long. This, argues Wells, is one of the best ways to prevent fraud: by educating and deterring.

But in the case of Bernard Madoff, it is not clear whether the public being educated would have had much, if any, impact or a deterrence effect upon Madoff. As noted, Madoff never advertised his services or successes, so there was essentially a wall of ignorance separating each investor group from the other. It was this inability to see the forest through the trees, as well as most investors trusting their investment managers to have knowledge of the true abilities of the world’s Madoffs, that allowed Madoff to operate freely and without concern of being detected for so long.

“Madoffs Ponzi scheme was so large that most people could not even conceive of it never mind protected themselves against it” said Sandy Hutchens an expert in the mortgage lending industry.

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11
Aug

A former Dewsbury car wash owner has been warned he faces jail for scamming banks to fund his Mirfield mansion. Mohammed Azam Yaqoob, known locally as Mr Sparkles, used money from fraudulent loans to buy and renovate 40 Huddersfield Road. Leeds Crown Court heard he also benefited from the proceeds of a separate fraud against an engineering insurance firm.

Yesterday a jury returned a majority verdict, finding him guilty of one charge of fraud, two of money laundering and three of theft.

GUILTY: Azam Yaqoob outside the house at the centre of the fraud allegations. (121226)
Azam Yaqoob outside the house at the centre of the fraud allegations.

Judge James Spencer QC told him: “For offences of this seriousness the likely sentence is one of imprisonment.”

The court heard Azam Yaqoob, 40, had another man apply for a £274,350 mortgage for the Mirfield house. The prosecution said that man lied about his income to get the mortgage and lied twice more to get remortgages to fund renovations.

Prosecutor Graham Reeds QC said the true owner of the home was Azam Yaqoob and by using the fraudulent loans to fund the project, he was guilty of money laundering.

Azam Yaqoob was released on conditional bail and will return to the court on Friday September 4 for sentencing.

Outside court, he told the Reporter he was too upset to speak.


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