In this case it's lack of any action. My list of tough lender / servicers is no secret when it comes to working on Loss Mitigation and completing Short Sales. I don't often put it in writing just based on the fact that the list differs week to week. I will tell you this though, Citigroup has been on my top five 'Hardest to Work With Lenders' for over a year. And just like every other US lender, the pat themselves on the back because they are doing what they can to help. I have a four letter word for them 'LIES!'
The good news is that Citigroup helped 108,000 people avoid foreclosure during the second quarter, a nearly 30% increase from the previous period.
The bad news is that the number of its borrowers at least 90 days behind in payments surged to 4.7%, up from 3.9% in the first quarter.
Still, CitiMortgage CEO Sanjiv Das feels the bank's ramped-up foreclosure prevention efforts can help stem the number of its borrowers falling behind.
"You keep plugging away at the early stages of delinquency and that's how you slow down the number of foreclosures," Das said in an interview.
Citigroup reported Tuesday that for every completed foreclosure, 12 at-risk borrowers get to stay in their homes. Six months ago, the ratio was 1 to 6.
The bank's loss mitigation initiatives include repayment plans, payment extensions, forbearance, and loan modifications.
When borrowers can't afford to stay in their homes, Citi also helps them avoid foreclosure through short sales -- in which a homeowner sells the property for less than what's owed -- and deeds-in-lieu-of-foreclosure, in which a homeowner signs over the house to the bank. The 1 to 12 ratio that it reported Tuesday does not include short sales or deeds-in-lieu.
Total modifications decreased by 5% during the quarter as the bank ramped up its implementation of the Obama administration's loan modification program. The president's program, which gives banks incentive payments to modify loans, requires that borrowers be put into a three-month trial period before the modification is finalized. Citi also has its own modification programs.
The bank, one-third of which is owned by U.S. taxpayers, said the redefault rates for modified loans continued to decline. Only 6.54% of loans adjusted in the first quarter were delinquent after 30 days, compared to 7.67% of loans modified in the fourth quarter and 10.86% of those adjusted in the third quarter.
More troubling, however, is the fact that foreclosures and delinquencies continue to rise. The number of foreclosures in process for Citi-serviced loans increased about 10% from the first quarter, though foreclosures initiated dropped by 14%. Completed foreclosures rose by 5%.
It will be interesting to see if the American consumer takes a hostile position against Sanjiv Das the way they have with B of A CEO Ken Lewis.
Just a thought.
-Christopher Rockey
Monday, August 31, 2009
Thursday, August 27, 2009
More Loan Modification Details
So here's the deal... I am now being blasted by Loan Modification company's daily because they are so insistent on their "Huge Success Rate." I am currently interviewing Loan Modification company's on a national platform to refer agents to. I have found one Loan Modification company that I am close to endorsing based on a couple key features. First, I like that they are in the non profit sector. Second, I like that they do not charge an advanced fee to apply to their Loan Modification program. I also like their executive transparency, nobody seems to be hiding behind gate keepers. I have a national conference call tomorrow at 1:00 with this company. I will keep you posted. In the meantime, I wrote a manual on how homeowners can speak to lenders while seeking a Loan Modification. Please email me if you would like a copy of my "Guide to Negotiating a Settlement with your lender and Keeping Your Home." Here are a few passages:
What is a loan modification? To “negotiate” a loan modification means to talk to your lender and negotiate a more favorable payment plan. This usually means lowering your rate or extending the payment plan. There are several steps:
1. Realize that you cannot pay your current mortgage rates
2. Create a income vs. expense worksheet. Include your total income, your household expenses and then calculate how much you can reasonably afford per month to pay mortgage.
3. Write a “letter of hardship” explaining your current financial situation and why you need a loan modification. Lenders do not want you to file for bankruptcy and would rather give you a loan modification. Make sure to emphasize that you can pay off your mortgage if you are given a modification. This will increase your chances of success.
4. Contact the loan modification department of your lending company. Be patient and be nice. There brokers are your key to a modification.
5. Your broker will ask you for your income worksheet and your letter of hardship. Have those ready.
6. Now its negotiation time. Your broker will be working with the bank to see if you can get a modification. At this time, read our “loan modification negotiation tips”.
7. Once negotiations have ended the decision will be made. If you failed to secure a loan modification consider contact an attorney to help you negotiate. Qualified attorney have the legal power to aggressively make you a priority to your lender. Beware of unqualified attorneys or so called “loan modification” companies. These companies do not have any more knowledge than you do from reading this article.
Good luck! If you succeed then I can guarantee you that you that paying your mortgage will be a lesser burden.
-Christopher Rockey
rockey@mresolution.com
Wednesday, August 26, 2009
Positive National Data
After three years of declines, home prices increased 2.9% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.
Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.
"We're seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.
The Case-Shiller 20-city index rose quarter-over-quarter by 1.4% but fell 15.4% year-over-year. Still, that was a smaller loss than analysts were predicting: A consensus of experts compiled by Briefing.com had forecast a 16.4% drop
"This is great news; prices may be starting to grow again" said Pat Newport, a real estate analyst for IHS Global Insight. "Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are showing price improvement."
Providing a boost
The slide may be over partially because prices have reached affordability levels not seen in a generation, drawing many buyers into the market.
Helping housing markets, too, is the government economic stimulus effort, which includes an $8,000 first-time homebuyers tax credit. That added discount has spurred many entry-level buyers into homeownership.
The rebound may mean that potential homebuyers will have more of a feeling of urgency, afraid that they'll miss the market bottom.
That's already happening in some of the markets that had gone through steep price declines over the past few years, such as the area east of Los Angeles that went through a severe boom and bust cycle. Home sales there are now booming again, according to Chuck Whitehead, a Coldwell Banker real estate broker.
"There's such a frenzy to get in before prices go up again," he said. "Buyers are more concerned about that than about getting the first-time homebuyers tax credit."
Among cities, Cleveland reported the biggest rebound; prices improved by 9.8% compared with the first quarter of 2009. Dallas prices rose 6.5% and San Francisco 5.9%. Prices declined in seven cities, including 7.8% in Las Vegas, 2.2% in Miami and 1.2% in New York.
Warning signs
Despite the upbeat report, Robert Shiller, one of the principle authors of the Case-Shiller index, expressed caution, pointing out that last year's turnaround quickly fizzled out.
In early 2008, prices were falling 3% a month. That improved to -0.5% a month in the spring, giving the impression that the market would turn around. But prices quickly started falling more steeply again. The same thing could happen again, especially with the economy still in a downspin.
"The really important things [affecting home prices] are unemployment and momentum," said Shiller, who is a Yale economist. "We have momentum, which is very important, but we also have high unemployment."
And, he added, "the government has not yet handled the foreclosure problem."
Increased bank repossessions could unleash of flood of new supply on the market, which could dampen prices. Plus, is also some indication of shadow inventory -- repossessed homes the banks are holding onto because they don't want to flood inventories.
That leads Stuart Hoffman, the chief economist for PNC Financial Services Group (PNC, Fortune 500), to conclude that it's still a good time to be a buyer.
"Given the tremendous amount of inventory, nearly a year's worth," he said, "it should continue to be a buyer's market for a while."
Shiller, too, is relatively optimistic despite being cautious. "I have found that momentum matters," he said, "and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing."
My warning: We still need to take caution of lenders purposely holding back REO inventory so they don't inundate the market place. What happens if they do decide
to inundate because the coast seems clear?
-Christopher Rockey
Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.
"We're seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.
The Case-Shiller 20-city index rose quarter-over-quarter by 1.4% but fell 15.4% year-over-year. Still, that was a smaller loss than analysts were predicting: A consensus of experts compiled by Briefing.com had forecast a 16.4% drop
"This is great news; prices may be starting to grow again" said Pat Newport, a real estate analyst for IHS Global Insight. "Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are showing price improvement."
Providing a boost
The slide may be over partially because prices have reached affordability levels not seen in a generation, drawing many buyers into the market.
Helping housing markets, too, is the government economic stimulus effort, which includes an $8,000 first-time homebuyers tax credit. That added discount has spurred many entry-level buyers into homeownership.
The rebound may mean that potential homebuyers will have more of a feeling of urgency, afraid that they'll miss the market bottom.
That's already happening in some of the markets that had gone through steep price declines over the past few years, such as the area east of Los Angeles that went through a severe boom and bust cycle. Home sales there are now booming again, according to Chuck Whitehead, a Coldwell Banker real estate broker.
"There's such a frenzy to get in before prices go up again," he said. "Buyers are more concerned about that than about getting the first-time homebuyers tax credit."
Among cities, Cleveland reported the biggest rebound; prices improved by 9.8% compared with the first quarter of 2009. Dallas prices rose 6.5% and San Francisco 5.9%. Prices declined in seven cities, including 7.8% in Las Vegas, 2.2% in Miami and 1.2% in New York.
Warning signs
Despite the upbeat report, Robert Shiller, one of the principle authors of the Case-Shiller index, expressed caution, pointing out that last year's turnaround quickly fizzled out.
In early 2008, prices were falling 3% a month. That improved to -0.5% a month in the spring, giving the impression that the market would turn around. But prices quickly started falling more steeply again. The same thing could happen again, especially with the economy still in a downspin.
"The really important things [affecting home prices] are unemployment and momentum," said Shiller, who is a Yale economist. "We have momentum, which is very important, but we also have high unemployment."
And, he added, "the government has not yet handled the foreclosure problem."
Increased bank repossessions could unleash of flood of new supply on the market, which could dampen prices. Plus, is also some indication of shadow inventory -- repossessed homes the banks are holding onto because they don't want to flood inventories.
That leads Stuart Hoffman, the chief economist for PNC Financial Services Group (PNC, Fortune 500), to conclude that it's still a good time to be a buyer.
"Given the tremendous amount of inventory, nearly a year's worth," he said, "it should continue to be a buyer's market for a while."
Shiller, too, is relatively optimistic despite being cautious. "I have found that momentum matters," he said, "and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing."
My warning: We still need to take caution of lenders purposely holding back REO inventory so they don't inundate the market place. What happens if they do decide
to inundate because the coast seems clear?
-Christopher Rockey
Tuesday, August 25, 2009
Good News From Uncle Ben
Federal Reserve Chairman Ben Bernanke on Friday gave his most upbeat economic outlook yet, saying the recession seems to be ending and a recovery should begin shortly.
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near-term appear good," Bernanke said at the Fed's annual conference in Jackson Hole, Wyoming.
Most economists expect the recession to end in the third quarter, with many saying it's already over. Many, however, expect unemployment — now at 9.4%— to peak above 10% early next year.
I'm not sure myself how much economic recovery we can expect when unemployment
is still projected to peak. I'm just glad to exit the Dooms Day Soap Box finally,
or am I speaking to soon?
-Christopher Rockey
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near-term appear good," Bernanke said at the Fed's annual conference in Jackson Hole, Wyoming.
Most economists expect the recession to end in the third quarter, with many saying it's already over. Many, however, expect unemployment — now at 9.4%— to peak above 10% early next year.
I'm not sure myself how much economic recovery we can expect when unemployment
is still projected to peak. I'm just glad to exit the Dooms Day Soap Box finally,
or am I speaking to soon?
-Christopher Rockey
Wednesday, August 12, 2009
To Recover or Not to Recover
All over the US lenders are holding back REO inventory creating a false up rise in the housing market. We know this lets, look past it. My local newspaper this last Sunday ran an article stating 'The Road to the Housing Recovery.' I have said several times in the past I do NOT want to be a Prophet of Doom! But facts are facts, I was even manipulated a bit by several offers on every home, my solution, let's wait and see what I'm writing on my January 10th 2010 article. The title will likely say something like "I Told You SO!!"
The number of government repo homes is expected to increase further following the significant rise in the percentage of loans insured by the Federal Housing Administration in June, based on data released by the Mortgage Bankers Association.
Out of all home loans provided to homebuyers in June, FHA-insured home loans comprised 36 percent, the biggest FHA share of the home loan market since 1990.
In August 2005, FHA loans accounted for only 5.8 percent of the home loan market.
Analysts expect government repo homes to increase because of the rising trend in FHA loan default. Based on FHA data, the default rate increased to 5.65 percent in February this year, a substantial increase of nearly 23 percent from the default rate of 4.6 in October last year.
As of the last months of 2008, more than 4 percent of loans insured by FHA were delinquent by 90 days or more. These delinquencies increased the number of government repo homes.
Many housing analysts are worried that the factors that largely caused the current subprime mortgage crisis will also cause another crisis involving FHA loans and government repo homes. They pointed out current housing programs that enable many borrowers to get loans with zero down payments.
In many states, housing officials are providing financial assistance so borrowers can use the federal $8,000 tax credit to make their down payments and their closing costs.
The popularity of FHA loans exploded sharply since 2008, soaring by a staggering 314 percent nationwide. In the first two months of this year alone, 670,000 homebuyers took out FHA loans, compared to the 425,000 taken out in all the 12 months of 2007.
FHA officials expect to insure a total of 1.75 million of new loans in 2009, according to Meg Burns, head of the Office of Single Family Program Development at FHA.
Dennis Maag, a home lending regional vice president at JPMorgan Chase, said his mortgage firm has been carefully screening FHA loan applicants, putting its FHA default rate to only 0.4 percent.
Fifth Third has a 1.6-percent default rate and Huntington has a 2.4-percent default rate.
But FHA loan defaults in other mortgage banks are rising. Strategic Mortgage has a staggering 12.1-percent default rate nationwide while Countrywide Homes Loans holds a delinquency rate of 16.2 percent in Ohio.
To prevent another wave of government repo homes similar to what the subprime crisis caused, analysts said FHA must examine current FHA loan defaults and its loan insurance policies.
Despite signs that the real estate market is bottoming out, millions of homeowners are likely to find themselves in worse shape within the next two years.
In fact, here are a few numbers to think about.
Nearly half of the nation's 52 million mortgage borrowers will have negative equity by the end of the first quarter of 2011, up from the 14 million at the end of this year's first quarter, according to estimates in an Aug. 5 report by Deutsche Bank. With so many borrowers underwater – or owing more on their home than it's worth – the risk is high that they'll default and their homes will go into foreclosure, says Mark Zandi, the chief economist at Moody's Economy.com. (Moody's Economy.com estimates that 17.5 million mortgage borrowers will be underwater by early 2010.)
So what do you think is more realistic? A magical recovery during the largest recession since the Great Depression? Or... Lenders manipulating the public again?
-Christopher Rockey
The number of government repo homes is expected to increase further following the significant rise in the percentage of loans insured by the Federal Housing Administration in June, based on data released by the Mortgage Bankers Association.
Out of all home loans provided to homebuyers in June, FHA-insured home loans comprised 36 percent, the biggest FHA share of the home loan market since 1990.
In August 2005, FHA loans accounted for only 5.8 percent of the home loan market.
Analysts expect government repo homes to increase because of the rising trend in FHA loan default. Based on FHA data, the default rate increased to 5.65 percent in February this year, a substantial increase of nearly 23 percent from the default rate of 4.6 in October last year.
As of the last months of 2008, more than 4 percent of loans insured by FHA were delinquent by 90 days or more. These delinquencies increased the number of government repo homes.
Many housing analysts are worried that the factors that largely caused the current subprime mortgage crisis will also cause another crisis involving FHA loans and government repo homes. They pointed out current housing programs that enable many borrowers to get loans with zero down payments.
In many states, housing officials are providing financial assistance so borrowers can use the federal $8,000 tax credit to make their down payments and their closing costs.
The popularity of FHA loans exploded sharply since 2008, soaring by a staggering 314 percent nationwide. In the first two months of this year alone, 670,000 homebuyers took out FHA loans, compared to the 425,000 taken out in all the 12 months of 2007.
FHA officials expect to insure a total of 1.75 million of new loans in 2009, according to Meg Burns, head of the Office of Single Family Program Development at FHA.
Dennis Maag, a home lending regional vice president at JPMorgan Chase, said his mortgage firm has been carefully screening FHA loan applicants, putting its FHA default rate to only 0.4 percent.
Fifth Third has a 1.6-percent default rate and Huntington has a 2.4-percent default rate.
But FHA loan defaults in other mortgage banks are rising. Strategic Mortgage has a staggering 12.1-percent default rate nationwide while Countrywide Homes Loans holds a delinquency rate of 16.2 percent in Ohio.
To prevent another wave of government repo homes similar to what the subprime crisis caused, analysts said FHA must examine current FHA loan defaults and its loan insurance policies.
Despite signs that the real estate market is bottoming out, millions of homeowners are likely to find themselves in worse shape within the next two years.
In fact, here are a few numbers to think about.
Nearly half of the nation's 52 million mortgage borrowers will have negative equity by the end of the first quarter of 2011, up from the 14 million at the end of this year's first quarter, according to estimates in an Aug. 5 report by Deutsche Bank. With so many borrowers underwater – or owing more on their home than it's worth – the risk is high that they'll default and their homes will go into foreclosure, says Mark Zandi, the chief economist at Moody's Economy.com. (Moody's Economy.com estimates that 17.5 million mortgage borrowers will be underwater by early 2010.)
So what do you think is more realistic? A magical recovery during the largest recession since the Great Depression? Or... Lenders manipulating the public again?
-Christopher Rockey
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