Wednesday, September 29, 2010

Monday Morning Cup of Coffee

by JON PRIOR

A look at stories across HousingWire’s weekend desk…with more coverage to come on bigger issues:

Sales of distressed properties will peak in 2011 at 2.3 million transactions before falling to more normal levels at 850,000 in 2016, according to a report from John Burns Real Estate Consulting.

Because lenders are transferring more of the shadow inventory of foreclosed and defaulted mortgages into real property ready for the market, analysts at John Burns estimate these properties will account for more than 40% of the all resale activity through 2012.

Many market analysts have predicted home sales and prices to trend downward again without the homebuyer tax credit. How fast and deep the market falls depends on how financial institutions manage the flow of these foreclosed and REO homes onto the market.

According to John Burns, a typical market shoulders 6% to 7% of distressed sales taking up the resale market. "We are closely tracking an increase in REO activity this year, which will result in a peak for distressed sales next year. This forecast significantly impacts our belief that prices will fall 8% to 11% (depending on the index) through 2012," according to the report.

California Attorney General Jerry Brown ordered Ally Financial, formerly GMAC Mortgage, to suspend foreclosures in the state until it can prove it is in compliance with state law.

Last week, GMAC suspended evictions on foreclosure cases where faulty affidavits were detected. The suspension came across 23 states including New York, Illinois and Florida. GMAC did admit however that some personnel were signing foreclosure documents without knowledge of what was in them and without a notary signature.

Moody's, on Friday, put the GMAC servicer rating up for review.

Lenders cannot file a notice of default in California on mortgages originated between Jan. 1, 2003 and Dec. 31, 2007 without first reaching out to the borrower with a loan modification offer.

"Prior to resuming foreclosures here, the company must prove that it's following the letter of the law," Brown said.

In the second quarter, 87.3% of active mortgages were current and performing, down from 88.6% a year ago, according to a mortgage metrics report released by the Office of the Comptroller of the Currency and the Office of Thrift Supervision on Friday.

The OCC and the OTS monitor 34 million mortgages, representing 65% of the mortgages on the market.

More than a 1 million mortgages were delinquent in the second quarter, up 10.6% from the previous quarter but 3.7% less than a year ago. Meanwhile, lenders initiated more than 292,000 new foreclosures in the second quarter, the lowest number in the previous five quarters.

Dubai Islamic Bank, the largest lender in the United Arab Emirates, took a 57.33% stake in the troubled mortgage-lender Tamweel Sunday, up from 21%, according to a Dubai government statement.

It is a move to improve property lending in the region and will allow Tamweel to resume providing credit as a subsidiary under DIB.

"This strategic move is the culmination of intensive efforts over the past few months to resolve the stalemate at Tamweel that will allow the company to resume its core activity of providing mortgages and real estate financing," according to the Dubai government.

In May, Bank of America Merrill Lynch analysts said prime property in Dubai reached a floor after dropping as much as 45%.

There were two bank closings over the weekend, totaling 128 for the year. The Federal Deposit Insurance Corp. estimated a total $104.7 million cost to the Deposit Insurance Fund.

The Florida Office of Financial Regulation closed Haven Trust Bank in Florida. First Southern Bank in Boca Raton agreed to assume all $133.6 million in deposits and to purchase essentially all $148.6 million in assets.

The FDIC estimates the closing to cost $31.9 million to the DIF.

The Washington Department of Financial Institutions closed North County Bank, and Whidbey Island Bank agreed to assume all $276.1 million in assets and purchase essentially all $288.8 million in assets.

The FDIC estimates the closing to cost the DIF $72.8 million.


URL to Original Article: http://www.housingwire.com/2010/09/27/monday-morning-cup-of-coffee-66

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