MetLife Inc., the nation’s largest insurer, announced Tuesday it is getting out of the mortgage-origination business and that it will no longer be accepting new mortgage applications as it prepares to shutter its residential mortgage unit. However, the company says MetLife Home Loans will continue to offer reverse mortgages as well as service its current mortgage customers.
For any loan applications already in the pipeline, the company said it will continue to process those loans and expects most of the loans to close within 90 days.
In October, MetLife had said that excessive regulations in the banking industry was prompting the company to get out of the mortgage business. Last month, General Electric agreed to buy MetLife Bank for about $7.5 billion. However, MetLife was unable to find a buyer for its mortgage business.
The closing of the company’s home mortgage origination business is expected to cost MetLife at least $90 million, and 4,300 employees are expected to lose their jobs.
In 2010, MetLife was the 13 largest mortgage originator in the nation, issuing more than $22 billion in home loans.
Source: MetLife and “MetLife Exits Forward Mortgage Business,” HousingWire (Jan. 10, 2012)
Wednesday, January 11, 2012
Mortgage Applications Soar 4.5%
Mortgage applications for purchase -- a gauge of future home buying -- increased 8.1 percent last week, the Mortgage Bankers Association reports. The purchase index on an unadjusted basis now stands at 41.9 percent higher than last year, signaling more people taking out loans to buy homes.
More home owners are also taking advantage of low interest rates. Refinance activity last week also increased, inching up 3.3 percent from a week earlier. Overall, mortgage applications were up 4.5 percent last week.
For the fifth consecutive week, 30-year fixed-rate mortgages have averaged at historical lows below 4 percent, Freddie Mac reported last week. For the week ending Jan. 5, 30-year fixed-rate mortgages averaged 3.91 percent, with an average 0.8 point, matching the previous record low set a few weeks ago.
Source: “Mortgage Applications Rise 4.5%,” HousingWire (Jan. 11, 2012)
More home owners are also taking advantage of low interest rates. Refinance activity last week also increased, inching up 3.3 percent from a week earlier. Overall, mortgage applications were up 4.5 percent last week.
For the fifth consecutive week, 30-year fixed-rate mortgages have averaged at historical lows below 4 percent, Freddie Mac reported last week. For the week ending Jan. 5, 30-year fixed-rate mortgages averaged 3.91 percent, with an average 0.8 point, matching the previous record low set a few weeks ago.
Source: “Mortgage Applications Rise 4.5%,” HousingWire (Jan. 11, 2012)
Banks Face Scrutiny Over Home Insurance Steering
The New York State’s Department of Financial Services is investigating several big banks to determine if they illegally steered distressed home owners toward overpriced insurance policies, The New York Times reports.
The agency has found cases where large banks have steered distressed home owners into insurance policies “up to 10 times as costly as the home owners’ original plans,” The New York Times reports. For example, in one case, the agency found that a home owner was paying $2,000 a year to State Farm but then saw an increase to $6,000 a year when switching to a new insurer.
The agency is also investigating whether the banks showed conflicts of interest in offering customers home insurance policies that may have been affiliated with the banks rather than shopping for the best rate in the open market.
“In general, mortgage servicers are allowed to take out insurance policies on homes after a home owner allows existing coverage to lapse,” The New York Times' article explains. “Though home owners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.”
JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are among the major banks named in the investigation.
Source: “Big Banks Face Inquiry over Home Insurance,” The New York Times (Jan. 10, 2012)
The agency has found cases where large banks have steered distressed home owners into insurance policies “up to 10 times as costly as the home owners’ original plans,” The New York Times reports. For example, in one case, the agency found that a home owner was paying $2,000 a year to State Farm but then saw an increase to $6,000 a year when switching to a new insurer.
The agency is also investigating whether the banks showed conflicts of interest in offering customers home insurance policies that may have been affiliated with the banks rather than shopping for the best rate in the open market.
“In general, mortgage servicers are allowed to take out insurance policies on homes after a home owner allows existing coverage to lapse,” The New York Times' article explains. “Though home owners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.”
JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are among the major banks named in the investigation.
Source: “Big Banks Face Inquiry over Home Insurance,” The New York Times (Jan. 10, 2012)
Home Affordability Offering Up 40-Year Deals
Home affordability is at 1971 levels, due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD).
Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.
"With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.
Home sales have been ticking up, according to recent reports by the National Association of REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.
However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.
Source: “Home Affordability Reaches 1971 Level,” HousingPredictor (Jan. 11, 2012
Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.
"With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.
Home sales have been ticking up, according to recent reports by the National Association of REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.
However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.
Source: “Home Affordability Reaches 1971 Level,” HousingPredictor (Jan. 11, 2012
Justice Department Issues Report in Support of Foreclosure Mediation
The U.S. Department of Justice released a 69-page report Tuesday on a foreclosure intervention method that is becoming increasingly popular across the country – mediation.
The paper, titled Foreclosure Mediation: Emerging Research and Evaluation Practices, draws from a March 7, 2011 workshop put on by the Justice Department’s Access to Justice Initiative, a panel established in 2010 which works to ensure the U.S. justice system remains accessible and fair to all, irrespective of wealth and status.
The workshop was attended by dozens of foreclosure mediation program stakeholders and researchers. Tuesday’s report summarizes the workshop proceedings and shares recent research and resources for foreclosure mediation.
“The loss of a home to foreclosure can be devastating to a family,” said Mark Childress, who heads the Access to Justice Initiative as senior counselor.
“The report released today compiles the best available research on foreclosure mediation programs and serves as an important resource for existing programs around the
country as well as for jurisdictions attempting to establish foreclosure mediation programs,” Childress said. “Well-structured foreclosure mediation programs may offer the millions of families at risk of foreclosure a way to stay in their homes.”
Foreclosure mediation programs are viewed by policymakers and consumer advocates as a means to bring borrowers and their lenders together to work out an alternative to foreclosure. But some industry participants contend that mandated mediation programs only delay the inevitable.
Florida’s Supreme Court terminated its state-wide mediation program last month, citing the program’s lack of success in resolving foreclosure disputes between lenders and borrowers. The court-run mediation program had been operational for two years, but the Supreme Court said after reviewing the files, it “determined it cannot justify continuation of the program.”
As the Justice Department suggests, there has not been a lot of research or analysis conducted to assess the effectiveness of foreclosure mediation. Officials say the department’s March 2011 workshop was designed to define best practices for evaluating foreclosure mediation programs and to strengthen relationships among program administrators, the lending community, and government agencies.
One of the key findings that emerged from the workshop is that the “federal government should take an active role, both in helping to develop program and evaluation guidelines and in providing resources for mediation programs and research,” according to DOJ officials.
The full report, Foreclosure Mediation: Emerging Research and Evaluation Practices, is available for download at justice.gov/atj/foreclosure-mediation.pdf.
The paper, titled Foreclosure Mediation: Emerging Research and Evaluation Practices, draws from a March 7, 2011 workshop put on by the Justice Department’s Access to Justice Initiative, a panel established in 2010 which works to ensure the U.S. justice system remains accessible and fair to all, irrespective of wealth and status.
The workshop was attended by dozens of foreclosure mediation program stakeholders and researchers. Tuesday’s report summarizes the workshop proceedings and shares recent research and resources for foreclosure mediation.
“The loss of a home to foreclosure can be devastating to a family,” said Mark Childress, who heads the Access to Justice Initiative as senior counselor.
“The report released today compiles the best available research on foreclosure mediation programs and serves as an important resource for existing programs around the
country as well as for jurisdictions attempting to establish foreclosure mediation programs,” Childress said. “Well-structured foreclosure mediation programs may offer the millions of families at risk of foreclosure a way to stay in their homes.”
Foreclosure mediation programs are viewed by policymakers and consumer advocates as a means to bring borrowers and their lenders together to work out an alternative to foreclosure. But some industry participants contend that mandated mediation programs only delay the inevitable.
Florida’s Supreme Court terminated its state-wide mediation program last month, citing the program’s lack of success in resolving foreclosure disputes between lenders and borrowers. The court-run mediation program had been operational for two years, but the Supreme Court said after reviewing the files, it “determined it cannot justify continuation of the program.”
As the Justice Department suggests, there has not been a lot of research or analysis conducted to assess the effectiveness of foreclosure mediation. Officials say the department’s March 2011 workshop was designed to define best practices for evaluating foreclosure mediation programs and to strengthen relationships among program administrators, the lending community, and government agencies.
One of the key findings that emerged from the workshop is that the “federal government should take an active role, both in helping to develop program and evaluation guidelines and in providing resources for mediation programs and research,” according to DOJ officials.
The full report, Foreclosure Mediation: Emerging Research and Evaluation Practices, is available for download at justice.gov/atj/foreclosure-mediation.pdf.
Suspected Mortgage Fraud Continues to Rise, But at Slower Pace
Suspicious activity reports (SARs) involving fraud across the financial industry rose from 1.32 million in fiscal 2010 to 1.45 million in fiscal 2011, according to the latest annual report from the Financial Crimes Enforcement Network (FinCEN), based in Vienna, Virginia.
The mortgage industry is in keeping with this trend, though the pace of increase has been slowing over the past few years, according to FinCEN.
FinCEN reported in June that mortgage fraud SARs had risen 31 percent from the first quarter of 2010 to the first
quarter of 2011. However, 86 percent of these reports concerned actions that took place more than two years prior.
FinCEN says this trend is the result of mortgage lenders reviewing loans on which they received repurchase demands.
Mortgage SARs in the second quarter of 2011 were also higher than their year-ago levels, having risen from 15,727 to 29,558.
FinCEN reported the most common types of suspicious activity reported included misrepresentations of income, occupancy, and debts and assets.
Debt elimination scams and fraudulent use of Social Security numbers were also common.
Mortgage SARs reports have also increasingly referenced bankruptcy, according to FinCEN.
Commercial real estate SARs have been on the rise, having nearly tripled between 2007 and 2010.
“Analysis of SARs shows that non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings,” stated the FinCEN report.
The mortgage industry is in keeping with this trend, though the pace of increase has been slowing over the past few years, according to FinCEN.
FinCEN reported in June that mortgage fraud SARs had risen 31 percent from the first quarter of 2010 to the first
quarter of 2011. However, 86 percent of these reports concerned actions that took place more than two years prior.
FinCEN says this trend is the result of mortgage lenders reviewing loans on which they received repurchase demands.
Mortgage SARs in the second quarter of 2011 were also higher than their year-ago levels, having risen from 15,727 to 29,558.
FinCEN reported the most common types of suspicious activity reported included misrepresentations of income, occupancy, and debts and assets.
Debt elimination scams and fraudulent use of Social Security numbers were also common.
Mortgage SARs reports have also increasingly referenced bankruptcy, according to FinCEN.
Commercial real estate SARs have been on the rise, having nearly tripled between 2007 and 2010.
“Analysis of SARs shows that non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings,” stated the FinCEN report.
Loan Mods and Delinquencies Rise in November: HOPE NOW
The number of mortgage modifications completed during the month of November rose 5 percent from October, bringing the year-to-date total to about 969,000, according to HOPE NOW, a voluntary private sector alliance of mortgage industry participants.
Proprietary modifications continue to outpace modifications completed through the government’s Home Affordable Modification Program (HAMP). Of the nearly 84,000 modifications completed in November, 57,000 were proprietary while 26,877 were completed through HAMP.
Of the 5.13 million modifications that have been completed since 2007 when HOPE NOW began reporting data, 4.22 have been proprietary and a little more than 900,000 were completed through HAMP.
While completed modifications rose from October to November, 60-plus day delinquencies also increased. After reporting 2.65 million 60-plus day delinquencies in October, HOPE NOW reported 2.77 million in November.
Foreclosure starts, on the other hand, declined in November from 209,000 to 166,000.
Completed foreclosure sales rose from 64,000 in October to 71,000 in November.
About 68 percent of proprietary modifications completed in November reduced principal and interest payments for borrowers, and about 66 percent lowered principal and interest payments by at least 10 percent.
About 83 percent of proprietary modifications were fixed-rate modifications with an initial fixed period of at least five years.
“There are more alternatives to foreclosure than ever before for homeowners through federal programs, proprietary modifications, and state level initiatives such as Hardest Hit Funds,” said Faith Schwartz, executive director of HOPE Now.
“Mortgage servicers and non-profit, housing counselors are using all tools at their disposal to find options that fit each individual homeowner’s situation whenever possible,” Schwartz said.
According to Schwartz, the industry continues to emphasize “improving the customer experience through enhanced technology, single point of contact and leveraging all tools available to assist with foreclosure prevention, which in some cases includes graceful exits.”
HOPE NOW plans to host homeowner outreach events in several cities in the first quarter of 2011, including: Charlotte, North Carolina; Miami and Tampa, Florida; Las Vegas, Nevada; and Sacramento and Los Angeles, California.
Proprietary modifications continue to outpace modifications completed through the government’s Home Affordable Modification Program (HAMP). Of the nearly 84,000 modifications completed in November, 57,000 were proprietary while 26,877 were completed through HAMP.
Of the 5.13 million modifications that have been completed since 2007 when HOPE NOW began reporting data, 4.22 have been proprietary and a little more than 900,000 were completed through HAMP.
While completed modifications rose from October to November, 60-plus day delinquencies also increased. After reporting 2.65 million 60-plus day delinquencies in October, HOPE NOW reported 2.77 million in November.
Foreclosure starts, on the other hand, declined in November from 209,000 to 166,000.
Completed foreclosure sales rose from 64,000 in October to 71,000 in November.
About 68 percent of proprietary modifications completed in November reduced principal and interest payments for borrowers, and about 66 percent lowered principal and interest payments by at least 10 percent.
About 83 percent of proprietary modifications were fixed-rate modifications with an initial fixed period of at least five years.
“There are more alternatives to foreclosure than ever before for homeowners through federal programs, proprietary modifications, and state level initiatives such as Hardest Hit Funds,” said Faith Schwartz, executive director of HOPE Now.
“Mortgage servicers and non-profit, housing counselors are using all tools at their disposal to find options that fit each individual homeowner’s situation whenever possible,” Schwartz said.
According to Schwartz, the industry continues to emphasize “improving the customer experience through enhanced technology, single point of contact and leveraging all tools available to assist with foreclosure prevention, which in some cases includes graceful exits.”
HOPE NOW plans to host homeowner outreach events in several cities in the first quarter of 2011, including: Charlotte, North Carolina; Miami and Tampa, Florida; Las Vegas, Nevada; and Sacramento and Los Angeles, California.
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