Ally's mortgage arm files for Chapter 11

DETROIT - The U.S. government is hoping that Monday's bankruptcy filing by Ally Financial Inc.'s troubled mortgage business will help the company repay its government bailout faster.

Residential Capital LLC, or ResCap, filed for Chapter 11 bankruptcy protection in New York, unable to make payments on debt taken out to finance soured home mortgages. The filing will separate the money-losing ResCap subsidiary from Ally's auto-loan and banking businesses, allowing the latter businesses to grow and speed up repayment of Ally's bailout from 2008 and 2009, Ally said in a statement.

Ally also said Monday that it is exploring the possible sale of its international operations, a move that also should help strengthen its finances and make payments to the government. International businesses include auto loan, insurance and banking operations in Canada, Mexico, Europe, England and South America.

Ally, which is 74 percent owned by the U.S. government, was the financial arm of General Motors Co. until the banking industry meltdown in 2008. It needed a $17.2 billion bailout to survive the downturn. Ally has repaid about $5.5 billion and it still owes the government just under $12 billion. The government is hoping to get the rest of the money back through a public stock offering by Ally, or perhaps the sale of its remaining businesses.

When the bankruptcy and potential sale of international operations are finished, Ally expects to repay two-thirds of its bailout, or about $11 billion. The additional payments could come by year's end, the company said.

"We believe that this action puts taxpayers in a stronger position to continue recovering their investment in Ally Financial," Assistant Treasury Secretary Timothy Massad said in a statement. ResCap is a separate company, and the government does not hold any debt or equity in it, the government said. The ResCap board decided to seek bankruptcy protection on Sunday.

Ally's statement said that ResCap has reached agreements with its key creditors for a speedy bankruptcy. But Ally has to put up $150 million for bankruptcy financing and pay $750 million to ResCap to make the deal work. Ally also will make the first bid on up to $1.6 billion worth of troubled mortgages that will be auctioned. The agreements made before the filing have milestones for ResCap to come out of bankruptcy protection by the end of the year, Ally said.

ResCap also has agreements with big investors in mortgage-backed securities to support the bankruptcy reorganization, Ally said.

Ally makes loans to GM and Chrysler customers and finances dealer inventories. The government first bailed out the company, then known as GMAC Inc., in late 2008. Additional funding was provided in May and December 2009.

by Tom Krisher - May. 14, 2012 06:19 PM Associated Press




Ally's mortgage arm files for Chapter 11

Arizona's mortgage improvement fastest in U.S.

Delayed mortgage payments are decreasing faster in Arizona than in any other state, indicates a new report.

Arizona delinquencies on past-due home loans fell by one-fourth over the 12 months ending in March, reports credit-researcher TransUnion.

That gave Arizona the nation's best delinquency-improvement rate, though the percentage of past-due home loans here remains above the national average, TransUnion said Wednesday.

Arizona's mortgage-delinquency rate fell to 6.86 percent at the end of March, down from 9.14 percent one year earlier. The U.S. mortgage-delinquency rate also improved, falling to 5.78 percent at the end of March from 6.19 percent a year earlier. The new national rate is the lowest since the first quarter of 2009.

TransUnion defines delinquencies as the percentage of borrowers who are 60 or more days past due and extracts the information from individual credit reports, about 27 million in total.

Combined with other indicators such as rising home prices and declining personal bankruptcies, the delinquency report provides further evidence that the state's economic recovery is continuing.

For example, Phoenix home values rose 3.3 percent over the 12 months through February, the best performance among 20 large cities tracked by the Standard & Poor's/Case-Shiller housing index. Arizona State University reported a 20 percent year-over-year home-price increase through March.

Meanwhile, metro Phoenix and statewide bankruptcies have been falling for 15 straight months on a year-over-year basis. In April, for example, Valley filings were down 27 percent from April 2011.

Also, national consumer delinquencies on credit cards and 10 other loan categories tracked by the American Bankers Association fell across the board during the most recent quarter -- the first time that has happened in eight years.

"You can't get a better consumer-credit report card than this," said the ABA's chief economist, James Chessen, in a statement.

Nationally, mortgage delinquencies tracked by TransUnion have been trending lower for three years, though they increased moderately in the third and fourth quarters of 2011.

"While we are still about three times above the pre-recession norm, this should mark the start of consistent improvement each quarter," said Tim Martin, a group vice president focused on housing in TransUnion's financial-services unit.

Arizona's improvement largely reflects stable or rising home prices and a declining jobless rate, Martin said. The state also is coming down from a surge in bankruptcies.

"It's a very good story for Arizona," Martin said. "Arizona started from a high base and has been showing improvement, and we expect it will continue to show improvement through the end of the year."

The Arizona delinquency rate, which started 2007 at just 1.45 percent, rose almost continuously as the Great Recession worsened, peaking at 11.33 percent in the fourth quarter of 2009, before reversing course over the past couple of years.

TransUnion predicts mortgage delinquencies will continue to drift lower in 2012, as more homeowners are able to make payments. That forecast is based on assumptions about economic activity, consumer sentiment, unemployment rates, personal income, real-estate values and more. The forecast would change with unanticipated shocks to the economy or a renewed slide in housing prices, the company said.

As another positive, Martin cited low interest rates and rising refinancing activity, including through the federal Home Affordable Refinance Program, or HARP.

In addition to having the best mortgage-delinquency improvement rate, Arizona also has cut its housing debt notably. The average amount of mortgage debt here fell 3.3 percent to $196,300 over the past 12 months, said TransUnion. That was the second-largest debt decrease after a 6.2 percent decline in Nevada. Arizona's housing debt peaked at about $220,200 in the first quarter of 2009.

by Russ Wiles - May. 9, 2012 06:17 PM The Republic | azcentral.com




Arizona's mortgage improvement fastest in U.S.

Arizona lawmakers target mortgage settlement

Arizona lawmakers say they need $50 million from a mortgage settlement to pay for other pressing state needs, even as housing advocates say they may sue if the Legislature takes the funds.

Legislative leaders say their proposal for the fiscal 2013 budget will not deprive relief to victims of the foreclosure crisis: Those needs will be covered by $1.5 billion from the settlement fund, according to state budget staffers. Arizona posted the highest foreclosure rate in the nation in March, the most recent month for which statistics are available, with 9,497 foreclosures, according to RealtyTrac.

The $50 million will come out of an additional $97.7 million in settlement funds overseen by Arizona Attorney General Tom Horne's office. Horne's website says that money is to be used for "state foreclosure prevention programs, Attorney General Office costs and fees, and to remediate the effects of the foreclosure and housing crisis in Arizona."


The settlement language calls for the $97.7 million to be used, among other things, for housing counselors, legal aid, hotlines and to help stressed homeowners with their payments.

Lawmakers say the money amounts to a pricey outreach and education fund. It won't hurt to take half of it, House Speaker Andy Tobin said.

"We're using the funds to relieve the pressure on the budget," said Tobin, R-Paulden. Those stresses range from a push to replace welfare dollars lost to federal budget cuts to prison construction, he said.

Tobin disputed claims from housing advocates that the money would be used to build private prisons. The $50 million goes into the general fund and is not earmarked for a specific program, he said.

The budget includes $50 million over the next two years for 500 maximum-security beds, but those beds would be built and overseen by the state, not private contractors.

The Arizona Housing Alliance said it is considering a lawsuit to stop the fund transfer. The Homeowner Advocacy Unit at Arizona State University's Sandra Day O'Connor College of Law has joined in the effort to monitor the use of funds.

The housing alliance estimates that $50 million could provide 75,000 troubled homeowners with housing counseling and 10,000 homeowners with legal assistance.

Senate Majority Leader Andy Biggs, R-Gilbert, said many of the states benefiting from the mortgage settlement have put the dollars into their general funds.

by Mary Jo Pitzl - Apr. 30, 2012 09:28 PM The Republic | azcentral.com



Arizona lawmakers target mortgage settlement

Reagor: Lenders settlement spurs scams

Scams to try to cash in on the $25 billion settlement with the nation's largest lenders have already begun, and the deal was finalized just last month.

The Arizona attorney general is warning consumers to watch out for companies contacting them about the settlement. People who are eligible for part of the settlement will be contacted directly by one of the five major lenders involved -- BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo.

Arizona's portion of the settlement is $1.6 billion. About $1.3 billion of that amount will go toward principal reduction on mortgages and won't be cash paid directly to the state or consumers.

Only borrowers with loans owned by the five lenders involved are eligible for aid from the national settlement, and those lenders are responsible for contacting eligible homeowners in the coming month to offer assistance.

"Consumers should be aware that scammers are already using the media coverage of the settlement to exploit homeowners by promising quicker assistance in obtaining the refinancing, principal reduction or cash payments available to eligible consumers under the settlement," Arizona Attorney General Tom Horne said in the consumer alert issued earlier this week. He warns consumers to be wary of any unsolicited contact about the settlement.

Here are tips from the Attorney General's Office to help consumers eligible for the settlement avoid scams.

Beware of anyone calling and asking for your routing number, checking-account number or other financial information over the phone. Lenders will not do that.

You may receive legitimate mail from your servicer regarding the settlement if your mortgage loan is serviced by one of the lenders in the settlement. If you do receive a call or mail regarding the settlement, examine it closely to make sure it's the same entity handling your mortgage payments.

If you are unsure whether a caller is legitimate, ask for the person's name and title and say you are going to call your bank to confirm.

Here are numbers for the lenders involved in the settlement: Bank of America: 877-488-7814; JPMorgan Chase: 866-372-6901; Wells Fargo: 800-288-3212; CitiBank: 866-272-4749; GMAC/Ally: 800-766-4622.

Lenders also agreed to use part of the funds to reduce borrowers' interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.

The national settlement does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage holders.

Federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates, and the national average for a principal reduction is $20,000 per mortgage.

Horne said homeowners whose mortgage balances are 175 percent or more of their current home values and who are current on their payments probably will be the first to receive principal reductions.

by Catherine Reagor, columnist - Apr. 27, 2012 03:07 PM The Republic | azcentral.com




Reagor: Lenders settlement spurs scams

Borrower Behavior & Loan Stats Of Interest | The Basis Point

Here are some interesting borrower and loan stats that have caught my eye lately…

(1) Ellie Mae released a report using a sample of loan application data from its database for March compared to February 2012 and September and December 2011. (Ellie Mae States that there were two million loan applications processed through its systems in 2011.) In March, 61% of originations were for refinancing, about the same as three and six months previous but down from 67% in February. FHA-backed loans accounted for 28% versus 64% for conventional. A typical loan regardless of its purpose took 42 days to close in March, about the same as in February but down three to five days from December. The majority of loans that went through Ellie Mae were 30-year fixed-rate loans but 20% were 15 year and about 4% were ARMs.

(2) In a stat of great interest to secondary marketing folks, Ellie Mae calculated a “pull-through” rate for a sampling of loans for which applications had been submitted 90 days earlier. The pull through for March was 47%: 56% for purchases and 42% for refi’s. The average loan closed in March had a FICO score of 749, an LTV of 77% and a DTI of 23/35. (Loans that were denied had an average FICO of 699, 85% LTV, and a DTI of 27/43.)

(3) According to NAR, investors purchased 1.23m existing and new homes, an increase of 64.5% from 2010, and investment home sales comprised 27% of all activity, an increase of 17%. Nearly half of investor purchases were made in cash, and half were distressed homes. The regions that saw the most activity were the South (41%) and West (23%), while purchases in the Midwest and Northeast made up 17% and 15% of the total, respectively.

(4) A recent study conducted by TransUnion has revealed that, when faced with credit card, auto loan, and mortgage debt, the typical troubled borrower is most likely to let their mortgage payments slip. Four million indebted borrowers were surveyed and a mere 9.5% of those were delinquent on auto loans, while 17.3% were delinquent on credit card payments. Nearly 40% of the borrowers polled were behind on their mortgage, opting instead to pay auto and credit card loans.

(5) January saw more short sales close nationally than foreclosures for the first time, meaning that banks were agreeing to more deals. Short sales accounted for almost 24% of home purchases in January versus about 20% for sales of foreclosed homes. (In January 2011 it was 16 and 23%, respectively.) Depository banks were never designed to be landlords, hold real estate, or voluntarily swallow losses on thousands or millions of homes. But they can process short sales in less time and at significantly less cost than foreclosures, leading to fewer foreclosures on the market, leading to fewer distressed properties on the market.

by Rob chrisman TheBasisPoint.com Apr 24, 2012


Borrower Behavior & Loan Stats Of Interest | The Basis Point

US gov't proposes new mortgage lending rules

WASHINGTON - The federal government proposed new rules on Tuesday that will give homeowners more ways to avoid foreclosure and get an accurate accounting of their monthly mortgage payments.

Congress mandated changes in the rules covering the mortgage servicing industry in the wake of the 2008 financial crisis.

The Consumer Financial Protection Bureau's proposed rules would require mortgage servicers to give all borrowers standardized monthly statements and warn borrowers about interest rate or insurance change.

The mortgage servicers would also be required to make "good-faith efforts" to contact borrowers at risk of foreclosure and give them options to avoid losing their homes. There are also stipulations for improving record-keeping and providing foreclosure counseling to those who need it.

The agency said it will formally propose the rules this summer and finalize them by January 2013.

"By fixing these root causes of mortgage servicing problems -- and securing transparency and accountability for borrowers -- consumers would have clearer information about their options to keep their homes and would be in a better position to hold servicers accountable for their decisions," Richard Cordray, the agency's director, said during a speech in Washington on Tuesday.

The Consumer Financial Protection Bureau supervises U.S. payday lenders, mortgage companies and private student lenders. It also can write rules to supervise big lending companies and institute fines. Cordray said Tuesday the new rules would be backed up with "sharp teeth."

Nearly 8 million Americans have faced foreclosure since the housing bubble burst in late 2006. Many homeowners have said companies that process mortgages failed to verify information on foreclosure documents. The worst practices, known collectively as "robo-signing," included employees signing documents they hadn't read or using fake signatures to approve foreclosures.

In February, the nation's five largest mortgage lenders agreed to overhaul their mortgage servicing practices and pay $25 billion to U.S. states to help those who lost their homes or face foreclosure.

A mortgage servicer collects payments from the borrower on behalf of a loan's owner and typically handles customer service, escrow accounts, collections, loan modifications and foreclosures. Most borrowers do not choose their mortgage servicers. The owner of a loan frequently is not the original lender, even when the original lender is the servicer.

by DEREK KRAVITZ - Apr. 10, 2012 09:58 AM AP Economics Writer



US gov't proposes new mortgage lending rules

Principal forgiveness gains appeal

Fannie Mae and Freddie Mac could save $1.7 billion if they forgave principal on some distressed mortgages, new analysis show.

The Federal Housing Finance Agency-- which regulates the mortgage giants -- may decide in the next few weeks about whether to use principal forgiveness as a foreclosure prevention tactic, said Edward DeMarco, acting director of the FHFA while speaking Tuesday at the Brookings Institution.

The FHFA, and DeMarco, have come under pressure to allow Freddie and Fannie, which own or guarantee 60% of all home loans, to do principal forgiveness.

FHFA's previous analysis has shown that forgiving mortgage debt is no more effective than other loan modification efforts at reducing home loan defaults -- and could cost taxpayers more money since Freddie and Fannie were placed under government control in 2008.

But new incentives from the Treasury Department may change that, FHFA's preliminary assessment shows. With those, Freddie and Fannie could curb losses by $9.9 billion if almost 700,000 homeowners received a mortgage reduction, FHFA says. That's $1.7 billion more than if those homeowners received principal forbearance -- which means they defer payment on a portion of their loan.

DeMarco cautioned that any principal forgiveness would only help the U.S. housing crisis at the "margin," given that 11 million homeowners owe more on their homes than they're worth, based on CoreLogic estimates.

He also warned that some homeowners may stop paying their mortgages to try get a principal reduction. That could wipe out benefits to Freddie and Fannie. Also, Treasury incentives come from taxpayer funds so they'll still be "on the hook," says Anthony Sanders, real estate finance professor at George Mason University.

Principal reduction "is clearly getting more traction" as a foreclosure prevention tactic, says Laurie Goodman, senior managing director of Amherst Securities. The recent $25 billion mortgage settlement requires loan servicers to do at least $10 billion in principal reduction. That doesn't cover Freddie or Fannie loans.

Principal forgiveness supporters say it'll lead to fewer foreclosures and help stabilize housing prices. FHFA's new analysis -- and DeMarco's discussion of it -- signals that a change is likely, says Ira Rheingold of the National Association of Consumer Advocates.

DeMarco is "under enormous heat from the Obama administration" to do so, Rheingold says.

by Julie Schmit - Apr. 11, 2012 08:08 AM USA Today



Principal forgiveness gains appeal

The Impact of Rising Mortgage Rates

Mortgage rates will be starting to rise from this week on.  From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.  Usually the initial phase of rising rates can quicken the decision to sign on the dotted line as consumers do not want to face even higher mortgage rates later on.  However, a prolonged increase will shrink the pool of eligible home buyers.

Here are some raw statistics to contend with.  Let’s say a person is committed to paying at most $1,000 per month in principal and interest to be comfortably within this person’s budget.  A mortgage calculator will spit out that at a 3.9 percent rate (last week’s rate), this homebuyer will be able to take out $212,000 in mortgage amount.  At 4.5 percent (near future rate), the figure drops to $198,000, or the equivalent to a drop of 7 percent in purchasing power.  The homebuyer therefore has to shoot for lower price points.

Another way to view the impact of rising rates is to compute the income required to get the $212,000 in mortgage funds as in the above example.  At 3.9 percent, the income would have to be $4,000 per month, assuming that this particular person only feels comfortable with a mortgage payment taking up 25 percent of his or her income.  At 4.5 percent, the mortgage payment to buy that same home would be $1,074 per month and the corresponding monthly income requirement would be $4,296.  Now, how many people have a monthly income between $4,000 and $4,296 or on an annual basis between $48,000 and $51,552?  According to the Census income distribution table, 2.9 percent of the population is between these two incomes.  This income gap also represents how many people would have qualified to buy this particular example home before and after the mortgage rate change.

Simply put, if mortgage rates rise to around 4.5 percent in the upcoming weeks from the previous 3.9 percent, then home sales are expected to be impacted by 3 percent.  If the 30-year fixed mortgage rate rises to 5 percent then the impact is closer to 6 percent.

This illustration is what economists call a static analysis.  It assumes that other variables are not changing.  In the real world, the confluence of factors makes the data analysis less clean.  The 3 percent impact may not be meaningful if, say, job gains pick up steam or mortgage underwriting standards become less restrictive.  Then there are the cash buyers, making up about one-third of all buyers in the past year, who would care squat about rate changes. Still, it is worth keeping in mind that rising rates will put some drag on the broader housing market recovery.

 

by Lawrence Yun Chief Economist National Association of Realtors Mar 16, 2012

The Impact of Rising Mortgage Rates

US Mortgage Restrictions to Increase

The poor fiscal health of the Federal Housing Administration (FHA) is expected to make getting home loans even more difficult as the agency responds to increasing legal costs that stem from loan servicing claims and insuring banks against loan defaults. Prior to the $26 billion mortgage settlement between banks and the government, the FHA had applied for a $688 million loan from the U.S. Treasury to cover its rising expenditures. High-risk borrowers who turn to the FHA for loans are likely to find them as unwilling as banks to extend credit due to banks’ demands that the agency cover their losses. With both banks and the FHA raising lending restrictions, many would-be borrowers will be left with nowhere to turn for financing. For more on this continue reading the following article from TheStreet.

Getting a home loan is only going to be tougher, as banks tighten standards for Federal Housing Administration (FHA) loans amid rising legal claims.

Analysts at FBR Capital have long been worried that the FHA's poor fiscal health will lead it to deny insurance claims and file lawsuits over servicing and origination of FHA loans.

The FHA insures banks against defaults on loans and has seen its share of the mortgage origination market rise from 3% in 2005 to 24% in 2011 in the wake of the sub-prime crisis. But the high default rate during the crisis has drained its resources.

The latest budget plan found that the FHA might need as much as $688 million from the U.S. Treasury to bridge a shortfall in its reserves. That problem was quickly resolved by the recent $26-billion mortgage settlement between the nation's largest servicers and the 49 states.

Under the settlement, the five banks would have to inject $1 billion into the agency's capital reserves to settle claims related to servicing.

Still, not all legal concerns have been put to rest. Analyst Paul Miller notes that the settlement only covers servicing violations and not origination violations. He cites the example of Flagstar Bancorp(FBC) which recently entered into a settlement with the Justice Department for $133 million related to fraudulent FHA lending practices.

Bank of America(BAC) also entered into a $1 billion settlement with the Justice Department over allegations that the bank's Countrywide Unit knowingly made loans insured by the FHA to unqualified home buyers.

Recent fines also include Citi Mortgage, a subsidiary of Citigroup(C) agreed to pay $158 million to settle a civil complaint by the Manhattan attorney's office, accusing the company of routinely certifying that loans qualified for FHA when they did not.

According to FBR, the fines imposed on banks could be quite severe, in some cases trebling damages for violations of FHA's "highly complicated and technical" rules.

The recent Flagstar settlement might just be a one-off, but the analysts believe that the "damage to lender confidence" has already been done. "We believe that this settlement could result in lenders reexamining their risk with respect to FHA lending and tightening standards for the FHA product. Our major concern is that the tightening credit policies could lead to fewer borrowers being able to qualify for an FHA mortgage," the analysts wrote in a note Monday.

Recent government measures have aimed at providing relief to the troubled borrower, but as the Federal Reservefrequently notes, the credit conditions for those seeking a fresh mortgage are still too tight.

One reason is banks have pulled back from lending to borrowers with riskier profiles because of rising putback claims from Fannie Mae and Freddie Mac.

Now, higher risk borrowers who have so far managed to avail of FHA loans might now find that even this source of credit is drying up.

Currently, less than 25% of all loans being purchased by Fannie Mae have a credit score below 740. Over the past 10 years, borrowers with FICO scores between 620 and 660 have fallen from 12% to less than 2% of loans purchased, while roughly 75% of loans have a FICO score over 740, according to the report.

by Shanthi Bharatwaj NuWire Investor Mar 13, 2012

US Mortgage Restrictions to Increase

FHA to hike premiums on mortgages

NEW YORK (CNNMoney) -- In an effort to bolster its capital reserves, the Federal Housing Administration is planning to hike the insurance premiums it charges borrowers.

Beginning April 1, the agency, which is the largest insurer of low-down payment mortgages, will raise the up-front insurance premium it charges borrowers by 75 basis points to 1.75% of the base loan amount.

In addition, annual insurance premiums will go up 0.1 percentage point for loans under $625,500 and 0.35 points for loans that exceed that amount.

The agency said the hikes are necessary to replenish the agency's declining capital reserves, which fell below the level mandated by Congress back in 2009.
Further red flags were raised in November when the agency's annual report warned that if home prices continued to drop in the coming year, the agency's losses could exceed its reserves.

"After careful analysis of the market and the health of the [Mutual Mortgage Insurance] fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market," said acting FHA commissioner Carol Galante.

Why the Fed can't fix housing

Borrowers will be able to roll the higher up-front fees into their mortgage balance, which should help borrowers better afford the cost. Combined, the higher up-front fees and the 0.1 point premium increase are expected to add about $5 to the average monthly mortgage payment for FHA loans, according to the agency.

Even though those payouts may seem nominal, it's bad news for the housing market, said Jaret Seiberg, an analyst with the Washington Research Group. He said the hikes will discourage sales to first time homebuyers by making it more expensive to borrow thereby depriving sellers of potential buyers.

The impact of the increase, however, is less severe than it could have been because most of it is in the upfront fee, which is far less damaging than a boost in the premium, according to Seiberg. Builders will also suffer as FHA-insured loans remain an important source of financing for their buyers, he added.

By Les Christie @CNNMoney February 28, 2012: 8:13 AM ET


FHA to hike premiums on mortgages

California Mortgage Applicants Tops in the Nation With Highest Credit Scores | Mortgage News | Daily National and State Headlines

A study conducted by Mortgage Marvel has concluded that California mortgage applicants, for the second year in a row, have the highest average credit scores in the nation at 754—a full 24 points above the national average of 730. Mississippi mortgage applicants, again for the second year in a row, had the lowest average credit score of 686, 44 points below the national average. The information was compiled by analyzing more than 330,000 mortgage applications received in 2011 by clients of Mortgagebot, a D+H company. Mortgagebot is the owner of Mortgage Marvel and the provider of the PowerSite suite of integrated point-of-sale solutions.

Of the states with the highest average credit scores, four are in the West and five are in the Northeast. There was only one state in the top 10, Wisconsin, from another region (Midwest).

The Southeast occupied five of the 10 lowest credit score positions. Mississippi, for the second year in a row, had the nation's lowest average credit score.

by NationalMortgageProfessionals.com Feb 10, 2012

California Mortgage Applicants Tops in the Nation With Highest Credit Scores | Mortgage News | Daily National and State Headlines

Late Arizona mortgage loans may fall in 2012

A credit-tracking firm predicts mortgage delinquencies will fall more sharply in Arizona next year than in any other state.

Credit bureau TransUnion expects the proportion of past-due Arizona home loans will drop nearly in half by the end of 2012, albeit from high levels.

At the end of the third quarter of 2011, 7.46 percent of residential mortgages in Arizona were 60 or more days past due, the third-highest level among the states behind those of Florida (14.08 percent) and Nevada (12.39 percent).

TransUnion predicts 7.15 percent of Arizona loans will be delinquent at the end of 2011, falling to 3.84 percent by the end of 2012.

Arizona's credit-card delinquencies are expected to change minimally, rising from 0.72 percent currently to 0.78 percent by the end of 2011 before easing to 0.75 percent at year-end 2012.

TransUnion randomly samples 27 million consumer-credit records on an anonymous basis to evaluate trends.

Its findings are based on various economic assumptions, including gross state product, consumer sentiment, unemployment rates and real-estate values. The company said its forecasts would change in the event of unanticipated shocks to the economy or real-estate market.

The predicted improvement in Arizona mortgages reflects several factors, including an expected stabilization of housing prices and much more conservative underwriting standards on new loans, said Charlie Wise, director of research in one of TransUnion's business units.

He said a high proportion of troubled loans in Arizona has been charged off by lenders.

Nationally, TransUnion expects mortgage delinquencies to decline from about 6 percent at the end of 2011 to about 5 percent at year-end 2012.

Favorable factors could include rising credit quality on new mortgages, improving consumer confidence and gains in gross domestic product.

After Arizona, TransUnion expects the biggest mortgage-delinquency improvements to occur in Wisconsin and Colorado. All told, the company predicts delinquencies will fall in 38 states and rise in the other 12, plus the District of Columbia.

Nationally, credit-card delinquencies, accounts 90 or more days past due, are expected to ease from 0.74 percent at the end of 2011 to 0.69 percent at the end of 2012.

"In today's uncertain economy, consumers have found that credit cards are among their most-valued assets due to the flexibility they provide," Steve Chaouki, a TransUnion vice president, said in a statement. "As a result, consumers have made a concerted effort to make on-time payments and maintain relatively low balances."

National credit-card debt per borrower stands at $4,762, down roughly $1,000 from mid-2009, according to TransUnion.

by Russ Wiles The Arizona Republic Dec. 8, 2011 05:48 PM





Late Arizona mortgage loans may fall in 2012

Mortgage battle vs. bank gets new ally - USATODAY.com

Phoenix resident June Geffre has found an ally in her fight to stop the bank from taking her home.

How to seek help

The Homeowner Advocacy Unit will accept clients referred by the Arizona Foreclosure Prevention Task Force as well as those referred by other community organizations that work with distressed homeowners.

Homeowners with mortgage problems or facing foreclosure can contact the Arizona Foreclosure Prevention Task Force for assistance at 877-448-1211 or azforeclosureprevention.org.

Geffre, a 69-year-old widow who says Bank of America refused to honor a loan-modification agreement it had negotiated with her late husband, is being represented in court by a new homeowner-advocacy group at Arizona State University's Sandra Day O'Connor College of Law.

The ASU Homeowner Advocacy Unit, a student-faculty initiative launched in August under which law-college students litigate real cases, chose Geffre as its first client.

"This case is an example of why this clinic is so important," said Mary Ellen Natale, director of the unit. "The bank's conduct is egregious."

Under the guidance of faculty supervisor M. Robert Dauber, who is licensed to practice in Arizona, the unit filed a lawsuit Monday in Maricopa County Superior Court against BofA on Geffre's behalf. The complaint demanded that the Charlotte, N.C.-based lender cease its pending foreclosure, reinstate the loan-modification agreement and compensate Geffre for damages, including extreme emotional distress.

The Arizona Republic e-mailed a copy of the lawsuit to BofA early Tuesday at the request of a bank representative. The bank representative later said the company could not comment because of the pending litigation.


Law-school advocacy

The litigation program is one of two to be created by the ASU law school in the 2011-12 academic year in response to issues created by the region's housing-market meltdown.

The Phoenix area experienced a record 58,157 home foreclosures in 2010. Jim Belfiore, president of Belfiore Real Estate Consulting, said the area is on pace to have about 54,000 foreclosures by the end of the year and predicted about 38,000 foreclosures in 2012.

The Homeowner Advocacy Unit, which opened in August, allows students to litigate on behalf of clients who believe they have fallen victim to illegal mortgage-related activity.

The college's Foreclosure Mediation Unit, scheduled to open in the spring semester, will put students to work as impartial mediators assisting in the resolution of mortgage-related disputes.

Both programs are funded by a grant from the Arizona Attorney General's Office, ASU officials said.

Loan-modification dispute

According to Geffre's complaint, her late husband, Thomas Geffre, had been approved for a trial home-loan modification under the federal Home Affordable Modification Program in summer 2009.

In January 2010, BofA approved a permanent modification and mailed documents for Thomas Geffre to sign and return to the bank, the lawsuit said.
However, Thomas Geffre had died in November 2009 from complications of pancreatic cancer, the lawsuit said.

When June Geffre received the loan-modification forms in the mail, she said she signed them and mailed them to BofA, along with a copy of her husband's death certificate.

The lawsuit alleged that the lender refused to accept June Geffre's signature, saying that her late husband's signature was required for the permanent-modification agreement to become effective.

Geffre explained to BofA representatives on multiple occasions that her husband was dead and therefore unable to sign the documents and that she repeatedly sent copies of the death certificate as proof he had died, the lawsuit said.

Meanwhile, the lender continued to accept Geffre's modified-loan payments, the lawsuit said. The original monthly mortgage payments were roughly $1,200, Geffre said, and under the modification agreement, they had been lowered to about $800.

After accepting 18 payments at the modified amount, BofA rejected Geffre's July payment and told her she owed about $20,000 for incomplete payments and penalties, she said.

"They dropped the bombshell on me," Geffre said.

The bank initiated foreclosure proceedings in September, she said.

Bid to stop foreclosure

Along with the complaint, the ASU unit filed a motion Monday for a temporary restraining order to stop the foreclosure sale of Geffre's home, which had been scheduled for 10 a.m. Tuesday.

Judge John Rea granted the order, temporarily halting the sale. A preliminary hearing on Geffre's request for a permanent injunction against BofA is scheduled for Thursday morning, court documents show.

Natale, the advocacy unit's director, said Geffre's case is a perfect example of why the unit is needed.

"Here we have an elderly widow willing and able to make the agreed-upon payments, and the bank would rather take her home and render her homeless," Natale said. "It makes no sense, and it is just wrong."

Student attorneys are seeking to have the loan modification deemed valid and enforceable, have the foreclosure sale canceled and garner compensatory and punitive damages for Geffre.

Geffre is grateful for assistance.

"I'm just amazed at the help they are giving and what they're doing for me," she said.

By J. Craig Anderson The Arizona Republic Dec 7, 2011



Mortgage battle vs. bank gets new ally - USATODAY.com

Reagor: Revised program targets underwater homeowners

The housing market is confusing and difficult to navigate for most these days. One month prices are up, the next they are down. The same with foreclosures. In one metro Phoenix neighborhood, there are more short sales than regular sales. In another area less than a mile away, homes are selling for the asking price.

As a real-estate reporter for The Arizona Republic since 1996, I have been watching the market closely for a while. I have owned more than one home in the region. My stomach churns with other homeowners' when prices fall, and I am elated when I see even the slightest positive signs in the housing market. But it all has to be put into perspective.

Starting today, I'll be answering real-estate questions from you, often with the help of experts, at least once a month.

Question: When will the (expanded refinancing) program be available to homeowners? How do you know you are eligible? Also, are the banks being given any incentives to help homeowners who qualify for the program? Right now, it is next to impossible to get anyone from my bank on the phone to talk about my options. -- Carl S.

Answer: Since Monday's announcement by the Obama administration about the expansion of the Home Affordable Refinancing Program, I have heard from dozens of readers who want to know the same thing: Are they eligible?

Homeowners must have a mortgage backed by government-owned Fannie Mae and Freddie Mac. To determine if your mortgage is backed by Fannie or Freddie, call your mortgage servicer or go to makinghomeaffordable.gov, where you can look it up.

Homeowners must be underwater and not have missed more than one payment in the past year. Now, there aren't supposed to be any limits on how much more a homeowner owes on a house compared with what it's worth. This is known as the loan-to-value ratio. Previously, HARP capped the LTV at 125 percent, which is of little help to homeowners in metro Phoenix.

The federal government won't release all details of the program until December. But HUD and Treasury officials said this week that they would cut fees and work on other ways to get lenders to participate quickly. I will continue to follow the program and track its success or failure.

Q: How will I know when new-home prices have hit bottom? I have been looking for a new house in the Gilbert/Chandler area, and it looks like homes now cost half what they did a few years ago. -- Michelle in Tempe

A: Homebuilders are competing with foreclosure homes. They are trying to build and sell houses for the lowest prices they can and still eke out a profit. Housing analysts say it's a great time to buy a new home. In most cases, you don't have to compete with investors paying cash because they are buying foreclosure homes.

Also, the number of new foreclosures is slowing. That means fewer inexpensive homes on the market, which will stabilize prices. The number of homes listed for sale is down, so prices could climb again next year, even in the new-home market.

If you have the cash for a 10 to 20 percent down payment, interest rates are still at new record lows, making it a great time to get a mortgage if you have decent credit. But don't buy unless you plan on holding onto the house for at least a few years, housing advocates warn. No one really knows when the housing market will recover.

by Catherine Reagor The Arizona Republic Oct. 28, 2011 05:12 PM




Reagor: Revised program targets underwater homeowners

Arizona underwater homeowners to get refinance help

Jewel Samad/AFP/Getty Images President Barack Obama speaks on the economy and housing in a residential neighborhood in Las Vegas, Nevada.



More Arizona homeowners may soon be able to refinance to current low mortgage-interest rates, no matter how far underwater they are in their homes.

The Obama administration on Monday announced long-awaited details of an expansion of a program that helps homeowners refinance to reduce their payments.

Mortgage rates have fallen to record lows, and many homeowners would save hundreds of dollars a month if they could reduce the amount of interest they pay. But the housing crash has created a huge barrier.

A refinanced loan typically requires the home have enough value to cover the entire amount of the new loan. But plunging home values means many owners owe far more on their loans than their homes are worth. An estimated 40 percent of metro Phoenix homeowners are currently underwater.

The federal Home Affordable Refinancing Program has allowed certain loans to be refinanced if the borrower owed up to 125 percent of the home's value. But many underwater borrowers in Arizona owe more.

The plan announced Monday would lift the value requirement completely, allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.

Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.

Speaking on a temporary stage in a Las Vegas neighborhood, Obama touted the plan as a way to allow struggling homeowners to save money.

"Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago," he said. "And as long as this goes on, our recovery can't take off as quickly as it would after a normal recession."

The plan

The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.

The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply.

Among the key elements:

- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.

As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.

The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.

Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.

"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."

The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009.

Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.

"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."

- Refinancing will be available to homeowners who are current on their mortgage payments.

To qualify, homeowners must not have missed more than one payment in the past year.

The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.

Instead, the refinancing is open to borrowers who have made their payments.

Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.

- Refinancing will be available no matter how much the home is currently worth.

The loan simply must be backed by Fannie or Freddie and be within standard sizes - for example, oversize "jumbo" loans will not qualify.

Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.

The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.

"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."

- Refinancing will cost less.

The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.

Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program.

He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."

The doubts

Housing advocates point to past programs that have garnered bad reputations.

The Housing Affordable Modification Program, HAMP, was announced in conjunction with the original refinancing program two years ago.

Tens of thousands of homeowners in Arizona alone were promised loan modifications and put in trial programs. These borrowers made the trial payments for more than a year in some cases only later to be denied a permanent modification.

Overall, the federal housing plan called for helping 7 million to 9 million homeowners. Fewer than 2.5 million have been helped with all of the plan's programs.

Phoenix real-estate agent Kevin Kaufman is skeptical of the new plan.

"I'm honestly very, very pessimistic about any government program actually helping people," he said. "Having been in the trenches for four years now and seen so many empty promises. I don't believe the government will actually help."

Too late?

When Obama unveiled federal efforts to stem foreclosures two years ago, he traveled to Mesa to make the announcement. At the time, foreclosures were surging.

Today, foreclosures have been steadily slowing in metro Phoenix. So the latest move has been criticized as coming too late.

Also, many market observers note that for many homeowners, the real problem is not just their monthly payment but the fact that they will still owe so much more than their houses are worth, making them unable to sell or move.

The Obama administration is hinting about more aid for people who have lost homes to foreclosure and neighborhoods with many empty foreclosure homes.

But this expansion of HARP does help the homeowners who continued to pay as others walked away.

Tom Schroder was turned down for a refinance last year because he owes at least 40 percent more than his Scottsdale home is worth. He said he is angry because he feels like he's being penalized for other people's foreclosures and bad decisions.

"I keep paying my mortgage on time and watching others buy homes at 5 or now even 4 percent (interest rates)," he said. "The changes to the refinancing program sound good. I just want to see some action on it from lenders and fast."

Patricia Garcia Duarte, president of the Phoenix-based non-profit homeownership counseling service Neighborhood Housing Services, said the new refinancing plan rewards homeowners with good credit who have not missed many payments.

"Owing more on a property than it is worth is still problematic for many in Arizona," she said. "Revamping HARP is a good thing, not the entire solution."

by Catherine Reagor The Arizona Republic Oct. 25, 2011 12:00 AM




Arizona underwater homeowners to get refinance help