Mortgage news

News, trends and analysis of the mortgage and credit market

Thursday, December 27, 2007

US Mortgage Applications Sink to Year Low




December 27 2007 CNBC.com

U.S. mortgage applications sank last week to the lowest level since the end of last year despite falling borrowing costs, an industry trade group said Thursday. The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 7.6 percent in the week ending Dec. 21 to 603.8, its lowest reading since falling to 575.6 in the Dec. 29, 2006 week. The MBA's weekly indexes have been exaggerated on the high side much of the year. Borrowers facing stricter loan standards often apply numerous times in search of getting one request approved. The applications slump this week and last, however, appears to more closely reflect the status of ailing housing sales.
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Tuesday, December 25, 2007

Ameriquest mortgage to pay $18M to N.Y subprime victims




December 25 2007 NYorkDailyNews.com
Nearly 14,000 New Yorkers stung by a predatory mortgage company will share in an $18 million restitution fund this holiday season, state authorities said Monday. Ameriquest Mortgage Co. and its subsidiaries will pay the money as part of a nationwide $325million settlement for illegal lending practices. The money is being distributed to 13,686 homeowners - who will get an average of $1,315 apiece - in New York who did business with Ameriquest and "suffered harm as a result," state officials said.
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Sunday, December 23, 2007

2008 housing outlook: deeper home price slump




December 21 Money.CNN.com
The United States is deep in its worst housing slump since the Great Depression, and according to a new report, it's not going to get better any time soon. The forecast is for a longer, deeper home-price slump than previously expected, with double-digit declines in many markets. In a new survey, Moody's Economy.com says many metro areas will record losses of 20 percent or more during the downturn, with the national median price for single-family homes dropping 13 percent through early 2009. Factoring in discount offers from sellers, the actual price decline would be well over 15 percent. Eighty of the 381 metro areas covered by the report will record double-digit losses, according to the report. Most of the worst-hit markets are in once high-flying areas, such as California and Florida.
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Merrill Lynch may get $5 billion Temasek injection




December 21 MarketWatch.com

Merrill Lynch & Co is in advanced talks to receive a $5 billion cash infusion from Singapore's state investment company Temasek Holdings Ltd., becoming the latest among a number of blue-chip Wall Street and European financial institutions to receive funding from Asian or Middle Eastern government funds in the wake of the ongoing turmoil in structured credit markets, according to a media report Friday.
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Saturday, December 15, 2007

Fed to crack down on shady lenders



December 15 2007 Money.CNN.com
Central bank will propose rules on Tuesday to protect mortgage borrowers from banks and brokers. People taking out home mortgages may gain new protections soon against shady lending practices as the Federal Reserve seeks to back even the riskiest borrowers, already hit hardest by the housing and credit crunches. Rules expected to be proposed Tuesday would apply to loans made by all types of lenders, including banks and brokers. The plan from the Fed, which has regulatory powers over the nation's financial system, could be finalized next year. The effective date would be know then.
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Friday, December 14, 2007

Moody downgrades Citigroup's Rating




December 14 2007 CNBC.com
Moody's lowered Citigroup's rating to "Aa3," saying it doubted that the U.S. bank could rebuild its capital ratios any time soon, and said Citi's failure to restore its capital ratios in the medium term could lead to a further downgrade. Citigroup said it will provide emergency support to seven structured investment vehicles if they can't find buyers for their short-term notes. The move is being seen as a body blow for a rescue fund that several large banks have been working to develop at the urging of the Treasury Department.
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Wednesday, December 12, 2007

US central banks take steps to help credit markets




December 12 2007 MarketWatch.com
The Federal Reserve announced plans Wednesday to ease elevated pressures in mortgage markets. The Fed will inject cash into the markets through auction of short-term funds. The Fed also announced foreign exchange swap lines with the European Central Bank and the Swiss National Bank. The Bank of Canada is also a partner in the liquidity plan. The first auction will be held on Monday Dec. 17.
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Tuesday, December 11, 2007

Fed Trims Rates 1/4 Point, Disappointing Investors




December 11 2007 CNBC.com
The Federal Reserve cut benchmark U.S. interest rates by a modest quarter-percentage point on Tuesday to help the U.S. economy withstand tightened credit and a prolonged housing slump, disappointing Wall Street, which had hoped for more-aggressive action. The central bank's decision takes the bellwether federal funds rate, which governs overnight lending between banks, down to 4.25percent. While the action was widely expected, some economists had thought the Fed might offer a bolder half-point reduction in the rate.
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Monday, December 10, 2007

Bank of America halts fund's redemptions




December 10 2007 Money.CNN.com
Problems in the credit market seem to have infected an institutional money market fund run by Bank of America’s (BAC) Columbia Management. Money market observer Crane Data reports that Columbia Funds Strategic Cash has halted redemptions after the fund’s assets fell to $33 billion from $40 billion after a run of redemptions. Crane says the fund in question is an enhanced cash pool available to only the largest qualified institutional investors. Bank of America previously pumped $300 million into the fund.
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Saturday, December 8, 2007

American Mortgage seeks options after losses




December 8 2007 Reuters.com
American Mortgage Acceptance Co said it was exploring strategic options after the real estate investment trust liquidated certain investments to meet margin calls, sending its stock down more than 40 percent in after-hours trading. American Mortgage said it sold its Fannie Mae and Ginnie Mae debt securities and may need to sell additional assets to maintain liquidity. The company, which originates and buys mortgage loans and other debt instruments usually secured by U.S. multifamily and commercial properties, said its board also decided not to declare its regular fourth-quarter dividend to common shareholders.
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Friday, December 7, 2007

Mortgage lenders stocks rebound as refinancings increased




December 7 2007 Reuters.com
Shares in U.S. mortgage lenders rebounded for a second day as the pace of residential refinancings increased and on optimism that some struggling lenders may find buyers. Shares of Fremont General Corp. rose $1.75, or 25.8 percent, to $8.53 amid hopes the subprime lender, one of the nation's largest, is close to selling its Fremont Investment & Loan subprime unit. New Century Financial Corp. closed up 14 cents at $5.16 but is still 64.8 percent below its Friday close. Shares of NovaStar Financial Inc. another subprime lender, rose 56 cents to $5.09, but are 29.7 percent below Friday's close. Countrywide Financial Corp., the largest mortgage lender, up 15 cents to $37.00; Impac Mortgage Holdings Inc.up 88 cents to $5.75, and IndyMac Bancorp Inc., up $1.52 to $31.18.
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Thursday, December 6, 2007

Home equity dips; falling home prices a factor




December 6 2007 Money.CNN.com
Federal Reserve reports that owners' home equity drops to barely above 50 percent, falling home prices are a factor. The amount of equity homeowners hold in their homes slipped in the third quarter to just above 50 percent, according to a report from the Federal Reserve Thursday. Home equity has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing. This decline could curb retail spending as homeowners stop tapping home equity and, instead, save money.
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Treasurys fall as hopes of mortgage fix lift stocks




December 6 2007 MarketWatch.com
Treasurys fell Thursday, sending yields higher as the Bush administration's plan to help homeowners with subprime mortgages helped lift stocks and removed safe-haven flows in government bonds. President Bush and Treasury Secretary Henry Paulson announced a plan to help struggling homeowners avoid losing their properties, including a temporary freeze on low, introductory mortgage
-interest rates that would otherwise jump higher in the next few years. Hopes that the plan will help cushion the ailing U.S. economy and ease a credit crisis linked to bad home loans helped lift the Dow Jones Industrial Average.
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Bush subprime plan offers help to 1.2M




December 6 2007 Money.CNN.com
Mortgage interest rates will be frozen only for ARM borrowers who are not yet in foreclosure. The Bush administration unveiled a foreclosure relief plan Thursday that the White House said could help 1.2 million distressed homeowners. But the freeze is limited. It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months. It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates.
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Stocks Rally on Data, Mortgage News




December 5 2007 BusinessWeek.com
Encouraging reports on labor and productivity, and word of a plan to aid distressed U.S. homeowners, lifted equities Wednesday. Major U.S. stock indexes closed broadly higher Wednesday, supported by favorable economic data, continuing hopes for lower interest rates, and a report that the Bush administration has worked out a program to help out certain subprime mortgage holders. According to a report on the Wall Street Journal website, the Bush administration is expected to announce Thursday an agreement with the mortgage industry to freeze interest rates for certain subprime mortgages for five years.
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More Housing Price Drops, even Google falling




December 5 MarketWatch.com

PIMCO's Bill Gross is still one of the top bond fund managers in the U.S., if not the world. Homeowners by the hundreds of thousands, to be sure, but also those that created, packaged, insured, distributed, and ultimately bought what should have been labeled "junk mortgages," but which by a masterstroke of marketing genius were given a more respectable imprimatur. Defaults are rising, the dollar’s sinking, and good Lord—even Google’s stock price is going down. Something must really be wrong here.
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Wall Street slips amid economic concerns about mortgage market meltdown




December 4 2007 CNBC.com
Wall Street wilted Tuesday as investors awaiting next week's Federal Reserve meeting remained uneasy that fallout from the slumping housing market could bring more bank losses and pull the economy into recession. Meanwhile, JPMorgan downgraded major securities firms, warning that while further write-offs of bad mortgage debt might help the firms' stocks, longer-term concerns about their risk management might hurt their overall valuation. JPMorgan lowered its earnings estimates for some of Wall Street's biggest players: Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley. Those investment banks and other financial companies fell, including Washington Mutual Inc., Citigroup Inc., Bank of America Corp., the government-sponsored Freddie Mac and Fannie Mae, and JPMorgan Chase & Co.
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Sunday, December 2, 2007

Paulson Crafts Subprime Deal to Prevent Second Bush Recession




December 3 2007 Bloomberg.com
U.S. Treasury Secretary Henry Paulson, struggling to prevent a second recession in the presidency of George W. Bush, will today discuss plans to keep troubled subprime borrowersfrom losing their homes. The Treasury is negotiating with lenders to fix interest rates on some mortgages to prevent a surge in defaults as borrowing costs on 2006 loans rise from initially low rates. Paulson speaks at a conference in Washington at 10:30 a.m. Paulson and Federal Reserve Chairman Ben S. Bernanke are concerned that falling home values will throttle consumer spending, which has driven much of the six-year expansion. By heading off further deterioration in the $11.5 trillion mortgage market, officials are also aiming to stem losses on securities backed by subprime loans.
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Foreclosure rehabbers hope handiwork sells




December 2 2007 USATODAY.com

After the unpaid mortgage bills, the creditor warnings and finally the sheriff's sale, it's sometimes left to a handy man to clean up the mess left by the nation's home foreclosure crisis. Most foreclosed homes are bought at auction by the lenders, get fixed by contractors who specialize in the work and return to the real estate market. Rehabbers gamble that the renovations they do — new carpeting, fresh paint, refinished floors, for instance — will enable them to quickly resell or rent a property. A rehabber's stake depends on the market and neighborhood, and that can be as little as $20,000 or $30,000 for a fixer-upper in blue-collar Cleveland, where a rehabbed home might fetch $50,000 or $60,000.
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Rate freeze plan for ARMs gains traction




November 30 2007 Money.CNN.com
Plans to suspend interest rate increases for resetting adjustable rate mortgages are moving forward. One solution to the foreclosure problem gaining traction would freeze rates at lower levels. Lenders quietly began offering such freezes during the summer. Last week California officials announced a rate-freeze deal with four major lenders. And now the Hope Now Alliance, coalition of lenders, servicers, investors and community groups, put together by the Treasury Department, is working on its own version of a freeze. Details of the Hope Now plan have not been finalized, according to Kurt Pfotenhauer, a senior vice president for government affairs with the Mortgage Bankers Association, which is part of the Alliance.
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Fed Likely to Cut Rates, But How Much Is Unclear




November 30 2007 CNBC.com

Fed Chairman Ben Bernanke’s latest analysis of the weakening economy makes another interest rate reduction at the Dec. 11 policy meeting a near certainty, say economists, but the size of that cut is very much up in the air. That will be depend on the nature of key economic data for the month of November due out the week ahead of the FOMC meeting. The ISM index of manufacturing activity, as well as nonfarm payroll and unemployment data, are critical.
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Citi cuts assets of sponsored SIVs by $17 billion




November 30 2007 MarketWatch.com
Citigroup Inc. said late Friday that it has reduced the assets of structured investment vehicles it advises by $17 billion in the past two months, as the banking giant tries to maneuver through this year's subprime thicket. Structured investment vehicles borrow short-term money by selling commercial paper and buying longer-term, fixed-income investments. The longer-term assets usually pay higher interest rates than the short-term debt, so they make money on the difference. Some of those higher-yielding assets were mortgage-backed securities and so-called collateralized debt obligations partly backed by subprime home loans. As the subprime crisis spread, SIVs struggled to refinance themselves because spooked money-market funds and other investors refused to buy more commercial paper from them.
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Banking: This Disaster Was Guaranteed




November 29 2007 BusinessWeek.com
Money-back assurances on subprime-linked securities are costing some leading banks billions. Although refund policies have long been standard practice for retailers, they've rarely been given for financial investments--and for good reason. A closer look at the mortgage meltdown reveals Citigroup and other big banks offered a type of money-back guarantee to buyers of nearly $100 billion of subprime mortgage-linked securities. Incredibly risky in retrospect, the refund policies were critical in the banks' push to keep a steady stream of money coming in during the peak years of the housing market from 2004 to 2006. But the myopic decision has been a central cause of the billions in losses that some banks are now reporting. Citi, which declined to comment, announced on Nov. 5 that it was on the hook for $25 billion worth of such deals.
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