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Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt – JOSHUA ROSNER

Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt – JOSHUA ROSNER


Housing in the New Millennium: A Home Without Equity is Just a Rental with Debt

Joshua Rosner
Graham Fisher & Co.

June 29, 2001

Abstract:     
This report assesses the prospects of the U.S. housing/mortgage sector over the next several years. Based on our analysis, we believe there are elements in place for the housing sector to continue to experience growth well above GDP. However, we believe there are risks that can materially distort the growth prospects of the sector. Specifically, it appears that a large portion of the housing sector’s growth in the 1990’s came from the easing of the credit underwriting process. Such easing includes:

* The drastic reduction of minimum down payment levels from 20% to 0%
* A focused effort to target the “low income” borrower
* The reduction in private mortgage insurance requirements on high loan to value mortgages
* The increasing use of software to streamline the origination process and modify/recast delinquent loans in order to keep them classified as “current”
* Changes in the appraisal process which has led to widespread overappraisal/over-valuation problems

If these trends remain in place, it is likely that the home purchase boom of the past decade will continue unabated. Despite the increasingly more difficult economic environment, it may be possible for lenders to further ease credit standards and more fully exploit less penetrated markets. Recently targeted populations that have historically been denied homeownership opportunities have offered the mortgage industry novel hurdles to overcome. Industry participants in combination with eased regulatory standards and the support of the GSEs (Government Sponsored Enterprises) have overcome many of them.

If there is an economic disruption that causes a marked rise in unemployment, the negative impact on the housing market could be quite large. These impacts come in several forms. They include a reduction in the demand for homeownership, a decline in real estate prices and increased foreclosure expenses.

These impacts would be exacerbated by the increasing debt burden of the U.S. consumer and the reduction of home equity available in the home. Although we have yet to see any materially negative consequences of the relaxation of credit standards, we believe the risk of credit relaxation and leverage can’t be ignored. Importantly, a relatively new method of loan forgiveness can temporarily alter the perception of credit health in the housing sector. In an effort to keep homeowners in the home and reduce foreclosure expenses, holders of mortgage assets are currently recasting or modifying troubled loans. Such policy initiatives may for a time distort the relevancy of delinquency and foreclosure statistics. However, a protracted housing slowdown could eventually cause modifications to become uneconomic and, thus, credit quality statistics would likely become relevant once again. The virtuous circle of increasing homeownership due to greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures.

Presented: 2002 Mid-Year Meeting American Real Estate and Urban Economics Association National Association of Home Builders Washington, DC May 28-29, 2002.

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© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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DJSP Enterprises, Inc. Announces Further Staff Reductions

DJSP Enterprises, Inc. Announces Further Staff Reductions


PLANTATION, Fla., Oct. 22, 2010 (GLOBE NEWSWIRE) — DJSP Enterprises, Inc. (Nasdaq: DJSP) (Nasdaq:DJSPW) (Nasdaq:DJSPU) today announced that it has instituted further staff reductions as a result of continued reduced file volumes. DJSP has reduced its staffing levels by an additional 198 employees, bringing the total number of layoffs to approximately 300 since the reduction in staff was initiated.

About DJSP Enterprises, Inc.

DJSP is the largest provider of processing services for the mortgage and real estate industries in Florida and one of the largest in the United States. We provide a wide range of processing services in connection with mortgages, mortgage defaults, title searches and abstracts, REO (bank-owned) properties, loan modifications, title insurance, loss mitigation, bankruptcy, related litigation and other services. Our principal customer is The Law Offices of David J. Stern, P.A. (“DJSPA”). We are headquartered in Plantation, Florida, with additional operations in Louisville, Kentucky and San Juan, Puerto Rico. Our U.S. operations are supported by a scalable, low-cost back office operation in Manila, the Philippines, that provides data entry and document preparation support for our U.S. operations.

Forward Looking Statements

This press release contains forward-looking statements about us within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), including but not limited to management’s expectations about the impact of our expense reduction efforts and recent developments in the residential mortgage foreclosure industry. Additionally, words such as “anticipate,” “believe,” “estimate,” “expect” and “intend” and other similar expressions are forward-looking statements within the meaning of the Act. Such forward-looking statements are based upon the current beliefs and expectations of our management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions, changing interpretations of generally accepted accounting principles; outcomes of government or other regulatory reviews, particularly those relating to the regulation of the practice of law; the impact of inquiries, investigations, litigation or other legal proceedings involving us or our affiliates, which, because of the nature of our business, have happened in the past to us and DJSPA; the impact and cost of continued compliance with government or state bar regulations or requirements; legislation or other changes in the regulatory environment, particularly those impacting the mortgage default industry; unexpected changes adversely affecting the businesses in which we are engaged; fluctuations in customer demand; our ability to manage growth and integrate acquisitions; intensity of competition from other providers in the industry; general economic conditions, including improvements in the economic environment that slows or reverses the growth in the number of mortgage defaults, particularly in the State of Florida; the ability to efficiently expand our operations to other states or to provide services we do not currently provide; the impact and cost of complying with applicable U.S. Securities and Exchange Commission (“SEC”) rules and regulations; geopolitical events and changes, as well as other relevant risks detailed in our filings with the SEC, including our Annual report on Form 20-F for the period ended December 31, 2009, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this press release speak only as of the date of the press release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

CONTACT: DJSP Enterprises, Inc. Chris Simmons, Director of Investor Relations 954-233-8000 ext. 1744 Cell: 954-294-9095 900 South Pine Island Rd. Plantation, FL 33324
© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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FANNIE MAE goes after Servicers for Foreclosure Delays

FANNIE MAE goes after Servicers for Foreclosure Delays


“A compensatory fee not only compensates Fannie Mae for damages but also emphasizes the importance placed on a particular aspect of the servicer’s performance,” the GSE stated in its servicing guide.

Fannie also updated the allowable foreclosure time frames for four states: Florida – 185 days; Maryland – 90 days; Nevada – 150 days; New York (upstate) – 300 days; and New York (downstate) – 420 days.

To remediate a specific problem affecting a loan or correct the servicer’s overall performance, Fannie Mae reserves the right to impose a compensatory fee as provided in the Servicing Guide, Part I, Section 207: Imposition of Compensatory Fees.

  • With this Announcement, Fannie Mae:
  • has updated the allowable foreclosure time frames for four states;
  • is monitoring all delinquent loans in Fannie Mae’s portfolio or MBS pools, and will begin notifying servicers of delays in processing delinquent loans;
  • may begin conducting reviews of servicer loan files, processes, or procedures;
  • requires accurate and timely reporting on the delinquency status of mortgage loans; and,
  • will exercise its remedy to assess compensatory fees as deemed necessary.

Effective with the date of this Announcement, any mortgage loan referred to an attorney (or trustee) to initiate foreclosure proceedings with properties located in the States of Florida, Maryland, Nevada, and New York must meet the new foreclosure time frames noted below:

  • Florida – 185 days

This timeline has an additional 35 days added to allow for a mediation referral prior to a foreclosure suit being commenced.

  • Maryland – 90 days

This timeline begins when the case is referred to an attorney to file suit together with a Loss Mitigation Affidavit. The servicer must execute a Final Loss Mitigation Affidavit at the commencement of the case, if appropriate. If a Preliminary Loss Mitigation Affidavit is required, then the time frame allowed will be extended to 120 days.

  • Nevada – 150 days
  • New York (Upstate) – 300 days
  • New York (Downstate) – 420 days

    In the State of New York, a timeline of 300 days applies to all localities except for New York City and Long Island.

    A timeline of 420 days applies for foreclosures conducted in the five boroughs of New York City — Bronx, Brooklyn (Kings County), Manhattan (New York County), Queens, and Staten Island (Richmond County) — and on Long Island (Nassau and Suffolk Counties).

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© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in fannie mae, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, mbs, mortgage, servicers, Wall StreetComments (0)

Lenders Repurchase $3 Billion in Mortgages from GSEs in Q1: DSNEWS

Lenders Repurchase $3 Billion in Mortgages from GSEs in Q1: DSNEWS


BY: CARRIE BAY DSNEWS.com

With home loans going bad at a still-staggering pace and losses mounting for the GSEs, the nation’s two largest mortgage financiers are pursuing several avenues to recover money, including returning poorly underwritten loans to lenders. During the first three months of this year,Fannie Mae and Freddie Mae required lenders to buy back $3.1 billion in mortgages they’d sold to the two firms.

Lenders repurchased approximately $1.8 billion in loans from Fannie in Q1, measured by unpaid principal balance, according to a recent filing by the GSE with the Securities and Exchange Commission (SEC). During the same period last year, Fannie forced lenders to buy back $1.1 billion in bad loans.

“We conduct reviews of delinquent loans and, when we discover loans that do not meet our underwriting and eligibility requirements, we make demands for lenders to repurchase these loans or compensate us for losses sustained on the loans, as well as requests for repurchase or compensation for loans for which the mortgage insurer rescinds coverage,” Fannie wrote in the regulatory filing.

Freddie Mac sent $1.3 billion in faulty home mortgages back to the loan sellers during the January to March period, the GSE said in its Q1 SEC filing. That compares to repurchases of $789 million during the first quarter of 2009.

“We are exposed to institutional credit risk arising from the potential insolvency or non-performance by our mortgage seller/servicers, including non-performance of their repurchase obligations arising from breaches of the representations and warranties made to us for loans they underwrote and sold to us,” Freddie Mac explained in the regulatory document.

Freddie says some of its seller/servicers failed to perform their repurchase obligations due to lack of financial capacity, and many of the larger seller/servicers have not completed their buybacks “in a timely manner.”

“As of March 31, 2010 and December 31, 2009, we had outstanding repurchase requests to our seller/servicers with respect to loans with an unpaid principal balance of approximately $4.8 billion and $3.8 billion, respectively,” the GSE said.

As of the end of March, approximately 34 percent of Freddie’s outstanding purchase requests were more than 90 days past due.

“Our credit losses may increase to the extent our seller/servicers do not fully perform their repurchase obligations,” Freddie Mac wrote in the filing. “Enforcing repurchase obligations with lender customers who have the financial capacity to perform those obligations could also negatively impact our relationships with such customers and ability to retain market share.”

According to regulatory filings made by the GSEs earlier in the year, the two companies are expecting to return as much as $21 billion in home mortgages to banks in 2010. The nation’s four largest lenders – Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase – are the largest sellers of home loans to Fannie and Freddie and will likely take the biggest hits.

A recent report from Bloomberg noted that these banks sell mortgages to the GSEs at full value, which means they must buy them back at full value. But the news agency says at least one bank, JPMorgan Chase, says most of the loans repurchased must be immediately written down, sometimes by as much as 50 percent.

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AGENTS BEWARE! HERE COME THE HAFA VENDORS aka LPS AFTER YOUR COMMISSION

AGENTS BEWARE! HERE COME THE HAFA VENDORS aka LPS AFTER YOUR COMMISSION


I believe Mr. Churchill miss this one LPS Auction Solutions is uniquely positioned to sell and close foreclosed properties. View bank foreclosed home auctions, buy foreclosed properties online.
lpsauction.com

 
Posted by:
Lance Churchill on 03/25/2010.

A few weeks ago I posted an article on this blog in which I expressed concern about deductions that could occur from real estate agent commissions because of the language in the new HAFA short sale guidelines that are about to go into effect.  That language states that agent commissions are protected up to six percent of the transaction unless the servicer chooses to retain “a vendor to assist the listing broker with the sale” and if a vendor is retained, “this vendor must be paid ___% (or $___) from the commission.” 

In essence, I predicted that a new industry of short sale vendors would spring up, not really to assist the broker, but to do the servicer’s job at the real estate agent’s expense, resulting in smaller commissions than were being paid even a few years ago when servicers were routinely reducing commissions as a condition of short sale approval.  I noted at the time that some agents were already running into some of these vendors in their short sale transactions. 

With the effective date of HAFA only ten days away, these short sale vendor companies are starting to appear like weeds.   Here are excerpts from three press releases I have seen in just the last few days:

March 16, 2010 — Lender Processing Services, Inc. (LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, is pleased to announce the launch of its professional short-sale service.  Offered through LPS Asset Managements Solutions, LPS short-sale solution helps servicers respond more quickly to short sale offers and close more transactions. http://www.lpsvcs.com/NewsRoom/Pages/20100316.aspx 

March 18, 2010 — Scottsdale, Ariz.-based Loan Resolution Corp., a provider of short sale services, plans to add 100 positions this month to meet demand for the government’s new Home Affordable Foreclosure Alternaltives program.  http://www.mortgageorb.com/e107_plugins/content/content.php?content.5487 

March 25, 2010 — Lenders Asset Management Corporation (LAMCO), a full service, nationwide default asset management company offering comprehensive REO services, announced its company’s approach to help mortgage servicers fully comply with the federal government’s Home Affordable Foreclosure Alternatives (HAFA) program. http://www.earthtimes.org/articles/show/lamco-ramps-up-short-sale-services-in-conjunction-with-hafa-program,1217095.shtml

Notice how the press releases proclaim these companies are creating these divisions to help the servicers comply with HAFA.  I guess they didn’t read that it was supposed be the agents they were assisting.   I hope that they do make the short sale process easier, but the drafters of the HAFA program (with recommendations from the servicers) shouldn’t have tried to be cute with their wording in HAFA by guaranteeing a 6% commission unless a vendor is hired to assist the broker

The implication is that the vendors will make an agent’s job so much easier, that the agent doesn’t really deserve a full commission on the transaction.  After all, now all the agent will have to do is work with the seller, list the property, qualify the seller for HAFA, market the property, deal with buyers with low ball offers, negotiate with unrepresented buyers, negotiate with selling agents, get a contract signed, send it to the servicer or vendor for approval, guide it through closing, appear at closing and deal with all the other usual issues in a transaction.  

In other words, HAFA listing agents will not only be doing everything they would do in any other transaction, but will also now have to deal with the HAFA process.   HAFA’s drafters should have just honestly stated in the guidelies that:  Real estate agents are going to give up one quarter of their commission so that the servicers can hire somebody to do the servicer’s job.

All the complaining aside, the HAFA program is what it is unless NAR can lobby the Treasury Department and get this provision changed.  Hopefully, when Freddie and Fannie come out with their own HAFA compliant guidelines in the near future, they will strike this provision.  After all, both Fannie and Freddie within the past year changed their loss mitigation policies to protect 6% commissions for agents. 

I think a real effect of this provision is that it will result in many selling agents avoiding HAFA short sales which will ultimately affect the success of the HAFA program.  One of the primary reasons that the investors/owners of loans listed as short sales started paying 6% commissions, was they realized that in today’s difficult real estate market, some selling agents with solid buyers were avoiding short sale properties that only paid a two or two and one half percent commission to the selling agent.  With all the short sales on the market, there were plenty of properties to show their buyers that paid a full commission.  If this happens, the lenders and servicers greed will have caused them to once again shoot themselves in the foot.

In the next installment on the new HAFA program taking effect on April 5, 2010, I will discuss some of the pros and cons of participating in the HAFA program along with some of HAFA’s flaws that may cause it a lot of problems as it is implemented.  In the meantime, for more education on the HAFA program, check out our free video series at www.hafaprogram.com or our in depth course at www.2010shortsaleplaybook.com.

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