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Souring Mortgages, Weak Market Put Loan Agency on a Tightrope
Wall Street Journal (01/19/10) P. A1; Timiraos, Nick
Congress wants the FHA to tighten underwriting to address rising losses on its loans, but there is concern that doing so could stifle housing recovery and hurt the economy. FHA Commissioner David Stevens is considering such steps as higher down payments and mortgage insurance premiums, a minimum credit score and a lower threshold for seller-paid closing costs. The agency has enough reserves to cover current losses and does not expect to run out of money unless residential prices tumble again, but Stevens says that hiking down payment requirements would hold back lending and spur home-price declines.
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Treasury Delay on Bank Home-Equity Debt Imperils Housing Pickup
BusinessWeek (01/19/10) Shenn, Jody; Gittelsohn, John>
The Treasury Department has been unable to convince lenders to rework struggling borrowers' home-equity debt. None of the lenders holding more than $1 trillion in the debt has inked deals requiring participation in the second-mortgage modification plan unveiled last April. Analysts warn that the near-record level of home-equity debt held by such lenders could trigger a wave of foreclosures that would destabilize the housing market after the worst slump since the 1930s.
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Advocates Call for Swifter Action as Loan Modifications Trickle In
Washington Examiner (01/19/10) Sherfinski, David
Homeowner advocates are calling for a swift review of the Home Affordable Modification Program, considering 2.8 million homes went into foreclosure last year. Although the Obama administration wants to offer between 3 million and 4 million lower mortgage payments via loan workouts by 2012, just 66,000 homeowners have had their mortgages modified and avoided foreclosure since HAMP was introduced about a year ago; and more than 5 percent of borrowers have dropped out of the program. The White House has moved to increase aid to Fannie Mae and Freddie Mac, which could lead to an increase in refinancing and more lower monthly payments for borrowers.
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Capmark Unit Files for Chapter 11, and Inks Deal
New York Times (01/19/10)
In a bid to unload its management contracts and interests in real estate equity funds, Capmark Investments has filed for Chapter 11. A unit of the bankrupt commercial property lender Capmark Financial Group, the firm listed assets and debt of at least $1 billion on its bankruptcy petition. The unit, which specializes in managing equity real estate and mortgage-related investments, had more than $1.7 billion under management at the close of 2009.
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Credit Seen Growing Slowly in 2010
American Banker (01/19/10) P. 4; Adler, Joe
The federal funds rate will rise as high as 0.65 percent by the fourth quarter and conventional mortgage interest will jump as high as 6.15 percent, projects the 2010 economic forecast from the American Bankers Association. There will be a slight improvement in delinquencies and foreclosures, but the unemployment rate remains a problem, according to the outlook, which foresees slow growth in the credit markets this year. Also, small business-lending will recover, but consumers may continue to focus more on paying down debts than borrowing any more money at this time.
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