New data released by Clear Capital Thursday shows that home prices nationally are up 5.0 percent compared to February 2009. It's the second straight month that year-over-year price variations have been in positive territory. Clear Capital also reported that REO saturation increased in February, but that was expected with the typical winter slowdown in sales. Regarding the threat of a shadow inventory, the company suspects this inflow will arrive with a stronger springtime and summer buying season, helping to ease the shock to the marketplace.
Ocwen Financial has one of the industry's most impressive track records when it comes to restructuring loans under the Home Affordable Modification Program (HAMP). The company is converting trials to permanent mods at a rate that is 10 to 20 times higher than some of the biggest banks, and its re-default rate is under 5 percent. Based on his company's success, Ocwen's president has proposed several changes to improve HAMP, including principal writedowns and requiring underperforming servicers to outsource their HAMP processes.
The FDIC has built up a stockpile of some $40 billion in underperforming real estate loans and other assets seized from failed banks over the past couple of years. The federal agency is a regulator and deposit insurer, not an asset manager, and it doesn't like to hold on to these loan leftovers for very long. But the agency's asset portfolio is growing faster than it can conduct auctions and offload these loans. That's led the FDIC to try a new tactic - package the loans and sell them to investors as securities on the secondary market.
Ending a three-week trend of declines, the Mortgage Bankers Association reported that home loan application volume soared 14.6 percent last week. The increase came from a 17 percent jump in refinancing activity, as long-term mortgage rates dipped below the 5 percent threshold. But even with recent upsurges in the refinancing numbers and record-low rates, investment bank Credit Suisse says 37 percent of borrowers with 30-year fixed-rate mortgages are still paying on loans with rates of 6 percent or higher.
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