While delinquency rates in the United States continue to reach new highs, the pace of deterioration has slowed, Lender Processing Services (LPS) said Monday. Still, company's analysts caution that the nation's housing market remains far from a full recovery. According to LPS' latest Mortgage Monitor report, nearly 7.5 million loans are in some stage of delinquency or foreclosure, with an additional one million properties in REO or post-sale foreclosure.
Sen. Christopher Dodd introduced legislation Monday that outlines a revamp of the nation's financial regulatory system. The long-awaited reform bill calls for the creation of an "independent" Consumer Financial Protection Bureau to regulate mortgages and other loan products. It also establishes a systemic risk council, which has the authority to force complex firms to divest some of their holdings if they become "too big to fail," and it requires the largest financial firms to contribute to a $50 billion fund that would be used to pay for future financial collapses.
GMAC Financial Services is quietly making preparations to unload its Residential Capital (ResCap) home loan financing division. Although GMAC has declined to comment on a possible deal, reports from multiple news agencies confirm that the struggling auto and mortgage lender has hired Goldman Sachs to advise and start the selling process. Billionaire investor Warren Buffett reportedly has his eye on the ResCap business unit.
With the expiration of several key government support programs looming, loss severities on distressed U.S. residential mortgage loans are likely to escalate, Fitch Ratings recently reported. The expiration in the coming months of both the homebuyer tax credit and the Federal Reserve's $1.25 trillion mortgage-backed securities (MBS) purchase program will increase negative pressure on home prices and loss severities.
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