Countrywide hit harder than I expected It's apparent that Countrywide was hit harder by the subprime marketi than we originally anticipated. I had originally thought based on their perfomance last quarter. The subprime part of Countrywide's portfolio drove down profit by 37% over the previous quarter. I had expected Countrywide's internal knowledge of the California market (and how cyclic it can be) to mitigate some exposure to the fall out in the subprime market. It's apparent that even Pasadena based Indymac isn't immune. "IndyMac, whose Alt-A loans aren't supposed to be as risky as subprime mortgages, reported its lowest profit in almost three years. Earnings fell to $52.4 million, or 70 cents a share, from $79.9 million, or $1.18 million a year earlier."

Media Reports:
Bloomberg on Countrywide's 1st Quarter 2007
CNN Money on Countrywide

Labels: countrywide, countrywide1stquarter2007, indymac, Pasadena

  ¶ Countrywide hit harder than I expected 0 Comments

Bank Account Returns Typically your FDIC insured bank accounts aren't a great place to earn a decent return. One site, Savingsaccounts.com is looking to change that. It offers online banking interest rate comparisons at SavingsAccounts.com will help you find the best high yield online savings account or checking account.

What they have done is assemble in one location the best checking and savings accounts that have higher yields than typical 1% interest accounts. What I find interesting is that they have done a great job covering the various types of accounts available that yield from 2.29% to 6% rate of return. If you have money in your checking account, doesn't it make sense to have a decent rate of return on those funds? All banks offer online access and some have minimum requirements. The 6.00% rate of return actually has no minimums from HSBC online banking. It makes sense once your have consolidated your debt to begin earning a reasonable return on your checking or savings account.



This is a sponsored post.

Labels: checking, interestbearingaccount, interestchecking, interestearningaccount, savingsaccount

  ¶ Bank Account Returns 0 Comments

Mortgage Fraud Analytics Basepoint has recently launched two new services (Enhanced Fraud Review and Fraud Organizational Framework) which are designed to help eliminate mortgage fraud for originators. Both services will help identify and prevent the funding and purchase of fraudulent loans by incorporating proven best practices into the loan review process. According the to Tim Grace, president and CEO of Basepoint,

“The concept of Enhanced Fraud Review is simple. BasePoint helps companies pin-point those mortgage loans where fraudulent misrepresentations are most likely to exist using our market leading FraudMark™ scoring solutions. Then, using the Enhanced Fraud Review, we guide lenders and due diligence companies through an intelligent process for investigating those high risk applications, vetting out the actual misrepresentations and thus preventing fraud from slipping through. The guided process takes place in the form of an intelligent checklist that an underwriter completes, and which can dynamically adjust according to the underlying risk and information in the application itself.

The second service, Fraud Organization Framework, facilitates improved risk and fraud management systemically. Lenders and investment banks are focused now more than ever on controlling credit and fraud risk. Investment banks are implementing FraudMark™ scoring before sampling for due diligence and using Enhanced Fraud Review at their due diligence companies for each loan trade. To ensure that fraudulent loans never reach the point of purchase, lenders are implementing organizational structures that ensure higher quality loans are ultimately funded before being sold on the secondary market.

Using BasePoint’s service to define new risk management organizational structures, lenders can accelerate their success in minimizing fraud and risk. For investment banks, this service recommends the structure and staffing of the due diligence fraud review process. BasePoint’s new Fraud Organizational Framework is based on best practices in fraud management from within the mortgage industry as well as other areas of financial services including highly advanced organizational practices that have been developed in the credit card industry over the past two decades. BasePoint fraud consultants work with clients to design, introduce, and implement the right fraud management processes to achieve each organization’s fraud and risk management goals."

While Basepoint's software might be more effective than current measures (and in many cases far more effective) but the root case was the loose credit standards that epitomized this round of housing boom. On the other hand Basepoint analytics can help capture more subtle forms of fraud than simple income falsification. Mortgage fraud is often perpetuated by fairly sophisticated individuals who often practice it on a wide scale. This give originators a leg up on those individuals.

Related URLS:
Basepoint Analytics

Labels: basepoint, mortgage-fraud-analytics, mortgage-fraud-software

  ¶ Mortgage Fraud Analytics 0 Comments

Loans - Cover that shortfall In my last post I covered foreclosure - what to do?. In this post I am going to talk about what to do if you just have a temporary shortfall. Sometimes secured loans are one answer. These are loans that are secured by personal or real property and typically have a higher interest rate. They can help you cover a shortfall or temporary loss of income. Sometimes you can make your mortgage payment but can't make your credit card payment. Other times homeowner loans are the way to go. Typically these are either seconds or home equity lines of credit. If your credit is good apersonal loans are the way to go, enabling you to consolidate expenses an other other options. In any case the best way to go is to consolidate your loans and reduce your expenses. Loans should be at best a temporary measure to help solidify your financial position. Successful management of your loans will enable you to improve your credit score, and qualify for lower interest rates on the future loans you might have.


This is a sponsored post.

Labels: home-equity-line-of-credit, loan, personal-loans, seconds

  ¶ Loans - Cover that shortfall 0 Comments

Foreclosure - What to do? Many people avoid the problem of home foreclosure, not realizing that proactive measures can save your house. Let's face it, it's embarrassing to be behind on your mortgage, but don't let embarrassment cause you to lose your house. Remember the mortgage holder doesn't really want to foreclosure on the home. Foreclosure is expensive and in today's market usually means that the lender is going to lose money. Furthermore foreclosures can have network effects driving down home values throughout a neighborhood. If a lender has additional loans out there it can adversely affect their portfolio. So here are some steps you can take

• Face the problem.
  This means immediately calling your lender when you know you cannot make your payment. Most people never bother to call the lender, treating it like a credit card vendor you are behind on. The vendor owns the majority stake in your home. Treat them like a partner, not a creditor you would rather avoid.
  
• You have options.
  You may have some options including negotiating a repayment plan, requesting forbearance and asking to restructure the loan.
  
  Under a repayment plan, a lender will give you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period, you will have paid back the delinquent amount.
  
  In the case of a forbearance, the lender will temporarily allow you to pay less than the full amount of your mortgage payment and may even exempt you from paying anything during the forbearance period.
  
  Typically you qualify for forbearance if you can prove that you'll be getting funds from a bonus, a tax refund or some other source that will let you bring the mortgage current at a specific time in the future. You may also qualify for a forbearance if your income has dropped temporarily.
  
  
• The environment has changed.
  When the real estate market was red hot, lenders were less likely to restructure or work with borrowers. Now that the market has cooled lenders are much more likely to work with home owners. Lender don't want to be in the realty business.
  
  
• There are non profit options.
  For example the Homeownership Preservation Foundation, a nonprofit organization based in Minneapolis, has established -- with a lot of funding from lenders -- a toll-free hotline at 1-888-995-HOPE (4673), available in English and Spanish. You can also get information by going to http://www.995HOPE.org.
  

There are options out there to avoid foreclosure, you just need to find them and face the problem.

Labels: california-foreclosures, forclosure, forclosure-scam, Foreclosure, foreclosure-help, foreclosure-options

  ¶ Foreclosure - What to do? 0 Comments

Mortgage Prep Most people just don't take the time to qualify for the best rate on their mortgage. That preparation starts about 6 month before you apply. Ideally you should check your credit at least a year in advance but by checking 6 months in advance and cleaning your credit then (by paying everything off) you can significantly improve your credit score and lower your rate. What do you do even if you have poor credit? There are a number of vendors available for bad credit mortgages for poor credit customers. By just doing the minimal amount of work cleaning your credit, you can improve the rate on your Mortgage. If your APR is too high or your ARM has reset, it might be time to consider a remortgage as an option.

So to improve your interest rate for your mortgage, the first clean your credit as best you can 6 months before applying for a re-finance or for your current lendor.



This is a sponsored post.  ¶ Mortgage Prep 0 Comments

Blame it on the Rain NAR attributes the worst month to month drop in existing home sales in 18 years to "unusually" bad weather in February. Well the weather was like it always was in February - cold and rainy. More than likely the increase of sales the previous three months was due to unusually warm weather. See the weather can be used as any excuse. How the world works they have an interesting metric for tracking new housing starts - remittances

Monthly remittances from the U.S. to Mexico have dropped every month since their peak of $2.6 billion in May 2006 -- shortly before new-home construction in the U.S. plunged. In February 2007, the latest month for which data are available, remittances to Mexico had slowed to $1.7 billion.

New housing starts have been coasting on builders using their existing permits to continue building. In other words they are building what they have already permitted but aren't seeking as many new permits.

Labels: February-2007, January-NAR-report, March-NAR-report, Mexico, new-housing-starts, sales-drop

  ¶ Blame it on the Rain 0 Comments

H&R Block Leaving Mortgage Business - Oh yeah we are selling Option One too! H&R Block has decided to sell Option One mortgage (the first provider of my very first mortgage) to OOMC Acquisition Corporation. The expected closing date is H&R Block;s fiscal second quarter. From Stockwatch

"It said the transaction excludes Option One subsidiary H&R Block Mortgage Corp, which it has decided will cease operations. This will result in around 25 mln usd in pretax charges for severance, facilities closure and other costs and a 16 mln usd goodwill impairment charge of around 16 mln usd in its fiscal fourth quarter."

Once again the bitter pill is coated with sugar. The real story here isn't that H&R Block is selling Option One. It's that it's leaving the mortgage business altogether. This particular story is very clearly a rehashed corporate PR which is designed to hid a huge fact in plain sight, namely that H&R Block is leaving the mortgage business. That fact is thrown in as throw away paragraph at the end.

Labels: HRBlock, HRBlockMortgageCorp, OOMCAcquisitionCorporation, OptionOne

  ¶ H&R Block Leaving Mortgage Business - Oh yeah we are selling Option One too! 0 Comments

Wells Fargo Beats the Street Wells Fargo beat the earnings estimate. They did so on the growth of their commercial lending and a growth in deposits. It's also apparent Wells has managed their sub prime exposure proactively since 4th quarter 2006. I imagine the previous corporate experience with the California market's previous two real estate slow downs is one reason why Wells was able to manage the turn in the sub prime market. Wells did set aside 715 million for the softening home equity market. Earnings were reported at $.64/share


Here are the stories reporting on Wells Fargo's earnings.
Marketwatch:Wells reassures on subprime exposure, warns on home equity loans

Labels: 1stQuarter2007, earnings, mortgagebrokeinCalifornia, WellsFargo

  ¶ Wells Fargo Beats the Street 1 Comments

Fremont General Sells Subprime Portfolio Santa Monica based Fremont General is selling most of it's sub prime portfolio. The buyer is still undisclosed but there are some notable things about this deal.

• Fremont General is taking a 100 million dollar pretax loss.
  
• The deal is largely being underwritten by the sale of it's residential real estate assets to the same entity. "The Company alsoannounced that it has entered into exclusive negotiations with the same institution under an executed letter of intent to sell most of it's residential real estate business and assets." From PRNewswire
  
• After the sale the companies cash position remains strong with 1.5 billion in assets.
  

Fremont General will exit the sub prime market with this sale. The discount is pretty heavy but considering that the current subprime market has a foreclosure rate of 4%. Fremont General was smart to leave the market. Remember this is going to be the first year where ARMS are resetting to actually include principal. We can expect the ARM foreclosure rate to sky rocket in the upcoming years. This won't hit the California market as hard since the California economy is vibrant. I expect it to hit parts of Texas, Indiana, Georgia and other bid up secondary markets pretty hard.
Related Links:
Fremont General

Official Announcement of Fremont General's sale it's subprime portfolio

Labels: FremontGeneral, Subprime, subprimemortgagecalifornia, subprimeportfolio

  ¶ Fremont General Sells Subprime Portfolio 0 Comments

Wells Fargo Announce 1st Quarter 2007 earnings I am waiting for the announcement. It looks like they are announcing EOD today.

Labels: 1stQuarter2007, Fargo, WellsFargo

  ¶ Wells Fargo Announce 1st Quarter 2007 earnings 0 Comments

Industrywide foreclosure rate was 0.54 percent in the fourth quarter, the highest in its 37 years of surveys. Amidst the reporting that Countrywide was reporting an increase in foreclosures was the news that Countrywide was also increasing the number of loans that they were servicing. Additionally it was reported that foreclosures are now the highest ever recorded in 4th quarter 2006. For Countrywide having more loans in the pipeline is a clear sign that the long predicted consolidation in the marketplace is continuing. Countrywide as the largest US mortgage lender isn't immune to the effects of the subprime market but it's far more likely to weather the storm. Furthermore customers are more likely to chose vendors who are larger (and thus seen as more trustworthy). It's going to be interesting to see what Wells Fargo reports on April 17th.

Labels: Calabasas, countrywide, countrywidesubprime, forclosures, foreclosures37yearhigh

  ¶ Industrywide foreclosure rate was 0.54 percent in the fourth quarter, the highest in its 37 years of surveys. 0 Comments

1/3 of all ARMs in California will end in forclosure One of the things I love is little tidbits that sometimes get buried in articles about the implosion of the sub prime market. This article is about how lawmakers are blaming mortgage bond investor should be held liable for deceptive loans. Well there is plenty of blame to go around for the sub prime market (starting with Alan Greenspan's decision to keep the prime artificially low). But four paragraphs in we get this little tidbit

Economist Christopher Cagan projected about a third of all adjustable-rate loans originating from 2004 to 2006 will default because of reset, when the initial "teaser rate" expires and borrowers must start making regular payments that include principal, he said in a study by First American CoreLogic released last month.
While many consumer and civil rights groups want government intervention, not everyone is pleased about any legislation costing taxpayer dollars.

"People have bought houses they can't afford, period," said Christopher Thornberg, economist and principal of Beacon Economics. "So unless the government is going to give them $100,000 to $200,000 each, what option do they really have?"

Given that sub prime East Bay borrowers who are sixty days late have risen from 4.29 to 12.23 percent, that rate adjustment is going to come as a complete shock.

The problem is of course is that there isn't a clean happy solution to the sub prime borrowing situation. It's going to end in foreclosures, tighter lending standards and an overall tightening of credit.

Labels: CAMortgageNews, EastBay, EastBaySubprime, forclosure, novastar, refinance, Subprime, subprimeforeclosure, subprimemortgagelending

  ¶ 1/3 of all ARMs in California will end in forclosure 0 Comments

The Subprime Directive For all the talk of the minimal effect the sub prime defaults are going to have, it's pretty apparent that the "minimal effects" are going to be larger than anyone has expected. Let's just look at the current closings and layoffs

• Loancity closed on 3/22/07
  
• Countrywide's subprime mortage defaults for 2006 may exceed the company's highest on record.
  
• New Century lays off 54% of their workers (this company is headed for the dustbin)and files for Chapter 11
  
• Aegis Lending plans to shutter its Sacramento office
  
• People's Choice (another sub prime lender) files for chapter 11
  

The shake out in California continues. You can bet that you will hear about it hear first (or nearly first). New Century was one of the ones that we reported on very early on (when I got a few emails about the situation there).

Labels: aegislending, CAMortgageNews, countrywide, countrywidesubprime, NewCenturyFinancialCorp, Subprime, subprimemortgagecalifornia

  ¶ The Subprime Directive 0 Comments