Fannie Mae: Outlook for Home Prices Rises Again

By Mia Lamar

The consumer outlook for U.S. home prices improved again in January, extending a recent upward trend in housing market sentiment, according to mortgage market firm Fannie Mae.

For its monthly reading, Fannie Mae said respondents in its January survey predicted home prices will rise by 1% over the next year, up from the 0.8% gain forecast in December.

Views on the direction of the U.S. economy also continued to improve. According to the respondents, 30% said they believe the U.S. economy is on the right track, up from 22% with that view in December. The percentage who said the economy is headed in the wrong direction fell to 63% of respondents, marking a 6 percentage point decline from the previous month.

Fannie Mae Chief Economist Doug Duncan pointed to a slowly improving U.S. job market as one cause for rising confidence in the long-battered housing market. ”The strengthening employment picture last Friday provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of consumer spending,” Duncan said.

A report last week from the U.S. Labor Department showed nonfarm payrolls grew 243,000 last month, the largest gain since April. The jobless rate fell from 8.5% to 8.3%, the lowest it has been since February 2009.

Fannie Mae’s January survey also found 44% of respondents expect their personal financial situation to improve over the next year, up from 40% with that view in December.

The survey is based upon a monthly poll of roughly 1,000 adults and has a margin of error of plus or minus 3.1%.

Write to Mia Lamar at mia.lamar@dowjones.com

January Housing Scorecard Released by HUD, Treasury

The
Departments of Housing and Urban Development (HUD) and Treasury issued the
administration’s January Housing Scorecard on Monday.  The report is essentially a summary of
data on housing and housing finance released by public and private sources over
the previous month and/or quarter.  Most
of the data such as new and existing home sales, permits and starts, mortgage
originations, and various house price evaluations have been previously covered
by MND. 

The scorecard incorporates by reference
the monthly report of the Making Home Affordable Program (MHA) through the end
of December.  This includes information
on the universe of MHA programs including the Home Affordable Modification
Program (HAMP), HOPE Now, and Second Lien Modifications and other initiatives. 

Since the
HAMP program began in April 2009 1,774,595 homeowners have entered into trial
loan modifications, 20,074 since the November HAMP report.  About half of these homeowners, 933,327, have
completed the trials and converted to permanent modifications; 23,374
conversions took place during the current report period.  Just over three-quarters of a million of the permanent
modifications are still active.

While the
HAMP program dates to April 2009, it underwent substantial revisions to its
policies and procedures in June 2010, and many of the measures of its
performance are benchmarked at that time. 
Eight-four percent of homeowners who entered a trial modification after
that date have received a permanent modification with an average trial period
of 3.5 months compared to 43 percent who entered a trial prior to the changes.  As of December, 21,002 of the active trials
had been underway for six months or more; in May 2010, the month before the
changes took place, 190,000 trials were six months old or more.  In December every servicer except Ocwen was
above an 80 percent conversion rate.

HAMP
modifications with the largest reduction in mortgage payments continue to
demonstrate the lowest redefault rates.  At
18 months after modification all loans have a 90+ day default rate of 23
percent.  However, loans with a 20
percent or smaller reduction in loan payment are defaulting at the rate of 36.4
percent while loans with a 50 percent payment decrease or greater have a
default rate of 13.3 percent. 

The Home
Affordable Foreclosure Alternatives program offers incentives to homeowners who
wish to exit home ownership through a short sale or deed-in-lieu of
foreclosure.  Thus far 43,368 homeowners
have been accepted into the program and 27,665 transactions have been
completed, the vast majority through a short sale.  More than half of the completed transactions
(18,350) were on loans owned by private investors; 7,711 were portfolio loans
and 1,604 were GSE loans.

There has
been an emphasis in some quarters on reducing the principal balance of
distressed loans since the last HAMP report. 
Some members of Congress have asked for justification from the GSEs as
to why they were not participating in principal reductions and the Treasury
Department recently urged them to do so as well while tripling the incentives
it is paying to other investors to reduce principal.  The HAMP Principal Reduction Alternative
(PRA) has started trial modifications for 63,203 home owners and permanent
modifications for 42,753 of which 40,374 are still active.  The median principal amount reduced in these
modifications is $67,196, a median of 31.1 percent of the principal balance.

Each month
HAMP reports on selected servicer performance metrics.   Servicers
are expected to make Right Party Contact (RPC) with eligible homeowners and
then evaluate their eligibility for HAMP.  HAMP evaluated servicer outreach to 60 days
delinquent homeowners over the previous 12 months (November 2010-December 2011)
and found most services have made RPC at least 85 percent of the time; however
there is a wide range of performance results in terms of completed the evaluations.
 

Servicers
are also expected to identify and solicit homeowners in early stages of
delinquency and, effective October 1, 2011, a higher compensation structure was
put into effect to reward servicers who complete evaluations and place
homeowners in a trial modification within 120 days of first delinquency.  The table below shows the status of major
servicers relative to their eligibility for maximum incentives.

…(read more)

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Nearly 100 Metro Areas on Improving Market List

The list of Improving Housing Markets (IHM) maintained by
the National Association of Home Builders (NAHB) took another big jump in
February, rising from 76 in January and more than doubling the 41 reported in
December.  There are now 98 metropolitan
areas
representing 36 states included on the list.

The IHM identifies metropolitan areas that have shown
improvement from their respective troughs on each of three metrics –
employment, housing permits, and home prices – for at least six consecutive
months.  NAHB uses data from the Bureau
of Labor Statistics, the U.S. Census Bureau, and Freddie Mac to measure
improved performance.

The additions to the February Index include some
metropolitan areas that had been particularly weak including Miami, Detroit,
Memphis, Kansas City, Missouri; Portland, Oregon, and Salt Lake City.  NAHB points out that inclusion in the Index
does not indicate strong recovery, merely that some of these troubled areas are
coming off of extreme lows.

Seven metro areas dropped off of the Index in February due
to softening housing prices.  One of
these was Washington, DC, one of the few areas that had continued to show
strong prices and sales through 2011. 

“While many of the markets on the February IMI are far from fully
recovered, the index points out where employment, home prices and housing
production are no longer retreating and have held above their lowest recession
troughs for six months or more,” said NAHB Chief Economist David Crowe.
“This is a sign that a large cross section of the country is starting to
turn the corner as local economic conditions stabilize.”

 MSA  Permits Trough Date Growth From Trough Prices Trough Date Growth From Trough Employment Trough Date Growth From Trough
1 Florence, AL 03/31/09 2.6% 02/28/11 0.6% 07/31/09 3.9%
2 Tuscaloosa, AL 05/31/11 8.8% 02/28/11 3.6% 06/30/09 1.7%
3 Fayetteville, AR 03/31/09 1.2% 02/28/11 1.0% 02/28/10 3.0%
4 Napa, CA 06/30/11 31.2% 02/28/11 0.3% 02/28/11 3.3%
5 Boulder, CO 11/30/09 11.6% 01/31/11 6.2% 01/31/10 2.7%
6 Denver, CO 03/31/09 2.8% 02/28/11 2.1% 01/31/10 1.4%
7 Fort Collins, CO 03/31/09 4.5% 12/31/10 4.6% 12/31/09 3.5%
8 Greeley, CO 11/30/10 8.1% 02/28/11 3.3% 12/31/09 0.1%
9 Bridgeport, CT 03/31/09 1.2% 02/28/11 4.5% 01/31/10 1.4%
10 New Haven, CT 04/30/11 26.0% 02/28/11 0.0% 02/28/10 2.1%
11 Cape Coral, FL 03/31/09 3.1% 02/28/11 8.1% 01/31/11 1.7%
12 Deltona, FL 03/31/11 2.6% 03/31/11 15.1% 01/31/11 3.3%
13 Jacksonville, FL 04/30/09 1.4% 02/28/11 1.5% 02/28/10 2.3%
14 Miami, FL 04/30/09 7.3% 03/31/11 2.6% 03/31/10 1.7%
15 North Port, FL 01/31/09 2.7% 02/28/11 6.2% 06/30/11 1.2%
16 Punta Gorda, FL 01/31/09 1.6% 02/28/11 11.5% 06/30/09 3.5%
17 Tampa, FL 03/31/09 1.7% 03/31/11 3.8% 12/31/09 2.6%
18 Athens, GA 03/31/11 4.2% 01/31/11 2.7% 01/31/10 0.8%
19 Augusta, GA 12/31/08 1.7% 03/31/11 3.0% 05/31/11 0.0%
20 Honolulu, HI 12/31/08 0.4% 01/31/11 3.4% 08/31/10 3.1%
21 Ames, IA 07/31/10 7.4% 02/28/11 6.3% 05/31/11 2.4%
22 Davenport, IA 05/31/09 1.8% 12/31/10 4.1% 01/31/10 0.7%
23 Des Moines, IA 02/28/09 4.5% 01/31/11 2.6% 05/31/11 1.5%
24 Dubuque, IA 12/31/08 5.0% 02/28/11 3.1% 04/30/09 5.8%
25 Waterloo, IA 03/31/09 1.4% 11/30/10 0.9% 07/31/09 4.1%
26 Elkhart, IN 04/30/09 2.2% 02/28/11 1.5% 08/31/09 10.4%
27 Indianapolis, IN 01/31/09 0.4% 02/28/11 3.0% 10/31/09 0.6%
28 Lafayette, IN 01/31/09 15.7% 02/28/11 5.4% 07/31/09 4.0%
29 Muncie, IN 04/30/11 11.1% 02/28/10 3.4% 02/28/11 2.7%
30 Lake Charles, LA 04/30/11 6.2% 02/28/11 0.9% 11/30/10 3.6%
31 Monroe, LA 03/31/09 3.3% 05/31/10 3.6% 03/31/11 1.3%
32 Shreveport, LA 01/31/09 1.9% 03/31/11 5.6% 10/31/09 3.2%
33 Boston, MA 02/28/09 1.1% 03/31/11 0.7% 07/31/09 2.9%
34 Springfield, MA 04/30/11 3.8% 03/31/11 2.5% 08/31/09 2.6%
35 Cumberland, MD 05/31/10 3.1% 01/31/11 6.2% 06/30/11 6.5%
36 Lewiston, ME 06/30/11 16.1% 01/31/11 1.4% 06/30/11 3.8%
37 Ann Arbor, MI 05/31/09 0.1% 12/31/10 4.5% 07/31/09 3.0%
38 Detroit, MI 04/30/09 8.6% 03/31/11 6.8% 06/30/09 2.4%
39 Grand Rapids, MI 04/30/09 2.9% 02/28/11 7.7% 07/31/09 5.0%
40 Lansing, MI 05/31/09 4.4% 02/28/11 10.6% 08/31/09 2.7%
41 Monroe, MI 12/31/09 2.7% 02/28/11 7.6% 10/31/09 2.5%
42 Muskegon, MI 11/30/09 0.2% 01/31/11 6.1% 12/31/10 1.6%
43 Duluth, MN 05/31/11 2.9% 03/31/11 4.6% 09/30/09 0.6%
44 Minneapolis, MN 03/31/09 1.8% 02/28/11 2.5% 09/30/09 1.5%
45 Rochester, MN 03/31/09 0.7% 02/28/11 2.4% 12/31/10 1.5%
46 Columbia, MO 11/30/08 1.7% 02/28/11 1.5% 08/31/09 3.6%
47 Jefferson City, MO 08/31/10 1.0% 03/31/11 3.9% 02/28/10 2.1%
48 Joplin, MO 02/28/11 5.0% 02/28/11 15.4% 08/31/09 1.2%
49 Kansas City, MO 03/31/09 3.2% 02/28/11 5.2% 06/30/11 1.2%
50 Hattiesburg, MS 01/31/11 2.2% 03/31/11 4.1% 04/30/11 3.6%
51 Fayetteville, NC 12/31/08 2.1% 01/31/10 0.3% 10/31/10 3.2%
52 Winston-Salem, NC 03/31/09 1.9% 11/30/10 0.1% 01/31/11 2.4%
53 Bismarck, ND 03/31/09 15.3% 02/28/10 8.8% 12/31/07 8.8%
54 Fargo, ND 04/30/09 4.9% 02/28/11 3.0% 07/31/09 4.2%
55 Grand Forks, ND 04/30/09 3.0% 12/31/10 7.7% 09/30/10 4.2%
56 Lincoln, NE 01/31/09 1.6% 01/31/11 4.2% 07/31/10 3.2%
57 Omaha, NE 07/31/10 4.5% 03/31/11 2.7% 02/28/10 2.6%
58 Manchester, NH 02/28/11 2.1% 02/28/11 0.5% 01/31/10 1.8%
59 Ocean City, NJ 03/31/09 1.0% 03/31/11 6.3% 05/31/11 5.7%
60 Syracuse, NY 03/31/11 2.9% 03/31/11 10.2% 08/31/10 1.5%
61 Cincinnati, OH 01/31/09 0.2% 02/28/11 2.1% 12/31/10 1.6%
62 Springfield, OH 01/31/11 13.4% 03/31/11 2.5% 01/31/10 3.5%
63 Toledo, OH 05/31/09 1.4% 01/31/11 0.6% 06/30/09 3.4%
64 Youngstown, OH 06/30/11 5.2% 02/28/11 3.9% 06/30/09 4.0%
65 Oklahoma City, OK 05/31/09 0.6% 02/28/11 1.0% 01/31/10 4.0%
66 Tulsa, OK 10/31/10 0.8% 02/28/11 4.4% 02/28/10 3.1%
67 Corvallis, OR 04/30/11 5.7% 02/28/11 4.3% 07/31/09 4.9%
68 Portland, OR 03/31/09 2.6% 03/31/11 3.7% 11/30/09 2.0%
69 Erie, PA 03/31/11 4.6% 02/28/11 3.1% 02/28/10 3.9%
70 Philadelphia, PA 03/31/09 0.7% 02/28/11 2.9% 02/28/10 0.5%
71 Pittsburgh, PA 02/28/09 1.6% 01/31/10 6.5% 02/28/10 4.1%
72 Williamsport, PA 03/31/11 46.3% 02/28/10 8.5% 12/31/09 3.9%
73 Chattanooga, TN 05/31/11 2.6% 02/28/11 4.0% 08/31/09 3.2%
74 Clarksville, TN 01/31/09 2.7% 02/28/11 1.3% 08/31/09 5.1%
75 Kingsport, TN 02/28/11 0.4% 01/31/11 1.6% 02/28/10 2.8%
76 Memphis, TN 04/30/09 2.8% 03/31/11 1.1% 09/30/10 3.1%
77 Nashville, TN 03/31/09 1.6% 02/28/11 1.4% 09/30/09 3.7%
78 Amarillo, TX 10/31/08 1.7% 01/31/10 3.2% 04/30/10 4.6%
79 College Station, TX 10/31/10 5.5% 02/28/11 10.2% 12/31/07 3.6%
80 Corpus Christi, TX 01/31/11 5.1% 12/31/10 4.3% 11/30/09 6.0%
81 Dallas, TX 05/31/09 0.9% 02/28/11 0.5% 12/31/09 3.6%
82 Laredo, TX 12/31/08 1.3% 01/31/10 2.9% 09/30/09 7.1%
83 Longview, TX 04/30/09 3.2% 03/31/11 5.9% 10/31/09 7.9%
84 McAllen, TX 01/31/09 0.4% 11/30/10 1.9% 12/31/07 5.2%
85 Midland, TX 04/30/09 3.6% 01/31/10 8.7% 08/31/09 10.0%
86 Odessa, TX 02/28/09 24.5% 11/30/10 8.9% 08/31/09 9.0%
87 Tyler, TX 03/31/09 0.4% 12/31/10 0.8% 07/31/10 5.3%
88 Victoria, TX 09/30/10 4.2% 02/28/11 6.2% 11/30/09 4.8%
89 Provo, UT 02/28/09 2.7% 03/31/11 1.1% 12/31/09 4.6%
90 Salt Lake City, UT 03/31/09 2.3% 03/31/11 0.4% 02/28/10 3.6%
91 Danville, VA 03/31/09 1.8% 11/30/10 11.4% 11/30/09 2.9%
92 Winchester, VA 04/30/11 7.9% 10/31/10 8.4% 08/31/09 5.4%
93 Burlington, VT 03/31/11 6.1% 01/31/10 1.3% 09/30/09 4.5%
94 Bellingham, WA 04/30/11 2.7% 03/31/11 0.2% 06/30/11 0.4%
95 Kennewick, WA 03/31/09 4.2% 03/31/11 0.3% 12/31/07 4.4%
96 Madison, WI 01/31/09 1.3% 02/28/11 0.8% 08/31/09 2.1%
97 Casper, WY 11/30/10 7.0% 01/31/10 3.2% 12/31/09 8.5%
98 Cheyenne, WY 12/31/08 6.0% 12/31/10 3.0% 01/31/10 2.8%

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MERS, Banks Sued by New York State; MERSCORP Responds

Three major banks and Virginia-based
MERSCORP, Inc. and its subsidiary Mortgage Electronic Registrations Systems
(MERS) were sued Friday by the state of New York.  The suit, filed by the state’s Attorney
General Eric T. Schneiderman
, charges that the creation and use of a privately
national electronic registration system, MERS, “has resulted in a wide range of deceptive and fraudulent foreclosure
filings in New York state and federal courts, harming homeowners and
undermining the integrity of the judicial foreclosure process.”  Further, the lawsuit charges that the
employees and agents of the three banks, Bank of America, J.P. Morgan Chase,
and Wells Fargo
, acting as “MERS certifying officers,” have
repeatedly submitted court documents containing false and misleading information
that made it appear that the foreclosing party had the authority to bring a
case when in fact it may not have.  The
suit also names additional defendants for some of the charges including loan
servicing subsidiaries of the three banks.

The
lawsuit, filed in the Supreme Court of the State of New York, Kings County levies
the following charges:   

  • MERS was created to allow financial
    institutions to evade country recording fees, avoid the need to publicly record
    mortgage transfers and facilitate the rapid sale and securitization of
    mortgages. MERS members log all of their
    transfers in a private electronic registry rather than in the local county
    clerk’s office.
     
  • MERS is a shell company with no
    economic interest in any mortgage loan.
    It is the nominal “mortgagee” of the loan in the public records and
    remains as such regardless of how often the loan is sold or transferred among
    its members.
     
  • MERS has few or no employees but
    serves as the mortgagee for tens of millions of mortgages. It has indiscriminately designated over
    20,000 MERS member employees as MERS “certifying officers” expressly
    authorizing them to assign MERS mortgages and execute paperwork to foreclose on
    properties and submit claims in bankruptcy proceedings while failing to
    adequately screen, train, or monitor their activities. Assignments were often automatically
    generated and “robo-signed” by individuals who did not review the
    underlying property ownership records, confirm the documents’ accuracy, or even
    read the documents. MERS certifying
    officers have regularly executed and submitted in court mortgage assignments
    and other legal documents on behalf of MERS without disclosing that they are
    not MERS employees, but instead are employed by other entities, such as the
    mortgage servicer filing the case or its counsel.
     
  • Use of the private database to
    record property transfers has eliminated homeowners’ and the public’s ability
    to track them through the traditional public records system. This data base is plagued with inaccuracies
    and errors which make it difficult to verify the chain of title or the current
    note-holder. In addition, as a result of these
    inaccuracies, MERS has filed mortgage satisfactions against the wrong property.
     
  • This “bizarre and complex end-around
    of the traditional recording system” has saved banks more than $2 billion in
    recording fees and allowed the banks to securitize and sell millions of loans, “often
    misrepresenting the quality and nature of the mortgages being transferred.”
     
  • The creation and use of the MERS
    System by the Defendant Servicers and other financial institutions has resulted
    in a wide range of deceptive and illegal practices, particularly with respect
    to the filing of New York foreclosure proceedings in state courts and federal
    bankruptcy proceedings.

The lawsuit estimates that MERS
members have brought over 13,000 foreclosures against New York homeowners
naming MERS as the foreclosing property when in many cases MERS lacks the
standing to foreclosure.  Even when
foreclosures were not initiated in MERS name, proceedings related to their
registered loans often included deceptive information.

The lawsuit seeks a declaration that
the alleged practices violate the law, as well as injunctive relief, damages
for harmed homeowners, and civil penalties. The lawsuit also seeks a court
order requiring defendants to take all actions necessary to cure any title
defects and clear any improper liens resulting from their fraudulent and
deceptive acts and practices.

On January 24 the U.S. Court of
Appeals for the 11th Judicial Court upheld an appeal from MERS that
contended a lower court had erred in finding that a homeowner had been
improperly foreclosed on by MERS on the grounds that:

1).   The assignment of the security deed was
invalid because MERS, as nominee of a defunct lender could not assign the
documents of its own volition.

2.
    The “splitting” of the mortgage and
the note rendered the mortgage null and void and therefore notices of
foreclosure were invalid as not coming from a secured creditor.

The New York suit differs slightly from
the facts in Smith V. Saxon Mortgage,
but if Schneiderman wins his case, it could be that the legitimacy of MERS will
ultimately have to be decided by the U.S. Supreme Court.

…(read more)

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OBAMA ADMINISTRATION RELEASES DECEMBER HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the December edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the December Housing Scorecard show some subtle improvements in the market over the past year, but underscore fragility as the overall outlook remains mixed. For example, new and existing home sales rose compared to the prior month and remain higher than a year ago, and homes are more affordable than they have been since 1971. Median-income families today have nearly double the funds needed to cover the cost of the average home. However, home prices showed a slight dip from the prior month and remain below year ago levels. The full report is available online at www.hud.gov/scorecard.