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.

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Foreclosure deal: Closer, but not there yet

States have until the close of the business day to agree to the latest draft deal aimed at relieving homeowners struggling with mortgages bigger than their home’s value.

Mortgage rates hit another new low

Just one day after President Obama detailed a proposal to enable millions of homeowners to refinance to record-low mortgage rates, those rates notched another record.

Solemn Remembrance of Those Lost Aboard Shuttle Columbia

Like countless persons across the world, I watched in quiet disbelief as thousands of pieces of debris streaked across the vast Texas sky the morning of February 1, 2003.
 
Unlike what had transpired in 1986 during the launch of the shuttle Challenger, this time the shuttle Columbia was re-entering earth’s atmosphere.  Traveling at Mach 19 at an altitude of 200,000 feet, the shuttle was only a dozen or so minutes from touching down at the Kennedy Space Center – where family and support personnel waited.  Sadly, that landing never happened.
 
What also made this morning different for me was that I had taken over the White House Office of Cabinet Affairs only 10 days earlier.  The Office served as a policy-coordinating body across the White House policy councils, in addition to its primary function as an early warning system for events transpiring across the Executive branch – including NASA.
 
Watching the events unfold on television, I knew to quickly head to the office as I did most Saturdays and not surprisingly my phone went off en route to the White House.  I arrived at 10:00 and already meetings and conference calls related to the disaster were being scheduled.
 
There was no doubt that all aboard were lost – a point made crystal clear to us later that morning.  A human simply cannot withstand the tremendous physical forces from a rapid deceleration of that magnitude.  We also learned quickly that few nations have the capability to shoot down anything traveling at that altitude and speed, thus ruling out the possibility of an act of terror.
 
All we knew was that something had gone horribly wrong.
 
White House Chief of Staff Card entered my West Wing office early that afternoon and told me I was going to be the main point of contact for the White House for this tragic event and for the soon-to-be-announced accident investigation board.  I wasn’t quite sure what that meant at the time but Mr. Card instructed me to get the NASA chief of staff on the phone.
 
That is when I first met Courtney Stadd – an impassioned public servant who had dedicated his life to the US space program.  Courtney was amazingly patient with me and explained in great detail what protocols were already being invoked, as were dictated post-shuttle Challenger accident.  Courtney was laser-focused on the families of the astronauts, as was all of NASA.  Throughout the months-long ordeal of the accident investigation, Courtney worked diligently behind the scenes, focused at all times on the well-being of the families of the fallen astronauts.
 
Following a Homeland Security Council meeting that afternoon, a second meeting was held early in the evening among the various offices within the Executive branch, as we heard more about the soon-to-be-announced Columbia Accident Investigation Board and a memorial service at the Johnson Space Center later that week.
 
While it was not discussed that day, we also learned that, this time, the mindset of the public was questioning the American space program and, specifically, whether or not the risk of space flight was worth the reward.  That was in stark contrast to the mindset post-Challenger accident, when the public was eager for the shuttle to fly safely again as soon as possible.  This new mindset ultimately led us to chart a new course for NASA – a policy announced in January 2004.
 
But that was much later, as more immediate matters took precedent.
 
At the invitation of NASA, I attended the memorial service of Astronaut David Brown of Virginia.  I had never met Mr. Brown, but you could not help but be in awe of his accomplishments, which were many.  He was by training a medical doctor and was the first Navy flight surgeon to become a fighter pilot.  He was also a college gymnast and had somehow managed to remain single.  The similarities between the two of us were few and far between, yet as I sat only three feet from his flag draped coffin, I learned we were only a couple of months apart in age and both not yet married.  And as I heard others tell his life story during the memorial service at the Arlington National Cemetery Chapel, I felt a sense of deep regret that I never had the opportunity to meet him.
 
Following the service, the coffin was placed atop a horse-drawn caisson for the mile long walk to his final resting place near the marble amphitheater.  As we got closer, the crowd was 10 deep and I recall my amazement at seeing so many school kids who, I suspect, were there as part of a school trip.  Here they stood by the hundreds, heads draped and hands over heart as the cortege moved slowly toward Mr. Brown’s final resting place.  Many of them wiped away tears and occasionally cried aloud.  Otherwise, there was compete silence except for the occasional plane landing at nearby Reagan National Airport.
 
America buried many heroes that day and this is only one of many stories to be told of sacrifice and duty to Country which in this instance includes India and Israel.  I would hope that Americans remember them all, and on this — the 9th anniversary of Shuttle Columbia’s tragic accident — pay eternal solemn respect to the crew of her final mission: Commander Rick Husband, Commander William McCool, Commander Michael Anderson, Payload Specialist Ilan Ramon, Mission Specialist Kalpana Chawla, Mission Specialist Laurel Clark, and Mission Specialist David Brown.  The words of President Reagan spoken many years ago are a fitting tribute to each of them: May God cradle you in His loving arms.

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Refinancing Continues to Drive Application Volume

The
Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey
reported that mortgage applications as measured by its Market Composite Index
were down 2.9 percent on a seasonally adjusted basis during the week ended
January 27 but increased 9.0 percent from the previous week on an unadjusted
basis.

The
seasonally adjusted Purchase Index was down 1.7 percent while it increased 17.1
percent on an unadjusted basis from the week ended January 20 and was 4.3
percent lower than during the same week in 2011.  The Refinance Index decreased 3.6 percent
from the previous week.

All
of the four week moving averages were higher for the week.  The seasonally adjusted Market Index rose
4.11 percent, the seasonally adjusted Purchase Index was up 2.48 percent and
the Refinance Index increased 4.22 percent.

Applications for
refinancing represented 80.0 percent of all applications, down from 81.3
percent the previous week.  Applications
for adjustable-rate mortgages (ARMs) had a 5.6 percent market share compared to
5.3 percent a week earlier.

Refinancing
applications in December increased in every U.S. state according to MBA and,
despite multiple holidays only 12 states had fewer purchase applications than
in November.  In Connecticut refinancing
applications increased 80.1 percent from November and Maine saw a 30.8 percent
increase in applications for home purchase mortgages.

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

Rates fell for all
fixed rate mortgages (FRM) compared to the previous week.  The average contract interest rate for
30-year conforming FRM (balances under $417,500) decreased to 4.09 percent with
0.41 point from 4.11 with 0.47 point. Rates for jumbo mortgages (those with
balances over $417,500) decreased from 4.39 percent to 4.33 percent while
points increased from 0.40 to 0.41.  This
is the lowest rate for the 30-year jumbo mortgages since MBA started tracking
them one year ago. 

FHA backed 30-year
FRM rates decreased one basis point to 3.96 percent with points increasing to
0.61 from 0.57.  Rates for the 15-year
FRM were down from 3.40 percent with 0.40 point to 3.36 percent with 0.41
point.  The effective rate of all of the
mortgage products listed above also decreased.

The sole rate increase was for the 5/1 ARM which increased on average to 2.94 percent with 0.39 point
from 2.91 percent with 0.41 point.  The
effective rate also increased. 

Follow what drives changes in mortgage rate each day with Mortgage Rate Watch from MND.

All rates quoted
are for 80 percent loan to value loans and points include the origination fee.

Michael
Fratantoni, MBA’s Vice President of Research and Economics said of the week’s
results, “The Federal Reserve surprised the market last week by indicating
that short-term rates were likely to stay at their current low-levels until the
end of 2014.  Longer-term treasury rates dropped in response, and mortgage
rates for the week were down slightly as a result.  Although total application volume dropped on
an adjusted basis relative to last week, refinance volume remains high, with
survey participants reporting that the expanded Home Affordable Refinance
Program (HARP) contributed to roughly 10 percent of their refinance
activity.”

MBA’s weekly
survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted since 1990.  Respondents include
mortgage bankers, commercial banks and thrifts.  Base period and value for
all indexes is March 16, 1990=100.

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