by Calculated Risk on 1/16/2010 10:57:00 AM

Jillayne Schlicke writes: The Financial Crisis Inquiry Commission is Interviewing the Wrong People

If the Commission really does want to learn WHO knew what, when, then they’re interviewing the wrong people.

They need to interview the line workers. Mortgage loan processors, managers, escrow closers, underwriters from the banks, private mortgage insurance companies as well as wholesale lending, loan servicing default and loss mitigation workers and even consumers. Seasoned mortgage industry veterans who have proof in the form of saved memos or emails, that they informed senior management of the red flags, predatory lending, and the insane relaxation of underwriting guidelines that started to pop up as early as 2001 and 2002 yet were ignored or whose concerns were dismissed.

I think this is the key - instead of interviewing bank CEOs and top regulators, start with the field examiners and the "line workers" in the mortgage industry. And as Jillayne noted, talk to the consumers too.

by Calculated Risk on 1/16/2010 05:00:00 AM

From HUD: HUD takes action to speed resale of foreclosed properties to new owners (ht Soylent Green is People)

... With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
...
In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
...
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

•All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
•In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
•The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.

The title of the document is WaivPropFlip2010.pdf (probably stands for Waiver Property Flipper - aptly named)!

To be clear, this change isn't to help flippers buy - this change is to help homeowners to buy from flippers. Previously the flipper had to own the home for 90 days for the next buyer to obtain an FHA loan, now the period can be less. The 20% price increase is not a limit, however higher price increases require extra verification.

by Calculated Risk on 1/15/2010 11:59:00 PM

UPDATE: The trials modification period was originally 3 months, and then was extended to 5 months, and then extended to the end of January. This means that for the borrowers in the trial modification program, there will be no further extensions. For borrowers just entering the trial phase, they will have the normal three month period.

From the WSJ: Paperwork Woes Plague Mortgage Plan

The administration last month gave borrowers who were current on their payments after at least three months an extension until Jan. 31 to provide needed paperwork. But the administration doesn't plan to extend that deadline, Assistant Treasury Secretary Michael Barr said Friday.

"We are going to have further guidance for [mortgage] servicers at the end of the month," he said.

No extension, but "further guidance".

Unless something changes, distressed sales (foreclosures and short sales) should start to increase in February. BofA's estimates the number ...

"of homes being taken back by Bank of America [will] range from 11,000 to 14,000 a month in the early part of this year to 29,000 to 35,000 by November and December, said John Ciresi, vice president and portfolio manager for Bank of America in Towson, Md.
...
The system became "clogged" by a voluntary moratorium on foreclosures while banks met the requirements of President Obama's Making Home Affordable mortgage plan program and by state legislation requiring mediation before banks can start the foreclosure process, Ciresi said ...

Bank of America is getting 40,000 new offers a month on short sales, or homes offered for less than the mortgage balance, Ciresi said."

Here comes the next wave of distressed sales, and based on the BofA estimates, the wave will build all year.

Here was an earlier post today: HAMP: 66,465 Permanent Mods

Here is the Press Release from Treasury: Administration Releases December Loan Modification Report, Update on Conversion Drive and the December HAMP report.

by Calculated Risk on 1/15/2010 09:30:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Changes and comments from surferdude808:

Since last week, the Unofficial Problem Bank List increased by a net 6 institutions to 582 and aggregate assets were virtually unchanged.

There was removal, which was the failed Horizon Bank ($1,3 billion). Seven institutions were added, with most being smaller national banks as the OCC released its actions for December 2009.

As suggested in the narrative last week, there were several national banks added back to list as the OCC replaced terminated Formal Agreements with Consent Orders. These add backs include First National Bank of Baldwin County, Foley, AL ($263 million); Capitol National Bank, Lansing, MI ($229 million); and First National Bank of Wyoming, Laramie, WY ($218 million.

The only other modification was a Prompt Corrective Action order issued by the Federal Reserve against Old Southern Bank, Orlando, FL ($384 million).

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)



Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 1/15/2010 08:03:00 PM

Hope, Change, have vanished
Crestfallen bank expiring
Mortally wounded
by Soylent Green is People
From the FDIC: FDIC Creates a Deposit Insurance National Bank of Kaysville, Utah to Protect Insured

Depositors of Barnes Banking Company, Kaysville, Utah
Barnes Banking Company, Kaysville, Utah, was closed today by the Utah Department of Financial Institutions, which appointed Federal Deposit Insurance Corporation (FDIC) as receiver. ....

The FDIC will mail checks directly to customers with CDs and IRAs. ...

As of September 30, 2009, Barnes Banking Company had $827.8 million in total assets and $786.5 million in total deposits. ...

The cost to the FDIC's Deposit Insurance Fund is estimated to be $271.3 million. Barnes Banking Company is the fourth bank to fail this year and the first in Utah. The last FDIC-insured institution closed in the state was America West Bank, Layton, on May 1, 2009.

No one wanted this one.