by Calculated Risk on 1/28/2010 07:31:00 PM

From Bloomberg: Lenders Pursue Mortgage Payoffs Long After Homeowners Default

[L]enders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors.
...
While there are no statistics on the number of deficiency judgments approved by courts, the Federal Deposit Insurance Corp. tracks the amount banks collect after defaulted loans were written off.

These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Washington-based regulator. Recoveries on defaulted home-equity loans almost doubled to $392 million, the FDIC data shows.

As we've discussed before, the recourse laws vary by state. As an example Florida is a recourse state, however in California purchase money is non-recourse. If the borrower walks away in California, the lender is stuck with the collateral. However, if the borrower in California refinanced their home, then the lender usually has recourse, and can pursue a judicial foreclosure (as opposed to a trustee's sale), and seek a deficiency judgment. Usually 2nd liens have recourse too.

Historically lenders rarely pursued a deficiency judgment in California because the trustee's sale was much cheaper and quicker than a judicial foreclosure - and the borrowers rarely had any resources anyway. However in Florida, all foreclosures are judicial, so the lender might as well obtain a deficiency judgment too.

This is important for short sales too. All sellers should obtain the advice of a lawyer and make sure the lender waives their rights for a deficiency judgment if possible.

Update: For a few examples in California, see Greg Weston's blog on jingle mail.

by Calculated Risk on 1/28/2010 04:41:00 PM

Earlier I posted the Freddie Mac delinquency graph.

And here is the monthly Fannie Mae hockey stick graph ... (note that Fannie releases delinquency data with a one month lag to Freddie).

Click on graph for larger image in new window.

Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 5.29% in November, up from 4.98% in October - and up from 2.13% in November 2008.

"Includes seriously delinquent conventional single-family loans as a percent of the total number of conventional single-family loans."

Once again it is important to note these stats do include Home Affordable Modification Program (HAMP) loans in trial modifications.

by Calculated Risk on 1/28/2010 02:11:00 PM

There are two key components:
1) New Requirements that Documentation be Provided Before Trial Modification Begins.
2) and guidance on Converting Borrowers in the Temporary Review Period to Permanent Modifications

From Treasury: Administration Updates Documentation Collection Process and Releases Guidance to Expedite Permanent Modifications. And the Special Directive.

1) On beginning trial modifications: The original plan allowed servicer discretion on when to place borrowers in HAMP trial modification programs. Some servicers required documentation and a first payment before putting the borrower in a trial program, others just accepted a verbal agreement over the phone. The new rules include:

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents, subsequently referred to as the “Initial Package”. The Initial Package includes:

Request for Modification and Affidavit (RMA) Form,

IRS Form 4506-T or 4506T-EZ, and

Evidence of Income

The trial period will start after the initial documents are received, a trial plan is sent to the borrower, and the borrower makes the initial payment.

The Treasury was initially trumpeting the number of trial modifications, but that was a poor metric of success since some servicers were just putting anyone who answered the phone in a trial modification.

2) The second key component of the directive is how to handle all the current trial modifications. For the borrowers who have not made all of their payments, the directive requires the HAMP trial program to be canceled. For borrowers who have made payments, but are missing documentation, Treasury provides some additional guidelines.

This suggests a surge of trial cancellations in February.

by Calculated Risk on 1/28/2010 01:16:00 PM

The good news for hotels is it appears the occupancy rate might be near the bottom. This week Smith Travel Research reported the occupancy rate was "virtually flat with an 0.9-percent decrease" compared to the same week in 2009.

The bad news for hotels is the average daily rate (ADR) is still falling because the occupancy rate is so low. Therefore RevPAR (revenue per available room) is still falling.

From HotelNewsNow.com: Boston leads occ., RevPAR increases in STR weekly numbers

Overall, in year-over-year measurements, the industry’s occupancy ended the week virtually flat with an 0.9-percent decrease to 46.8 percent, average daily rate dropped 9.4 percent to US$93.87, and RevPAR for the week fell 10.3 percent to finish at US$43.89.

Click on graph for larger image in new window.

This graph shows the occupancy rate by week since 2000, and the rolling 52 week average occupancy rate.

Notes: the scale doesn't start at zero to better show the change.

The graph shows the distinct seasonal pattern for the occupancy rate; higher in the summer because of leisure/vacation travel, and lower on certain holidays. Business travel is the key over the next few months.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 1/28/2010 11:04:00 AM

Here is the monthly Freddie Mac hockey stick graph ...

Click on graph for larger image in new window.

Freddie Mac reported that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 3.87% in December 2009, up from 3.72% in November - and up from 1.72% in December 2008.

"Single-family delinquencies are based on the number of mortgages 90 days or more delinquent or in foreclosure as of period end ..."

Just more evidence of the growing delinquency problem, although some of these loans may be in the trial modification programs and are still included as delinquent until they become permanent.

Fannie Mae should report soon ...