The Norris Group Blog

Today’s News Synopsis:

First American CoreLogic expects about 10 percent of all U.S. mortgages to adjust within the next few years. FHA plans to reduce the maximum lending amount that seniors can receive for reverse mortgages. Consumers are claiming that Wells Fargo is guilty of cutting their credit lines for no apparent reason. Whitehouse spokesman Robert Gibbs has confirmed that president Obama is in favor of extending the first time home buyer tax credit.

In The News:

Chron - “New round of foreclosures looms in U.S.” (10-5-09)

“About 10 percent of all mortgages in this country are scheduled to adjust in the next few years, with the numbers peaking in mid- to late 2011, according to First American CoreLogic. Those loans are worth about $1 trillion, and nearly 20 percent of the borrowers who have them are already seriously behind on their monthly payments.”

San Francisco Chronicle – “Declining home values squeeze reverse mortgages” (10-5-09)

“In a letter to reverse mortgage lenders Sept. 23, FHA Commissioner David Stevens said his agency must reduce the maximum amounts seniors can receive on reverse mortgages because of a $798 million estimated deficit in the program in the coming fiscal year.”

Calculated Risk – “The Impact of the Declining Homeownership Rate” (10-5-09)

“Since about 2/3s of all households are owner occupied, an increase of 1.25 million households per year would imply an increase in homes owned of about 800K+ per year. If an additional 500K per year moved to homeownership – as indicated by the increase in the homeownership rate from 1995 to 2005 – then the U.S. would have needed 1.3 million additional owner occupied homes per year.”

Los Angeles Times – “Too many palatial homes, too few princely buyers” (10-5-09)

“Spec mansions are now amassed in some areas like rising floodwater behind a dam. A search of homes for sale built since 2007 and priced above $3 million shows 39 such properties in Newport Beach and Newport Coast, 27 in Laguna Beach, 19 in Manhattan Beach, 18 in Irvine and 11 on the Palos Verdes Peninsula.”

San Francisco Chronicle – “Wells Fargo cutting customers’ lines of credit” (10-4-09)

“This is not the first time I’ve heard from readers saying banks have cut off their credit for no apparent good reason, and sometimes without warning. Officers at the Wells Fargo branch in question said they could not comment. A corporate spokesman would not confirm that the bank had sent out letters last week, except to say the reader’s e-mail ‘isn’t accurate about the purported quantity of letters suggested.’”

Inman - “Obama backs extension of tax credit” (10-5-09)

“White House spokesman Robert Gibbs today confirmed that President Obama supports an extension of the first-time homebuyer tax credit, along with prolonging jobless benefits and health care subsidies for unemployed workers.”

Housing Wire – “FHA is Replacing Securitization in Mortgage Financing” (10-5-09)

“The collapse of the private securitization market in 2007 and retrenchment by the private mortgage insurers led to a huge funding gap in mortgage finance, especially in the higher loan-to-value (LTV) sector. That gap that is quickly being filled by Federal Housing Administration (FHA)-insured loans, according to a panel of regulators and enforcers speaking at the CRA & Fair Lending Colloquium, hosted by Wolters Kluwer Financial Services and now underway in New Orleans.”

Wall Street Journal – “A Return to Real Estate” (10-5-09)

“Individuals looking to dip their toes into real-estate securities should consider buying a mutual fund that invests both in the U.S. and abroad, says Dave Yeske, a financial planner in San Francisco. When buying risky assets like real estate, it’s best to spread your bets across companies and countries, he says.”

National Mortgage News – “Panel May Look at New FHA Net Worth Requirements” (10-5-09)

“One topic a panel titled ‘The Recent Evolution of Independent Mortgage Bankers’ may end up covering is the Federal Housing Administration’s plan for a $1 million net-worth lender requirement. Net worth may be a ‘significant’ problem for the smaller nondepository, said Tim Stern, co-founder and president of Lenders One, St. Louis, in a phone interview. He said his cooperative group, which helps mortgage bankers collectively achieve scale, also requires at least $1 million in net worth.”

Housing Wire – “IBM to Purchase Wilshire Credit from BofA” (10-5-09)

“Global IT services giant IBM (IBM: 119.75 +0.61%) is in the process of acquiring mortgage servicer Wilshire Credit Corp. from Bank of America (BAC: 16.96 +3.79%), numerous sources with knowledge of the transaction confirmed to Housing Wire over the weekend.”

Bloomberg – “General Growth Proposes $11.6 Million Bonus Pool” (10-5-09)

“General Growth Properties Inc., the second-largest shopping mall owner in the U.S., asked for court permission to pay as much as $11.6 million in incentive bonuses to 12 executives including Chief Executive Officer Adam Metz and Chief Operating Officer Thomas Nolan.”

Bloomberg - “Mortgage-Bond Prices Double From March Lows in Rally” (10-5-09)

“Typical prices for the most-senior prime-jumbo securities rose 2 cents on the dollar last week to 84 cents, according to Barclays Capital data. Similar bonds backed by Alt-A loans with a few years of fixed rates increased 2 cents to 60 cents. The jumbo bonds are up from about 75 cents three months earlier, while the Alt-A bonds have climbed from 47 cents.”

Bloomberg - “Treasury Says Three More Money Managers Receive PPIP Funding” (10-5-09)

“The U.S. Treasury Department said AllianceBernstein Holding LP, BlackRock Inc. and Wellington Management Co. have raised a combined $1.94 billion for their funds participating in the U.S. effort to buy toxic assets from banks. By getting that money from private investors, the three firms qualify for federal funds under the Public Private Investment Program. The U.S. will match the funds each money manager raised, and provide debt financing that will give them a combined purchasing power of $7.74 billion.”

Orange County Register – “Brightwater developer misses $1.7 million payment” (10-5-09)

“The troubled builder of the Brightwater development by the Bolsa Chica wetlands announced today that it skipped a $1.7 million debt payment that was due this week but is working with the lender to restructure its loans.”

Orange County Register – “Foreclosures total 4% of houses for sale” (10-5-09)

“Steve Thomas at Altera Real Estate in Aliso Viejo reports that the number of O.C. distressed properties (homes listed by agents as foreclosures or short sales) was 2,346 last week, -38 vs. two weeks earlier or a -1.6% change.”

Looking Back:

The Hope for Homeowners program gave permission to FHA to guarantee $300 billion dollars worth of 30 year, fixed rate home loans. Countrywide Financial Corp. settled fraud complaints in 11 states by cutting interest rates and borrowers’ owed amounts. The Federal Reserve boosted its auctions of cash to banks up to $900 billion.