There seem to be more every month! According to RealtyTrac, US homes facing foreclosure almost doubled in July as property owners with adjustable-rate mortgages saw their payments rise. Lenders sent 179,599 notices of default, scheduled auctions or bank repossessions last month. California, Florida, Michigan, Ohio and Georgia accounted for more than half of the country’s total filings. US home sales dropped to a four-year low in the second quarter and prices fell in a third of US cities, according to the National Association of Realtors.
Of the $10.4 trillion, which companies are servicing the most residential loans out there? Countrywide is #1 with over $1.4 trillion, almost a 14% market share. Wells is #2, followed by Citi, Chase, and WAMU. Interestingly, for FHA & VA loans (with $423 billion outstanding), Wells is #1 with a 32% market share. Of the $10.4trillion in mortgages, only 13% are sub prime and, of that, only about 14% are delinquent. And only about 5% (of the 13%) are in foreclosure.
Yesterday the markets seemed to believe that the Federal Reserve may be able to avoid an emergency reduction in the benchmark interest rate as some of its steps to increase liquidity show signs of success. In other words, things were relatively calm. US Treasury bill yields rose for the first time in six days as demand for the safest government debt declined. Richmond Fed President Jeffrey Lacker, said decisions need to be guided by the outlook for prices and growth rather than strictly looking at market gyrations. The difference in yield between two- and 10- year note has reached the widest since 2005, helping ARM prices relative to fixed. There were no economic releases yesterday, but Senator Dodd held a morning press conference following his meeting with Fed Chairman Bernanke and Secretary Paulson in which he said that they are committed to using all of the tools at their disposal to restore stability in the markets and continued to reiterate his support for lifting Fannie and Freddie’s portfolio caps to help provide additional liquidity.
Under “mortgage company news” Nat City made a series of pricing adjustment changes (FICO, loan amount, etc.) to their various programs, and a rumor sprang up (in the WSJ, citing unnamed investors) about Warren Buffett possibly being interested in Countrywide’s servicing business and mortgage-backed securities portfolio.
Here’s what you can tell your client if their mortgage lender goes out of business.
1. “Keep making your payments. Regardless of what kind of trouble the mortgage company may be in, you still need to send in your payments on time. Remember, your payments are considered an asset to the company. If a lender declares bankruptcy, those assets will just be sold to another lender.”
2. “Know Your Rights: the terms of your loan should always stay the same, no matter who holds your loan. It’s important that you thoroughly review the details of your mortgage agreement. The interest rate and the type of loan you get should not change in a transfer. If your lender does sell your mortgage, you should receive a letter from the company within 15 days that outlines the new mailing address and payment deadline.”
3. “If you have paid off your loan in full, and you want a mortgage satisfaction documents from the company when it’s no longer in business, go to your State Attorney General’s office.”
4. “Negotiation will still be hard. The servicer – the company you make your monthly check out to – may not think it’s worth its while to negotiate with homeowners to lower monthly payments.”
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