Need To Know News

FDIC Chairman Sheila C. Bair today announced that IndyMac Federal Bank will implement a new program to systematically modify troubled mortgages.

“The program we are announcing today will provide affordable mortgages for eligible borrowers primarily in the so-called ‘Alt-A’ market. It provides a systematic approach for modifying troubled loans with payment resets due to negative amortization and other resets — a market where we are seeing growing defaults and foreclosures,” Bair said.

The former IndyMac Bank…was closed on July 11th by the Office of Thrift Supervision and the FDIC was appointed as receiver. On the same day, the FDIC was named as conservator for a new institution, IndyMac Federal Bank, FSB.

Under the IndyMac Federal program, eligible mortgages would be modified into sustainable mortgages permanently capped at the current Freddie Mac survey rate for conforming mortgages.

IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal or for investors in securitized or whole loans. Modification offers will be provided consistent with agreements governing servicing for loans serviced by IndyMac Federal for others.

Bank of America’s Florida home loans are going under water at an alarming rate.  According to Realtytrac’s data, Florida has the third highest foreclosure rate in the nation with a 14% month on month increase in foreclosure rates from July to August.   Foreclosures are up 139% year on year as of July and Florida is home to the largest number of properties with foreclosure filings on them (just over 45.8k).  Bank  repossessions are up 678% year on year and default notices leapt 100%.  Fort Meyers, Fl has the highest metropolitan area foreclosure rate with 1 in 64 households notified in July.  BAC has over $15bln in mortgage loans in Florida with at f/c rate of just over 3%.

“Mortgage rates held relatively steady for the second week in a row amid offsetting economic data releases,” said Frank Nothaft, Freddie Mac vice president and chief economist. “For instance, consumer credit grew by $14 billion in June, more than twice the market consensus, but retail sales were weaker in July.”

Realty Trac, in its July 2008 U.S. Foreclosure Market Report, indicated that 272.2k U.S. properties had either received default notices, auction sale notices or were repossessed by banks, an 8 percent increase from the June data. On a July 2007 - July 2008 basis, foreclosures are up 55% and one in every 464 U.S. households received a foreclosure filing in July.

Bank repossessions were the fastest growing portion of the foreclosure market, indicating a 184% year on year increase. The year on year increase in default notices was on the order of 53% and auction notices are up 11% year on year. In short, banks are now in the property ownership business and are adding to already high housing inventory numbers, suggesting that the work off may be longer than the 11 months noted in the last spate of housing data.

Freddie Mac has issued its August economic and housing market outlook, and it ain’t pretty.

GDP
Q3: 1.7%
Q4: 1%
2008: 1.4%
2009: 2.5%
2010: 3.5%

CPI
Q3: 2.5%
Q4: 2.5%
2008: 3.6%
2009: 2.5%
2010: 2.5%

Unemployment
Q3: 5.8%
Q4: 6%
2008: 5.5%
2009: 6.1%
2010: 5.9%

30yr Mortgage Rates
Q3: 6.5%
Q4: 6.6%
2008: 6.3%
2009: 6.9%
2010: 6.9%

Housing Starts
2008: 970k
2009: 1.07mln
2010: 1.17mln

Home Prices
2008: -4.7%
2009: -4.5%
2010: -1.1%