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Wednesday, August 27, 2008

Housing/Subprime/Credit Roundup — August 27, 2008

Items of Interest:

Paul Jackson / Housing Wire:
Mortgage Applications Increase — or Did They? -- Most media sources will report that mortgage applications posted their first increase in three weeks, according to data released by the Mortgage Bankers Association on Wednesday, as mortgage rates fell slightly. The group’s weekly application survey found that applications rose 0.5 percent from one week earlier, with a composite index rising to 421.6 for the week ended Aug. 22. Applications are off 31.2 percent from year-ago levels, however, the MBA said.

But — as has been the case throughout the current cycle — the MBA data may be overstating forward demand for mortgages, given that the index data doesn’t correct for multiple applications. A separate application index, known as the MAX, found that applications fell sharply last week; the MAX corrects for multiple applications, and tends to be relied upon by prepayment modelers more often, as a result...

USA Today:
Mortgage applications rise 0.5% as most rates dip -- The Mortgage Bankers Assocation said Wednesday that its composite index of loan applications rose slightly in the week ended Aug. 22, as interest rates slipped.

The composite index rose a seasonally adjusted 0.5%, the MBA said, as the refinance index increased 0.3% from the previous week and the purchase index increased 0.6%.

The refinance share of mortgage activity increased to 35.2% of applications from 34.8% the previous week, the MBA said. The adjustable-rate mortgage (ARM) share fell to 7.9% from 8.0% of applications the previous week.

The report said the average rate for 30-year fixed-rate mortgages slipped to 6.44% from 6.47% the previous week...
CNN Money:
Mortgage fraud still soaring -- A crackdown on underwriting has failed to halt an explosion of fraudulent home loans.

With the housing market in turmoil and lending standards tougher than ever, you'd think that the kind of unscrupulous activity that helped plunge the industry into crisis would be a thing of the past.

You'd be wrong. Mortgage fraud is still soaring, according to a new report from the Mortgage Asset Research Institute (MARI), a division of ChoicePoint.

The study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007...
Wall Street Journal:
FHA Raises Its Premiums to Insure Repayment of Mortgages -- The Federal Housing Administration, a U.S. agency that is rapidly shouldering more of the risk on home loans, raised the premiums it charges for insuring that mortgages will be repaid.

In a posting on its Web site Tuesday, the FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1. That is up from the 1.5% that was in effect until July 14, when the FHA adopted a "risk-based" pricing system that created a range of charges depending on borrowers' credit scores and the amount of the down payment or equity they owned in the homes. In late July, Congress approved a housing bill that included a provision requiring the FHA to revert to a standard premium at least until Oct. 1, 2009.

On a $300,000 loan, the new upfront premium works out to $5,250, up from $4,500. The annual premiums paid by borrowers would remain at 0.50% to 0.55% of the loan balance.

The FHA may well need more income to cope with the payouts it will have to make to lenders and loan investors in coming years. At a time when house prices generally are falling, the share of new mortgages insured by the FHA has soared to 23% in July from a low of 1.8% in 2006...
CNN Money:
2 million troubled borrowers avoid foreclosure -- The Hope Now coalition reports that it completed a record number of mortgage workouts in July - but that was outpaced by the increasing rate of foreclosures.

Hope Now has helped more than 2 million at-risk borrowers stay in their homes during the past 13 months, according to numbers released by the coalition on Wednesday.

The alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures fixed more than 192,000 problem loans during July, a one-month record that represents a 6% increase over June.

Despite this progress, foreclosures continue to climb; 91,752 families lost their homes in July. That represents an increase of 14% from June and more than double the number of July 2007, when only 42,043 homes went to foreclosure...
CNN Money:
Bankruptcy filings surge to 1 million - up 29% -- Number of bankruptcy filings in recent 12-month period rises to nearly 1 million.

As things in the economy have gotten worse, the number of people and businesses heading to bankruptcy court has spiked.

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released Wednesday.

Total filings rose to 967,831 from 751,056 a year earlier.

Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009, up 28% from last year...
America's Most Distressed Housing Markets -- During the recent real estate run-up, flippers who bought and sold homes within a year often reaped great profits.

Today, you still see a lot of flipping, only buying and selling within a year often results in staggering losses.

Who is suffering? Regular homeowners, speculators and the foreclosed upon who try to get out of loans they can't afford or properties worth less than the value of their mortgages.

Hardest-hit are those in Las Vegas, Sacramento, Calif., and Los Angeles...

America's Most Distressed Housing Markets:
  1. Las Vegas, Nev. - Homes sold for a loss: 69% - Sold within year of last sale: 30.5%
  2. Sacramento, Ca. - Homes sold for a loss: 63.8% - Sold within year of last sale: 30.8%
  3. Riverside, Ca. - Homes sold for a loss: 65.1% - Sold within year of last sale: 27.7%
  4. Denver, Colo. - Homes sold for a loss: 42.3% - Sold within year of last sale: 37.3%
  5. Detroit, Mich. - Homes sold for a loss: 56.4% - Sold within year of last sale: 23.7%
  6. San Diego, Ca. - Homes sold for a loss: 54.4% - Sold within year of last sale: 24.5%
  7. Memphis, Tenn. - Homes sold for a loss: 43.8% - Sold within year of last sale: 29.4%
  8. Phoenix, Ariz. - Homes sold for a loss: 52.1% - Sold within year of last sale: 21.4%
  9. Los Angeles, Ca. - Homes sold for a loss: 51.1% - Sold within year of last sale: 20.8%
  10. San Francisco, Ca. - Homes sold for a loss: 48% - Sold within year of last sale: 19.5%

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