Marc's Mortgage Matter's

Do you live in a flood plain, or have borrowers that do? Be forewarned that the Senate adjourned last Friday without extending the National Flood Insurance Program. Language that would have kept the program in place until April 30 was part of a more comprehensive House bill that extended a variety of federal programs was stalled in the Senate. Personally, I have not heard exactly what will happen to transactions whereby flood insurance is required but unavailable. 

"FDIC", "Friday", and "four banks" all start with the letter "F". Four U.S. banks were seized last Friday by state regulators, two in Georgia (McIntosh Commercial Bank and Unity National Bank, taken over by CharterBank and Bank of the Ozarks, respectively), one in Florida (Key West Bank, assumed by Centennial Bank of AR), and one in Arizona (Desert Hills Bank, assumed by New York Community Bank), bringing the total number of bank failures since the beginning of 2008 to 206 and to 41 this year. Wow!

The FDIC announced that when the FDIC is appointed receiver and simultaneously announces a sale of the failed bank's assets, that does not mean that these assets are automatically transferred by state law, nor does it mean that the buyer can be deemed a "successor" to the failed bank. The "conveyance of all assets, including real and personal property interests, purchased by the assuming bank under this agreement shall be made, as necessary, by receiver's deed or receiver's bill of sale... The FDIC is prepared to execute releases, deeds of REO, assignments, etc. as receiver." The FDIC will commonly grant a power of attorney to certain individuals at the failed bank, at the buyer bank, or internally, to enable the execution of these instruments, and the institution is responsible for ensuring that the power of attorney complies with state law requirements for the recordation of these instruments.

If you don't think that the economy is doing better, look at the price of oil. Oil hit a 2010 high yesterday, and is up over $4 per barrel just this week. This week we have a new round of 3, 10, and 30-yr Treasury auctions to compete with institutions buying mortgage-backed securities. This weekend Non-farm payrolls showed a gain of 162,000 jobs, the unemployment rates came in at 9.7%, but average hourly earnings declined .1%. January & February had revisions of +40k jobs. After all this it seems mortgage rates are following Treasuries and rates look indeed higher going into the week.

The FDIC announced that it has sold about $491 million in troubled residential mortgage loans from 19 failed banks. The winning bidder was Roundpoint Mortgage Servicing (NC) which paid $34.4 million for a 50% stake in a new company set up to hold the home mortgage loans. The FDIC has the other 50%. About half the loans are 30 or more days delinquent, the FDIC said, and 80% of the loans are in AZ, FL (so flat that you could stand on a can of tuna an watch your dog run away for 3 days), and GA.

Freddie Mac announced that it will be selling off hundreds of foreclosed homes in Las Vegas and Southern California this month through foreclosed property marketing firm New Vista. Freddie Mac said buyers may qualify for the assistance under the U.S.'s Neighborhood Stabilization Program (with NSP homebuyers are eligible for closing costs and down payment assistance when they buy distressed homes in designated areas) and the first-time homebuyer $8,000 tax credit deadline of April 30.

We've been asked about the now-upon us change in the mortgage marketplace many times over the past few months. As we transition away from a Federally-backed mortgage market to a more private-oriented one, cues for interest rates will come from more traditional factors, including economic growth or decline, inflation or deflation concerns, and investor appetites. This shift from certainty back to the vagaries of the marketplace will probably have some unexpected twists and turns, but at least at the moment, we seem to be in a fairly gentle handoff period. Intervals of rising rates are sure to come at some point; the April to July period over the last couple of years has seemed particularly vulnerable to such things. Increases in rates of three-eighths to as to as much as three-quarters of a percentage point have been seen during this period since 2006. There's no way to know if one will come, but if it does, it's a good thing we're starting from extraordinarily low levels.

Three sisters, ages 92, 94 and 96, live in a house together.
One night the 96-year-old draws a bath. She puts her foot in and pauses. She yells to the other sisters, "Was I getting in or out of the bath?"
The 94-year-old yells back, "I don't know. I'll come up and see." She starts up the stairs and pauses "Was I going up the stairs or down?"
The 92-year-old is sitting at the kitchen table having tea listening to her sisters. She shakes her head and says, "I sure hope I never get that forgetful, knock on wood."

She then yells, "I'll come up and help both of you as soon as I see who's at the door."