| | | | | sub prime portfolios more appealing – especially the |
| | | | Pacific States, Texas and the Midwest where the |
| | | | | action has been centered the past few months. |
| SO FAR, SO GOOD – HOME PRICES ARE UP | | | | What does all this mean to the smaller to mid-size |
| AGAIN | | | | investor? Approximately 85% of all bulk asset |
| | | | | acquisitions are accomplished in large institution to |
| Real estate values are still holding in spite of a new | | | | institution transactions. But those assets that make it to |
| wave of foreclosures. According to Clear Capital, for | | | | the ‘one off' secondary market have seen a |
| the second month in a row, year-over-year home | | | | recent sustained price stabilization. Even with the dip in |
| prices are up 5%. Considering the annual slowdown in | | | | sub prime pricing, portfolios across the board are selling |
| sales during the winter season, Clear Capital observed | | | | higher than they did six months ago. And many |
| that even with an increase in REO saturation in the | | | | analysts are predicting a continuation as the summer |
| February, prices were able to increase slightly indicating | | | | buying season opens offering a tantalizing prospect of |
| that the typical surge in spring and summer buying may | | | | further recovery if the lien holders can hold back the |
| ease the burden on the marketplace from pending | | | | 2010 foreclosure tsunami predicted by Credit-Suisse. |
| foreclosures. Keeping wholesale values up in 2010 will | | | | |
| be determined largely by how much of the $4B in | | | | THE GOOD NEWS |
| foreclosures predicted by Credit-Suisse and Goldman | | | | The good news is the lenders are actively engaging |
| Sachs can be deflected from overwhelming the | | | | delinquent homeowners in avoiding foreclosures. Using |
| market and undermining values. | | | | short sales and loan modifications they are becoming |
| The FDIC inventory is growing and more bank failures | | | | more and more pro-active in assisting the |
| appear imminent. To keep up they have been | | | | homeowners to stay in their home. Ocwen is one of |
| auctioning seized REO and NPN assets in large chunks | | | | the best examples of the new attitude. According to |
| through structured partnerships for the past two years. | | | | Carrie Bay at DSNews.com, the Florida based servicer |
| As reported by Carrie Bay at DSNews.com, just last | | | | "is converting trial mods to permanent status at a rate |
| month they sold $3B to the Lennar Corporation and | | | | that is 10 to twenty times higher than some of the |
| another $1B to Colony Capital. The Wall Street Journal | | | | biggest banks". And its HAMP modifications have a |
| recently announced that the FDIC has three more | | | | (ninety day) default rate of 5% - compared to the |
| private placement deals in the works totaling another | | | | industry's average range of 19 to 34 per cent. |
| $4B – one for $1.8B that may sell this month. Each | | | | Realizing a slice of something is a whole lot better than |
| portfolio comes with an FDIC guarantee backed by | | | | a whole pie of nothing, Ocwen has made principal |
| the government strengthening their attractiveness to | | | | reductions in 15% of their loan mods. They have even |
| investors and will be offered initially through outfits like | | | | appealed to the administration to lower the HAMP |
| Barclay's Capital. | | | | payment to income ratio to 31%. All of which adds up |
| Although those numbers are well beyond the ken of | | | | to the most effective program in the industry. |
| most investors, is also reporting that the FIDC is | | | | The lenders finally seem to be catching on. As |
| preparing to auction recently seized assets from 19 | | | | reported by Ms Bay, Ocwen president, Ronald M Faris |
| failed banks totaling $610M. This portfolio consists of | | | | told Washington that "Almost a year into HAMP, too |
| primarily residential real estate acquisition, development | | | | many homeowners are having difficulty getting their |
| and construction loans. Most were originated in 2007 | | | | loans modified. In our view, this is due mainly to a lack |
| and are located in CO, CA, UT, ID, NV, GA and WA | | | | of sufficient capacity and expertise in the industry to |
| making this a highly anticipated sale. Bids for this | | | | handle the volume". Maybe if a few more of them |
| offering can be tendered through Mission Capital | | | | were as pro-active as OCwen the outlook for 2010 |
| Advisors LLC. | | | | might be more promising. |
| | | | | Price stabilization is a key element to achieving |
| SUB PRIME PORTFOLIO PRICES DECLINE 6% | | | | recovery in the both the retail and wholesale real |
| A recent Fitch report noted that the taint of Sub Prime | | | | estate market. Keep your eye on March – if the |
| portfolios has weakened their value slightly – sub | | | | foreclosure rate declines and the mod/short sale |
| prime prices are down 6% sparking the interest of | | | | remedies increase again and we see a third month in |
| buyers. The dip in pricing combined with the anticipation | | | | a row of price bumps of year-over-year home prices |
| of a summer increase in home sales may make the | | | | – we might be on to something. |