Beyond the Headlines

ConsumerWatchdog says mortgage servicing still riddled with problems

Source: The Washington Post

 

Error-prone and even abusive practices still plague the mortgage servicing business, according to a new

report from the Consumer Financial Protection Bureau (CFPB). The report indicates that servicers have

made a variety of mistakes, including sloppy payment processing, poor communications with consumers,

and insufficient programs to ensure compliance with federal laws. Under the 2010 Dodd-Frank law, the

CFPB is tasked with oversight of consumer products, including mortgages and credit cards, due to issues

that stemmed from the 2007-2009 financial crisis.

Making sense of the story



The CFPB has launched investigations into the conduct of banks and other financial firms since

many companies continue to violate the terms of the 2012 National Mortgage Settlement.



In some instances, homeowners faced extra fees due to the sloppy payment processing of

mortgage servicers. Also, some homeowners were not notified that their loans were transferred to

another company.



Non-bank servicing firms, which are now subject to examinations, reportedly lack formal

procedures to address consumer complaints or ensure quality control. The report shows an

absence of systems for compliance management.



“Deceptive communications to borrowers” about modification requests remains an issue, and

services failed to help struggling homeowners find more manageable repayment plans where

possible. Applications for loan modifications also took too long to process.



New mortgage servicing standards are set to take effect in January 2014 to force servicers to give

homeowners easy access to information about their loans, among other things. The CFPB issued

the new standards to promote greater transparency.

Read the full story

http://www.washingtonpost.com/business/economy/cfpb-says-mortgage-servicing-still-riddled-withproblems/

2013/08/21/93a1c1e0-0a7f-11e3-9941-6711ed662e71_story.html

In other news …

Fannie Mae, Freddie Mac IgnoringWrite-Offs

Source: Bloomberg

A government auditor has revealed that Fannie Mae and Freddie Mac’s slow adoption of a new

accounting system has obfuscated an accurate picture of the companies’ finances. Specifically, the

mortgage giants have ignored billions of dollars in potential losses on overdue loans. The revelation may

cast doubts on the record profits of the two government-sponsored enterprises.

Read the full story

http://www.bloomberg.com/news/2013-08-19/fannie-mae-and-freddie-mac-said-to-avoid-billions-inwrite-

offs.html

The Housing Market Is Hot, So Re/Max Is Going Public

Source: BusinessWeek

Following in the footsteps of Realogy (parent of Coldwell Banker and Century 21) and Trulia,

Re/Max

has filed papers to go public, thereby making its public offering the third biggest IPO in the real estate

sector in the past year.

The franchiser has more than 92,000 agents in some 85 countries and reported a

2012 profit of $33.3 million on sales of $143.7 million.

Read the full story

http://www.businessweek.com/articles/2013-08-19/the-housing-market-is-hot-so-re-max-is-going-public

FHA Trims Waiting Period for Borrowers Who Experienced

Foreclosure

Source: DSNews.com

Borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale can now reenter the

market in as little as 12 months under a new guideline established by the Federal Housing Administration.

The more lenient approval process does have some eligibility requirements, such as documentation of

“certain credit impairments” and economic hardship.

Read the full story

http://www.dsnews.com/articles/fha-trims-waiting-period-for-borrows-who-experienced-foreclosure-

2013-08-19

Homebuilders picked up pace of construction, permits in July

Source: The Hill

The Commerce Department has reported that construction experienced an increase of 5.9 percent from

June, thereby bringing the seasonally adjusted annual rate to 896,000. Multifamily construction also rose

26 percent. Permits jumped 2.7 percent to 943,000 largely due to a boost from apartment permits.

Read the full story

http://thehill.com/blogs/on-the-money/1091-housing/317401-home-builders-picked-up-pace-ofconstruction-

permits-in-july

Debunking the Myth of Strategic Default

Source: UCLA

Researchers at UCLA’s Ziman Center for Real Estate say data suggests that “strategic” defaults during

the 2007-2009 recession were relatively rare. They found that job loss increases the probability of default

between 5 to 13 percentage points, and severe negative equity (-20% or more) also increases the

probability of default by 5 to 18 percentage points. Reportedly, job loss is the main “single trigger”

determinant of default, which could have policy implications when it comes to promoting temporary

mortgage modifications.

Read the full story

http://www.anderson.ucla.edu/Documents/areas/ctr/ziman/UCLA_Economic_Letter_Herkenhoff_8-20-

13.pdf

Dissolving Fannie Mae, Freddie Mac may hurt borrowers

Source: The LA Times

What will the proposed elimination of Fannie Mae and Freddie Mac mean for consumers? In the absence

of a government guarantee, experts contend that mortgage rates are likely to rise, and the widespread

availability of 30-year mortgages would be jeopardized. Economists at Moody's Analytics estimate the

average mortgage borrower would see interest rates increase by one-half to three-quarters of a percentage

point.

Read the full story

http://www.latimes.com/business/realestate/la-fi-harney-20130818,0,635900.story

What You Should Know…



Home prices continued to post strong annual gains, and home sales recorded the first annual

increase in six months, according to the CALIFORNIA ASSOCIATION OF REALTORS

®

(C.A.R.). Closed escrow sales of existing, single-family detached homes in California totaled a

seasonally adjusted annualized rate of 443,520 units in July, according to information collected

by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.



C.A.R. reports that sales in July were up 7 percent from a revised 414,670 in June and up 1.5

percent from a revised 436,870 in July 2012. The year-to-year sales increase was the first since

December 2012, following six consecutive months of declines.



C.A.R.’s July 2013 resale housing report also notes that the available supply of existing, singlefamily

detached homes for sale held steady in July at 2.9 months, unchanged from June’s Unsold

Inventory Index. The index was 3.5 months in July 2012. The index indicates the number of

months needed to sell the supply of homes on the market at the current sales rate.