U.S. mortgage applications rise, but so do rates: MBA

NEW YORK, Wed Aug 7, 2013 — Potential buyers crept back into the U.S. housing market last week as applications for mortgages edged up, even though rates resumed their ascent, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended Aug 2.

The gauge of loan requests for home purchases, a leading indicator of home sales, was stronger, adding 0.7 percent after falling in four of the past five weeks.

Appetite for mortgages has dropped over the summer, hurt by a surge in interest rates on the Federal Reserve’s plan to start slowing its economic stimulus later this year if the economy progresses as expected.

The Fed is currently buying $85 billion in bonds a month to keep borrowing costs low. The cheap mortgage rates have helped spur home buying and worries have emerged that higher costs could take some of the strength out of the housing market’s recovery.

Mortgage applications rebounded last week as rates fell: MBA

NEW YORK, Wed Mar 27, 2013 — Applications for home mortgages rebounded last week as interest rates pulled back for the first time in three weeks, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 7.7 percent in the week ended March 22.

The index has declined for six of the past nine weeks as rates have pulled higher. Still, interest rates remain low on a historical basis, kept down by the Federal Reserve’s efforts to boost the economy by buying bonds and mortgage-backed securities.

The seasonally adjusted index of refinancing applications jumped 8 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, gained 6.7 percent.

The refinance share of total mortgage activity was unchanged at 75 percent of applications.

Fixed 30-year mortgage rates averaged 3.79 percent in the week, down 3 basis points from 3.82 percent the week before.

The survey covers more than 75 percent of U.S. retail residential mortgage applications, according to MBA.

Mortgage applications fell last week as rates rose: MBA

NEW YORK, Wed Feb 20, 2013 — Applications for U.S. home mortgages fell for a second straight week as both refinancing and loan requests for new mortgages eased last week, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, was 1.7 percent lower in the week ended Feb. 15.

The MBA’s seasonally adjusted index of refinancing applications fell 1.6 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, dropped 1.7 percent.

The refinance share of total mortgage activity fell to 77 percent of applications, the lowest level since May 2012, from 78 percent the week before.

Fixed 30-year mortgage rates averaged 3.78 percent in the week, up 3 basis points from 3.75 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Fed to hold lenders’ feet to the fire on mortgages

NEW YORK, Mon Dec 3, 2012 — Frustrated Federal Reserve policymakers on Monday sought an explanation from mortgage lenders as to why the benefits of lower interest rates were not filtering to home buyers as quickly as in the past even as investors benefited.

At an all-day New York Fed workshop, officials from Fannie Mae, Freddie Mac, Wells Fargo & Co. and other big lenders will be asked why there is a growing disconnect between the rates Americans pay on home loans, and the yields on mortgage-backed securities.

The question has puzzled central bank policymakers who worry the situation is undercutting their efforts to stimulate the country’s slow economic recovery from recession.

Since September, when the Fed targeted the U.S. mortgage market with its latest round of large-scale bond purchases, the closely watched spread between the interest rates homeowners pay and what investors reap on mortgage-backed securities has widened to record levels.

The Fed’s purchase of $40 billion per month in agency MBS has made a big splash in the secondary market. Yet in the primary market, the drop in the mortgage rates that home buyers can get from lenders has not been as pronounced as the central bank wanted, lagging historical trend.

This clog in the passage between the primary and secondary markets undermines an important reason for the Fed’s monetary stimulus: kick-starting a housing sector that was at the heart of the 2007-2009 financial crisis, and that has only just begun to show some life.

“There is clearly something that is manifesting as a form of constraint,” Jeremy Stein, a Fed governor, said when asked about mortgage lending at a Boston conference on Friday.

Civil liberties group sues Morgan Stanley over discrimination

NEW YORK, Mon Oct 15, 2012 – The American Civil Liberties Union is filing what it says is the first lawsuit against an investment bank, Morgan Stanley, alleging discrimination for packaging subprime mortgage loans into securities.

The ACLU and other plaintiffs will file the case on behalf of five Detroit residents and its Michigan affiliate, claiming the investment bank encouraged a mortgage lender to make loans with justifiably high costs and a strong possibility of foreclosure to enrich its business of selling securities to institutional investors.

“With this lawsuit, real victims of the subprime lending scandal are stepping forward to hold investment banks like Morgan Stanley accountable for the devastation the banks wrought in their lives and in our economy,” ACLU Executive Director Anthony Romero said in a prepared statement.

The civil liberties group will file the lawsuit in U.S. District Court in New York, and asked the court to certify it as a class action. It said as many as 6,000 black homeowners in the Detroit area may have suffered similar discrimination.

Until now, discrimination lawsuits have been brought directly against the original mortgage lenders rather than investment banks that packaged the loans into securities, the ACLU said.

Wells Fargo to pay more than $6.5 million to settle SEC charges

WASHINGTON, Tue Aug 14, 2012 – Wells Fargo & Co. will pay a penalty of more than $6.5 million to settle civil charges alleging it sold complex mortgage-backed instruments to municipalities and non-profits during the financial crisis without fully disclosing the risks.

The Securities and Exchange Commission said on Tuesday that the bank has agreed to settle without admitting or denying the charges, and the money will be placed into a fund to help harmed investors.

The SEC also charged a former Wells Fargo vice president, Shawn McMurtry, for his role in selling the products. He settled the charges without admitting or denying them. He will pay a $25,000 penalty and will also be suspended from the industry for six months.

Fewer troubled mortgages hobble banks in first quarter

WASHINGTON, Wed Jun 27, 2012 – U.S. banks held fewer troubled mortgages in the first quarter of 2012, according to a report issued on Wednesday by the Office of the Comptroller of the Currency, as loans serviced by national banks performed better in the first three months of the year.

The report said the overall quality of serviced mortgages improved, and the percentage of serviced loans that were current and performing at the end of March was 88.9 percent, the highest level in three years. The improvement was due to an uptick in the economy and continued emphasis on programs intended to keep borrowers in their houses, the OCC said.

Overall, the percentage of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the OCC began tracking the mortgage data in the first quarter of 2008. The percentage of mortgages in the portfolio that were 30 to 59 days delinquent at the end of the first quarter decreased by 17.3 percent from the previous quarter and by 3.8 percent from a year earlier.

“This improvement can be attributed to several factors, including strengthening economic conditions during the quarter, seasonal effects, servicing transfers, and the ongoing effects of both home retention loan modification programs as well as home forfeiture actions,” the OCC said in the quarterly report.

The number of foreclosures in process decreased from a year ago, edging down 1.8 percent from the previous quarter and by 8.1 percent from a year earlier.

However, the percentage of mortgages in the process of foreclosure at the end of the first quarter of 2012 increased, rising by 1.8 percent from the previous quarter and 2.3 percent from a year earlier.

Fed’s Dudley: potential for more action on mortgages

NEW YORK ― The weak housing sector continues to pose a strong headwind to the U.S. economic recovery, and the Federal Reserve could potentially do more to drive down mortgage rates to support the sector, a top Federal Reserve official said on Monday.

William Dudley, president of the New York Federal Reserve Bank, also warned about the risks of “spillover” effects from Europe’s debt crisis.

Dudley’s comments marked the second time in a week that a Fed policy maker highlighted the possibility that the U.S. central bank could do more to support the housing market.

Housing has been a persistent headwind to the U.S. economic recovery. A glut of foreclosed homes on the market and tight credit have contributed to a sector virtually stuck in the mud and unable to gain traction.

“Breaking this vicious cycle is one of the most pressing issues facing policy makers,” Dudley said in a speech at Fordham University’s Gabelli School of Business in New York.

“Clearly we’ve indicated our interest in supporting the housing market in keeping mortgage rate spreads, and spreads between mortgage rates and Treasury yields, from getting too elevated,” Dudley said.

“Depending on how the world evolves, we potentially could move to do more in that direction.”

Dudley, who as head of the New York Fed has a permanent voting seat on the Fed’s policy-setting committee, said the U.S. central bank will continue to do everything within its power to help the economic recovery.

Dudley’s comments come on the heels of remarks by Fed Governor Daniel Tarullo last week that there was “ample room” for policy makers to do more to spur economic growth and that more mortgage-related securities purchases should be on the table.

Faced with the worst recession in decades, the Fed in late 2008 cut rates to near zero and has since bought $2.3 trillion in bonds to spur a recovery.

U.S. central bank officials regularly cite housing as having hamstrung the recovery from the worst recession in decades. But the purchase of mortgage securities was a controversial part of the first round of quantitative easing in 2009, and some officials criticize it for propping up a specific sector of the economy.

Speaking in the New York City borough of the Bronx, Dudley called the housing market “a serious impediment” to a stronger recovery, which this year has been plagued by “quite disappointing” growth in gross domestic product.Yet the rebound has been weak and is now threatened by Europe’s debt crisis, casting doubt on the central bank’s strategy and effectiveness but also raising some expectations for more asset purchases.”The Fed is doing — and will continue to do — everything within its power to promote jobs and price stability,” said Dudley.

Mortgage applications slumped last week, reports MBA

NEW YORK ―Applications for U.S. home mortgages tumbled nearly 15 percent last week as demand for both refinancing and purchases evaporated, while interest rates climbed, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dropped 14.9 percent in the week ended Oct 14.

The MBA’s seasonally adjusted index of refinancing applications slid 16.6 percent, while the gauge of loan requests for home purchases gave up 8.8 percent.

The refinance share of total mortgage activity fell to 77.6 percent of applications from 79.1 percent the week before.

Fixed 30-year mortgage rates averaged 4.33 percent, up 8 basis points from 4.25 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Deloitte sued for $7.6 billion, accused of missing fraud

NEW YORK ― Deloitte Touche Tohmatsu Ltd., the world’s largest accounting and consulting firm, was accused on Monday of failing to detect fraud during its audits of one of the biggest private mortgage firms to collapse during the U.S. housing crash.

A trust overseeing the bankruptcy of Taylor, Bean & Whitaker Mortgage Corp, or TBW, and one of the company’s subsidiaries filed complaints in a Miami Circuit Court claiming a combined $7.6 billion in losses.

Deloitte “certified TBW as a solvent, viable company with accurate financial statements every year from 2001 to 2008,” one of the complaints said.

“Despite Deloitte’s credentials and expertise as one of the ‘Big 4’ accounting firms, those statements — and the rosy picture they depicted of TBW — were completely false,” it said.

Deloitte spokesman Jonathan Gandal said the “claims are utterly without merit.”

It was the latest lawsuit to hit one of the major accounting firms over their role in the credit crisis.

Pricewaterhouse Coopers, KPMG and Ernst & Young are also facing accusations about their auditing standards by investors who collectively seek to recoup billions of dollars lost in the financial meltdown.

Lee Farkas, the former chairman of Taylor, Bean and Whitaker, was sentenced to 30 years in prison in April for masterminding what U.S. officials described as one of the biggest bank frauds ever.

U.S. Justice Department officials said Farkas ran a $2.9 billion fraud scheme that led to TBW’s downfall and the collapse of one of the largest U.S. regional banks, Colonial Bank.

The complaint filed by Neil F. Luria, a plan trustee of Taylor, Bean & Whitaker Trust, claims losses of approximately $6 billion. A second complaint by Ocala Funding, a wholly owned TBW subsidiary which served as a lending facility, claims losses of $1.6 billion.

Farkas was accused of running a wide-ranging scheme to cover up large losses at Taylor, Bean, which was based in Ocala, Fla., by moving funds between accounts at Colonial Bank and also by selling mortgage loans that either did not exist, were worthless or had already been sold.

“Deloitte missed this fraud because it simply accepted management’s conflicting, incomplete and often last-minute explanations of highly-questionable transactions, even though those explanations made no sense and were flatly contradicted by the documents in Deloitte’s possession,” the complaint by Ocala Funding said.

“Ocala relied on Deloitte to detect material misstatements in the financial statements due to error or fraud,” the complaint said.

Gandal said the plaintiffs in the cases were “companies through which convicted felon Lee Farkas and his co-conspirators committed their crimes.”

“The bizarre notion that his engines of theft are entitled to complain of injury from their own crimes and to sue the outside auditors they lied to defies common sense, not to mention the law,” he said in a statement.

Several other Taylor, Bean and Colonial Bank employees who pleaded guilty for their roles in the fraud were also sentenced earlier this year.