Investment Outlook William H. Gross November 2010
Run Turkey, Run
•The Fed’s announcement of a renewed commitment to Quantitative Easing has been well telegraphed and the market’s reaction is likely to be subdued.
•We are in a “liquidity trap,†where interest rates or trillions in asset purchases may not stimulate borrowing or lending because consumer demand is just not there.
•The Fed’s announcement will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment.
From: http://ping.fm/Z90TM
Wednesday, October 27, 2010
Wednesday, October 20, 2010
GMAC Mortgage to Move Forward with Foreclosures
GMAC Mortgage to Move Forward with Foreclosures
10/19/2010 By: Carrie Bay
GMAC Mortgage was the first company to halt foreclosures in 23 states where a judge’s approval is required because of concerns that the legal paperwork was not validated and processed correctly. After two months of reviewing individual case files, the company says it will restart foreclosure proceedings.
“Our review and remediation activities related to cases involving judicial affidavits in the 23 states continues,†said James Olecki, a spokesperson for GMAC Mortgage’s parent company Ally Financial. “As each of those files is reviewed, and remediated when needed, the foreclosure process resumes.â€
GMAC’s suspension of foreclosure actions and REO sales was prompted by the unearthing of a court deposition in which one of its servicing executives testified that he was signing off on thousands of foreclosures a month, without checking the paperwork for accuracy or signing the documents in the presence of a notary.
News of documentation deficiencies at GMAC and a number of other major servicers has raised questions about the legitimacy of foreclosure rulings and homeowner evictions, but Olecki says his company has found “no evidence of inappropriate foreclosures to date†and plans to move forward with taking possession of properties where borrowers have failed to make payments on the mortgage.
Bank of America announced Monday that it is also lifting its foreclosure suspension in 23 states.
The company says it has found no instances in which a homeowner was wrongly foreclosed upon and has begun the process of preparing 102,000 foreclosure affidavits that have been on hold for re-submission to the courts beginning next Monday. BofA plans to continue postponing foreclosure sales in the remaining 27 states until the company’s paperwork reviews are completed on a state-by-state basis.
Bank of America and GMAC may be intent on moving forward with foreclosure proceedings, but at least one county sheriff in the judicial state of Illinois says he’s not going to carry out their evictions.
Sheriff Thomas Dart of Cook County, which includes the city of Chicago, said Tuesday that he will not put defaulted borrowers out of their homes based on eviction orders from BofA, GMAC, or JPMorgan Chase until the companies “can provide complete assurance that the foreclosure was done properly and legally.â€
The three lenders have until Monday, October 25th to respond to Dart’s demand for affidavits affirming any foreclosures they file in Cook County have been properly processed in accordance with Illinois law. The sheriff says BofA, GMAC, and JPMorgan, along with their subsidiaries, make up a third of the approximately 3,700 foreclosure eviction orders filed with his office annually.
Dart says he will extend the county-wide moratorium on evictions to any other lending institutions which publicly admit to or which investigators find engaged in questionable foreclosure processing practices.
According to a statement from the Cook County sheriff’s office, even after filing, it typically takes about 10 months before a foreclosure eviction order is actually carried out there. Dart says one in every 30 homes in Cook County is at some stage of foreclosure.
From: http://ping.fm/LN9KF
10/19/2010 By: Carrie Bay
GMAC Mortgage was the first company to halt foreclosures in 23 states where a judge’s approval is required because of concerns that the legal paperwork was not validated and processed correctly. After two months of reviewing individual case files, the company says it will restart foreclosure proceedings.
“Our review and remediation activities related to cases involving judicial affidavits in the 23 states continues,†said James Olecki, a spokesperson for GMAC Mortgage’s parent company Ally Financial. “As each of those files is reviewed, and remediated when needed, the foreclosure process resumes.â€
GMAC’s suspension of foreclosure actions and REO sales was prompted by the unearthing of a court deposition in which one of its servicing executives testified that he was signing off on thousands of foreclosures a month, without checking the paperwork for accuracy or signing the documents in the presence of a notary.
News of documentation deficiencies at GMAC and a number of other major servicers has raised questions about the legitimacy of foreclosure rulings and homeowner evictions, but Olecki says his company has found “no evidence of inappropriate foreclosures to date†and plans to move forward with taking possession of properties where borrowers have failed to make payments on the mortgage.
Bank of America announced Monday that it is also lifting its foreclosure suspension in 23 states.
The company says it has found no instances in which a homeowner was wrongly foreclosed upon and has begun the process of preparing 102,000 foreclosure affidavits that have been on hold for re-submission to the courts beginning next Monday. BofA plans to continue postponing foreclosure sales in the remaining 27 states until the company’s paperwork reviews are completed on a state-by-state basis.
Bank of America and GMAC may be intent on moving forward with foreclosure proceedings, but at least one county sheriff in the judicial state of Illinois says he’s not going to carry out their evictions.
Sheriff Thomas Dart of Cook County, which includes the city of Chicago, said Tuesday that he will not put defaulted borrowers out of their homes based on eviction orders from BofA, GMAC, or JPMorgan Chase until the companies “can provide complete assurance that the foreclosure was done properly and legally.â€
The three lenders have until Monday, October 25th to respond to Dart’s demand for affidavits affirming any foreclosures they file in Cook County have been properly processed in accordance with Illinois law. The sheriff says BofA, GMAC, and JPMorgan, along with their subsidiaries, make up a third of the approximately 3,700 foreclosure eviction orders filed with his office annually.
Dart says he will extend the county-wide moratorium on evictions to any other lending institutions which publicly admit to or which investigators find engaged in questionable foreclosure processing practices.
According to a statement from the Cook County sheriff’s office, even after filing, it typically takes about 10 months before a foreclosure eviction order is actually carried out there. Dart says one in every 30 homes in Cook County is at some stage of foreclosure.
From: http://ping.fm/LN9KF
Tuesday, October 19, 2010
Bank of America and Fidelity National Reach Agreement for REOs
Bank of America and Fidelity National Reach Agreement for REOs
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/8A70I
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/8A70I
Bank of America and Fidelity National Reach Agreement for REOs
Bank of America and Fidelity National Reach Agreement for REOs
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/LMAis
10/18/2010 By: Joy Leopold
Bank of America and Fidelity National Financial have come to an agreement regarding the foreclosure paperwork issues that have plagued several of the largest lenders in the past weeks.
Under the agreement, Jacksonville, Florida-based Fidelity agreed to continue to provide title insurance for Bank of America’s recently foreclosed homes. BofA agreed to cover all court related costs and settlements related to any lawsuits, and Fidelity agreed it would defend new homeowners in court.
Charlotte, North Carolina-based Bank of America is working on similar agreements with other title insurers, though at this time it has not lifted its ban on foreclosure proceedings.
Dan Frahm, spokesperson for Bank of America Home Loans, said the bank on Monday began the process of
preparing 102,000 foreclosure affidavits for submission in the 23 states in which judicial approval is required for foreclosure.
“We anticipate that by Monday, Oct. 25, the first foreclosure affidavits will be resubmitted to the courts,†he said.
He continued, “Upon judgment, foreclosure dates will be set and Bank of America will resume foreclosure sales in such proceedings in the 23 judicial states.â€
Of the other states, Frahm said, “We will continue to delay foreclosure sales in the remaining 27 states until our review is complete on a state by state basis.â€
This agreement comes on the heels of assertions by some title insurers that they would no longer insure foreclosed properties for lenders. Fears of title-ownership discrepancies have put REO sales on hold until banks can verify that documents signed by “robo-signers†are valid.
Agreements between lenders and title insurers can help the REO market gain some much-needed stability.
American Land Title Association (ALTA) released a statement in support of such agreements during this foreclosure furor.
The Federal Housing Finance Agency released a directive with guidelines for servicers to take to identify and correct potential mistakes in foreclosure paperwork.
“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,†said Kurt Pfotenhauer, CEO of ALTA.
From: http://ping.fm/LMAis
Tuesday, October 5, 2010
Amherst: One out of Five Borrowers Could Lose Their Home
Amherst: One out of Five Borrowers Could Lose Their Home
10/04/2010 By: Carrie Bay
If governmental policy on foreclosure prevention does not change, 11.5 million borrowers are in danger of losing their homes, according to the analysts at Amherst Securities Group LP.
The staggering figure put forth by the mortgage investment brokerage equates to one out of every five borrowers – an astronomical 20 percent default rate that Amherst says “politically cannot happen.â€
The dire forecast should be a wake-up call to regulators and government officials charged with plugging the nation’s foreclosure tsunami, and the analysts at the New York-based firm say they do believe “the government will attempt successive modification plans until something works.â€
But up to this point, the administration still hasn’t hit on a successful equation. Reports on the progress of the Home Affordable Modification Program (HAMP) seem to grow more disappointing with each month’s new dataset. Treasury’s August report showed that nearly half of all homeowners approved for trial HAMP mods have already fallen out of the program.
Amherst’s report warns that while recent industry data shows a drop in the number of delinquent loans, this information is skewed. According to the firm’s analysts, this so-called “improvement†simply reflects large-scale modification activity. The study explains that modifications are being flagged as “current†often with no cash flow from the borrower.
The firm’s analysts say, the bottom line is that 20 out of every 100 U.S. first lien residential mortgages are already impaired:
•Nine are seriously behind in their payments.
•Six have been behind and are classified as what Amherst calls “dirty current†because they have been modified. But the firm says these loans are re-defaulting at an eye-popping rate of 50 percent.
•Five are underwater by more than 20 percent of their current value and are defaulting at a 20 percent per-year-pace.
So how can the administration fix deficiencies in its loan modification program and keep the mortgage default rate from hitting the menacing 20 percent mark? Amherst analysts say the answer lies in cutting borrowers’ principal balances.
They argue that the success rate on mortgage modifications can be raised by making greater use of principal reductions. Amherst says this approach would help to address the phenomenon of strategic default, which is becoming increasingly acceptable among frustrated borrowers. Policymakers must first recognize that the inclination to walk-away from one’s mortgage has become an economic issue, not a moral one, according to Amherst. In addition, the costs of default must be made explicit, and the second lien issue must also be addressed.
Unfortunately, it is unlikely that these foreclosure-prevention policy changes will be sufficient to address the housing crisis, according to Amherst. The firm says additional government intervention is needed to boost housing demand.
Amherst recommends that the government provide leverage for investors to buy real estate, ideally through its federal housing agencies – the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Currently, Fannie and Freddie credit availability for investor properties is very limited, requiring large down payments and pristine credit, while FHA is for owner-occupied homes only.
Amherst says just when the market needs to increase demand for homes, demand is actually contracting due to credit availability issues. The firm’s analysts say new financing channels should be opened up to investors, noting that investors are currently purchasing a disproportionate share of foreclosed properties for cash.
In addition, Amherst recommends increasing credit availability on prudent terms to borrowers with less than pristine credit.
The large numbers of borrowers who have defaulted or will default on existing mortgages will, under present programs, be locked out of owning a home for years, but the company’s analysts say this setback can be addressed by re-qualifying borrowers who are in a home they can’t afford into one that better fits their financial situation.
From: http://ping.fm/dw5lh
10/04/2010 By: Carrie Bay
If governmental policy on foreclosure prevention does not change, 11.5 million borrowers are in danger of losing their homes, according to the analysts at Amherst Securities Group LP.
The staggering figure put forth by the mortgage investment brokerage equates to one out of every five borrowers – an astronomical 20 percent default rate that Amherst says “politically cannot happen.â€
The dire forecast should be a wake-up call to regulators and government officials charged with plugging the nation’s foreclosure tsunami, and the analysts at the New York-based firm say they do believe “the government will attempt successive modification plans until something works.â€
But up to this point, the administration still hasn’t hit on a successful equation. Reports on the progress of the Home Affordable Modification Program (HAMP) seem to grow more disappointing with each month’s new dataset. Treasury’s August report showed that nearly half of all homeowners approved for trial HAMP mods have already fallen out of the program.
Amherst’s report warns that while recent industry data shows a drop in the number of delinquent loans, this information is skewed. According to the firm’s analysts, this so-called “improvement†simply reflects large-scale modification activity. The study explains that modifications are being flagged as “current†often with no cash flow from the borrower.
The firm’s analysts say, the bottom line is that 20 out of every 100 U.S. first lien residential mortgages are already impaired:
•Nine are seriously behind in their payments.
•Six have been behind and are classified as what Amherst calls “dirty current†because they have been modified. But the firm says these loans are re-defaulting at an eye-popping rate of 50 percent.
•Five are underwater by more than 20 percent of their current value and are defaulting at a 20 percent per-year-pace.
So how can the administration fix deficiencies in its loan modification program and keep the mortgage default rate from hitting the menacing 20 percent mark? Amherst analysts say the answer lies in cutting borrowers’ principal balances.
They argue that the success rate on mortgage modifications can be raised by making greater use of principal reductions. Amherst says this approach would help to address the phenomenon of strategic default, which is becoming increasingly acceptable among frustrated borrowers. Policymakers must first recognize that the inclination to walk-away from one’s mortgage has become an economic issue, not a moral one, according to Amherst. In addition, the costs of default must be made explicit, and the second lien issue must also be addressed.
Unfortunately, it is unlikely that these foreclosure-prevention policy changes will be sufficient to address the housing crisis, according to Amherst. The firm says additional government intervention is needed to boost housing demand.
Amherst recommends that the government provide leverage for investors to buy real estate, ideally through its federal housing agencies – the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Currently, Fannie and Freddie credit availability for investor properties is very limited, requiring large down payments and pristine credit, while FHA is for owner-occupied homes only.
Amherst says just when the market needs to increase demand for homes, demand is actually contracting due to credit availability issues. The firm’s analysts say new financing channels should be opened up to investors, noting that investors are currently purchasing a disproportionate share of foreclosed properties for cash.
In addition, Amherst recommends increasing credit availability on prudent terms to borrowers with less than pristine credit.
The large numbers of borrowers who have defaulted or will default on existing mortgages will, under present programs, be locked out of owning a home for years, but the company’s analysts say this setback can be addressed by re-qualifying borrowers who are in a home they can’t afford into one that better fits their financial situation.
From: http://ping.fm/dw5lh
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