Bank Failure #29 & #30: Florida and Louisiana

From the FDIC: Centennial Bank, Conway, Arkansas, Assumes All of the Deposits of Old Southern Bank, Orlando, Florida

Old Southern Bank, Orlando, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …

As of December 31, 2009, Old Southern Bank had approximately $315.6 million in total assets and $319.7 million in total deposits. …

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $94.6 million. … Old Southern Bank is the 29th FDIC-insured institution to fail in the nation this year, and the fourth in Florida. The last FDIC-insured institution closed in the state was Marco Community Bank, Marco Island, February 19, 2010.

From the FDIC: Home Bank, Lafayette, Louisiana, Assumes All of the Deposits of Statewide Bank, Covington, Louisiana

Statewide Bank, Covington, Louisiana, was closed today by the Louisiana Office of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …

As of December 31, 2009, Statewide Bank had approximately $243.2 million in total assets and $208.8 million in total deposits. …

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.1 million. … Statewide Bank is the 30th FDIC-insured institution to fail in the nation this year, and the first in Louisiana. The last FDIC-insured institution closed in the state was The Farmers Bank & Trust of Cheneyville, Cheneyville, December 17, 2002.

Louisiana makes an appearance …

via Calculated Risk: Bank Failure #29 & #30: Florida and Louisiana.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Bank Failure #28: Park Avenue Bank, New York, New York

From the FDIC: Valley National Bank, Wayne, New Jersey, Assumes All of the Deposits of the Park Avenue Bank, New York, New YorkThe Park Avenue Bank, New York, New York, was closed today by the New York State Banking Department, which appointed the Federal Deposit Insurance Corporation FDIC as receiver. ..As of December 31, 2009, The Park Avenue Bank had approximately $520.1 million in total assets and $494.5 million in total deposits. …The FDIC estimates that the cost to the Deposit Insurance Fund DIF will be $50.7 million. …. The Park Avenue Bank is the 28th FDIC-insured institution to fail in the nation this year, and the second in New York. The last FDIC-insured institution closed in the state was LibertyPointe Bank, New, York, New York, on March 11, 2010.OK, now it is Friday.

via Calculated Risk: Bank Failure #28: Park Avenue Bank, New York, New York.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Bank Failure #27: LibertyPointe Bank, New York – and it wasn’t even Friday!

From the FDIC: Valley National Bank, Wayne, New Jersey, Assumes All of the Deposits of LibertyPointe Bank, New York, New York

LibertyPointe Bank, New York, New York, was closed today by the New York State Banking Department, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver….

As of December 31, 2009, LibertyPointe Bank had approximately $209.7 million in total assets and $209.5 million in total deposits. …

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $24.8 million. … LibertyPointe Bank is the 27th FDIC-insured institution to fail in the nation this year, and the first in New York. The last FDIC-insured institution closed in the state was Waterford Village Bank, Williamsville, July 24, 2009.

Is it Friday?

via Calculated Risk: Bank Failure #27: LibertyPointe Bank, New York, New York.

A couple of thoughts here…..

• I don’t know whether it’s because the FDIC was short staffed or because they have a LOT of banks that they are going to close today, but it’s highly unusual that they would close a bank on a Thursday.
• If you look at the estimated cost and the assets vs. deposits, it doesn’t sound to me like it’s a huge loss (relatively speaking) so I think there’s probably more going on than meets the eye.

Stay tuned…….

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Foreclosures Down 2% in February: Don’t Pay Attention to the Headlines….

Don’t pay attention to the headlines – foreclosures down 2%.   Instead, look at the rest of the story:

• Foreclosures are up from last year.
• Foreclosures aren’t up as much as in the past, but they have been up on a year over year basis for 50 months in a row.
• Look at the quote that the CEO of Realty Trac says below.   It’s not that the foreclosure problem is done or even getting better, it’s just that certain programs are slowing down the process.  (Isn’t that called kicking the can down the road?)

This illustrates again why I’m writing under a pen name.   If you talk to “banks” they’ll say, “See, Foreclosures are down, the worst is over, all is well.”

I’ll tell you the truth as I see it, even if the banking industry doesn’t like it.

KH

via Foreclosures Down 2% in February: RealtyTrac « HousingWire.

James Saccacio, CEO of RealtyTrac, said the 6% increase from last year was the smallest since January 2006, but it was the 50th consecutive month of yearly increases.

“This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity — albeit at a historically high level that will likely continue for an extended period,” Saccacio said.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Let’s Call It What It Is – Sovereign Risk

So who is this Mohamed El-Erian?  He’s the CEO of PIMCO.    Who is PIMCO?   One of the largest institutional investors in the bond market, that’s all.

What’s he talking about when he says that Sovereign Risk is the key issue for this year?

Plain and simple, it’s the concern over whether any countries are going to default on their financial obligations.   That’s right, he’s talking about governmental bankruptcies……

What difference would that make to the mortgage world?   A couple of possibilities:

• A large amount of the debt in the mortgage world is funded by government debt.   If the concern rises about governments being able to pay it back, that will raise rates on those debts.   If that happens, guess what happens to mortgage rates?
• If it gets really bad, the credit markets could totally seize up.    That wouldn’t do well for the housing market.

Am I terribly concerned about either one of these happening?   I think the first scenario is significantly more likely than the second one.   I also expect we’ll see fluctuations in rates as the markets assess the likelihood of any of those issues happening.

Stay tuned…….

El-Erian: Sovereign Risk Is the Key Issue this Year – CNBC

Investors must recognize balance sheets of governments and sovereign risks are a key issue this year, Mohamed El-Erian, chief executive officer of PIMCO, said on Tuesday.

“It is the year of sovereign risks. Everyone has to recognize sovereign balance sheets themselves are an issue. Sovereigns are called sovereigns for reasons. Everyone gets influenced,” El-Erian, who is also co-chief investment officer at PIMCO, told a briefing in London.

Technorati Tags: Greece, Sovereign Risk, Housing Market

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Now I’m not saying it’s true…..

but this story reminds me of the John Grisham novel, The Rainmaker.   Why?   Let’s just put it this way:   The insurance company in the Grisham novel made a practice out of denying every single claim that came in, no matter how valid they were.

Am I saying that the PMI companies are doing the same thing?   No, I’m not.   But there is an indisputable fact – PMI companies are denying a LOT more claims than they used to.

So what does that mean going forward?   A couple of things:

• If the PMI companies are denying claims because documentation wasn’t quite right, expect the paperwork requirements to increase on any deal that requires less than 20% down.
• If the PMI companies are experiencing higher and higher losses, expect PMI to become more costly.
• If lenders are finding claims being denied on PMI loans, expect a higher and higher standard for loans that require PMI.    It’s going to get more expensive and harder to get PMI loans.

So, if you are looking at getting a mortgage some time in the next 12 to 18 months and you will probably need mortgage insurance, I’d seriously look at whether you can move up your time frame.   It’s not going to get easier to get a mortgage with PMI (mortgage insurance) any time soon.

More later……

K

Growing Trend of Mortgage Insurance Claim Denials are Costing Servicers « HousingWire

Friday, February 26th, 2010, 4:26 pm

In the face of dwindling business, with January 2010 showing fewer new policies than any month in 2009, mortgage insurance (MI) companies are increasingly denying claims for defaulted loans that allegedly do not conform to underwriting standards, increasing costs for servicers and investors.

Historically, MI rescission rates were low, generally around 7%, but in recent quarters, that rate has jumped to 25%, associate analyst Aleksandra Simanovsky wrote in the Moody’s Investors Service latest “ResiLandscape” commentary provided to HousingWire.

According to Moody’s, the issue came to a head in December 2009, when Bank of America (BAC: 16.66 0.00%) filed a lawsuit against MGIC (MGIC: 1.80 0.00%), claiming the insurer improperly denied claims from BofA’s servicer unit. While the lawsuit is still pending, mortgage insurers are becoming more confident in denying partial or whole claims from servicers and Simanovsky wrote the industry can expect continued high rescission rates for the future. That increase, combined with the below-investment-grade ratings of MI companies such as Radian (RDN: 9.82 0.00%) and MGIC “further constrain any benefits we might allow to the pool policies in RMBS transactions.”

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Home Prices Going Up? Don’t Hold Your Breath!

Housing Wire has the story about how analysts from Barclays are predicting only another 4 to 5% drop before things stabilize.   But they are also predicting that we’ll see basically zero appreciation for several years.    Why?    A couple of things:

• There are a LOT of foreclosures that have been temporarily stalled due to loan modification programs and very few of those are actually going to work long term.
• Because of that, as soon as we see any “sign” of increased appreciation, we’re going to see the backed up inventory (foreclosures, temporarily stalled foreclosures, sellers who just want to move etc.) flooding the market.    And that’s going to put downward pressure on the market again.

So what does this mean for the mortgage world?   A couple of things:

1. Assuming that we aren’t going to see strong appreciation means we’re also not going to see relaxation of underwriting guidelines any time soon.
2. Stability in prices means that we will probably see a stabilizing in the losses at Fannie and Freddie, but not a marked turnaround in their fortunes or their ability to do anything other than very conservative lending.

In other words, the house isn’t burning down right now (like it was in the fall of 2008) but it’s going to be a long road from here out of this mess.

Stay tuned……

Home Prices Will Not go up Anytime Soon, Say Analysts « HousingWire

The rate at which home prices are dropping may be slowly coming to a halt across the United States, with analysts at Barclays Capital predicting only a 4 or 5% dip left to go before stabilization. But the rate of appreciation on the back side of that bottoming out is likely to “muddle along for the next few years,” they say in a weekly letter to investors.

This conclusion is based on expected aftershocks of the “smoothed-out” housing supply model, where millions of potential foreclosures are being averted temporarily with government-backed programs or by suppliers slowing the rate in which foreclosures hit the market. On the positive side, they say this effort actually prevented home prices from falling considerably more.

Technorati Tags: Real Estate, Home Prices, Fannie and Freddie, Straight Talk About Mortgages

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Banking Reform…..

I’ll be the first to admit that there’s almost always more to the story than what is reported on CNBC, but I have to say that I like this idea.   Let me lay it out briefly:

• If you are a bank that either gets FDIC insurance or gets any sort of Federal support, then you can’t engage in speculative activity unrelated to basic banking activity.
• If you don’t get government support, then go right ahead and do all of that speculative stuff.   But, if you lose money, don’t come crying to Uncle Sam for a bailout because it’s not going to happen.
• The big question to me is what the word “unrelated” means.    Banks can’t do speculative activity unrelated to basic banking.    What does that mean?

It’s a step in the right direction, but how big of a reform it is depends on what the word “unrelated” means.

Stay tuned…….

Ex-US Treasury Secretaries Back Volcker Rule – CNBC

Five former Treasury secretaries urged Congress Sunday to bar banks that receive federal support from engaging in speculative activity unrelated to basic bank services.

“The principle can be simply stated,” the five said in a letter to The Wall Street Journal. “Banks benefiting from public support by means of access to the Federal Reserve and FDIC insurance should not engage in essentially speculative activity unrelated to essential bank services.”

The Treasury secretaries said, however, that hedge funds, private-equity firms and other organizations engaged in speculative trading should be “free to compete and innovate” but should not expect taxpayers to back up their endeavors.

“They should, like other private businesses, … be free to fail without explicit or implicit taxpayer support,” said the former secretaries for both Republican and Democratic presidents.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Well, of course they do….

Okay, call me Captain Obvious, but this doesn’t surprise me at all.   Let me lay it out:

• TARP cost taxpayers $787 Billion (or it will eventually).
• There was a huge public backlash and anti-banker sentiment was running rampant during the time that this was put into place.
• The rules regarding TARP cost bank executives (aka bankers many levels up the food chain from me) a LOT of money because of salary caps and bonus caps.

So, of course the majority of them are going to say that it didn’t have a positive impact.   It cost the bankers money, cost them public prestige and made them “not liked” by people.    Of course they don’t like it.

The second part of this is a similar type of statement.    Let me explain:

• As part of the banking crisis last year, the FDIC increased the insurance on deposit accounts to $250,000, from $100,000.
• They did so because many people were concerned (and rightly so) about their banks.
• The banking executives said, “We think that was a very good thing to do!”   

Well, why would they say that?    A couple of potential reasons:

• By increasing the limit, it kept their clients from moving their money elsewhere.
• That made these executives’ banks more profitable.
• That made the bonuses that they could get larger.

Unexpected?   Nope.    But you need to ask yourself the questions that you didn’t know you should ask.   It puts a different spin on things.

Tom Vanderwell

Only 12% of Bank Execs Think TARP Leaves Positive Impact : HousingWire || financial news for the mortgage market

While larger financial institutions complete full repayment of the Troubled Asset Relief Program (TARP), as is the case with the $45bn repaid last week by Citi (C: 3.31 -1.78%) and Wells Fargo (WFC: 26.6101 -0.26%), a bank survey completed by the Bank Administration Institute (BAI) claims only 12% of respondents feel the program positively impacted their operations.

The BAI & Finacle Bank Executive Index tracked the opinion of banking executives from the top 100 financial institutions in the United States. The executives, who staff commercial and savings banks, as well as credit unions, filled out an online survey regarding questions on the overall health of the economy as well as factors that improve customer satisfaction.

While respondents feel negative towards TARP, 87% of those surveyed said the government’s action to raise FDIC insurance to $250,000 helped drive confidence in consumer bank deposits.

Technorati Tags: Markets, Banks, FDIC

Since when did $3.5 Billion become “no big deal?”

The announcement came out that the Treasury is going to be giving $3,500,000,000 to GMAC.    It’s pretty much being treated as a non-event in the markets.  

So what does this tell me?   A couple of things:

• $1 Billion sure ain’t what it used to be.
• If the government thinks that they need to give any additional funding to a mortgage company, that tells me that the government doesn’t think this is done yet.

I’ll have more as time goes on.

Tom Vanderwell

Treasury plans to inject around $3.5 billion into GMAC | detnews.com | The Detroit News

The Treasury Department plans to announce as early Wednesday afternoon that it will give GMAC Inc. around $3.5 billion in additional capital, sources told The Detroit News.

Detroit-based GMAC and the Treasury Department have been in talks for months to finalize the amount of money the company would receive. The Treasury Department said earlier this year it would invest up to $5.6 billion more in GMAC — on top of $13.4 billion GMAC has received over the last year.

Technorati Tags: GMAC, Treasury, Bailout

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