Daily Dose

The National Community Reinvestment Coalition (NCRC), the National Association for the Advancement of Colored People (NAACP), and the League of United Latin American Citizens (LULAC) sent a letter to President Obama, calling on the Administration to end the conservatorships and recapitalize Fannie Mae and Freddie Mac.

Counsel's Corner is an ongoing series in which DS News talks with default servicing attorneys around the country about the most pressing issues facing the default servicing and mortgage industries. This installment features Mike Flynn, partner in Goodwin Procter’s Financial Institutions Group.

A recent report found that nationwide, there are approximately 20,000 so-called zombie foreclosures, which are residential properties that have been vacated by the owner but the foreclosure process has not yet been completed. With the owners gone, these abandoned properties are typically not maintained by banks, which potentially breeds blight, attracts violent crime, and brings down values of surrounding properties.

October 2015 marks the two-year anniversary since the first SFR securitization, IH 2013-SFR1 (Invitation Homes), in October 2013. Since then, total issuance for 25 single-family securitizations in two years have amounted to $13.08 billion backed by loans on nearly 100,000 homes, according to Morningstar.

With that expansion of the total mortgage portfolio came a drop of four basis points in the serious delinquency rate for loans backed by Freddie Mac, down to 1.41 percent—a year-over-year decline of more than half a percentage point, from 1.96 percent in September 2014.

However, the decline in GDP growth coincides with a drop in a couple of key housing indicators for September. Thursday’s announcement of 1.5 GDP growth came the same day as the National Association of Realtors' pending home sales index for September, which was reported to be at its lowest level in eight months.

At the end of the third quarter of 2015, the bank’s LAS unit was handling about 107,000 delinquent loans, according to the bank’s Q3 earnings statement released earlier in October.

Largely due to a combination of increasing home prices and a lack of suitable inventory, flipping edged out renting as the preferred strategy in Q3 2015 for the fourth consecutive quarter, since Auction.com began tracking investor intent data. Overall in Q3, 53.7 percent of investors said they preferred flipping, while 45.1 percent said they intended to rent the properties they purchased.

While waiting for the Fed to raise rates, banks will likely place "additional focus on cost controls to improve operating efficiencies and extend balance sheet duration" to reduce margin compression, according to a recent report from Fitch Ratings. Bank margins have fallen to 3.02 percent as of the first quarter of 2015, the lowest average since 1984, the Federal Deposit Insurance Corporation said.

The good news for Ocwen is that the company ended Q3 with more than $731 million in available liquidity, including $459 million of cash on hand, and brought the amount of reduced corporate debt by 47 percent, or $812 million, year-to-date in 2015 by the end of the third quarter.