Foreclosure

A new initiative announced Monday by HUD will give state and local governments and nonprofit groups participating in the department's Neighborhood Stabilization Program (NSP) preference to acquire homes from its inventory of foreclosed properties at discounted rates. This temporary program will provide NSP grantees an exclusive option to purchase HUD's REO properties before they are marketed to other purchasers. Furthermore, NSP purchasers will receive a 10 percent discount off the appraised value of the home.

According to an article recently released by the Federal Reserve Bank of Cleveland, much can be gleamed by studying the historic link between foreclosure and unemployment rates--including the fact that according to past patterns, we can expect the current high foreclosure rate to persist for some time. This finding was based on the observation that states that experienced boom-bust housing cycles in the past (such as Texas, Oklahoma, Massachusetts, and California) had elevated foreclosure starts for years after the peak in foreclosure starts and inventory, and these previous boom-bust cycles were small in comparison to the current cycle.

Households across the nation have been negatively impacted by the foreclosure crisis, but African-American and Latino families have been hit the hardest, according to a report recently released by the Center for Responsible Lending (CRL). The report found that while the majority of families who have lost their homes are non-Hispanic and white, African-American and Latino families have been disproportionately affected relative to their share of mortgage originations. Among recent borrowers, CRL estimates that nearly 8 percent of both African-American and Latinos have lost their homes to foreclosure, compared to 4.5 percent of whites.

Wells Fargo is restructuring its financial division--a move which outlines for the closure of 638 Wells Fargo Financial stores, as well as for the company to stop originating nonprime portfolio mortgage loans. The bank said this move is the result of its 2008 acquisition of Wachovia Corp, which makes these units no longer necessary. Of the 14,000 employees at Wells Fargo Financial, approximately 2,800 positions will be eliminated within the next 60 days, with an additional 1,000 positions to be eliminated over the next 12 months.

Despite a month-over-month increase in the commercial mortgage-backed securities (CMBS) default rate in June, Trepp LLC--a New York based company tracking commercial real estate--still sees hope in its latest report. The monthly delinquency rate for commercial real estate loans in CMBS showed a jump of 17 basis points in June, coming in at 8.59 percent for loans 30 or more days delinquent. However, Trepp said this marked the best reading since July 2009.

A new study developed by TransUnion finds that consumers with multiple account relationships with the same lender outperform consumers who maintain only one relationship with that lender, with the biggest improvements in delinquencies seen among mortgages. The study found that borrowers whose only credit relationship with their lender was for their mortgage had a 30-day or worse delinquency rate of 4.8 percent. However, this delinquency level dropped to 4 percent if the borrower had two relationships with the lender, and that rate fell even further with each additional relationship.

Safeguard Properties, the largest privately held mortgage field services company in the United States, has expanded its marketing and business development team with two new appointments. Tod Burkert has been named vice president of business development, and Anthony Golden has been named director of strategic initiatives.

Equator, the Los Angeles-based provider of software solutions for the default servicing industry, has introduced Professional (PRO) Short Sale and PRO HAFA modules to expand its PRO Workstation application. The newly launched modules provide a method for lenders, real estate agents, and borrowers to conduct real-time, transparent communication throughout the short sales process.

Marshall & Ilsley Corporation (M&I), a Milwaukee-based financial services corporation, has extended its foreclosure moratorium through September 30, 2010, tacking on an extra three months to the previously lengthened moratorium.

As part of outreach through the National Stabilization Program, HUD recently announced an agreement with foreclosure-rocked Cuyahoga County in Cleveland, Ohio. Under this new agreement, HUD will sell homes to the Cuyahoga County Land Reutilization Corporation (CCLRC) for deeply discounted prices, which the CCLRC can then repair and resell in an effort to prevent neighborhood blight through the county. HUD said this agreement is similar to another successful program run in Cleveland where HUD sold 441 properties to the city at reduced prices.