Market Studies

Included in the Treasury's latest installment of the Home Affordable Modification Program's (HAMP) monthly progress report is a new section detailing the performance of loans permanently modified. The report says the redefault rate for homeowners that have been in permanent modifications for at least six months is 1.7 percent. In commentary published Wednesday, analysts at Barclays Capital took issue with the Treasury's calculations, primarily because trial cancellations are not factored into the equation.

Bolstered by a week-to-week drop in interest rates, mortgage loan application volume jumped 7.6 percent for the week ending July 16, 2010, the Mortgage Bankers Association (MBA) reported Wednesday. According to MBA's Weekly Mortgage Applications Survey, the uptick in overall mortgage application volume came as both purchase and refinance activity grew from one week to the next. These increases came as rates for both 30-year and 15-year fixed-rate mortgages fell to the lowest levels ever recorded in the survey.

Profit margins for independent mortgage bankers and subsidiaries continued to fall in the first quarter of this year, as production volume declined and production operating expenses rose, the Mortgage Bankers Association (MBA) reported Tuesday. According to MBA's quarterly survey, independent mortgage bankers and subsidiaries made an average profit of $606 on each loan they originated in Q1, down from $890 per loan in the fourth quarter of 2009 and substantially lower than the $1,088 average profit recorded one year ago.

Data through June 2010, released Tuesday by Standard & Poor's and Experian points to a declining trend in consumer default rates, with a reduction in first mortgage past dues leading the drop. Based on data extracted from Experian's database of approximately $11 trillion in outstanding loans, first and second mortgage default rates were 3.3 percent and 2.4 percent, respectively, as of the end of last month. The companies say default rates on first mortgages are down 45 percent from a year ago; second mortgage defaults have dropped 44 percent.

Bolstered by the big four banks' loss mitigation efforts, the total number of active permanent modifications completed under the Home Affordable Modification Program (HAMP) jumped to 389,198 as of the end of June. Servicers completed 51,205 permanent modifications during the month, and more than half - 26,525 - of these were initiated by the nation's four largest banks - Bank of America, Wells Fargo, JPMorgan Chase, and Citi.

New data from the Treasury shows that the redefault rate for the Home Affordable Modification Program (HAMP) is far lower than many critics have projected and well below typical industry averages. According to the July report, the re-default rate (90 or more days past due) for homeowners in permanent modifications for at least six months is 1.7 percent. The latest figures from the OCC put the redefault rate of mortgages modified by the nation's 11 largest servicers - incorporating proprietary mod programs - at 57 percent.

Mortgage insurer PMI has cut its growth projections for 2010 home sales by more than half. The company's analysts now expect sales of existing homes to rise a modest 2.9 percent for the year to 5.31 million units. That's a sharp drop from a mere month ago, when they predicted a 6.1 percent gain. PMI says the falloff in sales now that the tax credit is gone suggests even record low mortgage rates and attractive pricing aren't enough to elevate demand in today's market.

It's evident that the homebuyer tax credit gave a much-needed boost to the housing market. What's unclear is how much of this heightened volume will be sustained. Due to the extension of the closing deadline for this ever-popular government incentive, only time will tell the answer to this question. Regardless, the housing market continued to ""hold its own"" in June, as both home sales and prices increased over year-ago levels, RE/MAX recently reported.

Prices of U.S. commercial real estate properties as measured by the Moody's/REAL Commercial Property Price Indices (CPPI) increased 3.6 percent in May. It was the second monthly gain in a row, after a 1.7 percent rise in April. But the ratings agency isn't reading too much into the successive increases. Moody's says, expect commercial real estate prices to remain ""choppy"" in the months ahead and transaction volume to be muted.

Both sellers' asking prices and inventory levels of residential properties rose slightly during the second quarter, according to a market gauge developed by Altos Research that tracks such statistics in 10 major cities. The company's 10-city composite of home prices inched up 0.2 percent from the first quarter to the second to $477,937. In Q2, Altos found that the inventory of properties listed for sale rose by 5.4 percent across the 10-city composite. San Francisco came out on top in terms of home price and inventory increases.