Market Studies

Nationwide, one in every 200 residential loans funded last year, totaling $14 billion, involved fraud, according to First American CoreLogic. Despite what looks like an unsettling amount of shadiness lurking within the mortgage market, the company says the fraud rate has been steadily declining for the past three years and is now about 25 percent lower than when it peaked in the third quarter of 2007.

Home prices in extremely overvalued U.S. metropolitan areas declined nearly 37 percent on average between 2005 and the fourth quarter 2009, according to IHS Global Insight. At the peak of the bubble, nearly half of the metros in IHS' study were considered ""overvalued."" Now, not a single market can make that claim. In fact, nationally, the company says housing is 8.9 percent undervalued. And new data from Altos Research suggests that prices in many of the hardest-hit markets are still on a slippery downward slope.

In two separate reports released this week, Fannie Mae took a look at the past and made predictions for the future. On Thursday, the government-sponsored enterprise (GSE) released ""Helping Housing Recover: A Report on Fannie Mae's Mission Performance,"" describing the company's efforts to provide liquidity, stability, and affordability to the nation's housing finance system. On Wednesay, the GSE released its March 2010 Economic Outlook, cutting its mortgage origination predictions for this year.

For the first time in two years, commercial real estate investors are expressing a renewed sense of optimism about the future. Based on their responses to a quarterly survey conducted by PricewaterhouseCoopers, investors believe the worst has passed and a commercial real estate recovery is on the horizon. According to the survey findings, investors believe owners and lenders are finally coming to grips with what assets are truly worth, and as a result they expect sales activity in 2010 to be a marked improvement over 2009.

The Treasury has committed $50 billion of Troubled Asset Relief Program (TARP) funds to the Home Affordable Modification Program (HAMP) to pay servicers for helping homeowners avoid foreclosure. New estimates released by the Congressional Budget Office (CBO) show that the administration is expected to use no more than $20 billion for servicer incentives when all is said and done - indicating that HAMP will help far fewer distressed homeowners than originally promised.

Driven by drops in commercial mortgage-backed securities (CMBS) and construction loans held by banks and thrifts, the level of commercial/multifamily mortgage debt outstanding in the fourth quarter of 2009 decreased on both a quarter-to-quarter and year-over-year basis, according to the Mortgage Bankers Association's (MBA) analysis of the Federal Reserve Board Flow of Funds data.

Notice of defaults, which represent the start of the foreclosure process in California, increased by 19.7 percent in February, according to new data released this week by a locally-based company that tracks every foreclosure in the state. The sudden jump comes after four straight months of declines, when default notices fell to their lowest level in a year. The about-face has quickly quelled any ideas that California might be starting to make its way out of a crippling housing crisis.

Mortgage rates for the week ending March 18, 2010 showed very little movement from last week, Freddie Mac and Bankrate reported Thursday. According to Freddie Mac's Primary Mortgage Market Survey, rates for 30-year fixed mortgages averaged 4.96 percent with an average 0.7 point this week, nudging up from last week's average of 4.95 percent. Bankrate reported that rates for 30-year fixed mortgages averaged 5.07 percent, a slight drop from last week's average of 5.08 percent.

Since the peak of 2008, hotel revenue has declined almost 20 percent. Fitch Ratings says it's the largest decline among the major commercial mortgage-backed securities (CMBS) property types. Given the current capital restrictions, the agency predicts defaults on hotel loans held by CMBS investors will nearly double by 2012 - with delinquencies jumping from the current level of 16.6 percent to 30 percent.

Following two consecutive weeks of growth, mortgage loan application volume fell 1.9 percent for the week ending March 12, 2010, the Mortgage Bankers Association (MBA) reported Wednesday. The slump in mortgage application volume was surprisingly accompanied by a week-to-week drop in interest rates.