Market Studies

Marking the sixth straight month of declines, national house prices fell 2.3 percent in January, according to the latest IAS360 House Price Index (HPI) released Wednesday by Denver-based Integrated Asset Services, LLC (IAS). The culprit? IAS says unusually severe winter weather in large regions of the country may have added to housing market woes. The January numbers resulted in the largest single-month decline in the IAS360 in more than a year.

Fairway Independent Mortgage Corporation reported this week that it more than doubled its mortgage sales in New England in 2009. Mortgage loan volume for the company's New England offices grew from $295 million in 2008 to $720 million in 2009 - a 244 percent increase.

Fitch Ratings warned Tuesday that the still-weak financial fundamentals of the nation's lenders have cemented its rating outlook for the U.S. banking sector as negative. The New York-based agency did note, though, that many of the factors that have been putting downward pressure on banks' ratings, including lending and liquidity, are easing. However, commercial real estate exposure, particularly for regional banks, as well as consumer mortgages are expected to weigh heavy on lenders' earnings into 2011.

An increase in purchase activity for the week ending March 5, 2010 caused mortgage loan application volume to nudge up 0.5 percent on a seasonally-adjusted basis from the prior week, the Mortgage Bankers Association (MBA) reported Wednesday. According to MBA's Weekly Mortgage Applications Survey, the seasonally-adjusted Purchase Index increased 5.7 percent on a week-to-week basis, but the Refinance Index fell 1.5 percent.

With the buy-now attitude fading, national home price reduction levels continued to decrease this month, according to a recent report by San Francisco-based Trulia, Inc., a real estate search engine. As of March 1, 19 percent of listings on the market had experienced at least one price cut, falling 10 percent from the previous month to the lowest level since Trulia began tracking price reductions in April 2009.

In an effort to attract buyers, home sellers in major cities throughout Florida are reducing prices by more than 10 percent, according to a monthly survey of home listings conducted by ZipRealty, an online real estate brokerage based in Emeryville, California.

Driven by legal actions against mortgage modification firms, overall mortgage litigation hit its highest level yet last quarter, according to recent industry study by the Washington, D.C.-based law firm Patton Boggs, LLP. The firm's analysis shows that loan modification cases more than doubled in the last three months of 2009 - and it appears the trend will persist as state and federal agencies continue to crack down on foreclosure rescue fraud.

The 29 basis-point (bp) increase in delinquencies to 6.26 percent at the end of February was driven in large part by upcoming maturities from U.S. commercial mortgage-backed securities (CMBS) deals originated in 2005, according to Fitch Ratings. The agency says these five-year loans will have difficulty refinancing this year as liquidity remains limited, and warns that in many cases, sponsors will have to either contribute additional equity or look to their servicers for extensions and modifications.

According to the Federal Reserve's well-recognized Beige Book, U.S. economic conditions have shown signs of improvement through the first part of this year. Data from nine of the 12 Federal Reserve districts indicated that economic activity improved, but in most cases the increases were ""modest."" Residential real estate markets improved in a number of districts, while nearly all characterized commercial real estate as weak. Stronger home sales were attributed to the federal tax credit for homebuyers.

University Financial Associates, LLC (UFA) in Ann Arbor, Michigan, recently released its quarterly Default Risk Index, showing that although mortgage risks are still elevated, they are quickly returning to normal levels.