News

The number of layoffs fell 4.0 percent to 1,507,000 in January, the Bureau of Labor Statistics (BLS) reported Tuesday in its monthly Job Openings and Labor Turnover Survey (JOLTS) release, which details the ins and out of the labor market. The layoff total was the smallest since the JOLTS reports began in December 2000. At the same time, BLS said, the number of job openings rose 2.2 percent in January to 3,693,000, which meant there were 3.34 unemployed people for every job opening--a slight improvement from 3.38 in December.

In the fourth quarter of 2012, commercial and multifamily mortgage debt continued to grow, reaching the highest level in four years, according to a report from the Mortgage Bankers Association (MBA). Commercial and multifamily mortgage debt was up by $21.8 billion, or 0.9 percent, from the previous quarter and up $29.7 billion, or 1.2 percent, from the fourth quarter of 2011, the MBA reported.

Ally Bank, a subsidiary of Ally Financial, announced an agreement to sell mortgage servicing rights (MSRs) to Ocwen Financial Corporation for $585 million. The transaction includes MSRs with an unpaid principal balance of $85 billion and another $5 billion in agency MSRs created based on commitments made through the end of February. ""Ally continues to make significant progress in exiting its non-strategic mortgage activities. Going forward, the Bank's full focus and resources will be centered on its leading direct banking franchise and advancing its customer-centric deposit activities, as well as continuing to grow its key role in Ally's auto finance operation,"" said Barbara Yastine, president and CEO of Ally Bank.

Fannie Mae and Freddie Mac are at risk of losing billions as a result of fluctuations in interest rates, according to a white paper from the Federal Housing Finance Agency (FHFA) Office of Inspector General (OIG). According to the OIG's paper, an increase of just 1 percentage point in interest rates could cause the GSEs to lose nearly $2 billion in the fair value of their assets. To protect against interest rate risks, the OIG outlined its own suggestions, one of which included the use of derivatives.

A justice for New York's Supreme Court has ordered Nationstar to stop the auction of some of its mortgage notes through Auction.com. KIRP LLC filed a complaint against Nationstar over its selling of non-performing loans backing securities. KIRP argues that as master servicer, Nationstar has the authority to foreclose or modify the loans, not to sell them. An analysis of the case by Barclays determined it is unclear what the courts will decide and if the decision applies across the board, ""given the wide variation in the language of the servicing agreements.""

Mortgages originated from 2010 and into early 2012 are seeing elevated prepayment rates as low mortgage rates continue to encourage refinance activity, Fitch Ratings explained in a recent report. Despite the high levels of prepayment activity, the rating agency suggested ""the credit implications have been modest to date due to the high overall credit quality of the original pools."" According to Fitch, prime RMBS mortgage pools issued since 2010 had an average conditional prepayment rate (CPR) of about 42 percent.

FDIC announced Friday the closure of Frontier Bank, based in LaGrange, Georgia. The Georgia Department of Banking and Finance shut down the bank, appointing FDIC as receiver. HeritageBank of the South (Albany, Georgia)has picked up all of Frontier Bank's $224.1 million in deposits and ""virtually all"" of the closed bank's $258.8 million in assets, FDIC said.

The evidence is clear that the recovery in housing is finally under way, but the question that remains open is whether the positive trends in housing are sustainable, Federal Reserve Board Governor Elizabeth A. Duke said in a speech at the Mortgage Bankers Association's Mid-Winter Housing Finance Conference. In her view, the recovery does appear to be sustainable. ""I do not believe that a flood of houses on the market from households that are currently underwater or from bank REO is likely to materialize or to be sufficient to outpace growing demand,"" she said.

Perhaps the most important piece of economic news in the last few days was not the continued drop in the unemployment rate or the positive blurbs in the Beige Book or even the Dow reaching a new record high, but Thursday's quarterly Flow of Funds report. According to the report for Q4 2012, household assets grew to $79.5 trillion in the fourth quarter, an increase of $1.3 trillion--not too shabby. Household financial assets were up $784 billion to $54.4 billion but home equity (the value of household real estate less loans against that real estate) grew $452.8 billion, the result of two moving parts: real estate values (which increased) and household mortgage liabilities, which dropped.

The goal of attracting private capital into the mortgage market is at the center of discussions throughout the industry and the government. Thus far, ""efforts by the Federal Housing Finance Administration and other federal agencies to provide incentives for the creation of a vibrant private mortgage securitization market have been largely unsuccessful,"" according to Fitch Ratings. However, the ratings agency does see some promise in a couple of FHFA's goals.