Ladd Tower sold for $79 million, by Wendy Culverwell, Portland Business Journal

Ladd Tower in Portland, Oregon, USA

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Ladd Tower sold for $79.35 million to a Dallas-based institutional investor in November, marking the largest apartment sale of the year.

CoStar Group and the Daily Journal of Commerce first reported the news.

Invesco Institutional acquired the 332-unit tower from U.S. Bank. The bank took over Ladd Tower, 1300 S.W. Park Ave., in August from developer Opus Northwest in lieu of foreclosing on an $82 million construction loan.

Ladd Tower is one of the last local projects completed by Opus Northwest, once one of the region’s most prolific developers with 17 million square feet developed in the metro area.

Also in November, Opus sold its 101-unit Park 19 project, 550 N.W. 19th St., or $28.8 million to TIAA-CREF, a New York investment giant.

@wendyculverwell | | 503-219-3415

Read more: Ladd Tower sold for $79 million | Portland Business Journal

Pending Sales of U.S. Existing Homes Rose 3.5% in November, by Bob Willis,

The number of contracts to buy previously owned homes rose more than forecast in November, a sign sales are recovering following a post-tax credit plunge.

The index of pending resales increased 3.5 percent after jumping a record 10 percent in October, the National Association of Realtors said today in Washington. The median forecast in a Bloomberg News survey called for a 0.8 percent rise in November, and the gain was the fourth in five months. The group’s data go back to 2001.

Home demand is stabilizing after sales collapsed to a record low in July, as the effects of a tax incentive worth as much as $8,000 waned. A jobless rate hovering near 10 percent means foreclosures will remain elevated and any recovery in housing, the industry that precipitated the worst recession since the 1930s, will take time to develop.

The figures are “in line with an ongoing gradual pickup in existing-home sales in December,” Yelena Shulyatyeva, an economist at BNP Paribas in New York, said in an e-mail to clients. “Housing demand should continue its uneven recovery entering 2011 as housing oversupply should keep pushing housing prices down.”

A report today from the Labor Department showed claims for jobless benefits fell last week to the lowest level since July 2008, showing the labor market is improving heading into 2011. Filings decreased by 34,000 to 388,000 in the week ended Dec. 25, fewer than the lowest estimate of economists surveyed.

Business Barometer

Other figures showed the economy accelerated at the end of the year. The Institute for Supply Management-Chicago Inc.’sbusiness barometer jumped to 68.6 in December from 62.5 in the prior month. Readings greater than 50 signal expansion and the level was the highest since July 1988.

Stocks fluctuated between gains and losses after the reports. The Standard & Poor’s 500 Indexfell 0.1 percent to 1,258.23 at 11:17 a.m. in New York. The benchmark 10-year Treasury note declined, pushing up the yield to 3.39 percent from 3.35 percent late yesterday.

The projected increase in pending home sales was based on the median of 24 forecasts in the Bloomberg survey. Estimates ranged from a drop of 5 percent to a gain of 5 percent.

Two of four regions saw an increase, today’s report showed, led by an 18 percent jump in the West. Pending sales rose 1.8 percent in the Northeast. They fell 4.2 percent in the Midwest and 1.8 percent in the South.

November 2009

Compared with November 2009, pending sales in the U.S. were down 2.4 percent.

Even as the labor market is improving and manufacturing is growing, housing remains a weak link. NAR chief economist Lawrence Yun last week estimated there were about 4.5 million distressed properties that could potentially reach the market in coming months.

Average home prices as measured by the S&P/Case-Shiller indexes have begun dropping again after rising when the tax incentive was in effect. The group’s 20-city index fell 0.8 percent in October from a year earlier, the biggest year-on-year decline since December. It fell 1 percent from the prior month, and is down 30 percent from its July 2006 peak.

Reports earlier this month showed the housing market is stuck near recession levels. Housing permits fell in November to the third-lowest level on record, while starts rose for the first time in three months, the Commerce Department reported Dec. 16.

Home Sales

Sales of new and existing homes last month rose less than projected by the median forecast of economists surveyed by Bloomberg, reports from the Commerce Department and the National Association of Realtors showed last week. Existing home sales represent closings on the contracts captured by the pending sales gauge.

Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent.

“The year can generally be described as one where we and the industry were bouncing along the bottom,” Chief Executive Officer Ara Hovnanian said on a conference call.

Even so, economists in the past two weeks have boosted projections for fourth-quarter growth, reflecting a pickup in consumer spending and passage of an $858 billion bill extending all Bush-era tax cuts for two years.

To contact the reporter on this story: Bob Willis in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

    Wells Fargo Top Mortgage Lender for the Fourth Consecutive Quarter,

    Wells Fargo's corporate headquarters in San Fr...

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    Wells Fargo was the top residential mortgage lender for the fourth consecutive quarter, according to

    The San Francisco-based bank and mortgage lender grabbed nearly a quarter (23.13 percent) of total market share with $102.8 billion in loan origination volume during the third quarter.

    The company bested its year-ago total of $97.9 billion and crushed the $83 billion originated in the second quarter, thanks in part to the record low mortgage rates on offer, which sparkedrefinance demand.

    Bank of America came in a distant second with $74 billion and 16.66 percent market share – Chase originated about half of that, with $42.7 billion and 9.60 percent market share.

    Their volume was nearly identical to the volume seen a quarter earlier, but 25 percent lower than that seen a year ago.

    Rounding out the top five were CitiMortgage and Ally Bank/Residential Capital (GMAC) with $20.3 billion and $20.2 billion, respectively.

    The pair saw market share of just over nine percent combined.

    So the five largest mortgage lenders accounted for nearly 60 percent of all loan origination volume.

    Quicken Loans was the biggest gainer in the top 10, with an 88 percent increase seen from the third quarter of 2009.

    SunTrust Bank was the biggest loser year-over-year, chalking a 34 percent decline.

    Take a look at the top 10 mortgage lenders in the third quarter of 2010:


    Oregon Real Estate Wanted: New Listing SG12

    I have new clients that are looking for a home to lease, lease to own or buy on contract. This is a professional couple that will be moving to the area with in the next 60 to 90 days. They have a dog that is well trained and mannered. It is a 100 pound german shepherd. Homes in which pets are welcomed and either has a dog positive yard or near areas where my clients can walk their dog in safety are a must. Client can provide references for themselves as well as their dog.

    If you have a listing you feel my clients might be interested in or you know of one let me know. When you contact me just reference SG12 so I will know which clients you are referring too.

    Please feel free to forward this message to anyone you feel might have a property for my clients.

    To find out more information about my clients and what they are looking for please visit and scroll down to buyer SG12 or contact me.




    Fred Stewart
    Stewart Group Realty Inc.

    503-289-4970 (Phone)


    Obama Considers Foreclosure Ban, by Carrie Bay,

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    President Obama and his administration are floating an idea to prohibit lenders from foreclosing on a home unless the borrower has been considered for the government’s Home Affordable Modification Program (HAMP).

    The proposal would require servicers to initiate contact with all borrowers who are 60 or more days behind on their mortgage payments and offer them access to the federal modification program. Only after the homeowner has been screened under the HAMP guidelines and it is determined that the loan cannot be saved, could foreclosure proceedings commence. The proposal would also halt any foreclosures already in process once a borrower has been accepted into the trial phase of the program.

    The proposal was reviewed by lenders last week on a White House conference call and “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMPor reasonable contact efforts have failed,” Bloomberg Newsreported, citing a Treasury Department document outlining the plan.

    Some lenders have been voluntarily suspending foreclosure proceedings while they evaluate a homeowner’s eligibility for HAMP, but under the program’s current guidelines there is no requirement to do so, and a number of homeowner advocacy groups have submitted complaints to the administration that even borrowers who are making their trial payments are being hit with foreclosure litigation.

    A Treasury spokesperson confirmed that a foreclosure ban is under consideration, but stressed that it is one of many ideas on the table and has not been approved yet.

    Laurie Goodman, a senior managing director at the Amherst Securities Group who has been highly critical of the government’s modification program, told the New York Times that even if the proposal came to pass, it would.

    not be “a major change. We think there is a large public relations element to this,” she said.

    As the Times noted, the government could use some favorable public relations for its modification program. Lawmakers have begun to openly express their disappointment with the program. On Thursday, members of the House Committee on Oversight and Government Reform said matter-of-factly in a report, that by every practical measure, “HAMP has failed.”

    Reps. Darrell Issa (R-California) and Jim Jordan (R-Ohio) called the program a misuse of taxpayer money, theWashington Post said. The program has been allocated $75 billion to pay incentives to servicers, investors, and borrowers for loan restructurings, but the paper says that so far only $15 million has been spent.

    As of the end of January, 116,297 troubled mortgages had been permanently modified under HAMP. About 830,000 more were in the trial phase of the program. The administration’s goal is to help three to four million borrowers save their homes through the program by the end of 2012.

    News of a draft document by the Treasury outlining additional changes to HAMP also circulated this week. Besides the proposed ban on foreclosures until after aHAMP review, the administration is also considering implementing a mandatory 30-day appeal period for borrowers that are denied a federal modification. Servicers would not be allowed to proceed with a foreclosure sale during this time.

    The proposal would also require servicers to prove that they have made multiple attempts to contact delinquent borrowers both by phone and via written notices, and would require them to consider HAMP applications from homeowners that have already filed for bankruptcy.

    Lenders have expressed concern that the proposed requirements would prolong foreclosure delays beyond the current 12 month timeline that it typically takes to resolve the loans that don’t qualify for a modification.

    Earlier this month at the American Securitization Forum’s annual meeting, Seth Wheeler, a senior advisor at the Treasury Department, told mortgage bond investors and lenders that the administration is also considering revising HAMP’s net present value (NPV) model in order to incorporate more principal writedowns into the equation. The NPV test is applied to determine if the mortgage owner can recoup more money by restructuring the loan or by foreclosing.

    Fannie Mae and Freddie Mac HARP Refinancings Increase in Third Quarter,

    Half million dollar house in Salinas, Californ...

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    RISMEDIA, December 27, 2010—Refinancings through the Home Affordable Refinance Program (HARP) increased 26% in the third quarter of 2010. Fannie Mae and Freddie Mac loan modifications through the Home Affordable Modification Program (HAMP) increased 16% in the quarter, although the overall volume of loan modifications and the pace of HAMP modifications declined from previous periods. The data were released in FHFA’s Third Quarter 2010 Foreclosure Prevention & Refinance Report, which includes data on all of the Enterprises’ foreclosure prevention efforts.

    Findings of the report include:

    -Loans modified in the last three quarters are performing substantially better three months after modification, compared to loans modified in earlier periods.

    -More than half of the loan modifications completed in the third quarter lowered borrowers’ monthly payments by over 30%.

    -Loans that are 30-days delinquent increased by 17,600 loans or 2.7% during the third quarter to approximately 682,000.

    -Loans 60-plus-days delinquent declined for the third consecutive quarter. The 60-plus-days delinquent loans decreased by 109,700 loans, or 6.8% during the third quarter to approximately 1.5 million.

    -Nearly 35,400 HAMP trial modifications transitioned to permanent during the third quarter, bringing the total number of active HAMP permanent modifications to nearly 260,000.

    For more information, visit and

    RISMedia welcomes your questions and comments. Send your e-mail to:

    Have you heard about RISMedia’s Real Estate Information Network® (RREIN)? RREIN is an elite network of leading real estate companies dedicated to providing consumers and their agents with leading real estate information, and committed to the belief that Information Share Equals Market Share. Having only launched this past June 2010, the RREIN network is already comprised of 40 leading brokerages, which make up 575 offices, 30,000 agents, 167,000 closings and represents over $41 billion in transactions. How can RREIN help your recruiting efforts and differentiate your company today? For more information, email

    Cloud of suspense surrounds Bank of America, WikiLeaks, by Rick Rothacker,

    Picture of Julian Assange during a talk at 26C3

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    Internal security stepped up after Assange announces plans for ‘megaleak’ about a large bank.

    Heading into the new year, a big question looms for Bank of America: What’s next in the WikiLeaks saga?

    Julian Assange, the anti-secrecy organization’s founder, has said he is preparing a “megaleak” about a large bank, leading to speculation the Charlotte bank is the target. On Monday, he told the Times of London that he had enough information to make the bosses of a major bank resign.

    Meanwhile, Bank of America has cut off payments intended for WikiLeaks, spurring the group to tell customers to stop doing business with the bank. Other financial institutions that have foiled payments have faced cyberspace attacks from WikiLeaks supporters, but so far the bank doesn’t appear to be suffering ill effects.

    Analysts say it’s possible WikiLeaks could stir up new trouble for the nation’s biggest bank, perhaps exposing more problems in the mortgage arena or reviving questions about its Merrill Lynch acquisition. It’s also possible the revelations cause little harm or that WikiLeaks bypasses the bank altogether.

    Bert Ely, a Virginia-based banking consultant, said he suspects all major financial institutions are girding for the group’s next move.

    “We don’t know it’s Bank of America,” he said. “It could be one of a number of banks.”

    In recent months, WikiLeaks has gained notoriety for exposing Pentagon and State Department secrets and for Assange’s fight against sexual assault charges in Sweden. In November, he told Forbes magazine that his group planned a bank leak in early 2011. That drew attention to a 2009 article in which Assange said WikiLeaks had obtained a Bank of America executive’s hard drive.

    Bank of America has said it has no evidence that WikiLeaks has company data but it has said little else on the subject. In a speech earlier this month, chief marketing officer Anne Finucane hinted Bank of America was steeled for any possible revelations, partly because it already has endured intense investigations of its 2008 Merrill deal.

    “We have been out there pretty much 24/7, whether those of us who run communications like it or not, and we have learned not only to react, but deal with this as a given,” Finucane told a Boston audience.

    A Bank of America employee told the Observer that it appeared the bank had stepped up security internally recently, taking steps to block access to websites such as Gmail on company laptops. The bank declined to comment on security procedures.

    Analysts say they’re watching for the next development, which could cause new problems for a company still trying to recover from the financial crisis. When speculation surfaced on Nov. 30 that Bank of America could be WikiLeaks’ next target, the bank’s shares plunged more than 3 percent to $10.95. But since that drop-off, the bank’s shares have climbed nearly 15 percent to $12.98 at Tuesday’s close.

    Jefferson Harralson, a bank analyst with Keefe, Bruyette & Woods, said WikiLeaks’ revelations are unlikely to highlight a new problem but could add more color around topics already in the news. The bank’s mortgage unit, bulked up by the 2008 Countrywide Financial acquisition, has been the biggest trouble spot lately. The most costly issue is requests by investors to buy back billions in soured mortgage loans originated and sold off by Countrywide during the housing bubble.

    “The soft underbelly (for Bank of America) would be the mortgage crisis,” Harralson said.

    Still, analysts already are braced for huge losses tied to mortgage loan repurchase requests. Harralson estimates the bank could spend $35 billion over five years buying back mortgages, although he suspects the amount could end up being less.

    Ely, the banking consultant, said WikiLeaks could reveal information on a range of issues, from executives’ actions during the Merrill Lynch acquisition to who is using the company jet. One of the more damaging disclosures would be evidence of securities law violations, such as the manipulation of earnings or the failure to disclose material information to investors, he said.

    “That can trigger lawsuits from shareholders and bring out the class-action bar,” he said.

    The New York Times on Tuesday reported that regulators also are worried that WikiLeaks revelations could show failings by the agencies charged with overseeing the banking industry. Earlier this month, however, Federal Deposit Insurance Corp. chairman Sheila Bair downplayed concerns about a leak. “I have a hard time understanding what would be so provocative,” she said after a speech. “So I would just ignore it, I really would.”

    On Friday, Bank of America said it cut off payments to WikiLeaks because it had “reasonable belief that WikiLeaks may be engaged in activities that are, among other things, inconsistent with our internal policies for processing payments.” A bank spokesman declined to answer further questions.

    Analysts said the bank could have a number of reasons for making the move, including pressure from the government, a desire to separate itself from possible criminal activities or revenge for obtaining its internal information.

    Through its Twitter handle, WikiLeaks has encouraged Bank of America customers to close their accounts. The bank’s website doesn’t appear to be suffering from cyberspace attacks. Rich Mogull, analyst and chief executive at security research firm Securosis, said WikiLeaks supporters would need “massive resources” to dent the bank’s formidable defenses.

    “Bank of America is always under attack,” Mogull said. “It’s one of the biggest targets on the Internet.”

    In case of any leaks, Harralson said Bank of America is likely preparing its legal response, although that could be difficult against an “ephemeral” organization like WikiLeaks. “You can examine your legal options,” he said, “but it’s a hard organization to pin down.”

    Read more: Updated Notice Of Default Lists

    Multnomah County Courthouse in Portland, Orego...

    Image via Wikipedia was updated with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 3 years. idocuments the fall of the great real estate bust of the 21st century. Over 50,000 Notice of default Listings

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures

    Stewart Group Realty Inc.

    Mortgage Rates Continue to Climb, Closing in on 5% Mark, by Carrie Bay,

    Borrowing costs on home loans continue to increase, with mortgage rates rising sharply for the past five weeks in a row. New data released Thursday show that the average rate for a 30-year mortgage jumped 22 basis points over the last seven days. Freddie Mac reports that rates for a 30-year fixed mortgage averaged 4.83 percent (0.7 point) for the week ending December 16, 2010. That’s up from last week’s average of 4.61 percent. Last year at this time, the 30-year rate was 4.94 percent.

    The GSE’s weekly rate survey is based on data gathered from about 125 lenders across the country, and it showed increases across the board.
    The 15-year fixed-rate mortgage this week averaged 4.17 percent (0.7 point) in Freddie’s study. Last week, it was 3.96 percent, and a year ago at this time, it was 4.38 percent.

    Adjustable-rate mortgages (ARMs) also climbed higher. Freddie says the 5-year ARM averaged 3.77 percent (0.7 point) this week, up from 3.60 percent. Rates on 1-year ARMs came in at 3.35 percent (0.7 point), compared to 3.27 percent the previous week.
    A separate study released by Bankrate Thursday, which derives its figures from data provided by the top 10 banks and thrifts in the top 10 U.S. markets, shows that 30-year rates among its covered lenders already hit the 5.00 percent (0.4 point) mark this week. That’s up from a 4.89 percent average reported by Bankrate last week.
    It’s the first time since May that the 30-year rate has hit the 5 percent threshold in Bankrate’s study. As recently as November 3, mortgage rates were at a record low of 4.42 percent, according to the tracking firm’s analysis.
    The average 15-year fixed mortgage increased to 4.37 percent (0.38 point), and the larger jumbo 30-year fixed rate rose to 5.58 percent in Bankrate’s study.
    Adjustable rate mortgages were also higher, with the average 5-year ARM jumping to 3.95 percent and the average 7-year ARM climbing to 4.36 percent.
    Bankrate surveys a panel of mortgage experts each week to gauge which way they think rates are headed over the next seven days. Nearly three-quarters of the panelists, 73 percent, expect mortgage rates to increase and only 7 percent predict rates to decline. The other 20 percent forecast that rates will remain more or less unchanged over the next week.

    New Regulatory Rule to Support Foreclosure-Ridden Neighborhoods, by Carrie Bay,

    The federal bank and thrift regulatory agencies on Wednesday announced changes to the Community Reinvestment Act (CRA) parameters in support of stabilizing communities affected by high foreclosure levels.

    The final rule was issued by the Federal Reserve, FDIC, Office of the Comptroller of the Currency, and the Office of Thrift Supervision, and it encourages depository institutions to finance development activities in areas that qualify for HUD’s Neighborhood Stabilization Program (NSP). Through the agency’s NSP initiative, HUD has provided funds to state and local governments, as well as nonprofit organizations, to purchase and rehab abandoned and foreclosed properties. The new rule revises the term “community development” to encourage depository institutions to make loans and investments, and provide services to support NSP activities in areas with HUD-approved plans. Financial institutions will receive favorable consideration under CRA requirements for their participation in efforts to stabilize local communities where there are large numbers of foreclosures and vacant homes. Federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions. CRA was initially enacted by Congress in 1974 to encourage depository institutions to meet the credit needs of their local communities by lending to borrowers in all segments, including low- and moderate-income neighborhoods. Under the new rule, financial institutions will receive CRA credit for any NSP-eligible activities, such as loans extended to grant recipients for the purchase of foreclosed homes or for a donation of REO properties to nonprofit housing organizations. The federal government has allocated nearly $7 billion for HUD’s NSP program to provide what the regulatory agencies described as “emergency assistance” to help alleviate problems brought on by the foreclosure crisis, such as growing inventories of vacant properties, depreciating home values, declining property tax bases and the destabilization of local communities. The regulators stated in the final rule that high levels of foreclosures are projected to continue into 2012 and beyond with particularly devastating spillover effects for certain hard-hit neighborhoods.

    Debate on Reverse-Mortgage Risks Heats Up, by Maya Jackson Randall,

    A report by Consumers Union and other advocacy groups has ignited a debate about whether reverse mortgages are too risky for house-rich seniors in need of extra cash, just as the nation’s new consumer agency is starting to examine the issue.

    The groups are urging the new Consumer Financial Protection Bureau to boost oversight of the complex loans and to move to fight scams and deceptive marketing. Other groups, however, defend reverse mortgages.

    The call for increased oversight comes as the market for reverse mortgages is poised for expansion as the baby-boom generation retires. Meanwhile, lenders are aggressively marketing reverse mortgages, tapping celebrities such as actor and former U.S. Sen. Fred Thompson as spokesmen and holding seminars at senior centers to sell the loans.

    Most reverse mortgages are made under the Home Equity Conversion Mortgage program, begun in 1988 and administered by the Department of Housing and Urban Development. A borrower must be at least 62 years old and have paid off all or most of the mortgage. Instead of a monthly mortgage payment, the borrower receives payments as a lump sum, monthly cash advances or line of credit. When the homeowner dies, moves or sells the house, the loan must be repaid.

    The consumer advocates say seniors should use reverse mortgages—which allow older Americans to tap into the equity in their home—only as a last resort because fees can be high and the loans could affect eligibility for government-assistance programs such as Medicaid. Also, if borrowers deplete home equity, they won’t have much to pass on to heirs and could have a harder time funding long-term care, the groups warn.

    Advocates also worry that if more isn’t done to help vulnerable consumers understand the risks, the expanding reverse-mortgage market could melt down just like the subprime-mortgage market did ahead of the financial crisis.

    “The public, policy makers and legislators should be aware that this time, yesterday’s subprime lenders are now preying on a growing elderly population who are trying to remain financially independent in their own homes during a depressed economy,” says the report from Consumers Union, the California Advocates for Nursing Home Reform and the Council on Aging Silicon Valley released last week.

    Defending reverse mortgages, groups such as RetireSafe and the National Reverse Mortgage Lenders Association say the report fails to acknowledge recent pro-consumer changes.

    “I think they’re rattling the cages here without having much concrete to offer or any evidence to back up their allegations that there are widespread problems,” said Peter Bell, president of the NRMLA.

    Meanwhile, the Government Accountability Office, Congress’s investigative arm, has found examples of potentially misleading claims in loan-marketing materials. Also, the Federal Bureau of Investigation warned in a March 2009 bulletin that loan officers and real-estate agents have exploited reverse mortgages to defraud senior citizens.

    Congress directed the new Consumer Financial Protection Bureau to study reverse mortgages. According to a bureau official who works closely on mortgage-related issues, the bureau is beginning to examine reverse mortgages and plans to build on the Federal Reserve’s and GAO’s efforts to improve disclosures and prevent misleading advertising.

    The advocacy groups say reverse mortgages are reasonable for some seniors in foreclosure who don’t plan to move into assisted living and for low-income seniors who lack other retirement assets, don’t qualify for lower-cost alternatives and can’t meet their current mortgage obligation.

    But most seniors should consider alternatives, the groups say.

    Still, Barbara Stucki, a vice president at the National Council on Aging, expects homes to become more popular sources of income for retirees, given that fewer Americans have defined-benefit pensions and more Americans are living longer after retirement.

    “Today’s retirement realities are daunting, and when you combine that with the economic challenges, people are going to be tapping the equity in their homes,” she said. “We want to make sure that options like reverse mortgages are viable and properly regulated.”

    The industry itself doesn’t seem opposed to new regulation.

    “We understand that the demographics are in our favor. The market will grow, and the need will grow because people need to fund longevity, but it will only grow if consumers feel the products are fair and the people who offer them are trustworthy,” said Mr. Bell of the National Reverse Mortgage Lenders Association. “If the regulatory regime helps get us there, that’s great.”

    Write to Maya Jackson Randall at

    Just because we can do an FHA loan at 580 FICO, does that mean we should? By: Jason Hillard

    this post was originally published on home loan ninjas on July 2nd 2010

    Perhaps the biggest advantage to being an affiliate branch of a mortgage bank is our inherently “hybrid” nature. We are the bank; we have more responsibility and control than ever before. However, there are some hard and fast guidelines that all loans we originate and underwrite “in-house” must adhere to. These are policies that ensure our good standing with the investors we sell the loans to. Without access to these investors, we wouldn’t be in business because we do not service loans.

    One of these steadfast rules is a minimum FICO score of 640, regardless of the loan program. This is where the “hybrid” nature of our operation kicks in and really sets us apart from a traditional bank. If we have clients that don’t meet certain underwriting criteria as prescribed by our investors, we can broker the loan to another bank. Hybrid: part bank, part broker. It really is a beautiful thing because it allows us to assist more customers than before. And we can be faster on our feet because we aren’t always relying on third parties, and provides more options to the consumer.

    A quick perusal of the matrix of banks we are brokered with yielded a surprising tidbit of information: we can still do an FHA loan down to a 580 credit score.

    This, of course, brings up an important question…

    Just because we can, does that mean we should?

    My partner and I, as I have previously mentioned, rarely fill out a client’s home loan application the first time we talk to them. Many people out there don’t qualify for their “ideal” mortgage right away. Others don’t know how much income they truly make. The point is, we get to know the down and dirty details before we begin the process in earnest. Outside of a few exceptions, this is the only responsible way to do business.

    Now many times one of those details is a “less than perfect” credit score. Frequently, this can be remedied in 6 to 12 months with a little hard work, diligence, and a willingness to pay the items that are negatively impacting the client’s credit score.

    We help people climb back up. Its what we are supposed to do. We are advisors, not just salesmen.

    Can you make a case in the post-bubble (fingers-crossed) era for doing loans for people with a 580 credit score?

    Right now, we have quite a few clients that are in this range. Actually, we always do because we talk to a lot of people and we don’t believe in simply turning people down with no plan to become “approvable”.

    So how do we determine whether or not to proceed?

    The answer, to me, lies in whether or not the consumer is climbing the stairs up, or riding the slide down.


    Let’s say we had a client come in to review their credit history with us 6 months ago, and at that time, their score was 493. We highlighted a plan of action, and they set their minds to achieving those goals. Let’s now assume that client followed all the steps and now they have a 597 credit score. They mention that they saw a house for sale over the weekend that they absolutely fell in love with. They want to know if they can get approved to purchase the home. I am morally OK with my Originator beginning the process with them. They have worked hard to improve their situation, and want to take an advantage of the opportunity to buy a house they really want, rather than settling for something now and trying to upgrade later.

    Now let’s look at another situation that isn’t uncommon. A borrower comes to my mortgage company to get pre-approved to buy a “to be determined” property. They have a 641 credit score at the time of application. They start house-hunting, but can’t find anything they want for 60 days. Then they find something, put an offer in, and the offer is rejected. They put an offer in on another house; this one’s a short sale. They go back and forth with the seller over the next few weeks about closing cost concessions and inspection addendums. Suddenly the credit report is over 90 days old, which means we have to pull a new one. Low and behold, the borrower has maxed out a credit card, or taken a new loan out and missed a payment. Their credit score has dropped to a 599. Should we go ahead with the home loan?

    The answer is not so clear cut, but I am damn certain about this: we are not acting in the consumer’s best interest if we don’t at least review the situation with them and determine the delinquency’s validity. It’s not professional to negotiate a mortgage for someone who is on the slippery slope of credit decline.

    We aren’t trying to be “negative”, just honest and professional. The collective irresponsibility of borrowers, brokers, lenders, and banks got us into the current mess, and professional responsibility is the only way to prevent a repeat.

    question mark image credit  Image: jscreationzs /

    slide image credit Image: Tina Phillips /

    Panel Is Critical of Obama Mortgage Modification Plan, by David Streitfeld,

    The Treasury Department’s loan modification program, which has been criticized as ineffective almost since its inception, came in for another battering in a Congressional report released Tuesday.

    Only about 750,000 households will be helped by the Home Affordable Modification Program, which pays banks to modify loans under Treasury guidelines. That is far fewer than the three million or four million modifications promised in early 2009 by the Obama administration, the Congressional Oversight Panel said.

    The panel’s report calls the program a failure, although Senator Ted Kaufman, a Democrat from Delaware and chairman of the panel, declined to go that far in a conference call with reporters.

    “The program has turned out to be a lot smaller and had a lot less impact on the housing market than we thought,” Mr. Kaufman said.

    One reason: the loan servicers, who act as middlemen between the distressed homeowners and the investors who own the mortgage, often find it more profitable to foreclose than modify. The modification program provides incentives for servicers to participate in the program but no penalties for their failure to do so.

    The oversight report estimated that the modification program would spend only about $4 billion of the $30 billion approved for it. With the deadline for reallocating the money having passed, “an untold number of borrowers may go without help,” the panel said.

    Tim Massad, acting assistant secretary for financial stability, said at his own press briefing that the criticism was “somewhat unfair.”

    Aside from the borrowers directly helped by the modification program, Mr. Massad said, many others have been helped indirectly, as servicers used the government standards in proprietary modifications.

    The program “is having a real impact on the ground, even though I certainly acknowledge there are a lot of challenges and a lot of difficulties,” he said.

    One of the challenges is a persistently weak housing market. Many households that have won permanent modifications are still heavily in debt, which leaves them vulnerable to redefaulting.

    If the redefault level rises significantly, Mr. Kaufman said, “that’s a lot of taxpayer money down the drain with no effect.”

    Other members of the oversight panel include Damon Silvers, director of policy and special counsel to the A.F.L.-C.I.O., and Richard H. Neiman, New York superintendent of banks.

    Oregon to Launch Foreclosure Prevention Program on Friday, by Joy Leopold,

    Half million dollar house in Salinas, Californ...

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    Since the development of the Hardest Hit Fund in February, the state of Oregon has received more than $200 million to help homeowners struggling with their mortgages and to develop foreclosure prevention measures.

    This Friday the state will open its first foreclosure prevention program.

    This launch follows this summer’s development of the Oregon Homeownership Stabilization Initiative (OHSI) to develop foreclosure prevention plans to distribute the $220 million.

    The application for the Mortgage Payment Assistance (MPA) program will be available on the recently launched OHSI Web site from December 10 to January 14, 2011.

    Program participants will be randomly selected from a pool of eligible applicants by a software program and notified after the application is closed.

    Each applicant will fill out the online application and then meet face-to-face with an advisor to answer questions and make sure all required documents have been submitted.

    “While we recognize there are not enough resources to serve the great need faced by homeowners in Oregon, we are pleased to have created a solid program that will help smooth the difficult path many families have been traveling,” said Victor Merced, director of Oregon Housing and Community Services (OHCS).

    Around 5,000 applicants will be selected to receive mortgage payment help for up to one year or up to a maximum payout of $20,000, whichever comes first.

    The MPA has been funded with $100 million of the Hardest Hit money. Three smaller programs developed by the OHSI will use portions of the remaining money for foreclosure prevention initiatives.

    Are banks unfairly denying certain loan applicants?, by

    WASHINGTON — A national consumer coalition plans to file a series of landmark federal fair housing complaints beginning Monday challenging a widespread practice by banks and mortgage lenders: Requiring borrowers who apply for FHA loans to have FICO credit scores well above the 580 minimum score set by the FHA itself for qualified applicants with 3.5 percent down payments.

    The complaints allege that the higher FICO requirements disproportionately discriminate against African-American and Latino borrowers, many of whom have credit scores above the 580 threshold set by FHA but below the 620 to 660 minimums frequently imposed by private lenders. FICO scores run from 300 to 850, with higher scores correlated with lower future risk of default.

    Since FHA insures lenders against losses from serious delinquency or foreclosure, there is “no legitimate business justification” for rejecting applicants solely on the basis of FICO scores that are acceptable to FHA, the complaints contend.

    The identities of the 20-plus mortgage lenders who are expected to be the subjects of fair lending filings were not available in advance. But John Taylor, CEO of the National Community Reinvestment Coalition, which plans to file the complaints, said they include “large, medium and small banks,” all of whom maintain minimum FICO scores higher than what FHA requires. The coalition represents 600 local and regional consumer, economic development, and civil rights groups, and has long been an advocate of equal opportunity in mortgage lending.

    According to a draft complaint that I obtained in advance, the coalition conducted what it calls “extensive” blind tests among lenders active in the FHA program. Testers presented themselves to loan officers as financially qualified applicants for FHA-insured mortgages, with FICO scores between 601 and 605. Loan officers routinely informed them that they cannot accept applicants with FICOs less than 620.

    When applicants responded that they knew FHA is willing to insure loans for borrowers with credit scores as low as 580, often they were told the same: We require higher FICO scores on FHA loans than FHA does itself.

    Lenders with higher FICO policies “knew or should have known that African-Americans and Latinos disproportionately have credit scores between 620 and 580, both within the FHA portfolio” and within the lender’s own market areas. As a result, the complaint argues, these lenders’ policies have “the effect of discriminating against African-Americans (and) Latinos.”

    In an interview, Taylor said “the insidious part of these policies” is “not simply that they discourage” minorities from purchasing homes, but they also are “cutting off refinancings” that might be available via FHA for current homeowners who need loan modifications to avoid foreclosures.

    FHA, which was created by the federal government during the Great Depression, traditionally has been a crucial source of mortgage financing for moderate-income, minority and first-time home purchasers.

    Asked what he thinks about lenders’ independent credit score cutoff limits, David H. Stevens, the FHA commissioner, said the current FICO 580 minimum standard is “based on pretty in-depth analysis of performance data” by borrowers, and represents an acceptable level of risk for the agency consistent with its mission.

    In an interview that did not touch on the upcoming fair-lending complaints, Stevens said he has “concerns” about the negative impacts lenders trigger when they impose stricter credit-score standards on applicants than the minimum required by FHA. This is especially the case when borrowers’ scores are low not because they are “habitual late payers,” but because they’ve experienced unforeseen economic reverses such as recession-related job losses or uninsured medical bills.

    One of the country’s top advisers to FHA lenders, Brian Chappelle, a principal with Washington, D.C.-based Potomac Partners, said banks set higher credit-score limits for sound economic reasons: They are concerned about costly indemnification demands from FHA and “reputational risk” in the investment community if low-FICO loans go sour. Also, Chappelle said, they don’t want to lose valuable revenue they receive for servicing FHA-insured mortgages that are paying on time.

    Terry H. Francisco, a spokesman for Bank of America, one of the highest-volume FHA lenders, confirmed that rationale and said the bank sets its own “credit standards based on our best analysis of an applicant’s capacity and willingness to repay the loan.”

    Brian D. Montgomery, the immediate past FHA commissioner, agreed that the recent “stricter credit” limits have “some (people) asking if FHA is still serving (its) traditional type of borrower.” But, he emphasized, the potentially heavy “incremental expenses of managing delinquent borrowers” are the key drivers of rising credit score standards.

    Ken Harney’s e-mail address is kenharney(at)