Are Reno Home Redefault Reports Misleading?
Barclays Argues Treasury Report on HAMP Redefaults is Misleading
“We find that the data as reported in this table are misleading and fail to capture the full magnitude of redefaults from these modifications,” Barclays said.
According to Treasury’s assessments, the redefault rate (90 or more days past due) for homeowners in permanent modifications for at least six months is 1.7 percent. The report states that fewer than 6 percent of the permanently modified loans at the six-month mark are 60 days past due.
Treasury’s table outlining the performance status of modified loans, on page 3 of the HAMP progress report, shows loans that are 60-plus and 90-plus days delinquent at the end of 3,6, and 9 months by quarter of modification. The report also states that 8,628 loans have been cancelled from the permanent HAMP modification stage due to the borrower’s failure to fulfil payment obligations. Digging farther into the delinquency buckets, Barclays estimates that 8,205 permanently modified loans have fallen behind on the payments by at least 60 days.
“We believe that the total number of loans that have gone bad after the permanent mod stage is probably closer to the 60-plus loans estimated above, plus the cancelled permanent modifications, which more than doubles the absolute number from 8,205 to 16,833 bad loans,” Barclays’ analysts wrote. “The report does not contain enough information to allow us to calculate true redefault rates by quarter of modification, but we would expect them to exceed the level reported” by the Treasury, Barclays said.
The research firm also says it can be argued that to measure redefault rates more accurately and make them comparable with pre-HAMP redefault rates, the Treasury should include trial cancellations related to non-payments.
According to Barclays, adding back in trial failures and redefaults on other alternative mods offered to HAMP applicants could increase the redefault rates by 25-30 percentage points.
Barclays says the reporting of mod performance in the HAMP scorecard takes the tradeoff of mod rates vs. redefault rates to an extreme. Removing 90-plus permanent mods from the delinquency calculation and basing the calculation only on successful modifications makes the redefault rates look too low, the research firm explained.
The analysts at Barclays say their opinion is that the data presented by Treasury continue down the same path by taking deeply delinquent borrowers out of the performance calculation and showing lower delinquency rates as a result.
“Given the nature of reporting available for most HAMP mods in loan performance, where only permanent mods are reported, we find that a more consistent approach is to use mod rates based on permanent mods and redefaults from permanent mods,” Barclays wrote.
“On that definition, we believe that our base case expectation of about 60 percent lifetime redefaults on HAMP are still adequate,” the analysts wrote, although they noted that overall redefaults from HAMP “will be better than from prior mods.”
A recent study by Fitch Ratings makes projections along those same lines. The agency is expecting HAMP-modified loans to redefault at a rate of 55 to 75 percent.
Article provided by www.DSNews.com
Reno Homeowner Redefault Rates Look to Follow the National Trends
HAMP Redefault Rate Less Than 2% After Six Months
07/20/2010
The latest figures from the Office of the Comptroller of the Currency (OCC) put the redefault rate of mortgages modified by the nation’s 11 largest servicers – incorporating proprietary mod programs – at 57 percent.
A recent study by Fitch Ratings projects HAMP-modified loans will redefault at a rate of 55 to 75 percent. But Treasury officials say the program guidelines ensure
restructured mortgage payments are truly affordable for participating borrowers, and as a result they stand a better chance of continued success.
Homeowners in permanent modifications are receiving a median payment reduction of 36 percent, more than $500 per month, according to the Treasury’s July report. Homeowners in permanent modifications are guaranteed lower payments for five years as long as they remain current. After five years, then the loan structure is adjusted to offer fixed terms that lock in today’s low interest rates for the life of the mortgage.
Servicers added 51,205 modified loans to the permanent column during the month of June, a 15 percent increase since the previous report. Treasury says growth in permanent modifications has averaged more than 50,000 a month over the last six months. Currently there are 389,198 active permanent mods in the program.
Servicers report the number of homeowners receiving restructured mortgages has increased to a new total of 2.95 million, including more than 1.2 million homeowners in HAMP trials and nearly 400,000 benefitting from FHA loss mitigation activities.
However, cancellations from HAMP trial plans remain high, as many borrowers who received temporary modifications have not been able to verify their income or have missed trial payments.
As of the end of June, 520,814 HAMP trials had been cancelled – more than have been converted to permanent status.
However, data from the eight largest servicing shops show that just over 50 percent of homeowners not granted a permanent HAMP mod are offered a proprietary modification or are able to bring their loan current. Fewer than 2 percent have gone to foreclosure sale, while 2.4 percent, or 8,245 borrowers, have accepted a short sale alternative.
Article provided by www.DSNews.com
Bill Extending Tax Credit Closing Deadline Falls Through in Senate
Senate Majority Leader Harry Reid (D-Nevada) proposed the extension, and the amendment itself was approved by a large margin last week as an add-on to H.R. 4213, the American Jobs and Tax Loopholes Act.
Republican senators, though, defeated the full measure on Thursday, for the third time, when Democrats moved to end debate and push it to a chamber vote. Reid has indicated that after three unsuccessful attempts, he plans to drop the matter altogether.
The amendment would have extended the tax credit deadline for closing on a home purchase to September 30. The current deadline is June 30.
The National Association of Realtors (NAR) says some 180,000 homebuyers who signed contracts in time will not be able to make the June 30 closing deadline, simply because of the time it takes for lenders to complete transactions. The trade group estimates that 75,000 of those who will miss out on the tax break are buyers of distressed properties.
NAR says its members have reported that as many as one-third of qualified applicants have already been notified by lenders that their mortgages will not close before June 30, due to the sheer volume of applications in the pipeline.
The tax credit amendment was just one piece of the multi-faceted bill that was primarily intended to extend unemployment benefits for Americans out of work for more than six months.
Republicans rallied against the measure on the grounds that it would have added $30 billion to the “already staggering national deficit,” they said.
Article provided by www.DSNews.com
Nevada Gets $100 Million to Help Prevent Foreclosures
Arash Mosaleh, 06/23/2010, Channel 2 News
President Obama has approved the so-called “hardest hit” fund to help out states hardest hit by the housing crisis.
More than $100 million is coming our way to help prevent foreclosures statewide.
According to Senator Harry Reid’s office, Nevada will get the most funding per capita out of any of the five states that will receive funds from the program.
The money will create a mortgage modification program which will offer homeowners assistance to reduce and eliminate second liens with earned foregiveness over a three year term.
Also, Nevada will provide allowances for appraisal and transaction fees as well as moving fees.
The state can start making the money available to Nevadans in August.
Once a Ranger, Krch brings agility to realty brokerage.
Megg Mueller, 6/14/2010, Northen Nevada Business Weekly
As a member of the Army’s 75th Ranger Regiment, Kyle Krch learned a thing or two about discipline, hard work, sacrifice and dedication. The elite special forces branch of the Army requires its members to be ready to deploy anywhere in the world with just 18 hours notice, and be ready for pretty much anything. It makes a person nimble, to say the least.
The ability to adapt quickly is a skill Krch now brings to Krch Realty, the real estate company he started in 2005. In the military, Krch was an intelligence analyst who spent Monday through Friday behind a desk analyzing data, while weekends were spent jumping out of airplanes and rolling in the mud. Today, Krch is successfully navigating the terrain of rapid change in the real estate industry.
He grew up in Ely. His two older sisters both attended the University of Nevada, Reno, but he had other plans. With an eye toward a career in law enforcement, Krch joined the Rangers right out of high school.
“I gave up scholarships to go in the military. My mom didn’t stop crying for about two months,” Krch says. “But after graduation, she was so proud.”
Krch spent four years with the Rangers, a time he says was both grueling and amazing.
“The best thing I learned in the military? Myself. It pushes you to your limits and past. Every day, I thought, ‘What the hell am I doing.’ But it’s a leadership school,” he says.
Toward the end of his stint, he decided not to re-enlist for another eight years. That decision changed his life in more ways than he imagined.
His last day in the military was Sept. 3, 2001. Eight days later when the towers fell, Krch called his regiment to see if he could re-enlist. It felt personal; during his service he’d had a picture of Osama bin Laden on his computer and was part of the group tracking him in the late ’90s. But he did not go back in the military, and less than a month later, he was in California working as a contractor for a tech company.
Not only had his career taken a sharp turn, but fate intervened again and he met his wife, Sandra. Krch kept on the move with his job, but when the locations took him further and further from Sandra, it was time to make another change. He took a tech job in Reno, and Sandra, a dietitian, followed. The couple has been married for seven years.
Krch had been making investments in Reno property since his days in the Army; he says he never had time to spend his money, so real estate was an easy choice.
When he moved to Reno, the desire to travel for work diminished and he decided to take a chance on real estate as a career. He got his license in June 2003, and started working for Century 21. He knew he’d make considerably less than his previous job, but otherwise, his new career didn’t offer any major surprises.
“I was so naïve, nothing really surprised me,” Krch remembers, then laughing, adds: “The hours are incredible.”
Once he got into the business, he always knew he’d open his own firm, and when he became a broker, Krch Realty was launched.
His technology background is evident in his company’s Web site and the tools he offers his clients and staff. After the birth of his sons, Jordan who is 2-1/2, and Cameron who is 6 months, Krch started thinking about how he could grow his business, but he cut his hours to be with his family more. He began hiring agents, new and established, to sell for him. He gets a cut of their sales, and in return he offers them training, flexibility, tools like an intranet for communication and resources, and his experience.
“Every time I failed, I failed in a really hot market. So I had a little more wiggle room and I could learn without it ending my career,” Krch says. “Now I pass that along.”
Failure has never been a factor for Krch, simply because he’s not afraid of it, he says. To that end, he opened a small satellite office in Las Vegas a year ago to give the southern Nevada market a try.
“You have to be willing to gamble. I like having to answer ‘what if’ … I can’t be as risky with two little ones, but we can go back at anytime to where we were,” he says of his growing company.
Sandra is now part of that growing company, and she takes clients through the escrow process. Her decision to change careers and start again is not lost on her husband.
“She’s one of the reasons we do so well. She’s amazing. This is as much her as it is me,” he says. Krch hopes to be the dominant real estate company in the area in five years, and he thinks because the company is small and fast, it just might happen.
The basics:
Who: Kyle Krch, broker and owner, Krch Realty
Family: Wife Sandra and two sons; Jordan 2-1/2 and Cameron, 6 months.
He says: “It should be a high school requirement to read ‘Rich Dad, Poor Dad.’ If you’ve got your financial stuff in order, you can do anything.”
