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News of the Competition (1/28/15)

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  • NEW YORK (1/28/15)-- Ocwen Financial Group said Monday investors had no basis for claiming the large mortgage servicing firm failed to comply with agreements to collect $82 billion in home loan payments. The investors, which include BlackRock, Metlife and Pimco, sent a notice of non-performance to Ocwen Financial and trustees for 119 residential mortgage-backed securities trusts, the initial step toward a lawsuit ( Reuters Jan. 27). The investors claim that Ocwen's performance lagged other servicers each year from 2009 through 2013 and that the trusts experienced losses of more than $1 billion …

Consumer confidence surges to 7-year high(1)

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NEW YORK (1/28/15)--U.S. consumer confidence surged in January to its highest level since August 2007.

The Conference Board, a private research group, said its index of consumer confidence jumped to 102.9 from a revised 93.1 in December, first reported as 92.6, The Wall Street Journal reported (Jan. 27).

"A more positive assessment of current business and labor market conditions contributed to the improvement in consumers' view of the present situation," said Lynn Franco, Conference Board director of economic indicators and surveys. "Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings."

Consumers' assessment of present-day conditions was considerably more favorable in January than in December. Those saying business conditions are "good" increased to 28.1% from 24.7%, while those claiming business conditions are "bad" decreased to 16.8% from 18.9%.

Consumers were also much more positive in their assessment of the job market. Those stating jobs are "plentiful" increased to 20.5% from 17.2%. Those claiming jobs are "hard to get" decreased to 25.7% from 27.3%.

The economy grew from July through September at a 5% annual rate, the fastest in 11 years.

Adding to improving spirits: Gas prices have plunged to $2.04 a gallon Tuesday from $2.32 a gallon a month ago, according to AAA.

Refis climb as interest rates slip, home prices bolster

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BOSTON (1/27/15)--Homeowners have been pulling equity from their homes through refinancings at nearly double the pace seen last year at this time, according to data from Freddie Mac.

Slimmed-down mortgage rates and strengthening home prices have emboldened waves of home owners to refinance their mortgages with "cash-out refinancings" to pay for remodeling projects, college tuition payments or other investments (The Boston Globe Jan. 26).

According to the recent numbers, cash-outs rose to 28% of refinancing loans compared with 14% from a year earlier.

Robert Cashman, president/CEO of $1.3 billion-asset Metro CU, Chelsea, Mass., told The Globe that homeowners are merely taking advantage of the perfect conditions to pursue such deals.

Cashman said he's encouraging members with higher mortgage rates to at least explore refinancings.

"Now is the time if someone hasn't had the opportunity, if they haven't had the chance to refinance," Cashman said.  

Cash-out refinancings allow homeowners to access equity by borrowing more than they owe on their mortgages.

Thanks to mortgage rates that have dropped to as low as 3.63% for 30-year fixed-rate mortgages, or 2.93% for 15-year mortgages, lenders saw a spike in these types of refinancings over the last month, which is traditionally one of the slowest points of the year.

Refinancings in general have surged in recent weeks on the heels of the low mortgage rates as well.

According to the Mortgage Bankers Association, applications for refinancings jumped 22% for the week ending Jan. 16 after a whopping 66% surge the week prior (The Boston Globe).

News of the Competition (1/26/15)

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  • NEW YORK (1/26/15)-- The forfeiture of billions of dollars in settlement money helped fuel decreases in profit for America's six largest banks in 2014, the first step back in earnings for the group in six years ( The Wall Street Journal Jan. 23). Collectively, the big banks--which include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley--posted $72.52 billion in profits last year, down from $77.13 billion in 2013. Goldman Sachs and Wells Fargo posted positive earnings for the year. The settlement money used by a number of the big banks to resolve accusations of illegal lending practices that helped cause the financial crisis in 2008 played an especially big role in the decline in profits for Bank of America and Citigroup , which saw net income fall 58% and 46% respectively on an annual basis, The Wall Street Journal reported. Further, return on average assets also fell for the group, dropping to 0.74% from 0.80% in 2013, according to SNL Financial ...

Existing-home sales fall in 2014, 1st drop since 2010

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WASHINGTON (1/26/15)--For the first time in four years, existing-home sales took a step back in 2014, despite consistently low mortgage rates and a strengthening labor market ( MarketWatch Jan. 23).

Existing-home sales fell to 4.93 million units for the year, a 3.1% annual drop, according to numbers from the National Association of Realtors (NAR).

"All the indicators would have pointed to higher sales," said Lawrence Yun, NAR chief economist, referring to the stronger job market, the improved consumer confidence and the thinning mortgage rates that marked 2014 ( MarketWatch) .

Instead, the economy saw a sales performance that Yun called "mildly disappointing."

Yun still expects, however, that sales will rebound in 2015, as pent-up demand should translate into a healthier market this year.

The final month of 2014 may have signaled the beginning of such an improvement.

In December, existing-home sales rose 2.4% on a seasonally adjusted annualized basis. Led by single-family homes, the monthly performance pushed sales 3.5% above levels seen in December 2013 ( Jan. 23).

By home type, single-family homes jumped 3.5% in December and sit 4% higher year-over-year, while condominium and co-op sales fell 5% and remain level with their year-ago numbers.

Further, the market for single-family homes tightened significantly in December, according to Moody's.

Single-family inventory dropped 11.9% during the month, and the ratio of inventory to sales fell to 4.4 months from 5.1 months in November.

The West region posted the highest monthly increase in existing-home sales with a 9.8% jump, while the Midwest posted the weakest month with a 3.5% step back in December.

Nationally, the median price for single-family homes came in at $210,200 in December, a 1.1% increase month-over-month and a 6.3% jump year-over-year.

Nov. home prices climb; mortgage rates still slipping

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WASHINGTON (1/23/15)--House prices edged up by 0.8% in November on a seasonally adjusted basis, according to the Federal Housing Finance Agency, a slightly quicker rate of appreciation than October's 0.4% increase.

Annually, home prices rose 5.3% in November, though they remain 4.5% below the April 2007 peak.

Broken down by the nine U.S. census divisions, monthly price increases in November ranged from -0.9% (New England) to 1.8% (East South Carolina). Though, each division posted positive annual increases in home-price appreciation in November.

Current mortgage rates, meanwhile, continue to dwindle.

The 30-year fixed-rate mortgage rate fell to 3.63% for the week ending Thursday, down from 3.66% the week prior and 4.39% the year prior, according to the Freddie Mac Primary Mortgage Market Survey ( Jan. 22).

The 30-year rate as tracked by Freddie Mac hit its lowest mark since May 2013, when the rate averaged 3.59%.

The 15-year fixed-rate mortgage rate also dropped, falling to 2.93% from 2.98% for the week, and from 3.44% annually.

"Mortgage rates continued to fall, albeit at a slower pace," said Frank Northaft, Freddie Mac vice president/chief economist (Housingwire). "Housing starts picked up in December coming in at a seasonally adjusted 1.089 million-unit pace and beating market expectations. Meanwhile, the drop in energy prices pushed the producer price index down 0.3% in December and the consumer price index fell 0.4%."

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.83%, compared with 2.9% the prior week and 3.15% the prior year.

Further, the one-year Treasury-indexed adjustable-rate mortgage stood pat at 2.37%.

Dec. housing starts jump 4.4%

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WASHINGTON (1/22/15)--Housing starts rose 4.4% in December to 1.089 million after seasonal adjustments and annualizing, according to the Census Bureau.

The increase, which pushed starts 5.3% above their year-ago levels, was driven by single-family construction rather than apartment structures, with three of four census regions posting gains, according to Moody's.

"Residential construction ended 2014 on a high note, in particular showing the kind of increase in single-family construction volume that the economy needs to see more if construction employment and other housing-related industries are to recover," said Andres Carbacho-Burgos, Moody's analyst ( Jan. 21). "The only sour taste was from a monthly decline in total permits, but this is entirely because of falling multifamily construction, an unsurprising decline given how fast apartment construction recovered in 2012-13."

Broken down, single-family starts rose 7.2% for the month, and climbed by 7.9% year-over-year. Multifamily starts fell 4.2%, but stood 0.3% higher than their year-ago levels.

Completions, meanwhile, have been accelerating, Moody's said.

Total completions jumped 6.3% in December, and rose by 19.6% annually, with both single- and multifamily completions advancing.

Permits fell 1.9% during the month, led by volatile multifamily permits, which dropped by 12.4%. Single-family permits rose 4.5% in December and sat 8.1% higher than levels seen in December 2013.

Regionally, housing starts increased 12.5% in the Northeast, 8.8% in the South and 5.8% in the West. The Midwest experienced a poor December, however, watching starts fall 13.3% from their November levels.

Multifamily starts drove the decline in overall starts for the Midwest.