S&P to speed mortgage warnings

S&P to speed mortgage warnings

The ratings company, responding to rising delinquencies, will alert bond investors before foreclosures occur.

From Bloomberg News

In another sign of growing concern about mortgages made to high-risk borrowers, Standard & Poor's said it would no longer wait for homes to be foreclosed on and sold at a loss before alerting investors in mortgage-backed bonds that it expects to lower ratings on the bonds.
The ratings company now will consider issuing downgrade warnings based on the amount of loans that are delinquent, in foreclosure proceedings or already backed by seized property, Robert Pollsen, an analyst at the New York-based firm, said during a conference call with investors Thursday.
S&P will assume that none of the borrowers more than 90 days late will resume paying their mortgages, he said.
The firm is reacting to rising delinquencies and defaults on the riskiest types of home loans made in 2006. Many of those loans were packaged and sold to investors via mortgage-backed securities that pass interest through to the investors.
S&P said Wednesday that it was considering downgrades on 18 low-rated bonds from 11 securitizations of mortgages last year amid early loan problems.
"It is a watershed event" because it means S&P is now actively considering downgrading bonds within their first year, said Daniel Nigro, a portfolio manager at Dynamic Credit Partners, a manager of about $6 billion in hedge funds and collateralized debt obligations. "We welcome them being more open" about their methods.
The riskiest mortgages made last year are experiencing more delinquencies than ones from previous years at comparable ages, after a period in which some lenders lowered standards to attract business and home-price growth slowed from record levels in many regions.
S&P's warnings Wednesday were on bonds backed by so-called sub-prime and Alt-A loans, and by home-equity loans.
Sub-prime loans are those made to people with imperfect or poor credit histories.
Alt-A loans are defined as ones that fall only slightly short of the credit standards of Fannie Mae and Freddie Mac, the two largest U.S. mortgage firms.
Borrowers are 60 days or more behind on payments on 11-month-old 2006 sub-prime mortgages that represent 8.2% of the loans' total original balances, Steven Abrahams, an analyst at brokerage Bear Stearns Cos., wrote in a report this week.
The levels were "well ahead of the second-place class of 2000," whose problems totaled 5.2% at the same point, Abrahams wrote. "Given the underwriting legacy already in the pipeline and the tendency for serious delinquencies to develop slowly, news about sub-prime is likely to continue for months."
Probably the biggest issue is that many of the sub-prime loans were given out with small or no down payments through the use of "piggyback" home-equity loans, said Ernestine Warner, an S&P analyst.
In mid-2006, S&P began requiring more protection for bond investors when mortgages with piggyback down payments were included in securities, after finding they were 50% more likely to default. Santa Monica-based Fremont General Corp. this week eliminated so-called combo loan programs.
One of the bonds S&P warned about this week was backed by Alt-A mortgages. It was the company's first warning about any of those securities sold in 2006.
Alt-A loans often are made with less proof of borrowers' pay, or are interest-only loans or "option" adjustable-rate mortgages, whose payments can fail to cover the interest owed.
"In terms of performance, I'd say there are equal concerns" about Alt-A loans and sub-prime loans at S&P based on early delinquencies, Warner said.
The Alt-A bond S&P warned about was issued by Calabasas-based Countrywide Financial Corp., the largest U.S. mortgage lender. Newport Beach-based Impac Mortgage Holdings Inc. made the loans.
Before Wednesday, S&P had already told investors it might downgrade several low-rated sub-prime and home-equity mortgage bonds created last year.
Competitors Moody's Investors Service, Fitch Ratings and Dominion Bond Rating Service also have notified investors they're considering downgrades on similar bonds.
The firms' announcements were a departure from past practices of waiting for at least one year from issuance to review their initial assessments about the quality of a mortgage bond.

Ohio Gives a Million to Prevent Foreclosures

Kerri Panchuk 02.16.07

The Ohio Department of Development has generated $1 million in rescue funds to help distressed homeowners in their state. The donation will benefit the much larger Ohio Foreclosure Prevention Initiative — a statewide program that educates at-risk borrowers by referring them to a toll-free foreclosure prevention hotline. The statewide campaign involves NeighborWorks America, the Columbus Housing Partnership, and numerous other state and nonprofit agencies.Organizations in the network say foreclosure prevention is crucial since foreclosures are leaving black stains on entire neighborhoods and costing the community upwards of $50,000 in foreclosure expenses. With that in mind, the state agencies believe it's more cost-effective to focus on loss mitigation.“Our partnership with NeighborhoodWorks America is helping Ohio's foreclosure crises through education and outreach, quality counseling and referrals to local nonprofit agencies,” said Amy Klaben, president and chief executive officer of the Columbus Housing Partnership.

Source DSNews.com

I like to see the bigger State such as California, Texas, New York and Florida have programs to help prevent homeowners go into foreclosures .. Great Job Ohio!!

More Californians at risk of losing homes

The number of Californians defaulting on their mortgage loans is rising rapidly, according to figures released recently, providing striking evidence that more people are at risk of losing their homes.

Default notices jumped 145% in the last three months of 2006, accelerating a trend that began in late 2005 as home sales started to cool.

Florida Foreclosure Rates Rising

The state of Florida had the eighth highest rate, with an increase of more than 6% and 8,898 properties entering some state of foreclosure -- more than every state except Texas. Foreclosure filings had increased 42.55% in the first quarter of 2006 over the fourth quarter of 2005.

source : topix.net

California Foreclosures up again

Lending institutions sent homeowners 37,273 default notices during the October-to-December period. That was up by 36.9 percent from 27,218 the previous quarter, and up 145.3 percent from 15,196 for fourth-quarter 2005, according to DataQuick Information Systems.

County/Region 2005Q4 2006Q4 %Chg
Los Angeles 3,480 7,445 113.9%
Orange 918 1,983 116.0%
San Diego 1,173 3,150 168.5%
Riverside 1,607 4,528 181.8%
San Bernardino 1,473 3,538 140.2%
Ventura 261 794 204.2%
Imperial 66 167 153.0%
Socal 8,978 21,605 140.6%
San Francisco 106 173 63.2%
Alameda 456 1,173 157.2%
Contra Costa 541 1,511 179.3%
Santa Clara 489 874 78.7%
San Mateo 176 339 92.6%
Marin 51 101 98.0%
Solano 297 781 163.0%
Sonoma 143 323 125.9%
Napa 33 87 163.6%
Bay Area 2,292 5,362 133.9%
Santa Cruz 62 134 116.1%
Santa Barbara 83 298 259.0%
San Luis Obispo 66 119 80.3%
Monterey 94 291 209.6%
Coast 305 842 176.1%
Sacramento 849 1,927 127.0%
San Joaquin 464 1,293 178.7%
Placer 149 540 262.4%
Kern 424 1,044 146.2%
Fresno 518 1,059 104.4%
Madera 55 130 136.4%
Merced 118 466 294.9%
Tulare 179 427 138.5%
Yolo 64 188 193.8%
El Dorado 59 199 237.3%
Stanislaus 159 909 471.7%
Central Valley* 3,179 8,531 168.4%
Mountains* 110 208 89.1%
North Calif* 332 725 118.4%
Statewide 15,196 37,273 145.3%
* includes additional counties

Source: DataQuick Information Systems and Dqnews.com