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US Home Builders Begin to See Credit Thaw

Fri, 17 Aug 2012 01:55:54 +0000

The U.S. home building industry is finally coming off its lowest volumes ever, albeit in fits and slow starts.

New single family home starts fell 6.5 percent in July from the previous month but are still up 17 percent from a year ago. Building permits, considered a more dependable future indicator, rose 4.5 percent month-to-month and are up 23 percent from a year ago. (Related: Housing Starts Drop, Permits Jump; Jobless Claims Rise.)

Much of the demand is coming from potential buyers who have been shut out of the lower-priced, distressed market by avid, all-cash investors. The big public builders, almost across the board, reported huge jumps in new orders in the first half of this year. Smaller builders are still hampered by lack of credit to build and therefore meet the demand. Construction loans nearly ground to a halt after the latest housing crash.

Just last month PNC Bank
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] announced it was getting out of the construction loan business for home builders entirely. PNC had acquired the business when it bought Raleigh’s RBC bank, which was apparently already winding down the unit.

“Builders do still rank this as one of the confounding issues that limits their ability to respond to the budding demand,” said National Association of Home Builders chief economist David Crowe. “It is especially important for builders to be able to build enough spec homes to respond to immediate demand, since trade-up buyers in particular are waiting until their home is sold before signing a contract, and then they need a home very soon.”

That may be about to change. This week Wells Fargo
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] announced it is forming a homebuilder banking group to serve clients on the east coast, Texas and the Midwest. The team will offer “a comprehensive suite of financial solutions,” according to a release, including project and corporate financing facilities, and a referral network to treasury management, insurance, mortgage and capital markets products. (Related: Homebuilders Most Confident in More Than 5 Years.)

“It’s not as if we were all in then, all out now, all in again,” said Wells Fargo’s head of Homebuilder Banking, Bird Anderson, in an interview.

“It is more of a sense of the opportunities within an improving market that we can be more entrepreneurial in looking for new business opportunities,” Bird added, citing increased demand in the homebuilding sector in many markets.

Texas homebuilder Bruno Pasquinelli of CB Jeni Homes is still relying on private capital, hoping to deliver 400 homes per year, but he says he is beginning to see a credit thaw.

“My understanding is that several banks in our market wanted to get more volume out the door,” Pasquinelli said. “Simple economics — they need to take market share or they will only grow at the rate that housing is growing.”

The view, however, is not so bright further east in Columbia, South Carolina, where homebuilder Wade McGuinn says financing is still scarce. (Related: Home Price Bottom or Bubble?)

“The biggest issue in recovering markets is that lot inventory has equalized, and the banks, because of the Feds, won’t lend money for land development. This will make all recovering markets ripe for the picking by publicly held companies who are not in need of bank financing,” McGuinn said. “This ultimately could be the death nail in the coffin of the small and family builders, who although they have money and credit, won’t be able to compete.”

Like the rest of the nation’s housing market, improvement will come slowly and locally, with some areas seeing improved demand and improved access to credit, while others will be slower to rise from the ashes.

“It feels like there’s a little bit more credit supply out there, but not a lot of credit supply out there,” Wells Fargo’s Bird admitted.

For now, that will have to be enough.

—By CNBC’s Diana Olick
—CNBC Realty Check producer Stephanie Dhue contributed to this report.

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48690097?__source=RSS*blog*&par=RSS

Changes Ahead for Mortgage Servicing

Wed, 03 Aug 2011 04:45:59 +0000

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Diana Olick is off today. This post was written by Stephanie Dhue, CNBC Real Estate Producer.

Robo-signing, lost paperwork and wrongful evictions have put mortgage servicers under the gun.

Banking Committee Chairman Tim Johnson on Tuesday blamed servicers, in part, for stalling a housing recovery: “Homes that should move through the foreclosure process are held up because courts and servicers are concerned that paperwork has not been completed properly.”

To address the problem, lawmakers are considering a national standard for mortgage servicers.

The four largest — Bank of America [ BAC 9.49 -0.32 (-3.26%) ], JPMorgan Chase [ JPM 39.84 -0.60 (-1.48%) ], Wells Fargo [ WFC 27.18 -0.75 (-2.69%) ] and Ally Financial [ ALLY-PB + (+0.00%) ] — have 60 percent of the servicing market.

The industry is urging caution. Servicers are already subject to a slew of new servicing rules from bank regulators, the FHA, Fannie Mae and Freddie Mac. And more could be on the way, as banks are in settlement talks with states attorneys’ generals.

Faith Schwartz, who heads up the industry-led Hope Now Alliance, says “it is important to understand the wide variety of rules and initiatives already in progress.”

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Article source: http://www.cnbc.com/id/43991596?__source=RSS*blog*&par=RSS

Realtors Face Off Against Mortgage Bankers

Fri, 13 May 2011 07:32:56 +0000

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Yesterday I had the great opportunity to moderate a symposium on mortgage liquidity with a pretty heavy panel of mortgage bankers and industry executives.

I knew they would be guarded in their answers, as I asked about the new world of underwriting, the wind down of Fannie Mae and Freddie Mac, the tighter more expensive FHA, new federal regulation in the industry and a controversial new appraisal process.

And they were guarded, until I opened up the floor to the Realtors, who hammered them hard on foreclosures, short sales, and mortgage credit for independent contractors like themselves.

A Realtor from Wilmington, NC asked what are the plans for companies to put the shadow (foreclosed) inventory onto the market? Most agents believe banks are holding on to these properties to somehow game the market, but the bankers were firm in their rebuttal:

Cara Heiden/Wells Fargo [ WFC 28.23 +0.07 (+0.25%) ]: “With respect to shadow inventory, we are not holding on to properties. On average we do hold the REO about 160-70 days, but once they’re listed they’re sold in 90 days and the reason that we hold them for a period of time prior to listing is so that we can get them in better shape for sale and uphold, to the extent that we can, market values. So we’re not holding other than for the purpose of getting that property to a level that does help maintain market values whenever possible.”

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Article source: http://www.cnbc.com/id/42992433?__source=RSS*blog*&par=RSS

Will Banks Be Forced to Reduce Loan Principal?

Fri, 25 Feb 2011 05:23:34 +0000

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I’m reporting today from a Wells Fargo two-day mortgage modification event in Portland, OR. This is the 20th such event WFC has held since September of 2009, meeting face to face with over 19,000 borrowers.

Some borrowers will walk into this convention center today and walk out with a mortgage modification, including payment reductions and possibly even a permanent reduction of mortgage principal.

That last part is particularly pertinent today, amid several reports that government regulators and state attorneys general are nearing a $20 billion settlement with the big banks that would force more loan principal reduction.

This in the wake of the so called “robo-signing” foreclosure paperwork scandal last fall. (Read more: A Primer On The Foreclosure Crisis)

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Article source: http://www.cnbc.com/id/41759443?__source=RSS*blog*&par=RSS