Daily Briefing: Tuesday, May 7, 2013
TODAY'S TOP STORIES
Wells Fargo, BofA face suit in mortgage case
NEW YORK – May 7, 2013 – New York Attorney General Eric Schneiderman said Monday he intends to sue Bank of America and Wells Fargo, saying they violated terms of last year’s $25 billion mortgage settlement.
Schneiderman said his office has documented 210 violations by Wells Fargo and 129 involving BofA since October. The banks have “flagrantly violated” the settlement’s standards, he said.
The settlement, reached between five large banks and 49 state attorneys general, called for billions of dollars in consumer relief and new rules aimed at protecting consumers from abusive mortgage-servicing practices.
The attorney general said he has notified the settlement’s monitor and its monitoring committee of his intentions to file a lawsuit if the committee doesn’t act.
The lawsuit could be filed within weeks in U.S. District Court for the District of Columbia.
If so, it would be the first by a state attorney general to enforce the settlement’s terms.
The banks’ alleged violations relate to not meeting deadlines for processing loan modifications, including requirements to make decisions on completed applications within 30 days and to tell borrowers about any missing documents within five days of getting their applications.
The allegations are similar to those directed at mortgage servicers before the settlement.
They’re not the first signs that banks might not be meeting the standards, which took effect in October.
Consumer complaints in New York and elsewhere underscore that “problems persist,” says Ira Rheingold, executive director of the National Association of Consumer Advocates.
The settlement monitor, Joseph Smith, says his office received 5,818 consumer complaints about servicers through February and hundreds more that came from professionals such as lawyers.
“I continue to believe there are areas in which the banks must improve their treatment of their customers,” Smith said in a statement Monday.
He’s expected to deliver his first big report on the banks and servicing standards in June.
Under the settlement, Smith can require banks to fix servicing problems, but only if their failures exceed an acceptable margin of error, says Mark Ladov, a lawyer with the Brennan Center for Justice at New York University.
The complaints received by Smith – and those publicized by Schneiderman – might prompt Smith to be more aggressive about speaking out than he’s been so far, Ladov says.
In response to Schneiderman’s allegations, Bank of America released a statement saying that it would take the customer servicing problems “seriously” and work quickly to address them.
Wells Fargo’s statement restated its commitment to full compliance with the settlement’s standards and added that it was “unfortunate” that Schneiderman took the course he did.
In addition to BofA and Wells Fargo, the settlement includes Citibank, JPMorgan Chase and Ally Financial/GMAC.
More of the complaints from New York homeowners concerned BofA and Wells Fargo, Schneiderman said.
If New York files a lawsuit, it may prove a model for other states.
On Monday, Florida Attorney General Pam Bondi said her office is monitoring compliance with the standards and is in contact with several banks on behalf of complainants.
 Copyright © USA TODAY 2013, Mike Groll, AP
March home prices rise 10.5% year over year
IRVINE, Calif. – May 7, 2013 – The March CoreLogic HPI (Home Price Index) report released today finds that prices nationwide increased 10.5 percent year-over-year in March – the biggest yearly increase since March 2006, and the 13th consecutive monthly increase in home prices nationally.
On a month-over-month basis home prices increased 1.9 percent in March.
CoreLogic breaks its home sales statistics into two categories: Sales prices that include distressed home sales, and sales prices after backing out distressed sales. Distressed sales include short sales and real estate owned (REO) transactions.
In Florida, home sales, including distressed, rose 8 percent year to year and 1.2 percent month to month. Compared to the state’s high point for home sale prices in September 2006, home prices are down 42.8 percent.
With distressed sales backed out of the calculation, Florida home prices rose 10.1 percent year to year, and 2 percent month to month. That’s slightly lower than the national non-distressed home price increases of 10.7 percent year to year, and 2.4 percent month to month.
According to CoreLogic’s analysis of pending home sales, it predicts prices will rise in April 9.6 percent year to year. Excluding distressed sales from the numbers, it predicts prices will rise 12 percent year to year and 2.7 percent month to month. Pending prices are based on Multiple Listing Service (MLS) data.
“For the first time since March 2006, both the overall index and the index that excludes distressed sales are above 10 percent year over year,” says Dr. Mark Fleming, chief economist for CoreLogic. “The pace of appreciation has been accelerating throughout 2012 and so far in 2013.”
“Much of the price increases … are the result of rising demand among investors and homebuyers for a still-limited supply of homes for sale,” adds Anand Nallathambi, president and CEO of CoreLogic.
© 2013 Florida Realtors®
Software glitch slashes Citizens premium 92%
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TAMPA – May 7, 2013 – While every Florida property insurance policy covers “catastrophic ground collapse” sinkhole coverage, homeowners can opt out of sinkhole insurance coverage for less major damage. However, some of the homeowners who dropped the optional sinkhole coverage through the state-owned Citizens Property Insurance Corp. received an unexpected surprise: A property insurance bill up to 91.7 percent less.
A report by the Tampa Bay Times finds that almost 1,500 Florida homeowners have benefitted from the glitch within Citizens, though not all in the 92 percent range.
Some insurance agents, such as Don Whiting of Whiting Insurance in Spring Hill, say they told Citizens about the problem months ago, but the company has not yet corrected it – but Citizens does admit that there is a glitch.
John Reddin, a Spring Hill insurance agent with Economy Insurance Mart, says he first noticed the problem in December 2012. He cites one local homeowner who paid $2,977 for property insurance that included the optional sinkhole coverage. But the sinkhole part on the original policy amounted to $2,453. In theory, the new premium should have been the difference between the two numbers – $524 – but it dropped to $246 through Citizens software program.
“We know there’s an error,” Reddin says.
Source: Tampa Bay Times, May 7, 2013, Susan Taylor Martin
© 2013 Florida Realtors® |
Tight new home supply sparking price hikes
WASHINGTON – May 7, 2013 – People looking at newly constructed homes will likely start to see price hikes – and possibly a smaller selection. Many of the nation’s builders say they’ve had to increase prices to offset a rising cost for land, labor and materials.
For example, Pulte’s sale price, on average, has increased 10 percent to $287,000 in the first quarter of this year. Meanwhile, the average existing home price was $233,200 in March, according to the National Association of Realtors®.
“Builders are feeling pinched by rising costs of key building components which is causing home construction costs to rise at a faster pace than appraised values,” says David Crowe, chief economist of the National Association of Home Builders.
Some builders are limiting sales in order to keep prices higher.
“We are pricing our homes and limiting the number of lots we’re releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities,” Meritage CEO Steven J. Hilton wrote in the company’s quarterly earnings report recently.
Source: “Despite Rising Demand, Some Builders Slow Production,” CNBC (April 25, 2013)
© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688
What could stop the housing recovery?
NEW YORK – May 7, 2013 – The housing recovery appears to be on track and growing stronger. Home sales and prices are up after reaching bottom in 2010, foreclosures and mortgage delinquencies are dropping, yet housing affordability still remains high.
So why are some analysts and economists concerned?
At a recent Milken Institute Global Conference in Beverly Hills, Calif., panelists said that threats to the housing recovery still remain. The biggest threats they pointed to included:
1. Land scarcity: Real estate developers are struggling to find desirable land to start new projects, which is limiting the supply of new homes. A few years ago, banks took ownership of land after developers had foreclosed on some projects. The land is worth less than its original price, so banks are reluctant to write off additional losses by selling it too cheaply. Plus, lenders remain cautious about issuing loans for new land purchases.
2. House flippers should be cautious: Housing affordability is high mostly due to super low mortgage rates, and investors are taking advantage with intentions of flipping homes for profit.
“No doubt you can buy a house today and get a really good price and a low-interest loan,” says Jeff Greene, president of Florida Sunshine Investments. “But if you want to sell that house to somebody two or three years later and rates go up to 5 or 6 percent, how much is he going to pay for that house?”
3. Foreign buyers potentially inflating prices: In some markets, strong demand by foreign buyers has helped home prices recover, which has made homes more expensive for Americans in some areas.
Some analysts fear that it could even lead to another housing bubble if interest rates start rising quickly as well. Markets like Miami, Los Angeles and New York are seeing strong demand among foreign buyers. Some say this is a good thing, because it reflects a strong faith in the U.S. market.
4. A ‘patchy’ recovery: Some markets are seeing rapid increases with bidding wars, rising prices and low inventories, while other markets are still at a standstill. For example, Miami’s housing market is “on fire” while 80 miles north in Palm Beach County there’s a “huge glut of housing,” says Greene.
Source: “5 Reasons the Housing Recovery Remains Wobbly,” U.S. News & World Report (May 3, 2013)
© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688
The best marketing tool is still the most basic one
NEW YORK – May 7, 2013 – Examination Management Services Chief Executive Marsha Friedman stresses that integrity is a business professional’s most valuable marketing tool. It’s critical to show customers and prospects that they have accurately represented themselves, their company and their practice – otherwise, they could seriously damage their reputation and lose clients in the process.
Agents need to be honest and upfront about what they can and cannot do for a client, even if it means they lose that person’s business.
They also need to keep their word, which means never promising more than can be delivered.
Finally, they must understand the line between being creative in order to distinguish themselves from the competition and deception – which, even if it does not amount to fraud, leaves clients angry and disappointed.
Source: RISMedia (03/21/13) Friedman, Marsha
© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688
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