Residential Briefs
MBA (4/28/2008 ) Palaparty, Vijay
ValuFinders Upgrades Appraisal System
ValuFinders Inc., Culver City, Calif., a provider of valuation services to lenders and government agencies, upgraded its web-based appraisal ordering system, Appraisal CONCEIRGE. The development anticipates the proposed Home Valuation Protection Code that will go into effect January 1, 2009.
Appraisal CONCEIRGE will comply with code requirements of making a copy of the appraisal report available to the borrower. When the appraiser delivers the report to the lender, at the request of the lender, the system will automatically generate and send the borrower an email with the appraisal report as an attachment. ValuFinders will offer this service at no cost.
Appraisal CONCIERGE is an outsourcing database that places appraisal orders online. Appraisals can be ordered through an integrated system, which is independent and acts as the firewall in the process—avoiding communication between the requestor and the appraiser.
Lydian Announces Partnerships with Financial Crossing, MRG
Financial Crossing Inc., Palo Alto, Calif., a provider of liability management and Lydian Data Services LLC, Boca Raton, Fla., a mortgage fulfillment and delivery outsourcing center, announced a partnership to provide products and services for their common clients.
The partnership creates the ability to analyze lending options from financial institutions and recommend deal structures. Once a borrower chooses a loan and submits it through the Liability Manager system, it is passed to the paperless Lydian environment for processing and fulfillment. The loan originator receives automatic updates in Liability Manager as it passes through each stage of Lydian’s processing.
Lydian Data Services also formed a partnership with MRG Document Technologies, Dallas, a provider of compliance and documentation services. The alliance enables MRG to extend its Miracle document preparation system to Lydian’s origination fulfillment center customers who use Lydian’s outsource capabilities to supplement or replace their own internal processes.
Through a custom interface created by MRG, Lydian provides access to MRG’s Miracle up-front and interim disclosures and closing documentation through the Lydian Exchange Network, Lydian’s networking platform uniting lenders and industry service providers.
Custom Credit Systems Offers Document Retrieval
Custom Credit Systems, Richardson, Texas, partnered with Hyland Software Inc., Cleveland, Ohio, developer of the OnBase enterprise document management software suite. CCS will provide its customers with document retrieval capabilities to increase efficiency in the lending process.
Custom Credit Systems’ product suite allows financial institutions to manage the lending process from the sales/lead generation stage through post-close and document retention. The integration with OnBase will provide Custom Credit Systems’ customers the ability to work within Custom Credit Systems products and services and retrieve customer information such as scanned and imported documents in any file format from the OnBase repository.
SearchMyLoan.com Partners with Strategic Information Resources
SearchMyLoan.com, Port Washington, N.Y., a provider of loan search and pricing services for the mortgage industry, announced an alliance with Strategic Information Resources, Springfield, Mass., a provider of credit reports, mortgage reports and background screening services.
SIR’s database of credit reports and related information integrates into SML’s search and pricing engine, enabling originators to pull credit and re-issue credit data for loan decisioning. Lenders also have access to SIR’s mortgage reports, background screenings and credit products and services, allowing lenders to evaluate attributes of potential customers.
Pro-Teck Services Selects Rackspace to Host ProValue
Pro-Teck Services, Waltham, Mass., a residential property valuation and risk management provider, selected Rackspace, San Antonio, a provider of hosted IT services, to support its ProValue platform.
Pro-Teck’s ProValue connects financial institutions with real estate data and modeling to manage real estate collateral. The system also connects vendor and client partners in real time and provides archiving, retrieval and data stream capabilities.
Xerox Mortgage Services Adds DataGlyphs Technology
Xerox Mortgage Services, Rochester, added Xerox’s DataGlyphs technology into its BlitzDocs Collaboration Suite. The BlitzDocs software creates integration between the multiple parties involved in the mortgage process by allowing them each to view, edit and share documents across one network.
The addition of DataGlyphs adds a level of security by embedding computer-readable data into individual documents. DataGlyphs offers automatic classification capabilities, stores large amounts of data and can be recreated when damaged or tampered.
Veros Offers Market Valuation Forecasts
Veros Real Estate Solutions, Santa Ana, Calif., released its quarterly review results of its forecasts for U.S. residential real estate markets, covering a period from March 1 through March 1, 2009. Veros is releasing an 18-month forecast with the same national coverage as the 12-month forecast of single family residences in major metropolitan areas and non-metro areas, covering 75 percent of the nation’s population.
The expanded also offers results of Veros’ HPI analysis, providing a historical basis option, allowing users to access historical and current trend analysis along with future forecasts. The 18-month forecast contains elements, detail and analysis of the 12-month forecasts, including the two validation metrics, R-squared and Mean Absolute Error.
iEmergent Introduces Mortgage Market Forecasts Analytic Tools
iEmergent, a Des Moines, Iowa-based market research, forecasting and advisory services firm for the financial services, mortgage and real estate industries, introduced its suite of Market Manager reports that enable lenders to better understand their primary markets, improve efficiency and increase market share.
iEmergent’s primary product lines are derived from market metrics that calculate where and what types of lending opportunities exist, enabling lenders and brokers to anticipate and forecast mortgage opportunity. Through iEmergent’s mortgage lending forecasts, market comparisons and measurements, financial institutions can identify and quantify the current potential lending opportunities in markets throughout the U.S., the growth rates of mortgage lending in the future and how those opportunities are changing in individual markets.
Northern Nevada Regional MLS Integrates DocCentral
Northern Nevada Regional Multiple Listings Service will be among the first associations to provide DocCentral, a new non-proprietary document management platform from Fidelity National Real Estate Solutions, Jacksonville, Fla.
DocCentral is a tool that allows real estate professionals to manage and organize their documents. Documents are stored on secure servers and are accessible online by agents and the clients and vendors they authorize.
DocuLex Updates Professional Capture
DocuLex, Winter Haven, Fla., creators of electronic document management software, updated its Professional Capture, enabling DocuLex PC-distributed, server-based Goby Capture integration. It allows for automated paper and native format electronic file capture, fostering knowledge management and workflow collaboration. Professional Capture converts paper to searchable electronic files in corporate and service bureau environments. It fulfills the demands of imaging projects, providing image processing and indexing capabilities.
Wolters Kluwer Forms Alliance with FNIS
Wolters Kluwer Financial Services, Minneapolis and Fidelity National Information Services, Jacksonville, Fla., announced plans to integrate Wolters Kluwer Financial Services’ loan modification document products and services and compliance content into the loss mitigation module of the FIS Desktop platform.
FIS Desktop is a workflow, document and expense management system that provides mortgage lenders, servicers and investors with business management technology to help manage the post-origination loan cycle. The loss mitigation module is available to all servicers and is integrated with FIS’ Mortgage Servicing Package platform, as well as other servicing platforms.
Online Service Boosts Collections, Settlement Rates
A new online service offered by SourcingPoint Solutions, Garden Grove, Calif., helps businesses track delinquent debtors and conduct efficient settlement processes. PersonLocate, the newest addition to SourcingPoint Solutions’ PowerScreen background screening services line, gives users the ability to access information that can help determine a person’s whereabouts. The new service automates a practice commonly referred to as skip tracing.
NeighborWorks Reports Difficulty in Tax Credit Market
An informal survey of members of the NeighborWorks Multifamily Initiative, a group of non-profit apartment developers and managers, suggests tough times for multifamily housing. Tax credit prices have fallen in the past year and major investors in tax credits have pulled back.
While most financing arrangements in today’s market still go to closing with fewer than 17 parts, the weakness in the low-income housing tax credit market has pushed up the cost of financing and led some investors to pull out of deals, NeighborWorks reported. Survey respondents noted that investors are coming back with reduced prices on tax credit projects or pulling out altogether. If a non-profit developer doesn’t have enough flexibility with its project, it may not close.
Freddie Mac Deploys $10.5 Million to Aid Borrowers
Freddie Mac announced $10.5 million in grants to housing counseling organizations to use for their outreach, education and foreclosure prevention efforts to help borrowers. The grants will enable the non-profit organizations to add and train staff, pay operational expenses and support outreach campaigns to borrowers having difficulty making their mortgage payments, especially subprime borrowers. The organizations were selected for their abilities to educate and advise borrowers about their foreclosure options and/or help them obtain workouts from their mortgage servicers.
The largest share of the funds will be administered through the HOPE NOW Alliance in grants totaling more than $6 million. Of that amount, nearly two-thirds is allocated for HOPE NOW’s counseling, operations and outreach, with the remaining funds earmarked for organizations including Enterprise Community Partners, NeighborWorks America, the Metropolitan Washington Council of Governments and HomeFree USA.
Online Banking Lacks in Providing Consumer Confidence
MBA (4/28/2008 ) Palaparty, Vijay
Thirty-two million consumers either discontinued banking online or refused to begin online banking last year due to a lack of confidence, said research from Gartner Inc., Stamford, Conn. Their reluctance may be justified as some banks such as M&T Bank, Buffalo, reveal frequency of attacks increasing tenfold in the past three years.
“The volume of attacks has increased and they are specifically targeted toward consumers,” said Matt Speare, CTO of M&T Bank. “The biggest threat to the online channel is having a high level of assurance that the consumers are who they say they are while maintaining a user-friendly experience. What’s we’ve seen, as the internet fraud hackers moves from an egocentric model to a financially drive one, is that they’ve migrated from the traditional consumer type of hacks to those of commercial business as well.”
Avivah Litan, vice president and distinguished analyst at Gartner, reported the emergence of four attack vectors in 2007. “The first vector attacks directly against consumers through phishing and spyware,” she said. “Thieves are stealing financial and personal data, usernames and passwords.”
The other vector codes include hackers injecting malicious code into e-commerce sites. Card system breaches were reported as a significant development because companies tend to leave devices that are situated on network peripheries unsecured, Litan said.
“They gain access through wireless networks that are not secure or secured improperly,” Litan said.
The fourth attack vector against companies involved internal fraud that was linked to external fraud—collaborations between “crooks” within companies who aid outside “crooks” to compromise data.
“Last year alone saw a $2 billion loss in sales transactions online,” Litan said. She suggested a layered approach to security because of the amount of uncertainty in the source of attacks, often occurring through email, data transfers, hackers entering using malware, database administrators making unauthorized changes or taking data outside the company.
“It requires many approaches,” Litan said, listing data protection through encryption, host intrusion prevention to stop hackers, email monitoring, application with source code scanners, application security scanners and even firewalls as possible mechanisms for protection and prevention.
“You have to be able to look inside the application to determine whether the user is a legitimate user,” Litan said. ”When thieves hijack accounts, you have to be able to detect that.”
The advances in malware still pose problems form companies to be able able to separate legitimate users versus imposters. Litan described a behavior monitoring approach to alert of fraudulent activity, monitoring users through access points. Access to banks is available through a branch, ATM, kiosk, phone and online. Fraud detection requires monitoring these channels from a physical location perspective and even closely through IP address monitoring.
“Look at channels and what we expect of the users,” Litan said. “Apply our own rules on what our enterprise considers suspicious and monitor and stop the transactions that are questionable. It requires going back to the consumer to verify activity.”
For example, Litan said, a user might make an online transactions on one coast of the U.S. with simultaneous activity at an ATM machine in another distant geographic location. She said that should raise a red flag to stop both transactions until the user is contacted and asked for verification.
“It’s a seamless, continuous method to monitor access behavior and compare that to what we expect of the user to ultimately stop unauthorized transactions,” Litan said.
Both Speare and Litan agreed that too much interference could also be troublesome, throwing off their “good” users. Consumers want a few questions to authenticate but are concerned mostly with efficiency, Litan said. Regardless, visible security measures seem highly important to most consumers—80 percent find them very important while only 5 percent said they do not care at all.
“The solution should catch 95 percent of fraud and you don’t want a high false positive rate,” Litan said. “It should also have a response team that is available 24/7 because criminals tend to strike on weekends and holidays. The system should provide ease of use for companies and also have a web portal. Most importantly, though, it should provide analysis and information from which companies can learn and constantly work to improve their systems.”
“Risk-based authentication will be a cornerstone for our anti-fraud efforts,” Speare said. “While there is a lack of an available federated identity theft management model, risk-based authentication offers the best hope of assurance to prevent loss for both our institutions and consumers.”
Home Sales Continue to Contract
MBA (4/28/2008 ) Velz, Orawin
Recent data continue to support a notion that, if the economy is already in a recession, it should be mild and short.
Manufacturing activity has so far fared much better than during the 2001 recession, supported by strong exports. Initial jobless claims have trended higher but have remained below the 400,000 trend seen in the 2001 recession. There are two exceptions: home sales and consumer confidence, whose performances have been comparable to more severe recessions in the early 1980s.
Both total existing and new home sales fell in March. Since their peak in September 2005, single-family existing home sales have declined about 31 percent. Compared to peak-to-trough declines in six economic recessions since existing single-family home sale data collection began in 1968, the decline in the current cycle was the third largest, following the 1980 recession (40 percent drop) and the 1981-82 recession (45 percent drop).
New home sales have performed much worse than existing homes. The decline to date from the peak in July 2005 of 62 percent is already the largest on record since the inception of the series in 1963, surpassing the 58 percent drop in the 1980 recession.
The University of Michigan’s Consumer Sentiment Index for April was the lowest since March 1982, more than a point below its lowest level during the 1990 recession and was well below its lows during the 2001 recession. The forthcoming tax rebates should help lift confidence. Rising gasoline prices may temper the impact on spending as they act as a tax increase on consumers. In addition, according to the survey, only one-third of consumers said they planned to use the rebate on spending; most intended to use it to repay debt and add to their savings.
Treasury yields rose steadily this week despite bearish housing data. Fed funds futures pared down expectations for a rate cut at the Federal Open Market Committee meeting on Wednesday. The odds of a 25-basis point cut in the fed funds rate declined to about 70 percent, down from 100 percent in the previous week. The yield on the 10-year Treasury note rose to 3.88 percent by mid-Friday afternoon, 11 basis points higher than the closing rate on the previous Friday.
Housing and Mortgage Indicators:
Total existing home sales fell 2.0 percent in March to a seasonally-adjusted annualized rate of 4.93 million, as the drop in single-family home sales outweighed the increase in condo sales. Single-family home sales fell 2.7 percent, completely reversing the increase in February. Condo sales rose 3.6 percent, following a 3.7 percent increase in February and an 8.2 percent drop in January.
Sales of single-family homes during the first quarter of this year were down 20.0 percent from those during the same period last year. Condo sales have performed worse, with year-to-date condo sales 28.7 percent lower than those last year. Since their peak in September 2005, single-family existing home sales have declined about 32 percent, surpassing the peak-to-trough drop of about 30 percent seen in the 1990-91 recession.
Even with a drop in home sales for the month, sales’ performance improved considerably for the quarter as a whole. The decline in the first quarter—at a 3.7 percent annualized rate—moderated significantly from the drop of at least 25 percent in each of the previous three quarters.
Existing home sales rose in two regions: 2.3 percent in the Northeast and 2.2 percent in the West. Sales dropped 6.5 percent in the Midwest and 3.5 percent in the South.
New homes sales decreased 8.5 percent in March to a seasonally-adjusted annualized pace of 526,000, following a 5.3 percent drop in February (previously reported as a 1.8 percent drop). The March pace is the slowest since September 1991.
Sales of new homes during the first quarter of this year were down 33.6 percent from those during the same period last year. Sales have declined about 62 percent since their peak in July 2005.
On a regional basis, sales of new single-family homes fell in all four regions of the economy, with the Northeast posting a 19.4 percent drop, followed by 12.9 percent in the West, 12.5 percent in the Midwest and 4.6 percent in the South.
The number of homes available for sale dropped 1.1 percent to 468,000. This is the 12th consecutive month of decline to the lowest level since July 2005. The steady decline in inventory reflects considerable cutbacks in single-family home building.
A small drop in inventory but a huge decline in sales pace pushed up the months’ supply or the inventory-sales ratio to 9.8 months in March, the highest reading since September 1981.
Another indicator of sluggish housing demand is a sharp increase of the length of time on the market. The median number of months on the market picked up sharply this year, rising to 7.5 months in March, the largest since February 1992. The median number of months on the market averaged 5.7 months last year.
The median price for new homes fell 13.3 percent in March from a year ago, the fourth year-over-year decline in the past five months and the largest decline since July 1970.
The Office of Federal Housing Enterprise Oversight (OFHEO) Purchase-Only House Price Index (HPI) increased 0.6 percent in February from January, the first monthly increase in eight months. From a year ago, the purchase-only index fell 2.4 percent, slightly moderating from a year-over-year drop of 2.7 percent in January. Since peaking in April 2007, the monthly purchase-only index has declined 3.1 percent.
The OFHEO index portrays a more optimistic picture of home prices than other measures of home prices. It is based on data from Fannie Mae and Freddie Mac. Thus the index includes only conventional conforming loans, largely excluding high-priced homes, especially in areas of the country where home prices have weakened considerably over the past year. The OFHEO data also include relatively fewer subprime loans and adjustable rate mortgage loans, which have performed relatively worse over the past year.
Economic Indicators:
Durable goods orders declined 0.3 percent in March, following a 0.9 percent drop in February. This was the third consecutive monthly decline. For the first quarter, new orders fell at an 8.5 percent annualized rate, accelerating from a 5.9 percent drop in the fourth quarter. Excluding transportation, new orders rose a healthy 1.5 percent.
Nondefense capital goods orders excluding aircraft—a proxy for future business investment—were unchanged in March, after declining in January and February. Shipments for nondefense capital goods including aircraft—the proxy for equipment and software spending used in the calculation of economic growth in the current quarter—rose 1.2 percent following two consecutive monthly declines. On a quarterly basis, inflation adjusted shipments of non-defense capital goods excluding aircraft declined at an annual rate of 3.2 percent in the first quarter, compared with a 3.6 percent increase in fourth quarter of 2007.
One troubling sign in the report was that inventories of durable goods jumped 1.1 percent—the biggest this year—and shipments fell. The inventory-to-shipments ratio rose to 1.56 months, the highest since November 2001. That indicates companies will need to pare production in coming months.
The University of Michigan’s Consumer Sentiment Index declined 6.9 points to 62.6 in April from the March. The index measuring consumers’ assessment of current conditions declined 7.2 points to 77. The expectations component declined 6.8 points to 53.3.
With rising food and energy prices, consumers reported they expect inflation of 4.8 percent a year from now, an increase from 4.3 percent reported in March. Their expectations for five years from now rose more modestly to 3.2 percent from 2.9 percent.
Free Credit Score Site to Offer a Modeling Tool
American Banker (04/28/08) P. 10; Launder, William
Users of Credit Karma will be able to see how paying down their debt or building a longer credit history impacts their credit score. The San Francisco-based start-up, which was launched in January, plans on adding features to the free site that will allow consumers to compare credit scores based on a number of factors, including one’s age, hobby or whether they live in a “red” or “blue” state. Credit Karma, which makes its money by hosting targeted advertising to consumers based on their credit quality, counts home equity lenders among its partners. The Web site uses credit scores from the Chicago-based credit bureau TransUnion.
Estimates Are Key at Financial Firms
Washington Post (04/28/08) P. D1; Hilzenrath, David S.
Experts say it is difficult to gauge the financial health of Fannie Mae and Freddie Mac, as subjective estimates and differing accounting methods are used to calculate the level of reserves necessary to cover anticipated losses. Freddie Mac said in its 2007 annual report that calculating reserves “is a complex process that is subject to numerous estimates and assumptions requiring significant judgment.” These calculations have been pushed to the forefront in recent months because the government-sponsored enterprises (GSEs) back at least three-quarters of new mortgage-backed securities, and substantial losses could make it more difficult for borrowers to obtain mortgages and further depress home prices. Both Fannie Mae and Freddie Mac wait up to 24 months to take problem loans off their books, delaying the negative mark on their earnings in the hopes that delinquencies are remedied without foreclosure. The underlying value of the properties serving as loan collateral was once viewed as a cushion against losses, but inflated appraisals have many experts concerned that borrowers do not have as much equity as originally thought and are more willing to abandon their mortgages–a scenario that would dramatically bolster losses for the GSEs.