Forecasters See ‘Slightly Busier’ Atlantic Storm Season
Submitted by Ronald Tennant with Metrocities Mortgage:
MBA (5/23/2008 ) MBA Staff
The National Oceanic and Atmospheric Administration anticipates a “slightly busier” than average Atlantic storm season this summer, citing a “good chance” of six to nine hurricanes forming and possibly 12 to 16 named storms.
“The main factors influencing this year’s seasonal outlook are the continuing multi-decadal signal—the combination of ocean and atmospheric conditions that have spawned increased hurricane activity since 1995—and the anticipated lingering effects of La Niña,” said Gerry Bell, lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center. “One of the expected oceanic conditions is a continuation since 1995 of warmer-than-normal temperatures in the eastern tropical Atlantic.”
However, NOAA officials took pains this week to stress that its forecast has a wide range of probability, citing a “60 to 70 percent” chance its prediction would actually come true. This comes on the heels of criticism of the forecast, which has occasionally been wildly inaccurate.
For example, while 2007’s forecast came in fairly accurately—NOAA predicted 13 to 17 storms (there were 15) and seven to 10 hurricanes (there were six, of which two were major); in 2005—the year of the devastating Hurricanes Katrina and Rita—NOAA predicted 12 to 15 named storms, but a record 28 formed.
“The outlook is a general guide to the overall seasonal hurricane activity,” said NOAA Administrator Conrad Lautenbacher. “It does not predict whether, where or when any of these storms may hit land.”
An “average” season has 11 named storms of which six become hurricanes (two of which become major), NOAA said.
Another forecaster, Colorado State University researcher William Gray, predicted 15 storms this season, including eight hurricanes of which four could be major (winds in excess of 110 miles per hour).
“We foresee a well above-average Atlantic basin tropical cyclone season in 2008,” Gray said. “We have increased our seasonal forecast from our initial early December prediction. We anticipate an above-average probability of United States major hurricane landfall.”
The Atlantic storm season begins June 1 and runs through November 30.
Lenders Seek Quality, Efficiency through Outsourcing
Submitted by Ronald Tennant with Metrocities Mortgage:
MBA (5/23/2008 ) Palaparty, Vijay
Lenders continue to outsource business processes to vendors in search of quality and efficiency. Technology companies such as Guardian Mortgage Documents Inc., Denver, see an opportunity in the market to help lenders improve processes and ultimately increase profit margins.
“The mix of business has really changed though the industry is flat,” said Tim Anschutz, vice president of marketing and channel sales at GMD. “Companies however are working more with vendors and outsourcing for a mix of services and even consulting. They are especially pushing for integrating efficiencies in order to focus on leveraging return on investment. They are focused on increasing profit margins and they can achieve that with more effective interfaces with their partners.”
Anschutz said vendors also establish partnerships with other vendors to round out their offerings. GMD, a document preparation provider with outsourced products and services, interfaces with Mavent Inc., Irvine, Calif., for compliance and quality assurance review.
“All the data runs through Mavent and if there is any question on any aspect of the loan data, it puts a hard stop because of quality assurance rules,” Anschutz said. “Drawing the hard line refines the process and allows lenders to go higher up the value chain by identifying potential problems early on.”
Guardian Mortgage Services, a division of GMD, offers closing and post-closing services as well. Anschutz said outsourcing of back-office operations is most beneficial to lenders because maintaining in house processing when volumes are low results in wastage. “It comes at 100 percent variable cost and reduces burden for lenders,” he said. “Evaluate the right-sizing aspect of it—it makse sense.”
GMD maintains all of its outsourcing operations onshore in the U.S. Anschutz said that document preparation and related due diligence require having the entire operation onshore. “What we do is involves real-time and logistically it requires an onshore presence,” he said. “We even list that as an advantage and find our clients look for it.”
Increasingly, lenders looking for an entirely onshore presence be because of security concerns, efficiency and functionality, Anschutz said. He said that offshore operations are better suited for software development and related activities that require a larger span of time and usually don’t have immediate implications and requirements.
Core Mortgage Group LLC, Scottsdale, Ariz., recently selected GMS to provide outsource fulfillment services for back office operations. “With the state of the mortgage industry, we wanted to minimize our amount of risk while keeping costs down,” said Matt Trainor, secondary marketing director at Core Mortgage Group. “We decided to develop relationships with companies in helping us meet our long-term strategic objectives. We structure business around solid relationships with vendors.”
“Quality is achieving consistency in process,” Anschutz said. “It’s a balance of efficiency in processes and is often situational. Quality doesn’t necessarily drive efficiency but achieving higher return on investment requires both.”
GMD reported most activity in loan modifications. “Loan modifications have been an increasing trend, increasing well over 100 percent,” Anschutz said. “It’s a healthy sign that fits with industry efforts to stabilize homeownership.”
Home Price Declines Deepen
Submitted by Ronald Tennant with Metrocities Mortgage:
MBA (5/23/2008 ) Velz, Orawin
Home prices continued to deteriorate in the first quarter, according to the House Price Index (HPI) from the Office of Federal Housing Enterprise Oversight (OFHEO).
The HPI controls for the mix of sales by focusing on transactions on the same properties over time. It is based on repeat sales of homes financed through Fannie Mae and Freddie Mac; thus it excludes properties financed with jumbo loans and government-insured loans and under-represents subprime loans and loans financed with adjustable rate mortgages.
The all-transactions HPI, which includes refinance transactions, was flat in the first quarter from a year ago. The index excluding refinance transactions (i.e. the purchase-only index) showed a year-over-year decline of 3.07 percent after a 0.5 percent year-over-year drop in the fourth quarter of 2007.
Fifteen states posted year-over-year declines in home prices, with California, Nevada and Florida seeing more than an 8 percent drop in prices. In the fourth quarter of 2007, 11 states saw drops in home prices from a year ago. Of the 292 metropolitan areas covered in the report, 128 posted quarterly declines in the overall HPI, up from 99 in the fourth quarter.
A separate report showed that initial claims for unemployment insurance fell by 9,000 to 365,000 for the week ending May 17. This latest decline in initial claims provided further evidence that layoffs have stabilized in recent weeks and suggest another modest decline in nonfarm payroll employment in May.
Stock markets rallied and Treasuries declined on the news of an unexpected drop in initial unemployment claims. The yield on 10-year Treasuries was up 11 basis points and stayed around 3.91 percent by mid-Thursday afternoon.
National City to Pay $4.6 Million Settlement
Submitted by Ronald Tennant with Metrocities Mortgage:
Toledo Blade (OH) (05/23/08)
National City Mortgage Co.–the home lending division of National City Corp.–has reached a settlement in a civil case that accused it of defrauding a HUD program. The company is said to have deceived the government agency about the status of several dozen loans for which it was seeking HUD insurance. National City allegedly claimed that the loans, part of a HUD effort targeting low- and moderate-income families, were not past due when they actually were more than 30 days late. The mortgage subsidiary did not admit any wrongdoing, but it agreed to pay $4.6 million to settle the charges
Ranieri Plans $1 Bln Fund to Buy Home Loans–Report
Submitted by Ronald Tennant with Metrocities Mortgage:
Reuters (UK) (05/23/08); Singh, Neha
Mortgage bond pioneer and former Salomon Brothers Inc. executive Lewis Ranieri is seeking $1 billion for a venture that will purchase home loans. According to a regulatory filing, Selene Residential Mortgage Opportunity Fund LP has already raised $151 million from investors in three states–New York, Ohio and Pennsylvania–as of mid-April. Ranieri is one of the fund’s managing partners. Another Selene managing partner, David Creamer, states, “Our plan is to raise $1 billion and buy delinquent mortgages that we will recast and refinance and try to keep the borrower in the house without a foreclosure.”