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News of the Competition (12/23/14)

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  • NEW YORK (12/23/14)--Ocwen Financial came to an agreement with New York regulators this week to pay $150 million to settle allegations that it doctored foreclosure documents in order to deny borrowers adjustments to mortgage loans (National Mortgage News Dec. 22). The majority of cases involved borrowers who had received letters--which were dated 30 days prior to arriving--stating their mortgage loan adjustment applications had been denied. Because borrowers only have 30 days to appeal such a denial, by the time notification arrived, the appeal period had ended. The company will pay $100 million of the settlement to New York State as a civil penalty, and $50 million to current and former New York homeowners whom Ocwen had filed foreclosures against between January 2009 and December 2014. According to National Mortgage News, Ocwen also announced this week that its founder and executive chairman, William Erbey, will step down after 30 years with the company ...

Nov. existing-home sales falter: NAR

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WASHINGTON (12/23/14)--After consecutive months of positive gains, existing-home sales regressed in November, dropping 6.1% to 4.93 million annualized units sold from 5.25 million in October ( Dec. 22).

November's performance comes in 2.1% higher than last year's number nationally, but only two of the four census regions posted numbers higher than last year's pace. And all four regions recorded monthly declines in sales in November.

While Lawrence Yun, chief economist for the National Association of Realtors, said November's poor sales performance was an aberration--caused by stock market swings that scared away investors--Janet Yellen, chair of the Federal Reserve, said last week that she continues to be surprised the housing market has not recovered more robustly, and suggested that tight credit was partly responsible (MarketWatch Dec. 22).

By region, sales fell 4.2% in the Northeast, 8.9% in the Midwest, 3.2% in the South and nearly 10% in the West.  

Nationwide, condos, co-ops and single-family homes all posted fewer sales in November.

Inventory fell in November as well, dropping to 2.09 million units from 2.24 million in October, or a 6.7% decline. The supply of homes, meanwhile, held steady at 5.1 months between October and November.

Further, the median sales prices of single-family homes dropped slightly in November to $206,200, which is still higher than the price seen in November of last year.

Annually, single-family home prices have climbed 3.9%.

News of the Competition (12/22/14)

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  • WASHINGTON (12/22/14)-- Big banks received a break from the Federal Reserve last week, as regulators handed the large financial institutions two more years to sell their stakes in private-equity, venture-capital and hedge funds covered by the Volcker rule ( The Wall Street Journal Dec. 18). Banks had asked regulators for seven years to unwind these programs, but the Fed only extended the deadline to 2017 from 2015. The Fed agreed in order to "reduce the potential disruptive effects that significant divestitures of covered funds could have on markets," according to The Journal . Once the new deadline arrives, the banks must have their investments in these funds entirely drawn down. The Volcker rule is one of the most critical features of the 2010 Dodd-Frank Act, as it's designed to keep banks from taking part in risky activities that could jeopardize the federally insured deposits of their clients , The Journal said ...

Underwater mortgages down 40% since 2012

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SEATTLE (12/22/14)--The number of U.S. homeowners with underwater mortgages--where the value of the mortgage is higher than the value of the home--has fallen by 40% since 2012, according to a recent report from the Seattle-based real estate website Zillow.

When the housing market crashed in 2008, more than 16 million homeowners watched their mortgages flip upside-down. But two years removed from the lowest point of the recession, nearly half of those underwater have pulled themselves out of negative equity, Zillow said.

"The market has made terrific strides since bottoming out in late 2011 and early 2012, with millions of underwater homeowners freed in just the past few years, and millions more set to surface in coming months and years," said Stan Humphries, Zillow chief economist.

Many homeowners have reversed their fortunes through the foreclosure process or short sales, Zillow said, while others have simply continued to make mortgage payments until property values improved.

Whatever the case, the housing market could receive a boost with millions more homeowners holding positive equity, as they will be more likely to sell.  

Improvements in this area of the housing market have varied across the country, with those geographic areas hit hardest during the financial crisis experiencing the most relief.

In Atlanta, 55% of homeowners were underwater in 2012, compared with just 23% of homeowners in 2014. Phoenix reached 58% of homeowners with upside-down mortgages in 2011, and that number has fallen below 20%.

News of the Competition (12/19/14)

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  • WASHINGTON (12/19/14)-- Wells Fargo was hit with a $1.5 million fine this week by the Financial Industry Regulatory Authority (FINRA) for its role in a number of anti-money-laundering failures ( The Wall Street Journal Dec. 18). The big bank's financial advisory arm, Wells Fargo Advisors, failed to take the necessary steps to verify the identities of nearly 220,000 new customer accounts between 2003 and 2012, eliciting the fine, the Journal reported. Proper verification would have required Wells Fargo to establish and maintain a written customer identification program that verified all customers who had opened new accounts. "Firms must be vigorous in the testing of their electronic systems to ensure they are operating correctly, including those designed to ensure compliance with critical aspects" of anti-money-laundering rules, said Brad Bennett, FINRA enforcement chief, in a statement ...

Mortgage rates hit lows for 2014: Freddie Mac

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WASHINGTON (12/19/14)--Mortgage rates tracked by Freddie Mac continue to drive lower, as the government-sponsored mortgage giant reported Thursday that rates have hit their lowest points for 2014.

According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage fell to 3.8% for the week ending Dec. 18, a drop from the 3.93% seen last week. In 2013, the rate averaged 4.47% ( Dec. 18).

"The 30-year fixed mortgage rate dropped to its lowest point of 2014 this week," said Frank Northaft, vice president/chief economist for Freddie Mac. "Mortgage rates fell along with 10-year Treasury yields, which closed at their lowest level since May 2013."

The 15-year fixed-rate mortgage rate dropped to 3.09% for the week, falling from 3.2% the week prior and 3.52% from its year-ago level.

Further, the five-year Treasury-indexed adjustable-rate mortgage rate slipped to 2.38%, down from 2.98% the prior week, and the one-year Treasury-indexed adjustable-rate mortgage rate fell to 2.38%, a slight drop from 2.98% the prior week.

"November housing starts came in at a seasonally adjusted annual rate of 1.028 million starts, down 1.6% from an upwardly revised October value," Northaft said. "Housing starts for the calendar year will likely come in around 1 million, above the 2013 pace but lower than forecasters had expected at the start of 2014."

Bankrate reported similar falling mortgage rates, with rates dropping for the sixth consecutive week based on its data ( Housingwire ).

The 30-year fixed-rate mortgage rate tracked by Bankrate fell to 3.94% from 4.03%, and the 15-year fixed rate fell to 3.21% from 3.28%.

News of the Competition (12/18/14)

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  • WASHINGTON (12/18/14)--The Financial Industry Regulatory Authority (FINRA) has fined Merrill Lynch, Pierce, Fenner and Smith $1.9 million for violating fair pricing and supervisory laws in more than 716 cases of retail customer transactions of distressed securities (MarketWatch Dec. 16). FINRA also has ordered Merrill Lynch, a unit of Bank of America, to pay the affected customers $540,000 for the infractions. FINRA asserts that Merrill Lynch bought notes from Motors Liquidation Co., the name used by General Motors after the company went bankrupt, for prices well below their market value, and then sold them to brokers at, or above, market prices. The government agency also alleges that Merrill Lynch failed to conduct post-trade best execution or fair pricing reviews for any of the transactions, according to MarketWatch. Merrill Lynch has not admitted to or refuted FINRA's findings ...