Foreclosure Deal Progressing Well

  • Putrajaya submits early report on flight MH370, but won’t publicise it, says CNN
    Putrajaya submits early report on flight MH370, but won’t publicise it, says CNN

    Putrajaya has sent its preliminary report on the disappearance of flight MH370, but has yet to release it publicly, CNN reported today, despite insisting that it has nothing to hide. “It just adds fuel to the fire – which is like a furnace now – of disbelief, particularly in China, as to what is going on,” Geoffrey Thomas, managing director of... …

  • It’s Obama’s right to see Anwar or not, says Dr Mahathir – Bernama
    It’s Obama’s right to see Anwar or not, says Dr Mahathir – Bernama

    Former prime minister Tun Dr Mahathir Mohamad said it was up to the president of the United States whether to see opposition leader Datuk Seri Anwar Ibrahim or not. "It is his (Obama) right, up to him who he wants to see, he does not even want to see me, a former prime minister," Dr Mahathir (pic) told reporters in Putrajaya today. He was... …

  • Karpal’s Bukit Gelugor seat will stay DAP’s, analysts say
    Karpal’s Bukit Gelugor seat will stay DAP’s, analysts say

    GEORGE TOWN, April 24 — Analysts believe that Barisan Nasional (BN) does not stand a fighting chance in Bukit Gelugor, and even said it may not be worth the ruling pact’s time to contest the seat... …

  • Tuhan Harun case postponed again to July 22 – Bernama
    Tuhan Harun case postponed again to July 22 – Bernama

    The Lower Shariah Court today postponed again the case of leader of the “Tuhan Harun” deviant sect, Harun Mat Saat, to July 22. Judge Abdul Wahid Mohd Ali set the date after hearing the application from Pahang Islamic Religious Department deputy prosecutor Mohd Fahmi Abd Jalil that he needed more time to examine the legal representation... …

  • What if flight MH370 is never found?
    What if flight MH370 is never found?

    Despite assurances from Malaysia and Australia that the search will continue for Malaysia Airlines flight MH370, the lack of significant leads after almost seven weeks are leading many to ask: What if the jetliner that disappeared over the southern Indian Ocean is never found? At the start of the massive international search effort, such a... …

  • New law to give Sarawak natives freedom in purchasing customary rights land
    New law to give Sarawak natives freedom in purchasing customary rights land

    Bumiputera from Sarawak could eventually buy Native Customary Rights (NCR) land outside their ethnic group or community when the state amends its Land Code in November. Chief Minister Tan Sri Adenan Satem (pic, right), in disclosing the government's intention to table the amendment at its Budget sitting, said with the amendment the Iban, for... …

The progress report released under the foreclosure settlement deal shows that 5 mortgage servicers involved in it remain on track to fulfill the commitments by Mar 1.  The servicers – Bank of America Corporation (BAC), Citigroup, Inc. (C), JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC) and Ally Financial Inc. – provided $45.83 billion in relief during the period from Mar 1, 2012 to Dec 31, 2012. This has served an average of $82,668 to about 554,389 borrowers.

Out of the total $45.83 billion, the maximum relief of $19.51 billion was provided via short sale (vending of homes by owners for a value lesser than the mortgage amount). Here, BofA led the way with $11.8 billion of short sales, followed by JPMorgan with about $5.3 billion.

Further, the first lien modification was completed for 70,810 borrowers, receiving $7.41 billion in loan principal reduction, averaging at about $$104,626 per borrower. In addition, second lien modifications and extinguishments were given to 170,339 borrowers, representing nearly $11.60 billion in relief. Hence, a total of $19.01 billion worth of principal reductions (both first and second lien) was done by the mortgage servicers.

Moreover, as of Dec 31, 2012, another 25,114 borrowers were in active first lien trial modifications with the aggregate principal value of $3.49 billion. If the trials are successful, this would represent average potential relief of $138,802. The servicers also provided another $2.21 billion in relief via refinancing 56,400 home loans with an average unpaid principal balance of $211,834.

Hence, taking into consideration the various types of relief extended (excludes relief in process) by the banks, BofA tops the chart with $26.8 billion in aid, followed by JPMorgan with $7.7 billion, Wells Fargo with $4.2 billion, Citigroup with $2.8 billion and Ally Financial with $624 million. Though the amount totals approximately $42.1 billion, the mortgage servicers (with an exception of Ally Financial) are yet to achieve the goal as settlement provides limited credit for a certain category of assistance.

Under the terms of the foreclosure deal, the servicers receive 45 cents credit for every dollar of relief provided. The servicers will have to furnish approximately $20 billion in relief to homeowners on the verge of eviction over a period of 3 years. Also, they will be required to lower loan balances for struggling borrowers and refinance the loans for customers with homes worth less than the value of their mortgages.

Though the settlement deal came as a big relief for the banks, they are required to meet the targeted commitments or pay penalties instead. If banks fail to meet the targeted modification commitments over a period of 3 years, they could face penalties of 125%–140% of the deficit. Further, they are required to finish 75% of the commitments by the end of 2014 and the remaining over the next 12 months.

However, the foreclosure deal covers only a small proportion of underwater mortgages (nearly 11 million homes) as it is expected to provide aid to just 1 million of these. Yet, we believe that the housing sector is going to benefit from the deal as lower unemployment rates are likely to help homeowners avoid foreclosures in the near term. Also, the servicers will be benefited as it will facilitate the improvement of balance sheet.

Read the Full Research Report on JPM

Read the Full Research Report on WFC

Read the Full Research Report on C

Read the Full Research Report on BAC

Zacks Investment Research



More From Zacks.com

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • MH370 passenger’s partner tells of strange email from sacked Fox officer The Malaysian Insider
    MH370 passenger’s partner tells of strange email from sacked Fox officer

    The partner of an American passenger aboard the missing Malaysia Airlines flight MH370 has spoken about how a Fox executive who was recently sacked by the news station had contacted her offering to raise funds on her behalf. Sarah Bajc, whose partner Philip Wood is among the 239 people on board the missing plane, told the Sydney Morning Herald... …

  • My last moments with Pa: Ramkarpal Singh The Malaysian Insider
    My last moments with Pa: Ramkarpal Singh

    A week after the tragic crash that took the lives of veteran lawyer and politician Karpal Singh and his personal aide, Michael Cornelius, his son Ramkarpal recounts the final hours with his father that fateful day. This is his story, as told to V. Anbalagan, assistant news editor. “My parents (Karpal and Gurmit) had gone to Pantai Hospital... …

  • In Disney's shadow, homeless families struggle Associated Press
    In Disney's shadow, homeless families struggle

    KISSIMMEE, Fla. (AP) — When they moved from Georgia to the theme park playground of central Florida four years ago, Anthony and Candice Johnson found work at a barbecue restaurant and a 7-Eleven. Their combined salaries nevertheless fell short of what they needed to rent an apartment, so the couple and their two children have instead been hopping among cheap motel rooms along U.S. 192. …