Month: December 2011

by Tim Herriage Tim Herriage No Comments

Happy New Year

Thank you for being a part of in 2011.  As the New Year approaches, I hope you are able to plan 2012 to be the best year yet.  Whether you had a great year or not, be thankful for the opportunities, and learn from the mistakes.

I'll see you at The Real Estate Investor Expo in a couple of weeks.  Prices go up again tomorrow night, so make sure you reserve your spot before the ball drops!

Thank you again, and Happy New Year!

Tim Herriage

Use the discount code happynewyear at for 25% off through midnight tomorrow!

Tim Herriage

by Tim Herriage Tim Herriage No Comments

Freddie Mac Finding itself in a little more trouble

According to a request to the treasury last week from Freddie Mac, the tune of $160 billion was not enough to keep the Government Sponsored Enterprise afloat. After another recorded loss of over $4 billion last quarter, Freddie Mac is seeking another $6 billion dollars in additional supplements.

The current rate for a 30 yr. fixed note is somewhere between 3.5% to 4.5%.  When compared to the average rate of 7% and an adjustable rate at another 3%-5% (which was vastly the most popular product sold in the early to mid 2000's), it is easy to see why there would be little to no profits after a note refis into the current average rate.

An obvious assumption would be the unequivocally large amount of foreclosures in our current housing bust.  However, a surge in refi’s through the HARP program has produced a crippling effect on profit margins through the last quarter.  One refi alone averages a loss in $2,500.00 per month to Freddie Mac.  HARP also projects another 1 million refis over the next year as an attempt to contain the already massive looming shadow inventory.

So, if the treasury prints off another $6 billion to bail another GSE out of despair again, who is the gambler that is buying the bonds that will back this note?  China? Right. The more concerning issue over the failing Freddie Mac is the continuance of stretching the dollar until it is worth less than the paper it is printed on….
But, I guess that's a whole different ball of wax.
Freddie Mac Requests $6B More in Taxpayer Aid
11/03/2011BY: CARRIE BAY
The nation’s second largest mortgage company is asking the U.S. Treasury for another $6 billion in capital support after posting its largest quarterly loss in over a year.
Freddie Mac said Thursday that it recorded a net loss of $4.4 billion for the quarter ended September 30, 2011, compared to a net loss of $2.1 billion over the previous three-month period and $2.5 billion for the third quarter of 2010.
The McLean, Virginia-based GSE explained that while its latest earnings results reflect net interest income of $4.6 billion, the company shouldered a $4.8 billion loss on derivatives and a $3.6 billion provision for credit losses.
Freddie Mac’s CEO Charles E. Haldeman, Jr. pointed out that hundreds of thousands of borrowers refinanced into lower mortgage rates or shorter mortgage terms in the third quarter. Long-term interest rates declined by approximately 125 basis points in the third quarter, compared to a decrease of about 30 basis points in the second quarter.
“[T]he borrowers we helped to refinance will save an average of $2,500 in interest payments during the next year,” Haldeman said.
While the savings bode well for homeowners and should help to ensure those who were struggling to make their payments will remain current, it means less money coming in for the GSE, resulting in higher loss severity rates and thus the recorded increase in Freddie Mac’s provision for credit losses.
Such losses will likely grow over the coming quarters with the administration’s retooling of the Home Affordable Refinance Program (HARP), which is expected to allow another 1 million borrowers with loans backed by Freddie Mac and sibling Fannie Mae to take out new mortgages at today’s rock-bottom rates.
The GSEs’ are expected to issue guidance about the HARP changes to their mortgage servicers by November 15.
Freddie Mac says the increase in its third-quarter credit loss provision was also driven lower expectations for mortgage insurance recoveries, as a result of the deteriorating financial condition of certain mortgage insurers used by the company.
Freddie’s $4.4 billion loss in the third quarter combined with the $1.6 billion dividend payment it made to Treasury for past bailout money left the GSE with a $6 billion net worth deficit as of the end of September. To eliminate this deficit, the Federal Housing Finance Agency (FHFA), as conservator, is submitting a draw request to Treasury for the same amount.
The company’s Q3 draw is the largest quarterly request since the first quarter of 2010, and brings the cumulative amount of Freddie Mac’s taxpayer-supported bailout to $72.2 billion. The GSE has returned $14.9 billion to Treasury in the form of cash dividends.
Freddie Mac’s single-family serious delinquency rate was 3.51 percent as of the end of September, nearly unchanged from 3.50 percent at mid-year, but the company says its rate remains “substantially below industry benchmarks.” The GSE also stressed that new single-family business acquired after 2008 continues to demonstrate stronger credit quality.
Freddie Mac says it helped approximately 48,000 struggling borrowers avoid foreclosure in the third quarter, finding home retention solutions – including loan modifications, repayment plans, and forbearance agreements – for three out of every four. The GSE completed 11,744 short sale and deed-in-lieu transactions over the three-month period.
Freddie carried $127.9 billion in non-performing assets as of the end of September, including single-family and multifamily loans that have undergone a troubled debt restructuring, are seriously delinquent, in foreclosure, and REO. That figure represents 6.6 percent of the company’s total mortgage portfolio.
The GSE’s REO operations expense skyrocketed to $221 million in the third quarter, compared to $27 million for the second quarter. REO operations expense primarily consists of costs incurred to maintain foreclosed properties, valuation adjustments on properties, disposition gains or losses, and recoveries from credit enhancements, such as mortgage insurance.
Freddie Mac says the increase in REO operations expense last quarter was primarily driven by higher REO holding period write-downs as fair values declined during the third quarter, as well as a reduction in projected recoveries on mortgage insurance.
by Tim Herriage Tim Herriage No Comments

Number of short sales on the rise

Short sales — when lenders allow financially strapped borrowers to sell homes for less than their unpaid mortgage — accounted for 12% of home sales nationwide in the second quarter. That's up from 10% in the same period last year, says researcher RealtyTrac.
The increases were sharper in some states, including California, Nevada, Michigan, Georgia and Colorado, the data show.
In Colorado, short sales were 17% of all sales in the second quarter, up from 10% a year earlier. In California, they made up 25% of sales, vs. 18%.
Bank of America, the largest home mortgage servicer, expects to complete more than 100,000 short sales this year — more than double what it did in 2009, the bank says.
Wells Fargo Senior Vice President J.K. Huey says short sales have been “steady to slightly” up in recent months, partly because there are fewer bank-owned houses for sale in some markets, and that has forced buyers to pursue more short-sale properties.
Short-sale homes, which often remain occupied until sold, tend to retain values better than those that go through foreclosure. That helps values of neighboring homes.
In the second quarter, short-sale homes sold at a 21% discount to non-foreclosure homes, while bank-owned homes went at a 40% discount, RealtyTrac says. Short sales may also reduce losses for loan owners because they avoid full foreclosure costs. Borrowers may qualify for new mortgages sooner after a short sale than after a foreclosure.
“Short sales are a very positive solution,” says BofA Vice President Dave Sunlin.
Short sales peaked at 16% of the market in early 2009, RealtyTrac says. Realtors say there should be more short sales and that they should get done faster.
“We lose buyers constantly because short sales take too long,” says Beth Peerce, president of the California Association of Realtors. Short sales completed in the second quarter took 245 days, on average, RealtyTrac says. In a June survey, 77% of California Realtors called short sales difficult or extremely difficult; 15% said clients were foreclosed on while pursuing short sales.
Many short-sale efforts fail because homeowners aren't eligible because they can still make payments, or purchase offers are too low, says Wells Fargo's Huey. Loan owners may not agree on sale prices, either, she says. In most states, lenders can try to recoup short-sale losses from homeowners unless balances are forgiven. At BofA, Sunlin says balances are forgiven more than half the time.
by Tim Herriage Tim Herriage No Comments

Delinquency Rate Down in Fort Worth-Arlington

As usual, The metroplex real estate market continues to shine above the national average.  Although numbers show that foreclosures are declining locally and nationally, speculation concurs that motivated sales from distressed property owners are not on the decline.  My assumption is that banks, realtors, and homeowners have other options besides filing for foreclosure.  The second article below states the increase in shortsales that are up 10% nationally from the previous year.  


Fewer Fort Worth-Arlington homeowners delinquent on mortgage payments

The Fort Worth-Arlington mortgage delinquency rate has decreased, CoreLogic research firm said today.
In August. 5 pecent of mortgage loans were at least 90 days delinquent, compared to 5.4 percent in August 2010.
In Texas, the mortgage delinquency rate fell to 4.5 percent in August, from 4.9 percent a year ago. And nationally, the rate fell to 7.1 percent, down from 7.8 percent.
The foreclosure rate, though, which measures the percentage of loans in some stage of the foreclosure process, was 1.6percent in August, up from 1.5 percent in August 2010, CoreLogic said.
In Texas, the foreclosure rate was 1.5 percent in August, up from 1.4 percent in August 2010. And nationally, the rate rose to 3.4 percent from 3.2 percent in August 2010, figures show.

Read more:

by Tim Herriage Tim Herriage 1 Comment

Default Service Departments of Ocwen, GMAC, and CITIMortgage far outperform larger entities

This is a great article below regarding the productivity and performance for the default servicing companies  of non performing loans. It seems to be a direct correlation as to the limitations its competitors possess as a stronghold against who may purchase and how these bad assets may be purchased.
Banks that are under performing to servicers such as Ocwen, GMAC, and CitiMortgage are Bank of America and Fannie Mae.  There is evidence pointing to strict guidelines aimed at preventing fraudulent transactions occurring on the resale of the property from investors as the cause to the decreased production of their REO department.
While intentions may be good, these limitations are deferring investors, the only purchasers capable and willing to buy properties in a distressed state, with cash.
Such limitations from Fannie Mae include a 15 day wait period for investors to present offers and a limitation of a re-sale price of more than 120% after the first 90 days of purchase.  While investors struggle with the adjustment of Fannie Mae, They are presented with more stonewalling from Bank of America.  BofA has completely limited the transfer of deed for all foreclosures for 90 days, period.  This has got to be the exact reason for decreased productivity for BofA's REO re-sale department.  
For now, investors are paying more attention to Banks with less restrictions and will continue to do so.  It would be in the best interest of other banks to follow suit and release such outlandish restrictions before they are left with more shadow inventory creating a larger bubble ultimately causing an out of control downward spiral of bottoming out values of homes…….

Amid a challenging environment for servicers, CitiMortgage, GMAC, and Ocwen have outperformed major competitors – Bank of America and Chase – with regards to loss mitigation and foreclosure timelines, according to a recent report from Moody’s.

Moody’s Investor Service’s Servicer Dashboard for the second quarter of 2011 rates major servicers for their performance over the year from June 2010 to June 2011.
Bank of America’s and Chase’s performances were affected by large servicing acquisitions and foreclosure moratoria resulting from robo-signing investigations, according to Moody’s.
Moody’s Current to Worse Roll Rate measures the percentage of loans that start the year in current status and end the year delinquent, in default, or in foreclosure.
At 4.3 percent, CitiMortgage ranked best for Current to Worse Roll Rate for jumbo loans, a sign of their “working with imminently defaulting borrowers prior to delinquency and their use of short-term loss mitigation programs for borrowers in early stages of delinquency,” according to the report.
GMAC ranked first for both ALT-A and subprime loans, and Wells Fargo ranked second in Current to Worse Roll Rate for jumbo, ALT-A, and subprime loans.
“Wells has strong staffing ratios, allowing them to manage large volumes of loans and reduce the number of current loans that slip into distress,” states the report.
BofA ranked fourth for all three loan types, and Chase fell into last place for all three. The Current to Worse rates were highest for subprime loans – 25.8 percent of Chase’s current subprime loans were delinquent, in default, or in foreclosure, while 21.7 percent of BofA’s subprime loans fell into one of these categories by year-end.
Moody’s attributes these rankings to both bank’s servicing portfolio acquisitions.
In terms of curing default, Citi, GMAC, and Ocwen performed well. Moody’s notes that Citi and Ocwen both have their own default servicing systems with modification programs, which allow them to modify loans for more borrowers.
Moody’s also points to Ocwen’s and GMAC’s low modification re-default rates, which it attributes to the fact that these banks have consistently verified borrowers’ financial information before allowing them to enter trial modification periods.
As with Current to Worse rates, Chase and BofA showed a weak performance in loss mitigation.
Moody’s was not the first to note shortcomings in BofA’s and Chase’s loss mitigation efforts. When the Treasury scored servicers for their HAMP performance, the only two servicers categorized as needing “Substantial Improvement” for both the first and second quarters of this year were Chase and BofA.
by Tim Herriage Tim Herriage No Comments

Texas tops the list of the best states for jobs

Texas tops the list of the best states for jobs – Business – –



NEW YORK ( – When it comes to which states will add the highest percentage of jobs over the next few years,Forbes reports Texas will lead the way.

Total employment here is forecast to expand 2.9 percent annually through 2015, according to research firm Moody’s Analytics. That represents 1.6 million new net jobs for the state over five years.

Forbes points to Texas' “low tax, business-friendly climate with a surging population that offers a nearly unlimited supply of young labor” as reasons for the growth. However, it also acknowledges that the state's rapid population growth has pushed its unemployment rate to 8.5 percent, the highest in 24 years.


Tim Herriage

by Tim Herriage Tim Herriage No Comments



I am very excited today.  My sons football team won a youth football championship this weekend.  It was a long, COLD, weekend!  The boys played extremely hard, and won all four games!  They only had one on Saturday, and THREE on Sunday in 40 degree rain.  They scored 98 points, and allowed 0.  It was a complete team effort, with no “shining star”.  That is the way we coach.

My son, Alex, got upset during one game.  He felt like he wasn’t getting to run the ball enough.  He was blocking more in that game, because there was a great middle linebacker that no one else could block.  His frustration is a lot like that which we all face in our lives, and careers.  Sometimes we want to measure the glory and attention, but don’t want to do the hard work.

Alex and I talked about doing the hard work, and making the carries count, instead of counting the carries.  This lesson helped me too.  As a real estate investor, I love to deposit the profit checks, but sometimes get tired of the grind of making offers, advertising, and managing property.  You see, to me, this is the blocking!  Alex came around after a good father son chat, and finished the game hard.  His chance came in the championship game, and he had an 80 yard breakaway run.

Keep doing the hard work (blocking), because that is the only way you’ll ever get to score!

Tim Herriage