Delinquencies and foreclosures drop

The percentage of delinquent mortgages declined and fewer loans were in foreclosure in the last quarter of 2011, says the Mortgage Bankers Association.

About 7.58 percent of outstanding mortgages were past due in the fourth quarter, a decline of 41 basis points on the seasonally adjusted delinquent rate. When compared to the first quarter of 2010, when the delinquency rate peaked at 10.1 percent, it is a significant improvement.

But we're still only halfway through the problem, says Jay Brinkmann, MBA’s chief economist. Prior to the recession, the delinquency rate was about 5 percent, according to the MBA.

Another good sign is the combined percentage of loans that were in foreclosure or at least one payment past due was 12.63 percent, a 10 basis point decrease compared to the third quarter.

Lenders also started fewer foreclosures in the last quarter. Foreclosure actions were started on 0.99 percent of loans, down 9 basis points compared to the third quarter and 28 basis points lower than the fourth quarter of 2010.

"Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy," Brinkmann says. "The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago."

Delinquency rates and foreclosure starts fell in almost all types of loan, including prime, subprime and ARMS. The exception was FHA loans, which saw an increase in delinquency and foreclosures

"Part of the reason is that the FHA book of business has shown rapid growth," he says. "And purchase loans originated in 2008 and 2009 are only now entering the peaks of a normal delinquency curve.

Before the crisis, FHA-insured loans accounted for about 3 percent of all mortgages. These days, FHA loans account for about 30 percent of the market, the MBA says.

More than half of all mortgages in foreclosure are concentrated in a handful of states: California, Illinois, New York and New Jersey.

Follow me on Twitter @Polyanad

They have dropped for now. However I fear what might come in the future! I wish I could say it was all almost over!

Top 100 Largest Banks - Defaulted Loan Portfolios and REOs Statistics

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Top 100 Largest Banks - Defaulted Loans & REOs

The table below is a list of the Top 100 largest banks measured by total assets. Also the amount of REO assets (real estate owned) held, and Non Current Loans (defaulted loans).  Also total default rate of the loans as a percentage, based on non-current loans / assets.  Also adjusted non-current loans as a percentage of assets, where non-current assets are adjusted by subtracting out non-current loans which are wholly or partially insured by the US government.

# Bank Name  Total Assets   REO - Real Estate Owned   Noncurrent loans and leases   REO / Assets NC Loans / Assets Adj NC Loans / Assets
    (000s) (000s) (000s)      
               
1 Bank of America, National Association   1,496,322,329  2,874,270   60,209,602 0.19% 4.02% 3.07%
2 Wells Fargo Bank, National Association   1,065,890,000  3,758,000   59,330,000 0.35% 5.57% 3.98%
3 JPMorgan Chase Bank, National Association   1,674,523,000  1,832,000   46,703,000 0.11% 2.79% 2.14%
4 Citibank, National Association   1,171,094,000  1,290,000   30,340,000 0.11% 2.59% 2.04%
5 PNC Bank, National Association      254,518,132     734,004   11,411,333 0.29% 4.48% 3.65%
6 U.S. Bank National Association      277,509,284  1,726,653     9,427,352 0.62% 3.40% 1.67%
7 SunTrust Bank      160,993,399     767,681     6,818,747 0.48% 4.24% 3.35%
8 Wells Fargo Bank South Central, National Association        37,737,000       43,000     2,428,000 0.11% 6.43% 6.39%
9 OneWest Bank, FSB        27,957,076     422,533     2,334,987 1.51% 8.35% 1.67%
10 MidFirst Bank        12,365,241       87,672     2,305,021 0.71% 18.64% 2.66%
11 ING Bank, fsb        91,272,405     130,065     1,752,666 0.14% 1.92% 1.92%
12 Capital One, National Association      123,046,451     268,290     2,804,345 0.22% 2.28% 2.27%
13 Bank of America, Rhode Island, National Association        22,326,426               -       1,578,575 0.00% 7.07% 7.07%
14 Branch Banking and Trust Company      157,652,005  1,716,883     4,950,042 1.09% 3.14% 1.92%
15 HSBC Bank USA, National Association      183,562,481       76,180     3,373,945 0.04% 1.84% 1.82%
16 E*TRADE Bank        44,290,766     121,887     1,653,716 0.28% 3.73% 3.73%
17 Flagstar Bank, FSB        14,323,245  1,115,347     1,461,535 7.79% 10.20% 6.80%
18 BankUnited        11,463,601     149,789     1,168,693 1.31% 10.19% 0.00%
19 Bank of America California, National Association        26,656,738               -       1,062,694 0.00% 3.99% 3.99%
20 Citicorp Trust Bank, fsb        18,012,669       14,482     1,137,396 0.08% 6.31% 6.29%
21 Bank of America Oregon, National Association        14,736,199               -          764,869 0.00% 5.19% 5.17%
22 Hudson City Savings Bank        61,106,025       19,563        744,871 0.03% 1.22% 1.15%
23 Fifth Third Bank      110,801,047     398,933     3,589,499 0.36% 3.24% 3.05%
24 The Huntington National Bank        51,418,039     151,090     1,940,280 0.29% 3.77% 3.53%
25 Sovereign Bank        73,394,090       90,235     2,242,645 0.12% 3.06% 3.06%
26 Regions Bank      133,186,492     600,810     4,708,015 0.45% 3.53% 3.47%
27 Firstbank of Puerto Rico        18,839,328       73,444     1,796,680 0.39% 9.54% 9.15%
28 Banco Popular de Puerto Rico        22,865,000     112,000     1,816,000 0.49% 7.94% 7.12%
29 RBS Citizens, National Association      114,492,129       53,001     1,830,573 0.05% 1.60% 1.53%
30 Manufacturers and Traders Trust Company        67,458,977       95,352     1,537,466 0.14% 2.28% 1.92%
31 First Tennessee Bank, National Association        25,713,088     122,061     1,095,398 0.47% 4.26% 4.08%
32 Astoria Federal Savings and Loan Association        20,020,076       50,319        427,314 0.25% 2.13% 2.13%
33 M&I Marshall and Ilsley Bank        50,065,908     426,180     1,825,733 0.85% 3.65% 3.65%
34 Compass Bank        65,147,452     348,174     2,796,504 0.53% 4.29% 3.42%
35 Metlife Bank, National Association        13,572,632       12,179        347,043 0.09% 2.56% 0.59%
36 The Bank of New York Mellon      162,064,000         5,000        787,000 0.00% 0.49% 0.49%
37 Ally Bank        55,172,742         7,800        350,150 0.01% 0.63% 0.63%
38 Union Bank, National Association        85,053,226       45,492     1,436,470 0.05% 1.69% 1.68%
39 Harris National Association        43,395,792       16,189        688,765 0.04% 1.59% 1.58%
40 Bank of the West        61,178,361     145,598     1,619,911 0.24% 2.65% 2.64%
41 TD Bank, National Association      148,084,280       72,482     1,219,741 0.05% 0.82% 0.79%
42 TCF National Bank        18,198,488     101,436        372,640 0.56% 2.05% 2.04%
43 Third Federal Savings and Loan Association of Cleveland        10,688,238       18,195        224,382 0.17% 2.10% 2.10%
44 New York Community Bank        39,888,490       60,701        846,826 0.15% 2.12% 1.69%
45 Washington Federal Savings and Loan Association        13,791,807     237,013        289,720 1.72% 2.10% 2.10%
46 KeyBank National Association        91,953,232     130,843     2,833,239 0.14% 3.08% 3.08%
47 Webster Bank, National Association        17,981,329       23,821        349,563 0.13% 1.94% 1.94%
48 Westernbank Puerto Rico        10,797,345       84,255     1,556,219 0.78% 14.41% 14.41%
49 RBC Bank (USA)        26,115,214     187,621     1,320,454 0.72% 5.06% 5.02%
50 Associated Bank, National Association        22,809,664       61,380     1,197,314 0.27% 5.25% 5.06%
51 Northern Trust, National Association        12,431,409       31,011        168,921 0.25% 1.36% 1.36%
52 Citizens Bank        11,049,897       44,008        503,808 0.40% 4.56% 4.26%
53 Comerica Bank        56,965,482       93,310     1,229,040 0.16% 2.16% 2.13%
54 Whitney National Bank        11,565,070       60,731        454,074 0.53% 3.93% 3.92%
55 Arvest Bank        11,304,192       65,884        334,153 0.58% 2.96% 2.94%
56 Deutsche Bank Trust Company Americas        45,147,000       17,000        757,000 0.04% 1.68% 1.68%
57 Zions First National Bank        17,195,645     164,826        713,776 0.96% 4.15% 4.03%
58 People's United Bank        21,357,102       26,220        252,682 0.12% 1.18% 1.14%
59 Carolina First Bank        12,410,757     142,632        377,598 1.15% 3.04% 3.04%
60 State Farm Bank, F.S.B.        15,903,221         7,894        218,280 0.05% 1.37% 1.37%
61 The Northern Trust Company        63,109,667       14,184        152,860 0.02% 0.24% 0.23%
62 Citizens Bank of Pennsylvania        30,927,173         4,049        334,488 0.01% 1.08% 0.97%
63 First-Citizens Bank & Trust Company        18,486,817     124,569        101,402 0.67% 0.55% 0.55%
64 Susquehanna Bank        13,628,538       20,697        268,075 0.15% 1.97% 1.95%
65 California Bank & Trust        11,240,218       65,222        541,490 0.58% 4.82% 2.02%
66 BancorpSouth Bank        13,232,594       59,268        223,401 0.45% 1.69% 1.64%
67 Bank of Oklahoma, National Association        16,643,644       63,969        252,647 0.38% 1.52% 1.47%
68 Charles Schwab Bank        45,885,344         2,533          33,389 0.01% 0.07% 0.07%
69 Bank of Hawaii        12,413,175         3,192          54,452 0.03% 0.44% 0.44%
70 The PrivateBank and Trust Company        12,640,063       76,585        380,047 0.61% 3.01% 3.01%
71 East West Bank        20,231,320       85,260        822,904 0.42% 4.07% 0.86%
72 Valley National Bank        14,452,652       12,466          95,647 0.09% 0.66% 0.61%
73 First Hawaiian Bank        14,258,879         3,392          41,042 0.02% 0.29% 0.29%
74 Silicon Valley Bank        13,434,468               -            50,833 0.00% 0.38% 0.38%
75 Amegy Bank National Association        11,332,248       43,109        566,838 0.38% 5.00% 4.98%
76 Firstmerit Bank, National Association        12,306,555       22,692        131,775 0.18% 1.07% 1.07%
77 First Niagara Bank        14,863,116         9,935          77,920 0.07% 0.52% 0.49%
78 City National Bank        19,744,141     135,551        674,545 0.69% 3.42% 1.77%
79 Commerce Bank, National Association        17,859,861       14,333        138,335 0.08% 0.77% 0.72%
80 Cathay Bank        11,854,833     111,858        322,217 0.94% 2.72% 2.71%
81 First National Bank of Omaha        11,433,327       18,400        246,197 0.16% 2.15% 2.14%
82 USAA Federal Savings Bank        40,407,499         1,822        243,184 0.00% 0.60% 0.60%
83 Discover Bank        63,056,053               -       1,441,536 0.00% 2.29% 2.27%
84 The Frost National Bank        16,803,603       26,456        179,207 0.16% 1.07% 1.02%
85 TD Bank USA, National Association        12,066,492               -              1,289 0.00% 0.01% 0.01%
86 Wells Fargo Bank Northwest, National Association        17,118,000               -          399,000 0.00% 2.33% 0.80%
87 Goldman Sachs Bank USA        89,744,000               -                    -   0.00% 0.00% 0.00%
88 UBS Bank USA        29,342,330               -              3,404 0.00% 0.01% 0.01%
89 GE Money Bank        18,477,070      (28,318)        449,049 -0.15% 2.43% 2.43%
90 Morgan Stanley Bank, National Association        72,292,000               -          500,000 0.00% 0.69% 0.69%
91 FIA Card Services, National Association      212,895,604               -       7,137,366 0.00% 3.35% 3.35%
92 Chase Bank USA, National Association      146,310,819               -       4,153,857 0.00% 2.84% 2.84%
93 Barclays Bank Delaware        12,535,645               -          331,766 0.00% 2.65% 2.65%
94 Citibank (South Dakota), N.A.      157,935,238               -       3,894,811 0.00% 2.47% 2.46%
95 Capital One Bank (USA), National Association        73,205,207               -       1,780,633 0.00% 2.43% 2.43%
96 USAA Savings Bank        13,369,757               -          160,237 0.00% 1.20% 1.20%
97 American Express Bank,  FSB.        32,979,716               -          378,086 0.00% 1.15% 1.15%
98 American Express Centurion Bank        26,369,286               -          233,263 0.00% 0.88% 0.88%
99 State Street Bank and Trust Company      149,611,355               -          273,731 0.00% 0.18% 0.18%
100 Bank of China        11,458,224               -                    -   0.00% 0.00% 0.00%

Source of Data:  http://www2.fdic.gov/sdi/main.asp  As of 2010 Q1, Downloaded 6/2/2010

Note:  This table is not at all an accurate measure in itself of troubled banks or the health or soundness of a bank.  For a better indicator of bank soundness, please refer to the Texas Ratio link below.

Other Useful Banking Data and Banking Info:

REO Listings of Bank Owned Properties of all Major Lenders / Government Agencies

FDIC Failed Banks, Bank Watch List and Bank Ratings

Top 25 Banks Defaulted Loan Portfolio - SFR 1-4, 1st Mortgage Portfolio

Texas Ratio and Troubled Bank List & Analysis

Just in case you were interested!

California Housing Market Braces for Facebook Millionaires

“I’m kind of worried — a thousand millionaires are going to be buying houses!” Connie Cao said as she and her family toured a home in a good school district here.

Her husband, Jared Oberhaus, was more optimistic. “Maybe sellers are sitting on their houses now, waiting for Facebook, and they’ll all come on the market at the same time,” he said.

It will be some time before the first Facebook shares are sold to the public, and even longer before Facebook’s employees are able to turn their paper wealth into cash and officially take their places as the newest members of the 1 percent. But the mere anticipation of the event may pour a little kerosene onto what is already a fairly hot local real estate market.

When Ken DeLeon, a Silicon Valley real estate agent, recently sold an 8,000-square-foot house to a Facebook employee, he said, the movers showed up at the client’s old 1,000-square-foot home and asked, “Did you win the lottery?”

Silicon Valley has been good to Mr. DeLeon, a former lawyer, who said he sold $275 million worth of homes last year, and who is finishing up a memoir about overcoming illness, injury and loss that he calls “Why Do Bad Things Happen to Sexy People?”

Even after some of the air went out of the housing bubble in the Bay Area in recent years, prices in the most desirable parts of San Francisco and Silicon Valley stayed buoyant enough to remain out of reach for most people. A report on 2011 housing prices by Coldwell Banker, the real estate company, found that 8 of the nation’s 20 most expensive markets were in Silicon Valley or the Bay Area. Mr. DeLeon said Palo Alto, with its limited supply, had remained remarkably strong — and could hit new peaks this year.

In recent weeks, he said, there have been signs that the market has been heating up more: 10 homes in Palo Alto sold for more than their asking prices last month, some by large amounts. Now, with the long-expected Facebook public offering a step closer to reality, Mr. DeLeon said he expected to see several things happen: some sellers may keep their homes off the market until they judge the time is right, some speculators may snap up old houses to tear down and rebuild, and some buyers may feel pressure to make offers before the deluge hits.

A steady stream of would-be buyers walked through the open house Mr. DeLeon held here on Sunday — a 2,325-square-foot home with a small backyard and an asking price of nearly $1.8 million. They checked out the sunken Japanese-style dining room and the heated concrete floors with leaf inlays. Many got lattes from the barista stationed in the backyard.

Mr. DeLeon said he already had plans to market to Facebook employees. One strategy: he intends to buy ads on Facebook. “It’s amazing how you can target them,” he said.

I hope that some of these Facebook Millionaires decide to come to Marin County!

Marin county statistics as of Jan 31, 2012

The total number of listings of single family homes tells a lot about our local real estate market. 430 this year vs. 704 a year ago!

The 3.8% Tax Is Not a Real Estate Transfer Tax

By Robert Freedman, Senior Editor, REALTOR® Magazine

Shortly after the federal government enacted sweeping healthcare reform earlier this year, there was considerable concern over a last-minute addition to the legislation: a 3.8 percent tax on investment income of upper-income households to help shore up Medicare. The tax takes effect in 2013.

Among the concerns expressed among consumers and business people, including real estate professionals, both then and today, is that the tax amounts to a transfer tax on real estate. Not true, NAR Director of Tax Policy Linda Goold says.

Here’s how the tax works. For individuals earning $200,000 a year or more and married couples earning $250,000 a year or more, certain investment income above these income levels might be subject to the 3.8 percent tax on a portion of that income. I say “might” because whether the tax applies or not depends on many factors having to do with the kind and amount of the investment income the household receives.

Investment income includes capital gains, dividends, interest payments, and, for those who own rental property, net rental income.

Importantly, the $250,000 (for individuals) and $500,000 (for married couples) capital gain exclusion on the sale of a principal residence remains in place. So, if you’re a married household that sold a house for a $500,000 gain (that’s gain, not sale proceeds), that amount remains excluded from your income calculation.

Let’s take a look at a married couple that has $325,000 in adjusted gross income (AGI), plus $525,000 in capital gains from the sale of their house.

This household would be considered upper-income by most standards. Not only is their income relatively high, at $325,000 (adjusted gross income, or AGI), but they’re receiving a $525,000 gain on their house sale. Presumably, they bought their house years ago and it’s appreciated over the years, so upon selling it, their gain is a relatively high $525,000.

For this household, only $25,000 in investment income would be subject to the 3.8 percent tax. That would amount to $950. That’s because it’s the $25,000 over the $500,000 capital gains exclusion that’s taxable.

Before they would know that, though, they would have to do a calculation that involves their adjusted gross income. They would have to add their capital gain of $25,000 to the amount of their income above the $250,000 income trigger (for married couples).  Since their income is $325,000, they would add the $25,000 to $75,000 ($325,000 – $250,000), which would equal $100,000. Then they would compare the $25,000 to that $100,000, and apply the tax to the lesser of the two, which is the $25,000. Thus, $25,000 x 3.8%  = $950.

So, you have a household that had income of $850,000 for the year, and its tax on investment equaled $950.

This is a simplification. Other tax issues could come into play. But it shows that the tax applies to just a portion of investment income for certain upper-income households and that the capital gains exclusion remains untouched.

Nobody likes taxes, and this tax was inserted into the legislation at the 11th hour as a “pay-for,” that is, as a revenue generator to help offset some of the costs of the reform. It’s expected to generate $325 billion over eight years.

NAR has prepared a brochure that looks at how the tax might apply under eight income scenarios: 1) sale of principal residence (which we just looked at), 2) sale of a non-real estate asset, 3) gain, interest, and dividend from securities, 4) real estate investment income, 5) rental income as sole source of earnings, 6) sale of second home with no rental use, 7)  sale of inherited investment property, and 8. purchase and sale of investment property.

You can download the brochure for free. It’s written in plain language and I think you’ll find it organized efficiently, so you can see at a glance the potential considerations for the different scenarios. Of course, it’s just guidance: each household’s situation will be different, so you would want to suggest to your customers and clients that they consult with a tax advisor to make sure the tax is applied correctly in their case.

You can also get a good sense of how the tax works in the video above, in which Goold walks through a sample income scenario.

There is much confusion about this tax that will take place in 2013 so here is a good outline of what it involves.