Presentation on theme: "Erica L. Groshen Vice President and Director of Regional Affairs Dynamic Maps of Nonprime Mortgage Conditions September 24, 2008."— Presentation transcript:
Erica L. Groshen Vice President and Director of Regional Affairs Dynamic Maps of Nonprime Mortgage Conditions September 24, 2008
2 Agenda Federal Reserve’s Homeownership and Mortgage Initiatives Dynamic maps, etc. Plans
3 Homeownership and Mortgage Initiatives (HMI) Comprehensive strategy across the Federal Reserve System to provide information and outreach to prevent unnecessary foreclosures and to stabilize communities. Regulation HOEPA (Regulation Z) Truth in Lending changes in July 2008 Non-bank subsidiaries pilot -- compliance reviews of non-depository lenders and other industry participants Financial education Continue providing educational resources to help consumers make informed personal financial decisions, including those about homeownership Outreach Research and analysis
4 Outreach National partnership with NeighborWorks America to stabilize neighborhoods with high foreclosure rates. The Fed will Help train nonprofits and local officials on options for dealing with vacant properties. Produce reports and analysis to help target areas of highest need. Develop content to help consumers and inform community leaders, and convene key players to facilitate neighborhood stabilization. Continue support for training counselors. Foreclosure resource center websites with mitigation toolkits for each district Forums and local outreach efforts to advance understanding and problem-solving
5 Research and analysis Summary papers—to be posted soon on Fed websites “Snapshot” of current conditions “Synopsis” of research Network of commissioned research December research conference Coordinated data effort Purchase and process data Merge various sources LoanPerformance McDash HMDA Lis Pendens County records
6 Dynamic maps, etc. (research and outreach) Purpose: Help regional stakeholders target resources Location: Contents: Current monthly and 6-month change data on securitized subprime and alt-A mortgages Based on loan-level LoanPerformance data (90+% of securitized loans) Mostly for owner-occupied mortgages Dynamic maps Display state, county and zip code detail, for all US 12 variables covering loans, delinquencies, risk factors, foreclosures Spreadsheets US and states 56 variables covering loans, delinquencies, risk factors, foreclosures Technical Appendix Definitions of variables and terms 2 nd District tables
7 1. Loans per 1000 housing units 2. In foreclosure per 1000 housing units Density, neighborhood impact 3. REOs per 1000 housing units 4. Share ARMs Loan type 5. Share current 6. Share 90+ days delinquent Loan status 7. Share in foreclosure 8. Median combined LTV 9. Share low FICO & high LTV Underwriting risk factors 10. Share low or no documentation 11. Share ARMs resetting in 12 mos. Imminent default signals 12. Share late payment in 12 mos. Dynamic map variables (states, counties & zip codes) } } } } }
8 Themes from maps Two faces of the crisis Boom-bust (Florida, California, Arizona, Nevada) Slow growth (Youngstown, Cleveland OH; Des Moines, IA; Detroit, MI) Highly localized impact within states and counties Demographics, income, and proximity to troubled areas matter Rolling impact When the mortgages were made When home prices began falling and defaults started How long it takes to foreclose
9 Maps on NY Fed website—US view (density of loans) Scroll over shows state name and statistic. Darker color shows higher density.
10 Maps on NY Fed website—US view (share of loans in foreclosure) Scroll over shows state name and statistic. Darker color shows higher share.
11 Scroll over shows state name and statistic. Red shows increases. Green shows decreases. Yellow shows no change. Maps on NY Fed website—US view 6-month change in share of loans in foreclosure
12 Maps on NY Fed website — NJ state view (share of loans in foreclosure) Scroll over shows state name and statistic. Darker color shows higher share.
13 Maps on NY Fed website — Union county view Scroll over shows state name and statistic. Darker color shows higher share.
14 Spreadsheet Covers US and states Latest month and 6-month change All 12 map variables for subprime and alt-A loans Also, number of loans Owner-occupied and not Percent (share) of owner-occupied loans--yellow header More characteristics of loans and status than on maps Percent (share) of ARMs, owner-occupied--orange header Status variables Factors associated with ARMs only For definitions, see Technical Appendix
15 Spreadsheet variables (US and states) 1 Property state 2 Total housing units (2000 Census) 30 Percent with high LTV and FICO < Number of subprime loans 31 Percent with low LTV and FICO >= Percent non-owner occupied 32 Percent originated in Percent owner occupied 33 Percent originated in Loans per 1000 housing units 34 Percent originated in Average current interest rate 35 Percent originated in or before Average balance 36 Percent with no or low documentation 9 Average loan age(months) 37 Percent of purchases 10 Average FICO score 38 Percent of cash-out refinances 11 Number with a prepayment penalty at origination 39 Percent loans used for other purpose 12 Number with prepayment penalty in force 40 Average current interest rate of purchases 13 Average combined LTV at origination 41 Average current balance of purchases 14 Median combined LTV at origination 42 Average FICO of purchases 15 Number with a second lien at origination 43 Average combined LTV of purchases 16 Number with a high LTV ratio at origination 44 Average current interest rate of cash-out 17 Number with interest only 45 Average current balance of cash-out 18 Number with negative amortization 46 Average FICO of cash-out 19 Percent with FICO < Average combined LTV of cash-out 20 Percent with FICO > Percent ARM loans 21 Percent with at least one late payment in last 12 months 49 Average margin 22 Percent with a current payment 50 Average initial interest rate 23 Percent with a payment days past due 51 Average current interest rate 24 Percent with a payment days past due 52 Number with low LTV and FICO >= Percent with a payment 90+ days past due 53 Number with high LTV and FICO < Percent in foreclosure 54 Number already reset 27 Foreclosures per 1000 housing units 55 Percent resetting in next 12 months 28 Percent in REO 56 Percent resetting in months 29 REOs per 1000 housing units 57 Percent resetting in 24+ months
16 2 nd District tables—further detail for US, NY and NJ Includes non- owner occupied Breaks down ARM vs. FRM vs. other
17 Plans (in order of appearance) “Facts & Trends” Fact sheets describing 2 nd District conditions, focusing on mortgage issues New Jersey is out (August) Map quarterly Transunion (credit report) delinquencies by county for mortgages and credit cards (early October) Merge and map LP and McDash data to report on overall mortgage conditions
19 Commissioned research 1. Mortgage Servicing (Larry Cordell, Philadelphia with assistance from Board and Richmond) An overview of mortgage servicing. Information on workouts, contractual limitations on servicers, servicer incentives. 2. Home Counseling (Kelly Edmiston, KC) Counselor capacity and effectiveness. 3. Mortgage Foreclosure Costs (Nellie Liang, Board) Direct and indirect costs imposed by mortgage foreclosures. 4. Spillovers to Performance of Commercial Banks (John Krainer, SF) Direct and indirect exposure of commercial banks, particularly community banks, to residential real estate. 5. Information on Higher Price Lending in 2007 HMDA Data (Bob Avery, Ken Brevoort, Glenn Canner, Board) Patterns of higher price lending by lender, borrower characteristics, and neighborhood. 6. Factors that Drive Mortgage Performance across Geographies (Bob Avery, Ken Brevoort, Glenn Canner, Board) Factors that affect mortgage performance at the county level over
20 Commissioned research, contd. 7. Mortgage Broker Regulation and Mortgage Outcomes (Andreas Lehnert, Board; Dick Todd, Minneapolis) Effect of tighter broker regulations on nonprime mortgage lending, prices, and outcomes. 8. What is the Role of Investors in the Mortgage Market? (Dick Todd, Minneapolis; Breck Robinson, Richmond) Analysis of the amount, characteristics, and performance of non-owner occupied lending. 9. Estimates of Negative Equity and Effects on Performance of Subprime and Alt-A Loans (Andrew Haughwout, NY) Distribution of households’ equity shares in their homes and how this affects mortgage performance. 10. Effect of the Bankruptcy Reform Act of 2005 on Foreclosures (Don Morgan, NY) How changes in bankruptcy rules affected the mortgage foreclosures. 11. What Happens to Households who are Foreclosed upon and Lose their Homes? (Edmiston, KC; Prescott, Richmond) Where households who are foreclosed upon move to and whether they have trouble finding new housing. 12. Lending in Low-and-Moderate Income Neighborhoods: The Performance of CRA- Lending during the Subprime Meltdown (Elizabeth Laderman, Carolina Reid, SF) Relative performance of loans made by CRA-regulated institutions versus non-regulated lenders.