Scotsman Guide - January 2012 Residential Edition

Data
By David H. Stevens

PRESIDENT AND CEO, MORTGAGE BANKERS ASSOCIATION

Decoded

third-quarter delinquencies elicit cautious optimism

This past november, the Mortgage Bankers association (MBa) released its third-quarter national Delinquency Survey, showing that challenges persist in the housing market.

The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties fell to 7.99 percent in the third quarter, the lowest level recorded since fourth quarter 2008. Meanwhile, the percentage of loans on which foreclosure actions were started in the third quarter was 1.08 percent, a 12 basis points increase from the previous quarter and a 26 basis points decline from one year ago.

although the delinquency picture looks better, the foreclosure data indicates that we are not out of the woods yet. First, the increase in the foreclosure-starts rate was driven by large increases by just a few servicers, concentrated in certain hardest-hit states, reflecting the progression of delinquent loans through the foreclosure process. Outside of these states, improvement has continued, although at a slow pace because of the still-weak job market.

Second, the 30-day delinquency rate reached its lowest level since second quarter 2007, a sign that new mortgage delinquencies have slowed. Foreclosure starts, however, increased in the quarter — the first increase after three straight quarters of decline — and is now back to the levels of first quarter 2011. This is largely driven by loans leaving the loss-mitigation process and the ending of state remediation programs and foreclosure moratoria.

Source: Mortgage Bankers association

U. S. HISTORICAL DELINqUENC Y AND FORECLOSURE RATES

Twelve states saw an unchanged or lower foreclosure-starts rate for the quarter. among those states, new jersey, arkansas and Washington had significant decreases across all loan types, an implication that there might have been state-specific factors causing what may be a temporary stop on the initiation of the foreclosure process. These states also saw significant increases in the percentage of loans that are 90-plus days delinquent.

Meanwhile, the percentage of loans in the foreclosure process was unchanged quarter-over-quarter, but increased from third quarter 2010. The foreclosure inventory rate remains elevated but is at the lowest point since 2010. Similar to the previous quarter, the top-five states in terms of the number of loans in foreclosure make up more than 52 percent of the national total.

The disparity in loans in foreclosure between the judicial and non-judicial states continues to widen. Backlogs continue to grow in judicial states, with more new foreclosures entering an already clogged pipeline. Two prime examples of this phenomenon are California and Florida: Both are facing similar unemployment rates and housing-price drops, yet California’s foreclosure inventory rate is roughly 3. 5 percent while Florida’s is roughly 14. 5 percent. The difference? California can clear its foreclosure pipeline much faster because foreclosures do not have to go through the court system.

Furthermore, MBa’s research indicates that the key driver of the delinquency and foreclosure rate continues to be unemployment. MBa predicts that unemployment wil remain elevated through 2012, which could slow the improvement in delinquency and foreclosure volumes.

Short-term delinquencies are down and states are working through their foreclosure inventories. The unemployment rate remains stubbornly high, but is inching in the right direction. There is no doubt challenges still lie ahead, but there is cause to be optimistic that perhaps we have turned a corner.

david h. stevens is president and CEO of the Mortgage Bankers association. Previously, Stevens served as assistant secretary for housing at the U.S. Department of Housing and Urban Development and was appointed commissioner of the Federal Housing administration by President Obama. Stevens also was president and chief operating officer of Long and Foster Companies, senior vice president at Freddie Mac, and executive vice president at Wells Fargo. reach him at (202) 577-2700 or officeofthepresident@ mortgagebankers.org.

QA&

Dan Green LOAN OFFICER WATERSTONE MORTGAGE BY JENNIFER E. GARRETT

How important is marketing in today’s mortgage industry? If you’re not out there talking to potential customers, someone else is. If you spend too much time at your desk with your head down, you’re not spending any time looking for new business. It’s great to have an inbound referral network, but even loan officers who do nothing but referrals still market to their own database. If you stop reaching out to people, they’ll stop reaching into your practice.

What marketing channels work best? There is no marketing method that is bad if you have a well-refined process that works. Cold calling can work if it’s done right. any form of marketing can work if it’s executed properly and done repeatedly. The key is to have a strategy and to execute, and to continue to execute over time. If you’re consistent in your message, it’s hard not to succeed.

What different methods do you use? I put the majority of my effort into digital marketing. That includes using channels such as Twitter, but my blog is the primary focus. I also e-mail newsletters that connect to my blog. I use the blog as the hub of everything I do. I don’t do printed newsletters, although I know they’re effective. I don’t send postcards, although I know that’s effective, too. It’s just not my style. I use digital because that’s the area in which I’m most comfortable.

Do you use digital marketing also partly because of cost? There are two kinds of costs. There’s a cost to blogging and that’s time. anytime I sit down to work on a blog post, to me, that’s marketing, and it’s worth the time it takes. I could spend that same time at a networking event, but instead I use that time on my website.

Do brokers need to use some form of digital marketing? Having a well-functioning, updated website is not an elective at this point. It doesn’t need to be the primary focus of your marketing, but at some point in the transaction nearly all customers are going to go to your website to see what you’re about. It’s okay to have a website from your bank, but you probably want to have your own personal site, too, that looks professional and well maintained. as loan officers, we’re our own brands. We work for banks or brokers, but we really represent ourselves.

What should brokers do to prepare for 2012? I think it’s time to start thinking about 2013 already. If you’re starting at the beginning, you’re going to need this whole year to get something ramped up. Identify the market you want to pursue and spend this whole year getting geared up for it. Marketing takes time.