Mortgages

JPMorgan Chase Wins Again

twocents@thestreet.com (Philip van Doorn) — Wed, 22 May 2013 20:39 GMT

NEW YORK (TheStreet) -- JPMorgan Chase was again winner among the nation's largest banks on Wednesday, with shares rising over 1% to close at $53.63.

The strong action for JPMorgan's stock -- following a vote of confidence in CEO James Dimon by the company's shareholders on Tuesday -- ran counter to the broad market. The Dow Jones Industrial Average was down 0.5%, while the S&P 500 and Nasdaq Composite saw declines of 1%. Also see: Why JPMorgan Will Always Be a Better Villain Than Apple >>

In a strong bull market so far this year, one of the biggest questions for investors is when the Federal Reserve will finally pull back on its economic stimulus efforts, and how dramatically the central bank's policy will change. The Fed has kept the short-term federal funds rate in a range of zero to 0.25% since late 2008. Since September, the Fed has been expanding its balance sheet through net monthly purchases of $85 billion in long-term securities, in an effort to hold long-term rates down. ...

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Rebuilding After Sandy's Wrath

twocents@thestreet.com (Ruben Ramirez) — Wed, 22 May 2013 18:28 GMT

NJ Shore homes were devastated by Superstorm Sandy. American Modern Insurance's Karl New returns to the shore 7 months later to assess the recovery.

Foreclosure Inventory Rate Drops 25% in April: LPS

twocents@thestreet.com (Shanthi Bharatwaj) — Wed, 22 May 2013 14:16 GMT

NEW YORK (TheStreet) -- The number of U.S. homes in some stage of the foreclosure process fell 25% year-over-year in April, as fewer Americans fell behind on their mortgage loan payments and banks pursued other alternatives to foreclosure.

According to the LPS "First Look" Mortgage Report, the delinquency rate -- the percentage of mortgages that are more than 30 days past due but not in foreclosure -- fell to 6.21%, the lowest level since 2008.

The number of borrowers who were either delinquent or in the foreclosure process fell to 4.7 million in April, after dropping below 5 million in March, for the first time since 2008. ...

PNC Considers Selling BlackRock Stake

twocents@thestreet.com (Philip van Doorn) — Wed, 22 May 2013 13:51 GMT

NEW YORK (TheStreet) -- Shares of BlackRock have returned a whopping 42% this year through Tuesday's close of $291.69, and that's a very big deal for PNC Financial Services Group .

PNC of Pittsburgh "owned approximately 36 million common stock equivalent shares of BlackRock equity" as of March 31, according to the bank's 10-Q filing, with a carrying value of $5.6 billion. PNC "accounts for its investment in BlackRock under the equity method of accounting," according to the filing, "exclusive of a related deferred tax liability of $1.9 billion at both March 31, 2013." The bank's voting interest in BlackRock common shares is about 21%.

But the market value of PNC's common stake in BlackRock was $9.2 billion as of March 31, and the value of the BlackRock stake rose to more than $10.5 billion as of Tuesday's close. ...

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JPMorgan Chase: Dimon Winner

twocents@thestreet.com (Philip van Doorn) — Tue, 21 May 2013 20:42 GMT

NEW YORK (TheStreet) -- JPMorgan Chase was the winner among the nation's largest banks on Tuesday, with shares rising 1.4% to close at $53.02.

The broad indices all rose on Tuesday, after Jim Cramer earlier called this year's very strong run for stocks "the most ignominious bull market of all time."

"The market has taken out a record set in 1927, set two years before the great crash, and that represents a remarkable statement about just how dangerous this stock market really is," Cramer wrote. The broad market was up for a 19th consecutive Tuesday. The previous record of market increases was 15 consecutive Tuesdays, set in 1927, two years before the market crash of 1929. ...

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Now Is Not the Time to Insult Dimon

twocents@thestreet.com (Philip van Doorn) — Tue, 21 May 2013 11:46 GMT

NEW YORK (TheStreet) -- The media has been making plenty of hay in advance of the nonbinding vote of JPMorgan Chase shareholders on whether or not to split James Dimon's dual roles as CEO and chairman of the board, but voting against Dimon would do nothing for investors.

There have been reports that Dimon has indicated he would consider leaving JPMorgan Chase entirely if the shareholder vote were to go against him.

And what would shareholders gain from Dimon's exit? ...

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Bank Stocks Do It Again: Financial Winners

twocents@thestreet.com (Philip van Doorn) — Mon, 20 May 2013 20:44 GMT

NEW YORK (TheStreet) -- Capital One was the winner among the nation's largest banks on Monday, with shares rising 2% to close at $61.81.

The broad indices all ended with slight declines, but bank stocks continued their amazing run, with the KBW Bank Index rising 0.5% to close at 61.43. The KBW index is up 20% this year, after rising 30% during 2012.

Investors are looking ahead to Federal Reserve chairman Ben Bernanke's testimony before the joint congressional Economic Committee on May 22, ahead of the release of the minutes of the most recent meeting of the Federal Open Market Committee, on April 30 and May 1. Investors continue to wonder, as they must, when the central bank will slow the expansion of its balance sheet from monthly purchases of $85 billion in long-term securities, in an effort to hold down long-term interest rates. ...

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'Easy Money' Over for Bank of America Stock: KBW

twocents@thestreet.com (Philip van Doorn) — Mon, 20 May 2013 14:31 GMT

NEW YORK (TheStreet) -- "We are more than happy to take some profits off the table."

This sums up KBW analyst Christopher Mutascio's downgrade of Bank of America's stock on Sunday to a "market perform" rating from "outperform."

Bank of America's shares closed at $13.43 Friday, just below their reported March 31 tangible book value of $13.46. The shares have returned 16% this year, after more than doubling during 2012. ...

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When CEO is Superhero, Chairman Is Sidekick

twocents@thestreet.com (Shanthi Bharatwaj) — Mon, 20 May 2013 12:36 GMT

NEW YORK (TheStreet) -- Shareholder activists calling for an independent chairman at JPMorgan Chase may be guided by principles of sound corporate governance, but they fail to see the biggest weakness in their case.

So long as Jamie Dimon stays CEO, he will be the boss.

JPMorgan's annual meeting is on Tuesday. Among the various proxy items subject to a shareholder vote is a proposal to split Dimon's dual roles as CEO and chairman of the board of directors. ...

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Big Bank Phobia: Glass-Steagall Would Be Folly

twocents@thestreet.com (Philip van Doorn) — Mon, 20 May 2013 11:30 GMT

This is the third of a three-part series rebutting the three most popular approaches toward lowering the systemic risk of large U.S. banks. Part one tackles breaking up the banks and part two deals with capital vs. liquidity.

NEW YORK (TheStreet) -- Bringing back the complete separation of investment banks from commercial banks would not strengthen the U.S. financial system, but it would make future bailouts more likely.

This is the third of our three-part series rebutting the three major ideas for ending the perception that the nation's largest banks are "too big to fail," this time focusing on why bringing back the Glass-Steagall amendment to the Banking Act of 1933 would be a bad idea. ...

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Ambac Surges On BTIG Upgrade

twocents@thestreet.com (Dan Freed) — Fri, 17 May 2013 20:33 GMT

NEW YORK (TheStreet) -- Ambac Financial surged Friday after BTIG analyst Mark Palmer initiated coverage of the recently-reorganized monoline bond insurer with a "buy" rating and a $31 price target.

Palmer appears to be the only analyst covering Ambac at this point, though his thesis on the insurer looks fairly similar to his long-held views on MBIA and Assured Guaranty, which have proved to be very good calls, even if they took longer than expected are still well short of Palmer's aggressive target prices.

Ambac soared 10% to close at $26.03. ...

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Big Banks: Friday Financial Winners

twocents@thestreet.com (Philip van Doorn) — Fri, 17 May 2013 20:26 GMT

NEW YORK (TheStreet) -- The nation's largest banks again led the way on Friday, as the broad indices pushed to record highs.

Dow Jones Industrial Average rose 1% to end at a new closing high of 15,354.40, while the S&P 500 was also up 1%%, ending the session at a record closing high of 1,666.12.

The KBW Bank Index was up 2% to close at 61.13, with all 24 index components showing gains. ...

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Big Bank Phobia: Liquidity, Stupid, Not Just Capital

twocents@thestreet.com (Philip van Doorn) — Fri, 17 May 2013 12:00 GMT

This is the second of a three-part series rebutting the three most popular approaches toward lowering the systemic risk of large U.S. banks. Make sure to read Part 1, on breaking up the big banks and Part 3, on the folly of bringing back Glass-Steagall.

NEW YORK (TheStreet) -- The Federal Reserve's annual stress test process has done a lot of good, but the tests need to be broadened to include stresses to liquidity as part of the regulator's "severely adverse scenarios."

This is the second of our three-part series rebutting the three major ideas for ending the perception that the nation's largest banks are "too big to fail," focusing on the emphasis of regulators on making sure large banks have enough capital to avoid another government bailout. ...

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Regions Financial: Bank Stock Loser

twocents@thestreet.com (Philip van Doorn) — Thu, 16 May 2013 20:31 GMT

NEW YORK (TheStreet) -- Regions Financial was the loser among the largest financial names on Thursday, with shares sliding more than 2% to close at $8.95.

The broad indices ended lower and the KBW Bank Index was down 1% to close at 60.16, following a mostly disappointing batch of economic reports:

The Department of Labor reported that initial unemployment claims for the week ended May 11 increased by 32,000 to 360,000, while the four-week moving average for jobless claims increased by 1,250 to 339,250, from the previous week's revised figure of 338,000. ...

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Big Bank Phobia: Not Too Big to Fail

twocents@thestreet.com (Philip van Doorn) — Thu, 16 May 2013 12:22 GMT

This is the first of a three-part series rebutting the three most popular approaches toward lowering the systemic risk of large U.S. banks. Make sure to read Part 2, on liquidity vs. capital reserves and Part 3, on the folly of bringing back Glass-Steagall.

NEW YORK (TheStreet) -- There are three main approaches being taken by the enemies of large U.S. banks, and all of them are bad ideas.

Five years after the peak of the credit crisis, nearly three years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed, and more than two years since the last "final disposition" of government bailouts for the "big six" U.S. banks, it remains quite stylish for members of both political parties to continually bash the large banks, saying they represent a continued threat to the U.S. taxpayer. ...

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Nationstar Bulls Dream of Ocwen Spin-Off Magic

twocents@thestreet.com (Dan Freed) — Thu, 16 May 2013 11:00 GMT

NEW YORK (TheStreet) -- Nationstar Mortgage Holdings investors are hoping the company may look to spin off its Solutionstar unit, as they look to replicate the astonishing success of spin-offs by fellow mortgage servicer Ocwen Financial .

"I fully expect them to do this, but they won't confirm it because they can't," FBR Capital Markets analyst Paul Miller says of a potential Solutionstar spin-off. "If you ask them they say we're not allowed to have that discussion which tells you they're thinking about it," he says.

While Nationstar has seen shares triple over the past 12 months, and Ocwen's stock has risen by 176%, Ocwen spin-offs have been even more impressive. Altisource Portfolio Solutions is up 500% since Ocwen spun it off in August 2009. ...

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HSBC Makes U.S. Banks Look Fat and Lazy

twocents@thestreet.com (Philip van Doorn) — Wed, 15 May 2013 14:53 GMT

NEW YORK (TheStreet) -- HSBC is already firing on all cylinders as the company continues its remarkable turnaround, but the company on Wednesday announced plans to maintain its already impressive efficiency ratio.

HSBC CEO Stuart Gulliver said in a press release that "we have announced the closure or disposal of 52 non-strategic or underperforming businesses since the beginning of 2011, achieved US$4bn of annualized sustainable cost savings and generated double-digit loan growth in 15 priority markets. HSBC is now simpler, easier to manage and ready to take advantage of growth opportunities."

As part of the company's "unchanged" strategy, HSBC is aiming for an additional $2 billion to $3 billion in annual cost savings. ...

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Fannie Mae, Freddie Mac Help Uncle Sam Shrink Deficit: CBO

twocents@thestreet.com (Shanthi Bharatwaj) — Wed, 15 May 2013 14:23 GMT

NEW YORK (TheStreet) -- The U.S. budget deficit in 2013 is projected to shrink faster than earlier thought, thanks in large part to the government's new cash cows, bailed-out housing giants Fannie Mae and Freddie Mac.

The Congressional Budget Office on Tuesday said the budget deficit will shrink this year to $642 billion , the smallest shortfall since 2008. The projection was $203 billion smaller than the $845 billion shortfall forecast by CBO in February.

The budget agency said the decline in the projected deficit for 2013 "stems largely from a boost in in estimated revenues as well as from expected payments to the Treasury by Fannie Mae and Freddie Mac." Also see: Fannie Mae is a Government Cash machine >> ...

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Bank of America 'Close to Fair Value': Analyst

twocents@thestreet.com (Philip van Doorn) — Wed, 15 May 2013 13:53 GMT

NEW YORK (TheStreet) -- It's been quite a see-saw ride for Bank of America and its investors.

Shares of the nation's second largest bank by total assets closed at $13.34 Tuesday, returning 15% this year, after more than doubling during 2012. Of course, last year's performance followed an epic 58% drop during 2011, so the volatility has led to a 1% return since the end of 2010.

Not so good for long-term investors, but quite a bit of fun for day traders. ...

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Last Call: FHA Mortgage Insurance Discount Set to Expire

twocents@thestreet.com (TheStreet Guest Contributor) — Tue, 14 May 2013 17:00 GMT

By Julian Hebron of The Basis Point.

NEW YORK (TheStreet) -- The home loan product that carried low-down-payment consumers and the U.S. economy through the worst of "The Great Recession" has been winding down this year, and by June 3 will no longer be the smart money for most consumers.

The product is a Federal Housing Administration (FHA) loan, which enables borrowers to buy homes with 3.5% down and get 30-year fixed rates of 3.25%. The catch is mortgage insurance, an additional monthly fee borrowers pay as a risk premium. ...

Cullen/Frost Has Earned Its Premium, and More

twocents@thestreet.com (Philip van Doorn) — Tue, 14 May 2013 14:23 GMT

NEW YORK (TheStreet) -- On the surface, the stock of Cullen/Frost Bankers looks expensive, but the San Antonio lender appears primed for strong loan growth in its home state of Texas.

Cullen/Frost's shares closed at $62.53 Monday. The shares trade for 15.7 times the consensus 2014 earnings estimate of $3.98, among analysts polled by Thomson Reuters. That is the highest forward price-to-earnings ratio among the 24 components of the KBW Bank Index .

That forward P/E ratio looks especially high when compared to the largest U.S. banks, but the premium is justified because of Cullen/Frost's amazingly consistent long-term track record for strong earnings, and because of the bank's growing commercial loan pipeline. ...

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MBIA Bulls Look for Catalyst After Legal Settlements

twocents@thestreet.com (Dan Freed) — Mon, 13 May 2013 19:46 GMT

Updated from 2:52 p.m. ET.

NEW YORK (TheStreet) -- MBIA bulls continue to recommend the shares after they got a much anticipated pop last week when the monoline bond insurer settled litigation with Bank of America and Societe Generale, but it's hard to see what will drive the shares higher in the near term.

MBIA shares gained more than 50% at one point on May 6 when the company announced it would receive $1.6 billion from Bank of America, and that the bank would drop a legal challenge to a crucial MBIA restructuring. They added slightly to those gains May 8 once MBIA announced a settlement with Societe Generale in which MBIA will pay the French bank an undisclosed sum. ...

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USB Is a Bank Stock Bargain

twocents@thestreet.com (Philip van Doorn) — Mon, 13 May 2013 14:55 GMT

NEW YORK (TheStreet) -- With its stock clearly lagging the market, U.S. Bancorp looks like more of a bargain for long-term investors every day.

USB's shares closed at $33.49 Friday, returning just 5% this year, compared to a return of 14% for the KBW Bank Index. That's the second-worst year-to-date total return (including reinvested dividends) among the 24 index components. Only Capital One Financial has seen a smaller return of 3%.

U.S. Bancorp's shares trade for 10.3 times the consensus 2014 earnings estimate of $3.24 a share, among analysts polled by Thomson Reuters. That valuation is lower than the forward price-to-earnings ratios of 14 other components of the KBW Bank Index. Strong Earnings Through Thick and Thin ...

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3 Reasons to Buy JPMorgan: Goldman Sachs

twocents@thestreet.com (Shanthi Bharatwaj) — Mon, 13 May 2013 14:51 GMT

NEW YORK (TheStreet) -- Despite looming uncertainties, investors should buy shares of JPMorgan Chase , according to Goldman Sachs analyst Richard Ramsden.

"While investors are unlikely to get full clarity on the issues that have weighed on JPM in the near-term, we believe shares will begin to re-rate before the market has certainty, with the May 21 shareholder vote serving as a potential catalyst," Ramsden wrote in a note to clients on Monday.

JPMorgan's shares have been under pressure amid negative headlines surrounding litigation, growing regulatory scrutiny and the pending shareholder vote on splitting Jamie Dimon's Chairman/CEO dual role that may prompt his exit. ...

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Countrywide II Off to the Races

twocents@thestreet.com (Dan Freed) — Fri, 10 May 2013 16:34 GMT

Updated from 9:58 a.m. ET to include Friday afternoon market action and additional information on Penny Mac.

NEW YORK (TheStreet) -- Countrywide Financial may have made more subprime housing loans than any other institution before the housing bubble burst, but that certainly didn't scare away investors from the public market debut of Countrywide II, formally known as PennyMac Financial Services.

PennyMac, the parent of mortgage REIT PennyMac Mortgage Investment Trust , is run by Stan Kurland, who spent nearly 30 years at Countrywide, where at different times he served as president, chief financial officer and chief operating officer. Seven of PennyMac's nine executive officers, including Kurland, worked at Countrywide. ...

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Wells Fargo's Expense Cuts Can Offset Declining Mortgage Volume

twocents@thestreet.com (Philip van Doorn) — Fri, 10 May 2013 15:27 GMT

NEW YORK (TheStreet) -- Wells Fargo is facing a decline in mortgage loan demand and mortgage banking revenue, but the bank stands ready to quickly cut its expenses as volume declines.

Wells Fargo has emerged as a big winner from the financial crisis, becoming the nation's dominant mortgage lender, with a 27.7% share of newly originated loans during 2012. Much of Wells Fargo's mortgage growth has come at the expense of Bank of America , which greatly scaled back its loan origination activity in the wake of the financial crisis.

Bank of America's ill-timed acquisition of Countrywide Financial in 2008 has caused the bank to focus for years on working through mortgage repurchase claims from investors and other parties. Then again, the company may be ready to become a major competitor to Wells Fargo, now, following a major settlement with Fannie Mae in the first quarter, the ending of objections to its $8.5 billion proposed mortgage putback settlement with institutional investors in 2010 and with its groundbreaking settlement with MBIA on Monday. ...

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Uncle Sam: Fannie Mae Financial Winner

twocents@thestreet.com (Philip van Doorn) — Thu, 09 May 2013 20:37 GMT

NEW YORK (TheStreet) -- The U.S. government was the big financial winner on Thursday, after Fannie Mae announced its first-quarter results would enable it to pay the U.S. Treasury a dividend of $59.4 billion.

Mortgage giants Fannie Mae and Freddie Mac -- together known as the government sponsored enterprises, or GSEs -- were taken under government conservatorship in September 2008 at the height of the credit crisis. Both GSEs were bailed out. The federal government holds $117.1 billion in senior Fannie Mae preferred shares, and $72.3 billion in senior Freddie Mac preferred shares.

Because Fannie and Freddie have been profitable for several quarters, both GSEs have stopped taking additional draws from the Treasury, effectively freezing the bailouts at the current levels. Under their amended agreement with their regulator, the Federal Housing Finance Agency and the Treasury, Fannie and Freddie are required to pay dividends to the government equal to all capital in excess of $3 billion apiece. ...

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van Doorn: Fannie Mae Is a Government Cash Machine

twocents@thestreet.com (Philip van Doorn) — Thu, 09 May 2013 19:46 GMT

Updated from 12:25 p.m. ET with, with a correction to show that Fannie has pretty much fully tapped its DTA, and with very strong late afternoon market action for junior preferred shares of Fannie Mae and Freddie Mac.

NEW YORK (TheStreet) -- Fannie Mae on Thursday reported a first-quarter profit of $58.7 billion, setting up a $59.4 billion dividend to the U.S. Treasury.

The government-sponsored mortgage giant and its rival Freddie Mac were taken under government conservatorship at the height of the financial crisis in September 2008. Under the revised terms of the bailout agreement, the two companies are required to pay quarterly dividends to the U.S. government equal to their net worth in excess of $3 billion. ...

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Foreclosure Activity at 6-Year Low: RealtyTrac

twocents@thestreet.com (Shanthi Bharatwaj) — Thu, 09 May 2013 15:40 GMT

NEW YORK (TheStreet) -- National foreclosure activity in April fell to its lowest level in more than six years, according to the latest report from RealtyTrac.

Foreclosure filings -- which include notice of defaults, scheduled auctions and bank repossessions -- fell to 144,790 properties in April, down 5% from the previous month and 23% from April 2012. One in every 905 units had a foreclosure filing during the month.

Problem loan rates are declining as the housing market improves resulting in lower foreclosure activity. Banks are also pursuing alternatives to foreclosure such as short sales and mortgage modifications that have proved to be a less costly and more effective way of "curing" distressed mortgages. Also see: Mortgage Performance Sees Dramatic Improvement: TransUnion >> ...

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Wells Fargo Will Build on Credit Card Success: Citi

twocents@thestreet.com (Philip van Doorn) — Thu, 09 May 2013 15:06 GMT

NEW YORK (TheStreet) -- Wells Fargo has been the most successful among major U.S. lenders in growing its credit card business over the past year, and the bank is poised for a more aggressive growth push later this year, according to Citigroup analyst Donald Fandetti.

Following a recent meeting with Visa CFO Byron Pollitt, Fandetti in a note to clients said the payment processor's management was "particularly constructive on affluent credit spend and reiterated that this segment has driven virtually all of their US credit growth over the past two years."

Fandetti added that the Visa team believes "equities and housing drive affluent spend, with equities being the more important of the two." ...

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