Redefaulted HAMP Mortgage Modifications Reinforce Need to Carefully Structure Modifications

On April 24, 2013 the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) issued their Quarterly Report to Congress. Included in the report was a summary of the TARP homeowner relief programs, including the Home Affordable Modification Program (HAMP). The summary focused on alarmingly high re-default rates on HAMP Modifications, which, in a world with a very limited sample size, especially as it relates to modifications made at the individual credit union level, provides valuable information.

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Letter to Credit Unions 2013-3 Supervisory Guidance on Troubled Debt Restructurings

On April 2, the NCUA released Letter 13-3 “Supervisory Guidance on Troubled Debt Restructurings”. The letter discusses the May 2012 updated requirements of TDR reporting and internal controls, which the blog has covered previously.

Included in the 20+ page letter are examiner responsibilities as they relate to TDRs. Below are some excerpts you may be interested in when preparing for your exam.

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Twenty Twenty Analytics Featured on Editions w/ Terry Bradshaw

Twenty Twenty Analytics’ Steve Miller and Dan Price recently visited GTE Financial in Tampa, FL to film a segment for Editions, hosted by Four Time Super Bowl Champion Terry Bradshaw. The segment, which also features Kim Yarnelli, VP Member Home Loan Programs at GTE Financial focuses on how Twenty Twenty has helped financial institutions like GTE to better understand the makeup of their loan portfolios.

The segment will air on Bloomberg and Fox News, but we’ve obtained an advanced copy, which can be seen below!

Dan Price (Left) and Steve Miller (Right)

Twenty Twenty Analytics Valentines Day Links

Happy Valentines Day! I’m sure you’re all grasping for fun things to do today, so I wanted to post a links to some interesting articles I’ve recently come across.

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National Association of Realtors Q4 2012 Median Sales Summary

Yesterday (February 11, 2013), the National Association of Realtors (NAR) released their median home sales price indices for metropolitan areas throughout the United States for Q4 2012. The press release is titled “Fourth Quarter Metro Area Home Prices Show Strongest Performance in Seven Years” if that gives you any indications of the results.

Lawrence Yun, NAR Chief Economist at the National Association of Realtors said “Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years.”

Without further ado, below are some of the more significant quarter over quarter and year over year results. The title of the NAR press release is based on year over year data. Keep in mind because prices tend to decline moving into the winter, year over year performance on these loans are more relevant.

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Twenty Twenty Analytics Blog – 2012 Year in Review

It has been a great year for the Twenty Twenty Analytics Blog. We’ve added 17 posts and 52 subscribers to the Blog. Thank you all for reading! For those of you that are new to the blog, below is a recap of some of our favorite 2012 blog posts.

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National Association of Realtors Q3 2012 Median Sales Summary

The National Association of Realtors (NAR) recently released their median home sales price indices for metropolitan areas throughout the United States. The NAR saw improvements from Q2 2012 to Q3 2012 in 101 of 163 major metropolitan areas measured compared with 53 areas declining. More significantly, the NAR saw improvements for 120 of 163 areas year over year.

For the second quarter in a row, Lawrence Yun, NAR Chief Economist cited lower inventory being the primary driver of increasing prices. My thought is that as unemployment has begun to stabilize in many areas and foreclosures have come down, financial institutions have been moving properties faster than they’re taking possession of them leading to a reduction in bargain properties available. To continue in that train of thought…

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FFIEC Interagency Memo – Allowance for Loan Losses on Loans Secured by Junior Liens

On January 31, 2012, the Federal Financial Institutions Examination Council (FFIEC) released “Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties”. We’ve heard through our client-pipeline that the points discussed in this memo have recently come more into focus during NCUA Examinations.

Since most of you prepared for the examiner’s Q4 review of your Troubled Debt Restructuring Policy way back in June, you should have plenty of time to work on understanding this memo.

It’s a short memo, but in summary:

For junior liens in which you don’t own the superior position, it is considerably more difficult to understand the risk and losses because:

To understand your portfolio and forecast future losses, you need to understand these credit quality indicators.

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NCUA Panel Discussion on Troubled Debt Restructurings

On Thursday, September 20th, the NCUA recently hosted a webinar on Troubled Debt Restructurings. You can register for and view the webinar here. If you were awake through one of our previous TDR presentations, what the NCUA discussed will mostly be a review. If you weren’t able to make one of our presentations (or if you slept through it) most of what the NCUA presentation discusses is detailed in this summary of the original proposal and this follow up clarifying the details of the final TDR standards.

The primary reason for the webinar was to discuss the new supervisory letter the NCUA intends to send out to examiners setting out a uniform approach to examinations of your loans workout programs. This is great because it will *hopefully* eliminate some of the inconsistencies that may have existed in examination procedures from region to region (or examiner to examiner). A few key points:
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A Statistical Approach to Loan Portfolio Analysis

Steve Miller, our Director of Operations and I do a fair amount of public speaking. In fact, most of you who aren’t clients probably heard about the blog at one of our speaking engagements. There’s one thing we (and any speaker) will hear from the training coordinator prior to speaking:

“Your objective is to educate the attendees. Don’t talk about what you do at Twenty Twenty Analytics”

This is particularly challenging when teaching a class on Loan Portfolio Risk Analysis!

That concept has generally been applied to blog topics. No one would read the blog if all I did was talk about what we do, so in 18 months and 44 posts, only one is directly related to Multi-Dimensional Portfolio Analysis (MDPA).

I’m through with that for now. We’re buried in too many loans over here not to talk about them. More importantly, I’m running out of material. So unless some questions start coming through in the comments section or the NCUA decides to change the way you’re reporting your TDRs again, the next few blog posts will be about loan risk. I digress…
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