Monday Morning Cup of Coffee

A look at stories across HousingWire’s weekend desk…with more coverage to come on bigger issues: American International Group (AIG) unwound most of its remaining mortgage trades with Goldman Sachs (GS) after the insurer’s bailout in 2008, according to a story in the Wall Street Journal. AIG moved to terminate the credit-default swaps insuring about $3bn of mortgage-asset pools arranged by Goldman. The move caused AIG to realize a $1.5bn to $2bn loss last year, according to the story. Pending home sales increased 8.2% in February, according to Barclays Capital. The increase offset the drop in January. This could mean “a healthy start” to the selling season, according to the report. BarCap analysts expect home sales to move up over the next few months to a June peak when the first-time homebuyer tax credit expires for closed contracts. Along with sales, BarCap analysts expect housing starts to jump 7% when the March numbers come in. It would reverse that decline in February as well. Building permits have been trending upward, gaining 2.4% in February and up 16% since October 2009. While sales jumped, refinancing applications dropped for the fifth straight week, falling another 16.9% in the week ending April 2. BarCap analysts point to a rise in interest rates. The average rate on conventional fixed-rate mortgages climbed 27bps to 5.31% that week. The Royal Bank of Scotland released a report weighing in on the debate over what to do with the government-sponsored enterprises (GSEs) Fannie Mae (FNM) and Freddie Mac (FRE). According to RBS, US government support is likely to focus on the mortgage securitization side of the business while retained portfolios are wound down. “The new framework will likely correct the structural and regulatory failures that heightened systemic risk while promoting affordable housing, mortgage credit and overall financial market stability,” according to the report. Shares for the bond insurer Ambac Financial Group (ABK) soared 71% on Friday to close at $1.10 as the company reported a new profit in Q409. At the end of the quarter, Ambac reported a $558.1m net profit, compared to a $2.3bn loss at the end of 2008. Ambac recorded a $472m tax break during Q409 that allowed the company to carry back 2008 and 2009 operating losses as far back as 2003. Ambac Assurance Corp. (AAC), the principal operating subsidiary at Ambac received the $443.9m tax refund in February 2010. As Fitch Ratings expects the Peter Cooper Village and Stuyvesant Town loan to fall into foreclosure, commercial mortgage-backed securities (CMBS) delinquencies were pushed 85bps higher to 7.14% in March. According to Fitch, the Stuy Town loan was responsible for 61bps of the 85. Of all multifamily-backed loans Fitch rates, 13% are delinquent, up from 8.97% in February. The only other commercial sector with a higher delinquency rate is hotels, which has a 17.2% delinquency rate. “Both Extended Stay America and Stuy Town are driving the soaring delinquency rates for hotel and multifamily properties,” said Fitch managing director Mary MacNeill. “If both loans were excluded from the index, hotel and multifamily loans would still lead the delinquencies at 12.38% and 9.30%, respectively.” The Federal Housing Administration (FHA) will now accept electronic signatures for third-party documents for mortgage insurance endorsements, according to a letter from the Department of Housing and Urban Development (HUD). HUD defines a third-party document as something signed or originated outside of lender control. The Office of the Comptroller of the Currency closed Beach First National Bank in Myrtle Beach, South Carolina as the only bank failure over the weekend. Bank of North Carolina will assume all $516m in deposits and agreed to purchase all $581.5m in assets. The Federal Deposit Insurance Corp. estimated the cost to the Deposit Insurance Fund to be $130.3m. Write to Jon Prior. Disclosure: the author holds no relevant investment positions.

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3d rendering of a row of luxury townhouses along a street

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