Banks Return To Profitable Loan Growth: Hopes are that the recent good news from the FDIC means that banks can increase lending again.November 25, 2013
Home Destiation seeks to help Twin Cities buyers make better informed decisons by understanding current Minneapolis real estate news. The FDIC announced its fourth quarter findings for 2012. In the midst of uncertainty over a plan to reduce the federal budget deficit as well as the debt crisis in Europe, U.S. banks are showing a profit that could lessen tight lending regulations.
Home Destination, a Certified Distressed Property Expert works with homeowners to understand their home mortgage loan options that are necessary to buy a home, or request a home loan modification. For giant financial banking institutions, including the top three: Bank of America (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC) and JP MorganChase & Co. (NYSE: JPM), the new increases in profit margins may turn the lending industry around. that's additional money that could be rolled over in loans.
Minnesota is rolled into the Kansas City or Central Region. FDIC reports:
10.9 percent of FDIC-insured banks that had net losses during the second quarter — down from 15.7 percent a year earlier
the number of problem institutions fell from 772 to 732 during the quarter
72 percent of the 305 companies that reported production data for Q2 were independent mortgage companies.
The average return on assets for the entire group of banks increased to 0.99 percent from 0.85 percent a year ago.
Banks' total revenue increased a mere $1.3 billion, which is a slim 0.8 percent up from the second quarter in 2011.
Productivity improved to 3.6 loans originated per production employee per month in the Q2, from 3.3 in Q1 of 2012.
95 percent of the firms in the study posted pre-tax net financial profits in the Q2 of 2012, compared to 93 percent in Q1 of 2012.
“With the surge in production volume in the second quarter, net production profits among independent mortgage bankers increased, surpassing 100 basis points for the first time since inception of our report in 2008,” said MBA Associate Vice President of Industry Analysis Marina Walsh. “Secondary marketing gains improved by almost 14 basis points over the first quarter, the result of widening spreads between the primary and secondary markets. With the record volume, total production operating expenses also decreased by $164 per loan over the first quarter.”
Banks Are Examined By Region For Profitability
The FDIC schedule for banks examination is posted by region to help banks easily determine their schedule time. Minnesota is rolled into the Kansas City or Central Region. The regions are designated as follows:
1) Atlanta Region
2) Chicago Region
3) Dallas Region
4) Kansas City Region
5) New York Region
6) San Francisco Region
Focus Our Customers On Saving Money
There has been some pressure on Bank of America after the release of the recent Mortgage Settlement Overview's First Report. Bank of America Corp (BoA). was ordered by the National Mortgage Settlement to provide the largest piece of the relief to the tune of $8.6 billion. As of June 30, they hadn't completed any modifications of first-lien mortgages or refinancings. Dan Frahm spokesman for Charlotte, N.C. based Bank of America, has something to say about that. "We believe we will reach or exceed all program targets [within the first yea]. We continue working to reach eligible borrowers with these programs to prevent foreclosure, help our customers save money and support the recovery of the housing market."
Home Buyers Needs Less Tight Lending Standards
Banks cannot return to profitable loan growth with such an intense grip on home mortgage lending. The National Association of Realtors® (NAR) reports that REALTORS Confidence Index indicates we need a loosening of mortgage standards(RCI) for July identified tight lending standards was the key reason why many people are finding that buying a home cannot move forward. According to survey respondents, among the factors holding back a full housing recovery are:
* Tight mortgage standards
* Stringent and slow bank approvals
* Low appraisal values
* Tight inventories relative to demand which resulted in multiple bid situations in some cases
* Contributing to the tight supply was the reluctance by sellers to list at current depressed prices * An additional problem is that banks are holding their owned real estate off market
European Banks: Save The Banks And You Save The World
U.S banks are trying hard to return in full swing to a profitable loan growth and help home buyers gain quality loans. It is time for Greece to move off the grid. It is time to recognize that what they have been trying is not working. No matter how this is resolved, this is mega catastrophic impoverishment of the Greek people. It is important to end the domestic political uncertainty. Chase Bank, for example, is as concerned about someone who defaults on their loan as much in that Chase is capitalized against it. "The French banks are not capitalized to withstand a shock from Greece. In the U.S. the banks are doing okay. Loan to default rates are way down.
Save the banks; and you save the world," says Carl Weinberg of High Frequency Economics.
“Greek banks may be small,” said Carl Weinberg, the chief economist at High Frequency Economics, a consulting firm in Valhalla, N.Y., “but if the public doesn’t see that government authorities can ensure that the banks are safe at all times, then the banking system won’t be stable.”
Banks Will Review New Home Loans 3 Months Post Purchase
New regulations for the banking system take effect on Jan. 1, 2013 and should give banks more certainty about future costs by flagging potentially faulty mortgages earlier, FHFA said. Fannie Mae (FNMA) and Freddie Mac will use data collected on the loans they buy to spot potential defects, and will review samples within three months of purchase instead of waiting until borrowers default. This is a new step and homeowners who are struggling should be aware of the time line after buying a home. Homeowners carry the responsibility to be current on their mortgages; read Home Destination's tips on avoiding foreclosure, Distressed Assets Stabilization Plan, and about the U.S. Plan to avoid foreclosure.
“Lenders want more certainly about their risk exposure, and the enterprises want to ensure the quality of the loans,” Edward J. DeMarco, FHFA’s acting director, said yesterday in a North Carolina speech where he outlined the changes.
NOTE: Federal Deposit Insurance Corporation was created in 1933 by Congress to restore public confidence in the nation's banking system. The FDIC insures deposits at approximately 7,246 banks and savings associations and promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to they face.
Download the FDIC Banks Examinations Schedule Fourth Quarter 2012
Download the Banks Handling Of Mortgage Interest Rates Weighted And Unweighted
Download the FHFA Review of Options On Principal Forbearance And Forgiveness to return to profitable loan growth.
Download the Estimates of Economic and Operational Effects
Contact Home Destination to buy or sell a Twin Cities home. Call 612-396-7832 and ask for Jenna.
Jenna Thuening, a CDPE offers current and updated news on how banks are processing home loans.
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