It's that time again when I tell you that interest rates are low—very low. The prime rate, which is the index most commonly used for short term and floating rate debt, is currently resting at 3.25%, where it has been since January 2009. The driving factor for the prime rate is the federal funds rate, which has remained near zero over the same period. Through the Federal Open Market Committee, the Federal Reserve has stated that the federal funds rate will be held at current levels until at least 2015. Increasing the rate will be triggered by the reduction of national unemployment rate to 6.5% or lower. Even then, the rate will be increased, but will still be held below its expected long-run value. Meanwhile, the benchmark 10-year Treasury rate, the index we use for long-term loans, was around 1.85% at the end of March 2013, and was about 9 basis points higher at this time last year. Long-term Treasury rates are also being held low by activities of the Federal Reserve known as...
I've been a big pessimist about the Commercial Mortgage Backed Securities market over the past several years. Once the mainstay of my practice, CMBS lending went to zero in my shop and in mortgage brokerage offices across the country as the capital markets dried up and market players scattered to the four winds. And though I heard rumblings about the market coming back in 2012, I discounted the possibility that it would actually do so in any meaningful way, particularly in south Louisiana, and not for a while. But it looks like I might have been wrong. CMBS originations in 2012 outpaced 2011 with a strong fourth quarter and improved pricing, though nothing like we saw pre-2008. More lenders are getting back into the business as well, with most holding out for loans of $5 million or more, but some going all the way down to $1 million. So, are they doing deals in south Louisiana? Apparently the answer is yes, at least for several shops eager to look at deals in our markets. The...
Fannie Mae and Freddie Mac, the government-sponsored enterprises currently under the conservatorship of the Federal Housing Finance Agency—and both of which have been the largest issuers of multifamily debt of late—have been told by the FHFA to reduce their levels of multifamily loans by 10% in 2013. Acting FHFA Director Edward DeMarco says that the FHFA is "setting a target of a 10% reduction in multifamily business volume from 2012 levels." To put this directive in perspective, Fannie and Freddie had one of their best years in 2012, as other permanent lenders were still on the sidelines. DeMarco explains the reduction "will be achieved through some combination of increased pricing, more limited product offerings, and tighter overall underwriting standards." This reduction in production does not mean that multifamily investors will not have homes for their projects, since the conduit market is making its return and insurance companies have stepped up their lending...
The foreclosure rate in Baton Rouge was at 2.12% at the close of 2012, according to the latest report from CoreLogic. That's up slightly from the 2.09% rate in November—which was the lowest local rate since December 2009—but down considerably from the 2.48% rate at which Baton Rouge opened January 2012. The last time the local foreclosure rate was below 2% was December 2009, when it dipped to 1.98%. The highest the rate has climbed since then was 2.82% in February 2011. For historical comparison, the Baton Rouge area foreclosure rate was 1.28% in January 2009, 2.1% in January 2010, and 2.81% in January 2011. Meanwhile, the Capital Region's mortgage delinquency rate—that is, the percentage of home loans three months or more past due—was at 5.31%. That figure was also up slightly from the month previous, when it was 5.29%, but down from the 5.88% rate recorded in January 2012. CoreLogic has a map of foreclosure rates by ZIP code in the Capital Region that you...
If you want to buy a house with minimal cash by using an FHA-insured mortgage, here's some sobering news: Because of an ongoing series of fee increases and underwriting tweaks, those mortgages are getting steadily more expensive and may not work for you. Some of the FHA's traditional customers may find that conventional alternatives are cheaper, according to a Los Angeles Times report. The Federal Housing Administration is the largest source of low-down-payment mortgage money in the country. Its minimum down is just 3.5%, compared with 5% to 20% or more from conventional, non-government sources. For decades, FHA financing has made homeownership possible for first-time buyers with modest incomes and credit history blemishes. But in the wake of losses tied to bad loans insured during the housing bust years, the FHA has been raising its loan insurance fees and backing more loans to applicants with higher credit scores. With the latest increases, terms have gotten to the point...
With interest rates at historically low levels, lenders in the Capital Region say there's a lingering misconception that a large down payment is needed to buy a home. "The whole thought process—that if you don't have 20% to put down, you can't buy—is incorrect," says Tim Dubnansky, a senior loan officer at Assurance Financial. Both Dubnansky and James Arnold, vice president of America's Mortgage Resource, say first-time homebuyers with a credit score of at least 640 and two years of steady employment can qualify for loans with a down payment as little as 3.5%. Dubnansky says he is currently reaching out to clients who bought with interest rates at around 5.5% a few years ago, and is getting them into loans with interest rates around 2% for 15 years, 3.5% for 30 years. The difference can add up to as much as $200 in savings each month, he says. "The rates are phenomenally low," Dubnansky says. In designated rural areas—Ascension and Livingston parishes, most of West...
I've been receiving calls from bankers telling me that their 2013 budgets are set and that they're looking for good commercial real estate loans again. But before I can get all excited that the "good times are here again," they caution me that while they have aggressive budgets, management is still focused on maintaining the high credit quality that took the past few years to restore—and they have no interest in stepping back into high levels of problem assets, most of which have been resolved by this time. The focus will be on cautious loan growth based on conservative underwriting. And I suppose this is truly good news for everyone in our industry, because a steady supply of conservative credit sure beats no credit, which stifles the marketplace. It's also better than an oversupply of bad credit, which floods the market with ill-conceived and poorly underwritten deals destined to fail. The banks must be getting something right since the steady stream of bank failures since...
Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high. The Federal Reserve reports today that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion. Borrowing in the category that covers autos and student loans increased by $10.8 billion, while credit card borrowing rose by $3.4 billion—only the second monthly increase in that category over the previous five months. Consumer spending drives roughly 70% of economic activity, and many economists believe it could bounce back in November. But the underlying trend remains weak because unemployment remains high, which means many households lack discretionary income to spend. Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans. Credit card usage has fallen sharply since the...
The erratic pace of borrowing by small-business owners continued in November—a sign that they remained cautious about hiring. A report released this morning by PayNet, which provides credit ratings on small businesses, showed just a 1% increase in borrowing in November. That followed an 11% jump in October. Borrowing fluctuated throughout 2012. PayNet bases its findings on information in its database on the amount of new commercial loans and leases granted to small businesses. The slowdown in borrowing wasn't surprising. Many small businesses have been reluctant to borrow—and therefore to expand or hire—because of uncertainty about the economy and taxes. And the presidential election and debate in Congress over the "fiscal cliff" intensified that uncertainty in November. The Thomson Reuters/PayNet Small Business Lending Index, compiled from PayNet's data, rose to 108.3 in November from October's revised 107. There is a bright side to the drop in borrowing at small...
While BRAC works to identify local employment opportunities for Capital Region graduates, the Greater Baton Rouge Mortgage Lenders Association says it wants to connect those same young people with residential growth that is sprouting in the area. "We're going to try and reach out to a lot of young, local graduates and try and keep them here," says Cristyn Hodges, the incoming 2013 president of the association. Hodges, a loan officer at Assurance Financial for nine years, says she wants to revamp the group by getting more young people involved in it and bringing together depository lenders and non-depository lenders in a collaborative working manner. "We have not done a good job of working together as a lending group," says Hodges. The top mortgage originator at Assurance Financial says local lenders have not done enough to make lending easier for homebuyers as banks have tightened their lending restrictions over the past three years. Hodges says she plans to have influential leaders...
Judge William Morvant had harsh words earlier this week for BancorpSouth and its attorneys over the way they handled a discovery request from Windy Gladney and his attorney for emails that are believed to be relevant in a case between the local developer and the bank. In a transcript from Monday's hearing in the 19th Judicial District Court, Morvant tells attorneys for the bank he needed to choose his words carefully after learning that the bank has a disk containing some 500,000 electronic documents, which it had previously said did not exist. Earlier this year, the bank's attorneys told Morvant emails between Bancorp South President Larry Denison and others had long since been deleted. "To have the court told these emails are deleted, they're permanently gone, and now in 2012 I'm getting '06 and '07 Denison emails referencing these loans after I'm assured that they don't exist, it causes me some real concern," Morvant says. The judge is giving the bank 10 days to completely respond...
BancorpSouth is facing tough sanctions from the 19th Judicial District Court for failing to turn over during the discovery process a computer disk containing some 500,000 pages of documents sought by the attorney for Windy Gladney in the developer's long-running lawsuit against the bank. In a hearing late Monday, Judge William Morvant granted Gladney's motion for sanctions against the bank for withholding the documents, which include emails that may contain information about the loans that are at issue in the case. Details of the ruling have not yet been entered into the court record. Attorneys for BancorpSouth did not return calls for comment in time for publication, and Gladney's lawyer declined to comment until after the ruling has been made public. However, Morvant's decision is clearly a victory for Gladney and his partnership, Kleinpeter Trace. Gladney and development firm Kleinpeter Trace are being sued by the bank for defaulting on some $2 million in construction loans. He...
Rehabbers and real estate investors rejoice: You'll still be able to sell houses to first-time buyers using low-down-payment, FHA-insured mortgages next year, even if you've owned the fixed-up property for less than 90 days. As The Los Angeles Times reports, the Federal Housing Administration has decided to extend its rule permitting loans on quick "flips" of renovated houses beyond the scheduled Dec. 31 expiration deadline. The policy is widely considered one of the key federal government moves that has encouraged private investors in large numbers—often mom-and-pop, small-scale operations—to buy foreclosed and deteriorating houses from lenders, then repair them and resell within short periods of time. Since the plan was first put into place by the Obama administration in February 2010, more than 65,000 renovated homes have been financed using more than $11 billion in FHA-backed loans, according to federal officials. Roughly 23,000 of these properties were...
The percentage of Capital Region homes in some stage of foreclosure slipped down to 2.23% in September, according to a new report out this morning from CoreLogic. The foreclosure rate last month was 2.27%; it was 2.45% in September a year ago. The Baton Rouge metro area foreclosure rate in September remained below the state and national rates, which stood at 2.38% and 3.25%, respectively. Meanwhile, Baton Rouge's mortgage delinquency rate—that is, the percentage of home loans three months or more past due—was at 5.37% in September, according to CoreLogic. That's up slightly from the previous month's rate of 5.31%, but down from the 5.62% rate in September a year ago. CoreLogic has a map of foreclosure rates by ZIP code in the Capital Region that you can check out here.
Amedisys Inc., a Baton Rouge-based national home health provider, announced this morning it has entered into a new $225 million unsecured credit facility agreement that includes a five-year, $60 million loan. Amedisys says it will use the new loan and cash to pay off the remaining $15 million balance of a previous term loan, as well as $60 million in senior notes, which are loans that must be repaid first if a company goes out of business. The new facility includes a $165 million, five-year revolving credit line, and is being backed by a group of banks including JPMorgan Chase Bank, N.A., and Bank of America Merrill Lynch. "The five-year revolving credit facility will support our capital needs, including acquisition opportunities, which we believe will become increasingly attractive over the term of the agreement," says Amedisys CEO William Borne. "The strength of our balance sheet, coupled with this new credit facility and the amendment to our senior notes, will enable us to lower...
Americans boosted their borrowing in August by the largest amount in three months with strong gains in the category that covers auto and student loans and in credit card debt. The Federal Reserve says that total consumer borrowing increased $18.1 billion in August compared to July. In July, consumer borrowing had fallen for the first time in nearly a year. The rebound in August along with a separate report that showed the nation's unemployment rate dropped to 7.8% in September were together viewed as encouraging signs about an economy that has struggled in recent months. The August borrowing gains reflect a $4.2 billion increase in borrowing on credit cards and a $13.9 billion increase in auto and student loans.
Don't panic if your family doesn't have all of the financial resources you need to pay for college; there's a wealth of financial assistance out there to help you. Start by learning as much as you can about the many financial aid programs that are available, then talk to the financial aid offices at the colleges you're considering. They are there to help! Louisiana has one of the nation's best tuition assistance programs, TOPS, but there are also hundreds of nonprofits, organizations and businesses that have scholarship programs to help you.
Despite cutbacks in higher education spending in recent years, Louisiana has spent an average of $77 more per student each year—the most of any state over the past 25 years—according to a new report from a nonprofit group tracking state funding of higher education. The report, by the State Higher Education Executive Officers group, says Louisiana was also one of only 10 states to post an increase in per-student spending since 1986. Louisiana's per-student spending peaked in 2008 at $8,165; it bottomed out in 1995 at $4,911. Since 2008 the state has scaled back its spending on higher education, and in 2011 spending was at $6,904 per student. Neal McCluskey of the Cato Institute tells American Public Media—which is highlighting the report today with an interactive map—that state involvement with higher education is the reason college costs are escalating so quickly. He says that because the federal government provides grants and loans to prospective students,...
According to a new report out this morning from CoreLogic, 2.23% of all homes in Baton Rouge were in foreclosure at the end of June. That's down from 2.36% in May, and from 2.39% in June 2011. The local foreclosure rate is slightly lower than the statewide average, which ended June at 2.36%, down from 2.48% in May, and 2.58% in June a year ago. The national foreclosure rate edged down to 3.27% in June, according to CoreLogic, from 3.41% a month previous and 3.48% a year previous. Meanwhile, Baton Rouge's mortgage delinquency rate—that is, the percentage of home loans three months past due or more—also fell in June to 5.22%. That's down from 5.39% in May and 5.51% a year ago. See a map from CoreLogic detailing foreclosure rates by ZIP code in the Baton Rouge area here.
I've been speaking with several apartment owners recently about long-term financing available from Fannie Mae, a financing alternative made particularly attractive since 10-year fixed rates are currently 4% and lower. An important consideration to keep in mind is that while the actual interest will be in that low range, the lender will underwrite to a higher interest rate depending on the maturity of the loan. According to Jay Porterfield of Arbor Commercial Mortgage, Fannie Mae currently requires lenders to underwrite to floor rates of 5.25% on 10-year deals, 5.75% on seven-year deals and 6.75% on five-year deals. These higher rates will reduce proceeds based on cash flow coverage and provide a higher level of protection against interest rate increases in the near future. The takeaway here is that potential borrowers should base their expectations of loan proceeds on the lower of the standard loan-to-value considerations, as well as the loan amount supported by cash flow coverage...
The percentage of Baton Rouge homes in foreclosure fell to 2.36% in May, according to a report released today by CoreLogic, down from 2.39% the month previous and 2.47% in May 2011. The local mortgage delinquency rate—that is, the percentage of home loans three months past due or more—also fell in May to 5.39%. That's down from 5.54% in April, and 5.59% a year ago. The slight declines in both rates are similar to those seen in April, as well as most months so far this year. The foreclosure rate was 2.41% to start the year, and the mortgage delinquency rate was 5.79%. Baton Rouge's foreclosure rate remains more than a full percentage point below the national average—which also edged down slightly to 3.41% in May. It also remains slightly lower than Louisiana's 2.48% foreclosure rate in May, which was down 0.16 percentage points from the year previous. See a map from CoreLogic detailing foreclosure rates by ZIP code in the Baton Rouge area
Even wealthy families are scrambling to cover rising college costs by borrowing more and spending less, according to new research out today from student lender Sallie Mae and the polling firm Ipsos. Families earning more than $100,000 took out more loans in 2011 than the previous year, according to the study, while more students are saving money by attending less-expensive schools and living at home. "In the last few years, parents and students reached into savings to make sure kids got through college," says Sarah Ducich, senior vice president for public policy at Sallie Mae. Many families have exhausted those funds, she says, just as schools have tightened up scholarships and grants, and tuition is still going up. For 2012, those awards made up 21% of a family's total cost, down from 25% last year. Families are making up the difference by borrowing more. According to the fifth annual report, wealthy parents borrowed on average $3,399 in 2011 compared with $2,306 the previous year.
A new analysis of government data by the National Association of Home Builders says there's a connection between rising student loan debt and the onset of the housing slump. The analysis says home-owning parents who, in a healthy economy, would have used a home equity loan to help finance their kids' tuition weren't able to do so when the housing crisis led to a decline in loan availability. As a result, it says, students have increasingly taken out loans on their own behalf. "The data thus do not necessarily reveal a sharp increase in borrowing for college education, but rather a shifting in the form of borrowing," the analysis says. "And this is yet another consequence of the harm inflicted on the middle class as home prices fell, leading to a nearly 40% decline in median household net worth." The NAHB cites the 2010 edition of the Federal Reserve's survey of household balance sheets, the Survey of Consumer Finances, for the statistic on average net worth. The analysis also says...
Americans are stepping up borrowing to pay for college while cutting other debt as a weak job market contributes to increased college enrollment, The Wall Street Journal reports, citing new Federal Reserve Bank of New York data. Americans owed $904 billion in student loans at the end of March, nearly 8% higher than a year ago, the New York Fed says today in its quarterly report on consumer credit. That is more than the $679 billion on their credit cards at the end of the first quarter. The New York Fed's estimates of student debt are about 10% lower than the more than $1 trillion figure cited earlier this year by the Consumer Financial Protection Bureau. The New York Fed's estimate is based on a sampling of consumer-credit agency accounts; the CFPB's estimate is based on government data and a survey of private lenders. The New York Fed report shows that Americans are still cutting overall debt—a process known as "deleveraging" that began in the wake of the financial...
Andrews: Interest rates remain low at end of first quarter
It's that time again when I tell you that interest rates are low—very low. The prime rate, which is the index most commonly used for short term and floating rate debt, is currently resting at 3.25%, where it has been since January 2009. The driving factor for the prime rate is the federal funds rate, which has remained near zero over the same period. Through the Federal Open Market Committee, the Federal Reserve has stated that the federal funds rate will be held at current levels until at least 2015. Increasing the rate will be triggered by the reduction of national unemployment rate to 6.5% or lower. Even then, the rate will be increased, but will still be held below its expected long-run value. Meanwhile, the benchmark 10-year Treasury rate, the index we use for long-term loans, was around 1.85% at the end of March 2013, and was about 9 basis points higher at this time last year. Long-term Treasury rates are also being held low by activities of the Federal Reserve known as...
Andrews: CMBS market coming back sooner, even here
I've been a big pessimist about the Commercial Mortgage Backed Securities market over the past several years. Once the mainstay of my practice, CMBS lending went to zero in my shop and in mortgage brokerage offices across the country as the capital markets dried up and market players scattered to the four winds. And though I heard rumblings about the market coming back in 2012, I discounted the possibility that it would actually do so in any meaningful way, particularly in south Louisiana, and not for a while. But it looks like I might have been wrong. CMBS originations in 2012 outpaced 2011 with a strong fourth quarter and improved pricing, though nothing like we saw pre-2008. More lenders are getting back into the business as well, with most holding out for loans of $5 million or more, but some going all the way down to $1 million. So, are they doing deals in south Louisiana? Apparently the answer is yes, at least for several shops eager to look at deals in our markets. The...
Andrews: Fannie and Freddie reducing multifamily loan levels
Fannie Mae and Freddie Mac, the government-sponsored enterprises currently under the conservatorship of the Federal Housing Finance Agency—and both of which have been the largest issuers of multifamily debt of late—have been told by the FHFA to reduce their levels of multifamily loans by 10% in 2013. Acting FHFA Director Edward DeMarco says that the FHFA is "setting a target of a 10% reduction in multifamily business volume from 2012 levels." To put this directive in perspective, Fannie and Freddie had one of their best years in 2012, as other permanent lenders were still on the sidelines. DeMarco explains the reduction "will be achieved through some combination of increased pricing, more limited product offerings, and tighter overall underwriting standards." This reduction in production does not mean that multifamily investors will not have homes for their projects, since the conduit market is making its return and insurance companies have stepped up their lending...
B.R. foreclosure rates tick up to end 2012
The foreclosure rate in Baton Rouge was at 2.12% at the close of 2012, according to the latest report from CoreLogic. That's up slightly from the 2.09% rate in November—which was the lowest local rate since December 2009—but down considerably from the 2.48% rate at which Baton Rouge opened January 2012. The last time the local foreclosure rate was below 2% was December 2009, when it dipped to 1.98%. The highest the rate has climbed since then was 2.82% in February 2011. For historical comparison, the Baton Rouge area foreclosure rate was 1.28% in January 2009, 2.1% in January 2010, and 2.81% in January 2011. Meanwhile, the Capital Region's mortgage delinquency rate—that is, the percentage of home loans three months or more past due—was at 5.31%. That figure was also up slightly from the month previous, when it was 5.29%, but down from the 5.88% rate recorded in January 2012. CoreLogic has a map of foreclosure rates by ZIP code in the Capital Region that you...
Fee increases are making FHA mortgages more expensive
If you want to buy a house with minimal cash by using an FHA-insured mortgage, here's some sobering news: Because of an ongoing series of fee increases and underwriting tweaks, those mortgages are getting steadily more expensive and may not work for you. Some of the FHA's traditional customers may find that conventional alternatives are cheaper, according to a Los Angeles Times report. The Federal Housing Administration is the largest source of low-down-payment mortgage money in the country. Its minimum down is just 3.5%, compared with 5% to 20% or more from conventional, non-government sources. For decades, FHA financing has made homeownership possible for first-time buyers with modest incomes and credit history blemishes. But in the wake of losses tied to bad loans insured during the housing bust years, the FHA has been raising its loan insurance fees and backing more loans to applicants with higher credit scores. With the latest increases, terms have gotten to the point...
Lenders say down payments are lower than you might think
With interest rates at historically low levels, lenders in the Capital Region say there's a lingering misconception that a large down payment is needed to buy a home. "The whole thought process—that if you don't have 20% to put down, you can't buy—is incorrect," says Tim Dubnansky, a senior loan officer at Assurance Financial. Both Dubnansky and James Arnold, vice president of America's Mortgage Resource, say first-time homebuyers with a credit score of at least 640 and two years of steady employment can qualify for loans with a down payment as little as 3.5%. Dubnansky says he is currently reaching out to clients who bought with interest rates at around 5.5% a few years ago, and is getting them into loans with interest rates around 2% for 15 years, 3.5% for 30 years. The difference can add up to as much as $200 in savings each month, he says. "The rates are phenomenally low," Dubnansky says. In designated rural areas—Ascension and Livingston parishes, most of West...
Andrews: Banks to focus on loan growth in 2013, but cautiously
I've been receiving calls from bankers telling me that their 2013 budgets are set and that they're looking for good commercial real estate loans again. But before I can get all excited that the "good times are here again," they caution me that while they have aggressive budgets, management is still focused on maintaining the high credit quality that took the past few years to restore—and they have no interest in stepping back into high levels of problem assets, most of which have been resolved by this time. The focus will be on cautious loan growth based on conservative underwriting. And I suppose this is truly good news for everyone in our industry, because a steady supply of conservative credit sure beats no credit, which stifles the marketplace. It's also better than an oversupply of bad credit, which floods the market with ill-conceived and poorly underwritten deals destined to fail. The banks must be getting something right since the steady stream of bank failures since...
U.S. consumer borrowing rises to record $2.75 trillion
Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high. The Federal Reserve reports today that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion. Borrowing in the category that covers autos and student loans increased by $10.8 billion, while credit card borrowing rose by $3.4 billion—only the second monthly increase in that category over the previous five months. Consumer spending drives roughly 70% of economic activity, and many economists believe it could bounce back in November. But the underlying trend remains weak because unemployment remains high, which means many households lack discretionary income to spend. Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans. Credit card usage has fallen sharply since the...
Report: Small biz still cautious about borrowing
The erratic pace of borrowing by small-business owners continued in November—a sign that they remained cautious about hiring. A report released this morning by PayNet, which provides credit ratings on small businesses, showed just a 1% increase in borrowing in November. That followed an 11% jump in October. Borrowing fluctuated throughout 2012. PayNet bases its findings on information in its database on the amount of new commercial loans and leases granted to small businesses. The slowdown in borrowing wasn't surprising. Many small businesses have been reluctant to borrow—and therefore to expand or hire—because of uncertainty about the economy and taxes. And the presidential election and debate in Congress over the "fiscal cliff" intensified that uncertainty in November. The Thomson Reuters/PayNet Small Business Lending Index, compiled from PayNet's data, rose to 108.3 in November from October's revised 107. There is a bright side to the drop in borrowing at small...
Area mortgage lenders association reoriented to help young homebuyers
While BRAC works to identify local employment opportunities for Capital Region graduates, the Greater Baton Rouge Mortgage Lenders Association says it wants to connect those same young people with residential growth that is sprouting in the area. "We're going to try and reach out to a lot of young, local graduates and try and keep them here," says Cristyn Hodges, the incoming 2013 president of the association. Hodges, a loan officer at Assurance Financial for nine years, says she wants to revamp the group by getting more young people involved in it and bringing together depository lenders and non-depository lenders in a collaborative working manner. "We have not done a good job of working together as a lending group," says Hodges. The top mortgage originator at Assurance Financial says local lenders have not done enough to make lending easier for homebuyers as banks have tightened their lending restrictions over the past three years. Hodges says she plans to have influential leaders...
BancorpSouth given 10 days to complete discovery request in Gladney case
Judge William Morvant had harsh words earlier this week for BancorpSouth and its attorneys over the way they handled a discovery request from Windy Gladney and his attorney for emails that are believed to be relevant in a case between the local developer and the bank. In a transcript from Monday's hearing in the 19th Judicial District Court, Morvant tells attorneys for the bank he needed to choose his words carefully after learning that the bank has a disk containing some 500,000 electronic documents, which it had previously said did not exist. Earlier this year, the bank's attorneys told Morvant emails between Bancorp South President Larry Denison and others had long since been deleted. "To have the court told these emails are deleted, they're permanently gone, and now in 2012 I'm getting '06 and '07 Denison emails referencing these loans after I'm assured that they don't exist, it causes me some real concern," Morvant says. The judge is giving the bank 10 days to completely respond...
Judge sanctions BancorpSouth for withholding documents in Gladney case
BancorpSouth is facing tough sanctions from the 19th Judicial District Court for failing to turn over during the discovery process a computer disk containing some 500,000 pages of documents sought by the attorney for Windy Gladney in the developer's long-running lawsuit against the bank. In a hearing late Monday, Judge William Morvant granted Gladney's motion for sanctions against the bank for withholding the documents, which include emails that may contain information about the loans that are at issue in the case. Details of the ruling have not yet been entered into the court record. Attorneys for BancorpSouth did not return calls for comment in time for publication, and Gladney's lawyer declined to comment until after the ruling has been made public. However, Morvant's decision is clearly a victory for Gladney and his partnership, Kleinpeter Trace. Gladney and development firm Kleinpeter Trace are being sued by the bank for defaulting on some $2 million in construction loans. He...
FHA to extend rule permitting loans on 'flips' of fixed-up homes
Rehabbers and real estate investors rejoice: You'll still be able to sell houses to first-time buyers using low-down-payment, FHA-insured mortgages next year, even if you've owned the fixed-up property for less than 90 days. As The Los Angeles Times reports, the Federal Housing Administration has decided to extend its rule permitting loans on quick "flips" of renovated houses beyond the scheduled Dec. 31 expiration deadline. The policy is widely considered one of the key federal government moves that has encouraged private investors in large numbers—often mom-and-pop, small-scale operations—to buy foreclosed and deteriorating houses from lenders, then repair them and resell within short periods of time. Since the plan was first put into place by the Obama administration in February 2010, more than 65,000 renovated homes have been financed using more than $11 billion in FHA-backed loans, according to federal officials. Roughly 23,000 of these properties were...
B.R. metro foreclosure rate inches down in September
The percentage of Capital Region homes in some stage of foreclosure slipped down to 2.23% in September, according to a new report out this morning from CoreLogic. The foreclosure rate last month was 2.27%; it was 2.45% in September a year ago. The Baton Rouge metro area foreclosure rate in September remained below the state and national rates, which stood at 2.38% and 3.25%, respectively. Meanwhile, Baton Rouge's mortgage delinquency rate—that is, the percentage of home loans three months or more past due—was at 5.37% in September, according to CoreLogic. That's up slightly from the previous month's rate of 5.31%, but down from the 5.62% rate in September a year ago. CoreLogic has a map of foreclosure rates by ZIP code in the Capital Region that you can check out here.
Amedisys lines up $60 million loan
Amedisys Inc., a Baton Rouge-based national home health provider, announced this morning it has entered into a new $225 million unsecured credit facility agreement that includes a five-year, $60 million loan. Amedisys says it will use the new loan and cash to pay off the remaining $15 million balance of a previous term loan, as well as $60 million in senior notes, which are loans that must be repaid first if a company goes out of business. The new facility includes a $165 million, five-year revolving credit line, and is being backed by a group of banks including JPMorgan Chase Bank, N.A., and Bank of America Merrill Lynch. "The five-year revolving credit facility will support our capital needs, including acquisition opportunities, which we believe will become increasingly attractive over the term of the agreement," says Amedisys CEO William Borne. "The strength of our balance sheet, coupled with this new credit facility and the amendment to our senior notes, will enable us to lower...
U.S. consumer credit up $18.1B in August
Americans boosted their borrowing in August by the largest amount in three months with strong gains in the category that covers auto and student loans and in credit card debt. The Federal Reserve says that total consumer borrowing increased $18.1 billion in August compared to July. In July, consumer borrowing had fallen for the first time in nearly a year. The rebound in August along with a separate report that showed the nation's unemployment rate dropped to 7.8% in September were together viewed as encouraging signs about an economy that has struggled in recent months. The August borrowing gains reflect a $4.2 billion increase in borrowing on credit cards and a $13.9 billion increase in auto and student loans.
Ease your mind!!
Don't panic if your family doesn't have all of the financial resources you need to pay for college; there's a wealth of financial assistance out there to help you. Start by learning as much as you can about the many financial aid programs that are available, then talk to the financial aid offices at the colleges you're considering. They are there to help!
Louisiana has one of the nation's best tuition assistance programs, TOPS, but there are also hundreds of nonprofits, organizations and businesses that have scholarship programs to help you.
Report: La. posts biggest increase in per-student higher education spending since '86
Despite cutbacks in higher education spending in recent years, Louisiana has spent an average of $77 more per student each year—the most of any state over the past 25 years—according to a new report from a nonprofit group tracking state funding of higher education. The report, by the State Higher Education Executive Officers group, says Louisiana was also one of only 10 states to post an increase in per-student spending since 1986. Louisiana's per-student spending peaked in 2008 at $8,165; it bottomed out in 1995 at $4,911. Since 2008 the state has scaled back its spending on higher education, and in 2011 spending was at $6,904 per student. Neal McCluskey of the Cato Institute tells American Public Media—which is highlighting the report today with an interactive map—that state involvement with higher education is the reason college costs are escalating so quickly. He says that because the federal government provides grants and loans to prospective students,...
B.R. foreclosure rate down in June
According to a new report out this morning from CoreLogic, 2.23% of all homes in Baton Rouge were in foreclosure at the end of June. That's down from 2.36% in May, and from 2.39% in June 2011. The local foreclosure rate is slightly lower than the statewide average, which ended June at 2.36%, down from 2.48% in May, and 2.58% in June a year ago. The national foreclosure rate edged down to 3.27% in June, according to CoreLogic, from 3.41% a month previous and 3.48% a year previous. Meanwhile, Baton Rouge's mortgage delinquency rate—that is, the percentage of home loans three months past due or more—also fell in June to 5.22%. That's down from 5.39% in May and 5.51% a year ago. See a map from CoreLogic detailing foreclosure rates by ZIP code in the Baton Rouge area here.
Andrews: A guideline to Fannie Mae interest rates
I've been speaking with several apartment owners recently about long-term financing available from Fannie Mae, a financing alternative made particularly attractive since 10-year fixed rates are currently 4% and lower. An important consideration to keep in mind is that while the actual interest will be in that low range, the lender will underwrite to a higher interest rate depending on the maturity of the loan. According to Jay Porterfield of Arbor Commercial Mortgage, Fannie Mae currently requires lenders to underwrite to floor rates of 5.25% on 10-year deals, 5.75% on seven-year deals and 6.75% on five-year deals. These higher rates will reduce proceeds based on cash flow coverage and provide a higher level of protection against interest rate increases in the near future. The takeaway here is that potential borrowers should base their expectations of loan proceeds on the lower of the standard loan-to-value considerations, as well as the loan amount supported by cash flow coverage...
B.R. foreclosure, mortgage delinquency rates down
The percentage of Baton Rouge homes in foreclosure fell to 2.36% in May, according to a report released today by CoreLogic, down from 2.39% the month previous and 2.47% in May 2011. The local mortgage delinquency rate—that is, the percentage of home loans three months past due or more—also fell in May to 5.39%. That's down from 5.54% in April, and 5.59% a year ago. The slight declines in both rates are similar to those seen in April, as well as most months so far this year. The foreclosure rate was 2.41% to start the year, and the mortgage delinquency rate was 5.79%. Baton Rouge's foreclosure rate remains more than a full percentage point below the national average—which also edged down slightly to 3.41% in May. It also remains slightly lower than Louisiana's 2.48% foreclosure rate in May, which was down 0.16 percentage points from the year previous. See a map from CoreLogic detailing foreclosure rates by ZIP code in the Baton Rouge area
Risk pays off
Between the recession and financial-industry turmoil, borrowing has become harder than ever at a time when, for many, it's more necessary.
Families borrowing more to meet rising college costs
Even wealthy families are scrambling to cover rising college costs by borrowing more and spending less, according to new research out today from student lender Sallie Mae and the polling firm Ipsos. Families earning more than $100,000 took out more loans in 2011 than the previous year, according to the study, while more students are saving money by attending less-expensive schools and living at home. "In the last few years, parents and students reached into savings to make sure kids got through college," says Sarah Ducich, senior vice president for public policy at Sallie Mae. Many families have exhausted those funds, she says, just as schools have tightened up scholarships and grants, and tuition is still going up. For 2012, those awards made up 21% of a family's total cost, down from 25% last year. Families are making up the difference by borrowing more. According to the fifth annual report, wealthy parents borrowed on average $3,399 in 2011 compared with $2,306 the previous year.
Home builders say student loan debt crisis linked to lower home values
A new analysis of government data by the National Association of Home Builders says there's a connection between rising student loan debt and the onset of the housing slump. The analysis says home-owning parents who, in a healthy economy, would have used a home equity loan to help finance their kids' tuition weren't able to do so when the housing crisis led to a decline in loan availability. As a result, it says, students have increasingly taken out loans on their own behalf. "The data thus do not necessarily reveal a sharp increase in borrowing for college education, but rather a shifting in the form of borrowing," the analysis says. "And this is yet another consequence of the harm inflicted on the middle class as home prices fell, leading to a nearly 40% decline in median household net worth." The NAHB cites the 2010 edition of the Federal Reserve's survey of household balance sheets, the Survey of Consumer Finances, for the statistic on average net worth. The analysis also says...
Student-loan debt rises 8% to $904B
Americans are stepping up borrowing to pay for college while cutting other debt as a weak job market contributes to increased college enrollment, The Wall Street Journal reports, citing new Federal Reserve Bank of New York data. Americans owed $904 billion in student loans at the end of March, nearly 8% higher than a year ago, the New York Fed says today in its quarterly report on consumer credit. That is more than the $679 billion on their credit cards at the end of the first quarter. The New York Fed's estimates of student debt are about 10% lower than the more than $1 trillion figure cited earlier this year by the Consumer Financial Protection Bureau. The New York Fed's estimate is based on a sampling of consumer-credit agency accounts; the CFPB's estimate is based on government data and a survey of private lenders. The New York Fed report shows that Americans are still cutting overall debt—a process known as "deleveraging" that began in the wake of the financial...