TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/431978
Th e M Rep o RT | 37 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING THE LATEST report: Bofa settlement stalled by sec infighting A partisan split has commissioners deadlocked on penalty waivers requested by the bank. B ank of America's record $16.65 billion settlement with several government agencies over the sale of toxic residential mortgage-backed securities (RMBS) has been stalled by an internal disagreement within the U.S. Securities and Exchange Commission (SEC), according to sources familiar with the case in a report from Bloomberg. SEC's commissioners are reportedly disagreeing over whether or not to waive certain sanctions that go into effect when the settlement is entered in court. The sanctions, if enacted, could adversely affect Bank of America's asset management business and its ability to raise capital. Bank of America has request- ed relief from the sanctions, an action that was once routine but is now anything but. Sources say the two Democratic commis- sioners refuse to grant Bank of America a pass on the sanctions, while the two Republican com- missioners are in favor of waiv- ing the extra penalties. With SEC Chair Mary Jo White not participating due to a conflict, the four commissioners are deadlocked, according to sources. Banks that enter into settle- ments normally seek waivers from three main sanctions. The two major ones involve a ban on managing mutual funds and a ban on banks raising money for private companies. The third, which would not have as much consequence for Bank of America, would prevent the bank from issuing its own shares or bonds unless the SEC gives prior approval. The sources say Bank of America wants to continue seek- ing investors for private firms. However, they say the SEC is likely to allow the bank to con- tinue managing mutual funds, but that it is unlikely the SEC will waive the other sanctions. Home value growth continues to slow in Q3 Driven by traditional market fundamentals, appreciation returns to more sustainable levels. H ome value appreciation in the third quarter slowed to its lowest annual pace in the last year, further quelling analysts' fears of over- inflation in the housing market. The real estate data firm Zillow reported a 6.5 percent year-over- year gain in its Home Value Index for September, bringing the index up to $176,500. Annual home price appreciation peaked this year in April at 8.1 percent and has steadily fallen since then, the company said. Zillow's chief economist, Dr. Stan Humphries, said the latest report comes as a relief compared to last year, when the market was experiencing unsustainable price growth that went well into the double digits in some areas. "At this time last year, we were worrying about a number of frothy markets that looked like they could be on the edge of another housing bubble, places where homes were appreciating at more than 20 percent per year and where buyers' heads were spinning just trying to keep up," Humphries said. "Home values should continue to grow, but that growth will increasingly be driven by traditional market fundamentals like household formation and job growth, and less by artificial stimulants like decreased supply and wide- spread investor demand." By the end of Q 3 2015, Zillow anticipates home value growth will level off at about 3 percent annually, less than half its cur- rent pace. Among the markets post- ing the biggest slowdowns in price gains, many were previ- ously among the hottest metros of the recovery, particularly in California and the Southwest. For example, in Los Angeles, appreciation slowed from 18.5 percent annually in Q 3 2013 to just 8.3 percent in the latest completed quarter. The drop-off was more ex- treme in San Francisco, where appreciation slowed to 8.2 per- cent from 23.5 percent last year. With the market cooling down, the company also expects the dy- namic between buyers and sellers to shift. According to Zillow, there were 18.6 percent more homes on the market at the end of September than there were a year earlier, which translates into less competi- tion for homebuyers. The rise in inventory has also given home shoppers more room to negotiate: Nearly 37 percent of the listings on Zillow in September had at least one price cut in the last month, up from 33.6 percent a year prior, the company reported. "Home values should continue to grow, but that growth will increasingly be driven by traditional market fundamentals like household formation and job growth, and less by artificial stimulants like decreased supply and wide