November 2012

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THE LATEST ANALYTICS Industry Employment Continues to Grow The housing and mortgage industries added jobs in August, expanding 7 percent on a year-over-year basis. T Equifax Predicts H since November 2007, according to Equifax. The company says its findings signal "a possible turning point in mortgage demand." This newly developed trend in ome equity installment balances rose 0.3 percent in August—the first monthly increase home equity credit is highlighted in Equifax's newest National Consumer Credit Trends Report and bears noting after the home equity credit market plummeted along with property values dur- ing the housing downturn. The total number of home Market 'Set for Growth' The company's recent statistics may signal "a possible turning point" in demand for mortgage loans. record lows on almost a weekly basis, "The environment has been set for growth for a while—now it looks like it may finally be happening." While delinquency rates on " Crews Cutts explained. he mortgage banking and brokerage industry employs about 280,500 individuals, as of the end of August, according to the latest data from the Bureau of Labor Statistics. The industry added 2,800 jobs in August, bringing the year-to-date total to 18,400 new jobs. Year-over- year, the industry has seen about 7 percent growth. In August 2011, the industry employed 261,600 people. The Bureau also reported an increase in "real estate and rental and leasing" jobs from August to September. An additional 8,100 jobs were added over the month. While the industry experienced job growth in September, the nation overall added 114,000 nonfarm payroll jobs in September. Industries with the highest amount of job growth over the month were health care, transportation, and warehousing. Additionally, after a stubborn, prolonged stint of unemployment above 8 percent, unemployment fell to 7.8 percent, a rate not seen since January 2009. However, "involuntary part-time workers," those working part-time who prefer to work full-time, grew from 8 million in August to 8.6 million in September. The number of discouraged workers is down by more than 200,000 from last year to 802,000 in September. Mortgage Litigation equity installment loans fell 43 percent in a span of four years— from 7.7 million in August 2007 to 4.4 million in August 2012, Equifax reports. Home equity installment balances contracted even further, declining 49 percent from their $278 billion peak in September 2007 to just $143 billion in August 2012. But according to Amy Crews home equity accounts have been stable in a narrow band in recent months, Equifax says write-off rates accelerated their declines in August. Home equity installment loans were written off at a rate of just 2.69 percent during the month, down 16 percent from July's write-off rate and the lowest level Equifax has recorded since February 2008. Looking at home equity credit Cutts, Equifax's chief economist, recent trends seem to indicate the residential real estate market has finally found solid ground. "We're seeing signs that the contraction in mortgage debt is slowing and delinquencies con- tinue to trend down at the same time that mortgage rates set new 60 | THE M REPORT states with the greatest percent- age growth in loan balances were California (+2.3 percent), Nevada (+2.1 percent), Colorado (+2 per- cent), and Florida (+1.9 percent). The same states topped the charts for percentage growth in number of loans, but in different positions. Coming in behind New Mexico and the No. 1 spot was Florida (+1.6 percent), Nevada (+1.5 percent), California (+1.35 percent), and then Colorado (+1.3 percent). developments at a more granular level, New Mexico led August's growth with both the largest monthly gain in loan balances (+2.3 percent) and in the number of loans outstanding (+1.7 percent). Rounding out the top five T Index showed that litigation in the industry slowed its pace between the final quarter of 2011 and the opening quarter of 2012. Reporting numbers from the first racking mortgage-related legal activity around the nation, the most recent Mortgage Litigation quarter of the year, Mortgage Daily's survey revealed that the number of total lawsuits dropped from 244 to 216 between the periods. However, the index also indicat- related cases rose from 151 to 216 year-over-year, while legal activity for the servicing sector jumped from 49 to 65 during the same period. Additionally, litiga- tion in the sectors of foreclosure, investing, criminal activity, and title services escalated as well, rising from 46 to 89, 42 to 62, 27 to 56, and 8 to 47 respectively. Christopher Willis, partner The tally for all mortgage- ed that while case activity declined overall on a quarter-to-quarter basis, legal action was up across the board year-over-year. Litigation related to compliance, loan titles, and whistleblower action displayed especially strong increases, and Mortgage Daily noted that each of the three industry segments saw activity that was "significantly elevated versus a year earlier." Index on the Decline Showing a solid quarterly drop, legal activity related to mortgage lending is down around the country. for Ballard Spahr LLP, contrib- uted his commentary in a white paper related to the topic, noting, "Still, a decrease should be cause for some hope, shouldn't it? Unfortunately, I believe it is not, because of the underlying factors that likely operated to reduce litigation in the first quarter and the continued presence of very strong drivers for more mortgage litigation for the remainder of this year." SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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