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HOMEOWNERSHIP RATE FALLS TO 15-YEAR LOW By Mark Lieberman, Economist for the Five Star Institute The nation's homeownership rate (seasonally adjusted) dropped to 65.4 percent in the first quarter, its lowest level since the first quarter of 1997, the Census Bureau reported in late April. At the same, the homeowner vacancy rate fell to 2.2 percent nationwide, down from 2.6 percent in the first quarter of 2011, and the rental vacancy rate dropped to 8.8 percent from 9.7 percent one year earlier. The homeowner vacancy rate is at its lowest level since the 2006 first quarter. The median asking sale price for a vacant home fell to $133,700—the lowest level since second-quarter 2005—from $133,800 in the fourth-quarter and $143,700 one year earlier. The median asking rent in the first quarter rose to $721 from $712 in the fourth quarter and $683 in the first quarter of 2011. Within census regions, the rental vacancy rate was highest in the South (10.8 percent) and lowest in the West (6.3 percent). The rental vacancy rate in the Northeast was higher than in the first quarter of 2011 while the rates in the Midwest, South, and West were lower than a year ago. For the first-quarter of 2012, the homeowner vacancy rate was higher in the South than the Northeast but not statistically different from the rates in the Midwest and West. The homeowner vacancy rates in the Midwest, South, and West were lower than a year ago while the rate in the Northeast was not statistically different from the first quarter 2011 rates. The homeowner vacancy rates in principal cities (2.5 percent) and outside MSAs (2.6 percent) were higher than in the suburbs (1.9 percent), the Census Bureau said in its quarterly report. The number of housing units increased by 486,000 in the past year, the Bureau said. The number of occupied units went up by 1,011,000 while the number of vacant units fell 524,000. The number of homes held off the market increased 203,000 to 7,633,000 in the last year, according to Census data. The homeownership rate fell in all four Census regions in the first quarter— the steepest drop in the Northeast, 1.2 percentage points to 62.5 percent. The homeownership rate fell 0.8 percentage points in the South to 67.5 percent, 0.5 percentage points in the Midwest to 69.5 percent, and 0.2 percentage points in the West to 59.9 percent. For the first quarter of 2012, the homeownership rates were highest for those householders aged 65 years and over (80.9 percent) and lowest for the under-35 age group (36.8 percent). KNOW THIS It's been more than three years since HAMP and HARP were rolled out, and a recent survey conducted by FreeScore.com revealed 73% of respondents have never heard of the two government programs. 28 MOODY'S RANKS SUBPRIME SERVICERS BASED ON CASH FLOW GMAC, Specialized Loan Servicing (SLS), and American Home Mortgage Servicing performed better compared to other subprime servicers in terms of cash collected relative to losses on delinquent loans, according to a metric devised by Moody's. This was mainly due to shorter liquidation timelines that resulted in lower loss severities on foreclosed properties, the agency explained in a market update published in April. Authored by Moody's analysts Jiwon Park and Peter McNally, the rating agency's market update ranked a handful of servicers—GMAC, American Home Mortgage Servicing, Ocwen, Aurora, Select Portfolio Servicing, Wells Fargo, Chase, and Bank of America Home Loans—across a timeline spanning from 2010 to February 2012 for cash flow efficiency. After weighing how much cash the servicers generate from modifications and liquidations against how much is lost, each major servicer was ranked. GMAC, SLS, and American Home were consistently top ranking while Ocwen was in the middle and BofA and Chase ranked near the bottom. According to the report, GMAC's high metric is due primarily to shorter liquidation timelines and because the servicer maximizes cash flow on modified loans by keeping the re-default rates in line with the industry average even though it offers relatively low levels of relief in terms of principal and interest. Ocwen actually had a consistently high cash flow because it actively modifies loans while keeping cash flow coming with fewer delinquent loans. However, the article notes that Ocwen's success will depend on the redefault rate of the modified loans. Bottom-ranking Bank of America was not as efficient due to low volumes of modified loans and liquidated properties, leading to higher loss severities. The Moody's report also pointed out that cash flow is much lower in judicial states due to longer foreclosure timelines and greater loss severities. The article stated that since the rank order for servicers in both judicial and non-judicial states patterned after the overall ranking, this suggests that "judicial delays do not unduly affect the less efficient servicers."

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