Erica L. Groshen Vice President and Director of Regional Affairs

1
Dynamic Maps of Nonprime Mortgage Conditions

• Erica L. GroshenVice President and Director of
  Regional Affairs

September 24, 2008
2
Agenda

• Federal Reserves Homeownership and Mortgage
  Initiatives
• Dynamic maps, etc.
• Plans

3
Homeownership and Mortgage Initiatives (HMI)

• Comprehensive strategy across the Federal Reserve
  System to provide information and outreach to
  prevent unnecessary foreclosures and to stabilize
  communities.
• Regulation
• HOEPA (Regulation Z) Truth in Lending changes in
  July 2008
• Non-bank subsidiaries pilot -- compliance reviews
  of non-depository lenders and other industry
  participants
• Financial education
• Continue providing educational resources to help
  consumers make informed personal financial
  decisions, including those about homeownership
• Outreach
• Research and analysis

4
Outreach

• National partnership with NeighborWorks America
  to stabilize neighborhoods with high foreclosure
  rates. The Fed will
• Help train nonprofits and local officials on
  options for dealing with vacant properties.
• Produce reports and analysis to help target areas
  of highest need.
• Develop content to help consumers and inform
  community leaders, and convene key players to
  facilitate neighborhood stabilization.
• Continue support for training counselors.
• Foreclosure resource center websites with
  mitigation toolkits for each district
• Forums and local outreach efforts to advance
  understanding and problem-solving

5
Research and analysis

• Summary papersto be posted soon on Fed websites
• Snapshot of current conditions
• Synopsis of research
• Network of commissioned research
• December research conference
• Coordinated data effort
• Purchase and process data
• Merge various sources
• LoanPerformance
• McDash
• HMDA
• Lis Pendens
• County records

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Dynamic maps, etc. (research and outreach)

• Purpose Help regional stakeholders target
  resources
• Location http//www.newyorkfed.org/regional/subpr
  ime.html
• Contents Current monthly and 6-month change data
  on securitized subprime and alt-A mortgages
• Based on loan-level LoanPerformance data (90 of
  securitized loans)
• Mostly for owner-occupied mortgages
• Dynamic maps
• Display state, county and zip code detail, for
  all US
• 12 variables covering loans, delinquencies, risk
  factors, foreclosures
• Spreadsheets
• US and states
• 56 variables covering loans, delinquencies, risk
  factors, foreclosures
• Technical Appendix
• Definitions of variables and terms
• 2nd District tables

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Dynamic map variables (states, counties zip
codes)

• Loans per 1000 housing units
• In foreclosure per 1000 housing units
  Density, neighborhood impact
• REOs per 1000 housing units
• Share ARMs Loan type
• Share current
• Share 90 days delinquent Loan status
• Share in foreclosure
• Median combined LTV
• Share low FICO high LTV
  Underwriting risk factors
• Share low or no documentation
• Share ARMs resetting in 12 mos. Imminent
  default signals
• Share late payment in 12 mos.

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Themes from maps

• Two faces of the crisis
• Boom-bust (Florida, California, Arizona, Nevada)
• Slow growth (Youngstown, Cleveland OH Des
  Moines, IA Detroit, MI)
• Highly localized impact within states and
  counties
• Demographics, income, and proximity to troubled
  areas matter
• Rolling impact
• When the mortgages were made
• When home prices began falling and defaults
  started
• How long it takes to foreclose

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Maps on NY Fed websiteUS view (density of loans)
Scroll over shows state name and
statistic.Darker color shows higher density.
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Maps on NY Fed websiteUS view (share of loans
in foreclosure)
Scroll over shows state name and
statistic.Darker color shows higher share.
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Maps on NY Fed websiteUS view6-month change in
share of loans in foreclosure
Scroll over shows state name and statistic.Red
shows increases. Green shows decreases. Yellow
shows no change.
12
Maps on NY Fed website NJ state view (share of
loans in foreclosure)
Scroll over shows state name and
statistic.Darker color shows higher share.
13
Maps on NY Fed website Union county view
Scroll over shows state name and
statistic.Darker color shows higher share.
14
Spreadsheet

• Covers US and states
• Latest month and 6-month change
• All 12 map variables for subprime and alt-A loans
• Also, number of loans
• Owner-occupied and not
• Percent (share) of owner-occupied loans--yellow
  header
• More characteristics of loans and status than on
  maps
• Percent (share) of ARMs, owner-occupied--orange
  header
• Status variables
• Factors associated with ARMs only
• For definitions, see Technical Appendix

15
Spreadsheet variables (US and states)
16
2nd District tablesfurther detail for US, NY and
NJ
Includes non-owner occupied Breaks down ARM vs.
FRM vs. other
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Plans (in order of appearance)

• Facts Trends
• Fact sheets describing 2nd District conditions,
  focusing on mortgage issues
• New Jersey is out (August)
• Map quarterly Transunion (credit report)
  delinquencies by county for mortgages and credit
  cards (early October)
• Merge and map LP and McDash data to report on
  overall mortgage conditions

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Questions?
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Commissioned research

• Mortgage Servicing (Larry Cordell, Philadelphia
  with assistance from Board and Richmond)
• An overview of mortgage servicing. Information on
  workouts, contractual limitations on servicers,
  servicer incentives.
• Home Counseling (Kelly Edmiston, KC)
• Counselor capacity and effectiveness.
• Mortgage Foreclosure Costs (Nellie Liang, Board)
• Direct and indirect costs imposed by mortgage
  foreclosures.
• Spillovers to Performance of Commercial Banks
  (John Krainer, SF)
• Direct and indirect exposure of commercial banks,
  particularly community banks, to residential real
  estate.
• Information on Higher Price Lending in 2007 HMDA
  Data (Bob Avery, Ken Brevoort, Glenn Canner,
  Board)
• Patterns of higher price lending by lender,
  borrower characteristics, and neighborhood.
• Factors that Drive Mortgage Performance across
  Geographies (Bob Avery, Ken Brevoort, Glenn
  Canner, Board)
• Factors that affect mortgage performance at the
  county level over 2005-2007 .

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Commissioned research, contd.

• Mortgage Broker Regulation and Mortgage Outcomes
  (Andreas Lehnert, Board Dick Todd, Minneapolis)
• Effect of tighter broker regulations on nonprime
  mortgage lending, prices, and outcomes.
• What is the Role of Investors in the Mortgage
  Market? (Dick Todd, Minneapolis Breck Robinson,
  Richmond)
• Analysis of the amount, characteristics, and
  performance of non-owner occupied lending.
• Estimates of Negative Equity and Effects on
  Performance of Subprime and Alt-A Loans (Andrew
  Haughwout, NY)
• Distribution of households equity shares in
  their homes and how this affects mortgage
  performance.
• Effect of the Bankruptcy Reform Act of 2005 on
  Foreclosures (Don Morgan, NY)
• How changes in bankruptcy rules affected the
  mortgage foreclosures.
• What Happens to Households who are Foreclosed
  upon and Lose their Homes? (Edmiston, KC
  Prescott, Richmond)
• Where households who are foreclosed upon move to
  and whether they have trouble finding new
  housing.
• Lending in Low-and-Moderate Income Neighborhoods
  The Performance of CRA-Lending during the
  Subprime Meltdown (Elizabeth Laderman, Carolina
  Reid, SF)
• Relative performance of loans made by
  CRA-regulated institutions versus non-regulated
  lenders.