Money Talk: Underwater U.S. homeowners now at 12.7%, nation’s nest of negative equity in 1Q shifts to Rust Belt

Editor’s note: Each Monday, Talk Business & Politics provides “Money Talk,” a wrap-up of banking and financial news. ––––––––––––––––

UNDERWATER U.S. HOMEOWNERS NOW AT 12.7%, NATION’S NEST OF NEGATIVE EQUITY IN 1Q SHIFTS TO RUST BELT
The national negative equity rate – the share of all homeowners with a mortgage who are underwater, owing more on their mortgage than their home is worth – fell to 12.7% in the first quarter of 2016, according to the first quarter Zillow Negative Equity Report. The U.S. negative equity rate is down from 13.1% in Q4 2015 and 15.4% a year ago, and has fallen or stayed flat from the prior quarter for 16 straight quarters after peaking at 31.4% in Q1 2012.

The steady decline in negative equity nationwide has been driven by a consistent recovery in home values over the past several years. But while home values have risen to some extent in a large majority of U.S. markets, some markets have recovered much more quickly than others, and the concentration of negative equity nationwide has shifted from the Southwest and Southeast to the Midwest. To see the full report, click here.

FDIC ANNOUNCES $190 MILLION ON RESIDENTIAL MORTGAGE-BACKED SECURITIES CLAIMS
The Federal Deposit Insurance Corporation (FDIC) as receiver for five failed U.S. banks has announced a $190 million settlement of certain residential mortgage-backed securities (RMBS) claims with Barclays Capital Inc.; BNP Paribas Securities Corporation; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Edward D. Jones & Co., L.P.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC.

The settlement resolves federal and state securities law claims based on misrepresentations in the offering documents for 21 Countrywide RMBS purchased by the five failed banks. From November 2011 through August 2012, the FDIC filed six lawsuits for violations of federal and state securities laws in connection with the sale of the 21 RMBS to the failed banks. The settlement funds will be distributed among five failed bank receiverships: Colonial Bank of Montgomery, Ala., which failed on Aug. 14, 2009; Franklin Bank of Houston, Texas, which failed on November 7, 2008; Guaranty Bank of Austin, Texas, which failed on Aug. 21, 2009; Security Savings Bank of Henderson, Nevada, which failed on Feb. 27, 2009; and Strategic Capital Bank of Champaign, Ill., which failed on May 22, 2009.

UNNAMED WHISTLEBLOWER GETS $17 MILLION FOR ‘DETAILED TIP’ TO SECURITIES REGULATORS
The Securities and Exchange Commission on Thursday (June 9) announced a whistleblower award of more than $17 million to a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action. The award is the second-largest issued by the SEC since its whistleblower program began nearly five years ago. The SEC issued a $30 million award in September 2014 and a $14 million award in October 2013. By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

The SEC’s whistleblower program has now awarded more than $85 million to 32 whistleblowers since the program’s inception in 2011.

Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. Whistleblower awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million. All payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC by securities law violators.

FT. WORTH-BASED COLONIAL SAVINGS OPENS MORTGAGE OFFICE IN LITTLE ROCK
Colonial National Mortgage, a division of Colonial Savings, F.A., and one of the nation’s leading originators of residential mortgages, is opening a new retail mortgage branch in Little Rock. Colonial’s first Arkansas-based location will be located at 8201 Cantrell Road. Colonial, which services 99% of the loans they originate, offers a wide variety of loan programs to customers nationwide.