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Report: Banks, Title Firms Profiting from Mortgages Again

After a lengthy waiting period, the housing market is indeed improving, and banks and title insurers are beginning to prosper once again from a strengthening mortgage market, according to ""Turner Investments"":http://www.turnerinvestments.com/index.cfm, a global investment firm based in Berwyn, Pennsylvania.


In a characterization of today's housing market, Turner stated in a ""recent report,"":http://www.turnerinvestments.com/financial-services ""Like Vladimir and Estragon, two aimless men waiting for the title character to arrive in the play _Waiting for Godot_, we've been patiently looking forward to the housing industry recovering since its bubble burst in 2007-2008. Now it seems our patience may be finally paying off.""

With rising prices and disproportionately rising rents alongside historically low interest rates, Turner Investments says a few banks and title insurers are particularly well-positioned to prosper in the changing climate.

""We think that, unlike Vladimir and Estragon in _Waiting for Godot_,"" these institutions will begin to thrive ""as the play that could be called the New American Housing Recovery enters its next act in 2013,"" Turner Investments stated.

The institutions Turner singles out include four banks and one title insurer: EverBank Financial, based in Jacksonville, Florida; First Republic Bank, based in San Francisco; Texas Capital Bancshares, based in Dallas, Texas; Wells Fargo, based in San Francisco; and Fidelity National Financial, based in Jacksonville, Florida.

While foreclosure inventory, underwater homeowners, and the fact that ""[l]enders are petrified of loan buybacks"" continue to haunt the housing market, Turner Investments predicts double-digit increases in mortgage lending this year.

Prices are on the rise and are expected to continue their current upward trend, according to Turner. Rising prices tend to prompt potential buyers to purchase quickly before prices rise even higher.

At the same time, the ""Federal Reserve"":http://www.federalreserve.gov/ has announced intentions to keep interest rates low until unemployment reaches 6.5 percent and inflation reaches 2.5 percent. (Current rates are 7.8 percent unemployment and 2.2 percent inflation.)

Also incentivizing potential buyers are rising rents across the nation. The ratio of rent payments to mortgage payments in the third quarter of last year was 107.8 percent, according to statistics from ""Deutsche Bank."":https://www.db.com/us/ In other words, renting is more expensive than owning.

Household formation, which plummeted from about 1.5 million per year between 1997 and 2007 to about 500,000 between 2007 and 2010 is now on the rise. In 2011, about 1.1 million new households were formed according to ""Freddie Mac."":http://www.freddiemac.com/

Thus far, mortgage lenders have not responded to these positive trends in the housing market with much gusto. They haven't ""drastically changed their mortgage-lending standards"" yet, but Turner Investments says, ""the banks won't be able to ignore and aren't ignoring rising demand for mortgages for long.""

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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