History has shown that homeowners typically value their homes at a higher price point than appraisers, and as the housing market evolves, these opinions were beginning to inch closer to reaching a point of equilibrium up until last month when the gap widened.
What homeowners think their houses are worth and what they’re actually worth are slightly off nationally, and the gap between owner estimates and real appraisals widened in February  for first time in six months, according to the March's Home Price Perception Index  from Quicken Loans .
While homeowner values increased 1.51 percent in February and rose 3.89 percent year-over-year, appraised values were almost 2 percent lower than homeowner expectations nationally. In February, Quicken Loans found that homeowners valued their homes 1.75 percent more than appraisers in January 2016 , marking a full year that this trend had continued. Last month, the gap between home values and appraisers  was 1.80 percent.
Quicken Loans’ Chief Economist Bob Walters said that despite the new numbers, there’s no cause for concern here. “While it is always disappointing for homeowners to learn they don’t have quite the home equity they expected, the national HPPI is still within a normal range,” Walters said. “In an ever-changing real estate market, home values fluctuate and these changes are most quickly realized by appraisers who are evaluating local sales every single day.”
Earnings Statement Week
Investors will be watching this week as the nation's largest banks release their earnings statements for the first quarter of 2016, starting with JPMorgan Chase on Wednesday, April 13, followed by Bank of America, Wells Fargo, and PNC on Thursday, April 14, and Citigroup on Friday, April 15.
The bank to watch will be the one that releases its earnings statement first, JPMorgan Chase, on Wednesday. Last week, the bank's CEO, Jamie Dimon, said in his annual letter to shareholders that the bank was so well capitalized that it could absorb the theoretical losses for all 31 banks participating in the Fed's annual stress test. According to JPMorgan Chase’s Q4 2015 earnings statement , the bank pulled in a net income of $5.4 billion during the final quarter of the year—down from the $6.8 billion net income reported in Q3 but up from the $4.9 billion net income reported for the final quarter of 2014. Year-over-year in the fourth quarter of 2015, the bank's earnings totaled a record-breaking $23.7 billion, up from $23.5 billion in the fourth quarter of 2014.
The Mortgage Banking division of JPMorgan Chase experienced a disappointing fourth quarter, however, with net income totaling $266 million, down 21 percent year-over-year. Net revenue also fell 10 percent to $1.7 billion.
JPMorgan Chase hopes that two recent changes in leadership can turn around the Mortgage Banking Division’s fortunes in 2016: In December, Mike Weinbach changed roles at the bank , moving from head of Mortgage Servicing to become the CEO of Mortgage Banking. Earlier in January, the bank named Peter Muriungi as head of Mortgage Servicing  to replace Weinbach.
Bank of America, largely free of legal and other costs associated with a $16.65 billion settlement in August 2014, posted its best year since 2006  for the full year of 2015 with a net income of $15.9 billion. It was more than triple the bank's net income of $4.8 billion for 2014. For the fourth quarter of 2015, Bank of America's net income was $3.3 billion.
Citigroup reported net earnings of $3.3 billion  for the fourth quarter of 2015, nearly a ten-fold increase from the bank’s reported net income of $344 million for the fourth quarter of 2014. The spike was driven by "higher revenues and lower operating expenses, partially offset by a higher cost of credit. Citigroup’s effective tax rate was 29 percent in the current quarter, a decrease from 74 percent in the fourth quarter 2014, which was impacted by an elevated level of non-tax-deductible legal and related expenses," according to the release.
Wells Fargo’s Q4 2015 net income of $5.7 billion , a price of $1.03 per share, and full year net income of $23 billion for 2015 were all virtually the same as the year before (the full year net income did slightly decline, from $23.1 billion in 2014 down to $23.0 billion in 2015).
According to PNC’s Q4 earnings statement , the bank’s 2015 total net income was $4.1 billion, or $7.39 per share, down slightly from 2014’s profits of $4.2 billion, or $7.30 share. The bank’s fourth quarter earnings also ticked down year-over-year from $1.1 billion ($1.90 per share) in Q4 2014 down to $1.0 billion ($1.87 per share) in Q4 2015.
For PNC, residential mortgage banking noninterest income decreased $12 million primarily as a result of lower loan sales revenue. Residential mortgages totaled $113 million in the fourth quarter of 2015, down from last quarter's number of $125 million and last year's number of $135 million. Mortgage loans declined despite an increase in total loans PNC by $1.7 billion as of December 31, 2015 compared with September 30, 2015.
Legal League 100 Spring Servicer Summit, Thursday, April 14
The Legal League 100 Spring Servicer Summit  will be on Thursday, April 14, from 8 a.m. to 3:45 p.m. at the Westin Galleria Hotel in Dallas, Texas. This day-long gathering of industry professionals lays the course for active, collaborative discussions with attorney- and associate-members of the Legal League 100, as well as experts from the lending and servicing communities. RSVPs to this event are only accepted from lenders, servicers, GSEs, regulators, and members of the Legal League 100.
The Legal League 100  is a consortium of default servicing law firms and service providers created in collaboration with the Five Star Institute in April 2007 to provide the mortgage banking and default servicing industries with a reliable, results-driven resource that helps them easily locate the law firms specializing in servicing and default-related matters, while providing its members endless avenues to achieve growth and success.
Here is the lineup for the week:
Tuesday, April 12, 2016
Quicken Loans' Home Price Perception Index
Wednesday, April 13, 2016
JPMorgan Chase—Q1 2016 Earnings Statement
Federal Reserve Beige Book—2:00 PM EST
Thursday, April 14, 2016
Bank of America, Wells Fargo—Q1 2016 Earnings Statements
Friday, April 15, 2016
Citigroup—Q1 2016 Earnings Statement