Decreases seen in mortgage delinquencies
A May 16 report from the Mortgage Bankers Association added another bright note to the housing market, with the percentage of U.S. homeowners behind on their mortgages falling to the lowest level since 2008. The delinquency rate for residential mortgage loans decreased 7.4% during the first quarter of 2012.
Foreclosures are not improving at the same rate, however. The percentage of loans in the foreclosure process as of March 31 was 4.4%, relatively unchanged from the previous quarter and down one basis point from 4.5% a year ago.
“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve,” said Michael Fratantoni, MBA’s VP research and economics. “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future. The percentage of loans three payments or more past due, the loans that represent the backlog of problems that still need to be handled, is down to the lowest level since the end of 2008. Foreclosure starts are at their lowest level since the end of 2007.”
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Michaels hires former HD exec
Michaels Stores has announced the establishment of an interim office of the CEO to provide ongoing leadership and continuity for the business in the absence of current CEO John Menzer. Sharing the interim CEO duties will be Lew Klessel, managing director with Bain Capital Partners, and Charles "Chuck" Sonsteby, the company’s chief administrative officer and CFO.
Klessel joined Bain Capital in 2005 and is currently serving as the operational executive responsible for the firm’s investments in Michaels. Prior to joining Bain, Klessel held a variety of operating and strategy leadership positions from 1997 to 2005 at Home Depot, most recently as president of Maintenance Warehouse, a wholly owned subsidiary that distributed maintenance products to facility management customers.
Menzer suffered a stroke in April and is currently in stable condition, receiving continued medical care. He is on medical leave from the company and is expected to be out for an extended period of time. His status will be reevaluated by the board of directors on a periodic basis, according to the company announcement.
Michaels Stores is North America’s largest specialty retailer of arts, crafts, framing, floral, wall decor and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of May 4, 2012, the company owned and operated 1,067 Michaels stores in 49 states and Canada, and 130 Aaron Brothers stores.
Sears plans partial spinoff of Sears Canada
Sears Holdings Corp. has announced plans to pursue a partial spinoff of its interest in Sears Canada.
The move will reduce the Hoffman Estates, Ill.-based Sears Holdings’ stake in Sears Canada from 95% to about 51%, the company said.
In a press release Thursday, Sears said it expects Sears Canada to file documents with the Securities and Exchange Commission and the Canadian Securities administrators over the next few months with the expectation of completing the proposed spinoff during the 2012 calendar year.
Following the spinoff, Sears Canada will continue to be listed on the Toronto Stock Exchange.
Sears Holdings said it believes that the spinoff will permit each of Sears Canada and Holdings to focus on their respective businesses and allocate resources to best optimize returns on assets employed.
Sears Holdings expects to continue to include Sears Canada as a consolidated subsidiary in Sears Holdings’ Consolidated Financial Statements following the spinoff.
The spinoff is subject to a number of conditions, including approval of securities filings by the board of directors of Sears Canada, review by the relevant securities regulators and final approval of the Holdings board of directors.