Archive for May, 2009
Mortgage solution provider Calyx Software expanded its network by three mortgage service providers, increasing user access to tools and services to facilitate home appraisals, loss mitigation and product and pricing operations.
AMC Links, an appraisal ordering system, offers Home Valuation Code of Conduct compliance for mortgage brokers and lenders looking to use appraisal management companies.
Retreat Capital Management, a real estate services company, provides loss mitigation solutions to lenders with the intent of keeping homeowners in their homes while allowing lenders to restore cash flow.
Sollen Technologies offers Web-based loan searching, product validation, loan level pricing and lock desk management tools.
Calyx Point version 6.0 and higher automatically updates to include the new businesses when users connect with the Internet while the software is open.
Write to Diana Golobay.
Appraisal management company (AMC) DartAppraisal.com integrated with Mortgage Builder Software to bring Home Valuation Code of Conduct-compliant valuation services to mortgage banking clients. The integration ensures Mortgage Builder's clients are covered for the new regulation, which went into effect May 1.
"As [Mortgage Builder's] first AMC integration, DartAppraisal.com combines leading technology with stringent quality control measures for a comprehensive appraisal," said DartAppraisal president Darton Case in a media statement.
The Home Valuation Code of Conduct (HVCC) essentially requires that appraisers are selected and assigned on a blind basis via independent, third-party platforms to eliminate room for any faulty appraisals made around conflicts of interest.
Independent appraisers have argued since before the original HVCC was introduced that the use of AMCs risks the quality of an appraisal by cutting into fees. The revised code has done little to quell such discontent, and if anything, has pushed this debate to the forefront of the settlement services industry as appraisers, originators and third-party service providers race to cover themselves under the new regulation.
Write to Diana Golobay.
Fitch Ratings downgraded multiple Citigroup Mortgage RMBS series from triple-A to junk today after placing them on negative rating watch. The ratings agency made the downgrades as part of an ongoing review of prime and Alt-A RMBS transactions as the housing downturn continues to unwind.
Many of the vintage 07 series involved in Citigroup's RMBS downgrades migrated to double-C from triple-A but several made the leap to triple-C from triple-A.
The agency also slashed five series of Bear Stearns RMBS from triple-A to double-C, and one from triple-A to triple-C.
Bank of America Funding's RMBS on the most part maintained its triple-A rating, although a single series previously placed on negative ratings plunged from triple-A to triple-C.
Fitch recently revised its surveillance methodology for prime and Alt-A residential mortgage-backed securities to incorporate ResiLogic's mortgage loss and default model, which determines a base-case loss expectation in conjunction with a transaction specific assessment of the pool's actual performance.
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
The Federal Reserve in the week ending May 13 bought a gross $35.58bn in mortgage-backed securities (MBS) from mortgage Freddie Mac (FRE: 0.00 N/A) and Fannie Mae (FNM: 0.00 N/A), as well as from Ginnie Mae.
The weekly purchases come as the latest installment of government investments designed to lift mortgage-related assets from banks' balance sheets and encourage mortgage lending.
The Fed bought $6bn MBS from Freddie, $27.33bn from Fannie and $2.25bn from Ginnie; the various purchases are scheduled to settle on the Fed's balance sheet from May to August.
In the same week, the Fed sold a total $8.43bn, relieving its balance sheet of $1.92 in securities with 30-year maturations and 5% coupons, which settle in June. The Fed also sold $1.93bn of 30-year MBS with 5.5% coupons, $1bn of which settles this month while the remaining $930m is slated to settle in June.
The weekly purchases and sales once again show a discrepancy, as the Fed bought $5.1bn of 30-year MBS with 4.5% coupons to settle in June, $8.15bn of the same MBS to settle in July and another $5.25bn to settle in August. Meanwhile, the Fed only sold $950m of the same MBS, which settles in May, meaning the Fed took on $18.5bn of liabilities to settle over the next three months and only pushed 5% of that figure in comparable MBS off its sheet this month.
In other words, the room the Fed made for that specific coupon barely touches the financial commitment that will come due before August.
See a detailed chart of the Fed's weekly purchases and sales.
The discrepancy in these purchases and sales has made an impact on the Fed's balance sheet in recent months. The balance sheet rose $75.11bn the same week ending May 13 to a total $2.12trn, according to a weekly summary released Thursday. The figure is up $1.25trn from the year-ago week ended May 14, 2008, partly due to the sizable amounts of MBS purchased through the program.
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
BlackRock (BLK: 187.49 -0.20%) and Bank of New York Mellon (BK: 20.23 +1.15%) head up a line of possible suitors interested in purchasing Barclays' (BCS: 14.09 +1.15%) asset management segment, unnamed sources told Bloomberg.
Barclays may raise as much as $10bn through the sale.
BNY Mellon manages $881bn of assets through mutual funds and institutional accounts. One of HousingWire’s sources inside BNY Mellon tells us major European banks have parked considerable reserves at its Canary Wharf operations in London.
The source says large European banks are confident in leaving capital at BNY Mellon, a stateside Troubled Asset Relief Program administrator and consequentially very likely to be “insured” with government capital, should any problems arise, without the public shame of asking for a capital infusion.
BlackRock, which manages $1.3trn in assets, makes a name for itself buying distressed debt. Last year it began backing Private National Mortgage Acceptance, also known as PennyMac, which buys mortgages at a discount and look to service them in-house.
Both BNY Mellon and BlackRock profit well from such acquisitions, but they might be two of the few players left. For example, General Electric (GE: 19.03 -0.21%) in 2008 overextended itself in asset acquisitions, in September '08 revising its earnings guidance due to "unprecedented" weakness in financial services market.
“Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend commitment," GE CEO Jeffrey Immelt said in a media statement. "We have suspended the stock buyback to reduce GE Capital leverage, while still being able to pursue opportunistic acquisitions.”
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
Title insurer Fidelity National Financial (FNF: 18.15 -0.55%) plans to acquire LoanCare Servicing Center, a loan subservicer and outsourced loss mitigation service provider that will integrate with Fidelity's lender platform.
Previously a wholly-owned subsidiary of LandAmerica Financial Group, LoanCare will join a family of acquired LandAmerica businesses at Fidelity, including Commonwealth Land Title, Lawyers Title and Unit Capital Title. The new deal costs Fidelity $16.3m and brings LoanCare's $12.4m in tangible equity.
"We believe that LoanCare and ServiceLink, our national lender platform, can generate substantial ancillary product revenue opportunities through the subservicing and loss mitigation platforms, including additional title and closing revenue, trustee sale guarantees, valuations and a broad range of significant default based revenues," said chairman William Foley in a media statement Thursday.
The acquisition comes at a time when Fidelity seems to need the additional income stream to offset its quarterly losses. The company in late April posted a $12.4m net loss for the first quarter as the housing market continued to unwind, dragging order volumes. Fidelity might suffer the housing bust, but it also enjoys the booms that go along with it. For example, recent swells in refinance volume made for increased title insurance order volume, but the influx also increased the delay time until an order closes.
The acquisition of LoanCare, when complete, may not aid in the closing of title insurance orders, but it should help Fidelity streamline the subservicing side of its lending platform.
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
Housing affordability among first-time Californian home buyers in Q109 improved more than 20 percentage points from the year-ago period, according to survey results released Thursday by the California Association of Realtors (CAR).
The data suggest the potential for a significant increase in first-time buyer presence on the market, although it's unclear how many of these households will actually participate. The increased housing affordability indicates substantially lower home prices, likely affected by foreclosure sales in the state.
CAR found 69% of California households could afford to purchase an entry-level home in Q109, compared with only 46% in the same quarter last year.
The median entry-level price for a home in California was $213,040 in the first quarter, making the estimated monthly payment $1,270. A California household needs a minimum $38,090 yearly income to purchase under these circumstances, CAR said. These households typically purchase a home equal to 85% of the prevailing median price.
Californian households might enjoy some new affordability due to the state's high foreclosure sales volumes. A monthly report released this week by ForeclosureRadar saw foreclosure notices ease by 18% in the state during April, while sales at auction rose 35% overall and a record number of properties sold at an average 28% below the estimated market value.
Areas like California with high volumes of so-called “distressed” sales — which traditionally fetch 20% less than non-foreclosures — also tend to show the first signs of recovery, National Association of Realtors economist Jed Smith tells HousingWire for the upcoming June magazine issue.
“We’ve seen some phenomenal strength in California, Arizona, Nevada and Florida recently, largely because prices in those markets got bid down to such a point that the first-time home buyer and probably many others have seen a real opportunity there…to come back into the market,” he says.
Write to Diana Golobay.
A class-action lawsuit alleges IndyMac Federal Bank failed to meet its own underwriting guidelines on certain securitized mortgage loans. The suit points toward substantially higher rates of delinquencies and foreclosures on collateral for these highly-rated debt issues.
As a result of the collateral's poorer-than-estimated performance, the complaint says, underwriter rating agencies had to downgrade a number of pass-through certificates, forcing a substantial decline in their value and loss to investors who purchased the certificates.
Pass-through certificates involve the distribution of principal and interest payments through the system from borrowers to certificate holders. Morgan Stanley Capital earlier this week became the focus of another lawsuit regarding pass-through certificates.
The IndyMac case is only the latest step in a history of trouble at the thrift. The Federal Deposit Insurance Corp. took over IndyMac last July and arranged its sale to a consortium of private equity investors.
The sale completed in March, but not before the FDIC discovered an additional $10bn in previously-unknown liabilities related to problematic mortgage loans sold to Fannie Mae (FNM: 0.00 N/A). Despite the road blocks, the sale eventually finalized, including 33 branches, a reverse mortgage unit and a $176bn residential mortgage servicing portfolio. IndyMac at the end of January held $23.5bn in assets and $6.4bn of deposits.
Kohn, Swift & Graf and Wolf Haldenstein Adler Freeman & Herz filed the suit on behalf of all purchasing parties. Buyers of any certificates listed in the suit have until July 13 to request the appointment of lead plaintiff in the case.
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
Risk mitigation and compliance service provider Interthinx allied itself with a mortgage document preparation provider, Document Express, providing lenders with loan closing packages quickly without sacrificing compliance.
"With the torrent of new laws and increased enforcement by both regulators and investors, many lenders will not be able to keep up without outside support," said Interthinx president Kevin Coop in a media statement Thursday.
The integration allows Document Express' clients to verify loans against high-cost thresholds through a comprehensive report of federal, state, local and government-sponsored entity testing standards, ensuring the compliance of a loan at all levels. The partnership streamlines closing operations and cuts down on leeway for error associated with using an outside regulatory compliance service provider.
Write to Diana Golobay.
In effort to spur web-based software growth, mortgage software provider PCLender.com is expanding its sales and marketing team.
"We are expanding the depth and capabilities of our sales channel to better serve the lending industry in this ever-changing marketplace," says Lionel Urban, president and co-founder of PCLender.com.
In its efforts to do so, the company appointed Paul Eckert Sales and Marketing Manager of the company's newest sales division, Express Channel, which was developed for regulated lending institutions funding between ten to fifty units per month.
Eckert will lead marketing strategies, direct growth initiatives and head sales efforts for the Express division. His team will have a national focus and aim to further complement the existing sales and marketing staff, who currently serve larger financial institutions.
Most recently Vice President and Director of National Sales for LION, Inc. of Seattle, Wash., Eckert has a 20-year history with mortgage technology products and e-business solutions.
Write to Kelly Curran.
