Archive for July, 2009
Fannie Mae (FNM: 0.00 N/A) will accept mortgages refinanced through the Home Affordable Refinance Program (HARP) with loan-to-value (LTV) ratios between 105.01% and 125% on August 1, one month earlier than previously announced.
“We are providing this advance ability for whole loan committing to address lenders' needs to obtain secondary market pricing information so they can establish their own pricing for loan originations,” the government-sponsored enterprise said in a statement Friday.
The announced also said Fannie will start accepting whole loan and mortgage-backed securities deliveries with the new, higher LTV on September 1.
The HARP is an Obama Administration initiative aimed at helping borrowers refinance their underwater mortgages. Loans owned or serviced by Fannie Mae or Freddie Mac (FRE: 0.00 N/A) are eligible for the program.
Loans modified through the program are required to either lower a borrower’s monthly payment or move them into a more stable mortgage, i.e. going from an adjustable-rate mortgage to a fixed-rate loan. Loans with LTVs above 105% are required to be 30-year fixed rate mortgages.
Write to Austin Kilgore.
Disclosure: The author held no relevant investment positions when this story was published.
Genworth Mortgage Insurance Corp., a division of Genworth Financial (GNW: 7.83 +0.38%), removed 136 metropolitan markets from its declining and distressed markets list, potentially loosening loan-to-value (LTV) and down payment standards in these areas.
Genworth calculates a market as declining based on certain statistics including borrower performance, according to Terry Souers, a spokesman for Genworth's US mortgage insurance business.
The removal of these metros from the distressed list leaves room for higher LTVs among the mortgages Genworth will insure there, meaning local borrowers potentially can bring less cash to the closing table for down payment purposes. While metros remain on the declining and distressed list, the LTV standards are tighter.
"People with equity in their homes are more likely to be able to stay in those homes, even in hard times," Souers says. "It’s unfair to put someone into a home when there is a real possibility that they could be underwater before pictures were hung on the walls."
An expansion of LTV standards in these areas indicates at least a bit of recovery in terms of borrower performance.
Genworth's letter to lender customers (available to download here) attributes the removal of the metros from the declining and distressed list to "continued changes in the mortgage market and our ongoing evaluation of loan performance." In the metros affected by the changes, loans with LTVs greater than 90% — up to 95% — and with borrower credit scores of less than 700 will be eligible on or after Oct. 1, 2009 to receive mortgage insurance at Genworth's "nonstandard" rates, according to the letter.
The 136 markets removed from the declining and distressed markets list include Baton Rouge, LA; Charlottesville, VA; San Antonio, TX; Fort Worth-Arlington, TX; and Kansas City, MO.
Despite the removals, however, 41 individual metro areas 14 states remain on the declining and distressed list. A mix of so-called "sand states" and a handful of Northeast states populate the list, alongside Hawaii, Oregon and Utah.
Write to Diana Golobay.
Disclosure: The author held no relevant investment positions when this story was published.
Loss mitigation service provider Sterling Home Retention Services unveiled its new platform of "bundled services," including its flagship TouchPoint platform, which targets servicers participating in the Treasury Department's Home Affordable Modification Program (HAMP).
Partners in this service include a courier and office services provider, a customer services provider and Jacksonville-based short sale technology vendor National Quick Sale. The office services provider handles the HAMP modification documentation and borrower notification, while the customer services provider mans the phones needed to handle the calls to and from qualifying borrowers.
To round off the bundled services, National Quick Sale offers its Web-based short sale technology solution to borrowers, servicers, and investors as an alternative to default in the event a HAMP modification does not work. National Quick Sale finds buyers, assigns a Realtor and completes short sales before foreclosures are finalized, including sale and leaseback arrangements that the company says will ultimately keep borrowers in their homes.
Write to Diana Golobay.
Fitch Ratings downgraded nine real estate investment trusts (REIT) since April, but according to the firm’s quarterly report of the trusts, recent improvements in the financial markets encourage REITs to begin positioning themselves for economic recovery.
Most of the downgraded REITs moved from triple-B negative to double-B or double-B positive, but two, General Growth Properties and Thornburg Mortgage were downgraded from restricted default (RD) to default (D), due to the firms’ pending bankruptcies. Healthcare REIT Parkway Life was downgraded from triple-B plus to triple-B.
For the remaining 38 REITs Fitch rates, the situation is improving. Fitch reported five of its rated REITs have gotten back in the unsecured debt market since March, with transactions totaling $2.55bn. Others executed bond tender offers totaling $2.8bn.
Fitch's report said REITs have made common equity issuances that enable them to reduce leverage and improve liquidity.
While Fitch placed an overall negative outlook on US and European REITs, many individual REITs have “outlook stable” or “watch positive” outlooks assigned to them.
Fitch also warned many REITs will face challenges in maintaining their current rating, mainly addressing unstable financing across capital markets and the impact of declining property values and tenant defaults is having on property markets.
Write to Austin Kilgore.
The Federal Reserve Bank of New York received applications for $668.94m of loans to buy up commercial mortgage-backed securities through the Fed's Term Asset-Backed Securities Loan Facility (TALF).
The TALF program is aimed at stimulating lending by allowing private investors to purchase securities with a matching government investment. Back in mid-May, the Fed announced certain high-quality CMBS would qualify as eligible collateral under the program. The extension of eligibility to include legacy CMBS is intended to promote price discovery and liquidity for legacy CMBS, the Fed says.
The July 16 facility, which received the $668.94m of bids, offers two types of loans: The fixed 3-year loans bear a 3.02% interest rate and a maturation date of July 24, 2012, while fixed 5-year loans bear 3.87% maturity with a maturation date of July 24, 2014.
It marks the first batch of bids for participation in the CMBS market. The Fed's June 16 facility received no bids, indicating a stark turnaround in interest in the CMBS branch of the program in just a month.
Write to Diana Golobay.
The US Treasury Department added two mortgage servicers to its Home Affordable Modification Program (HAMP) since its early-July additions, bringing the total number of participating servicers to 27.
Lake National Bank and IBM Southeast Employees' Federal Credit Union both signed on July 10 to participate in the program, receiving up to $100,000 and $870,000 apiece in initial incentive payment caps.
Through HAMP, servicers receive and distribute incentive payments to borrowers and lenders/investors for modifications initiated and successfully maintained.
The Treasury is making a series of moves to increase servicer capacity for the program, including a letter issued last week to the (then 25) top US servicers participating in HAMP, urging them to step up modification efforts.
“We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share,” the letter reads.
The new participants in the program arrive after a mid-June cap adjustment on the Treasury’s TARP fund investments to several major servicers based on actual participation in the modification program. The Treasury reduced the total amount that CitiMortgage can receive and distribute to borrowers for modifications by more than $991m to a total $1.08bn, as a reflection of actual funds usage. Wells Fargo’s total incentive payment amount received more than $462m in reductions to a revised cap of $2.41bn.
Write to Diana Golobay.
Del Mar DataTrac (DMD) launched Version 9.0 of its automation platform, used widely by mortgage lenders, banks and credit unions to facilitate loan processing and underwriting.
The release includes new versions of WebTrac, a Web-based originator portal, and DocumentTrac, an electronic document manager, and addresses 246 product requests, according to the corporate release.
"We asked our clients how we could further improve their user experience and help them make more money, better control their business, save time and secure peace of mind — the core focus of DMD. Version 9.0 was built around their feedback," said Rob Katz, president of DMD, in the release.
New features update underwriting worksheets and improve new fields for appraisal, property and flood certification information. The update also revises county management with new loan limits from Fannie Mae (FNM: 0.00 N/A), and it enhances pricing adjustments. The new software makes improvements for underwriting, specifically for the Federal Housing Administration's mortgage insurance program.
Write to Jon Prior.
REO Insider, a new and independent source of information for brokers and agents conducting business in the REO market, debuts in print on August 18. An online counterpart at www.theREOInsider.com goes live today, offering commentary and an engaging behind-the-scenes look at the REO industry.
As the first publication of its kind, this twice-monthly “mini-mag” focuses solely on the world of bank-owned real estate, or REO.
The number of nationwide bank-owned properties increased over 65,000 in May to a total of 770,999 properties, according to RealtyTrac’s most recent data. At a time when bank-owned properties dominate much of the real estate market, REO Insider fills an information void long-felt by Realtors and brokers in the niche-based REO industry.
This publication will deliver time-sensitive REO news focused on information agents and brokers need to know, while also supplying a comprehensive platform for dialogue amongst industry players. Agents will read about everything from the latest technology trends, to expansion opportunities, new legislation and building better BPOs — even industry horror stories. The goal of the publication is simple: Offer agents front-line real estate information vital to generating optimal business in the current marketplace.
Long-time REO expert John Czerw is leading the publication as Associate Publisher. Czerw spent 20 years marketing single-family homes and served as Vice President of Freddie Mac’s innovative HomeSteps venture. At HomeSteps, Czerw tackled the flood of REO properties in California’s real estate market during the late 1990s, helping to drive a real estate recovery.
“I’m excited to lead the REO Insider team,” Czerw says. “The team we have assembled is second to none. It includes Jacob Gaffney, a former Deputy Editor at Thomson Reuters in London, who will head up the editorial staff of REO Insider as Managing Editor. Our real estate knowledge and media expertise afford us the capabilities to deliver the industry’s top-notch magazine.”
“I hold John in the highest regard,” says Coldwell Banker’s Stephanie Vitacco, top sales agent in Southern California’s West Valley. “I can’t wait to read the product his team produces.”
Long-term mortgage rates trended down in the week ending July 16, marking the third consecutive week of decreases after rates began edging upward in May, according to mortgage giant Freddie Mac (FRE: 0.00 N/A).
Freddie's latest rate survey found that 30-year fixed-rate mortgages (FRMs) posted an average 5.14% with an average 0.7 point, from 5.2% last week. Fifteen-year FRMs averaged 4.63% with an average 0.7 point, from 4.69% last week.
Thirty- and 15-year FRMs both came in well below year-ago levels of 6.26% and 5.78%, respectively.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.83% this week with an average 0.7 point, up from 4.82% last week, while one-year Treasury-indexed ARMs averaged 4.76% with an average 0.5 point, down from 4.82% last week, according to Freddie.
A separate rate survey conducted by Bankrate.com, which tracks large banks and thrifts, was less optimistic in terms of average rates this week. Bankrate found 30-year FRMs slipped to 5.58% from 5.59% a week earlier, while 15-year FRMs averaged 4.93%, unchanged from the previous week.
Write to Diana Golobay.
Four bank failures pushed the running '09 total to 57 failures. They pose an estimated cost to the Federal Deposit Insurance Corp.'s (FDIC) deposit insurance fund of a combined $1.09bn.
The Office of the Comptroller of the Currency shut down Vineyard Bank, which costs the FDIC an estimated $579m. California Bank & Trust assumes all of its $1.6bn of deposits, except for the bank's $134m in brokered deposits. California Bank & Trust also entered a loss-sharing agreement with the FDIC on about $1.5bn of the bank's $1.9bn of assets.
The California Department of Financial Institutions shut down Temecula Valley Bank, which will cost the FDIC $391m. First-Citizens Bank and Trust Co. will assume nearly all of the failed bank's $1.3bn of deposits, save for about $304m in brokered deposits. First-Citizens Bank and Trust Co. entered a loss-sharing agreement with the FDIC on about $1.3bn of the failed bank's $1.5bn of assets.
The South Dakota Division of Banking shut down BankFirst, which will cost the FDIC an estimated $91m. Alerus Financial assumes all of the bank's $254m of deposits as well as $72m of its $275m of assets. Additionally, Beal Bank Nevada entered an agreement with the FDIC to acquire $177m of the failed bank's loans.
The Georgia Department of Banking and Finance shut down First Piedmont Bank, which will cost the FDIC's fund an estimated $29m. First American Bank and Trust Co. paid a 1.01% premium to acquire the bank's $109m of deposits; it also bought $111m of its $115m in assets.
Fitch Ratings placed $1.6bn from 13 rated notes across four collateralized debt obligations (CDOs) on rating watch negative. Trust preferred securities, senior and subordinated debt issued by real estate investment trusts, home builders and financial institutions specializing in mortgage lending primarily back the notes. The Taberna Preferred Funding notes being watched now bear ratings anywhere from single-B to triple-B. Of the outlooks taken on the notes, Fitch said:
First American National Default Title Services unveiled its new National Residential Rental Services Division (NRRS), which aims to address the needs of financial institutions pursuing residential strategies for non-rural, non-seasonal single-family real estate-owned properties. NRRS allows financial institutions to use a loss mitigation strategy to not only generate positive cash flows from otherwise non-perfomring REO assets, but also protect the value of those assets for later disposition.
“First American believes a broader adoption of rental-based strategies provides significant macroeconomic and social benefits during these challenging economic times by providing investors and servicers with greater control and flexibility over the supply of competing REO ‘for sale’ properties while also providing a net positive cash flow,” said Wes Mee, president of First American National Default Title Services.
The New York Federal Reserve Bank purchased $22.98bn of agency mortgage-backed securities in the week ending July 15; $6.85bn from Freddie Mac (FRE: 0.00 N/A), $11.47bn from Fannie Mae (FNM: 0.00 N/A) and $4.66bn from Ginnie Mae. In the same week, the Fed sold $810m of agency MBS through the so-called "dollar roll" MBS market, when the seller agrees to buy back a security at a later date for an agreed price, thereby providing temporary liquidity for the funding of other securitizations. In the same week, the Fed's balance sheet swelled by $34.25bn to a total $2.01trn — up $1.12trn from the same time last year, due in part to the $489.06bn of MBS held outright.
Write to: Diana Golobay.
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