Archive for July, 2009
Reverse Mortgage Adviser, an online service that links borrowers and lenders of reverse mortgages, recruited TARGUSinfo to verify contact information for those inquiring about the loan service.
TARGUSinfo, a Virginia-based prospect provider, identifies and locates potential customers at the moment the borrower makes contact. Reverse Mortgage Adviser will receive updated names, addresses and phone data for lenders to generate leads.
“Through our relationship with TARGUSinfo, our reverse mortgage network of lending partners will receive an even higher quality of borrower with the most accurate and up-to-date contact information available,” said Gretchen Williams, director of customer relations at Reverse Mortgage Adviser, in a corporate release.
Reverse mortgages allow homeowners over the age of 62 to convert a portion of the home’s equity into cash. Repayment is not usually required on a reverse mortgage until the homeowner is deceased, sells the home or fails to maintain property tax payments.
Write to Jon Prior.
The Government National Mortgage Association — commonly Ginnie Mae — issued $43.5bn in mortgage-backed securities (MBS) during June.
It marked the first time in Ginnie's 41-year history when the monthly issuance surpassed $40bn, according to a corporate release.
"The extraordinary strength of our MBS program clearly demonstrates the continuing need for Ginnie Mae securities in the secondary market," said Ginnie Mae president Joseph Murin.
The month of issuance brings the total six-month total so far in 2009 to $207bn, well over the $107bn seen during the same time in 2008. Single-family accounted for $43bn of issuance, while multifamily composed $584m of issuance.
With the full faith and credit of the US government, Ginnie is in the position of taking on loans guaranteed by the Federal Housing Administration, the Department of Veteran Affairs, the Department of Agriculture’s Rural Development and Department of Housing, as well as the US Department of Housing and Urban Development’s Office of Public and Indian Housing.
Ginnie also participates in the Federal Reserve’s MBS purchase program as an ongoing part of the Fed’s role in the so-called “dollar roll” market — a purchase agreement where the seller traditionally sells the security now under an agreement to buy it back in the future at a lower price. The Fed purchased $4.05bn of MBS from Ginnie in the most recent week of transactions, providing a bit of liquidity for other issuance.
Write to Diana Golobay.
The US Treasury Department sent a strong message to mortgage servicers participating in the Home Affordable Modification Program (HAMP), urging a ramp-up in renegotiating loans, according to a letter signed by Treasury secretary Timothy Geithner and Housing and Urban Development (HUD) secretary Shaun Donovan.
The HAMP distributes Troubled Asset Relief Program (TARP) funds for servicer, borrower and lender/investor incentives on successful modifications initiated.
The Treasury's letter (which can be read here) details three steps the Treasury will take to ensure participating servicers comply, including a scheduled meeting on July 28 to discuss reports of the program’s results.
“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 letter addresses 25 servicers participating in HAMP, such as CitiMortgage and Wells Fargo Bank, which receive incentives for modifications designed under the Obama Administration's Making Homes Affordable (MHA) program.
The letter requests that servicers designate a senior liaison who will work with the Treasury department on the MHA program. Also, to avoid applications from slipping through the cracks, the Treasury appointed mortgage giant Freddie Mac (FRE: 0.00 N/A) to design a “second look” program that will audit loans that the servicers declined.
In the letter, the Treasury asks that servicers increase staff, expand call centers and provide more training for representatives.
The letter comes after a mid-June cap adjustment on the Treasury's TARP fund investments to 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 Jon Prior.
Defaults on hotel and retail loans drive up delinquency rates for commercial real estate loans, with strong concentrations in the parts of the US hit hardest by the housing crisis.
Fitch Ratings cited five defaulted loans of at least $100m each as contributing factors to a record $2.2bn net increase in delinquencies in June. According to its report, released Monday, delinquencies are up 48 bps to 2.55%.
Moody’s Investor Services put the delinquency increase in its July 10 report at 2.67%.
According to Moody’s state-by-state breakdown, Michigan’s 7.8% delinquency rate was the greatest of any state in the country. Nevada was second, (6.93%) followed by Rhode Island, (6.65%) Arizona (6.28%) and Tennessee (5.74%).
However, the report also said delinquency rates in California and New York, which represent 14.95% and 12.11% of the commercial real estate market, respectively, are below the national average. California's delinquency rate is 1.94% and New York's is 1.16%.
June’s largest commercial default, the reports said, was the Woodbridge Center in Woodbridge, N.J., a loan worth more than $207m. It, along with a $164.5m defaulted loan on the Jordan Creek Town Center in West Des Moines, Iowa, are sponsored by the Chicago-based General Growth Properties (GGP), which is currently under bankruptcy protection as the retail developer reorganizes.
GGP, the country’s second-largest mall owner, is negotiating $27bn in debt with its creditors.
Fitch reported 13 hotel loans worth a combined $596m defaulted in June alone. More than two-thirds of that value is in three loans for hotels in Phoenix, Las Vegas and New York City.
Delinquency rates for multifamily properties were more than 4.5% in both reports, and the highest of the commercial sectors. But Moody’s 4.58% rate came in only two bps higher than the multifamily delinquency rate in June. Multifamily delinquency rates decreased in the western and southern regions of the country, but a 61-bps increase in the Midwest kept the national average up.
Write to Austin Kilgore.
PIMCO Advisory, a division within global investment management firm PIMCO, hired an asset-backed securities (ABS) research veteran to work in its structured finance division.
Rod Dubitsky joins PIMCO Advisory — which analyzes, designs and manages complex asset-liability solutions — as an executive vice president and global structured finance specialist.
"Rod has extensive experience in the ABS market and his addition to our team further strengthens PIMCO Advisory's unique ability to provide customized analysis and advisory solutions for our clients," said Richard Weil, managing director and global head of PIMCO Advisory, in a corporate release.
He previously served as managing director, head of ABS research at international financial services firm Credit Suisse. There, he took the lead research role covering bonds backed by loans including mortgages. He also worked as a senior analyst at Moody's Investor Services.
Write to Diana Golobay.
[Update 4: clarifies status of General Motors' bankruptcy, clarifies loans were originated by GMAC, and seller's unknown identity.]
SilverLeaf Financial acquired $28m in mortgage notes, containing loans originated by GMAC, for a sharply discounted price of $4.9m, according to a corporate release.
In the bundle, SilverLeaf receives 321 30-year single-family mortgages from the financing arm of General Motors, which recently emerged from a bankruptcy filing. While GMAC book runs car loans for the auto maker, among other things, it also works on the banking deposit product side, with institutions Ally Bank and ResMor Trust. GMAC is also a mortgage lender and servicer through the GMAC Mortgage and ditech brands.
SilverLeaf reports it will negotiate with individual borrowers to improve under-performing loans in the new acquisition.
“Typically, we don’t buy residential property,” a spokesman for SilverLeaf tells HousingWire. “But in this instance, we had investors who were interested.”
SilverLeaf satisfied its commercial real estate interests with the purchase of a $5m note, secured by storage facility in Fort Meyers, Fla. ASAP Storage owns the facility, which sits at 50% occupancy.
SilverLeaf continues to fill its portfolio with failed bank assets purchased from the Federal Deposit Insurance Corp. The discounted prices make even under-performing loans attractive. Their usual price interest comes between $1m and $10m, a spokesman for SilverLeaf said.
While GMAC originated the mortgage loans that were sold, it's unclear who the seller was; an earlier version of a press statement from SilverLeaf had suggested that GMAC sold the loans. A spokesperson from GMAC Financial Services contacted HousingWire to say that the firm "has never done business with Silverleaf Financial and we have no knowledge of or participation in this transaction. Silverleaf Financial did not purchase these loans directly from GMAC Financial Services or any of our subsidiaries."
Write to Jon Prior.
After a review of 13 US residential mortgage-backed securities (RMBS) transactions, Standard and Poor’s lowered its ratings on 120 of the securities’ classes last week.
The collateral backing the vintage 2005-2007 securities are primarily Alt-A, first-lien residential mortgages.
S&P said it made the downgrades after reviewing the mortgage loan collateral in the securities and believes the investments will lose value because of an increase in delinquencies and the current negative condition of the housing market.
In one of the securities, American Home Mortgage Investment Trust 2007-2, S&P slashed one class from triple-A to triple-C. Classes in other securities also took similar hits, including one from GSAA Home Equity Trust 2006-3, which went from triple-A on watch negative to triple-C.
S&P affirmed its triple-A rating of seven classes in four of the transactions.
Other bank originators whose securitizations faced review include Bank of America, Lehman Brothers, Harborview Mortgage, Morgan Stanley, IndyMac and its Residential Accredit Loan Inc. (RALI) subsidiary.
The announcement came the day after S&P lowered its ratings on 86 classes from 10 RMBS securities backed by US prime jumbo, Alt-A, subprime and scratch-and-dent loans.
Market observers for months have kept an eye out for continuing pain in the Alt-A market as mortgage performance declines.
Write to Austin Kilgore.
Prepayment speeds among mortgage-backed securities (MBS) indicate that, although some lenders facing an influx of refinance interest may lack the infrastructure to manage all the requests, streamlined refinance programs have picked up since their implementation.
Bank of America-Merrill Lynch researchers noted late last week that aggregate 30-year fixed-rate MBS prepayment speeds declined 5% in June to 22.9% conditional prepayment rate (CPR), likely due to capacity constraints among lenders offering refinancings.
"We have been highlighting that capacity constraints have been one of the most important drivers of speeds and the recent prepay data seems to further support this claim, with 30-year Fannies consistently prepaying between 22% CPR and 24% CPR over the last four months, even though the refi index moved in a wide range."
Prepays on 6s and 6.5s increased despite lower speeds among 5s and 5.5s, however, indicating the streamlined refi program might be picking up overall, according to the researchers.
The researchers concluded that streamlined refinance programs seem to impact Freddie Mac (FRE: 0.00 N/A) prepays more than Fannie Mae (FNM: 0.00 N/A), with speeds on '06-'07 Gold 6s increasing more than speeds on Fannie 6s.
"We think that this happened as Fannie was imposing [loan-level price adjustments] LLPAs on streamline refis, thus reducing the refi incentive for Fannie 6s borrowers versus Gold 6s borrowers."
The report warned against undue optimism on refi popularity to continue driving prepayments, noting the Freddie Mac Survey Rate hovered between 4.8% and 4.9% in May before selling off in June. The refi index has trended downward since April, indicating a decline in refi activity in coming weeks. As a result, the researchers said they expect prepays to be flat to 15% lower next month.
"We think that in spite of the decline in refi applications, capacity constraints will continue be a major driver of prepays in the short term and as a result, speeds will be fairly sticky till the outstanding mortgage applications are cleared up," researchers said. "The backlog of applications should offset most of the decline in the refi index that we saw in April and May. Further, the recent prepay data is suggesting that streamline refi activity may finally be picking up, thus increasing the likelihood of borrowers being approved for refinancings."
Write to Diana Golobay.
US Treasury Department secretary Timothy Geithner made his pitch for enhanced regulation of over-the-counter (OTC) derivatives markets to the House Financial Services and Agriculture Committees Friday, calling for legislation that would consolidate regulation and require a central clearing for all standardized derivative trading.
Geithner blamed a lack of transparency in the market for OTC derivatives — which in 2008 topped a gross market value of more than $20trn — that let companies like AIG over-extend themselves and sell more credit protection for residential mortgage-backed securities (RMBS) than it could cover.
“The lack of transparency in the OTC derivative markets combined with insufficient regulatory policing powers in those markets left our financial system more vulnerable to fraud and potentially to market manipulation,” Geithner said in prepared testimony to the committees.
Geithner said the Obama Administration’s proposal would prevent OTC derivative activity from posing risk to the general financial system, make the derivative markets more transparent, prevent market manipulation and provide consumer and investor protections.
“The reforms that we propose seek to shift the balance by creating a more resilient financial system that is less prone to periodic crises and credit and asset price bubbles, and better able to manage the risks that are inherent in innovation in a market-oriented financial system,” Geithner said.
The secretary’s testimony drew 110 members of Congress and some waited as long as three hours for their five minutes to question Geithner, according to The New York Times.
While 117 representatives of Congress sit on the combined committees, the Times called the turnout “extraordinary.”
Write to Austin Kilgore.
A look at the stories on HousingWire’s weekend desk… with more coverage to come on bigger issues.
Senate Banking Committee chairman Chris Dodd, D-Conn., and House Financial Services Committee chairman Barney Frank, D-Mass., sent a letter to the heads of bank regulators, asking them to look into whether banks are inflating the value of second mortgages on their balance sheets, discouraging proactive mortgage modifications and loan restructurings.
Dodd and Frank say banks are unwilling to update their balance sheets to show second mortgages have declined in value, although house prices have plunged across the country, putting borrowers well underwater on their mortgages. At risk now, the chairmen say, is the willingness of second lien holders to participate in the Hope for Homeowners (H4H) program, which adjusts a troubled borrower's mortgage to 90% of the assessed value of the home.
From their letter:
The State of Florida enacted legislation to set aside $30.1m for the Florida Homebuyer Opportunity Program, which will provide up to $8,000 to qualifying first-time homebuyers as an advance on the federal first-time home buyer tax credit.
The Florida Association of Realtors (FAR) estimated "several thousand" first-time home buyers in the state could advantage from this program, which essentially monetizes the tax credit for use as down payment, closing costs or renovations and repairs on qualifying home purchases.
"We want Floridians to take advantage of this important program, which will help stimulate the state's economy as well as the real estate market," said FAR president Cynthia Shelton. "By helping qualified first-time buyers come up with the funds needed to purchase a home, this initiative will play a vital role in overcoming the largest financial barrier to homeownership."
The funds are available through local county and city housing offices that currently operate the State Housing Initiatives Partnership. The program, which runs through Nov. 30, 2009, allows up to $8,000 to a qualifying buyer, depending upon the value of the home. The funds must be repaid with the tax credit received by the borrower after filing the year's tax return.
It was a slow Friday of receiverships for the Federal Deposit Insurance Corp., with Wyoming bank regulators shutting down a single bank, Bank of Wyoming, the 53rd failure of 2009. The failure is estimated to cost the FDIC's deposit insurance fund $27m.
The FDIC entered a purchase and assumption agreement with Central Bank & Trust to assume all but $8m (of brokered deposits) of the bank's approximately $67m total deposits as well as $55m of the bank's $70m of assets. The FDIC will pay brokers directly for the amount of their funds and plans to retain any remaining assets for later disposition.
The New York Federal Reserve purchased another $23.25bn of agency mortgage-backed securities (MBS) in the week ending July 8: $3.15bn from Freddie Mac (FRE: 0.00 N/A), $16.05bn from Fannie Mae (FNM: 0.00 N/A) and $4.05bn from Ginnie Mae. In the same week, it sold $6.2bn of 30-year MBS with 5.5% coupons. A summary of the Fed's balance sheet shows MBS held outright slipped by $85m in the same week, bringing the total to $462.45bn of MBS currently on the balance sheet.
Write to Diana Golobay.
Posted in Commentary, Origination/Lending, Secondary Market/Investors, Servicing/Default | No Comments »