Archive for August, 2009
[Update 1: Corrects volume of refinance purchases in June versus July]
Refinance activity dropped in July among loans purchased by mortgage giant Freddie Mac (FRE: 0.00 N/A) as delinquencies rose among its single-family mortgages.
Freddie posted $44bn in purchases and issuances in July, from $63.1bn in June but up from $34.6bn in the year-ago period. Refinanced mortgages accounted for $34.1bn of purchases in July, down 33% from $50.9bn a month earlier.
Freddie's total mortgage portfolio, however, slipped at an annualized rate of 3.3% in July, according to the company's monthly volume summary.
The net amount of mortgage purchase or sales agreements made for Freddie's mortgage-related investments portfolio topped $11bn, up from $9.9bn last month. The aggregate unpaid principal balance of its mortgage-related investments portfolio fell to $799.1bn at the end of July from $829.8bn at the end of June.
But even as the unpaid principal balance fell within Freddie's mortgage-related investments portfolio, delinquencies rose 17bps among single-family loans.
The total single-family delinquency rate among Freddie's loans rose to 2.95% from 2.78% in June, while multifamily loan delinquencies held at 0.11% from last month. The rate of delinquency is up across the board from last year, when single-family loans were 1.01% delinquent in July 2008 and multifamily loans were 0.03% delinquent.
Write to Diana Golobay.
Disclaimer: The author held no relevant investments when this story was published.
Citigroup (C: 30.87 +1.61%) kept 108,000 mortgages with a combined original value of $16bn from foreclosure in Q209, 29% more than in Q109, according to data just released by its servicing business.
“CitiMortgage’s main concern is to help as many of our distressed customers as we can with a solution that is appropriate for their individual financial circumstances and needs," said CitiMortgage CEO Sanjiv Das in a company statement.
Modifications decreased 5% from Q109, but total loss mitigation efforts rose by 29%, due in part to trial modifications implemented under the Home Affordable Modification Program. The three-month trial period keeps pending HAMP modifications out of "modified" status until homeowners remain current through the three-month trial.
Citi said it hired 1,400 staffers in its loss mitigation department and has solicited more than 140,000 delinquent borrowers for the HAMP initiative since April and offered trial HAMP modifications to 40,000 borrowers.
Loss mitigation solutions outnumbered foreclosures by 12 to one in Q209, Citi said.
Foreclosures and delinquencies continue to trend upward overall, Citi said, as loans 90 or more days past due rose to 4.7% within Citi's servicing portfolio of first and second mortgages.
Re-default rates did not exceed 29% — the approximate industry standard — for loans modified between Q108 and Q109.
Write to Diana Golobay.
Disputes over real estate appraisals, loan modifications and foreclosures pushed a 54% increase in mortgage-related lawsuits, according to Second Quarter Mortgage Litigation Report from Dallas-based Mortgagedaily.com.
The analysis is based on active cases covered by the Web site, which monitors investor litigation.
There were 125 cases tracked in Q209, up from 81 in Q109 and 42 in Q209, led by investor lawsuits, which increased from 21 in Q109 to 31 in Q209.
There were no modification cases in Q109, but as the Making Home Affordable Modification Program (HAMP) was initiated, 22 cases were filed in Q209, mostly against modification firms. Foreclosure cases more than doubled from 12 in Q109 to 26 in Q209.
At the same time that the Home Valuation Code of Conduct was implemented, appraisal cases jumped from two in Q109 to 11 in Q209.
Write to Austin Kilgore.
Taylor, Bean & Whitaker Mortgage Corp. filed for relief under Chapter 11 bankruptcy to focus on restructuring its operations and potential wind-down of its assets, the company said Monday.
The mortgage lender will continue to operate on a scaled-down basis as it begins recovering, restructuring and possibly liquidating its assets.
Taylor, Bean & Whitaker appointed two independent directors, Bill Maloney and Bruce Layman, to managed the scaled-down business. The new independent board appointed Neil Luria of Navigant Capital Advisors as chief restructuring officer.
"This is a very complicated business, and the speed of its collapse has been stunning," Luria said in a corporate statement. "We are very appreciative of the efforts of the members of management and other company employees, along with a large team of professionals, who have worked tirelessly under very stressful circumstances to make today's filing possible."
Luria added: "Much remains to be done, but we are committed to creating and realizing the value of the company's assets."
The filing follows weeks of regulatory crack-downs by the US Department of Housing and Urban Development, which suspended Taylor, Bean & Whitaker's FHA-approved status, and Ginnie Mae, which terminated its status as issuer and servicer of Ginnie securitizations.
The servicing rights of Taylor, Bean & Whitaker's Ginnie portfolio transferred to Bank of America (BAC: 7.29 -0.14%), although the company still services nearly 35,000 private portfolio loans.
After the company said it would no longer accept online payments or automatic payment reductions on mortgages it still services, the Florida Office of Financial Regulation on Friday ordered Taylor, Bean & Whitaker to cease processing foreclosures and assessing late payments.
Write to Diana Golobay.
Bangalore, India-based business process outsourcing firm Infosys BPO entered into an alliance with Jacksonville, Fla.-based MortgageFlex Systems to provide support for Making Home Affordable Modification Program (HAMP) and other alternative mortgage modification programs, the two companies announced.
Infosys BPO will provide data hosting to MortgageFlex for its document reviews, payment plan creation, underwriting modifications and closing services.
“A hosted solution eliminates the high overhead of data center personnel and maintenance, while maintaining system compliance integrity,” William Black, MortgageFlex chief information officer, said in a statement.
Write to Austin Kilgore.
The current recession is characterized by locks in liquidity which are preventing the proper servicing of mortgage finance products.
For example, servicers must advance delinquent principal and interest to the trustee in US residential mortgage-backed securities (RMBS), at times creating a financial burden.
However, issuers could avoid the pressure on servicers' liquidity by pursuing RMBS structures that do not require advances, rating agency DBRS suggests in commentary Monday.
Servicers are typically expected to make advance payments for delinquent principal and interest (P&I), as well as make escrow advances for delinquent taxes and insurance (T&I) and corporate advances for such "out-of-pocket" expenses as foreclosure proceedings and fees associated with the management and liquidation of real estate-owned (REO) properties.
Servicers are reimbursed for these advances on either a monthly basis from general collections on the pool of mortgages or from subsequent collections on the related delinquent mortgage at the time of liquidation or reinstatement. Principal and interest recoveries typically take the first form of reimbursement, called pool-level recovery, while taxes and insurance recoveries take the loan-level recovery.
Servicers are usually reimbursed at the top of the trust payment "waterfall," and most RMBS servicing agreements specify the servicer recovers any previously non-reimbursed advances when a loan is modified.
The speed at which servicer advances are reimbursed depends on the type of advance and the foreclosure time line within the jurisdiction local to the mortgaged property. But high delinquency rates and increased time lines on foreclosure and real estate-owned processes cause liquidity challenges for many advancing servicers.
"Loan-level recoveries on servicing advances can take several years," DBRS said Monday in a structured finance commentary. "Additionally, the interest cost to carry relative to the servicer’s credit facility can become a serious financial burden."
As a result, issuers are considering the benefit of not advancing principal and interest in new RMBS transactions. DBRS said it sees growing requests with respect to transactions in which servicers are not required to advance P&I payments
"While servicer advances are intended to provide timely cash flows and liquidity to a transaction, they do not serve as credit support," said DBRS. "Furthermore, deals where advancing occurs typically have higher loss severities than those that do not because the advanced interest will have to be reimbursed from the trust upon the liquidation of the mortgage."
To keep liquidity flowing, some servicers are turning to servicing advance facilities, which enable them to securitize their rights to advance reimbursements at high investment-grade rating levels and receive funds up front, DBRS noted in market commentary in early August.
Write to Diana Golobay.
Home sales in the San Francisco Bay Area were at their highest July level in four years as activity rose in more expensive neighborhoods, according to MDA DataQuick.
There were 8,771 new and resale single-family homes and condos sold in the nine-county Bay Area last month, up 15.6% from 7,586 in July 2008 and up 1.5% 8,664 in June 2009.
While the median sales price in the nine-county area was $395,000, down 16% from $470,000 in July 2008, it was up 12.2% from $352,000 in June.
The July median was 36.2% higher than this housing cycle’s low of $290,000 in March 2009, it 40.6% below the June and July 2007 peak median price of $665,000.
MDA DataQuick said a reduction in real estate owned (REO) inventory on the market contributed to the increase median price. In July, 34.2% of homes were foreclosure resales, the lowest since the share was 33.3% in July 2008. The share of foreclosure resales peaked at 52% in February 2009.
“Evidence is mounting that in some areas we’ve approached at least a soft bottom for home prices,” MDA DataQuick president John Walsh said in a statement. “But we continue to view that possibility with an abundance of caution, given all of the uncertainty over future foreclosure inventories and ongoing job cuts. The market remains vulnerable.”
The media price was also bolstered by increased sales in the Bay Area’s more expensive neighborhoods.
“The high end of the market finally has a pulse and that has led to a swift rise in the median sale price,” Walsh said. “It’s the opposite of what we saw two years ago, when the credit crunch slammed the brakes on jumbo lending and sales of more expensive homes screeched to a halt. That triggered a near free-fall in the median sale price.”
Sales of homes at or above $500,000 also continue to accelerate. They represented 35.6% of all home resales in July, up from 34.1% in June, and the highest share since September 2008.
Write to Austin Kilgore.
[Update 1: Adds comments from Bob Dorsa]
Credit unions originated 38.8% more first-lien mortgages in Q209 compared to Q208, according to Callahan & Associates’ First Look Program market research.
Credit unions that participate in the research surveys reported originating a combined $30.7bn in mortgages during the quarter, up 16.1% from Q109.
According to American Credit Union Mortgage Association (ACUMA) president Bob Dorsa, credit unions hold nearly 6% of the mortgage industry market share, and have room to grow.
Dorsa told HousingWire the association’s membership has set a goal of 10% mortgage origination market share by 2016.
“The biggest impediment is that many Realtors and most consumers don’t really think about a credit union when they think about mortgage lending,” Dorsa said.
There are nearly 8,000 credit unions in the US, but because they lend to their own membership, Dorsa said the average credit union is only lending about 70% of its available funds.
“It’s not a matter of limited funds, it’s a matter of limit of knowledge and understanding and education by consumers and Realtors and builders,” he said.
To increase the appetite for mortgage lending, credit unions are working to get the word out to real estate professionals and consumers that they have money to lend.
Something that could help is the recent charter of a National Association of Realtors (NAR) credit union.
Credit unions are taking a larger share of the origination market and looking for additional resources to expand their capacity. Sources have told HousingWire small lenders and community banks are stepping up their mortgage operations.
Community banks and credit unions may even fill a growing need in the dwindling warehouse lending space as institutional lenders exit, says Mary Kladde, president and CEO of Titan Lenders Corp.
Write to Austin Kilgore.
For industry commentary on the potential role of community banks in warehouse lending, look for HousingWire’s October edition.
Cortland Savings and Banking Company will begin using the origination platform out of Mortgage Builder at the end of September.
It’s the first origination software upgrade the 117-year-old Ohio community bank’s made since 1992, and will assist in the company’s transition to paperless mortgage origination.
Cortland Bank loan officers are receiving training in the new software during the transition period.
“Everything we need is built into the system, including compliant loan documents and the ability to obtain everything we need without leaving the [system],” Cortland Bank vice president of mortgage lending Karen Clower said in a statement.
Write to Austin Kilgore.
Los Angeles-based foreclosure listing service REOTrans launched an online certification program for real estate agents that sell real estate owned (REO) properties.
Agents and brokers who take the online courses can display a “certified agent” logo on their marketing materials. The certification program is a marketing tool for agents to stand out in the crowd of real estate players, REOTrans CEO Chris Saitta said.
“There has been a huge influx of real estate agents to meet the growing demands for REO properties and it is our goal to provide the 8,000 asset managers who use REOTrans with agents who are committed to ongoing professionalism through certification and training,” he said in a statement.
Write to Austin Kilgore.
