Archive for September, 2009
Mortgage technology provider ISGN Solutions announced it will purchase the Loan Fulfillment Solutions (LFS) business unit from information management and electronic commerce systems firm Fiserv.
The deal is expected to close within 30 days.
The companies declined to disclose the financial terms of the transaction, but as part of the deal, Fiserv will receive a minority ownership stake in CFCL Technologies Limited, the parent company of ISGN Corporation.
The LFS unit provides home equity loan fulfillment services outsourcing to financial institutions, including broker price opinions, closing and settlement services, valuation services, flood and title certification, home retention and loan modification solutions, portfolio and vendor management solutions, and related services.
“We believe the LFS business, and the clients it serves, will benefit from the scale and expertise of ISGN,” said Jeffery Yabuki, Fiserv president and CEO.
ISGN’s products include fulfillment services, title and default management software. Fiserv provides primary loan origination and servicing lending platforms, as well as lending-related data and analytics products.
Write to Austin Kilgore.
A long year of weekly bank closures — the most recent costing about $892m —pressured the Federal Deposit Insurance Corp.'s (FDIC) insurance fund as the financial industry handles the full extent of default-related loan losses.
The FDIC is seeking to proactively replenish a pressured insurance fund, proposing a rule Tuesday that would require insured institutions to prepay three years of quarterly assessments.
Banks that pay for Q409 assessments would also prepay the estimated quarterly assessments for all of 2010, 2011 and 2012. This strategy should allow the industry to strengthen the cash position of the FDIC's deposit insurance fund outside of alternatives like borrowing from the Treasury Department.
"The decision today is really about how and when the industry fulfills its obligation to the insurance fund," said FDIC chairman Sheila Bair in a statement Tuesday.
The FDIC estimates the prepaid assessments would raise about $45bn for the insurance fund. The banking industry should have sufficient liquidity to prepay the assessments, the FDIC said, indicating insured institutions held more than $1.3trn in liquid balances as of June 30 – A 22% increase over the same time last year.
The FDIC said pursuing prepaid assessments should prove less likely to impair bank lending than a one-time special assessment.
"In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer," Bair added. "This proposal is a vote of confidence for the banking industry's resilience and will continue to recover its strength as we work through the significant challenges ahead."
The FDIC board also voted to adopt a uniform 3bps increase in assessment rates effective Jan. 1, 2011 and to extend the restoration period from seven to eight years. The FDIC is seeking public comment on the proposed rule for up to 30 days after its publication in the Federal Register.
Industry groups are already speaking up on the proposed rule, with the American Bankers Association (ABA) issuing a response early Tuesday.
ABA chief economist James Chessen indicated prepaid assessments would represent money the FDIC expects to receive from banks over the next several years. Having the cash on hand sooner rather than later, Chessen added, provides more flexibility in managing "contingencies" and covering losses related to bank closures.
“This year banks will pay nearly $17bn in premiums – including the large $5.6bn special assessment paid in the second quarter," Chessen said. "Another special assessment would likely do more harm than good as it would directly reduce bank income, hinder capital growth, and make lending much more difficult. At this critical time, when the economy is just beginning its recovery, looking to options that are less pro-cyclical and that spread the cost over time is the right policy.”
Write to Diana Golobay.
Auctioneer Hudson & Marshall is auctioning a pool of 50 homes in Colorado, Idaho, Washington, and Utah this week.
It’s the first auctions Hudson & Marshall is conducting in Idaho and Washington in eight years, and the first in three years in Utah.
The auctions, being held this week will offload homes in Seattle/Tacoma, Salt Lake City, Cedar City, Boise, Denver, and Colorado Springs, list homes typically valued from $50,000 to $600,000. All homes come with title insurance paid for by the seller. The winning bidder is required to make a cash or certified check deposit of $2,500 for each property purchased.
“Demand for bank-owned homes is high because people have realized they can buy great value homes while the market is down and get a huge return on their investment when prices rebound,” said Dave Webb, principal, Hudson & Marshall.
A number of the homes were sold on Hudson & Marshall’s Web site before the auction. The firm tells HousingWire that online portals are becoming increasingly important in the home auction space.
Write to Austin Kilgore.
US home prices may still be at levels similar to those seen in fall 2003 but, in an encouraging sign to the market, continue to improve on a year-on-year basis.
According to the latest Standard & Poor’s (S&P)/Case-Shiller home price indices, July marks the six month in a row that prices showed improvements, by way of comparison, based on the same month's performance in the bleak 2008 market.
The 10-city and 20-city indices declined 12.8% and 13.3%, respectively, in July 2009 compared to July 2008, but that rate of decline has steadily improved throughout 2009.
“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.
Only a month-over-month basis, the 10-city and 20-city composites increased 1.7% and 1.6% from June to July. That follows increases of 1.4% in both indices from May to June. Of the 20 metropolitan statistical areas measured, 13 have experienced at least three consecutive months of improvement.
“These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the federal first-time buyer’s tax credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.”
The indices are a monthly indicator of price movement for single-family homes throughout the US by comparing arms-length real estate transactions.
Write to Austin Kilgore.
Lenders One Mortgage Cooperative selected Clayton Staffing Solutions Group, a subsidiary of Clayton Holdings, as its preferred vendor for staffing services.
The cooperative is an alliance of more than 145 mortgage bankers and through the agreement, Clayton will provide contract underwriters of Federal Housing Administration (FHA) and conforming loans to Lenders One members for fulltime or temporary work, as well as support staff for closing, processing, quality control, default management and servicing jobs.
The temporary workers can report to the member office or work remotely from the firm’s 55,000 square-foot operation center in Tampa, Fla.
“In selecting a preferred outsourcing staff provider, we were looking for a partner that could immediately, as well as effectively, help our members cope with the changing demands of the marketplace,” said Luke Pille, Lenders One director of national programs.
“Clayton maintains a database of more than 10,000 vetted underwriters and processors, including a significant number of FHA underwriters. Its resources, expertise and the technology will help our members capitalize on the current market opportunities, and longer term will give them the option of converting their fixed labor costs to variable ones,” he added.
Write to Austin Kilgore.
The Texas coastal cities of Beaumont and Port Arthur top the list of real estate markets expected to perform the strongest during the next year, according to research released by Veros Real Estate Solutions. Markets in Nevada and Florida, on the other hand, filled the bottom spaces.
The real estate market in the Beaumont/Port Arthur region, located about 20 miles apart, is expected to improve 5%. Boulder, Colo., Amarillo, Texas, each with projected 5% improvements, and San Diego and Charleston, WV, with 4% projected increases, round out the top five strongest markets.
“The majority of top-performing markets from September 2009 to September 2010 are still forecast to be in Great Plains area with many good markets in Texas,” said Eric Fox, vice president of technology at Veros. “Coastal California markets are forecast to wake up as well and begin appreciating. This is in addition to markets we previously identified [in April 2009] as waking up, including San Diego, Boston and Denver.”
Veros projects the bottom five markets will all be in Nevada or Florida during the next year. Reno, Nev. will experience a 12% decrease and tops Veros’ list of worst performing markets. Las Vegas is not far behind with a projected 11% decrease, followed by the Palm Bay/Melbourne/Titusville, Fla. region (10% decline), Port St. Lucie/Fort Pierce, Fla. (9% decline) and Miami/Ft. Lauderdale/Miami Beach region (9% decline).
Veros uses its analytics software to calculate its projections, comparing factors including interest and unemployment rates, inflation, and housing inventory levels.
Write to Austin Kilgore.
Marshall & Ilsley (MI: 0.00 N/A), a Wisconsin-based mortgage banker, extended its voluntary foreclosure moratorium an additional 90 days through Dec. 31, 2009.
The new expiration date marks a year since the moratorium first went into effect at the company.
With $59.7bn in assets, M&I enacted its moratorium on all owner-occupied residential loans on Dec. 18, 2008 for customers who agree to work to reach a successful repayment solution.
The moratorium is part of M&I’s Homeowner Assistance Program that proactively reaches distressed homeowners who are identified in advance. It also offers a foreclosure abatement program that features refinancing options such as term extensions and decreased rates that reduce monthly payments.
M&I and other agencies put their moratoria in place at the end of 2008, but HousingWire sources explain that they are only temporary solutions. Once the moratoria expire, the foreclosure levels may pressure the recent signs of recovery in the market, said Martin Bernhard, of Credit Suisse’s private banking, investment services and products divisions.
When HousingWire reported on Fannie Mae’s (FNM: 0.00 N/A) efforts to provide funding to warehouse lenders because of brighter economic forecasts, Fannie’s president and CEO Michael Williams warned of the post-moratoria period.
“As more properties come onto the market, that’s going to make it harder for home prices and the market overall to recover completely,” Williams said.
Write to Jon Prior.
An '09 vintage residential mortgage-backed security (RMBS) rated last week rounded out three recent new issuances in the European securitization market.
The RMBS notes are backed by mortgages originated by Halifax and by Bank of Scotland, both wholly-owned subsidiaries of HBOS, which itself is a subsidiary of Lloyds Banking Group. The note issuance is valued at £4bn (US$6.4bn) for "modeling purposes," according to a statement by Fitch Ratings.
The new issue is one of the first offered on the European securitization market "in some time," according to a statement from the European Securitization Forum (ESF), an affiliate of the Securities Industry and Financial Markets Association (SIFMA).
"This initial return to the market by some of the best-recognized names in the European securitization primary market, which follows a recent compression in spreads, is a positive initial step in the right direction” said Rick Watson, managing director and head of the ESF, in a statement Friday. “As recently stated by a number of public institutions, it is important to recognize the many benefits associated with sound securitization.”
Credit is also moving in the European automotive and retail sectors with news of new issuance.
Days before the Lloyds' issuance, Fitch also assigned expected ratings to a forthcoming securitization of lease receivables originated within Germany by Volkswagen Leasing. The €500m (US$730.7m) portfolio is highly granular, with almost 38,000 leases, although the rating agency noted the recession will likely fuel higher delinquency and default levels in coming quarters.
Late last week, Fitch also issued a final rating to class A notes from Tesco Property Finance 2. The transaction, a securitization of rental income on 15 retail stores and two UK distribution centers, bears a final initial loan-to-value (LTV) ratio of 109.7%, the rating agency said.
These deals are another indication of life perhaps returning to the European securities market, according to the ESF's director Marco Angheben.
“This is a positive sign for a market which will contribute to the return of the European economy,” Angheben added in the statement Friday.
Write to Diana Golobay.
The US Treasury Department is "in discussions" to finalize a program to provide liquidity for state housing finance agencies (HFAs), according to Treasury officials.
State HFAs like the New York State Housing Finance Agency originate mortgages for low- and moderate-income borrowers and sell mortgage-related bonds as a method to keep liquidity flowing.
Details on the Treasury's program, which are "being ironed out," may arrive as soon as this week, said one source familiar with the discussions.
The program is part of an initiative announced in February within the Homeowner Affordability and Stability Plan. The program would be implemented through mortgage giants Freddie Mac (FRE: 0.00 N/A) and Fannie Mae (FNM: 0.00 N/A), according to an initial statement on the program.
"The Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving homebuyers," the Treasury said in February.
Write to Diana Golobay.
Nearly one-third of prospective first-time homebuyers said an extension of the $8,000 first-time homebuyer tax credit would have “no influence” on their decision to purchase a home in 2010, according to a survey conducted by Harris Interactive on behalf of Zillow.com.
In the survey of adults who qualify for the credit, 18% said extending the credit from Dec. 1, 2009 to Nov. 30, 2010 would be the “primary influence” in their decision to purchase a home. An additional 25% said it would be a “significant influence,” 27% said it would have “some influence,” and 31% said it would have “no influence.”
If the credit were extended, Zillow projects 1.86m homebuyers stand to take advantage of the program. And, if all buyers took the full tax credit, extending the program could cost $14.86bn.
Zillow research projects more than 4.3m homes will be sold in the 12 months leading up to Nov. 30, 2009. To calculate the estimated number of first-time homebuyers during an extension of the tax credit, Zillow estimated a 5% increase in US home sales from 2009 to 2010, based on research it obtained from the National Association of Realtors (NAR).
NAR also provided data that projects that 36% of all buyers would be first-time homebuyers during the hypothetical extension period.
Zillow.com chief economist Stan Humphries said of all homebuyers expected under the 12-month extension through 2010, only one in five homebuyers will enter the market specifically because of the extended tax credit. In other words, 334,000 mortgages will open because of the tax credit extension.
“While 334,000 may seem like a small number relative to the total number of homebuyers who would claim the credit, their addition to the market next year could make the difference between a robust annual increase in home sales next year and a flat or negative change in home sales relative to this year,” Humphries said.
The tax credit is set to expire on November 30, but a bill recently introduced in the Senate would extend the credit for an additional six months.
Write to Austin Kilgore.
