Archive for September, 2009
Mortgage mediation for distressed borrowers, as a requirement prior to foreclosure, is growing more common at national, state and local levels. However, a group representing the pockets of Americans hardest hit by the housing crisis is doubtful these initiatives will do much good in the long run.
Mortgage mediation efforts, that is where lenders reach out to borrowers in trouble in an attempt to bring loan payments current, suffer from the same lack of industry accountability that haunts voluntary federal mortgage modification programs, according to a new study from the nonprofit National Consumer Law Center (NCLC).
The NCLC says for all of the good these new regulations intend for borrowers, in the end it equals more bark than bite.
“There is as yet no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications,” according to the report.
The NCLC is a consumer advocacy group representing low-income families. For the latest research, the NCLC reviewed 25 foreclosure mediation programs in 14 states and warned that the expectations these programs encourage could be misleading.
Researchers also found that the existing programs fail to impose significant obligations on mortgage servicers.
“Without the imposition of these obligations, it is unlikely that mediations will lead to fewer foreclosures. The programs we considered often lack mandatory rules and fail to impose sanctions for non compliance with what minimal rules exist,” according to the report.
The programs do not require servicers to substantiate a right to foreclose, and they do not mandate an analysis of alternatives to loan modifications. Many of the programs set procedural barriers that keep some homeowners from participating, according to the study.
“It is unfortunate that the industry has so far prevailed in blocking Congressional action on court-ordered loan modifications, the one step that would level the playing field for consumers and ensure the necessary accountability from all parties,” said Geoffrey Walsh, the study’s author.
But the 57 servicers participating in the Home Affordable Modification Program (HAMP) are on track to the meet the Administration’s goal of reaching 3m to 4m homeowners over the next three years, according the US Treasury Department’s latest performance report of the participating servicers.
HAMP provides cap incentives to servicers for the modification of loans in danger of foreclosure, and the Treasury adjusts those caps based on performance. The Treasury said in its latest report that 360,000 trial modification are underway, led by Saxon Mortgage Services, which started trials for 39% of its eligible delinquency portfolio.
Write to Jon Prior.
Mortgage Contracting Services, a property preservation and inspection services provider to the mortgage industry, promoted Caroline Reaves as CEO of the company, according to a corporate release.
In 2007, Reaves joined MCS as president of MCS Asset Management and in the same year became president and chief operating officer of MCS Field Services.
Before her move to MCS, Reaves spent three years with First American Corp. (FAF: 14.98 +0.07%) as president of its national default outsourcing division, and she served as vice president of default for Midland Mortgage Co. where she managed foreclosure, bankruptcy, property preservation and real estate-owned (REO).
The promotion follows the resignation of MCS’ former CEO Allan Martin, who was with MCS since January 2003 and was appointed to vice chairman of the board.
“I have the utmost confidence in Caroline’s ability to lead MCS. With nearly 25 years devoted to this industry, she has a wealth of knowledge in a number of areas of the business, and her contributions to MCS’ collective success have been numerous and significant,” Martin said.
Write to Jon Prior.
Fitch Ratings downgraded four classes of notes issued by C-BASS CBO XI, a cashflow collateralized debt obligation (CDO) that closed in late 2004.
Fitch slashed one class to triple-C from single-A. The other classes were also lowered to junk status.
The actions came late Friday after severe credit deterioration among '04-vintage residential mortgage-backed securitization (RMBS) underlying the CDO, which is managed by C-BASS Investment Management.
The portfolio includes 80.7% RMBS, 6.8% structured finance CDOs, 10.3% asset-backed securities (ABS) and 2.2% commercial mortgage-backed securities (CMBS).
Since Fitch's last review in February 2009, about 58% of the portfolio faced downgrades, with 35% of the portfolio downgraded since June 1, 2009. The ratings agency indicated deteriorating house prices and high unemployment rates as driving factors in rising delinquencies despite "significant" seasoning of the loans.
Fitch's downgrades were not isolated to the residential mortgage market on Friday, as commercial mortgages continue to deteriorate in performance.
Fitch also downgraded 13 classes of '06-vintage commercial mortgage pass-through certificates out of GE Commercial Mortgage Corp. due to the rating agency's loss expectations on specially serviced loans. The ratings agency said it anticipates 4.6% losses on the affected transaction, should market conditions not recover for commercial mortgages.
Write to Diana Golobay.
Kennedy Wilson Auction Group will sell nine Nevada single-family homes and condominiums during an October 18 auction in Henderson, Nevada.
The initial pool of bank-owned homes for this auction was 14, but Kennedy Wilson is offering the homes on its Web site before the auction so that prospective buyers can make offers to purchase them.
A review of Kennedy Wilson’s Web site early Monday showed five of the homes already sold. The lowest starting bid for the nine remaining homes is $5,000.
On October 4, Kennedy Wilson will hold a similar but larger auction in Georgia.
Prospective bidders can register for the auction for free, but must bring a $2,500 cashier’s check to be allowed to bid.
Write to Austin Kilgore.
MBSData, a technology provider to the non-agency mortgage-backed securitization (MBS) industry, launched its new platform to deliver MBS performance data and analytics to investors.
The platform offers loan level remittance data at the first of each month and a complete history and performance on over 6,000 MBS deals.
The platform also provides loan modification information that includes vital cure rates. Users also receive deal rankings and alerts on deals that perform poorly compared with peer groups.
MBSData targets small and mid-size investors that were priced out of the market when trying to gather detailed MBS deal and loan level information.
Potential users can subscribe to the Web platform for access to the full suite of MBS data or subscribe to the bulk data services.
The platform is adjustable and can be tailored to meet an individual investor’s needs. The platform also provides larger investors access to monthly and historic deal and loan level databases.
Write to Jon Prior.
LoanSifter, a Web-based mortgage application, product, pricing and eligibility software, integrated with the new functionality of Wolters Kluwer Financial Services’ Disclosure Manager software.
Lenders who use LoanSifter can now access the Wolters Kluwer tool to generate standard and customized initial disclosure documents and electronically deliver to the borrower for electronic signature, or outsourcing the printing and mailing hard copies from Wolters Kluwer Financial Services’ mail fulfillment center.
“This key integration with Wolters Kluwer Financial Services closes the loop by automatically delivering up-to-date disclosures, ensuring proper compliance and reducing overhead,” said LoanSifter president Bruce Backer, in a statement.
Write to Austin Kilgore.
A dwindling supply of inventory and an improving market confidence boosted the average UK house price in September, according to Hometrack, which provides information services to the mortgage industry.
As housing prices show signs of better than expected growth in the US, according to Radar Logic, the UK market shows similar signs of improvement. The average price climbed to £156,100 ($248,892) or 0.2% from August but stayed 5.6% below the level in September 2008. In August, the average house price bumped 0.1% from July and 6.7% from the year before.
Despite the talk of general improvement in property and equities, which has boosted a positive outlook on the market, questions arise as to whether or not the recent surge in activity will continue, said Richard Donnell, director of research at Hometrack.
"A sustainable housing market recovery cannot be built on the back of price rises, driven off what is a short-term supply/demand imbalance," he said. "The reality is that constrained mortgage availability and expected increases in unemployment are set to act as a drag on demand across large parts of the market."
The price jumps over the last two months concentrate in London and the South East, Hometrack reported. Only 15% of postal codes saw an improvement in price growth, while 85% reported unchanged prices. Prices gained 0.4% in London and 0.3% in the South East, according to Hometrack.
The low sales volume and scattered housing on the sales block will likely continue to support the gains in London and the South East for the rest of the year, but prices in the rest of the country are set to track sideways, Donnell said.
But unlike the UK's inventory shortage, the flight of foreign buyers led to a massively oversupplied housing market in Spain, burdening the Costa del Sol region in particular. In Spain, the cost of a home mortgage fell 18.3% in July from last year and 2.3% from the month before. But mortgage cancellations fell by 23%, according to the Instituto Nacional de Estadística (National Statistics Institute).
Write to Jon Prior.
SigniaDocs, a Dallas-based eMortgage services provider, updated its loan documents to meet the Federal Reserve’s changes to Regulation Z, which take effect October 1.
Regulation Z is a truth in lending rule aimed at protecting consumers who purchase non-prime mortgage products, and the changes come as part of the Home Ownership and Equity Protection Act (HOEPA).
For “higher-priced loans” — loans with annual percentage rates that exceed Freddie Mac’s average prime offer rate by more than 1.5% for first mortgages and 3.5% for junior liens — lenders must now evaluate the borrower’s ability to repay and verify borrower income and assets. Lenders also must not have prepayment penalties for two years on most loans and establish escrow accounts for taxes and insurance.
“Compliance with the new regulation can be tricky, especially as market rates fluctuate frequently,” said Tim Anderson, president of SigniaDocs. “SigniaDocs loan documents are already compliant with the new rules, but we’ve taken additional steps to assure our lenders are protected.”
SigniaDocs’ system alerts the user when the additional disclosure information is required on a loan application. The system also allows for the electronic transmission of documents to borrowers.
Write to Austin Kilgore.
Evolution Capital Partners, a Cleveland, Ohio-based private equity firm, made an undisclosed equity investment in American Eagle Mortgage (AEM), a Lorain, Ohio-based mortgage lender that originates loans in Ohio, Kentucky and Florida.
AEM deals primarily in Federal Housing Administration- and Veterans Affairs-backed mortgages. The equity investment is the fifth of its kind in Evolution’s current fund.
“They have proven to be a significant player in what has become a very volatile market,” Evolution managing partner Brendan Anderson said of AEM.
“We look forward to partnering with management to continue to build on and expand American Eagle's product offering,” he added.
Write to Austin Kilgore.
A look at the stories on HousingWire’s weekend desk…with more coverage to come on bigger issues.
The leaders of the Group of 20 nations wrapped up their summit in Pittsburgh, Penn with a statement on staying the course of current policies until the global economy has recovered:
“The conditions for a recovery of private demand are not yet fully in place. We cannot rest until the global economy is restored to full health, and hard-working families the world over can find decent jobs. We pledge today to sustain our strong policy response until a durable recovery is secured."
“We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility.”
The statement also asserted that the development of the long-ignored and impoverished parts of the world is crucial to heal the global markets:
“Over four billion people remain undereducated, ill-equipped with capital and technology, and insufficiently integrated into the global economy. We need to work together to make the policy and institutional changes needed to accelerate the convergence of living standards and productivity in developing and emerging economies to the levels of the advanced economies. To start, we call on the World Bank to develop a new trust fund to support the new Food Security Initiative for low-income countries announced last summer."
Barclays Capital analysts reported in their weekly commercial mortgage-backed securities (CMBS) that the long rally of the CMBS market has tapered off. Analysts recommend select long positions despite the concerns of the near future, according the report, and that the rally of CMBX indexes is overdone.
In the Q209 Flow of Funds report, the commercial real estate (CRE) sector showed further deleveraging, according, according to the analysts. Researches expect the trend of widespread weakness across all lender types to continue in future quarters.
Barclays researchers also reported that that the deferred cease of the Federal Reserve Bank’s MBS purchases will relieve agency mortgages and the housing market.
Researchers prepare for weak data in housing prices at the end of 2009 but expect a recovery in prices in early 2010.
Standard & Poor’s released a statement late Friday in response to the “Accountability and Transparency in Rating Agencies Act,” introduced by Rep. Paul Kanjorksi, chairman of the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
“These reforms include significant enhancements to our governance and transparency, as well as a substantial strengthening of our analytics. However, industry wide regulation is required to restore overall investor confidence in ratings,” the statement reads.
The reform should be written to enhance transparency and ratings performance, according to the statement.
“Reforms should also increase competition and not create new barriers to entry. S&P welcomes the opportunity to compete for investor interest in its ratings regardless of whether ratings are embedded in regulation rules for investors,” according to the statement.
Late Friday, the closing of Georgian Bank in Atlanta, Ga. marks the fall of the 95th bank in the country this year. The Georgia Department of Banking and Finance closed the five branches, which cost the Federal Deposit Insurance Corp. $892m.
FDIC said First Citizens Bank agreed to assume all of the $2bn in deposits of the failed bank and "essentially" all of its $2bn in assets. The FDIC entered into a loss-sharing transaction with First Financial Bank on purchase of the assets.
Write to Jon Prior.
