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Servicing

Monday Morning Cup of Coffee: Short sales up in 2011

A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues:

Short sale volumes may not have experienced the boom many predicted, but they're certainly moving up.

Late last week, the Office of the Comptroller of the Currency issued a report on year-end loss mitigation activity for most of the mortgages serviced by the nation's largest banks.

The 227,570 new short sales completed in 2011 was a 12% increase from one year ago and more than double the 112,000 measured in 2009, according to the report.

As the robo-signing freeze thaws, and new requirements under the attorneys general settlement are enforced, short sales may continue upward in 2012.

The single-family delinquency rate on the Fannie Mae portfolio dropped to its lowest level in nearly three years, according to its February book of business report released late Friday.

The rate declined to 3.82% from 3.9% the month before. The delinquency rate is also down from 4.44% one year prior.

The GSE continues to lose billions every quarter from the mortgages guaranteed between 2005 and 2007, but it is working steadily through modifications, short sales and in some cases even foreclosures to clear out the backlog.

Meanwhile, it continues to be one the largest home loan financiers in the U.S. Fannie issued $56.7 billion in mortgage-backed securities in Feburary, up nearly 5% from the same month last year.

Analysts at JPMorgan Chase (JPM) found in an investor survey that major purchases of mortgage-backed securities from the private market are unlikely and the possibility of the government doing so through QE3 is even dimmer.

Therefore, the biggest buyers of MBS in 2012 could be real estate investment trusts.

"Typically REIT purchases have coincided with equity raises, which have generally occurred when price/book ratios are over par," the analysts said. "Based on changes in REIT equity prices and mortgage performance we estimate that REIT equity issuance could reach $5 billion in the second quarter, possibly resulting in $20 billion to $30 billion of MBS purchases."

The Federal Deposit Insurance Corp. reported the 16th bank failure Friday.

The Michigan Office of Financial and Insurance Regulation closed Fidelity Bank of Dearborn, Mich. The Huntington National Bank, based in Ohio, will assume all $747.6 billion in deposits and agreed to purchase essentially all $818.2 million in assets.

The closing is expected to cost the FDIC fund $92.8 million.

jprior@housingwire.com

@JonAPrior

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