Closing Complex Loans Faster With a Digitized Client Workflow

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Home appraisal’s ugly history and uncertain future

This is Part I of a deep dive into the home appraisal industry. Today we explore the origins of the appraisal industry and its current lack of diversity.

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Triad Posts Q2 Loss of $198.8 Million

Now in portfolio run-off, mortgage insurer Triad Guaranty Inc. (TGIC) said late Monday that it lost $198.8 million during the second quarter, or $13.36 per share, compared with net income of $12.0 million, or $.80 per share, for the year-ago quarter. During the second quarter, Triad saw its approval from both GSEs suspended as its ratings were cut, forcing it into run-off; the company stopped issuing commitments for new mortgage insurance coverage effective July 15, 2008, and laid off 45 percent of its staff, as a result. “Our focus now is on the efficient and effective servicing of our insured portfolio, particularly around loss mitigation,” said CEO William Ratliff, III, in a press statement. “We intend to continue to improve our processes in this area by examining and refining all aspects of our default management and claims process, including assessing servicer effectiveness, pursuing acquisitions of properties in foreclosure when appropriate and enhancing our investigations of potential fraud in the mortgage commitment process, particularly for recent policy years.” In other words, now that Triad’s in runoff mode, look for it to get pretty aggressive it what claims it pays and what claims it does not. Not surprisingly, credit quality continued to deteriorate during the quarter, as the insurer saw delinquencies rise 18.4 percent quarter-over-quarter in its primary flow business to 13,730 loans. That total is well over double the 5,504 delinquencies recorded in the second quarter of 2007. Delinquencies increased at a similar pace in the company’s comparatively smaller bulk and modified pool portfolios, according to an investor presentation; Triad’s flow business represented $10.52 billion in risk-in-force at the end of Q2, compared to $1.4 billion in bulk and $6.0 billion in modified pool portfolios. Overall, primary delinquencies (including flow and bulk) registered a rate of 6.01 percent at the end of June, up from 8.45 percent one quarter earlier; and modified pool delinquencies hit a whopping 10.75 percent, up sharply from 8.45 percent one quarter earlier. Net paid claims went through the roof in the company’s flow book of business, too, jumping to $48.1 million from $29.2 million just one quarter earlier. That’s a jump of 65 percent in paid claims in just one quarter. $7.3 billion of Triad’s $37.9 billion of primary insurance in force is tied to Alt-A mortgages, which the company defines as loans with credit scores above 620 and underwritten with low or no documentation. Defaults in this sector of mortgages, in particular, have been proving problematic as of late, for Triad and other insurers. Lastly, the company’s risk-to-capital ratio — a measure of how much capital the insurer has relative to risk in force — jumped to 42.7 to 1, meaning that for every dollar in capital, the insurer held nearly 43 dollars’ worth of risk. Last year at this time, that ratio was at 16 to 1. For more information, visit Disclosure: The author held no positions in firms mentioned in this story when it was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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