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Relatively Few First Quarter 2008 Mods Found Current
July 1, 2009
Less than three in 10 mortgages that were modified by servicers in the first quarter of 2008 are still current, according to a new "mortgage metrics" report released by the Comptroller of the Currency. The report indicates that as loan modifications age the chance of a mortgage going delinquent again increases significantly. The OCC found that just 29.5% of loans modified in 1Q08 are still "current and performing" while 48.2% of those modified in the fourth quarter were current. As for mortgages modified in the first quarter of this year — with the stated goal being home retention by the mortgagor — almost 36% are already in some stage of delinquency, the OCC found. Even though the relapse rate is poor, mortgage servicers are under increasing pressure to help consumers. Loan modifications by mortgage companies increased by 172% in the first quarter compared to the same period last year. Servicers initiated 185,156 new loan modifications in 1Q — a 55% jump from the previous quarter. The report also shows that foreclosure actions in the first quarter totaled 290,900, up only 4% since the first quarter of 2008.
Trial Period May Be Reducing Number of Modifications
July 1, 2009
The number of completed loan modifications has fallen in April and May as servicers put more loans through a 90-day trial period as required by the Obama administration's Home Affordable Modification program. "Many of these trial modifications will result in formal reporting of modifications after 90 days," according to Hope Now, an alliance of mortgage servicers. Hope Now servicers reported that they modified 101,000 mortgages in May, down from 121,000 in April and 134,000 in March. Meanwhile, foreclosure sales jumped to 82,600 in May, up from 62,800 the previous month. Nearly two thirds of the foreclosure sales in May and April involved prime mortgages.
Freddie Mac Seen Awaiting Approval of New Chief Executive
July 1, 2009
Freddie Mac's board of directors has selected Charles E. Haldeman Jr., a top executive at Putnam Investments, to be its next chief executive, according to a source familiar with the matter. "He's the leading candidate," said the source. The nomination has been sent to its regulator, the Federal Housing Finance Agency, which has yet to act on the pick. Mr. Haldeman would replace John Koskinen, a former Clinton Administration official. Mr. Koskinen replaced David Moffett who took control of the GSE when the government placed it into conservatorship this past fall. In other company news, the GSE said in a new regulatory filing that it received $6.1 billion in new funds from the Treasury Department to help offset its mounting liabilities. Counting the new infusion, the Treasury Department, to date, has given the GSE $51.7 billion to keep its net worth above zero.
Genworth Prices IPO for Canadian MI Unit
June 30, 2009
Genworth Financial Inc., Richmond, Va., has priced the initial public offering of its Canadian mortgage insurance subsidiary, revealing that it hopes to raise up to $730 million (U.S.) The IPO has been priced at $19 per share, Canadian, which translates into $16.45. U.S. Genworth hopes to complete the IPO by July 7. The stock will trade on the Toronto Stock Exchange under the symbol MIC. "This IPO reinforces our already sound financial foundation and provides additional capital flexibility to Genworth," said Michael D. Fraizer, chairman and chief executive of Genworth Financial. "At the same time, we will continue to benefit from the earnings associated with our majority position in Genworth MI Canada as it plays an important role in providing solutions to the housing finance market in Canada." The Canadian business had first quarter 2009 net operating income of $66 million, compared with $75 million for the same period one year prior. The unit had $2.4 billion of flow insurance sales and $0.4 billion of bulk sales for the first quarter 2009.
Celink Adding 1,500 to 2,000 Loans a Month
June 30, 2009
Reverse mortgage subservicer Celink of Lansing is adding between 1,500 to 2,000 new loans per month to its platform, according to company CEO John LaRose. The privately held company — of which Mr. LaRose is the owner — subservices about $4 billion in product. Celink is celebrating its 40th anniversary this year. The company has retained a third-party company to conduct a client satisfaction survey for it.
Credit Unions Facing More Fallout on Mortgages
June 30, 2009
The deterioration of the mortgage market and rising foreclosures and delinquencies is expected to cause increasing losses on billions of dollars of mortgage-backed securities being held by corporate credit unions, according to the National Credit Union Administration. The prediction comes as NCUA revealed it has pumped almost $20 billion into U.S. Central FCU and WesCorp FCU over the last six months to keep these two corporate CUs afloat. Scott Hunt, director of NCUA's Office of Corporate CUs, said current estimates are that U.S. Central will have a loss of $1.7 billion and WesCorp a loss of $5.7 billion on their mortgage securities, but agency officials expect those numbers to be even higher because of the ongoing deterioration in the market.
Case-Shiller: Home Prices May be Stabilizing
June 30, 2009
House prices fell by only 0.6% from March to April, according to the Standard & Poor's/Case-Shiller 20-city house price index, signaling that home values may be stabilizing. From February to March, prices fell 2.2%. "We are entering the seasonally strong period in the housing period, so it will take some time to determine if a recovery is really here," said David Blitzer, chairman of S&P's index committee. Overall, home prices are down 18.1% from April of last year. In 13 of the 20 metro areas, the annual rate of decline slowed from March to April. Eight metro areas experienced price increases in April, including Cleveland which saw values rise 1.2%. Dallas saw a 1.7% gain, and Denver 1.5%.
GAO Urges Closer Monitoring of Reverse Originations
June 30, 2009
The General Accountability Office is urging the Department of Housing and Urban Development to increase its monitoring of housing counselors who provide information about FHA reverse mortgages to senior citizens. GAO auditors secretly participated in 15 counseling sessions and discovered that counselors did not cover all the topics required by HUD. Seven of the 15 counselors did not discuss required information about alternatives to Federal Housing Administration reverse mortgages, which are known as 'home equity conversion mortgages.' GAO also noted some claims made by counselors are potentially misleading. One potentially misleading claim is that seniors are told they will "never owe more than the value of your house." HUD had approved this claim at one time, but later said it is not true in all situations, GAO said. "A borrower or heirs of a borrower would owe the full loan balance — even if it were greater than the value of the house — if the borrower or heirs chose to keep the house when the loan became due," said Mathew J. Scire, director of financial markets and community investment, in prepared testimony released Monday. The report also recommends that other federal regulators need to be "vigilant about emerging consumer protection risks" in the reverse mortgage market.
MIAC Offering Two Bulk Portfolios Representing $586MM in Rights
June 30, 2009
Mortgage Industry Advisory Corp. is offering investors two different bulk portfolios of mortgage servicing rights, one that includes a package of troubled GNMA receivables. MIAC managing director Dan Thomas cautioned that the bulk market is "not reviving in a big way" but noted that some buyers of servicing rights are beginning to see opportunities in the market. MIAC is offering a $336 million portfolio of Freddie Mac and private investor servicing rights, and what Mr. Thomas called a "high delinquency" Government National Mortgage Association package that represents $250 million worth of underlying loans. "Most of the servicing deals that are getting done are smaller deals," said Mr. Thomas. "You have firms out there that need to sell."
Wells Fargo Sells $600MM Non-Performing Portfolio
June 30, 2009
Wells Fargo & Co. has apparently found a buyer for a $600 million portfolio of non-performing subprime loans, according to investment banking officials. However, at press time it was unclear who the investor is. The buyer, noted one source, may not have bought the entire package but most of it. A Wells mortgage spokesman had not returned a telephone call about the matter. In the past the bank — the nation's second largest servicer with $1.78 trillion in receivables — has not commented on such auctions.
