Servicing

Gov. Arnold Schwarzenegger has reportedly signed into law a 90-day moratorium on California home foreclosures — but the measure carries certain exemptions for servicers. According to a report in The Orange County Register, state regulators can grant loan servicers and lenders exemptions, if they have a mortgage modification program in place that meets certain criteria. The measure covers owner-occupied homes and first mortgages originated between 2003 and 2007. The loan mod exemptions cover programs that defer a portion of the principal, lower interest rates for at least five years, or extend loan terms. Sen. Ellen Corbett, D-San Leandro, introduced the moratorium language as an add-on to the California budget package.

Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs. Four high ranking Republicans on the House Judiciary and Financial Services Committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage-backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

In their fight to stop bankruptcy cramdowns, financial services groups can no longer count on the support of the Realtors and homebuilders as the House prepares to vote on a housing bill that would allow bankruptcy judges to reduce or cram down the principal amount of residential mortgages. The National Association of Realtors is supporting passage of the bill (H.R. 1106) because it enhances the FHA Hope for Homeowners program that allows certain troubled borrowers to refinance and provides legal protections for servicers that engaged in loan modifications. The National Association of Home Builders recently changed its position on bankruptcy cramdowns. And the trade group is willing to accept a temporary change in the bankruptcy code to facilitate loan modifications. Meanwhile, the House is slated to vote Thursday (Feb. 26) on the housing bill and financial services lobbyists are working to narrow the negative effects of the bankruptcy provisions.

JPMorgan Chase has decided to close its warehouse lending division and is giving its non-bank customers just a few months to secure new lines. Meanwhile, mortgage advisors close to the warehouse issue say at least one more warehouse provider, a large regional bank, is seriously considering exiting the warehouse arena. Late on Feb. 24 a spokesman for JPM confirmed to National Mortgage News that the bank's warehouse business - bought from Washington Mutual last Spring - would be shuttered. Eight non-banks currently have lines of credit with JPM. (WaMu was sold to JPM in the fall with government assistance.) One advisor who has been tracking the warehouse issue, said he is not sure how large a player JPM is in terms of commitments but added, "This cannot help the industry." Earlier this year JPM began winding down its wholesale/broker division. Non-depository residential lenders that depend on warehouse credit are facing a funding crisis because so many banks and Wall Street firms have closed their warehouse divisions or scaled back credit. According to National Mortgage News there are about 10 banks or thrifts that are still active in warehouse lending compared to roughly 30 two years ago.

JPMorgan Chase has decided to close its warehouse lending division and is giving its eight current customers a few months to secure new lines. Late on Tuesday a spokesman for JPM confirmed to National Mortgage News that the business — bought from Washington Mutual last spring — would be shuttered. (WaMu was sold to JPM in the fall with government assistance.) One advisor who's been tracking the warehouse issue, said he is not sure how large a player JPM is in terms of commitments but added, "This cannot help the industry." Earlier this year JPM began winding down its wholesale/broker division. Non-depository residential lenders that depend on warehouse credit are facing a funding crisis because so many banks and Wall Street firms have closed their warehouse divisions or scaled back credit. According to National Mortgage News there are about 10 banks or thrifts that are still active in warehouse lending compared to roughly 30 two years ago.

Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs. Four high-ranking Republicans on the House Judiciary and Financial Services committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

Mortgage Contracting Services, a provider of property preservation and inspection services based in Tampa, Fla., has named Michele Struckman as assistant vice president of Tampa operations and Tracy Hager vice president of the company's Dallas operations Ms. Struckman and Ms. Hager join MCS with more than three decades of combined experience in the financial services industry. As assistant vice president of operations, Ms. Struckman is responsible for creating and implementing property preservation strategies, as well as leading operations for one of the company's largest servicing clients. Ms. Struckman was most recently with Countrywide Home Loans, where during her tenure, she worked as a foreclosure manager. In her position as vice president, Ms. Hager leads operations for the company's Dallas office, providing leadership through the day-to-day account team. Prior to joining MCS, Ms. Hager worked as vice president at First American Field Services.

Credit Union National Association officials are saying they support a possible Senate compromise on bankruptcy cramdown legislation, but they continue to oppose a bankruptcy bill that the House of Representatives is slated to vote on this Thursday (Feb. 26). "Senators Evan Bayh (D-Ind.) and Arlen Specter (R-Penn.) appear to agree with the approach that CUNA has advocated for over a year now," a top CUNA official told credit union executives at their annual legislative conference. He noted the two senators are working on a bill that would limit the "scope, application and duration" of bankruptcy mortgage relief. But the bill approved by the House Judiciary Committee, which allows judges to reduce or cram down the principal amount of a residential mortgage, would encourage everyone who has a mortgage to game the system. "The good mortgages you made shouldn't be subject to cramdown," he said.

After earning a profit in the third quarter, Radian Guaranty Inc., Philadelphia, lost $250.4 million in the fourth quarter, an improvement over last year's 4Q loss of $721 million. For all of 2008 the insurer lost $410.6 million ($5.12 per share), versus a loss of $1.3 billion ($16.22 per share) in 2007. In the fourth quarter Radian's mortgage insurance business posted a net loss of $77.0 million, compared to a loss of $336.6 million in the same period one year prior. For the year, the mortgage insurance business lost $784.7 million compared to $695.4 million in 2007. In the fourth quarter Radian wrote $5 billion of primary new insurance, most of it through its flow channel. In the same quarter of 2007, it wrote $13.6 billion of new insurance, $10.4 billion of which was flow. For all of 2008 it wrote $32.5 billion in new MI, compared to $57.1 billion the year before.

Home prices fell 18.2% in the fourth quarter, retreating to their 2003 levels, according to the newly released Standard & Poor's/Case-Shiller housing price index. "This is the steepest rate of decline we have seen," S&P managing director David Blitzer told reporters. The December HPI report shows that average house prices are down 26.7% since the peak in the second quarter of 2006. Wellesley College professor Karl Case noted that Case-Shiller data includes auction sales, which is one reason the index shows steeper price declines than other indexes. "There are very few, if any, pockets of turnaround that one can see in the data," said Mr. Blitzer. However, Boston, Denver, Los Angeles, San Diego and Washington D.C. showed a relative improvement in lesser rates of decline.