Servicing

Bank of America has decided to combine the wholesale and correspondent lending divisions of Countrywide Home Loans into one unit, placing executive Doug Jones in charge of both. Mr. Jones also will oversee warehouse lending for the bank, said a company spokesman. Todd Dal Porto, executive vice president in charge of wholesale, was named retail sales executive in charge of the Western U.S. In late April the Countrywide Home Loans brand will disappear entirely, replaced with Bank of America Home Loans, which will incorporate all residential lending for BoA and the old Countrywide franchise. BoA bought Countrywide Financial Corp., the parent of CHL, in July of last year. Prior to the purchase, BoA had ceased funding loans through wholesale and correspondent means, but so far has vowed to remain in these third-party lending channels, which Countrywide routinely dominated along with Wells Fargo & Co.

FHA lenders would be reimbursed for losses on any cramdowns under a housing bill pending in Congress. The bankruptcy bill recently approved by the House Judiciary Committee raised concerns that lenders of FHA and Department of Veterans Affairs guaranteed mortgages could suffer losses if a mortgage is crammed down. The housing bill (H.R.1106) that the House of Representatives is slated to vote on this Thursday allows FHA and VA lenders to cover lender losses (principal and interest) due to a bankruptcy cramdown. Despite these changes, the mortgage industry continues to oppose passage of the bankruptcy section of the housing bill. H.R. 1106 also provides legal protections for servicers that engage in loan modifications.

Expecting another big year for the FHA single-family insurance program, House appropriators are increasing the agency's commitment level to $315 billion, a 70% improvement from last year. Lenders originated $171.8 billion in Federal Housing Administration loans in FY 2008, which ended September 30. In the first quarter of FY 2009, FHA single-family endorsements totaled $71.9 billion, compared to $21.4 billion for the same period a year earlier. The House of Representatives is slated to vote on an omnibus appropriations bill this Wednesday (Feb. 25) that increases commitment levels for the Government National Mortgage Association and FHA. Meanwhile, appropriators have allotted the HUD Inspector General an extra $13 million to keep a closer watch on FHA, focusing on new programs, including the 'Hope for Homeowners Now' initiative which helps consumers refinance their underwater mortgages. On Thursday, the House is expected to vote on a bill (H.R. 1106) to make the H4H program more attractive to borrowers and servicers. H.R. 1106 also includes provisions to allow bankruptcy cramdowns, shield servicers engaged in loan modifications from investor lawsuits, and bolster the federal deposit insurance programs for banks and credit unions.

U.S. Mortgage Corp. of Pinebrook, N.J., whose credit union lending affiliate went bust last week, has closed its doors according to industry sources and a posting on its website. Company officials could not be reached for comment Friday afternoon. One loan officer familiar with the company said it may have had a servicing portfolio as large as $1 billion but that figure could not be confirmed. A posting on the lender's website says it has ceased operations "due to unforeseen circumstances." USMC was the parent of CU National Mortgage, a private label funder that served the nation's smaller credit unions. CUNM was founded 13 years ago.

The mortgage insurance industry -- after receiving certain assurances from the nation's GSE regulator -- has signaled its support for a new Fannie Mae and Freddie Mac program to refinance certain high LTV loans without using MI coverage. The refinance program is designed to lower the interest rate on at-risk risk loans that the GSEs already own or guarantee. Federal Housing Finance Agency director James Lockhart assured the Mortgage Insurance Companies of America that the MI exemption is limited and mortgage insurance will continue to be required on notes with loan-to-value ratios above 80% that are sold to Fannie and Freddie, as required by their charters. "We commend director Lockhart for offering this important clarification of the President's housing recovery plan," said MICA president Kevin Schneider. An estimated 4 million to 5 million borrowers who cannot refi because of falling house prices and tighter loan and mortgage insurance standards could be helped by the GSE refinance program. The GSEs can waive private mortgage insurance in refinancing these high LTV loans unless the borrower already has PMI. In that case, they have to "use best efforts to get the mortgage insurance rolled over to the new mortgage," Mr. Lockhart said. "Thus, it would be beneficial to the success of this initiative for the mortgage insurers to work with both companies as they move toward implementation."

Wingspan Portfolio Advisors, which specializes in highly delinquent loans, has launched a new consumer division focused on helping borrowers whose loans are in default. Dubbed "Foreclosure Resolution," the division will reach out to borrowers who are having trouble making payments, have been denied a loan modification, are considering bankruptcy, or who have ARMs balloon payments coming due.

Genworth Financial Inc., Richmond, Va., has been downgraded by A.M. Best Inc., Oldwick, N.J., which cited concern over exposure to mortgages on the company's balance sheet -- both at its life insurance side (as an originator and investor in commercial mortgages and securities, as well as residential mortgage-backed securities) and on the mortgage insurance side. While Best said Genworth had prudent commercial mortgage loan underwriting practices and limited delinquencies so far, the rating agency added it expected "rising defaults in response to the deepening recession, and is most cautious on the retail, hotel and office properties within close proximity to distressed housing markets and/or labor markets where unemployment is high." Best cut the financial strength rating on Genworth Financial from A+(Superior) to A(Excellent). The Best move came days after Fitch Ratings, Chicago, cuts its Insurer Financial Strength rating on Genworth Financial two notches, from A+ down to A-.

Fiserv Inc. said it has enhanced its loan servicing platform product so that it can now manage indirect and other third-party loans. The single-platform capability broadens the spectrum of loans to be processed and provides online, real-time back-office transactions for diverse portfolios, Fiserv said at the MBA Servicing Conference in Tampa, Fla. The Fiserv 'Loan Servicing Platform' is designed to manage all current types of indirect financing, including same-as-cash and staged funding loans that manufacturers, distributors and retailers may offer to borrowers.

In response to the need for mass loan modifications, Lender Processing Services has created RediMod, an application designed to streamline the loan modification process. LPS indicated at the MBA Servicing Conference in Tampa, Fla., that this new tool addresses processing and fulfillment needs for loan modifications by automating loan eligibility and best-fit determinations. The application is modular to enable those servicers with partial workout processes to merely fill in the gaps if there isn't a need for a new end-to-end process automation approach. RediMod includes data and analytics models that assign each loan in a portfolio a default propensity and loss severity score. It also has a rules engine that identifies borrowers currently in default and those at risk of defaulting in the future.

Three of the nation's top four residential servicing companies -- which together control almost half of all U.S. home loans -- saw their share prices fall to new 52-week lows on Friday. The three are: Bank of America, Wells Fargo & Co., and Citigroup, which rank first, second and fourth, respectively, among residential servicing firms with a combined market share of 47.75% ($4.65 trillion in loans), according to the Quarterly Data Report. The nation's third largest servicer, JPMorgan Chase, saw its share price fall to $19.03, a dollar and change above its yearly low. At press time the share price of BoA had fallen more than 14% on the day to $3.37, while Citigroup slid about 20% to $2.01. Citigroup briefly fell below the $2 mark. The decline was stoked, in part, by concerns from analysts that Citigroup and BoA could be nationalized.