Servicing

The value of homes nationwide will be more than a third lower when prices bottom out late this year, predicts Moody's Economy.com. Already, prices are down 25% and they will fall another 11% before stabilizing late this year, Moody's predicts. And even that prognosis for a bottom late this year is contingent upon the government enacting "strong action" to resuscitate the economy. Moody's says that before the carnage from the housing downturn is over, prices will fall 36% from their peak in 2006. On the bright side, Moody's said that three years into the housing correction, inventories of homes for sale are flattening, prices are coming "back down to earth," and sales are approaching stability. But Moody's Economy.com chief economist Mark Zandi said that so far, "Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures."

Modifications of loans owned or guaranteed by Fannie Mae and Freddie Mac were up 50% in the first two months after regulators seized control of the government-sponsored enterprises. The Federal Housing Finance Agency said mortgage servicers modified 5,600 GSE loans in October and 8,291 in November. The November figure was 68% higher than the monthly average for the previous 10 months of 2008. However, FHFA also found that serious delinquencies in the Fannie and Freddie portfolios are still rising. In November, 1.88% of the GSEs' loans were 90-days or more past due, up from 1.00% as of March 31, 2008. But foreclosure starts dropped late last year, possibly reflecting increased loss mitigation efforts. FHFA director James Lockhart noted that a foreclosure moratorium implemented by the GSEs only affected two business days of November, but he said the moratorium will have a big impact on delinquency and loss mitigation data for December and January.

Fannie Mae said Thursday that it would no longer require an appraisal or property inspection of some borrowers trying to refinance a Fannie-owned mortgage. Some analysts said the change would have a marginal impact. Starting April 4, Fannie said, its Desktop Underwriter system will validate property values for refis of Fannie loans by means of automated models instead of requiring an appraisal or property inspection. Brian Faith, a Fannie spokesman, said the change and several others would let "potentially millions of current mortgage holders" take advantage of historically low interest rates and "break the logjam in mortgage refinancing." A report by UBS analyst Jena Curro notes that the impact on prepayment speeds will be limited but says, "there are still some possible effects (pressure from lenders and third parties, origination) that should not be overlooked."

Senate Republicans are trying to revive and refine an interest rate buy-down proposal that would create a 4% mortgage even though the Senate shot down the language on a 35-62 procedural vote. The original buy-down amendment offered by Sen. John Ensign, R-Nev., provided low-rate mortgages to 40 million borrowers at an estimated cost of $300 billion. A majority of senators refused to waive budget procedures to add such an expensive program to the economic stimulus bill. In opposing the Ensign amendment, Sen. Charles Schumer, D-N.Y., said it would not help borrowers with underwater mortgages, adding that a refi surge would not reduce the glut of unsold homes on the market. "It is a totally flawed proposal," he said. One source said Sen. Ensign might pare down the buy-down program and possibly limit it to homebuyers. Sen. Patty Murray, D-Wash., is expected to offer an amendment on Friday that raises the maximum loan limit on Fannie Mae, Freddie Mac and Federal Housing Administration loans back to $729,750 for the rest of this calendar year. A similar loan limit provision is contained in the House-passed Economic Stimulus bill.

The Mortgage Bankers Association -- whose members have been decimated by the credit crisis and rising residential delinquencies -- is making contingency plans to cut staff and re-engineer its organization for leaner times. A spokeswoman for the trade group, which currently employs about 134 full-timers, stressed that no decision on layoffs is imminent. "We are going through a general re-engineering exercise," she told MortgageWire. "We want to make sure MBA is the right size and strong going forward." Former MBA employees said the trade group continues to struggle from poor leasing on its new 10-story headquarters in downtown Washington. The 160,000 square-foot building, which was completed last year, is about half leased. "The building is an albatross around their neck," said one former MBA executive.

Employment in the mortgage industry fell 18% in 2008 as nearly 60,000 full-time workers lost their jobs, according to new government figures released Friday. In December alone 4,800 full-timers were let go even though interest rates fell and refi applications began to pile up at month's end. Mortgage companies are using increased productivity to substitute for hiring people, according to Orawin Velz, director for economic forecasting at the Mortgage Bankers Association. "Some lenders are managing their pipelines by quoting higher rates," she said. "Unless they see a sustained increase in volume they don't want to hire right now," she said. The mortgage banking and brokerage segments now employ about 280,000 workers compared to more than 500,000 two years ago, meaning the industry is off 44% from its peak. Meanwhile, the U.S. Bureau of Labor Statistics made a huge annual adjustment -- of 52,800 jobs -- in its mortgage employment figures for 2008. BLS originally reported that employment in the mortgage banker/broker sector was 337,600 in November. But it then revised downward that number to 284,800 in Friday's jobs report. The revision shows that BLS under-estimated the amount of job losses early in the recession for all workers, not just those employed in housing finance.

Patricia Cook, the former executive vice president and chief business officer of Freddie Mac, has been hired by Green Tree, a provider of loan servicing solutions, capital markets, and industry expertise headquartered in St. Paul, Minn., as executive vice president, business development. Ms. Cook will be responsible for directing Green Tree's business development effort as well as launching new business initiatives that are complementary to Green Tree's core servicing platform. Prior to joining Freddie Mac in August 2004, she served as managing director and chief investment officer for fixed income at JP Morgan Fleming Asset Management. Prior to that, she held similar positions at Prudential Investment Management and Fisher Francis Trees & Watts.

REO asset management firm, Bank Owned Services in Orlando, Fla., has appointed Joyce Kindsvogel as chief operating officer. In her new position, Ms. Kindsvogel is responsible for the oversight of all client REO portfolios. Ms. Kindsvogel has over 20 years of REO operations management and bank-related experience. Her area of expertise is in real estate asset management and disposition of residential and commercial properties. Prior to joining Bank Owned Services, she was vice president of Real Estate Owned at the Impac Companies. Ms. Kindsvogel also served in similar capacities at ABN AMRO, Select Portfolio Services, Wilshire Credit Corporation, and U.S. Bank. The company can be found online at www.bankownedservices.com.

American Home Mortgage Servicing, the servicing platform of a failed subprime lender that was acquired by turnaround specialist WL Ross in 2007, is buying servicing rights on 185,000 loans from Citi Residential Lending. "With this acquisition, we have increased the number of loans we service to approximately 575,000, an increase of 45%," said David Friedman, CEO of WL Ross. AHMSI was established in April of 2008 and is based in Irvine, Texas. The firm also acquired the servicing assets of Option One, a subprime lender, in 2008. At the end of 2008, the firm serviced more than $85 billion of mostly alt-A and subprime loans. WL Ross is a private equity firm founded by Wilbur L. Ross. The firm currently oversees more than $8 billion in private investments. Citigroup earlier announced plans to dispose of "non-core" assets, including much of its subprime mortgage business.

The House Financial Services Committee approved three bills that could be merged into a bankruptcy cramdown bill the House might vote on soon. The three bills would revamp the Federal Housing Administration Hope for Homeowners refinancing program, protect servicers that modify mortgages from investor lawsuits and strengthen the Federal Deposit Insurance Corp. Committee chairman Barney Frank, D-Mass., told this newspaper the three bills could become part of the bankruptcy package House leaders want to pass. The mortgage industry continues to oppose the bankruptcy bill that recently cleared the House Judiciary Committee by a party-line vote of 21-15. Industry lobbyists are sure there are not enough votes in the House to pass the bankruptcy bill (H.R. 200) as a stand-alone measure. By packaging H.R. 200 with the FDIC bill that makes the temporary hike in the deposit insurance limit to $250,000 permanent, the legislation could garner more support.