Servicing

In Aug. 3 testimony before the Senate Banking Committee, Thomas Hamilton, speaking on behalf of the Securities Industry and Financial Markets Association, stated that possible steps to take to solve the issues currently affecting our mortgage finance system could include the government limiting the amount of borrowing that banks can do from the Federal Home Loan Banks, and developing a market for covered bonds in the United States.

Identifying potential buybacks can be particularly challenging when refinancing application volume picks up as it did recently when rates dropped notably during a volatile period in the market.

Military Housing Privatization Initiative bond financings could be negatively affected by budget cuts expected to hit the Department of Defense, according to Moody's Investors Service.

The Federal Housing Finance Agency is looking at raising the 125% LTV cap on refinancing underwater borrowers while considering other enhancements to the Home Affordable Refinancing Program, according to agency acting director Edward DeMarco.

Obama Administration officials have identified several constraints on the HARP program -- including mortgage buyback risk -- that are keeping Fannie Mae and Freddie Mac seller/servicers from refinancing underwater borrowers.

Morgan Stanley & Co. this week took bids on its residential servicing division, Saxon Mortgage, Ft. Worth, Texas, which holds $28 billion of contracts on its books, according to M&A officials.

Further European concerns by around noon on Friday had brought the rate-indicative 10-year Treasury yield back down near record lows seen earlier in the week and had had a somewhat mixed effect on industry stocks, some of which fared relatively well considering the Dow had dropped more than 300 points.

The size of the economic lift from any program to streamline refinancings is debatable, but the plunge in interest rates is already fattening mortgage production revenues.

PHH Corp., Mt Laurel, N.J. is the only independent mortgage loan servicer that can internally generate new unpaid principal balances for its platform and thus its loan production unit can generate MSRs at a discount compared to the cost to purchase them, an analyst for Sterne Agee said.

MGIC is in discussions to sell its eMagic unit as well as its Myers Internet business, a company spokeswoman confirmed. The pair contributes minimal revenue to the company and it has made a strategic business decision to try and divest them, she said.