Servicing

Fitch Ratings has upgraded the servicing status of Residential Credit Solutions, Ft. Worth, Texas, saying the firm can "effectively manage and liquidate" nonperforming loans and real estate.

Some good news emerges from the home equity credit market, which given historic high delinquency rates and negative equity concerns are both unexpected and welcome.

Mortgage fraud is a serious problem - still. Of course, credit standards are much higher today than a few years ago, and it is difficult for a borrower to obtain a mortgage by fibbing about his income or otherwise doctoring his loan application. But where there is a will to defraud, fraudsters will find a way.

Collecting payments is a big part of servicing, which is why it cries out for automating. To this end, CCG Catalyst, a bank consulting firm providing strategic guidance for financial organizations, is offering Payment Strategy services to help financial institutions boost profitability through the more efficient management of payment processes and systems.

PHH Corp. could have to writedown the value of its mortgage servicing rights by between $150 million and $200 million in the second quarter of 2010, according to an analyst's report from FBR Capital Markets.

Fortress Investment Group LLC, New York, has agreed to acquire CW Financial Services, a servicer, special servicer and originator of commercial and multifamily real estate loans, from majority shareholder Otéra US Holding Inc.

Long-term primary market mortgage rates tracked by Freddie Mac have hit more record lows and with the benchmark 10-year Treasury yield just above 2.9% shortly after noon Thursday there could be more ahead—depending on what employment numbers set for release on Friday are like.

Many housing markets could see stronger recoveries two years from now even though the latest forecast for the coming year shows only modest ones, according to one company's forecast. Although there aren't any overwhelmingly strong appreciating forecasts in the near term, the depreciating ones are milder than they were a year ago, according to Veros Real Estate Solutions, a collateral valuation provider based in Santa Ana, Calif. In its quarterly forecast update for June 2010 through June 2011, Veros said California's Inland Empire area, including Riverside, San Bernardino and Ontario, is seeing modest appreciation, joining the state's strongest metro region, San Diego. "Colorado is beginning to look good again to buyers, with three cities among the top 10," said Eric Fox, Veros' vice president of statistical and economic modeling. "A new entry among the top five positive trending areas is Louisiana's Shreveport and Bossier City area." Chico, Calif. leads the list of weakening markets, but Florida continues its depreciation trend in many areas along its East Coast. Nevada's second largest market, Reno/Sparks, stays on the list of weakest markets while Las Vegas avoided inclusion. Utah did not, however; the Salt Lake City and nearby Provo/Orem areas occupy the last two slots in Veros' bottom 10. Fox said while the Houston metro area is also demonstrating modest improvement, at this point the company can only speculate on the effects, if any, that will result in the residential real estate market from the catastrophic BP oil spill in the Gulf. The company said none of its ZIP code level models for the impacted coastal areas have yet shown significant forecast differences from those ZIP code models that are further inland and less impacted. Real estate values in the Central Plains areas are expected to hold steady in the coming year. Texas, Oklahoma, Kansas, Nebraska and parts of Louisiana and Arkansas are holding steady, underscoring a weak but consistent mild recovery.

Mortgage investors are very interested in a refinancing program the Federal Housing Administration plans to roll out this fall to help underwater borrowers with non-FHA loans, according to a Government Accountability Office report. However, the GAO auditors also found that the investors don't believe many borrowers will qualify for this principal reduction program. The aim of the new program is to prevent strategic defaults by giving investors an incentive to reduce the principal amount of the first and second mortgages. The new refinance option requires servicers to write down the principal amount of the first mortgage by at least 10%. The loan-to-value ratio on the newly originated FHA mortgage cannot exceed 97.75%. If there is a second lien on the property, the combined LTV cannot exceed 115%. "Investors we spoke with supported the principal reduction in conjunction with an FHA refinance," the GAO report says. "However, they also noted that the program might reach only a limited number of borrowers as it would only help borrowers who are current on their existing first-lien mortgage payments," the report says. After the refinancing, the borrower's mortgage payments cannot exceed 31% of income. And other debts cannot push the back-end ratio over 50% unless the borrower has a strong credit history. FHA officials did not respond to requests for comment on the GAO report.