Servicing

Sovereign Bank and M&T Bank Corp.--two midsized players in mortgages--have ended their merger talks, according to combined news reports. A report by Dow Jones said the two banks were in advanced merger discussions in recent weeks. The deal would have catapulted Sovereign's owner--Spain's Banco Santander SA--into the upper ranks of U.S. banking along with such other foreign banks as HSBC and ING. Sovereign is also an active player in providing warehouse credit to nonbank mortgage firms. According to figures compiled by National Mortgage News and the Quarterly Data Report, Sovereign ranks 25th nationwide among residential funders, M&T 28th.

Impac Mortgage Holdings said its real estate and mortgage services unit earned $1.3 million in the first quarter from an array of vendor activities, including loss mitigation and REO services. In a new filing with the Securities and Exchange Commission, the Irvine, Calif.-based nonbank notes that it would like to begin funding loans again but remains relegated to being a loan broker only. (In the filing it provides no volume figures.) It also reveals that most of its revenue stems from services performed on its own portfolio. A former alt-A lender, Impac is trying to reinvent itself in a variety of field and REO services. Its stock recently began trading on the American Stock Exchange after being on the OTS pink sheets.

An increase in distressed sales later this year will drag home prices down before the market hits bottom in the first half of 2011, according to Moody's Economy.com chief economist Mark Zandi. The West Chester, Pa., forecasting firm expects prices will fall 5% from the start of this year into 2011, based on the Standard & Poor's/Case-Shiller house price index. A key statistic for housing prices is the proportion of distressed sales to nondistressed sales. If foreclosure and short sales are increasing, "house prices will fall," Zandi told the National Association of Home Builders at its construction forecast conference on Tuesday. "We will see the number of problem loans going into foreclosure or short sales increase later this year," he said. He noted that 4.3 million first mortgages are 90 days or more past due and likely will default. The Treasury Department this week reported that 122,500 borrowers in trial loan modifications dropped out of the HAMP program in April. Economy.com forecasters expect 1.89 million foreclosure and short sales this year, down slightly from 1.97 million in 2009.

Residential delinquencies climbed to yet another new high at March 31 with 10.06% of all mortgagors behind on their payments, according to new figures released by the Mortgage Bankers Association. According to calculations made by National Mortgage News using MBA's findings, that means $1 trillion in both first and second liens are now in arrears. Compared to the same period a year ago, late payments rose 10%. Late payments worsened in all delinquency categories, but there was a slight respite in the "seriously delinquent" bucket which includes loans that are 90 days or more late or in foreclosure. The trade group found that 9.54% of all mortgages were seriously delinquent at March 31, a slight improvement from the 9.67% number recorded at yearend. At March 31, 2009, 7.24% of all loans were seriously delinquent.

Bank of America completed more permanent HAMP loan modifications in April than CitiMortgage, JPMorgan Chase, and Wells Fargo & Co. combined. A new tally of the Home Affordable Modification Program released by the Treasury Department shows that B of A completed 23,500 HAMP modifications, compared to 8050 for Chase, 6100 for CitiMortgage and 6080 by Wells Fargo. Overall, HAMP servicers completed 68,300 permanent modifications in April, compared to 60,600 in the previous month. Roughly 97,000 permanent modifications are pending that have not yet been signed by borrowers. Over the past several quarters, Treasury has pressured servicers to expedite the approval process which has dramatically forced more homeowners out of the payment trials. Overall, 277,640 borrowers have dropped out of the HAMP payment trials, including 122,170 in April. Herb Allison, Treasury Assistant Secretary for Financial Stability, noted that many of the trials were started based on the borrower's stated income -- but servicers have had a hard time verifying such information. Now HAMP servicers are requiring borrowers to verify their income upfront before starting the three-month payment trials. "We expect a much lower rate of cancellations going forward," Allison said. The Association of Mortgage Investors noted that the number of homeowners who have failed a trial modification is nearly as large as the 295,350 active permanent modifications. AMI has been critical of the HAMP's reliance on interest rate and term modifications. It supports Treasury's new emphasis on principal reductions of first and second mortgages.

Fidelity National Information Services, which manages the largest residential servicing bureau in the nation, confirmed that buyout talks with Blackstone Group and two of its partners have ended. A leveraged buyout for the payment processing company could have reached $15 billion. The consortium bidding for FNIS pulled out because of a disagreement over price, according to combined press reports. FNIS' servicing platform has a market share approaching 70%, according to past research conducted by National Mortgage News and MortgageStats.com. The publicly traded FNIS, which was spun off by Fidelity National Financial, the title insurance giant, saw its share price fall 5% Tuesday to $27.50.

Cash buyers - spell that i-n-v-e-s-t-o-r-s - purchased more than four out of every five new condominium units in the Greater Downtown Miami area in the first quarter, according to the latest figures from the Bal Harbour-based CondoVultures consulting firm. Of the some 700 apartments sold during the three-month period in the 60-square-block area, financing was used to acquire less than 120. "Even though the U.S. government is encouraging lenders to once again finance condo purchases, the results have not been impressive in South Florida," says consultant Peter Zalewski. "Many lenders claim to be willing to consider writing loans for buyers of condominiums, but the end results simply do not support that." Meanwhile, The Miami Herald reports that the developer of the opulent ICON Brickell condominium complex in Greater Downtown Miami has deeded back two of the three luxury towers that make up the complex to a group of construction lenders led by HSBC. The Related Group relinquished ownership of the 57-story North and South towers in the three-building, 1.793-unit complex after selling just a fourth of the apartments in the two structures, the newspaper said.

Single-family housing starts jumped 10% in April as builders rushed to meet demand from buyers seeking to take advantage of the expiring Federal homebuyer tax credit. The U.S. Census Bureau reported that single-family housing starts rose to a seasonally adjusted annual rate of 593,000 in April, up from a 538,000 rate in March. On a sequential basis, construction activity rose 18% in the Midwest, 15% in the South, 5% in the Northeast but fell 5% in the West. Overall, single family housing starts rose 54% from April 2009. The spike in activity caused the National Association of Home Builders/Wells Fargo Housing Market Index to rise three points to a reading of 22 in May -- its highest showing since August 2007. "Builders are hopeful that the solid momentum that the tax credits initiated will continue even now that those incentives are gone," said NAHB chairman Bob Jones. The homebuyer tax credit expired April 30, but buyers have until June 30 to close and qualify for the credit. (A California tax credit for $10,000 for new home purchases is on the verge of expiration.) Builders broke ground on 68,000 multifamily units in April, down 24% from March.

The Federal Deposit Insurance Corp. has once again pushed back the bid deadline on the sale of $23 billion in servicing rights that once belonged to AmTrust Bank, Cleveland, according to officials close to the deal. "It's just taking longer to get bidders in to conduct due diligence," said one investment banker who has reviewed the package. Originally, the FDIC had hoped to hold a first round of bidding in early May then pushed it back to later in the month. The new bid deadline is mid June. It's anticipated that the receivables could fetch a decent price: just 3.29% of the underlying loans are delinquent. Milestone Merchant Partners is the FDIC's advisor on the sale. The company declined to comment.

In denying a mortgage application, lenders will have to show the borrower their credit score under an amendment approved by the Senate and attached to the Wall Street Reform bill. Sen. Mark Udall, D-Colo., said his amendment will "empower consumers" by giving them immediate access to their credit score for free. "If you are turned down for credit because you have applied for a loan or you have a higher loan rate, you will have access to your credit score," Sen. Udall said. The Senate approved the Udall amendment Monday evening by a voice vote. The Senate also approved an amendment preserving the Federal Trade Commission's existing consumer protection mandate. The amendment by Sen. John Rockefeller (D-W.Va.) aims at getting the FTC and the new Consumer Financial Protection Bureau created by the reform bill (S. 3217) to work together. "The amendment directs the FTC and the new bureau to enter into a memorandum of understanding and coordinate their regulatory efforts," Rockefeller said. "The bottom line is that businesses will not be subject to multiple layers of regulation and rules," he added.