Servicing

Citigroup executives say they are seeing better performance in the bank's $152 billion North America residential mortgage portfolio, thanks in part to asset sales and loan modifications. The serious delinquency rate (90 days or more past due) on its $96.4 billion portfolio of first liens fell to 10% in the first quarter, down 115 basis points from the previous quarter. It is the first quarterly drop in a long time. "Net credit losses on first mortgages declined 24% to $819 million in the first quarter driven by HAMP loan conversions and improvement in loan loss severity and $1 billion in assets sales during the quarter," Citi said during a conference call. In the first quarter, Citigroup converted more than $2 billion of delinquent mortgages into permanent modifications under the Home Affordable Modification Program. The bank said HAMP modifications are performing better than other loan restructurings and "early results indicate the re-default rates are likely to be lower." The bank did not break out the results of its CitiMortgage subsidy in reporting a first quarter profit of $4.4 billion. However, the company said it originated $31.5 billion of single-family loans in the first quarter down slightly from the previous quarter. As reported by National Mortgage News recently, CitiMortgage has shown some interest in growing its wholesale division again, contacting certain high performance brokers that once sourced loans to the firm.

ServiceLink, provider of origination and default services based in Pittsburgh, Pa., and Fidelity National Financial's national lending platform are opening a new office in Rancho Cucamonga, Calif. and are expanding an existing operation in Buffalo, NY to support their growing loss mitigation operations. Outfitted with ServiceLink's technology, both locations aim to provide loss mitigation services to ServiceLink's lending clients. The new office in Rancho Cucamonga, Calif., opens today and will occupy over 19,000 square feet. The expanded Buffalo, NY, office will officially open on April 26 in a 15,000 square foot facility. "This expansion has doubled our loss mitigation capacity and allows ServiceLink to focus on assisting its clients in managing their troubled assets as the market continues to stress the capacity of lenders and servicers," said Jeff Coury, ServiceLink President and CEO. The company also has existing loss mitigation operations in Kansas and Virginia that provide outsource loss mitigation services including HAMP processing, HAFA, short sales, and deeds in lieu.

U.S. investors still consider real estate as a good investment, according to a survey released by Citi. When asked to rate whether it was a good or excellent time to invest in a specific type of investment, the real estate sector-which for this survey was defined as property, investment properties and/or real estate investment trusts-came back with a positive response from 47% of all investors and 50% of large investors, tops among both groups. "Real estate may have been badly battered in recent years. Still, it has an enduring appeal for Americans, who find it far easier to grasp the value of a house than the value of a stock or stock fund," said Jonathan Clements, director of financial education for Citi Personal Wealth Management. Hart Research Associates conducted the survey for Citi, with the respondents consisting of 756 investors with at least $100,000 of investible assets with 317 of those have more than $500,000 of assets.

Moody's Investors Service on Friday placed 3,000 pre-2005 jumbo prime residential mortgage-backed securities with an outstanding balance of $43.4 billion on review for possible downgrade. While the loan pools backing these securities have paid off to a significant degree, there has been continued performance deterioration due to declining home values, according to Moody's. The rating agency's Economy.com unit expects declines to continue another 5% to 7% this year, adding up to total declines of about 17% to 20% from mid-2004 levels and 5% to 10% from mid-2003 levels. Moody's is working on updating its loss projections methodology for seasoned RMBS.

Bank of America reported a $2.1 billion loss for its home loan and insurance business in the first quarter due to lower originations and increased provisions for credit losses totaling $3.6 billion. In the fourth quarter those provisions totaled $1.35 billion. The giant bank originated $69.5 billion of single-family homes during the quarter, down 20% from the fourth quarter. "Production income remains impacted from expenses associated with reps and warranties," B of A said. In 1Q, reps and warrants on loan buybacks cost the bank roughly $500 million. The $3.6 billion for credit losses includes $2.3 billion of net charge-offs. Of that amount, $813 million was for home equity loans. It also added $1.3 billion to its loan loss reserves.

Mission Capital Advisors is marketing two nonperforming CMBS loans with an aggregate outstanding balance of $50.7 million. The CMBS special servicer loan sale offers prospective bidders the chance to buy two large-balance, nonperforming loans secured by different collateral types. The biggest loan in the sale, with a principal balance of $25.6 million, is secured by 24 office buildings and a retail center. Collateral securing the respective loan is mostly located in Okemos, Mich. with two parcels in East Lansing and Grand Ledge, Mich. The sale's second loan is secured by 20 property parcels with a mixture of asset classes such as retail, industrial, office, medical office, multifamily and mixed-use assets. The respective loans are being sold out of separate CMBS trusts. The buyers must provide individual, loan-level bid pricing for each asset. Investors are allowed to bid for one or both of the assets.

Wells Fargo & Co. had 523,336 active trial and completed loan modifications as of March 31. Modifications done outside of the Home Affordable Modification program made up nearly 380,000 of that total. As of March 31, Wells Fargo had 144,932 active trial and completed modifications in the HAMP program, including 30,014 permanent modifications and 9,162 pending completion. The company said it had initiated or completed three mods for every one foreclosure on an owner-occupied property between October 2009 and March 2010, and that less than 2% of owner-occupied mortgages serviced by the company went to a foreclosure sale in the past 12 months. Wells also made an analysis of projected HAMP outcomes. Out of the 138,000 borrowers who made three HAMP trial payments as of March 31, 50% are expected to have completed modifications; another 30% will be found not to be eligible for HAMP once their documents have been reviewed; 10% will have some required documents not provided and another 10% would have no required documents provided. Wells has added over 10,000 home retention staff people since the start of 2009 and now has 17,400 people focused on these efforts.

GMAC Financial Services has promoted Jeffrey Lemieux, a former executive at Cerberus Capital, to the position of senior vice president of business lending sales in its mortgage division. In his expanded role he will oversee customer relationships in the firm's correspondent channel and warehouse network under the auspices of the business lending/mortgage capital markets unit. Lemieux's promotion comes in the wake of several recent departures of top managers in the servicing department of Residential Capital Corp., GMAC's mortgage banking affiliate. Earlier this week, National Mortgage News broke the news that servicing executive John Vella had left the company to take a position with another firm. Prior to his promotion, Lemieux was senior vice president of fee based servicing and he retains these responsibilities managing the servicing capabilities that GMAC provides to third-party organizations. A few years back Cerberus paid $14 billion for a 51% stake in GMAC. Today, that stake has been reduced to just under 15%, leaving Cerberus with a massive paper loss on its investment. The U.S. Treasury is the largest stakeholder in GMAC with 56.3%. The company has hired Goldman Sachs to explore a sale of ResCap.

A few months after losing his job during a cost-cutting maneuver at GMAC, industry veteran Tony Renzi has landed at Freddie Mac and will be in charge of the GSE's efforts to minimize losses in its portfolio while dealing with its seller/servicers. Industry sources said Renzi also interviewed over at Fannie Mae. Bruce Witherell, Renzi's new boss at Freddie, said he could not comment on where else the former GMAC servicing executive interviewed but said, "We're happy to have him here at Freddie." The GSE created a new position for Renzi, who worked at GMAC for more than 20 years. He will hold the title of executive vice president, single-family portfolio management. Witherell, Freddie's chief operating officer, said Renzi "will be involved in all aspects of our decisions on the credit and default side," including the disposition of Freddie's REO holdings.

Foreclosure activity increased 7% in the first quarter, following a substantial spike in March, according to the latest data from RealtyTrac. Foreclosure filings were reported on 932,234 properties in the first quarter, a 7% increase from 4Q09 and a 16% increase from the 1Q09. Foreclosure filings were reported on 367,056 properties in March, up 19% from February and up almost 8% from March 2009. REOs hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter, an increase of 9% from the previous quarter and up 35% from the first quarter of 2009. The data in the first quarter of 2010 followed a very similar pattern to what RealtyTrac saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March, said James J. Saccacio, CEO of RealtyTrac. He said the high amount of bank owned assets may be further evidence that "lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline." A total of 304,799 properties received default notices, down 11% from a peak of more than 342,000 in the 3Q09. Foreclosure auctions were scheduled on 369,491 homes, an increase of 12% from the previous quarter and up 21% from a year ago. A total of 257,944 properties became REO during the quarter, up 35% from the first quarter of 2009.