Servicing

Origen Financial Inc., a real estate investment trust that manages residual interests on securitized manufactured housing loans, lost $2.3 million for the fourth quarter and $8.6 million for the full year 2009. This is an improvement over net losses of $4.4 million and $35.4 million for the same periods in 2008. In July 2008, the Southfield, Mich., company exited both the manufactured housing loan origination and loan servicing businesses. Net interest income for the fourth quarter was $8 million, down 10% from the same period in 2008, while for all of 2009, it was $31.5 million, up 4%. Origen's fourth quarter loan loss provision was $5.4 million, down 10% from the fourth quarter 2008. Ronald Klein, Origen's chief executive, said "we are generally pleased with the loan portfolio performance in 2009, especially in light of the economic environment. While fourth quarter 2009 loan performance worsened, particularly for California loans, we have seen improvement thus far in 2010 and we are hopeful that some stabilization is returning to the housing market."

Pentagon Federal Credit Union, Alexandria, Va., the nation's third largest credit union, said Friday it has signed with Sun West Mortgage Co. to offer reverse mortgages to its members. PenFed, one of the biggest mortgage lenders among credit unions, will initially market the federally insured Home Equity Conversion Mortgage reverse mortgage to its members located in Washington, D.C.; Maryland and Virginia. PenFed's Reverse Mortgage eliminates the upfront origination fee - 2% of the adjusted property value - and the $35 monthly servicing fee, which are customary in the industry. Consequently, PenFed's competitively priced reverse mortgage will make additional home equity available to the homeowner.

The Federal Home Loan Bank of San Francisco has sued nine securities dealers that sold the government sponsored enterprise nearly $20 billion in private-label mortgage backed securities. The San Francisco bank, like other FHLBs, suffered losses due to its investment in AAA-rated private-label MBS. The complaint filed in Superior Court in the County of San Francisco, alleges that the dealers made "untrue or misleading statements" about the characteristics and quality of the mortgage loans underlying the securities. The San Francisco FHLB is seeking to rescind those MBS purchases, which originally cost $19.1 billion. In February, the Seattle FHLB filed a similar lawsuit against issuers to compel them to buy back $4 billion in private-label MBS.

Interactive Mortgage Advisors, Denver, is selling $532 million of Fannie Mae servicing rights in an auction that closes March 31. The package carries delinquencies and foreclosures of 3% and has a weighted average coupon of 5.4%. All of the loans are collateralized by properties in the Pacific Northwest. The seller's identity was not disclosed. A handful of other portfolios are on the market, including a $23 billion package of receivables from AmTrust Bank, and $10 billion in rights from Flagstar Bancorp. The AmTrust portfolio is being offered by Milestone Merchant Partners on behalf of the Federal Deposit Insurance Corp. IMA is the advisor on the Flagstar deal though it -- as well as the thrift -- have declined to talk about it.

Fannie Mae, which has been saddled with more foreclosed homes than any investor in the U.S., spent $449 million last year maintaining those properties, according to a new report from the GSE. The government-controlled company said it spent $182 million making "significant repairs" to its real estate owned (REO) inventory and $267 million on "maintenance." The GSE sold 120,000 REOs last year, with 68% of them going to owner occupants. Fannie also sold properties in bulk to investors, though that represents a small portion of its sales. In a recent interview, a GSE spokeswoman said the company prefers to sell its REO to owner occupants.

Republicans on the House Financial Services Committee Friday released a bare bones blueprint for the future of the nation's housing finance system, saying "private capital" should be the "primary source" of home mortgage money, replacing Fannie Mae and Freddie Mac. According to a document entitled "Goals and Principles for GSE Reform," Republicans, led by ranking member Spencer Bachus (R-Ala.), said Fannie and Freddie should wind down their operations within four years. Under its blueprint, the GOP thinks a covered bond market should replace the secondary market role currently played by the GSEs. They also want to see an end to GSE "jumbo loan limits" which they say is a taxpayer subsidy for mortgages made to millionaires. To date, the government has provided $127 billion in capital to Fannie and Freddie through the purchase of preferred stock. The cash has kept their net worth positions above zero. Next year the Obama Administration will release its official plan on restructuring the GSEs. Fannie and Freddie were taken over by the government in September 2008.

The nation's mega banks and other depositories repurchased roughly $30 billion in residential mortgages from Fannie Mae and Freddie Mac in the second-half of 2009 and will suffer losses of up to 40% on the loans, according to a new report from Credit Suisse. Penned by CS analyst Moshe Orenbuch, the report notes that repurchase volumes are accelerating and will "remain elevated in 2010 and moderate thereafter." Mr. Orenbuch estimates that large cap banks followed by CS account for roughly 88% of the $30 billion in buybacks. Among this universe of large caps, he told National Mortgage News, is Wells Fargo & Co., Bank of America, JPMorgan Chase, and Citigroup -- all of which have acknowledged buyback problems in earnings reports. The analyst said the loans being repurchased are "likely to be delinquent and/or deficient" and include what he called "differentiated" products, meaning alt-A, interest only mortgages and payment option ARMs. But there is some good news in the report: "given the bulk of the repurchases are from the 2007 vintage, we would expect repurchase demands to moderate in 2011, as the quality of industry originations strengthened during 2008."

Freddie Mac is coming to market with a $1.1 billion MBS backed by multifamily loans. The various pass-through certificates in the bond are collateralized by 68 recently originated multifamily mortgages from Freddie approved seller/servicers. It is the second of six such issuances anticipated during 2010. These "K-006" certificates, which will price on or about March 25 and settle 10 days later, will be offered by several dealers lead by JPMorgan Securities Inc. and Bank of America Merrill Lynch. Co-managers for the transaction include Deutsche Bank Securities Inc., Goldman Sachs, Jefferies & Co. and Sandler O'Neill.

Home price declines will continue into the spring before beginning to stabilize and then recover modestly in the remainder of the year, according to the January Loan Performance Home Price Index from First American CoreLogic. Nationally, single-family house prices are expected to decline another 3.7% before bottoming in April. National home prices, including distressed sales, decreased 0.7% in January 2010 compared to January 2009, a big improvement over December's year-over-year price decline of 3.4%. Excluding distressed sales, year-over-year prices declined in January by 0.4%. On a month-over-month basis, the national average home price index decline accelerated, falling by 1.9% in January 2010 compared to 0.8% in December 2009, indicating the housing market still remains weak. The markets with the largest future price declines are in Michigan, Oregon, Nevada, Maryland and Arizona, with predicted declines in the 3.5% to 4.5% range. Markets expected to see appreciation soon are located in Alabama, South Dakota and Kansas, with predicted appreciation in the 0.5% to 1.5% range. Sales of distressed properties continue to skew both actual and predicted price declines downwards, the HPI said. Going forward, house prices may increase over the next year by 4.5%. Excluding distressed sales, over the next year house prices could increase by 5.6%. Two major unknowns may affect the forecast, including how much of the "shadow inventory" of homes may come on to the market later in the year, and the expiration (or possible extension) of the federal homebuyer tax credit in April which has stimulated sales activity and the clearing of inventory.

Wells Fargo & Co. became the second mortgage servicer to agree to a government plan to modify the second liens of borrowers who have received a modification of their first mortgage. Bank of America signed up for the plan, known as "2MP," in January. "When a customer has reduced payments, it frees up the cash flow to benefit everybody," Kevin Moss, an executive vice president of Wells Fargo's home equity group, said in an interview. "This program will simplify the process." First-lien servicers participating in the plan are required to notify second-lien holders that a first lien has been modified through the Home Affordable Modification Program. The company said at the end of February that it had modified second liens for 180,000 customers and first liens held by 500,000 customers through various internal and government programs, including HAMP.