Servicing

Lender Processing Services has launched a new short-sale service to help mortgage firms handle their growing caseload of REO properties. The Jacksonville, Fla.-based vendor is offering the service through its Asset Management Solutions division. The company oversees a network of asset managers to market and sell distressed and depository-owned properties. The unit performs such functions as reviewing title, resolving junior liens and reviewing property values against short-sale offers. In other short-sale news, Loan Resolution Corp., Scottsdale, Ariz., said it is hiring 100 new workers this month to meet demand for the Treasury Department's new Home Affordable Foreclosure Alternatives program. LRC says it needs the additional workers to meet "unprecedented growth as demand for short sales and deed-in-lieus skyrockets." The vendor moved into a 30,000-square-foot office in North Scottsdale in September 2009. The new positions range from executive slots down to entry-level positions including asset managers.

Despite efforts by appraisers to discredit broker price opinions, there is no reason why the Treasury Department should ban the use of BPOs on short sales, according the National Association of Realtors. "There is no evidence that BPO exacerbates mortgage fraud or abuse," NAR says in a letter to Treasury secretary Timothy Geithner. The Realtors point out that BPOs are used to analyze mortgage loan portfolios for risk management and fraud detection. Home Affordable Modification Program servicers are gearing up to implement a new process to expedite short sales and Treasury has authorized the use of BPOs. Three appraisal groups recently warned Treasury that its decision to use BPOs could exacerbate mortgage fraud. "There is no evidence to support the assertion that appraisers are more or less likely to engage in mortgage fraud than real estate agents," NAR president Vicki Cox Golder said in the letter to Geithner. The Appraisal Institute, American Society of Appraisers and National Association of Independent Fee Appraisers claim that real estate agents and brokers generally are not independent or properly trained valuation specialists. "They have an inherent bias toward quick results which produces a fee for themselves," the appraisal groups said in a March 8 letter.

GMAC Financial Services has come to market with a $22 million package of nonperforming residential loans that were culled from securitizations. A company spokeswoman noted, "The vast majority of these loans are not part of ResCap's owned loan portfolio. This type of transaction is something we have done and continue to do in the normal course (of business)." GMAC's mortgage affiliate, Residential Capital Corp., is the servicer of the underlying loans. A few weeks back it put out for bid a $250 million package of NPLs. It said the offering went well but has not released any information on which firm was the winning bidder or the price paid.

The Federal Open Market Committee issued a statement Tuesday indicating that the Federal Reserve will follow through with its plans to end its purchases of agency mortgage-backed securities this month as well as with plans to end a program supporting loans backed by new-issue commercial MBS in June. The agency MBS and debt purchases "are nearing completion, and the remaining transactions will be executed by the end of this month," the FOMC said. However, the committee also noted that it will "continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability." The FOMC also said in its statement that the Fed plans to follow through with its plans to close its Term Asset-Backed Securities Lending Facility program for loans backed by new-issue commercial mortgage-backed securities on June 30 and close the TALF program for loans backed by other types of collateral by March 31.

While delinquency rates in the U.S. have risen to historic highs, the pace of deterioration has slowed, according to the February 2010 Mortgage Monitor report by Lender Processing Services Inc. in Jacksonville, Fla. Nearly 7.5 million loans are in some stage of delinquency or foreclosure, with an additional 1 million properties in REO or post-sale foreclosure. Approximately 2.5 million loans that were current on Jan. 1, 2009, were 60 or more days delinquent (including foreclosures) as of Jan. 31, 2010. Despite extraordinary loss mitigation efforts that have resulted in the execution of approximately 2 million loan modifications, including the federal government's Home Affordable Modification Program trial periods, LPS said the number of new delinquencies since Jan. 1, 2009, still exceeds this number by 25%. More than 31% of loans that have been delinquent for six months are not yet in foreclosure, while 22.8% of loans delinquent for 12 months have not been moved to foreclosure status (up from 9% in 2008). While the total loan delinquency rate was 10.2%, the foreclosure inventory rate was 3.3%. The total noncurrent loan rate was 13.5%, and states with the most noncurrent loans included Florida, Nevada, Mississippi, Arizona, Georgia, California, Indiana, Illinois, Michigan and Ohio. States with fewest noncurrent loans included North Dakota, South Dakota, Alaska, Wyoming, Montana, Nebraska, Vermont, Colorado, Oregon and Washington.

First American Corp., Santa Ana, Calif., in preparation for the split of its title and information services businesses into separate publicly traded companies, has named Anand K. Nallathambi as chief executive and Buddy Piszel as chief financial officer of its information solutions group. Mr. Nallathambi, who was appointed president and chief operating officer of the ISG in December, will continue to serve in those capacities. Mr. Piszel will continue to serve as the parent company's chief financial officer. The company's Financial Services Group will commence a search for Mr. Piszel's replacement as its chief financial officer. The target date for the split is June 1. Mr. Nallathambi previously served as chief executive and president of First Advantage Corp., which, until November 2009, was a majority-owned public subsidiary of the company and a business segment within the Information Solutions Group. Mr. Piszel joined the company as chief financial officer in January 2009. Prior to that, he was executive vice president and chief financial officer for Freddie Mac. In a separate announcement, First American said it would purchase the remaining 18% of First American CoreLogic that it does not already own. Parker S. Kennedy, chairman and chief executive of First American, said the purchase of the outstanding shares will simplify the structure as the information solutions group, which First American CoreLogic is a part of, moves toward being spun off. "This acquisition will result in an extra measure of flexibility and operational efficiency that will be beneficial as we develop our next-generation analytic capabilities for the financial services and capital markets industries," he added.

A new Consumer Financial Protection Bureau could examine any mortgage banking company, servicer or mortgage brokerage and take enforcement actions against those entities if the Senate passes a bill crafted by Banking Committee chairman Christopher Dodd, D-Conn. The CFPB would be housed at the Federal Reserve Board but operate as an autonomous unit when writing rules to curb abusive mortgage lending and credit card practices at banks and nonbanks. If a banking regulator objects to a CFPB rule, it would take a two-thirds vote of the members of the new Systemic Risk Council to kill the rule. The CFPB's authority over banks and credit unions depends on size. Institutions with assets over $10 billion could be subject to the bureau's exams and enforcement actions. The primary regulators of smaller institutions would retain that authority. Sen. Dodd said he wants the banking committee to markup and vote on his "Restoring American Financial Stability" bill next week. The massive bill merges the Office of Thrift Supervision into the Office of the Comptroller of the Currency, regulates derivatives, increases oversight of credit rating agencies and establishes risk retention for mortgage-backed securities.

The number of apartment units under construction at the end of February plunged to 180,000 dwellings on a seasonally adjusted annual basis, according to new figures released by the Commerce Department. The government found that construction of buildings with five or more rental units fell 51.4% compared to February 2009. The sequential decline was less startling: down 6.7%. (The numbers represents dwellings that are "under construction" at month's end, not necessarily started.) The poor performance is being blamed, in part, on severe snowstorms in the mid-Atlantic and Northeast. Construction of one-unit dwellings fared better in February: 301,000 (seasonally adjusted), a slight increase from the January rate but an 18% decline from February 2008. Total housing starts-which include both one-to-four family and multifamily construction-fell by almost 6% in February from January but posted a small gain compared to the same month a year ago. The government's report on housing comes a day after the National Association of Home Builders said builder confidence in the market is falling due to poor weather conditions and distressed property sales, the latter of which is suppressing housing prices. Also, there are concerns among both builders and lenders that the government's departure from the MBS market as a buyer could cause mortgage rates to rise in the coming weeks.

PennyMac Mortgage Investment Trust, a publicly traded vulture fund, says in a new public filing that it is exploring the idea of purchasing distressed condominium construction loans and growing its residential servicing business. In a filing with the Securities and Exchange Commission, the Calabasas, Calif.-based company says it would like to buy condo construction loans at a discount and then finance the completion of projects. "This solution creates the opportunity to effectively repackage distressed developer loans into high-quality residential loans." As for the MSR market, PennyMac thinks it can buy servicing rights from "liquidating and other institutions." PennyMac is currently subservicing more than $2 billion in troubled loans for outside parties.

Kondaur Capital Corp., an Irvine, Calif.-based mortgage vulture fund, recently laid off 44 asset managers as part of what the company calls a purging of "underperforming" personnel. Company CEO Jon Daurio said the mortgage investor laid off the workers on March 5, but then on Monday, March 8, hired eight new asset managers, bringing its total AM staff to 160. He downplayed the layoffs, adding that it's the "normal course" of business to let go asset managers that do not perform well. "We normally let 10 to 15 people go a month." Competitors in the mortgage space took notice of the cutbacks, and at least two firms located in the same vicinity received inquiries from some of those who were let go.