Servicing

Stephen Staid has joined Saxon Mortgage Services Inc., Irving, Texas, as executive vice president of customer relationship management. The Morgan Stanley-owned Saxon is repositioning itself into the residential subservicing space, specializing in distressed asset servicing. In this role, Mr. Staid will be responsible for financial transaction management, early stage delinquency, modification fulfillment, command center, call monitoring and customer service. He also will serve as a member of the Saxon executive committee, reporting directly to chief executive Anthony Meola. Mr. Staid has more than 15 years of mortgage servicing management experience. He specializes in customer service operations and has a deep knowledge of servicing technology.

LoanMarket.net, an online seller of nonperforming loans, is seeing an increase in its commercial business. The Irvine-based auction company said over the past two months it has closed between $30 million and $50 million of commercial mortgage deals. Jeff Freud, a principal in the company, noted that LMN is continuing to hire and now employs 13 full-timers. The company began holding live online auctions about a year ago. He added that buyer demand has picked up this year, adding that most of the winning bids are placed by private equity firms and hedge funds.

With perhaps one exception, the MBS market Friday did not have much of a reaction to an acceleration in Freddie Mac's prepayment speeds which reflected buyouts of a large number of delinquent loans. By staging the massive buyout of loans delinquent by 120-days-plus in a single month, Freddie Mac saw a "colossal" spike in its speeds, according to a Barclays Capital report. But there were "no surprises" there, the report indicated. "The only surprise for the market was some of the lower coupons came in faster than expected," said Walter Schmidt, senior vice president, manager, structured product strategies at FTN Financial Capital Markets. He said Friday morning that as a result swaps between Freddie Mac Gold securities and Fannie Mae securities "have underperformed a little, not by huge amounts."

Hudson City Bancorp, a top ranked residential lender in the New York metro area, wants to convert its thrift subsidiary to a national bank charter. However, company CEO Ronald Hermance Jr. is vowing that the institution will not change its current business model of "originating and purchasing first mortgage loans on residential properties." He said the strategy will continue if it becomes a national bank. He said the thrift may become a national bank because its regulator, the Office of Thrift Supervision, may be eliminated by legislation being promoted by the Obama Administration. "At a time when trust and confidence in the banking industry is being challenged like never before, we believe it is important to stay ahead of any legal and regulatory changes implemented with regard to federal financial oversight," he said. In 2009, Hudson City originated $6 billion and purchased $3 billion in residential mortgage loans.

The Federal Deposit Insurance Corp. is planning to extend its "safe harbor" policy past March 31 while its board continues to work on new securitization standards. The safe harbor provides comfort to investors that FDIC will not seize or delay payments on securitized assets sold by failed banks and thrifts. FDIC chairman Sheila Bair said the current safe harbor will be extended while the agency works with industry and other regulators on securitization standards. One of the standards involves risk retention where banks are required to retain 5% of the credit risk when they securitize mortgages and other assets. "These reforms would prevent the conflicts of interest we've seen in the past and give investors confidence that they can understand and manage the risks associated with asset-backed securities," Ms. Bair told a joint meeting of minority real estate groups. The comment period on permanently extending the safe harbor and establishing new securitization standards ended Feb. 22. Industry groups, including the American Securitization Forum, are urging FDIC to extend the current safe harbor until the end of this year. ASF noted that Congress is currently working on financial regulatory reform that includes risk retention requirements. "We are concerned about the potential impact of multiple layers of securitization legislation and regulation without coordination among legislators and regulators," ASF says in its comment letter.

GMAC Financial Services has auctioned off $250 million of problem mortgage assets, using Citigroup as its broker on the deal. A spokeswoman for GMAC said the bid process "went very" well but at press time no other details were available on the process including information about bidders and what they offered. The spokeswoman said, "Our plan is to continue to sell assets through the year in our normal course of business and as we have done historically." She added, "We are not interested in pursuing transactions that don't have the right economic value." GMAC and its mortgage division, Residential Capital Corp., are saddled with billions of dollars of troubled non-prime loans and securities. One investor involved in the bid process said he passed on making an offer on the pool "because they wanted us to bid based on 2008 appraisals that they did." He said he was not allowed to take a hard look at current values on the underlying assets. "We will not bid on assets without the ability to determine the underlying value." This investor, requesting anonymity, said many large sellers are operating in a fashion similar to GMAC.

House Financial Services Committee chairman Barney Frank, D-Mass., is calling on the CEOs of four major banks to work with the Treasury Department and banking regulators to deal with second mortgages that have become an obstacle to modifying troubled first liens. The four banks - Bank of America, Citigroup, JPMorgan Chase and Wells Fargo - hold $452 billion of seconds on their books. In a letter to the CEOs, Rep. Frank says many investors are willing to accept losses on principal writedowns of underwater first mortgages to prevent foreclosures. However, second-lien holders have become a "principal obstacle" to many modifications. "The problem of second lien-lien mortgages standing in the way of successful principal reduction modifications has reached a critical stage and requires immediate attention from your institutions," the March 4 letter says. Rep. Frank told a joint conference of minority real estate professionals that banks are reluctant to take writedowns because of accounting and regulatory capital issues. "The second liens in many cases are not worth anything," Rep. Frank said, adding that banks have not acknowledged it under the accounting rules. "At the point at which they acknowledge it, the bank's capital could be negatively affected," the chairman said. Rep. Frank said officials at Treasury, FDIC and HUD are trying to figure out how to deal with the accounting issues. They also are exploring incentives - such as giving second-lien holders a stake in the future appreciation of a property.

The mortgage industry shed 3,500 full-time workers in January, after shedding 1,900 jobs the previous month, according to new government figures. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell to 250,000 from 253,500 in December. Overall, the mortgage industry reduced its workforce by 9% over the past 12 months. Major lenders have relied on outsourcing and temporary workers to deal with fluctuating loan demand. BLS reported that 48,000 temporary jobs were created in February. Since September 2009, "temporary help services employment has risen by 284,000," BLS said. The nation's unemployment rate held steady at 9.7% in February and only 36,000 workers lost their jobs despite severe winter weather in parts of the country. It also may be a good sign for servicers that the number of long-term unemployed persons has been holding steady for the past three months, but still remains at a high level. The new jobs report shows the number of persons that have been unemployed for more than 27 weeks was 6.1 million. (There is a one-month lag in BLS reporting of mortgage industry employment data.)

The 30-day delinquency rate on securitized multifamily mortgages hit 9.87% in February, up 16 basis points from January, according to Trepp LLC. The expected default on the Stuyvesant Town and Peter Cooper Village apartments in Manhattan could push the delinquency rate close to 13%, according to the New York firm, which tracks the performance of commercial mortgage-backed securities. The owners are still current on the $3 billion in mortgage debt. But they have nearly depleted the 11,000-unit complex's reserves in making the last payment, according to Trepp analysts. The Trepp report shows that the 30-day or more past due delinquency on all securitized multifamily and commercial mortgages hit 6.72% in February, up from 1.67% a year ago. The serious delinquency rate (60-days or more past) on CMBS is 5.97%, up from 1.3% a year ago. The Federal Deposit Insurance Corp. recently reported that 1.2% of multifamily mortgages held by banks and thrifts are 30-89 days past due. The delinquency rate on other commercial mortgages is 1.24% as of December 31.

There are flat quarter-over-quarter price changes against year-over-year home price gains of 5% said the latest Clear Capital Home Data Index Market Report. This is based on data through February 2010. According to the Truckee, Calif.-based data provider all four regions posted very consistent 1.4% quarterly price changes, which company analysts called encouraging. Despite the slowdown due to negative economic news and the threat of more real estate owned properties hitting the market "prices have remained positive through the first two months of the year," said Alex Villacorta, senior statistician at Clear Capital. Providence, R.I., rose to the top of the highest performing markets list with a 6.1% quarterly price change. In Los Angeles, prices gained 2.2% for the quarter, giving California five of the 15 highest performing markets. REO saturation edged up in 11 of 15 of these markets this month by an average of 1.3%. At the same time REO saturation is expected to increase this month, while traditional non-distressed sales wait to be listed in the spring and summer months, the report says. An increase in demand may precede the end of the April tax credit deadline when home prices may dip slightly into negative territory before getting an added boost back. The Boston area, one of the first to see prices drop at the beginning of the downturn, saw yearly home prices recover 6.9%.