Servicing

LoanMarket.net, an online auction website specializing in residential and commercial loans, has hired mortgage banking veteran David Akre as a managing director. Mr. Akre co-founded New York Mortgage Trust, a mortgage lending and investing REIT that went public back in 2004. During his career, he also worked in secondary marketing and sales at Thornburg Mortgage, Santa Fe. Based in Irvine, Calif., LoanMarket is privately held. The company has been selling performing, subperforming and delinquent notes for almost a year.

The Obama Administration is providing $1.5 billion to housing finance agencies to develop innovative programs that might prevent foreclosures in some of the most economically hard hit states. HFAs in Nevada, Arizona, Florida, Michigan and California are expected to come up with new programs to help unemployed mortgagors remain in their homes until they find a new job. For borrowers with underwater mortgages, "HFAs may experiment with programs that would assist borrowers to negotiate with lenders to write down mortgages," according to a White House press release. To apply for the funds, HFAs have to submit proposals to the Treasury Department.

Mortgage Contracting Services, a nationwide property preservation and inspection provider, has launched a 24-hour call center service specializing in emergency responses for tenant occupied properties. With inbound and outbound capabilities, the domestically operated call center will enable clients to meet required repair timeframes and perform emergency work orders and service requests at any hour. "With passage of the Protecting Tenants at Foreclosure Act last spring, servicers are now facing the added responsibility of 24-hour maintenance availability," said Caroline Reaves, chief executive of MCS. The company is based in Tampa, Fla.

Despite the dimming prospects for the creation of an independent Consumer Financial Protection Agency, TARP watchdog Elizabeth Warren isn't ready to consider alternatives. "Right now there is no Plan B," Ms. Warren, the chairman of the Troubled Asset Relief Program's Congressional Oversight Panel, said in response to a reporter's question on a conference call. "Right now all the chips are on the table with the Consumer Financial Protection Agency." If the CFPA becomes reality it would oversee mortgages, credit cards and other types of consumer debt, taking certain oversight functions away from federal banking regulators. The conference call was organized by the U.S. Public Interest Research Group ahead of a Monday compliance deadline for the Credit Card Accountability, Responsibility and Disclosure Act.

The benchmark 10-year Treasury yield rose above 3.8% Friday morning and stayed there into the early afternoon, suggesting possible upward pressure on mortgage rates. Late Thursday the Federal Reserve surprised the markets by raising the discount rate it charges its member banks, citing improvement in financial market conditions. However, the Fed said, "The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy, which remains about as it was." The 10-year has been as low as 3.6% this month but has been on average closer to 3.7% recently.

The delinquency rate on all residential loans fell slightly in the fourth quarter to 9.47% while "seriously delinquent" mortgages (90 days or more past due) continued to rise, according to new figures released by the Mortgage Bankers Association. The trade group tried to put a positive spin on the overall delinquency rate, its chief economist Jay Brinkmann declaring, "We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007." Late payments by consumers fell 17 basis points in the fourth quarter (compared to the third), but were up 159 bps compared to the same period a year earlier. However, these figures are seasonally adjusted — and do not include foreclosures. (The seriously delinquent rate does include foreclosures.) The nonseasonally adjusted numbers show a bleaker picture: 10.44% of all home loans were late by 30 days or more compared to 9.94% in 3Q. Also, the numbers for Florida continue to be abysmal with 26% of all mortgages there late by one month or more.

The FHA's nearly forgotten Hope for Homeowners program may get a jump-start now that Joel Harrison of Banker's Portfolio has lined up an investor willing to make a multibillion-dollar bet on underwater mortgages. The H4H program turns conforming Fannie Mae and Freddie Mac loans that are "underwater" into new Federal Housing Administration-backed mortgages. Mr. Harrison said the investor — who he refused to identify — is willing to buy Ginnie Mae II H4H mortgage-backed securities. He hopes his Irvine, Calif., firm can deliver $25 billion to $50 billion in H4H loans before the congressionally approved refinancing program sunsets in September 2011. "We are really open to mortgage investors and asset managers contacting us," he said. Mr. Harrison said he has arrangements with several originating servicers to refinance the loans. Under the program, underwater mortgages must be written down to a 96.5% loan-to-value ratio based on a current appraisal with any subordinated liens being extinguished. (The Department of Housing and Urban Development is authorized to pay incentives to second-lien holders for releasing their liens.) Mr. Harrison started his shop two years ago and he believes mortgage holders are ready to accept such writedowns. "A H4H refinancing can be completed in 45 days with a 15% to 20% higher return than going through the foreclosure process, which can take 8-10 months," he said.

Stifel Nicolaus has initiated coverage of PennyMac Mortgage Investment Trust, calling the publicly traded vulture fund a "hold." There are now four investment firms following the company which went public last summer but has yet to turn a profit. PennyMac is trying to branch out from buying troubled mortgage assets into servicing and even lending through a conduit. Based in Calabasas, Calif., the company was formed two years ago by former Countrywide Financial Corp. president Stanford Kurland. It has been actively bidding on both nonperforming loan packages and servicing. It came in second in the bidding for an $11 billion package of jumbo servicing rights auctioned off by the bankruptcy trustee for Thornburg Mortgage of Santa Fe.

Mortgage servicers completed nearly 50,000 permanent HAMP modifications in January, up from 35,000 in the previous month, as the government's Home Affordable Modification Program appears to be finally gaining traction. The Treasury Department reported that HAMP servicers have completed 116,300 permanent modifications since the modification program was launched last spring. The first 5,000 permanent modifications were completed in October. Another 830,500 homeowners are participating in three-month payment trials and their monthly payments have been reduced on average by more than $500. "With nearly 1 million homeowners paying less each month and the number of permanent modifications steadily rising, HAMP is doing the job it was designed to do," said Phyllis Caldwell, chief of Treasury's Home Preservation Office. Treasury also reported that 60,500 borrowers have dropped out the payment trials during the life of program and 1,000 permanent modifications have been cancelled.

Essent Guaranty, the upstart mortgage insurer, has received approvals to write coverage for mortgages purchased by Fannie Mae and Freddie Mac, and hopes to issue its first MI policy early in the second quarter. Obtaining GSE approvals is essential for any new mortgage vendor because the two, today, account for roughly 70% of all originations. The MI industry currently boasts six active firms that write new policies. Triad Guaranty of Winston-Salem is in liquidation mode and recently sold its operating platform to Essent. One MI veteran, requesting his name not be used, called Essent's GSE approvals "a good development for all of us," adding that, "It shows this industry can attract fresh capital." Few MIs are earning money because of their "legacy" coverage, but observers note that Essent will have no such issues to deal with. Essent's management team includes former top executives from Radian Guaranty as well as Fannie Mae. National Mortgage News broke the story about the approvals Wednesday afternoon.