Servicing

Interactive Mortgage Advisors, Denver, is auctioning off a $130 million bulk package of GNMA servicing rights for an undisclosed seller. The receivables had a 16.44% delinquency rate at year-end with the 30-day late ratio at 11.63%. The portfolio has 937 loans.

PennyMac Mortgage Investment Trust, Calabasas, said it has bought a $40 million portfolio of problem loans and is negotiating to buy a second one which has an unpaid principal balance of $100 million. No purchase price was disclosed. Since the end of September, the company has reviewed $6 billion in whole loan portfolios and is seeing an increase in offerings in the secondary market. PennyMac, a publicly traded REIT, has a handful of affiliates which are engaged in servicing, investment, and advisory work. Penny Mac, which went public this past summer, will release its fourth quarter earnings Feb. 1.

Even though JPMorgan Chase reported strong earnings for the fourth quarter, the hangover from the mortgage crisis and the resulting loan 'buybacks' forced on the company by Fannie Mae and Freddie Mac are continuing to hurt its bottom line. In an earnings conference call Friday morning, chairman and CEO Jamie Dimon told analysts that repurchases are a worsening problem for the company and the industry at large. He noted that "you can assume" purchase requests on broker-sourced loans "will be worse." He also signaled that buybacks have picked up in the mortgage industry as investors "assess their rights" and bring claims against lenders. However, he said he could not offer any "broad numbers" at this time. A year ago JPM said it would quit the residential wholesale channel but in recent quarters has still originated some loans using brokers. Part of JPM's mortgage woes are tied to Washington Mutual, the troubled Seattle thrift it purchased in the fall of 2008. In Q4 JPM reported home equity net charge-offs of $1.2 billion compared to $770 million in the same period a year earlier. Subprime mortgage net charge-offs totaled $452 million (giving it a net chargeoff rate of 14.01% in this category) compared to $319 million in Q4 08. Prime mortgage net charge-offs were $568 million (a 3.81% net charge-off rate) compared to $195 million in the comparable period. JPM, as a whole, earned $3.3 billion but its retail financial services unit lost $399 million. The company cited "lower MSR [mortgage servicing rights] risk management results and an increase in reserves for the repurchase of previously-sold loans."

Nearly 9% of all Federal Housing Administration-insured single-family loans are 90-days or more past due, according to the agency's latest monthly activity report. The November report shows that FHA has a 8.94% default rate, up from 6.53% in November 2008. The insurer is trying to keep its capital reserves in the black and there's renewed speculation in the industry that it's only a matter of time before HUD will be forced to ask Congress for a bailout of the fund. To date, FHA officials have said they can avoid a bailout. Later this month, agency officials are expected to unveil several moves to tighten underwriting and possibly increase mortgage insurance premiums. Meanwhile, FHA lenders originated $26.6 billion in single-family loans in November, down 11% from the previous month, according to the activity report. Purchase mortgage transactions totaled $15.8 billion and comprised 60% of FHA originations.

The state has closed the loan modification businesses of two Southern California men for allegedly lying to consumers about being supervised by attorneys, according to a report in The Orange County Register. The two operated firms under the trade names Guardian Credit Services, Green Credit Solutions, Green Credit Services, Erickson Law Group, Green Credit Law and PacWest Funding. The state bar, which acted with the Orange County Superior Court in the case, has worked with other state and local officials to crack down on companies promising homeowner aid but not delivering it, the newspaper said. The bar alleges Curtis Melone of Huntington Beach and Christopher Fox of Redondo Beach promised to help homeowners facing foreclosure keep their homes but did nothing. An attorney for the men was not immediately available for comment.

Clark Street Capital, a Chicago-based provider of asset management and advisory services, is marketing what it describes as a $200 million loan portfolio secured by high-quality multifamily, mixed-use, residential, commercial and land assets in the Chicago area. This portfolio is offered in eight diverse pools, arranged by property type and asset quality. Property types include two-to-four family properties, properties designed to house five or more families, mixed-use properties of various performance types, performing single-family residences and residential condominiums, sub- and nonperforming SFRs and condos, performing retail and office assets, subperforming and nonperforming retail and office assets, and residential and commercial development land. The company said full due diligence information is available electronically, with indicative bids due by Jan. 26. Final bidders will be selected on Jan. 27 with final bids due on Feb. 4 and a closing date scheduled for Feb. 10. It also said buyers will have access to succinct asset summary reports prepared by Clark Street Capital and Loan Workout Advisers LLC, recent site inspections, and appraisals for the vast majority of the assets.

Sales of lower priced homes are doing much better than expensive ones in all parts of the nation, thanks, in part, to the first-time homebuyer tax credit, according to the Federal Reserve's latest "Beige Book" report. However, the central bank notes that home prices have changed little since its last "Beige Book." According to recent stories by National Mortgage News, the jumbo and super jumbo loan markets are suffering from a lack of available credit except for consumers with hefty down payments and large cash balances in their bank or brokerage accounts. Not surprisingly, residential construction activity remained at low levels in most districts with the Fed noting that home building "was reported to have increased in the Chicago and Minneapolis" districts. The $8,000 first-time homebuyer tax credit was extended through the spring but is not expected to be renewed after its current sunset.

The Federal Deposit Insurance Corp. has chosen Milestone Merchant Partners to sell the $20 billion mortgage servicing portfolio that once belonged to AmTrust Bank of Cleveland, according to investment banking officials. At press time, both Milestone and FDIC had not returned telephone calls about the matter. It is unclear what will happen to AmTrust's servicing platform. "It's possible a buyer may just take the servicing rights but we don't know yet," said one source. AmTrust, a thrift, was taken over by the FDIC in early December with most of its assets sold to New York Community Bancorp. NYCB, however, did not want AmTrust's servicing division.

There was a 21% increase in 2009 over 2008 in the number of default notices, scheduled foreclosure actions and repossessions, RealtyTrac declared in its Year-end 2009 Foreclosure Market Report. When the 2009 numbers are compared with 2007, the increase in filings was 120%. But these numbers, insiders said, were in part restrained by the effect of federal intervention. A total of 3,957,643 foreclosure filings were reported on 2,824,674 U.S. properties in 2009. And "as bad as the 2009 numbers are," said James J. Saccacio, chief executive of the Irvine, Cal., based online marketplace, "they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans." During the year the number of delinquencies continued to increase with up to 349,519 foreclosure filings reported in December alone, up by 14% from November, and 15% from December 2008. At the same time, while foreclosure activity in the fourth quarter of 2009 increased by 18% from same period one year prior, it dropped 7% compared to the third quarter 2009. High delinquencies however, represent a long-term supply of potential foreclosures expected to happen this year, said RealtyTrac.

More prime jumbo borrowers are falling behind on their payments and not catching up - with states such as California and Florida driving the trend, according to a new research note from Fitch Ratings. Fitch says MBS backed by loans taken out by these borrowers had a delinquency rate of 9.2% (60-plus days late) in December, almost triple the rate 12 months earlier. The five states with the highest volume of prime jumbo loans outstanding - California, New York, Florida, Virginia, and New Jersey - comprise two-thirds of the loans in question. Prime jumbo borrowers who were current on their payments in November but missed a payment the following month (roll rates) averaged about 1% a month for the last 12 months, reaching a seasonal high of 1.3% in December 2009. "While some of these borrowers caught up, many either remained a payment late or became more delinquent in the succeeding months," said Fitch managing director Vincent Barberio.