Servicing

Titanium Holdings Inc., a Fort Mill, S.C., firm that contacts troubled homeowners on behalf of mortgage servicers to discuss loan workouts, has started a unit for when such efforts fail. The unit, Excellen REO, helps Titanium clients unload repossessed properties. Its services include premarketing, valuations, marketing and sales negotiation, closing and funding and alternative sales methods. Excellen has "a nationwide network of real estate brokers and local eviction attorneys as well as property preservation companies," Titanium said. Excellen's president, Cary Sternberg, is the former senior vice president of the real estate owned department for American Home Mortgage Servicing, Coppell, Texas, which is owned by the private-equity firm Wilbur Ross & Co. LLC. In that position Mr. Sternberg managed more than 200 employees and 33,000 assets.

The new type of asset-backed security DelphX Capital Markets has created is currently on track to launch later this year with the assistance of its new partner, the Mortgage Industry Advisory Corp. "We're on target to roll out the first part of the second quarter of this year," DelphX chief executive officer Larry Fondren told National Mortgage News. MIAC is integrating its analytics with the market platform through which DelphX's recently renamed Syndicated Investor Guaranteed and Managed Asset securities are traded. The technology is designed to allow subscribers to access online asset-level information regarding a SIGMA portfolio and monitor its monthly performance thereafter. It also was designed to collectively assess the current value of each of these types of portfolios and related SIGMA securities as it anonymously trades all SIGMA issues. SIGMAs are based on American depository receipts, but they are officially considered ABS because, in contrast to the equity shares issued by foreign companies that ADRs issue the rights to, the ownership rights to the loan portfolios in SIGMAs officially are "terminal in nature" and don't persist the way rights to the stock in a company could. They are considered syndicated because they not sliced or diced but rather are participations or shares in the whole portfolio and they are guaranteed and managed by an investor "who holds skin in the game throughout," Mr. Fondren said.

First Catholic Federal Credit Union, Taylor, Mich., has filed suit in federal court to terminate a mortgage servicing contract it has with CUSO Mortgage, claiming CUSO violated its agreement with the credit union by, among other things, failing to file Form 1098s with the Internal Revenue Service for its borrowers. "That's only one of the allegations," said Charles Holzman, a Southfield, Mich., attorney for Holzman Ritter & Corkery, which is representing the credit union in the case. He said the CU hopes to resolve the dispute with a minimum of public attention. In its lawsuit, the $146 million First Catholic claims it should not have to pay a 2% (of outstanding principal balance) termination fee for the servicing contract because the company (a subsidiary of Wescom Central CU of Pasadena, Calif.) failed to live up to the contract. The 2% termination fee is currently being held in an escrow account. Among other things, the suit claims that CUSO Mortgage, which provides servicing for as many as 100 credit unions, has failed to pay delinquent taxes for previous tax years. First Catholic claims its employees have had to perform many of the servicing chores that CUSO was supposed to handle. It is asking the court to release the 2% payment, and to order the transfer of the mortgages to a new servicer hired by the credit union. Representatives from CUSO Mortgage declined to comment.

The Mortgage Bankers Association wants the White House to tone down expectations for the Home Affordable Modification Program and create a forbearance option for borrowers who become unemployed or suffer a loss of income. Delinquent borrowers are facing a tough economic situation and have a difficult time making it through the HAMP payment trials to qualify for a permanent modification, said MBA chairman Robert Story. If they become unemployed and cannot make their mortgage payments, they "can't qualify for HAMP," Mr. Story said. He noted that forbearance or deferred payments should be considered. Once the borrower gets a job, the servicer can "move them" into a HAMP modification, MBA president John Courson said in a press briefing Tuesday. MBA also wants the Obama administration to amend HAMP so servicers can offer borrowers an option to pay only interest on the mortgage and defer principal payments. Offering an interest-only option would help get the "payments down to a level the borrower can afford," said Mr. Courson.

The expansion-minded MetLife Home Loans is eyeing a possible entry into both correspondent residential lending and warehouse financing, a company spokesman confirmed. In an interview with National Mortgage News, the spokesman said MetLife is exploring these sectors for 2010 but could not provide any details at press time. Over the past two months rumors have circulated that MLHL, a subsidiary of MetLife Bank, N.A., was not only entering correspondent and warehouse lending but had hired a manager to spearhead the effort. The spokesman said he could not confirm the hiring of anyone at this time. In mid-2008 MetLife bought the origination and servicing divisions of First Horizon National Corp. of Memphis. The sale was accomplished through an asset purchase that included 230 retail and wholesale offices. Today, MLHL ranks 11th nationwide in both residential lending and servicing, according to the Quarterly Data Report.

The House Financial Services Committee this year will hold hearings on not only restructuring the nation's financial system, but what to do with Fannie Mae and Freddie Mac which together guarantee half of all outstanding home loans in the U.S. Committee chairman Barney Frank (D-Mass.) noted that the GSEs currently operate as public utilities and he has no desire to see them returned to their former "hybrid" status as private companies with a public mission. Talking to reporters, he said he does not know, at this time, what form the two eventually will take. (Fannie and Freddie were taken over by the federal government in September 2008 and continue to draw billions in taxpayer aid to maintain a net worth above zero.) The chairman stressed that the housing finance system, as a whole, must be analyzed, including the Federal Home Loan Bank System, the Government National Mortgage Association and the Federal Housing Administration. In terms of specific legislation, the chairman wants to address mortgage servicing and the decision-making process among investors, trustees, and servicers in regard to modifying loans. He said it seems unclear at this time which entities have the decision-making power on loan mods. "That is something we want to solve," he said.

The HUD Inspector General has subpoenaed 15 Federal Housing Administration direct-endorsement lenders as part of an investigation into why these firms have the highest default and claim rates in the nation. "We are not making any accusations at this time." said Department of Housing and Urban Development IG Kenneth Donohue. "We have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud." Despite the subpoenas, the targeted lenders will continue to originate FHA-insured mortgages. This investigation is "focusing on many of the worst performers in the FHA portfolio," said FHA commissioner David Stevens at a Washington press conference. The FHA chief said he supports the IG's effort to determine why these lenders have such a high claim rate on mortgages that are only 30 months old. "I will be interested to see what comes out of the audit work," said Mr. Stevens. The lenders issued subpoenas include: First Tennessee Bank N.A., Memphis; Alethes LLC, Lakeway, Texas; Security Atlantic Mortgage, Edison, N.J.; Pine State Mortgage of Georgia; Birmingham Bancorp Mortgage, West Bloomfield, Mich.; Alacrity Financial Services, Southlake, Texas; Assurity Financial Services, Englewood, Colo.; D and R Mortgage Corp. Farmington, Mich.; Webster Bank, Cheshire, Conn.; Mac-Clair Mortgage Corp., Flint, Mich.; Americare Investment Group, Inc., Arlington, Texas; 1st Advantage Mortgage, Lombard, Ill.; American Sterling Bank, Independence, Mo.; Sterling National Mortgage, Great Neck, N.Y.; and Dell Franklin Financial, Columbia, Md. These lenders have originated at least 1,000 FHA loans and their claim rates exceed their peers by 200%, HUD said. FHA streamlined refinancings or loans approved by automated underwriting systems are excluded from the claims rate.

One in 7.5 U.S. homeowners are either behind on their mortgage payments or in foreclosure, according to a new report from Lender Processing Services Inc., Jacksonville, Fla. LPS, in a 'Mortgage Monitor' report, notes that at the end of November 13.2% of mortgagors were non-current on their loans. (The figure includes both late payments and foreclosures.) Over the past year delinquencies increased by 21%, according to LPS.

U.S. CMBS delinquencies, at 4.71%, had increased to about five times what they were the previous year as of yearend 2009, according to the latest Loan Delinquency Index results from Fitch Ratings. The delinquency rate may not peak until 2012, according to Fitch managing director Mary MacNeill. "An increased amount of loans are coming due over the next two years that will result in delinquencies possibly peaking at 12%," she said.

While some U.S. subprime residential MBS prices are continuing to stabilize, 2004 and 2007 vintages are still showing notable declines, according to a Fitch Solutions credit default swap-based price index. On a month-to-month basis, prices for RMBS overall as of Jan. 1 had jumped just over 5% to 7.62 from 7.25 the previous month. "The 2005 vintage was the main driver of the positive trend, showing strong growth up 4.7% to 8.42," the company said. "The 2006 vintage also showed marginal improvement by rising to 2.81." However, the 2004 and 2007 vintages dropped 7% and 11%, respectively. "Higher quality borrowers' ability to refinance this summer resulted in higher prepayment rates, but left 2004 vintage pools on average with lower credit quality borrowers," said Fitch Solutions managing director Thomas Aubrey. He also noted the historical 90-day plus delinquencies in the 2007 vintage "jumped significantly," which he said suggests "default rates may begin increasing within the 2007 vintage."