Servicing

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."

Fitch's latest 12-month forecast for rate recasts on prime and alternative-A credit residential mortgage-backed securities indicates that more than $47 billion of collateral could be affected by rate shock. The forecast pertains to prime and alt-A RMBS slated to convert from interest-only payments to full principal and interest payments. "Sixty-day delinquency rates have risen over 250% in the 12 months following previous recasts for prime and alt-A loans," said Fitch managing director Roelof Slump. He said Fitch's current ratings consider the risks of upcoming IO recasts but mortgage pools with "significant" IO concentrations still could be downgraded "if performance is worse than anticipated."

Invesco Mortgage Capital Inc., Atlanta has priced its public offering of 7 million shares of common stock at $21.25 per share. The transaction will give the company gross proceeds of nearly $149 million. In addition, the underwriters have a 30-day option to purchase up to an additional 1 million shares to cover over-allotments. The offering is expected to close early next week. Invesco, a real estate investment trust that focuses on financing and managing residential and commercial mortgage-backed securities and mortgage loans, expects to use the proceeds to acquire residential and commercial MBS (and loans) on a leveraged basis, and to invest in a public-private investment fund managed by Invesco Advisers Inc. Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. are acting as joint book-running managers for the offering. Invesco's shares have been trading for about $22 each of late.

Jaymes Financial of Virginia is offering a $61 million portfolio of delinquent residential loans -- an auction that is actually a "re-trade" of an earlier sale. Jaymes Financial principal Andy Jaymes declined to identify the seller but noted that the $61 million is part of a $365 million sale of nonperforming loans sold by DebtX of Boston on behalf of the Federal Deposit Insurance Corp. A majority of the package being offered by Jaymes Financial includes Florida condominium loans.

Standard & Poor's Ratings Services has lowered its ratings on 99 classes from six residential mortgage-backed securities transactions. The securities, issued between 2005 and 2007, are backed by U.S. subprime and alternative-A credit mortgages as well as prime credit jumbo loans. S&P said 42 of the 99 classes were on its CreditWatch list for possible downgrades and now have been removed from that list. The credit rating agency also affirmed its ratings on 31 classes from four affected MBS and removed two of the affirmed ratings from its CreditWatch negative list.

Macquarie Research has upgraded Radian Group Inc. - the nation's third largest residential mortgage insurer - to "outperform" from "neutral," saying it expects the company to return to profitability by the second half of 2010. Macquarie analyst Matt Howlett said he sees the Philadelphia-based Radian as not only a survivor "but a leader in an industry poised for a comeback in 2010." Mr. Howlett recently raised the entire mortgage insurance sector to "overweight" from "marketweight." According to the Quarterly Data Report, Radian had $153 billion in "policies-in-force" at the end September, ranking behind MGIC ($216 billion), and PMI ($163 billion). At least two new MI firms are in the process of forming. Radian's shares have been trading at $9 of late compared to a 52-week low of 95 cents and a high of $12.50.

Lenders Asset Management Corp. has launched LAMCO Vendor Management Process, which evaluates, scores and ranks LAMCO-endorsed vendors.LAMCO is an REO management company. LAMCO qualifies new vendors and manages ongoing service provider relationships using the elements of TQRDCEB, a framework developed by Hewlett Packard Co. Vendors are evaluated on technology, quality, responsiveness, delivery, cost, environment and business impact using a scorecard system based on a weighted strength ranking. Service providers are selected as a LAMCO vendor based on their performance within the TQRDCEB system and are routinely evaluated on the same scale to measure performance, identify areas of improvement and promote an environment where the status quo is challenged.

Titanium Holdings Inc. is launching a new business unit, Excellen REO, an REO asset management company that offers a suite of services designed to create a customized property liquidation process for each client. The move will help the Fort Mill, S.C.-based Titanium Holdings, a provider of loss mitigation tools and services, expand client relationships and establish new partnerships. Cary Sternberg is president of the new company. With almost 40 years of experience in asset preservation, management and liquidation, Mr. Sternberg is the former senior vice president of the REO department for American Home Loan Servicing Inc. Excellen REO services include pre-marketing, valuations, marketing and sales negotiation, closing and funding and alternative sales methods. The company will leverage a nationwide network of real estate brokers and local eviction attorneys, as well as property preservation companies.