Servicing

The Clear Capital Home Data Index Market Report shows a 1.7% national quarterly price gain for the 30-day period ended Dec. 24, 2009. Yearly national home prices went from a decline of over 20% on a year-to-year basis for 2008 to a much more modest decline of 1.3% for 2009. On a quarterly basis all four regions showed gains: at 4.1% in the Midwest, 1.2% in the South and the West and a modest 0.4% in the Northeast. What is remarkable about these gains, according to Clear Capital president Kevin Marshall, is that home prices for the nation as a whole were generally flat for 2009 despite yearlong volatility that included record declines early in the year, followed by the gains during the summer and fall. Also, by year-end the annual national real estate owned saturation rate dropped 16 percentage points to 25.5%. Some encouraging results came from several micro markets. For example, the Las Vegas metropolitan statistical area drilldown showed its first positive quarterly price gain in over three years at 1.1%, even though yearly price declines in the area remain high at -27.4%. According to Clear Capital, Las Vegas "is showing signs of transitioning from home-price free-fall, to more traditional trends."

The seasonally adjusted 30-day delinquency rate on home equity lines of credit jumped 20 basis points in the third quarter from the previous quarter to a new record of 2.12%, according to an American Bankers Association survey. On closed-end second mortgages, the seasonally adjusted delinquency rate shot up 29 BP to 4.3% in the third quarter, also a new record. At the start of the year, 1.46% of HELOCs were 30 days or more days past due and 3.0% of closed-end second liens were 30 days or more past due. Banks and thrifts held $667.5 billion in HELOCs as of Sept. 30, according to Federal Deposit Insurance Corp. Call Report data. Of that, $9 billion or 1.3% was 30-to-89 days past due. Banks charged off $5.1 billion in HELOCs in the third quarter. FDIC-insured institutions held $187.7 billion in closed-end second liens and 2.6% or $4. 9 billion were 30-89 days past due. Charge-offs on second liens totaled $2.8 billion.

WL Ross & Co. has reportedly ended negotiations with American International Group, New York, to buy its mortgage insurance division, United Guaranty, Greensboro, N.C., according to MI industry sources. Wilbur Ross, chairman and chief executive of the company, was out of the country and could not be reached for comment. But he issued a statement to National Mortgage News which said, "We never confirmed we were in the deal." However, this past fall reports began to surface that WLR&C was indeed negotiating with AIG and even had an exclusive with the company for several months. Sources familiar with the original parameters of the talks say WLR&C wanted to purchase all of UG's licenses, operating systems, and its entire 2009 book of business, leaving the "legacy" coverage with AIG. No price was ever mentioned. According to the Quarterly Data Report, UG ranks fifth nationwide in terms of policies-in-force with $127 billion. AIG has received pledges of up to $180 billion in taxpayer aid since its near collapse 16 months ago. The U.S. Treasury owns about 80% of the company, which is still publicly traded after undergoing a reverse stock split last year.

A Standard & Poor's review of 15 U.S. subprime transactions issued between 1998 and 2004 has ended with lower ratings on 48 classes from 14 transactions. The rating agency also removed seven of the lowered ratings from CreditWatch with negative implications. In addition, it affirmed ratings on 45 classes and removed one of these ratings from CreditWatch Negative. "The downgrades reflect our belief that credit enhancement for the affected classes will be insufficient to cover projected losses due to increased delinquencies and the current condition of the housing market," S&P said.

Access to employment services is needed by nearly one in four homeowners to help keep their homes, according to a MortgageKeeper Referral Services' analysis of 400,000 homeowners at year-end 2009. MortgageKeeper Referral Services, which connects homeowners with qualified nonprofit and government agencies, found that employment assistance was the most requested of 19 service categories provided by their database. In the top five also were requests for food assistance, help paying utility bills, prescription drug assistance and legal assistance. The company said its database gets an average of 1,000 hits a day, helping over 30,000 families every month. These findings highlight that foreclosures are a symptom of much larger economic problems that need to be addressed to avoid redefaults on modified loans, said MortgageKeeper Referral Services president Rochelle Nawrocki Gorey.

The TCW Group Inc., an international asset management firm, has voluntarily withdrawn its UST/TCW Senior Mortgage Securities Fund LP from the U.S. Treasury's Public-Private Investment Program. TCW, a subsidiary of France's Societe Generale, said it will liquidate the fund and distribute capital to the fund's investors. "Given that we are at a very early stage of investment in this particular product, and in light of the recent changes in the portfolio management team, we believe this action is appropriate and in-line with TCW's commitment to act in the best interests of our clients," said Marc I. Stern, chief executive officer. "This will also benefit the holders of older TCW vintage funds, as we will be able to dedicate even more resources to those investments." TCW has been in the process of acquiring fixed income investment management firm Metropolitan West Asset Management. The UST/TCW Senior Mortgage Securities Fund LP, which has approximately $500 million in assets under management, completed its initial closing on Sept. 30, 2009. A call to TCW for additional comment had not been returned at deadline.

GMAC Financial Services has written down the value of the riskiest mortgage assets of its mortgage division by 41%, a move that could be a precursor to a sale of the unit. To date, GMAC has declined to comment on reports that Berkshire Hathaway has shown an interest in Residential Capital Corp., the nation's fourth largest home lender. (Berkshire also has declined to comment.) The risky mortgage assets that were marked down by 41% once had a face value of $9.2 billion. Company executives said the markdowns came as a way to make these assets attractive to buyers. "The values we have put on these assets would be sellable in the market," said GMAC chief of mortgage operations Thomas Marano. He noted GMAC sells loans on a regular basis and major capital market players have been consulted. "Yes we do believe we can sell those assets in the market," he added in response to an analyst's question. The writedowns, restructuring and recapitalization of ResCap leave the entity with $19.7 billion in mortgage assets, servicing rights and real estate owned. GMAC chief executive Michael Carpenter noted there are "potentially different strategic alternatives" for the mortgage assets and the servicing business. He also said ResCap can be operated as a wholly owned subsidiary for some time. "We are not in a hurry to do anything." GMAC noted that it will take $3.8 billion of mortgage-related charges for the fourth quarter. GMAC said ResCap owns $4.3 billion in assets that have "greater economic exposure." According to the Quarterly Data Report, ResCap ranks fifth among all residential servicers with $380 billion in servicing rights. To date, the government has pumped $15.1 billion of capital into GMAC through preferred stock and other maneuvers.

The Federal Housing Administration is temporarily delaying the effective date of its new policy to shield appraisers from loan officer and mortgage broker pressure until Feb. 15. The new policy would put FHA in synch with Fannie Mae and Freddie Mac and prohibit commission-based staff and brokers from selecting appraisers. FHA officials initially set a Jan. 1 effective date. But they concluded FHA lenders need more time to change to their systems and decided to give them 45 more days, according to sources. Back in September, FHA officials outlined a number of risk management initiatives, including the new appraisal policy. "FHA does not require the use of appraisal management companies or other third party providers, but it does require lenders take responsibility to assure appraiser independence," FHA officials said.

The number of foreclosure filings initiated last year in South Florida's tri-county area failed to hit the 100,000 mark, but it didn't miss by much, according to a new report from CondoVultures.com. At the end of the second quarter of 2009, foreclosure notices were being filed in Miami-Dade, Broward and Palm Beach Counties at an annual rate of 100,000-plus. But momentum slowed "just enough" in the third and fourth quarters to fall just short of that psychologically significant benchmark, according to the report. For the year as a whole, more than 97,000 lis pendens, or notices of default were initiated against properties in the three counties, a 29% increase compared to the nearly 76,000 actions filed in 2008. By comparison, "only" 32,000 notices were filed in 2007. "The newfound willingness of lenders to suddenly work with borrowers to modify mortgages or approve short sales has undoubtedly had an effect on the number of foreclosure filings in South Florida," said Peter Zalewski, a principal in CondoVultures, a Bal Harbour, Fla. real estate consultancy.

American International Group has agreed to sell its Canadian mortgage insurance unit to a private investor group with the Ontario Teachers' Pension Plan as the lead sponsor. Terms of the transaction were not disclosed. With assets of $274 million (Canadian dollars) and total equity of $127 million (Canadian), United Guaranty Canada is that nation's smallest non-government MI firm. (There are only two private MIs operating there.) The Toronto-based UGC commenced operations in 2006. Its chief competitors in Canada include a government-run organization (Canada Mortgage and Housing Corp.) and Genworth MI Canada Inc., whose majority shareholder is Genworth Financial, Richmond, Va. At one time three other U.S.-based mortgage insurers had established or attempted to establish operations in Canada — MGIC, PMI and Triad — but all three are no longer operational. "We believe the mortgage insurance industry in Canada to be an attractive market, and that United Guaranty Canada is well positioned to grow its market position," said Erol Uzumeri, senior vice president of Teachers' Private Capital, the private equity arm of OTPP. A request for comment from United Guaranty was not returned by press time.