Servicing

Countdown to Buy, Bethel, Conn., which operates an online real estate auction website, has lined up new investor commitments of more than $1.1 million, according to a source familiar with the matter. The official announcement on the capital raise is expected to come next week. Founded in 2008, Countdown hopes to expand from a regional online seller of real estate to a national player.

The Hope Now servicer alliance has launched a new web portal to expedite the collection of borrower documentation needed to approve permanent modifications under the government's Home Affordable Modification Program. HAMP appears to be floundering because of the document process. Housing advocates claim servicers are not set up to process origination documents and keep losing them -- forcing borrowers to send the same document multiple times. HAMP servicers are hoping the new portal will enable HUD-approved housing counselors to help homeowners in modification trials fill out the necessary forms and send in pay stubs and tax returns. "This new web portal will help homeowners get a faster answer, via their housing counselor, on whether or not they qualify for a HAMP loan," said Hope Now executive director Faith Schwartz. There are nearly 700,000 borrowers in trial modifications and only 31,382 borrowers received a permanently modified mortgage, according to the Treasury Department. Treasury estimates that 20% of borrowers have not submitted any documentation to their servicer while 37% have submitted incomplete documentation.

U.S. commercial mortgage-backed securities delinquencies jumped 43 basis points to 4.29% in November, according to a Fitch Ratings index. The rating agency said large hotel and multifamily loan delinquencies were responsible for the increase. But all loan types saw increases during the month. The hotel sector had the highest delinquency rate during the month, 8.07%; followed by multifamily, 7.03%; retail, 3.81%; industrial, 3.20%; and office, 2.50%. Large loans, defined as loans with balances of more than $100 million, continue to default each month, according to Fitch. Five additional large loans became delinquent in November.

The U.S. Attorney for Eastern District of Pennsylvania has indicted five people for a $14.6 million mortgage fraud scheme that resulted in at least 35 fraudulent loans. Named in the 15-count indictment are Edward McCusker and John Alford Bariana, owners of Axxium Mortgage Inc.; McCusker's wife, Jacqueline; and Jeffrey Bennett and Stephen Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C. They are charged with conspiracy to commit mail fraud, wire fraud, and money laundering. Mr. Doherty is also charged with bankruptcy fraud. According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants allegedly took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts. Edward McCusker and Bariana, along with Jacqueline McCusker allegedly obtained the mortgages by submitting false documents to lenders and making false claims about the straw purchasers' finances, the indictment said. Doherty allegedly used fraudulent bankruptcy filings for some borrowers to delay foreclosure until McCusker had obtained an investor and a mortgage. Bennett allegedly handled the closings for the real estate transfers. Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Stephen Doherty faces 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment. Attempts to reach the defendants were unsuccessful by press time.

National quarterly housing price gains, tracked on a rolling monthly basis, were at a modest 1.4% at the end of November compared to 3.7% at the end of October and 6.3% in September, according to the Clear Capital Home Data Index Market Report. Meanwhile, at 14.1% Detroit surpassed all other U.S. markets including five-month leader Cleveland where quarterly price gains were 12.8%. Other micromarket analysis data show gains in markets like Atlanta where home price gains of 13.4% over the last two rolling quarters indicate this metropolitan statistical area may have bottomed out and is beginning to recover. Clear Capital analysts find sustainable stable price levels in a growing number of metropolitan statistical areas during the year "after the dramatic fall off in prices in the preceding three years" indicate signs of a price bottom and more hope for further market stabilization. Even returning "seasonal influences" and "a potential increase in REO saturation rates" are not expected to fade the price gain stabilizing effect, according to Clear Capital.

U.S. home prices stabilized (relatively) in 2009 after losing trillions of dollars in value during 2008, according to real estate website Zillow.com. Homes lost $489 billion in value during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008, according to Zillow's real estate market reports. Forty-eight of the 154 markets tracked by Zillow showed gains in home values during 2009. The Boston metropolitan statistical area showed the largest gain of $23.3 billion, while the Providence, Rhode Island, MSA was second, with a gain of $12.4 billion. The stabilization in home values reduced rates of negative equity in the third quarter of the year. Twenty-one percent of single-family homeowners had mortgages under water compared with 23% in the second quarter. Most housing markets had a good summer, spurred largely by the government's tax credits for homebuyers, combined with very low mortgage rates, said Stan Humphries, Zillow chief economist. "Unfortunately, we believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high," Mr. Humphries said. "Both these factors will challenge the recent stabilization of home prices." Zillow.com said the biggest home value losses, in terms of total dollars lost in 2009, were in the large MSAs of Los Angeles, down $60.8 billion; Chicago, down $49.6 billion; and New York, down $49 billion.

The fourth quarter home price forecast from Local Market Monitor says the largest market with the best expected performance in home price is Baton Rouge, La. These top markets, identified as those with populations greater than 600,000, include cities in Texas, where good home price increases are likely once the economy improves, and others, notably in New York, where poor economic prospects make future price gains less likely. The other areas on its top markets list are: Columbia, S.C.; Fort Worth-Arlington, Tex.; Houston-Sugar Land-Baytown, Tex.; Little Rock-North Little Rock-Conway, Ark.; New Orleans-Metairie-Kenner, La.; Pittsburgh; Rochester, N.Y.; San Antonio and Santa Ana-Anaheim-Irvine, Calif. "Even our 'top' markets don't yet show price increases; rather, they're markets where prices will be steady," said Ingo Winzer, president and founder of Local Market Monitor in Cary, N.C. "Significantly, we now see Santa Ana-Anaheim among those markets, with Los Angeles not very far behind, as demand for housing from population growth absorbs excess inventory in Southern California." The largest markets with the worst expected performance in price are Bakersfield, Calif.; Bradenton-Sarasota-Venice, Fla.; Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.; Fresno, Calif., Las Vegas-Paradise, Nev.; Miami-Miami Beach-Kendall, Fla.; Orlando-Kissimmee, Fla.; Phoenix-Mesa-Scottsdale, Ariz.; Portland-Vancouver-Beaverton, Oregon-Wash.; San Jose-Sunnyvale-Santa Clara, Calif., Stockton, Calif.; and West Palm Beach-Boca Raton-Boynton Beach, Fla. Further large decreases will mainly be confined to markets in Arizona, California, Florida and Nevada, where massive overbuilding took place, the company said. Overall, national home prices in the 3Q2009 were down 5% from a year ago. The company expects to see a further 5% decrease in home prices during the next 12 months, with double-digit decreases in some markets.

November was the fourth straight month that foreclosure activity declined after hitting an all-time high in July, according to the latest data from RealtyTrac. It added November foreclosures represented the lowest level since February. Based on its November 2009 U.S. Foreclosure Market Report, foreclosure filings, including default notices, scheduled foreclosure auctions and bank repossessions, were reported on 306,627 properties during the month, a decrease of 8% from October but still up 18% from November 2008. Default notices nationwide were down 8% from October but still up 22% from a year ago, scheduled foreclosure auctions were down 12% but still up 32% from November 2008, and bank repossessions were flat from October and down 2% from November 2008. Nevada foreclosure activity decreased by a double-digit percentage for the second straight month, but the state continued to have the nation's top foreclosure rate. A total of 9,295 Nevada properties received a filing, down 33% from October and also a 33% decrease from a year ago. Florida took the No. 2 spot from California, which posted the nation's third highest foreclosure rate - one in every 180 housing units received a filing during November. After three straight months of decreases, Arizona foreclosures increased almost 8%. Las Vegas dropped from the top spot among metropolitan areas with a population of at least 200,000, to No. 5 thanks to a 33% decrease in foreclosures.

House and Senate appropriators are increasing the Department of Housing and Urban Development's resources to combat mortgage fraud, update its technology, while increasing the Federal Housing Administration's lending capacity to $400 billion. The conference report on the HUD appropriations bill for fiscal year 2010 includes $20 million to combat mortgage fraud, and $80 million to modernize its legacy computer systems. The appropriators also provide the HUD Inspector General with an additional $5 million to conduct audits of FHA-approved lenders. (Over the past week HUD banned two FHA lenders.) FHA endorsed $328 billion in loans in fiscal yeas 2009, which ended Sept. 30, and its business continues to grow. (The $400 billion figure is for FY 2010.) Ginnie Mae, which provides a secondary market outlet for FHA and other government-backed loans, is in line for a $185 billion increase in commitment authority to $500 billion in FY 2010, up from $315 billion in 2009. Congress is late in passing the FY 2010 budget bills. Democratic leaders have rolled the HUD appropriations bill into a consolidated appropriations bill that the House of Representatives is expected to pass soon. The timing in the Senate is unclear.

The winning bidder has been named in a foreclosure sale of certain ownership interests of the W New York-Union Square, a hotel trophy property that combined news reports indicate Dubai World's private equity unit had originally bought in 2006. The bidder, identified as 201 Park Avenue South PEH LLC, called the winning bid a "step to assume equity ownership" of the hotel. The limited liability company is an affiliate of Philadelphia-based private equity fund LEM Mezzanine, which in 2007 bought a mezzanine loan backed by the W New York-Union Square's property owner. The W New York-Union Square's foreclosure sale proceedings had been initiated in November. Near the end of that month, combined news reports indicated Dubai World, the United Arab Emirates' investment vehicle, was delaying some of its payments on debt in a move that briefly shocked world markets. The current owner of the aforementioned interests in the property attributes the foreclosure largely to the recent downturn in the hotel industry. Despite the downturn, it indicated it sees some value in the hotel's brand and location. It said its goal is to maintain the W New York-Union Square's operational strength and ensure it is well positioned for any market recovery that may occur.