Servicing

The chief executive of Celink, an independent reverse mortgage servicer based in Lansing, Mich., has donated $25,000 to housing and rehabilitation organizations that aid veterans to commemorate the recent 68th anniversary of Pearl Harbor Day. The donation supports Home for Our Troops, which builds handicapped accessible homes for severely wounded combat veterans, and the Achilles Track Club, which provides equipment, training and support for veterans who have lost limbs in combat. The former has been building their newest home in Macomb County, Mich.

In separate announcements, Fitch Ratings, New York, has downgraded Republic Mortgage Insurance Co., Winston-Salem, N.C., and CMG Mortgage Insurance Co., a joint venture between PMI Mortgage Insurance Co., Winston-Salem, N.C., and CUNA Mutual Insurance Society, Madison, Wis. Both were cited for increasing numbers of delinquent loans in their respective insured portfolios. However, CMG was hit much harder, as its A+ insurer financial strength rating was slashed to BBB. In its report, Fitch said CMG is not likely to get additional capital from either PMI or CUNA Mutual. The company's ownership agreement provides for a capital call to its parent companies if its risk-to-capital ratio reaches 19-to-1. At the end of the third quarter, it was 16.8-to-1. "Furthermore, Fitch notes that CMG is operationally dependent on PMI and this raises uncertainty regarding CMG's operational stability and infrastructure in a scenario where PMI is placed into runoff," the report said. RMIC's IFS rating was only cut a single notch from BBB to BBB-. Even though RMIC's default rate has gone from 10.34% at the end of last year to 15.04% for the most recent quarter, it is still better than its peers. But Fitch is worried about RMIC's "high exposure to 2007 vintage loans."

Sellers under duress were responsible for more than three out of four sales in the Las Vegas area in November, according to Rob Jenson, an agent with Re/Max Central. According to Mr. Jenson's monthly report, 77% of the 2,905 properties that changed hands in the month were distressed sales. That is the lowest share since June 2008. Total sales were down 10.2% in November. Mr. Jenson, who heads the Jenson Group at Re/Max, attributes the declines to the holiday season and the uncertainty over the first-time buyers tax credit, which was set to expire at the end of November, only a few days before Congress voted to extend the benefit through next June. On the brighter side - if there is such a thing in the devastated Vegas area - the average sales price rose a tad in November to $161,071. Also, the number of foreclosures on the market was down for the seventh consecutive month. But the number of short sale listings rose 2.6%, to 10,650. Overall, there is now a 6.8-month supply of homes for sale in the Vegas market. Excluding listings currently under contract, however, the supply dips to just three months' worth of houses. According to the report, nearly 11,500 properties are in contingent or pending status.

The Treasury Department cited mortgage challenges among other concerns that persist despite an improving economy in deciding Wednesday that it would extend the Troubled Asset Relief Program to early October of next year. In a letter to lawmakers, Treasury secretary Tim Geithner said there have been improvements in the economy but said TARP must be extended due to remaining challenges for mortgagors, homeowners and small businesses. "This extension is necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets and the needs of small businesses, and to maintain the capacity to respond to unforeseen threats," Mr. Geithner wrote. The secretary said he would limit the use of the program to a few areas: mitigating foreclosures, helping small businesses, providing capital to community banks and increasing the Term Asset Backed Securities Loan Facility, the latter of which now includes commercial mortgages. The Treasury secretary said he would only use TARP for other purposes if other moves were necessary to stabilize the financial industry. He said he would first consult with the president and the chairman of the Federal Reserve as well as submit written notification to Congress before taking other actions. He warned emergency actions might still be necessary.

JPMorgan Chase has 140,000 borrowers in Home Affordable Modification Program payment trials, but only 16% have been approved (or ready to be approved) for a permanent modification, a Chase executive told Congress. Approximately 71% of the homeowners are current on their trial mods, but many have not submitted the required documents for underwriting - pay stubs, proof of employment and tax returns. "We are focused on helping the 51% of borrowers that are paying but need help completing documents," said Chase executive Molly Sheehan. She also told a congressional panel that 29% of the homeowners did not make all their monthly mortgage payments during the three-month trials and are ineligible for a permanent HAMP modification. Chase, the nation's third largest servicer, has other modification alternatives to help these borrowers, she told the House Financial Services Committee. The Obama administration is making a big push this month to get 375,000 HAMP candidates into permanent modifications. Meanwhile, consumer groups and other critics don't expect HAMP to reach its potential because of high unemployment and so many underwater mortgages. Some also question the servicers' commitment to the program. Center for Responsible Lending senior policy counsel Julia Gordon noted that the HAMP program has the "theoretical potential" to help a significant number of struggling borrowers. "The servicing industry is either unable or unwilling to do what it is has been asked to do," she testified.

Triad Guaranty Inc., Winston-Salem, N.C., has notified NASDAQ that it will voluntarily delist its shares from the exchange. The nation's smallest MI is in the process of self liquidating and recently sold off its technology and other assets to Essent Guaranty, a new MI company based in Philadelphia. The delisting is expected to occur by the last week of December. The move follows receipt of a notice from Nasdaq that Triad was no longer in compliance with the rule to maintain a minimum bid price of $1 per share.

Thanks to a poor national jobs outlook, home prices will continue to slide next year and a new wave of foreclosures will hit the market, according to Dave McCarthy, president and CEO of Integrated Asset Services, Denver. Mr. McCarthy believes the $8,000 first-time home buyer tax credit -- which was recently extended by the government -- "persuaded some buyers to make their purchase sooner than they otherwise would have." The leading U.S. housing benchmark has fallen by more than 25% since its peak in July of 2006, and is roughly back to its January 2004 level, he noted. The executive warns that the home price slide could continue as rising unemployment causes more Americans to fall behind on their mortgage payments and end up in foreclosure. IAS is a vendor that offers default management and residential collateral valuations.

Low rates have led to adverse selection and performance deterioration in 2005 subprime residential MBS while low loan-to-value ratios have limited the prepayment concern for other recent vintages, according to a new report from Fitch Solutions. The company's monthly subprime RMBS index for the 2005 vintage dropped 11.4%. Managing director Thomas Aubrey said this reflects the fact that higher credit quality loans have been able to refinance out of the pool, leaving relatively poorer credit quality mortgages behind. The refinancing has affected the six-month constant prepayment rate for the securities, which over the last three months has risen to 4.3% from 3.5%. Fitch Solutions' Subprime RMBS Price Index, which is based on credit default swaps of RMBS, as a whole registered just under a 10% drop in the most recent month to 7.25 from 8.02. This is due primarily to the 2005 vintage's performance decline.

LoanMarket.net of California, which auctions nonperforming residential loans over the Internet, has launched a new program to sell distressed commercial loans too. Most of the product is low-balance commercial, the company said. "Your Taco Bells and stuff like that," said LoanMarket principal Jeff Freud. For now, the firm will offer commercial mortgages "off line," said Mr. Freud. The company currently has $50 million (unpaid principal balance) available for purchase. "We're marketing them off line and not in a pool," said Mr. Freud. It has three to four sellers interested in using its services.

Salene Residential Mortgage Opportunity Fund, which counts MBS pioneer Lewis Ranieri among its managing partners, has been identified as being the "stalking horse" bid on a portfolio of homes owned by the now-defunct Taylor, Bean & Whitaker of Ocala, Fla. Salene has made an offer on roughly 2,000 repossessed properties, according to investment banking sources familiar with the matter. A stalking horse bid is a strategy used by a bankrupt company (in this case TBW) whereby it obtains an initial bid on its assets from an interested buyer of its choosing. A bankruptcy court is overseeing the liquidation of TBW, which failed this summer. The REO portfolio has been appraised at $330 million. Additional bids will be taken in the coming weeks.