Servicing

Amherst Securities Group is warning MBS investors that not all triple-A rated restructured REMICs are the same and some could run into problems including possible downgrades under "modest stress" conditions. The investment banking boutique notes that Wall Street has restructured $43 billion in downgraded REMICs over the past 11 months — five times the volume it did last year. Amherst says the credit rating agencies are requiring different subordination levels for triple-A rated tranches. "As a result of the ratings patchwork, some of the ratings are too aggressive to us while others are too conservative," the company said.

The Federal Housing Administration insured $29.6 billion in single-family loans in October, a 6.7% gain from October 2008, according to new government figures. FHA insured $328 billion in loans in fiscal year 2009 (which ended Sept. 30) with production averaging $27.3 billion a month. The FHA monthly report shows the government's mortgage insurance agency endorsed nearly 167,100 loans in October. Refinancings comprised 35% of endorsements and 48% of the loans went to first-time homebuyers. Meanwhile, FHA insured $1.9 billion in condominium loans and $2.5 billion in reverse mortgages (Home Equity Conversion Mortgages). As of Oct. 30, FHA's insured single-family mortgage portfolio totaled $716.4 billion with 8.7% of the loans 90 days or more past due. FHA servicers completed 8,100 loan modifications in October, up 40% from a year ago, and 971 short sales, up 130% from a year ago.

PennyMac Mortgage Investment Trust, generally considered a buyer of problem residential loans, is auctioning off two different loan packages totaling $47 million. A company spokeswoman confirmed that the publicly traded REIT is offering an $18 million pool of nonperforming loans and a $29 million pool of performing mortgages. No other details were provided. The company is in the process of getting licensed as an originator and servicer in several states. In other nonperforming loan news, investment bankers say a large Wall Street firm is offering a small package of NPLs believed to be in the $20 million range. Gordon Albrecht, EVP for FCI Lender Services, Anaheim Hills, Calif., said he believes the NPL auction market is beginning to heat up but cautioned that "it's all small scale deals." Few large sales of NPLs — anything over $100 million in face value — have occurred over the past two quarters. (For full details see the Dec. 14 paper edition of National Mortgage News.)

The Department of Housing and Urban Development's Office of Single Family Asset Management will use Marshall & Swift's cost estimator data and solutions to provide repair, replacement, maintenance and improvement costs on Federal Housing Administration-owned housing units in a pilot initiative. M&S, a provider of building cost data and estimating technology based in Los Angeles, says the cost estimator responds to the industry need to estimate repairs on the growing number of residential properties now in or entering the foreclosure market. The move will help HUD simplify and ultimately eliminate the manual cost allowable updates routinely performed to develop and confirm costs on a consistent and verifiable basis. "The objective third-party information will provide a conduit for the agency and industry to work more closely with each other and reduce unneeded time, costs and expenses associated with the protection and preservation of assets," said Salil Donde, CEO of Marshall & Swift/Boeckh.

The commercial origination and servicing business of bankrupt Capmark Financial Group Inc. has been acquired by Berkadia Commercial Mortgage LLC, a joint venture of Berkshire Hathaway Inc. and Leucadia National Corp. The sale includes a commercial servicing portfolio of more than $240 billion. Michael I. Lipson, head of global services and loan originations, and a member Capmark's executive team since 1996, has been named president of Berkadia and will continue to lead the business. Berkadia's board of directors will include two representatives each from Berkshire Hathaway and Leucadia National. Berkadia is in the process of hiring more than 1,000 of Capmark's approximately 1,500 current employees. Berkshire is headed by billionaire investor Warren Buffett. Capmark is based in Horsham, Pa. Three years ago Capmark (then known as GMAC Commercial Mortgage) was sold to an investor group led by Goldman Sachs & Co.

Chardan 2008 China Acquisition Corp. is entering into a business combination with DAL Group LLC, which, following the closing, will be one of the largest providers of mortgage processing services in Florida. As a result of the acquisition, DAL will own 100% of the business and operations of Default Servicing, Inc. and Professional Title & Abstract Co. of Florida and the nonlegal operations supporting the foreclosure proceedings handled by the law offices of David J. Stern. Chardan will change its name to DJSP Enterprises Inc. The company provides a wide range of processing services in connection with mortgages, mortgage defaults, title searches and abstracts, real estate-owned properties, loan modifications, title insurance, loss mitigation, bankruptcy and related litigation. DJSP's clients include all of the top 10 and 17 of the top 20 mortgage servicers in the U.S. The company has approximately 1,000 employees and is headquartered in Plantation, Fla., with additional operations in Louisville and San Juan, P.R. U.S. operations are supported by a scalable, low-cost back office operation in Manila, the Philippines, that provides data entry and document preparation support at a low cost. Current business is increasing at approximately 20% per year as there is an increasing market demand for its services as volume of delinquencies, foreclosures and loan modifications rise and are expected to remain at historically high levels. DJSP said it plans to leverage its infrastructure to expand its service offerings, enter new geographic regions, and develop its cyclical business segments such as mortgage origination services.

Wells Fargo & Co. and Bank of America lead the list of unsecured creditors to Fairfield Residential LLC, one of the nation's largest apartment owners and developers which filed for bankruptcy on Sunday. According to the filing, which came in Delaware, Wells is owed almost $130 million, BoA $84 million. Other leading unsecured creditors include Capmark Finance ($79 million), Compass Bank ($64 million) and Regions Bank ($52 million). Freddie Mac, which buys multifamily loans in the secondary market, is owed $45 million. Capmark, a top-ranked commercial mortgage lender and servicer, itself is in bankruptcy. San Diego-based Fairfield listed assets of between $100 million and $500 million and liabilities north of $1 billion. The company, like many commercial real estate owners, has experienced problems refinancing its loans. None of the creditors had commented at press time.

The commercial origination and servicing business of bankrupt Capmark Financial Group Inc., has been acquired by Berkadia Commercial Mortgage LLC, a joint venture of Berkshire Hathaway Inc. and Leucadia National Corp.The sale includes a commercial servicing portfolio of more than $240 billion. Michael I. Lipson, head of global services and loan originations, and a member Capmark's executive team since 1996, has been named president of Berkadia and will continue to lead the business. Berkadia's board of directors will include two representatives each from Berkshire Hathaway and Leucadia National. Berkadia is in the process of hiring more than 1,000 of Capmark's approximately 1,500 current employees. Berkshire is headed by billionaire investor Warren Buffett. Capmark is based in Horsham, Pa. Three years ago Capmark (then known as GMAC Commercial Mortgage) was sold to an investor group led by Goldman Sachs & Co.

Colony Capital LLC, Los Angeles, has acquired a commercial real estate-secured nonperforming loan portfolio from BAG Bakaktiengesellschaft, Hamm, Germany, with a face value of $90 million. "The transaction marks the first NPL acquisition in Europe for Colony during this new distressed cycle," the Los Angeles-based company said. Morgan Lewis was the legal and tax advisor for Colony on the transaction. Dilip Awtani, a managing director who heads Colony's distressed efforts in Europe, said he sees value in underlying real estate in Germany and other European countries that he believes Colony will be able to benefit from. The company seeks to realize this value by helping banks monetize illiquid assets and positioning itself to benefit from an eventual recovery.

More than 759,050 struggling borrowers have received temporary mortgage payment relief under the Obama Administration's loan modification effort but only 4.1% have succeeded in landing permanent modifications, according to a monthly progress report on the Home Affordable Modification Program. The Treasury Department report shows that 31,382 borrowers who made it through the three-month payment trials had received permanent modifications as of Nov. 30. It appears that HAMP servicers completed over 20,000 permanent mods in November. Treasury and HUD officials have been disappointed with the servicers' efforts to convert trial mods into permanent mods and they recently initiated a month-long effort to accelerate the conversion rate. "Our challenge now is to keep the pressure on," HUD senior advisor William Apgar said. The administration launched HAMP in April and so far the average homeowner placed in the three-month trials has benefited from a $550 reduction in their monthly payment. The first conversions to permanent mods occurred in July and 10,087 had been completed by the end of October, according to a congressional panel that oversees the Troubled Asset Relief Program.