Servicing

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.

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.