Servicing

Phoenix-based CCG Catalyst now offers contract negotiation services to financial institutions for vendors such as loan origination systems, servicing and online banking providers. As banks seek ways to cut costs, many are looking to contract negotiations with their existing vendors as a way to streamline operating expenses. In the case of contracts that were signed during prosperous times in the industry, institutions are looking at renewals in regards to their decreased budgets and investigating whether they are receiving enough value from their investment. CCG Catalyst has found significant savings for institutions that enter into early renewal talks with their vendors. The service also helps to assess if an organization has gone too far with concession requests so a vendor no longer views the business as profitable.

Lenders Asset Management Corp., a nationwide default asset manager in Littleton, Colo., is expanding its REO liquidation management process to effectively handle the intricacies of each account. LAMCO's system for managing these teams enables the company to deliver customizable REO solutions that give lending institutions, servicers, investment firms and insurance entities the ability to scale operations and liquidate REO assets while mitigating risk in approximately half the time of the industry standard while ensuring data security and integrity.

Homeowners with combined loan-to-value ratios greater than 120% are more likely to fall behind on their payments than other borrowers who lose their job, according to analysts at the Amherst Securities Group. At a CLTV ratio above 120%, job loss "amplifies the likelihood a borrower will default," the analysts say in an Amherst Mortgage Insight article entitled "Negative Equity Trumps Unemployment in Predicting Defaults." The ASG analysts contend that the loss of a job is more of a "catalyst" that can trigger default. "When confronted with a catalyst that forces re-evaluation of financial priorities, the borrower will place an underwater mortgage much further down on the list. This pattern is most clear for prime borrowers," the article says. As of Sept. 30, an estimated 5.3 million or 11.3% of mortgaged homeowners have CLTVs of 120% or greater, according a recent report by First American CoreLogic. Fannie Mae recently reported 20% of its single-family mortgages with LTV ratios greater than 100% are 90-days or more past due.

Fannie Mae issued $40.7 billion in mortgage-backed securities in October, down 14.5% from September, according to the government-sponsored enterprise. October's issuance is the lowest since January, when the GSE issued $21.3 billion in MBS and it most likely reflects a decline in refinancing volume. Freddie Mac reported a similar 13.5% drop in MBS issuance in October. Freddie also reported that its purchases of refinanced loans fell by 15% month-over-month. Fannie did not report its purchases of refinanced loans. Recently it appears Fannie and Freddie MBS issuance has been tied to the refinancing market, while Ginnie Mae issuance has been tied to the homebuying market. Ginnie Mae MBS issuance totaled $38.7 billion in October, down only 2.5% from the previous month.

Marathon Asset Management LP, after raising $500 million from investors, has been cleared by the Treasury Department to participate in its 'Public-Private Investment Program' to buy toxic mortgage assets. The New York-based Marathon had already been prequalified by Treasury to invest in legacy assets by partnering with the government, but needed to raise the minimum $500 million to participate. On Monday it publicly announced that it had met the capital goal. The asset manager plans to buy subprime ABS, including both performing and subperforming asset classes. It has been actively reviewing and bidding on portfolios over the past year. Now that it has met the federal capital raise minimum, it can partner with Treasury 50-50 on toxic asset purchases and receive government financing.

The Treasury Department is setting up a Homeownership Preservation Office to ride herd on servicers that are failing to turn trial loan modifications into permanent modifications. The Obama administration also is threatening to impose sanctions and fine servicers with low conversion rates. Servicers participating in the administration's Home Affordable Modification Program have placed over 650,000 borrowers into trial modifications and 375,000 are due to convert to permanent modifications by yearend. The administration wants to achieve the highest conversion rate for those 375,000 borrowers. "We must now refocus our efforts on the conversion phase to ensure that borrowers and servicers know their responsibilities and are converting trial modifications to permanent ones," said Phyllis Caldwell, who heads the new Homeownership Preservation Office. Treasury/Fannie Mae account liaisons are being assigned to monitor servicers' performance. "Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences, which could include monetary penalties and sanctions," according to Treasury.

Fannie Mae issued $40.7 billion in mortgage-backed securities in October, down 14.5% from September, according to the government-sponsored enterprise. October's issuance is the lowest since January, when the GSE issued $21.3 billion in MBS and it most likely reflects a decline in refinancing volume. Freddie Mac reported a similar 13.5% drop in MBS issuance in October. Freddie also reported that its purchases of refinanced loans fell by 15% month-over-month. Fannie did not report its purchases of refinanced loans. Recently it appears Fannie and Freddie MBS issuance has been tied to the refinancing market, while Ginnie Mae issuance has been tied to the homebuying market. Ginnie Mae MBS issuance totaled $38.7 billion in October, down only 2.5% from the previous month.

Loan origination software provider Avista Solutions released a new consumer website function aimed at putting greater functionality into the hands of borrowers. The Columbia, S.C.-based LOS will "private-label" the new Web portal with lenders' websites and branding. Visitors can submit applications online, obtain automated approvals, receive online disclosures, and can receive notification when the rates they want are available. The portal also has payment calculators, loan-type scenarios and other tools so the borrower can self-serve online. Borrowers also can receive automated e-mail updates on the online status of their loans.

Real Estate Disposition LLC generated $55 million during a recent weekend of auction activity in New York, Las Vegas and Reno, and a national online auction, boosting its 2009 total sales to more than $2 billion. "Many people had winning bids on properties that were more than 50% less than the house's previous high value," said REDC CEO Jeff Frieden. The national online auction of houses from coast-to-coast generated $33.6 million in sales. The Solaria, a Riverdale, N.Y., luxury high-rise residence, received bids on all 54 residences, generating 21 contracts with over $17 million in proceeds. The Las Vegas and Reno auction sold 49 of 56 properties (87.5%) for $5 million. The company has conducted 302 auctions this year and has auctioned 35,900 properties, including foreclosed houses as well as commercial and builder-developer properties. REDC can be found online at www.auction.com.

Banks had to buy back $7.1 billion in defaulted single-family loans in the third quarter to reimburse mortgage investors, up from $1.9 billion in the previous quarter. Federal Deposit Insurance Corp. Call Report information shows that most of the buyback demands fell on JPMorgan Chase and Bank of America. Chase repurchased $2.7 billion in defaulted loans and BoA repurchased $2.3 billion to satisfy investor demands. Both are on the hook for troubled loans they took control of when they purchased ailing mega-thrifts — Countrywide in the case of BoA and Washington Mutual by Chase. The FDIC information also lists buybacks by Citibank ($898 million), National City Bank ($361.6 million), Wells Fargo Bank ($266 million) and SunTrust Bank ($232.3 million). Investors like Fannie Mae and Freddie Mac can require lenders to buy back defaulted loans that don't comply with their underwriting requirements. Freddie Mac forced its seller/servicers to buy back $960 million in bad mortgages in third quarter. (Fannie does not disclose buyback information.) Ginnie Mae and Federal Housing Administration also require buybacks and indemnifications on bad loans.