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Tourmalet Advisors, a Connecticut-based hedge fund, is in the process of raising $500 million to invest in nonperforming mortgages, according to an offering circular provided to National Mortgage News. Tourmalet has already invested $460 million in nonperforming loans (NPLs) through its "Matawin Fund" and has formed joint venture partnerships with other vulture funds including Kondaur Capital, Irvine, Calif. Tourmalet was founded earlier this year by Michael Corasaniti, a former managing director of Pequot Capital. During his career he also has worked in research at Keefe, Bruyette & Woods where he served as a vice president. At press time Tourmalet's investor relations department had not returned a telephone call about the capital raise. Hedge funds have been raising money and eyeing the NPL market for 18 months, but to date, few large sales have taken place.

LoanMarket.net, Irvine, Calif., which operates a website offering individual mortgages for purchase, has branched out into offering loan pools. It closed its first pool sale in August and currently has several more packages out for bid, said company principal Jeff Freud. "We hope to close a pool or two a month," said Mr. Freud. For now, the firm is focusing on package sizes ranging from $20 million to $100 million. The company is offering both performing and nonperforming mortgages as well as commercial and residential. Mr. Freud said banks are selling nonperforming loans (usually in small amounts) but noted that none are publicizing their deals. "Deals are closing," he said, "but no one wants to talk about it."

National home prices, including distressed sales, declined by 9.8% in September 2009 compared to September 2008, according to First American CoreLogic and its LoanPerformance Home Price Index. This was an improvement over August's year-over-year price decline of 11.1%. On a month-over-month basis, however, prices declined by 0.4% in September compared to August 2009, reversing a five-month trend of positive appreciation. The decline suggests the return of seasonal housing price patterns. The company revised its methodology for the HPI report beginning with August data to exclude distressed sales (short sales and REOs), which have become an increasingly large share of sales activity. Excluding distressed sales, year-over-year prices declined in September by -6.0% (in August non-distressed sales fell by -6.2% year-over-year). First American said this underscores the negative impact that distressed sales have on the HPI, as distressed sales continue to decline at a larger annual rate than non-distressed sales. When distressed sales were included Nevada (-25.5%) remained the top-ranked state for annual price depreciation with Arizona following close behind (-20.3%). Florida (-17.7%), Michigan (-15.1 %) and Idaho (-14.9%) round out the top five states for price declines. Excluding distressed sales, the worst five states for year-over-year price declines changes slightly. Nevada (-20.4%) still holds the top spot, followed by Arizona (-15.4%), Florida (-14.8%), Idaho (-10.9%) and Washington (-10.3%). The new forecast anticipates continued declines in most markets for the next six months, followed by a rebound in the spring. Above-average levels of foreclosures, inventories and unemployment will continue to take their toll in many major metropolitan markets in the short term. First American expects housing prices to bottom for most markets by March 2010 and then turn positive. In September 2010, the forecast projects that 12-month appreciation for national home prices, excluding distressed, will be 1.1%, bringing price levels for that segment of the market back to levels in May 2004.

Republican leaders on the House Financial Services Committee are calling for hearings on the financial health of the ailing Federal Housing Administration reserve fund, which recently reported a sharp drop in its capital ratio to 0.57%. Citing FHA's deteriorating financial position, Reps. Spencer Bachus (Ala.) and Shelley Capito (W. Va.) are urging committee chairman Barney Frank, D-Mass., to schedule a hearing as soon as possible. "If home prices do not recover, the economic value of the Mutual Mortgage Insurance Fund could fall below zero. We are concerned that such a drop could force HUD to request an appropriation from Congress," the two Republican lawmakers say in a letter. FHA officials maintain that they have taken corrective actions and the insurance fund is in no imminent danger of running out of cash. If necessary, the agency could raise the FHA upfront premium to keep the fund in the black. However, Reps. Bachus and Capito also have concerns about FHA's technological and management capacity. "It is incumbent upon our committee to get prompt answers to many of the questions surrounding FHA's risk management practices and finances," the Republicans say in a letter to Rep. Frank.

Mortgage moratoriums, HAMP and other loan modification programs will continue to create a trailing effect on the overall number of foreclosures, MBA's chief economist Jay Brinkmann said during a press conference regarding the group's National Delinquency Survey. Now there is a longer time line before a loan actually goes into foreclosure, he said. For example, it will be six months before we see foreclosures essentially from delinquencies that occurred in the first part of 2009. For those loans which will go south in 2010, perhaps by the end of 2010 or in 2011 they will go into foreclosure, thus creating the trailing effect. This crisis is different, he said. Normally any kind of economic pick up would help avoid this trailing effect as improvements in home prices would offset some of the foreclosure rate. "The problem is that if you're in an area where prices dropped 30% and you're under water, just because prices come back up 2%-3% it does not help much." The economist noted however that "the trailing effect" is more of a symptom of the economic crisis than a driver of foreclosures. It will have a certain effect on prices in certain markets, but it will have more to do with what is happening in job creation, and jobs creation really won't be impacted by the foreclosure rate."

Even though the recession ended some time this summer, late payments and foreclosures on residential loans continued on an upward course in the third quarter with delinquencies reaching a record 9.64% — a 40% spike from a year ago. According to the Mortgage Bankers Association's National Delinquency Survey, no loan type was spared: delinquencies on prime and subprime mortgages as well as FHA loans all rose during the quarter, reaching new highs. According to figures compiled by National Mortgage News, consumers owe $9.8 trillion on their homes, which means (based on the MBA's late payment rate) that $944.7 billion in mortgages are 30- 60-, or 90 days late or in foreclosure. Roughly $238 billion in subprime mortgages are delinquent as well. The national foreclosure rate rose to 4.47% at the end of September, a record, and a 50% jump from a year ago. The MBA reports delinquencies separate from foreclosures which means 14.11% of all home owners with a mortgage are either in arrears or in some stage of being foreclosed on. Given the national unemployment rate of 10.2%, MBA's findings were not unexpected.

REDC Auction.com said its 2009 sales of foreclosed properties has topped the $2 billion mark with successful weekend auctions in Dallas, Houston and Seattle. The Irvine, Calif.-based company said it sold just shy of $15 million of REO properties in those three cities. The company has conducted 298 auctions this year, selling 34,600 properties since January.

Triad Guaranty Inc., a mortgage insurer that is in self-liquidation mode, has received a delisting notice from the NASDAQ. The exchange told the nation's smallest MI that it is no longer in compliance with a rule requiring it to maintain a minimum market capitalization (based on common stock value) of $15 million. NASDAQ is giving the Winston-Salem company 90 calendar days, or until Feb. 9, 2010, to regain compliance. Triad, whose shares trade for about 50 cents, lost $102 million in the third quarter. In October Triad agreed to sell its MI platform, including its technology, to Essent Guaranty, a new MI company that hopes to begin writing policies next year. Triad has outstanding coverage on about $57 billion worth of home mortgages, according to the Quarterly Data Report.

Technology Credit Union of San Jose has introduced a new five-year jumbo ARM and is willing to fund mortgages up to $1 million in the high-priced San Francisco Bay Area. Introduction of the new product comes as area homebuyers are having a hard time finding affordable loans over the Fannie Mae/Freddie Mac limit, mainly because the secondary market for these nonconforming mortgages has dried up along with the securitization market. For now, most jumbo loans being funded are held in portfolio at depositories with Bank of America and Wells Fargo being two of the largest players in that market. Technology CU is a $1 billion credit union serving several hundred companies in Silicon Valley. A few months back Kinecta Federal Credit Union of Manhattan Beach, Calif., stepped up its jumbo lending.

The National Association of Insurance Commissioners has selected PIMCO as a third-party modeler that will help state regulators determine the risk-based capital requirements for residential mortgage-backed securities. The new NAIC model is slated to produce expected security-level losses for about 18,000 RMBS owned by U.S. insurers at the end of 2009 so insurers can map their holdings to designations set by the group and those designations' accompanying risk-based capital requirements. The designations in this case will apply only to yearend 2009 reporting.