Servicing

Green Tree Servicing, St. Paul, Minn., was the winning bidder on a $1 billion package of mortgage servicing rights recently auctioned off by the Federal Deposit Insurance Corp. The agency and company could not be reached for comment at press time. Sources close to the deal confirmed to National Mortgage News that Green Tree was the winning bidder. "The sale has closed," said one source, requesting he not be identified. The servicing rights belonged to Franklin Bank of Texas, which the agency took control of a year ago. Green Tree is a subservicing and specialty servicer.

Residential delinquencies increased for the 11th straight quarter, hitting an all-time high of 6.25% for the period ending Sept. 30, according to new figures released by TransUnion. Basing its findings on a random sample of 27 million credit files, the company found that Nevada leads the nation in delinquencies (14.5%) with Florida a somewhat close second with 13.3%. Year-over-year, mortgage delinquencies are up 58% and are expected to continue rising until the national job picture improves. The credit report agency defines delinquent as any loan where the borrower is 60 or more days past due. The Mortgage Bankers Association, which releases its delinquency figures on Thursday, defines delinquent as 30 days past due or more. According to National Mortgage News and the Quarterly Data Report, there are 60.5 million outstanding residential loans in the U.S. with a face value of $9.86 trillion.

The first new issue of commercial mortgage-backed securities completed under the government's Term Asset-Backed Securities Lending Facility is a step forward on what may be a long journey toward that market's recovery, according to Moody's Investors Service. The first CMBS deal done under TALF is collateralized by a $400 million loan to subsidiaries of Developers Diversified Realty Corp., a retail real estate investment trust. According to combined news reports, the security came to market this week but Moody's notes in a new report that, "significant issues affecting the broader CMBS securitization sector remain unresolved." The rating agency adds, "not all CMBS loan financings will benefit from the program, which has stringent rules."

The yield on the benchmark 10-year Treasury continued its drop Tuesday, suggesting that the recent downward drift in mortgage rates might continue. At press time, the 10-year was yielding 3.3% compared to 3.5% less than a week ago. Rates began to fall after Federal Reserve chairman Ben Bernanke spoke Monday, reaffirming the government's intervention policies in the mortgage market. The Fed is set to end its MBS liquidity program by the spring but the Fed chairman said the central bank might adjust the program, depending on what market conditions call for.

DreamBuilder Investments LLC has purchased a $173 million package of nonperforming second liens after the initial winning bidder on the deal failed to close. According Jaymes Financial of Virginia, which brokered the transaction, the privately held DreamBuilder paid less than one penny on the dollar for the loans, which include both secured and unsecured credits. The seller was The Cadle Co., Newton Falls, Ohio. A Texas company had won the bid a few weeks back but could not close on the transaction, said Andy James, a principal in Jaymes Financial. Several weeks back the privately held DreamBuilder bought a $400 million package of nonperforming seconds that belonged to National City Corp., Cleveland. The seller was PNC Financial Services, Pittsburgh, which bought NatCity late last year. No price was disclosed on the NatCity deal. DreamBuilder has been buying nonperforming second liens since 2002.

Although its portfolio is continuing to perform well, PMC Commercial Trust has seen the weakened economy impact some of its borrowers, according to its third quarter financial results. In addition, the Dallas-based commercial real estate investment trust has taken possession of two properties through foreclosure. "We anticipate the weakness to continue for at least several quarters," said PMC chairman Lance Rosemore in a statement, adding, "our loans are typically real estate secured and, in most cases, the value of the underlying collateral should cover our principal exposure." In response to the current economic conditions, PMC Commercial Trust increased its reserves for loan losses during 2009. Income from continuing operations increased to $1.5 million in 3Q09 from $587,000 during the third quarter of 2008. Net income increased to $1.9 million during the third quarter of 2009 compared to $603,000 for the third quarter of 2008.

Fannie Mae is offering a bulk package of 270 REO properties, one of few bulk offerings by the GSE this year, according to a bidder who has seen the offering circular. The package hit the market last week. Over the past two years Fannie has sold many of its real estate-owned properties one or two at a time. Roughly 30% of the bulk package includes homes in the Rust Belt, said the bidder, requesting his name not be used. The homes carry an average BPO (broker price opinion) of $25,000. A Fannie spokeswoman could not provide details at press time but noted that during the first nine months of the year the GSE sold 89,691 REO properties while acquiring title to 98,428. Last year it sold 64,843.

Freddie Mac said the conforming loan limits on the mortgages it purchases from lenders will not change in 2010. Moreover, even the $729,750 loan limit for high cost areas will remain the same since Congress extended it for another year. Otherwise, the loan limits for first mortgages are: $417,000 for mortgages secured by one-unit properties, $533,850 for mortgages secured by two-unit properties, $645,300 for mortgages secured by three-unit properties and $801,950 for mortgages secured by four-unit properties. Fannie Mae is expected to make the same pronouncement shortly.

Milestone Advisors plans to auction off a $275 million package of nonperforming acquisition, development and construction loans, a pool that is heavily weighted toward California. The loans — some of which involve foreclosures and bankruptcies — were used to fund residential and commercial projects. Milestone would not identify the seller but said it is a "western regional financial institution" seeking to liquidate assets. The investment banking and advisory firm said it is now qualifying prospective bidders and hopes to sell the loans by yearend.

Fannie Mae completed 56,816 loan modifications during the first nine months of the year with 46% involving mortgages with current loan-to-value ratios greater than 100%. "A significant portion of our modifications pertain to loans with a mark-to-market LTV ratio greater than 100%," Fannie said in its third quarter financial report. Fannie notes that 20% of its high LTV single-family mortgages are 90-days or more past due, compared to a serious delinquency rate of 4.72% on its entire $2.8 trillion guaranteed mortgage portfolio. In the third quarter, the GSE completed 28,000 loan modifications, including a "limited number" of borrowers who qualified for the Obama administration's Home Affordable Modification Program. However, the GSE said a "large number" of the third quarter modifications involved borrowers "who did not qualify for modifications under the Home Affordable Modification Program."