Servicing

BankUnited, Miami Lakes, Fla., has named Raymond S. Barbone executive vice president, mortgage services. In his new role, he will oversee loan administration and servicing, default administration, real estate owned disposition and mortgage modification efforts. Most recently, Mr. Barbone was a group senior vice president for operations at ABN AMRO Mortgage Group in Jacksonville, Fla. Prior to joining ABN AMRO, he spent 14 years with Atlantic Mortgage & Investment Corp., where he served in a variety of positions including controller and senior vice president, loan administration. He has served on the Freddie Mac Servicing Advisory Board and the Fidelity Information Services Mortgage Advisory Board.

Roughly 26% of homeowners with a mortgage had substantial equity, or paper profit, in their properties at the end of June in the Los Angeles-Orange County area, according to First American CoreLogic. But the company also found that 35% of mortgagors were underwater, owing more than their homes were worth. And according to The Orange County Register, 39% were within 5% of being underwater. California has one of the highest loan delinquency rates in the nation.

The Department of Labor, working with the Hope Now Unemployment Committee, has developed an online tool so servicers can easily verify a homeowner's unemployment benefits and the duration of those payments. The Obama administration has opened the door for homeowners that have lost their job to include unemployment insurance benefits in their gross income to qualify for a loan modification. But servicers have to verify that the borrower will receive at least nine months of unemployment benefits to be eligible for a modification under the Home Affordable Modification Program. "We have not been able to always get that information until now," said Katie King, who chairs the Hope Now Unemployment Committee. Unemployment has become such a problem, Ms. King said, that Hope Now is including DOL employment and training officials at their outreach events. Servicers also are directing troubled borrowers to the 3,000 local Department of Labor affiliated employment centers for career counseling, job training and placement opportunities. Ms. King is a community outreach manager at SunTrust Mortgage.

Three years after being sold to an investor group led by Goldman Sachs & Co., Capmark Financial Group — the nation's third largest commercial mortgage servicer — filed for bankruptcy protection, though it has vowed to continue making new loans. The Horsham, Pa.-based company, formerly known as GMAC Commercial Mortgage, services $288 billion of commercial real estate loans. In the first-half it funded just $1.94 billion of product compared to $10.39 billion for all of last year. In its filing, the nonbank lender listed $21 billon in debts and consolidated assets of $20.1 billion. Its other owners include KKR & Co., and Five Mile Capital Partners, Greenwich, Conn. Three years ago General Motors sold 78% of GMAC Commercial to the group for $1.5 billion in cash. At the time it looked like a good deal for Goldman and its partners — until commercial loan delinquencies began to rise and the U.S. economy collapsed in 2008. Capmark has struggled as the default rate on commercial mortgages held by financial institutions more than doubled to the highest rate since 1994. A spokeswoman for Capmark said the company plans to restructure it balance sheet. "We intend to keep making loans," she added.

U.S. residential mortgage-backed securities investors believe home prices will hit bottom while default rates will improve in the next 12 months, according to a survey conducted by a unit of Standard & Poor's. The Valuation Inputs Consensus survey tracks valuation projections of 64 institutions active in the U.S. and European structured finance markets. Expectations for default rates for loans included in 2007-vintage RMBS are down to 12% from 30% in the second quarter 2009 survey for alt-A and to 23% from 30% for subprime loans. However, prime fixed rate loan delinquencies for 2007-vintage RMBS trended up from 2% for the second quarter survey to 4%. "Because the majority of poorly performing securitized U.S. mortgage loans have already defaulted or paid down, default rate forecasts for underlying collateral on U.S. alt-A and subprime RMBS are stabilizing versus expectations for U.S. prime RMBS," says Peter Jones, global head of S&P's Valuation Scenario Services business. "Furthermore, default rate expectations for U.S. mortgage loans — although improving across most asset classes — remain significantly higher than U.K. loans, which are expected to deteriorate across all classes. Clearly, respondents see the U.K. and U.S. assets in two very distinct ways." Investors in RMBS secured by properties in the United Kingdom believe the default rates on non-conforming loans will climb from 8.2% over the next six month to 9.8% for the period covering 12-to-18 months from now. They expect home prices there to fall 7% in the next 12 months; in the second quarter survey, they expected a 10% decline.

The Federal Deposit Insurance Corp. continues to negotiate with a buyer on a $1 billion package of mortgage servicing rights that belonged to the now defunct Franklin Bank of Texas. A source close to the deal said negotiations between the FDIC's advisor, Interactive Mortgage Advisors, Denver, and a buyer have been ongoing for several weeks. IMA declined to comment. Franklin failed in 2008.

For the first time in decades, Ginnie Mae is outpacing Freddie Mac in the issuance of mortgage-backed securities. For the year ending September 30, Ginnie Mae guaranteed $418.1 billion in residential MBS. During the same 12-month period Freddie issued $382 billion. Freddie's MBS issuance rose 22% over the past 12 months, while Ginnie Mae issuance jumped 55% — due mostly to a dramatic increase in the origination of Federal Housing Administration and Department of Veterans Affairs guaranteed loans. (VA loans backed nearly 20% of Ginnie Mae securities.) According to newly released figures, Freddie issued $31.8 billion in MBS during September. The GSE said it purchased $21.4 billion in refinanced loans during the month, down from $35.6 billion in August. The government sponsored enterprise also reported a 20 basis point monthly increase in its single-family delinquency rate. The percentage of Freddie loans 90 days or more past due and in foreclosure rose to 3.33% in September.

Real estate investors last month bought 278, or 39%, of the 718 homes and condominiums sold at auctions in Orange County, Calif., one of the hardest hit housing markets in the state. According to a report by ForeclosureRadar.com, the ratio of properties not going back to the bank has been steadily increasing as residential lenders and servicers offer bigger discounts on auctioned properties. The Orange County Register reported that it has seen discounts as high as 60% off debt owed on a first mortgage and the norm seems to be around 30% off of debt owed.

The number of default notices filed against California homeowners fell in the third quarter of 2009 compared with the prior three-month period, the result of lenders' evolving foreclosure policies and an uptick in the number of mortgages being renegotiated, according to San Diego-based MDA DataQuick, which monitors real estate activity nationwide. A total of 111,689 default notices were sent out during the July-through-September period. That was down 10.3% from 124,562 for the second quarter, and up 18.5% from 94,240 in third quarter 2008. "It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings. If so, it's not out of the goodness of their hearts. Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses," said John Walsh, DataQuick president. The lenders that originated the most loans that went into default in the third quarter were Countrywide (7,583), Washington Mutual (5,146) and Wells Fargo (4,425). Along with Bank of America (1,979) and World Savings (4,237), they were also the most active lenders in the second half of 2006. The quarter's default rate on loans originated in the second half of 2006 ranged from 1.7% or Bank of America to 11.9% for World Savings. Smaller subprime lenders had far higher default rates for the period: ResMAE Mortgage was at 73.9%, OwnIt Mortgage 69.5%, BNC Mortgage 61.4%, Argent Mortgage 59.9% and First Franklin 59.4%. While these and most other subprime lenders are long gone, their loans were bundled, resold and now live on as "troubled assets," Mr. Walsh said. "There's a batch of truly nasty loans that were made in mid 2006. There's another batch made in late 2006. These are worse than the mortgages before and after, and it's taking a long time to process them."

Mortgage rates rose slightly this week, to 5% with 0.7 points paid by the consumer, according to Freddie Mac's latest primary market survey. A year ago mortgages rates were 100 basis points higher. The reading reflects the average interest rate on a 30-year fixed-rate loan. Freddie also found that the average rate on a 15-year loan was 4.43% (0.6 points paid) compared to last week's rate of 4.37%. The one-year ARM rate, however, fell to 4.54% from 4.60% last week. Mortgage and housing economists fear that rates could rise dramatically next year when the Federal Reserve reduces its MBS purchases.