Servicing

PHH Corp., has named Jerome J. Selitto, a former mortgage insurance executive at Amerin Guaranty Corp., president and chief executive, effective immediately. Mr. Selitto brings to PHH -- the nation's eighth largest lender -- nearly forty years of experience in mortgages and investment banking. His most recent position was as a senior consultant and then member of the senior management team of mortgage industry software provider Ellie Mae. George Kilroy, who in June had stepped in on an interim basis as acting president and CEO, will continue to lead the company's fleet management business. Mr. Selitto was CEO of DeepGreen Financial, an online home equity lender that he helped found. (DGF later closed the business.) From 1992 to 1999 he was the vice chairman and a founder of mortgage insurance company Amerin, which later merged with Commonwealth Mortgage Assurance Corp. and is now known as Radian Guaranty.

The embattled Lend America, Melville, N.Y., has been trying to sell a large package of Government National Mortgage Association servicing rights but has yet to close on a deal, according to investment banking sources. The company and an investment banker believed to be brokering the sale declined to comment. Sources say the portfolio of GNMA rights could be as large as $1 billion. Last week the Department of Justice and Department of Housing and Urban Development sought a court injunction to ban the firm from originating FHA loans, accusing it of fraud in regard to $14 million in originations. The court ruled against the injunction. Lend America's spokesman stressed that it is business as usual at the company. "The phones are ringing and they're still doing business," he said.

Local, state and national government agencies, nonprofits and other financial institutions gathered in Los Angeles to enter into an alliance that aims to help homeowners protect themselves from loan modification fraud. The "Loan Modification Scam Alert" campaign is the first of a number of other events that will be announced in major cities around the country. Partners include some of the country's largest organizations. NeighborWorks will coordinate the efforts with partner organizations such as the Department of Housing and Urban Development, the Federal Trade Commission, the U.S. Department of Treasury, Fannie Mae, Freddie Mac, and the Lawyers' Committee for Civil Rights Under Law. "As the foreclosure rate grows more and more homeowners are being deceived by scam artists who prey on their fears," said the COO of NeighborWorks, Eileen Fitzgerald. "Knowledge is the best defense, which is why the campaign equips homeowners with the tools they need to minimize their risk."

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.