Servicing

Farmington Hills, Mich.-based XSite Validation has launched a tool designed to evaluate overall "toxicity" in commercial loan pools. The tool can see into each and every commercial property loan in a portfolio, ranks all performing, non-performing and REO properties from "First to Worst," allows for quick reassessment of the concentration of types of properties within loan portfolios, and provides the "best use" evaluation of every loan portfolio property by presenting the top five potential uses of each property. For every property in a financial institution's portfolio, XSite uses its patent-pending XRI Scoring System, which assesses the "market viability of a property for its current or proposed commercial use, in conjunction with the financial institution's own loan grade/risk factors, to create a unique "Composite XRI Score." XSite's Composite XRI Score gives banks a single measurable that joins the financial viability and the market viability of the commercial property into one "go / no-go" decision-making factor.

MountainView Risk Advisors, LLC, Denver and AVM, L.P., have formed a strategic alliance to provide mortgage servicing rights risk advisory services. The alliance will provide hedge advisory and analytic services to assist financial institutions in stabilizing the returns associated with the MSR assets. The MountainView-AVM combination creates a comprehensive and integrated MSR hedging, analytics, research, sales and trading team. Clients of the alliance will be able to outsource virtually every aspect of designing and executing turnkey MSR risk management programs including identification of asset risks, infrastructure and program design, hedge strategy development and idea generation, derivatives trading and reporting, and attribution analysis. MountainView is continuing to expand its MSR services with this strategic alliance, following the hiring of industry veteran Greg Harris to lead MVRA earlier in 2009.

Keefe, Bruyette & Woods, New York, has made some changes to the KBW Mortgage Finance Index. Effective Aug. 19, it is deleting homebuilder and mortgage company Centex Corp., Dallas, because it is being acquired by another publicly traded homebuilder, Pulte Homes. Bloomfield Hills, Mich.-based Pulte will see an increase in its shares in the composition of the index as a result of the deal. MGIC Investment Corp., Milwaukee, Wis., will be added to the index as a replacement for Centex. The last change, and the only one not related to the Pulte-Centex deal, is that Ocwen Financial Corp., West Palm Beach, Fla., is having an increase in its shares included in the index as a result of its equity offering.

Mortgage loan delinquency, borrowers 60 or more days past due, increased for the tenth straight quarter, hitting an all-time national average high of 5.81% for the second quarter of 2009, according to the latest data from TransUnion.com. This statistic is up 11.3% from the first quarter's 5.22% average. Fourth quarter 2008 to first quarter 2009 saw an increase of almost 16%, indicating a continuing deceleration in delinquencies for the second quarter. Year-over-year, delinquencies are up approximately 65%. Delinquency rates in the second quarter of 2009 were highest in Nevada (13.8%) and Florida (12.3%), while the lowest mortgage delinquency rates were found in North Dakota (1.5%), South Dakota (2.1%) and Alaska (2.4%). The three areas showing the greatest percentage growth in delinquency from the previous quarter were Wyoming (+27.8%), Utah (+22.2%) and Hawaii (+21.7%). However, there were some bright spots: North Dakota and Ohio both showed a decline in mortgage delinquency rates, down 0.66% and 0.22% from the 1Q. The average national mortgage debt per borrower dropped (0.86%) to $193,811 from the previous quarter's $195,500. On a year-over-year basis, the second quarter 2009 average represents a 0.59% increase over the second quarter of 2008 average debt per consumer of $192,681. The area with the highest debt per borrower was the District of Columbia at $360,891, followed by California at $359,442 and Hawaii at $314,495. The lowest was in West Virginia at $97,979. Quarter to quarter, Alaska showed the greatest percentage increase in mortgage debt (+4.5%), followed by North Dakota (+2.2%) and Alabama (+1.5%). Areas showing the largest drop in average mortgage debt were Ohio (-4.4%), Idaho (-3.7%) and Connecticut (-3.0%).

Taylor, Bean & Whitaker said it is no longer able to offer online payments capabilities nor can it do automated payment deductions for those consumers whose loans it still services. Customers are asked to send a check by mail to the company to the attention of its cashiering department in Ocala, Fla. Since Aug. 4, a statement from TBW said, it has not taken any automated debit payments. For those who have already received notification that the loan was transferred to a new servicer, the statement said customers are to follow the instructions in the transfer notice. The statement also said TBW would "continue functioning in a reduced capacity until all loans have been transitioned to new servicers."

BB&T Corp., Winston-Salem, N.C., did not acquire any assets and liabilities relating to Taylor, Bean & Whitaker Mortgage Corp., Ocala, Fla., in its acquisition of the banking operations of failed Colonial Bank, Montgomery, Ala. A statement from the company also declared assets and liabilities that the Federal Deposit Insurance Corp. determines are related to fraudulent or criminal activities are excluded from the purchase as well, leaving the future of Colonial's warehouse lines in doubt. Further BB&T said FDIC indemnifies it "for any liabilities not expressly assumed in the transaction, including those related to fraudulent, criminal or inappropriate activities of Colonial." Colonial's Orlando mortgage warehouse business offices and TBW were raided by federal agents recently working under the auspices of the Special Investigator General for the Troubled Asset Relief Program. Colonial later said it was the target of a U.S. Department of Justice criminal investigation relating to its mortgage warehouse lending business. Calls to FDIC and BB&T about Colonial's warehouse lines to about 70 lenders were not returned by deadline.

The first of four participants in a foreclosure fraud scheme that targeted mortgage lenders and homeowners has been sentenced to nearly five years in prison. U.S. District judge Deborah K. Chasanow has sentenced Earnest Lewis of Takoma Park, Md., to 54 months in prison, followed by three years of supervised release. The defendant also agreed to forfeit $2.2 million gained from the scheme. According to Rod J. Rosenstein, U.S. attorney for the District of Maryland, Earnest Lewis' brother, Michael Lewis, aired TV ads claiming he could save financially vulnerable individuals' homes from foreclosure. The Lewis brothers and mortgage loan officer Winston Thomas fraudulently promised to help homeowners keep their homes by temporarily using the "good credit" of Earnest Lewis to refinance their homes after they signed their homes over to Earnest Lewis for roughly one year. In the meantime, they could remain in their homes by paying "rent." The victims' bank accounts were directly debited by an account belonging to co-conspirator Cheryl Brooke's company, In the House Technologies. Michael K. Lewis, Brooke and Thomas have all pleaded guilty and are scheduled for sentencing in September.

Freddie Mac borrowers are increasing their interest in 15-year fixed-rate mortgages but continue to shun adjustable rate loans, according to second quarter loan figures released by the GSE. While the 30-year FRM remains the preferred product of choice — with both 30- and 15-year rates at or near their historical lows — some borrowers are finding 15-year payments more affordable while providing an opportunity to lessen their loan terms as well as their rates. In 2Q borrowers continued to show an increasing preference for FRMs: 99% of Freddie Mac borrowers that had an ARM switched to a FRM. In the first quarter the ratio was 98%.

Every month Fannie Mae and Freddie Mac are paying bondholders about $1 billion to cover seriously delinquent homeowners. Guaranteeing timely payments on MBS and supplying liquidity to the primary mortgage market is the government-sponsored enterprises' main business. But once a loan has been delinquent for four months Fannie and Freddie can buy it out of the pool and stop advancing unpaid interest to investors. Ajay Rajadhyaksha, an analyst with Barclays PLC, said the companies should exercise this right a lot more often than they have been. "Every day that passes," he said, "is another day in which wealth is transferred from the U.S. taxpayer" to bondholders. The problem is that such buyouts would result in staggering hits to the GSEs' capital. Under bondholder agreements, Fannie and Freddie would have to pay 100 cents on the dollar for the loans, but under accounting rules, they would have to then write the mortgages down to their steeply discounted market prices. The paper losses would in turn force the GSEs to accelerate their draws on the $400 billion backstop the Treasury is providing. Analysts said such a course would run counter to the aspiration that at least some part of the companies emerge from conservatorship intact. Fannie and Freddie declined to discuss the issue.

Deutsche Bank is beginning to make a run at non-bank mortgage lenders, offering them warehouse lines of credit but also requesting that they sell their loans to the bank on a correspondent basis, according to investment banking sources. At press time Detusche Bank could not be reached for comment. Meanwhile, there is a new concern among some warehouse managers and consultants that with Government National Mortgage Association president Joe Murin stepping down, the agency's effort to aid the warehouse lending industry could be delayed or even imperiled. "He was definitely the point guy there on the issue," said one warehouse consultant, requesting anonymity. In other warehouse news, there are new reports that BB&T Corporation is the leading bidder to buy Colonial Bancshares of Alabama, the troubled bank that is also the nation's largest warehouse provider. BB&T is already in the warehouse business.