Servicing

The mortgage banking firm Taylor, Bean and Whitaker, which recently ceased making mortgages, originated an estimated $22 billion in Federal Housing Administration-insured loans over the past 24 months, which represents 4.5% of the FHA's total business during that period. TBW was FHA's third largest direct endorsement lender and it approved 119,800 loans over the past two years. However, 7.1% of those FHA-insured loans are 90 days or more past due or in foreclosure, according to FHA's Neighborhood Watch System. The average default rate for FHA loans is 4.6%. Based on a higher than average claim rate and loss severity rate of 40%, FHA could face possible losses of $800 million to $900 million due to its exposure to TBW, one source said. As previously reported, the Department of Housing and Urban Development on Aug. 4 suspended the Ocala, Fla., mortgage banking firm from making FHA loans. Freddie Mac also terminated TBW on Aug. 4. In a recent securities filing, Freddie said approximately 5.2% of its mortgage purchase volume in 2008 came from TBW and TBW accounted for 2.7% of its mortgage purchases during the first half of this year.

Single-family existing home sales jumped 6.5% in July from the previous month as "demand for foreclosed and lower-priced homes spiked," according to the National Association of Realtors. NAR reported that sales of previously owned SF homes rose to a seasonally adjusted annual rate of 4.61 million in July, up from 4.33 million in June. "The housing market has decisively turned for the better," said NAR chief economist Lawrence Yun, who noted that sales have increased for four consecutive months. First-time homebuyers who are eligible for an $8,000 tax credit purchased 30% of the homes, and distressed sales made up 31% of transactions. "In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower priced homes has spiked, and the lack of inventory is becoming a common complaint," Mr. Yun said. The median existing single-family home price was $178,300 in July, which is 14.6% below the sales price a year ago. The NAR report also shows that the inventory of unsold existing homes fell to an 8.6-month supply in July, down from a 10.4-month supply a year ago.

As a demand for mortgage default services increases, North American Property Preservation, a full service distressed property preservation and management company, is merging with The Property Preservation People. Acting as a one-stop solution to lenders, asset managers and brokers, the new company will continue to deliver responsive customer service and high-quality field services, said Brandy Cutler, NAPPCorp's managing director of national field services operations. Under the terms of the agreement, the combined company will begin joint operations under the name North American Property Preservation effective immediately. All employees of PPP have accepted positions with the new combined entity.

The Mortgage Bankers Association took an $8.6 million loss for the fiscal year ending September 30, 2008 as the mortgage crisis took its toll on MBA members and the trade group's revenues fell by 31% to $39.4 million. In fiscal year 2007, MBA generated a $6.7 million surplus with total revenues of $57.1 million, including $13.9 million in member dues and assessments. In its latest annual filing with the Internal Revenue Service, MBA reported that dues and assessments fell by 20% to $11.1 million. MBA expects to take another loss in FY 2009 and show a positive result in FY 2010, according to MBA spokeswoman Cheryl Crispen. MBA's board of directors has just approved its FY 2010 budget and it shows a "balanced, slightly positive" budget, she said. MBA moved into its newly constructed headquarters in June 2008 that is listed as a $98.6 million asset on the IRS report. MBA planned to lease out 60% of the building but reported no rental income. MBA has leased some of the space and there is "substantial interest" in the remaining office and retail space, Ms. Crispen said.

National housing prices fell 7.8% in June 2009 compared to June 2008 representing the smallest year-over-year decline recorded to date in 2009, according to First American CoreLogic and its LoanPerformance Home Price Index. June's decline was a 0.7% improvement over the 8.5% year-over-year decline in May. First American CoreLogic said a decline in distressed sales, rather than an increase in traditional home sales prices, was responsible for the uptick. If the decline in distressed sales is sustainable, this could be the first step toward recovery, it continued. By state, Nevada (down 25.4%) remained the top-ranked state for annual price depreciation with Florida (down 25.1%) second. Florida, First American CoreLogic said, unlike other hard hit states, is experiencing worsening price declines in 2009. California's depreciation rate is the lowest since October 2007. "Year-over-year and seasonal home price trends continued to move in positive directions in June. However, the economy continues to contract and there is a large overhang of distressed properties that have yet to clear. Until supply and demand imbalances adjust to more normal levels, future home price movements will remain sluggish," said Mark Fleming, chief economist for First American CoreLogic. There were 32.2% of all mortgaged properties in a negative equity position in June, a slight improvement over the 32.5% in May.

Although delinquencies for residential properties continued to climb in the second quarter of 2009, the rate of new foreclosures started was essentially unchanged from last quarter's record high, according to the Mortgage Bankers Association's national delinquency survey. The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a rate of 9.24% of all loans outstanding at the end of the second quarter of 2009, up 12 basis points from the first quarter of this year and up 283 basis points from the second quarter one year ago. According to the MBA, the percentages of loans 90 days or more past due and loans in foreclosure both set new record highs, breaking records set last quarter. The percentage of loans 30 days past due is still well below the record set in the second quarter of 1985. The percentage of loans in the foreclosure process at the end of the second quarter was 4.3%, up 45 basis points from the first quarter of 2009 and 155 basis points from one year ago. The combined percentage of loans in foreclosure and at least one payment past due was 13.16% on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey. The percentage of loans where foreclosure actions were started during the second quarter was 1.36%, down one basis point from last quarter and up 28 basis points from one year ago. "There was a major drop in foreclosures on subprime ARM loans," said MBA's chief economist Jay Brinkmann. "The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase." California, Florida, Arizona and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter. Those states had 44% of all new foreclosures in the U.S. during the second quarter 2009, down from 46% in the first quarter 2009.

Delinquency levels of residential mortgage- and asset-backed securities transactions in Russia and the Commonwealth of Independent States appear to be trending upward, according to a new Moody's Investors Service report. Delinquency levels have increased over the past two quarters and only one RMBS transaction rated by Moody's has closed in the two markets this year. "The Russian economy is in its worst recession since the 1998 crisis," said Nitesh Shah, a Moody's economist and co-author of the report. "Ruble depreciation has led to higher U.S. dollar mortgage obligations for many obligors, which — combined with falling house prices and the elevated risk of unemployment — does not bode well for obligors or the RMBS transactions in the sector that are exposed to U.S. dollar-denominated mortgages." Maria Divid, a Moody's senior associate and co-author of the report, said delinquencies increased in all RMBS transactions over the first half of the year.

John MacFarland has joined the independent real estate firm of Resource Title as senior vice president, National Commercial Division, to develop and grow certain lines of business at the company. Mr. MacFarland will spearhead the division's growth into the commercial real estate owned and default market segments, and take part in developing and servicing more traditional commercial and investment transactions as well. The company, based in Independence, Ohio, has been servicing the commercial market nationwide for twenty-five years, recently opening a second office in Chicago to serve its commercial customers. Resource Title also offers nontraditional services in the relocation, default and REO fields. Mr. MacFarland's arrival will enhance an already considerable national commercial presence, said Andrew Rennell, executive vice president.

Government-sponsored enterprise regulator James Lockhart is joining Wilbur Ross' firm, which specializes in managing funds that invest in distressed companies such as American Home Mortgage Services and BankUnited. Mr. Ross cited Mr. Lockhart's "unique insights into the U.S. mortgage markets" in the hire, saying this would help the company expand investment opportunities for its institutional and individual clients. Federal Housing Finance Agency director Lockhart — who recently stated his decision to step down — will become the vice chairman of WL Ross & Co. LLC in September. Mr. Lockhart will officially step down as the regulator of Fannie Mae, Freddie Mac and the Federal Home Loan Banks on Friday (Aug. 21) and Edward DeMarco will assume the duties of acting FHFA director on Monday.

Integrated Asset Services, LLC, a Denver-based provider of default management and residential collateral valuation, has launched a new company called Statebridge, which will provide custom, high-touch investor-focused servicing. The risk-based servicing, developed by a team that helped create the market for independent surveillance of mortgage securities, introduces a new adaptive approach designed to optimize investor success through tailored, high-touch servicing that aims to maximize return on performing and nonperforming loans. With the Statebridge launch, the IAS suite of mortgage servicing products — which already includes REO management and disposition, collateral valuation, conditioned valuation, and mortgage due diligence — is aimed at bridging the entire loan lifecycle. In association with IAS's valuation and REO capabilities, Statebridge aims to be the only servicing company providing a "one-stop shop" for mortgage servicing that is intensely focused on the needs of investors, according to Dave McCarthy, president and CEO of Integrated Asset Services. The company was designed to provide custom special servicing of both distressed and nondistressed mortgages. In addition to servicing advice on existing mortgages, Statebridge is equipped to offer collateral analysis, fiduciary review, pool level analysis, and pricing advocacy for new investments in mortgages.