Servicing

GMAC Financial Services said it has priced $4.5 billion of debt guaranteed by the Federal Deposit Insurance Corp. through the agency's Temporary Liquidity Guarantee Program. GMAC, the parent of Residential Capital Corp., the nation's fifth largest mortgage servicer, said the offering will further improve its liquidity position. The securities offering included $3.5 billion of senior fixed-rate notes and $1 billion of senior floating rate notes. The debt comes due in December 2012. In May 2009, GMAC received regulatory approval to participate in the TLGP for up to $7.4 billion. Earlier this year the company received a $5 billion infusion through the Treasury Department's TARP program.

Increasing numbers of corporate credit unions — which service as wholesale banks to retail CUs — are reporting large losses due to their holdings of mortgage-backed securities. According to a report in The Credit Union Journal, corporate credit unions provide liquidity and investment services to the nation's 7,800 regular credit unions. The combination of MBS losses and exposure to their own wholesale bank, U.S. Central FCU, which failed in March because of its MBS holdings, has sent regulatory capital at most of the corporates below regulatory minimums. But because of a regulatory forbearance offered by the CU regulator, the National Credit Union Administration, all of the corporates are now allowed to use their capital levels of last November. Florida-based Southeast Corporate FCU recently reported that charges related to its shares in U.S. Central and its mortgage-backed securities created a $79 million loss for the month of April. And SunCorp FCU, in Colorado, said it restated its 2008 financials to show a $135 million loss for the year. CUJ is a sister publication to National Mortgage News.

The Obama administration's Making Home Affordable loan modification program will not show real results until later this summer, according to a key regulator. Federal Housing Finance Agency director James Lockhart told a Congressional panel the impact of the MHA program will be delayed as the servicers register for the program and contractually agree to the program's terms and conditions. "Second, borrowers are required to submit the required documentation, be approved for a modification, and successfully perform under a three-month trial modification before the loans can be formally modified. Therefore, FHFA expects to see the results of current activities ramp up in late summer," Mr. Lockhart testified. Separately, Herbert Allison, President Obama's nominee to be Treasury assistant secretary and run the Troubled Asset Relief Program, told the Senate Banking Committee that 14 servicers are already active in the MHA program and they have sent modification offers to 100,000 homeowners. TARP is providing funds for incentive payments and to cover some of the modification costs. "There is a great deal of pressure on everyone" to get this program going, Mr. Allison said at his confirmation hearing. But he stressed it going to take time to ramp up. Mr. Allison recently served as president and chief executive of Fannie Mae.

Weighted-average delinquencies and cumulative losses in the United Kingdom's securitized residential mortgages have doubled since the first quarter of last year, according to Moody's Investors Service's index. These had reached 18.0% and 0.78%, respectively, by the end of the first quarter of this year. "While a number of forward looking indicators point towards the pace of the economic decline abating, consensus forecasts look for 3.8% contraction in [gross domestic product] over 2009 as a whole, which will be the worst yearly growth rate since modern records began in 1949," said Nitesh Shah, a Moody's economist and co-author of a report on the index. "The U.K. unemployment rate was 7.1% in the three months [leading up] to March, up from 5.2% a year ago. As the economy contracts, more jobs are expected to be removed from the market." In addition, Moody's noted that home price declines also contributed. The downward slide in housing values will likely continue even though the monthly pace of the decrease has been slowing, Moody's said.

Maria Sanchez, a real estate agent and loan officer from El Monte, Calif., was found guilty of fraud and money laundering charges for scheming with her sister to falsify home loan applications. The evidence presented during Maria's trial showed she submitted loan packages to purchase residential real estate in the names of family members. Those applications contained false statements and forged signatures. When the loans were funded, Maria fraudulently obtained more than $1 million in loan proceeds from financial institutions and mortgage lenders. She financially benefited from this scheme by flipping one of the properties, as well as collecting points, fees and commissions from the loan transactions. In three of the deals, Maria's sister Beatriz Sanchez, Los Angeles, was identified as the buyer of the property. Beatriz also has pleaded guilty, specifically to charges that she filed false documents with the IRS. Beatriz is scheduled for sentencing on Aug. 17. Maria is scheduled for sentencing on September 10.

A.M. Best Inc., Oldwick, N.J. has cut by one notch the financial strength ratings of Fidelity National Financial Inc., Jacksonville, Fla., and its title insurance units. The New Jersey-based rating agency said the downgrades were due to the adverse implications of FNF's acquisition of the title insurance underwriting subsidiaries of LandAmerica Financial Group Inc., Richmond, Va. The deal made FNF the nation's largest title insurer with a 45% market share, but it also resulted in an increase in underwriting leverage. "While Fidelity in the past has shown an ability to manage large acquisitions, such as its acquisition of Chicago Title in 2000, the current negative business environment poses a greater challenge as it proceeds with the integration of its newly acquired underwriters," A.M. Best said.

According to the Center for Responsible Lending a new foreclosure starts every 13 seconds, equaling nearly 6,500 a day. CRL data show the number of new foreclosure starts for the first five months of 2009 has reached one million. CRL is projecting 2.4 million foreclosure starts by the end of the year, which it says will reduce property values of some 70 million households by $502 billion, or at an average of $7,200 per homeowner. Last week the Mortgage Bankers Association reported that 12% of all home mortgages are delinquent. CRL estimates that by 2012 at least 9 million new foreclosures will cost $1.9 trillion in lost home equity to 92 million families.

The weakening economy and continued credit crunch led to increases in commercial/multifamily mortgage delinquencies during the first quarter of 2009, according to new figures released by the Mortgage Bankers Association. Between the fourth quarter of 2008 and first quarter of 2009, the 30-plus day delinquency rate on loans held in CMBS rose 68 basis points to 1.85%. The 60-plus day delinquency rate on loans held in life insurance company portfolios rose 5 basis points to 0.12%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 4 bps to 0.34%. According to the MBA, the 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 8 bps to 0.09%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 66 bps to 2.28%. "Delinquency rates on commercial and multifamily mortgages held by banks and thrifts, by Fannie Mae and in commercial mortgage-backed securities are all now at levels higher than at any time since the 2001 recession," said Jamie Woodwell, vice president of commercial real estate research at the MBA. Mr. Woodwell added that delinquency rates on commercial mortgages held by life insurance companies during 1Q09 remained below the 2001 recession levels.

A mix of non-depository mortgage banking companies and private individuals make up a majority of the private investment group led by Taylor, Bean & Whitaker that will inject $300 million into warehouse giant Colonial BancGroup, Montgomery, Ala., according to a new public filing. Mortgage firms cited in the Securities and Exchange Commission filing include Allied Mortgage Group, American Home Equity Corp., Atlantic Bay Mortgage, Envoy Mortgage, Myers Park Mortgage, Provident Funding Associates, WR Starkey Mortgage and others. Sources say most of these lenders are warehouse clients of the bank. Former Friedman, Billings, Ramsey executive Henry Fan is also part of the investor group, as is Florida developer Tibor Hollo.

A $240 million portfolio of non-performing loans offered for auction by H&R Block has failed to sell, according to participants with knowledge of the deal. At press time, H&R Block's media department had not returned a telephone call about the auction. The mortgages offered belonged to its now defunct subprime division, Option One Mortgage. Those familiar with the transaction declined to be quoted, citing confidentiality agreements. One observer noted that there was strong interest in the portfolio but "the bid price was a little low." Also, professionals who play in the NPL space say very few large NPL deals are getting done these days, citing changes to market-to-market accounting rules promulgated by the Financial Accounting Standards Board. "Banks are less inclined to sell because they don't have to write it down as much," said one investment banker.