Servicing

Mortgage insurance stocks rallied on Monday as newly released figures showed insurance default rates and "cures" improving. According to the Mortgage Insurance Companies of America, primary insurance cures fell to 58,587 units in April, the lowest monthly reading since January. A loan is considered "cured" when after being declared in arrears the payments become current again. The default ratio (60 days or more late) fell to 81,171 units in April, the lowest reading since October. Even though these were positive indicators for the struggling MI industry, private mortgage insurance applications fell to 60,947 in April, the weakest reading since November (39,098). Traditional MI written fell to $7.8 billion, a 20% sequential decline, and a 60% tumble from April 2008. Still, MI stocks soared Monday - along with the rest of the Dow. Winston-Salem, N.C.-based Triad Guaranty saw its stock price shoot up 36% to 83 cents per share. The PMI Group Inc., Walnut Creek, Calif., experienced a 29% leap in stock price, trading at $2.25 per share. Both Philadelphia-based Radian Group Inc. and Richmond, Va.-based Genworth Financial saw upticks of 10% in their stock prices. And MGIC Investment Corp., Milwaukee, saw its stock price go up by 7%. Old Republic, the healthiest of the nation's MIs, saw its share price increase by 2%.

Thirteen New York state residents have been charged with conducting a subprime mortgage fraud scheme involving loans on residential properties in Long Island and the New York City area, totaling more than $10 million. The defendants are: Micah Meyers, Stephen Caputo, Dawn Hughes, Fnu Lnu, Jakob Gearwar, Brian Urraro, Michael Didio, Daniel Hampton, Jennifer Moschitta, Victor Avendano, Adrian Avendano, Janet McGuinness and Liam Leavey. According to the indictment, from 2005 through 2007, the defendants — many of whom were worked at Bridgewater Funding, an Islip-based brokerage firm — targeted residential properties in Long Island and the New York City area that could be flipped or the homeowners were facing foreclosure. Bridgewater says the defendants are former employees who have not worked with the company for three years. The defendants were unavailable for comment. The defendants allegedly convinced troubled homeowners that selling their properties to the defendants would pay off their debts and "save" their homes. To purchase the properties, the defendants allegedly submitted mortgage loan applications that contained false information. The loans exceeded the actual purchase price of the property, producing a "spread" from which the defendants profited.

Woodward Asset Capital LLC, Southfield, Mich. has launched OfferSubmission.com, a web-based software program geared toward firms that want to sell assets, including mortgages. Woodward is marketing the program to banks, servicers, GSEs, private equity firms and hedge funds.

Colonial BancGroup, the nation's largest warehouse lender, said its chairman and CEO Robert Lowder will retire once Taylor, Bean & Whitaker completes its investment in the bank. Mr. Lowder founded the company in 1981. TBW is a mortgage banking firm based in Ocala, Fla. It is paying two-thirds of the $300 million that will be invested in the Montgomery, Ala.-based Colonial. Until the deal is finalized Mr. Lowder will continue on as chairman, director and CEO of the bank. Under his leadership Colonial completed 68 acquisitions and became the top player in residential warehouse finance.

Jon Daurio, chairman and CEO of Kondaur Capital, a mortgage investing vulture fund, says the closing of a private equity firm that pledged up to $1 billion for his investments will not slow his firm's growth, according to a report published in The Orange County Register. "Not in the slightest," Mr. Daurio told the newspaper. The hedge fund is Pequot Capital Management, which recently said it would close because of an ongoing investigation by the Securities and Exchange Commission. To date, Kondaur has invested about $175 million of the $1 billion pledged by Pequot. Recently, the Irvine-based Kondaur was hit with a final cease and desist order by the state of Georgia for engaging in mortgage broker/lending activities without a license or without first obtaining an exemption. Kondaur is a fast growing non-performing loan investor that hopes to triple its workforce to 900 employees by year-end.

With almost a 50% increase in year-over-year sales, the inventory of unsold existing single-family homes for sale in California has been cut in half, from a 9.8 months' supply in April 2008 to 4.6 months' supply this April, the state's Realtors reported. However, while sales were up 49.2% to a seasonally adjusted rate of 540,360 — the eighth straight month above the 500,000 level — the median price of houses sold in the month declined by more than a third, largely because the majority of sales were at the low-end of the market. "Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008," says California Association of Realtors President James Liptak. "The dramatic difference in inventory exemplifies how the low end of the market is attracting more first-time buyers and investors, creating a shortage of distressed properties for sale." The median price of existing homes sold in the month was $256,700, a 36.5 percent decrease from the revised $404,470 a year ago. But it was 1.4% greater than March's $253,040 median price. CAR's figures are based on data collected from more than 90 local Realtor associations statewide.

Mortgage insurer Genworth Financial in Raleigh, NC saved more than $2 billion of mortgages from foreclosure in the 12 months ending March 31, 2009, according the company's latest Foreclosure Prevention Scorecard, which tracks quarterly progress of the company's Homeowner Assistance program. Genworth and its servicer partners completed nearly 15,000 workouts nationwide. Of that amount, 89% received a "cure" workout, meaning the borrower was able to save their home and become current on their mortgage. The remaining 11% were able to avoid foreclosure through a "non-cure" workout. The report shows more successful workouts were completed in Florida, Texas and Georgia than anywhere else in the U.S. Over a quarter of the total value of foreclosures prevented was concentrated in those top three states ($218 million in Florida, $149 million in Texas and $111 million in Georgia). Nationally, workouts increased year-over-year by 56%, based on the company's data. Rounding out the top 10 states where workouts occurred were Ohio, Michigan, Pennsylvania, North Carolina, Illinois, New York and Arizona. The report shows that the Southeastern region of the country accounted for one-third ($614 million) of all workouts. Florida and Arizona saw triple-digit increases in workouts while Houston and Miami continue to top the list of the leading cities for workouts. Repayment plans accounted for most workouts with 31%, followed by loan modifications (38%), HomeSaver Advance (18%), short sales (11%) and deed-in-lieu of foreclosure (2%).

The Federal Deposit Insurance Corp. reported a surge in single-family originations by banks that contributed to a rebound in earnings for the first quarter. Commercial banks and FDIC-insured savings institutions reported combined earnings of $7.6 billion in 1Q, down 60% from a year ago, but a definite rebound from the $38.6 billion loss posted in the fourth quarter. FDIC officials attribute the first quarter profit mainly to securities trading by the larger banks. But they noted that an increase in refinancing activity also contributed to revenues. Originations by commercial banks and savings banks totaled $369.7 billion in the first quarter, a 72% gain from the previous period. (The total does not include originations by federally chartered S&Ls, which the Office of Thrift Supervision will report on Tuesday, June 2). The FDIC says 836 banks and savings institutions that are heavily committed to mortgage lending and investing earned $1.4 billion in the first quarter, compared to a $4 billion loss in the fourth quarter.

The Federal Deposit Insurance Corp.'s effort to sell troubled bank loans is facing headwinds, including congressional skepticism about the public-private investment funds that would provide government financing for investors, according to agency chairman Sheila Bair. "We are finding both on the buyer and seller side there continues to be discomfort about Congress' review of this program," Ms. Bair told reporters. There are concerns the Congress "could potentially change" the rules, she added. The FDIC chairman also noted that Congress has passed a housing bill (S. 896) that directs the Treasury secretary to craft conflict of interest rules for the PPIF program. Critics of the program are concerned sellers and buyers of the bad assets could game the system and make large profits at the expense of taxpayers. "Banks will not be able to bid on their own assets," the FDIC chairman said. However, Treasury needs to clarify other aspects of the conflict of interest rules mandated by Congress. FDIC is working on the structure of its 'Legacy Loan Program' that will give banks an opportunity to sell troubled real estate loans to PPIF investors. However, a "test sale" may be delayed. "Obviously there are issues we have to look at and take into consideration," an FDIC spokesman said. FDIC has been working toward sending the first sales packages to investors in June.

Freddie Mac's purchases of refinanced mortgages slowed in April despite the launch of the Obama administration's new program to help borrowers with high loan-to-value ratios refinance into lower cost loans. The mortgage giant purchased $43.3 in refinanced mortgages in April, down from $52 billion the previous month. "We began the purchase of refinance mortgages originated under the program in April," Freddie Mac said in its monthly activity report. "Due to the implementation of this program and recent declines in mortgage interest rates, our refinancing activity will likely remain high." Meanwhile, the serious delinquency rate on Freddie Mac-guaranteed single-family loans continues to rise. Loans 90 days or more past due or in foreclosure rose to 2.44% in April, up 15 basis points from the previous month. Issuance of mortgage-backed securities by Freddie Mac also slowed to $51.1 billion in April from $57.7 billion in March. The company also reported that its mortgage portfolio fell by $36.8 billion to $830.3 billion during April.