Servicing

The TransUnion Credit Risk Index reached 124.79 in the last quarter of 2008, the highest-level seen since its inception. The index recorded its biggest change? on a quarter-to-quarter basis (up by 5.99% compared to 3Q08). It increased 5.41% compared to the same quarter in 2007. The index is based on?the calculated average forecast of 90-day or worse delinquencies within a region and uses the fourth quarter of 1998 as a baseline comparison. According to Chet Wiermanski, TransUnion Analytics and Decisioning Services' global chief scientist, the index accounts for "the non-linearity of credit scores" to measure changes in regional risk and to compare regional risk levels over time relative to the nation as a whole at the end of 1998. TransUnion, Chicago, considers index readings above 100 to have a "higher level risk."

The TransUnion Credit Risk Index reached 124.79 in the last quarter of 2008, the highest level seen since its inception. The index recorded its biggest change on a quarter-to-quarter basis (up by 5.99% compared to 3Q08). It increased 5.41% compared to the same quarter in 2007. The index is based on the calculated average forecast of 90-day or worse delinquencies within a region and uses the fourth quarter of 1998 as a baseline comparison. According to Chet Wermanski, TransUnion Analytics and Decisioning Services' global chief scientist, the index accounts for "the non-linearity of credit scores" to measure changes in regional risk and to compare regional risk levels over time relative to the nation as a whole at the end of 1998. TransUnion, Chicago, considers index readings above 100 to have a "higher level risk."

Deutsche Bank in a profitable first quarter took another 1.0 billion euros ($1.3 billion) in partially mortgage-related sales and trading writedowns as well as a 500 million euro ($663 million) impairment charge on a resort and casino property and said it may see a rebound in its fortunes in the medium term. DB's total debt sales and trading markdowns were dominated by provisions against the mononline insurance segment. There were 1.4 billion euros ($1.9 billion) of writedowns in this category during the same period a year ago. During last year's first quarter, these were dominated by exposures to residential mortgage-backed securities and commercial real estate loans. The company generated 1.2 billion euros ($1.6 billion) in net income in the first quarter, up from a net loss of 141 million euros ($187 million) during the same period a year ago.

Fair Isaac — the company behind the most commonly used credit scoring system in the nation — has launched a new website that tells consumers if they qualify for a Fannie Mae or Freddie Mac loan modification under the Obama Administration's plan. The website asks the borrower 15 basic questions about their mortgage including the identity of their servicer. The GSEs launched similar initiatives a few weeks ago. The "Making Home Affordable" effort aims to modify or refinance up to 9 million GSE borrowers who are either underwater on their loans or have little in the way of refi options.

Foreclosure starts are continuing to rise to record highs but total delinquencies fell in March to 7.88%, a month-over-month decrease of 5.8%, according to the April 2009 LPS Mortgage Monitor from Lender Processing Services, Inc., Jacksonville, Fla. The seasonal February to March decline in delinquencies in the five years from 2002 to 2007 averaged 14%, and the number of newly delinquent loans saw a greater decline in March compared to 2008. March's foreclosure rate was 2.52%, reflecting a month-over-month increase of 12.8% and a year-over-year increase of 87.8%. The percentage of loans improving in status continued to increase in March, while loans deteriorating in status declined. The report said foreclosure starts in March hit new all-time highs across every major product category. The largest 12-month increase was seen in jumbo loans at 221%, non-agency conforming loans at 158%, and agency prime loans at 144%. Foreclosure starts on portfolio loans spiked significantly during the month, the company said. GMNA was the only investor category to remain stable for the month. LPS said foreclosure sales dropped significantly in March, due in large part to the reinstatement of the FHFA moratorium in February and continuing through the end of March. The report said refinance activity remains high, with a slight increase in available liquidity to borrowers who are 30-days delinquent.

MGIC Investment Corp., Milwaukee, said it is seeking new capital in order to continue to write new mortgage insurance policies. Curt S. Culver, chairman and chief executive said that while MGIC has yet to pursue raising capital from private sources, it has been in discussions with the U.S. Treasury and the Office of the Commissioner of Insurance of Wisconsin to explore options. The statement came in the company's first quarter 2009 earnings release. MGIC lost $184.6 million ($1.49 per share) during the period, compared with a loss of $34.5 million ($0.41 per share) one year ago; in the fourth quarter 2008, it lost $273.3 million ($2.21 per share). Mr. Culver added that MGIC believes it has adequate capital to pay its insured claims obligations. Losses incurred during the first quarter were $757.9 million, up from $691.6 million for the same period last year. Delinquencies went from 7.68% (5.19% flow, 23.19% bulk) in the first quarter 2008 to 13.51% (10.59% flow, 34.53% bulk) for the first quarter 2009. The amount of primary new insurance written decreased from $19.1 billion for the first quarter of 2008 to $6.4 billion for the most recent period.

To jumpstart the Hope for Homeowners program, the Treasury Department will pay servicers hefty bonuses to use the FHA refinancing program and purchase Ginnie Mae securities backed by H4H loans. "These purchases will increase secondary market liquidity for new Hope for Homeowners loans, supporting additional assistance to homeowners," Treasury says in an update to the Obama administration's loan modification program. Participating servicers are expected to evaluate homeowners that are going through a trial loan modification to see if they can qualify for a principal writedown under the Federal Housing Administration H4H program. If the investor agrees to a writedown, the servicer would receive a $2,500 up-front incentive payment for a successful H4H refinancing, instead of the $1,000 that is paid for a standard loan modification. In addition, "lenders who originate the new H4H loan are eligible for success fees of up to $1,000 per year for up to three years, so long as the refinanced loan remains current," Treasury says.

The Treasury Department has revised the President's loan modification plan to require participating servicers to consider the FHA Hope for Homeowners program as an option and write down the principal amount of the mortgage. "For borrowers where Hope for Homeowners works, it can be a better option for them," because it allows underwater borrowers to re-establish equity in their homes, HUD secretary Shaun Donovan said. If the investor is willing to do a writedown, "that will be first alternative to a modification," the Department of Housing and Urban Development secretary told reporters. The HUD secretary admitted the FHA H4H program is flawed and it has only refinanced 50 homeowners. However, the Obama administration is urging Congress to pass a housing bill (H.R. 1106) to revamp the H4H program and make it a more effective part of the administration's loan modification program. The new HUD secretary also said 11 of the largest servicers have signed up to participate in the President's loan modification program and they are beginning to modify mortgages in private-label securities. "Servicers are moving forward with modifying PLS loans." He also noted that an increasing number of investors are willing to do principal write downs under the FHA program.

RealtyTrac, an online marketplace for foreclosure properties, and Enormo, a global real estate portal, are forming a strategic alliance that will give Enormo's international user base of potential homebuyers and investors access to RealtyTrac's database of U.S. foreclosures. RealtyTrac's foreclosure listings are integrated into Enormo's search functionality, allowing users to browse more than 1 million foreclosure properties from 2,200 U.S. counties.

Data through February 2009 show continued broad-based declines in the prices of existing single family homes across the U.S. with 10 of the 20 metro areas showing record rates of annual decline, and 15 reporting declines in excess of 10% versus February 2008, according to Standard & Poor's Case-Shiller Home Price Indices. The three worst performing cities continue to be in the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31%. Dallas, Denver and Boston faired the best in terms of annual declines down 4.5%, 5.7% and 7.2%. Dallas also had the distinction of being the best performer for the month, returning -0.3%. "We witnessed some deceleration in the rate of decline in some of the markets," says David M. Blitzer, chairman of the index committee. "All 20 metro areas recorded a decline in February, but 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. We will certainly need a few more months of data before we can determine if home prices are finally turning around." Nine of the 20 metro areas showed improvement in their annual returns compared to their returns in January. In February, Cleveland was the only metro area having a record monthly decline, returning -5%. Cleveland, Charlotte, New York and Washington were the only MSAs showing larger declines in home prices in February compared to January's report.