Servicing

Mortgage Warehouse Network, Houston, is rolling out turnkey operations aimed at helping depositories enter the underserved warehouse-lending arena. Company chief operating officer Jeff White said its services consist of everything but "pushing the button on the wire for the bank." MWN said it provides the back office and systems, plus experienced personnel, while the bank controls the credit parameters. The warehouse-lending sector has been in the throes of a severe credit crisis because many banks and Wall Street firms have left the business or been unwilling to lend because of high capital requirements and eroding home values. The target bank for Mortgage Warehouse Network is one with $5 million in capital and willing to leverage it on a 10-to-one basis.

House leaders are preparing to vote on a housing bill next week that will fix a Federal Housing Administration refinancing program for underwater borrowers and likely make the $250,000 deposit insurance coverage permanent. However, the bill is not expected to include a controversial cramdown provision that would hold up final passage by the Senate. House majority leader Steny Hoyer, D-Md., told a bankers meeting that House and Senate bank committee chairmen "have pretty much reached agreement that the $250,000 is going to be made permanent." Congress temporarily raised the deposit insurance limit from $100,000 to $250,000 last fall. "There are a lot of good things in this bill," Rep Hoyer told MortgageWire after speaking at an Independent Community Bankers of America event. But Rep. Hoyer said Senate Democratic leaders stressed that they can't get a cramdown provision through the Senate. The House passed a cramdown provision that would allow bankruptcy judges to modify mortgages. But the Senate decisively rejected cramdowns in approving its version of the housing bill.

Freddie Mac — whose customer base traditionally has been more aligned with depositories — posted a $9.8 billion loss in the first quarter, a far better performance in the period than its sister company, Fannie Mae. Freddie's conservator, the Federal Housing Finance Agency, is asking the Treasury for a $6.1 billion infusion to maintain Freddie's net worth position above zero. Freddie said it had impairments of $7.1 billion on "available-for-sale" securities and $8.8 billion of provisions for credit losses. Its net interest income grew by almost 400% in 1Q to $3.8 billion (compared to just $798 million in 1Q08) because its funding costs plummeted thanks to government intervention in the credit markets. Fannie Mae, which released earnings on Friday, lost $23 billion and disclosed that it had $145 billion in nonperforming loans on its books. Fannie's earnings have been hammered by its huge investment in alt-A loans. Also, Fannie's largest customer for many years was Countrywide Home Loans. Countrywide's delinquencies were among the worst in the industry.

Freddie Mac's guaranteed loan portfolio is becoming more vulnerable to defaults due to a growing number of single-family mortgages with high loan-to-value ratios. The percentage of Freddie loans with LTV ratios above 90% had doubled over the past four quarters to 28% as of March 31. These mortgages are "more likely to default in the event of financial hardship," the mortgage giant says in its first quarter financial report. The company expects home prices will decline 5% to 10% this year and unemployment to rise, which will increase credit losses. In March, the percentage of single-family loans 90 days or more past due rose to 2.29%, up 57 basis points from Dec. 31. "We expect our delinquency rates will continue to rise in the remainder of 2009," Freddie says.

Freddie Mac — whose customer base traditionally has been more aligned with depositories — posted a $9.8 billion loss in the first quarter, a far better performance in the period than its sister company, Fannie Mae. Freddie's conservator, the Federal Housing Finance Agency, is asking the Treasury for a $6.1 billion infusion to maintain the Freddie's net worth position above zero. Freddie said it had impairments of $7.1 billion on 'available-for-sale' securities and $8.8 billion of provisions for credit losses. Its net interest income grew by almost 400% in 1Q to $3.8 billion (compared to just $798 million in 1Q08) because its funding costs plummeted thanks to government intervention in the credit markets. Fannie Mae, which released earnings on Friday, lost $23 billion and disclosed that it had $145 billion in nonperforming loans on its books. Fannie's earnings have been hammered by its huge investment in alt-A loans. Also, Fannie's largest customer for many years was Countrywide Home Loans. Countrywide's delinquencies were among the worst in the industry.

Half of all home sales in the first quarter involved first-time homebuyers and the National Association of Realtors expects more new buyers will be entering the market to take advantage of low prices and distressed property sales. "Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market," NAR chief economist Lawrence Yun said. "Housing affordability conditions are at record levels and we expect a measurable increase in home sales in the second half of this year, which would help stabilize prices in most areas," he said. An NAR survey also found that half of all sales in the first quarter involved foreclosed properties and short sales, which continue to put downward pressure on prices. At NAR's Washington conference, some Realtors noted that first time buyers are competing with investors for foreclosed properties.

Looking to "take advantage of a space screaming for help," Mortgage Warehouse Network, Houston, is rolling out a turnkey solution to help depositories enter the warehouse lending arena. Company chief operating officer Jeff White said its services consist of everything but "pushing the button on the wire for the bank." MWN said it provides the back office and systems, plus experienced personnel, while the bank controls the credit parameters. The warehouse lending sector is in the throes of a severe credit crisis with many banks and Wall Street firms leaving the business or unwilling to lend because of high capital requirements and eroding home values. The target bank for Mortgage Warehouse Network is one with $5 million in capital and willing to leverage it on a 10-to-one basis.

After losing money for all of last year, Farmer Mac earned $34 million in the first quarter of 2009, citing valuation gains from financial derivatives and trading assets. In trading Tuesday its share soared 112% to $7.69. Michael Gerber, president of the government-sponsored enterprise, said, "As we look ahead, we expect any credit losses to remain within manageable levels." He noted that, lenders in the agricultural and rural utilities sectors continue to face capital markets and economic challenges. Farmer Mac increased its capital surplus to $67 million at the end of March from $13 million at December 31. Its delinquencies totaled 1.9%. Formerly known as the Federal Agricultural Mortgage Corp., Farmer Mac provides liquidity to agricultural real estate and rural housing lenders. It purchases eligible loans directly from lenders and guarantees securities.

Ginnie Mae guaranteed $34.5 billion in mortgage-backed securities in April for the second consecutive month, compared to $28 billion in February and $27.3 billion in January. "We are steadily growing," said Ginnie president Joseph Murin. Ginnie Mae single-family MBS totaled $33.8 billion and multifamily totaled $707 million in April. Ginnie I single-family MBS totaled $26.8 billion in April — $1.4 billion less than in the previous month. However, Ginnie II single-family multiple issuer pools totaled $6.6 billion, up $1.1 billion from the previous month.

The ten largest unsecured creditors of the recently bankrupted Thornburg Mortgage include banks and Wall Street firms that were owed at least $4.6 billion, according to court records. The nature of the debts include senior subordinated notes, master repurchase agreements, and junior notes. The top three unsecured creditors are owed (combined) $3.2 billion and include Wilmington Trust ($1.3 billion), Royal Bank of Scotland ($1 billion), and Credit Suisse ($911 million). A jumbo lender based in Santa Fe, Thornburg filed for Chapter 11 protection in Maryland, listing debts of more than $1 billion. It was a publicly traded REIT. At last check this once high flying "super jumbo" lender had a servicing portfolio of about $16 billion — all of it jumbos or super jumbos.