Servicing

The fourth and final defendant involved with a scheme targeting Maryland homeowners facing foreclosure via local television ads has pleaded guilty to related charges. Earnest Lewis of Takoma Park, Md., admitted in U.S. District Court to participating in a scheme were his brother Michael K. Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. The co-conspirators fraudulently told the homeowners that they had to sign their homes over to Earnest Lewis and, in turn, he would use his credit to temporarily refinance their homes. They could repurchase the homes in a year, or once they regained their financial footing. During the interim, they could remain in their homes by paying "rent" and fees to Earnest Lewis by having their bank accounts directly debited by an account belonging to another co-conspirator. Co-conspirators Michael Lewis, Cheryl Brooke and Winston Thomas have also all pleaded guilty to participating in this scheme.

Generation Mortgage Company, Atlanta, closed 1,405 government backed 'Home Equity Conversion Mortgages' (HECMs) in the first quarter of 2009, a 233% increase from the first quarter of 2008.GMC says it is the nation's sixth largest funder of reverse mortgages. Company president Joe Morris said higher loan limits for reverses (HECMs) "provide greater liquidity in homes with higher values. This in turn makes the reverse mortgage more attractive than ever before for older boomers and seniors seeking greater financial independence."

Fair Isaac Corp. is offering Mortgage Recovery Initiative, a foreclosure prevention and management tool based on consumer credit behavior feedback.The tool was developed to help facilitate mortgage modifications and mitigate new delinquencies by reducing re-defaults and preventing foreclosures. The Minneapolis-based firm said MRI assists borrowers and lenders to be aware of and comply with the federal Making Home Affordable guidelines. MRI users can also contact program partners such as the Homeownership Preservation Foundation, a national network of HUD certified counseling agencies, Money Management International, a full-service credit counseling agency, and Equifax.

Homebuyer traffic is beginning to pick up in certain parts of the country, a sign that lower interest rates and tax credits are working, according to the Federal Reserve's new 'Beige Book.'Still, the government reports that residential prices, overall, are weak with home values and construction "still falling in most areas." The Fed reported this one positive note: "better-than-expected" buyer traffic led to a scattered pickup in sales in a number of its 12 regional districts. Districts seeing an increase in homebuyers include Atlanta, Kansas City, Minneapolis, Richmond and San Francisco. In the commercial real estate sector the outlook is negative: "Nonresidential real estate conditions to deteriorate," the Fed says. "Difficulty obtaining commercial real estate financing was constraining construction and investment activity." The government notes, however, that "Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement."

Foreclosure filings were reported on 803,489 properties in the first quarter of 2009, a 9% increase from the fourth quarter of 2008 and an increase of nearly 24% from Q1 2008.Filings were reported on 341,180 properties in March, up 17% from February and 46% from March 2008, despite a decrease in bank repossessions (REOs), which were down 13% from the fourth quarter of 2008 and 3% from February totals. Since much of the March activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays, said James J. Saccacio, chief executive officer of RealtyTrac. "The drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place." Nevada, Arizona and California continued to document the nation's highest state foreclosure rate. Filings were reported on 41,296 Nevada properties during the quarter, up nearly 111% from Q1 2008. REO in Nevada were down 3% from the previous quarter, but defaults increased 27% and auction sale notices increased 35%. California accounted for nearly 29% of the nation's total. Foreclosure activity increased 35% from the previous quarter and 36% from Q1 2008. Despite a 12% decrease from the prior quarter, Florida reported filings on 119,220 Florida properties, a 36% increase from the first quarter of 2008.

Fannie Mae and Freddie Mac experienced a stunning 152% increase in loan delinquencies in the 90-days or more past due category, according to a new report by their regulator, the Federal Housing Finance Board. The late payment rate rose to 2.14% from 0.85%. Meanwhile, the agency's 'Foreclosure Prevention Report' shows the GSEs increased their assistance for troubled borrowers and suspended most foreclosures from November 26 into the first quarter of this year. The foreclosure suspensions caused 12,600 troubled loans to remain on the government sponsored enterprises' balance sheets in December — "increasing the 90-day plus delinquency rates," the GSE regulator said. Nevertheless, the two had 655,900 seriously delinquent loans on their books as of December 30, compared to 511,166 on October 31, a sequential increase of 28%. Fannie and Freddie completed 3,400 foreclosures in December, down substantially from 14,400 in November. Overall, they foreclosed on 34,845 properties in the fourth quarter, compared to 47,500 in the third quarter. Their real estate owned (REO) inventory declined 3% in the fourth quarter to 92,800.

Even though JPMorgan Chase earned $2.1 billion in the first quarter, its consumer and mortgage lending group lost $389 million during the same period due to loan servicing and credit charges and higher mortgage costs tied to loan modifications.In particular the company singled out higher servicing costs and MSR "risk management results." JPM CEO Jamie Dimon said the banking giant "benefited from underlying growth" in, among other things, higher mortgage refinancing volumes. Mortgage production revenue for JPMorgan Chase was $481 million, as wider margins on new originations were offset partially by an increase in reserves for the repurchase of previously sold loans and lower mortgage origination volumes. Even though the consumer and mortgage unit lost money, net mortgage servicing revenue totaled $1.2 billion, compared to $1 billion a year ago. JPM said it also bought $34 billion in mortgage-backed securities, and has prevented 150,000 foreclosures since October 2008.

Home building permits hit another all-time low in March with the seasonally adjusted rate weighing in at 513,000 applications, another sign that the housing crisis is far from over.According to new government data, single-family (one-unit) housing starts totaled 361,000 sites (seasonally adjusted), a 7.4% decline from February and an ugly 42% decline from the same month last year. Meanwhile, multifamily starts (five-units or more) fell 15.4% to a seasonally adjusted rate of 132,000 units. Year-over-year multifamily starts plunged 52%. According to Weiss Research, "Tighter funding conditions for construction projects, the large overhang of housing inventory, and the broad economic weakness we're seeing are all conspiring to dampen building activity." Weiss notes that any future recovery "will come in fits and starts, and will take time." Even though the figures were horrible, the National Association of Home Builders said its 'Builder Confidence Index' posted its biggest gain in five years. NAHB chief economist David Crowe said, "we are at or near the bottom of the current housing depression."

The Treasury Department is providing $9.9 billion to six major mortgage servicers for successful loan modification incentives that will be paid not only to them but to borrowers and investors. Administration officials asked Citigroup and JPMorgan Chase and the other companies participating in the Obama administration's loan modification program to estimate how many loans in their portfolios can be modified under the new program to determine the possible cost of the incentive payments. One source familiar with the situation told National Mortgage News that these firms have been lobbying Treasury hard for the incentive payments because they realize the fee income at stake is enormous. According to published reports, Chase Home Finance is receiving a $3.6 billion allotment, Wells Fargo Bank $2.87 billion, CitiMortgage $2.1 billion, GMAC Mortgage $633 million, Saxon Mortgage Services $407 million and Select Portfolio Servicing $376 million. Under the Obama plan, the servicer receives a one-time $1,000 incentive for a loan modification, plus an annual $1,000 incentive if the borrower remains current for three years. The borrower can receive an annual incentive of $1,000 that is applied to principal reduction for up to five years. As an incentive to modify the non-GSE loans, there is a one-time payment of $1,500 payment to the investor.

Can Realtors become catalysts for change in the downtrodden market? The answer, according to one industry veteran, founder of The Distressed Property Institute in Austin, Texas, Alex Charfen is: Yes, if they acquire the knowledge to help homeowners avoid foreclosure.Mr. Charfen is calling on thousands of Realtors across the country to do just that. Since seven out of 10 homes go into foreclosure without any professional intervention, he says, Realtors who are certified as distressed property experts must and can help. Realtors skilled at home pricing can help owners avoid foreclosure. CDPE training and certification is a way for Realtors to not feel "painted into a corner."