Servicing

Retreat Capital Management, Inc., a third-party arbitration services company in Lake Forest, Calif., is collaborating with Ellie Mae to make its mortgage loan modification services available to more than 120,000 mortgage professionals using the Encompass Mortgage Management Solution. Users may either directly upload borrower information through their Encompass systems, or fax the information to RCM. Retreat Capital uses an advanced rules-based loss mitigation technology platform that interfaces with the lender's servicing system. Once a mortgage is submitted, the technology matches that loan against all available loss mitigation options to determine the most suitable solution. At that point, one of the company's negotiation specialists contacts the borrower to present the available options. Once a resolution is reached, Retreat Capital handles all of the required paperwork and closing activities. "In this market, lenders are in dire need of loss mitigation and foreclosure prevention services, but unfortunately, there's such an influx of activity that they don't always have the time to develop a workable solution on their own," said Arvin Wijay, CEO of Retreat Capital Management.

The number of completed foreclosures soared by 44% in March to a record 175,199, according to the U.S. Foreclosure Index. The index, released by ForeclosureS.com, Sacramento, Calif., shows the total number of first quarter 2009 foreclosures "is the highest quarterly total of completed foreclosures" since the crisis began. The number of pre-foreclosure filings also reached a new high: 600,000.

Title insurance giant Fidelity National Financial, Jacksonville, Fla., has increased the size of its planned public offering to 15.8 million shares, pricing the stock at $19.Originally, it was slated to sell 13.3 million shares. The new shares being issued are covered under an existing shelf registration the company has with the Securities and Exchange Commission. Earlier this week Fidelity said it would post a first-quarter loss of 6 to 10 cents a share, compared with a profit of 13 cents a year earlier. In December Fitch downgraded Fidelity's credit rating to junk after it bought LandAmerica, a troubled competitor in the title space. At press time its shares were trading at just over $19 a share compared to a 52-week low of $6.66 and a high of $22. Fidelity said it plans to use the proceeds of the stock sale "for general corporate purposes," including the potential repayment of $1.1 billion in syndicated credits.

UBS AG said Wednesday that it expects to report a first quarter net loss of nearly $1.75 billion and that it plans to reduce its workforce by more than 11%.Three years ago the bank was a top ranked subprime securitizer and warehouse lender. In a speech at the company's annual general meeting in Zurich, Group CEO Oswald J. Grübel said the poor performance stems from continuing credit charges tied to illiquid risk positions, and valuation adjustments — most of which are tied to mortgages. Having cut nearly 11,200 jobs since it began writing down mortgage-related securities, UBS expects to reduce its staff to about 67,500 worldwide in 2010 compared to 76,200 currently employed. In addition, the banking giant announced it will exit high-risk and "unpromising businesses" and is currently reviewing which businesses it will remain active in. "We know where we have to get to work," said Mr. Grübel. "It will be a long road back to success without any quick fixes. Rather, we will move forward step by step in a rigorous and disciplined manner."

The cost to service residential mortgages is rising significantly, according to preliminary research conducted by the Mortgage Bankers Association.Speaking at a recent servicing conference MBA chief economist Jay Brinkmann said "costs per loan are way up," adding that the reason is loan modifications. Mortgage bankers with large portfolios are adding both phone lines and additional employees to rework loans, adding to expenses. MBA is working on its annual cost survey which should be released later this year. On a different topic, Mr. Brinkmann said some portfolio lenders that he's spoken with "are happy as can be" because their cost of funds (deposits) are "so low" right now.

The Senate is expected to vote on a bill next week to expand bank fraud statutes to cover independent mortgage companies and mortgage brokers for the first time.The new definitions for "financial institution" and "mortgage lending business" will ensure that mortgage brokers and mortgage companies are held fully accountable under the federal fraud laws, according to a summary of the bill (S. 386). The Senate Judiciary Committee approved the bill by unanimous vote on March 5. Senate Majority Leader Harry Reid, D-Nev., filed a cloture motion just before Congress left for its two-week spring break to counter any attempt to filibuster or block Senate consideration of the mortgage fraud bill when Congress returns next week. The Fraud Enforcement and Recovery Act also authorizes $165 million in appropriations to fund mortgage fraud investigations by the Justice Department, HUD inspector general and U.S. Secret Service.

The latest IAS360 House Price Index showed house prices falling another 3% in February 2009, giving no indication of any positive turn in the housing markets the company tracks. The Northeast reported a 12.8% decline across the last five months and 4.6% drop in February. Similarly, the South dropped 12.8% and 3% for the same periods. The West, for its part, was down 10.2% and 2.5%. The Midwest, though down, is the only region not showing double-digit declines. House prices have now fallen 14.4% on a year- over-year basis and 17.9 % since the height of the real estate bubble in 2006. Just since the economic collapse began in September 2008, the IAS360 has shown a drop of 10.9%. Six out of the 10 largest MSAs in the country have experienced double-digit declines since half a year ago, the company said, the worst being Boston, San Francisco, and Miami, down 20.3%, 19.3%, and 18.1% respectively. The Boston area fell 10.3% in February alone.

Missouri Attorney General Chris Koster has filed a lawsuit against US Foreclosure Relief of California for allegedly taking money from consumers to help them modify their loans, but not performing the work."Unfortunately, these tough economic times have brought out opportunists who prey on people at some of their most desperate and vulnerable moments," said AG Koster in a statement. "People facing the loss of a home may feel that they have no other choice but to turn to these fraudulent companies. The Attorney General's Office intends to stop them from doing business in Missouri." According to The Orange County Register, US Foreclosure Relief is a California company with a location in Orange but its telephone does not pick up. AG Koster says US Foreclosure charged homeowners $1,850 for its services, along with a processing fee of $500. "The company demanded payment upfront, in violation of Missouri law. Missouri law is clear that payment may not be charged or collected until the foreclosure consultant service is performed," says the AG's office.

Bank of America, which releases first quarter earnings shortly, is facing more writedowns on its Countrywide-related mortgage holdings, according to a new report from Credit Suisse.Initiating coverage of BoA with a "neutral" rating, CS analyst Moshe Orenbuch writes that when the bank bought Countrywide Financial Corp. last summer CFC's $92 billion (mostly) residential portfolio was marked down by $14.4 billion or 15.6%. In his new report he says "further headwinds could put losses in excess" of the original marks. The $92 billion includes $33 billion in home equity loans, and $26.4 billion in payment option ARMs, two of the most toxic asset classes out there. Several months after the July 1 deal closed, BoA wrote down the portfolio by an additional $750 million. Citing CFC in particular, Mr. Orenbuch says "Credit quality deterioration is fairly broad-based" at the bank.

Chase Home Finance said it will no longer fund construction-to-permanent loans for consumers who want to build their own homes.A spokesman for the lender said a decision was made three weeks ago but not publicized. It took its last application in this product line on April 7. Roughly 60 employees based in Chase's Denver office are affected by the change. Some will be offered other jobs at the company. The spokesman declined to provide construction-to-perm origination volumes. "It's not a big part of our overall business," he said. Earlier this year Chase exited the wholesale channel. It remains as a correspondent funder. Based in Iselin, N.J., Chase is a subsidiary of financial services giant JPMorgan Chase.