Servicing

Accredited Home Lenders of San Diego, once a top ranked subprime lender, is expected to file for bankruptcy protection in Delaware, perhaps as soon as this afternoon, according to a source close to the matter.According to company notes provided to National Mortgage News it appears that Accredited will go into liquidation and will auction off its servicing platform. The lender, which was bought by Lonestar Funds, a hedge fund company, two years ago, at last check had about $6 billion in servicing rights on its books. The source said that Accredited Home Lenders (a holding company) and "certain affiliates and subsidiaries" will file voluntary petitions under chapter 11 of the bankruptcy code and then "commence an orderly wind-down of operations." Accredited, the source said, decided to liquidate "as a result of extremely challenging market conditions and the desire to conduct an orderly wind-down and disposition of assets." The lender is currently trying to sell its real estate owned (REO) portfolio. The source said the company is promising its borrowers that "there will be no disruption" for them in regard to the servicing of their loans. Accredited's board of directors is prepared to name Meade Monger of AlixPartners as its chief restructuring officer, the source said.

The U.S. Senate easily defeated an amendment that Sen. Richard Durbin, D-Ill., had pushed for the past two years to allow bankruptcy court judges to cram down a mortgage loan as a way to reduce foreclosures and help stabilize the housing market. The amendment was defeated by a vote of 51-45, with just 45 of the 59 Senate Democrats supporting it. The amendment would have given bankruptcy court judges the authority to reduce the interest rate and principal amount of a mortgage secured by a borrower's principal residence. Citigroup was the only bank to support Sen. Durbin's amendment after months of intense negotiations. Sen. Durbin complained the other banks and industry groups refused to compromise and negotiate in good faith. Sen. Tom Carper, D- Del., noted, however, that he might have voted for the amendment if Sen. Durbin had restricted cramdowns to subprime and nontraditional mortgages and made other changes.

Members of the HOPE NOW alliance and the larger mortgage lending industry provided 249,000 homeowner solutions through modifications and repayment plans in March. Modifications were done on 134,000 mortgages during March, the second consecutive month this many modifications have been completed, according to HOPE NOW data. Since September 2008 the industry averaged 116,000 modifications per month. There were 115,000 repayment plans created in March, up slightly from February. The number of completed foreclosure sales declined by 39%, from 87,000 to 53,000 in March, the lowest number since December 2007. Foreclosure starts increased 20%, from 243,000 in February to 290,000 in March. Michael Bright, HOPE NOW's chief statistician, said the sharp reduction in completed foreclosure sales in March may have been because servicers allowed troubled loans to be run through the Obama administration's Homeowner Affordability and Stability Plan. "It's too early to say this is a trend," he said. "But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes."

According to a study by Freddie Mac of its own portfolio, refinancings during the first quarter are on track to reduce consumer mortgage payments by $2.5 billion in the coming year. "The payment savings from 'rate-and-term' refinancing done during the quarter is about $160 a month on a $200,000 loan and in aggregate this adds up to about $2.5 billion," said Freddie Mac chief economist and vice president Frank Nothaft. Half of all borrowers who refinanced their loans during the period lowered their interest rate by at least 20%, according to Freddie Mac. The median ratio of new-to-old mortgage rate was 0.80 in the quarter and this marked the lowest ratio since the third quarter of 2003, Freddie Mac said. The government-sponsored enterprise added that this corresponds to a new interest rate that is about 1.25 percentage points below the old rate. Refinances in which the resulting new loan amounts were at least 5% higher than paid-off first-lien mortgage balances fell to a five-year low of 42% during the period. The volume of home equity loans and lines of credit rolled into the first lien during refinance increased during the first quarter to $7 billion in second-lien debt consolidations from $4.7 billion the previous three-month period, according to Freddie deputy chief economist Amy Crews Cutts. "Because second liens generally carry higher interest rates, the consolidation of $11.7 billion into a lower-cost first lien provides about $200 million in interest savings over the next year to these households," she said.

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.