Servicing

U.S. home prices may fall further than previously expected, by another 12.5% to 2002 levels, before showing more stability in late 2010, according to Fitch Ratings. "Currently, prices are hovering around levels seen in mid 2003," Fitch said. The rating agency said it previously had expected a 10% further decline. Huxley Somerville, group managing director and U.S. residential mortgage-backed securities group head at Fitch, said reasons for the revised forecast include "very weak employment, limited refinancing opportunities and turbulent financial markets have extended into the first months of 2009." He added that "government initiated programs have yet to yield any positive benefits."

Bank of America is rolling out new tools and products aimed at providing transparency and responsible lending to consumers, among them a flat closing fee loan that has no application fee, and a one-page loan summary for customers taking out retail purchase and refinance loans. The latter, the Clarity Commitment, spells out the key aspects of loan terms — the monthly payment, the date it's due, the rate, what the rate and monthly payment could reset to, if it is an adjustable rate mortgage and the closing cost. BoA also said it was introducing a new interactive Home Loan Guide website as part of the rollout, done as part of its Bank of America Home Loans rebranding for mortgage operations that now include its home equity business and the former Countrywide Home Loans. Bank of America said it extended more than $85 billion in mortgage credit in the first quarter of 2009, helping more than 382,000 customers purchase a home or save money on the one they already own. Seventy-five percent of first quarter originations were for refinance. BofA is bringing two companies together when interest rates are at an all-time low and the economy is in a recession. The company has added 3,000 positions and is in the process of adding 1,000 more to its fulfillment to keep pace with the demand on the refi and purchase side.

Senate Democratic leaders want to force a vote on the bankruptcy cramdown issue this week even though they have not reached agreement on the cramdown provisions and it appears they don't have the votes to pass it. The 41 Republican senators are united in opposition to cramdowns and observers expect at least six Democrats will vote against legislation that would allow bankruptcy judges to reduce or cramdown the principal amount of a residential mortgage to the fair market value. Nevertheless, Sen. Richard Durbin, D-Ill., is continuing to work with Wells Fargo, J.P Morgan Chase and Bank of America on compromise cramdown legislation. If an agreement is reached, the cramdown language could be attached a House-passed bill that strengthens the Federal Deposit Insurance Corp. and enhances the Federal Housing Administration loan modification programs. If Sen. Durbin losses that fight, cramdown opponents are concerned Sen. Durbin may try to attach his cramdown provisions to the credit card reform bill that the House is expected to pass later this week.

Freddie Mac's issuance of mortgage-backed securities totaled $57.7 billion in March — nearly double its activity in February as a result of the surge in refinancings. The mortgage giant purchased $52 billion in refinanced mortgages in March, its largest refinance purchase month since 2003. The company also said it added $45.1 billion in mortgage assets to its investment portfolio, including $19.1 billion of its own MBS. And the mortgage investment portfolio grew to $867.1 billion as of March 31. Meanwhile, delinquencies continue to creep up. In March, the percentage of Freddie single-family loans that are 90 days or more past due or in foreclosure rose to 2.29%, up 16 basis points from the previous month, and up from 0.77% in March of 2008.

Foreclosure filings were made on 11,017 properties in New York during the first quarter of 2009, representing a 23% decrease compared to the first quarter of 2008 and a 32% increase over the fourth quarter of 2008, according to data from the New York State Banking Department and RealtyTrac. Driving the increase was an 80% increase in lis pendens filings. The banking department and RealtyTrac said they anticipated the increase as a result of the state's new legislation, which went into effect in September 2008, and required a 90-day pre-foreclosure waiting period. This created a sharp decrease in New York foreclosures in the fourth quarter of 2008, and the first quarter of 2009 numbers represent a bounce from the fourth quarter lows, they said. Suffolk County, with 1,773 filings in the first quarter 2009, replaced Queens as the county with the highest number of filings. On a nationwide basis, New York's overall ranking dropped from 35th at the end of 2008 to 37th at the end of the first quarter. "While New York's overall rank among the other states continues to improve, we must not become complacent. There are still pockets where foreclosure levels continue to rise at alarming rates," said Richard Neiman, superintendent of banks for New York. "Four of our counties alone - Suffolk, Queens, Brooklyn and Nassau - represent 50% of the total foreclosure activity in the state."

Cities in California, Florida, Nevada and Arizona accounted for the 26 highest foreclosure rates in the first quarter among metro areas with a population of 200,000 or more in RealtyTrac's Metropolitan Foreclosure Market Report for the first quarter. Las Vegas posted the highest metro rate, with 4.48% of its housing units receiving a foreclosure filing during the quarter. Merced, Calif., saw the second highest metro foreclosure rate, with 4.21% receiving a foreclosure filing, and Cape Coral-Fort Myers, Fla., recorded the third highest rate, with 3.85% receiving a filing. "Sales activity appears to be increasing in some of these markets as home prices have fallen to levels that are attractive to first-time homebuyers and investors," said CEO James J. Saccacio. "While we expect many of these metro areas to continue to experience high levels of foreclosure activity throughout 2009, we also expect to see other markets rise up the ranks as unemployment rates surge throughout the country." Other metro areas in the top 10 were the California cities of Stockton, Riverside-San Bernardino, Modesto, Bakersfield, and Vallejo-Fairfield, along with Phoenix and Port St. Lucie, Fla.

The industry is looking for a more specific definition of "imminent default" in conjunction with its use in qualifying borrowers for new Treasury-directed agency refinancing and modification programs, according to panelists at the Mortgage Bankers Association's National Secondary Market Conference. Companies refinancing or modifying loans through the programs are concerned about whether they might be liable if the mortgages are found to not have met the definition, said Susanna Konracki, senior vice president of valuation and advisory services at RiskSpan Inc. They also fear exposure to other legal liabilities if they choose not to use the programs. As a result, several industry groups including the MBA have been working with the agencies to develop a consensus definition for the term, Ms. Konracki told this publication.

Wells Fargo & Co., the nation's second largest residential servicer, said Wednesday that 7% of its $1.6 trillion "owned" servicing portfolio was in some stage of delinquency as of March 31, but mortgage funding volumes and overall earnings were strong. Dollar-wise the delinquencies represent $112 billion in mortgages. Releasing its 1Q results, the San Francisco-based bank also announced loan charge-offs on its mortgage portfolio including: second liens ($847 million), one- to four-family ($391 million), and commercial mortgages ($556 million). The charge-offs include the mortgage operations of Wachovia Corp., the troubled bank it bought at year-end. Despite all the bad mortgage servicing news, Wells said it earned $3.05 billion in the first quarter, a record. The bank funded $101 billion in home mortgages during the period, a 55% gain from the same period a year ago. It has a mortgage application pipeline of $101 billion.

Freddie Mac has delayed its pricing of a five-year Reference Note offering expected to be at least $1 billion in size due to the "unattended death" of the government-sponsored enterprise's acting chief financial officer David Kellermann — an employee of the firm for 16 years. Mr. Kellermann was found dead at his Northern Virginia home early Wednesday morning, according to police. A spokeswoman for the Fairfax County Police Department told National Mortgage News that the medical examiner will perform an autopsy on the 41-year-old Mr. Kellermann later today. The police issued a press statement saying, "there was no evidence of foul play." Freddie said it found it "appropriate" to "temporarily postpone" the pricing "at least one day" in response to the death. Mr. Kellermann had been Freddie's CFO since September, when the government placed it and its sister company, Fannie Mae, into a federal conservatorship. As acting CFO, Kellermann was responsible for the GSE's financial controls, financial reporting, tax, capital oversight and related matters. He began his career at the company as a financial analyst/auditor. He also worked in Freddie's securities sales and trading unit. One former Freddie employee who worked at the GSE when Mr. Kellermann was there described him as "a very nice man, a family man." According to his company bio, he was a volunteer board member of the D.C. Coalition for the Homeless. Back in 2003 Freddie was embroiled in an accounting scandal where its top executives were accused of under-reporting income by $5 billion. A criminal investigation ensued but no charges were ever brought. Freddie's CEO (also appointed in September), David Moffett, resigned last month. Mr. Kellermann was promoted to acting CFO when Anthony 'Buddy' Piszel resigned.

David Kellermann, the acting chief financial officer of Freddie Mac -- and an employee of the firm for 16 years -- was found dead at his Northern Virginia home early Wednesday morning in what authorities said was an apparent suicide, according to combined press reports. The 41-year-old Kellermann had been Freddie Mac's chief financial officer since September, when the government placed the mortgage investing giant and its sister company, Fannie Mae, into a federal conservatorship. A spokesman for Freddie Mac had no comment and referred all press inquiries to the Fairfax County police. As acting chief financial officer, Kellermann was responsible for the GSE's financial controls, financial reporting, tax, capital oversight and related matters. He began his career at the company as a financial analyst/auditor. He also worked in Freddie's securities sales and trading unit. Freddie's CEO (also appointed in September), David Moffett, resigned last month. The company's stock trades for 86 cents a share.