Servicing

Thornburg Mortgage Inc., Santa Fe, N.M., has made plans to discontinue operations after winding down through a bankruptcy filing and a series of asset sales and liquidations, ending a struggle to survive the non-agency liquidity crisis that started in 2007. Remaining assets are slated to be sold or liquidated with the assistance of Houlihan Lokey Howard & Zukin Capital Inc. The company already has agreed to transfer its mortgage servicing rights, which were granted to certain Wall Street firm counterparties as security for TM's obligations under their respective financing agreements. The counterparties are JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Ltd., Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland plc and UBS AG. The counterparties have agreed to grant the company additional forbearance from demanding payment on deficiency claims under their various financing agreements through April 30, or earlier if certain events occur. But in exchange for the continued forbearance TM has agreed that the remaining counterparties who have not previously taken possession of their collateral under their respective financing agreements may do so at their discretion. The company said it will not be able to make certain senior subordinated notes payments but has a 30-day grace period before it defaults on these. It does not expect to file its 10-K annual report with the Securities and Exchange Commission. Thornburg Investment Management, which is co-located with TM and has the same chairman as TM, is a separate legal entity and said it would not be affected by TM's situation.

Sen. Jon Kyl, R-Ariz., is urging bankers to stand firm and not compromise on cramdown legislation because Senate Democratic leaders don't have the votes to pass it. "There is no reason to concede on cramdowns when you have the votes to stop it," the high-ranking Senate Republican told the American Bankers Association government affairs conference. Sen. Kyl stressed that all 41 Senate Republicans, as well as a handful of Democrats, oppose cramdowns, which would allow bankruptcy judges to reduce the principal amount of a residential mortgage to the fair market value. "You are well aware that such a change to the bankruptcy code would result in higher interest rates for all home mortgages — actually what we don't need now," Sen. Kyl said. Sen. Richard Durbin, D-Ill., has tied a cramdown bill to legislation that increases the Federal Deposit Insurance Corp.'s borrowing authority. ABA members are hoping the Senate will pass the FDIC bill soon. Sen. Kyl assured the bankers the FDIC borrowing bill "enjoys wide bi-partisan support" and the Senate can pass it without the cramdown provisions. "We will stand by you. We have the votes to defeat cramdown," Sen. Kyl said.

Colonial BancGroup, the nation's largest warehouse provider, has received a $300 million capital commitment from mortgage banker Taylor, Bean & Whitaker and other investors, an infusion that will aid in the bank's near-term survival. Described as the lead investor in the deal, TBW is also a warehouse lending customer of Colonial's. The deal was announced late Tuesday afternoon and no other details were released concerning the other investors. Based in Ocala, Fla., TBW is a privately held S&L holding company. According to the Quarterly Data Report, TBW is the nation's eighth largest lender overall and second largest wholesaler. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. According to a statement released by the bank, TBW's investment is contingent upon the Treasury agreeing to infuse the $550 million into Colonial. Once the deal is completed the investor group led by TBW will control 75% of the Alabama bank. On Tuesday, National Mortgage News reported that Colonial had been approaching "mortgage banking companies" about being part of the investor group.

Colonial BancGroup, the nation's largest warehouse provider, has received a $300 million capital commitment from mortgage banker Taylor, Bean & Whitaker and other investors, an infusion that will aid in the bank's near-term survival.Described as the lead investor in the deal, TBW is also a warehouse lending customer of Colonial's. The deal was announced late Tuesday afternoon and no other details were released concerning the other investors. Based in Ocala, Fla., TBW is a privately held S&L holding company. According to the Quarterly Data Report, TBW is the nation's eighth largest lender overall and second largest wholesaler. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. According to a statement released by the bank, TBW's investment is contingent upon the Treasury agreeing to infuse the $550 million into Colonial. Once the deal is completed the investor group led by TBW will control 75% of the Alabama bank. Yesterday National Mortgage News reported that Colonial had been approaching "mortgage banking companies" about being part of the investor group.

Single-family homes in January continued to see broad based declines in pricing across the U.S. with 13 of the 20 largest metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% compared to the same month last year, according to the new Standard & Poor's S&P/Case-Shiller Home Price Index. "Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20% in the last year," said David M. Blitzer, chairman of the index committee at S&P. Seven metro areas reported declines in excess of 4% in January. Phoenix had the worst decline with -5.5%. On a marginally positive note, S&P/Case said Cleveland, Los Angeles and Las Vegas are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values. The two worst performing cities, in terms of annual declines, were Phoenix (-35%), and Las Vegas (-32.5%). Dallas, Denver and Cleveland fared the best in terms of annual declines, falling 4.9%, 5.1% and 5.2%, respectively.

Prior to the recent sale of the government-owned IndyMac FSB to an investor group, Fannie Mae settled a $1 billion-plus buyback dispute with the thrift but all the parties involved are keeping the settlement secret.Representatives from IndyMac's new owners (Dune Capital), the Federal Deposit Insurance Corp., and Fannie all confirmed that the dispute was settled but have declined to say on what terms. A source familiar with the matter said the amount of loans Fannie wanted IndyMac to repurchase totaled about $1 billion. Loan buyback requests typically come about when a buyer of mortgages discovers that the portfolio acquired has early payment defaults or higher-than-anticipated delinquencies.

Colonial BancGroup, the nation's largest warehouse provider, is talking to an investor group that includes some of its mortgage customers about supplying much-needed capital to the bank, a source familiar with the matter told National Mortgage News. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. The source, requesting anonymity, said Colonial is approaching "mortgage banking companies" about being part of the investor group. The Wall Street Journal reported that non-bank lender Taylor Bean & Whitaker, Ocala, Fla., is part of that group and that TBW has a thrift affiliate that would be part of the deal. The newspaper says that the plan would be to convert Colonial from a commercial bank into a thrift. At press time officials from both Colonial and TBW declined to comment or had not returned telephone calls about the matter.

Pennant Capital Management, the largest shareholder in PHH Corp., Mt. Laurel, N.J., is seeking to install former Freddie Mac CEO Greg Parseghian and another candidate on the lender's board.In a new public filing Pennant, a hedge fund, says it wants Mr. Parseghian and Allan Z. Loren elected as directors at the PHH annual meeting in June. A proxy filing is forthcoming. Mr. Loren is the former chairman of Dun & Bradsheet, a business information publisher. Mr. Parseghian left Freddie Mac under a cloud in the summer of 2003 in the midst of a $5 billion accounting scandal. An independent report said Mr. Parseghian, while serving as a Freddie Mac executive, approved accounting treatments for different transactions that had the effect of the GSE under-reporting earnings. It is unclear from the SEC filing what ties Messrs. Parseghian and Loren have to Pennant. A spokesman from Pennant did not return a telephone call. At press time PHH — the nation's 10th largest residential servicer — had no comment on the matter. Pennant owns 9.97% of PHH's common.

The Department of Housing and Urban Development is seeking expanded loss mitigation authority allowing the principal amount of an FHA-insured mortgage to be reduced by up to 30% to help homeowners avoid defaults. The Federal Housing Administration would pay a partial claim to the servicer/investor to cover the writedown and make the mortgage current. Eventually, though, the borrower would have to repay the forgiven principal — but without interest. "It would save FHA money," said William Apgar, a senior advisor to the HUD secretary. He noted that such an aggressive approach is "consistent" with President Obama's loan modification plan. "We do believe FHA should have state-of-the-art modification tools," Mr. Apgar told National Mortgage News. Meanwhile, FHA's "serious" delinquency rate is creeping up. FHA loans 90 days or more past due, in foreclosure and in bankruptcy hit 7.46% in February, compared to 6.16% a year ago.

Despite helping 244,000 at-risk homeowners with loan modifications and repayment plans in February, the Hope Now alliance says the number of foreclosures continues to rise and foreclosures involving prime loans topped subprime by a significant margin. The alliance of 28 servicers reported that foreclosure sales increased to 87,000 in February, up from 68,000 in January. Meanwhile, foreclosure sales involving prime loans jumped to 55,500 in February from 30,400 in January. Foreclosure sales involving subprime loans fell to 31,800 in February from 37,700 the previous month. The February report also shows servicers modified more mortgages as opposed to placing troubled borrowers in repayment plans. Loan modifications totaled 133,800 in February, compared to 110,600 repayment plans. Hope Now executive director Faith Schwartz expects the percentage of loan modifications will continue to rise as servicers implement the Obama administration's loan modification and refinancing programs. "The mortgage industry is responding to the need of its customers and offering solutions that are appropriate to the current market and economic conditions," Ms. Schwartz said.