Servicing

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.

Servicer guidance along with the net present value (NPV) test for the Obama administration's new loan modification program will be issued "very soon," according to Federal Housing Finance Agency director James Lockhart."I'm hopeful we can get this kicked up very fast," Mr. Lockhart said in an interview with National Mortgage News Online. Fannie Mae and Freddie Mae have already issued servicer guidance for modifying loans they own or guarantee. The NPV test will be used to determine which non-agency loans qualify for a loan modification. "That is being finalized," the FHFA director said. Under the new modification program servicers are expected to reduce the homeowner's monthly mortgage payments to a 38% debt-to-income level at their own expense. To achieve a 31% DTI ratio, the government will share in the cost and reimburse the servicer. Fannie and Freddie are using an existing NPV test because they are not being reimbursed by the government, Mr. Lockhart said.

Wingspan Portfolio Advisors LLC, a Dallas-based mortgage servicer specializing in highly delinquent loans, has formed a professional network of attorneys to assist in efforts to help borrowers avoid foreclosure and stay in their homes. These law firms are normally more involved in seeing foreclosure actions through to their conclusions, but membership in the Wingspan Professional Attorney Network (WPAN) signifies their interest in seeking other ways to help their lender and servicer clients. Membership in the Wingspan Preferred Attorney Network is organized along the lines of a professional designation, said Tom Force, legal services manager for Wingspan Portfolio Advisors. Each member attorney receives a level designation among three available, based on experience initially, and later upon loan resolution success. The three levels are "Select," "Eagle," and "Angel," which is the top among the three.

Genworth Financial, which controls the nation's fourth largest mortgage insurance company, said it failed to meet requirements to receive a large capital infusion under the Treasury Department's Troubled Asset Relief Program. The revelation came late last week, but on Monday Genworth's shares were hammered, falling 21% to just over $2. In a statement company CEO Michael Frazier said TARP money is only one of Genworth's options for surviving in the current economic climate. A spokesman could not be reached for comment at press time. The Richmond, Va.-based Genworth has abandoned plans to buy a small Minnesota depository, which would have served as its conduit to getting TARP money. In 2008 Genworth posted a net loss of $572 million. For years it had garnered a reputation for being the most conservative of the nation's seven MI firms.

Mortgage stocks went up across the board at the end of trading on Thursday as the Dow closed up 246 points. In particular, Bank of America Corporation's stock went up 35.27%. Additionally, Wells Fargo saw its stock price go up 31.7% at the end of the day Thursday. Earlier today, the banking giant announced that it expects a $3 billion profit from the first quarter. SunTrust Banks also saw a huge surge at 30.56%. US Bancorp ended trading on Thursday at $17.64 a share, up 22.84% from the last trade. Government sponsored enterprises Fannie Mae and Freddie Mac also ended the trading day Thursday on up notes, up 8.82% and 10%, respectively.

The global law firm Morrison & Foerster LLP has created an interdisciplinary team of attorneys to represent clients in the accelerating wave of dealmaking, as real estate companies worldwide seek to deleverage, recapitalize, restructure and otherwise seek liquidity. The newly formed Real Estate Companies Solutions Group brings together experts with expertise from the firm's real estate, corporate, capital markets, tax, fund formation, bankruptcy, restructuring and litigation groups. The group will provide targeted advice to real estate companies, investors and other capital sources in entity-level transactions resulting from the current unprecedented real property and finance sector dislocations. It will represent clients to implement a broad range of options, such as M&A, tender offers, spin-offs, joint ventures, or bankruptcy including "prepackaged" bankruptcies. "The current 'perfect storm' affecting the real estate industry is creating both risks and opportunities for our clients," said Michael Cohen, a Los Angeles partner in the Corporate Finance Practice Group. Among the categories of transactions involving real estate companies, including REITs, the group expects to execute mergers and acquisitions, restructuring and workout transactions, and representing new equity in bankruptcies.

Terence Mayfield of Phoenixille, Pa., pleaded guilty before U.S. District Judge Joseph H. Rodriguez to charges stemming from his role in operating two ponzi schemes upon members of a Toms River church. The first defrauded members of the Church of Grace and Peace of more than $1 million through a phony real estate investment scheme. In this scheme, Mayfield spoke to church members about an investment opportunity he had developed through investments in income-generating real estate. He required each potential investor to pay between approximately $1,000 and $1,500 as an "entry fee" to the program and that they provide the investment funds directly to him. Mayfield neither maintained the funds in escrow accounts nor purchased investment properties, but rather used the investors' funds to repay earlier investors and to pay his personal expenses. The second scheme defrauded three sets of homeowners, who participated in three "foreclosure bailouts" purportedly involving two properties in Georgia and one in Pennsylvania, of more than $75,000. In this scheme, Mayfield solicited potential investors to buy homes facing foreclosure and lease the homes back to the homeowners for a two-year period. The homeowners would place two years' worth of rent payments into an escrow account maintained by Mayfield as a security deposit. At the closing of the foreclosure bailout transactions, Mayfield directed the homeowners to directly deposit funds intended for an escrow account into his company's bank account. He again used these funds for his own benefit. Judge Rodriguez released the defendant on a $100,000 bond pending sentencing, which is scheduled for July 14.