Servicing

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.

Fannie Mae acquired $53.7 billion of mortgages during February, an 86% increase from January, and its best purchase month since June of last year. According to new figures released by the company, Fannie issued $45.3 billion in MBS, more than double its issuance volume of the prior month. (As reported last week, Freddie Mac purchased $40 billion of mortgages in February, an 84% gain from January.) Thanks to the Federal Reserve and Treasury driving rates lower by purchasing billions in MBS, both GSEs are seeing their seller/servicers deliver more product. Fannie ended the month with $36.4 billion in "commitments to purchase" which means in March acquisitions could be strong too. Both GSEs have been operating under a federal conservatorship since early September.

The House Financial Services Committee has postponed a markup of a mortgage reform bill that bans certain types of yield-spread premium payments and requires lenders to retain 5% of the credit risk on subprime loans that are sold to investors. The committee had scheduled a Tuesday (March 31) markup session, but canceled it without explanation. Lenders that sell subprime loans will not be allowed to "directly or indirectly transfer the credit risk it retains," according to the bill, sponsored by committee chairman Barney Frank, D-Mass., and fellow Democratic Reps. Brad Miller and Mel Watt of North Carolina. The sponsors want to crack down on compensation that might encourage mortgage lenders and brokers to steer borrowers into higher-cost loans. "Specifically, the new measure will strengthen restrictions on compensation paid to mortgage loan originators and brokers that is based on a loan's interest rate and terms, often called a yield-spread premium," according to Rep. Miller. Marc Savitt, president of the National Association of Mortgage Brokers, said that he is okay with the language in the bill, noting that "this doesn't ban yield-spread premiums outright" and instead "prevents people from making a couple of extra points" by putting consumers in higher-cost loans. Mr. Savitt added that his reading of the bill indicates that it would require mortgage banking firms to disclose their "servicing-released premiums" to the public as well. "The bill means you have to disclose everything," said Mr. Savitt. The legislation also mandates that all licensed and registered originators would be subject to a "federal duty of care" measure under the bill, obligating them to only make loans that a customer can afford. With refinancings, lenders would have to prove a "net tangible benefit.