Servicing

The Treasury Department has explained how to use a new website that allows homeowners to learn about Obama administration's new housing plan and whether they can qualify for a loan modification.The new MakingHomeAffordable.gov website has a calculator that allows homeowners to estimate how they could benefit from a modification. "Be sure to check out the calculator that allows homeowners to estimate the reduction to their monthly mortgage that they might get under the plan," a White House blog says. Meanwhile, agency officials are working on a net present value (NPV) test that servicers will use to determine if a loan should be modified. They plan to roll out a standard NPV model soon that provides some flexibility for servicers. For example, a servicer with a low re-default rate would not have to use the national rate.

In an effort to get stalled housing markets going again in their respective jurisdictions, a number of states are following California's lead in adopting tax credits for homebuyers. According to the National Association of Home Builders' Sales and Marketing and Council, plus other sources, legislation awaiting the governor's signature in Utah offers a $6,000 grant to be used by buyers for downpayments. The Kentucky House has cleared a $5,000 tax credit for new home purchasers. A similar measure has cleared the Virginia Senate and has been introduced in the Illinois House. In Georgia, a $3,600 tax credit spread over three years for new homebuyers has passed the lower chamber. These are all in addition to the $8,000 federal tax credit adopted by Congress in February. Also, North Carolina and South Carolina are said to be looking at replicating California's program, which gives Golden State taxpayers who buy a new home a credit of 5% of the purchase price, up to a maximum of $10,000 to be paid out over a three-year period. If adopted, the combined federal-state benefit would be as much as $18,000. In Missouri, meanwhile, the state housing finance agency is advancing buyers the federal tax credit in the form of a short-term loan. Delaware has a similar program, and Pennsylvania, New Mexico and several other states are considering such programs. Builder associations in Indiana, Kentucky, Michigan, New York, Oregon, Tennessee, Texas, Washington are said to be pursuing Missouri's model, which, in effect, "monetizes" the credit so buyers can use it for cash needed to close on their mortgages instead of waiting until they file their tax returns.

The yield on the benchmark 10-year Treasury plummeted to 2.5% Wednesday afternoon after the Federal Reserve said it would give a $1 trillion-plus shot in the arm to the housing and mortgage markets by purchasing $750 billion of agency MBS, $100 billion of Fannie/Freddie debt as well as $300 billion of longer-term Treasury securities. "The Fed is now trying to influence not just the spread between private interest rates and Treasuries (through its mortgage-backed securities purchases, for example), but to pull down the entire spectrum of interest rates by driving down the rate on benchmark Treasuries," said IHS Global Insight chief U.S. economist Nigel Gault in a report. The agency MBS market shortly after 4 p.m. Thursday was "more than keeping up with swaps but not keeping up with Treasuries," Art Frank, director and head of agency mortgage-backed securities research at Deutsche Bank Securities, told MortgageWire. He said agency MBS rallied on the news without any huge volume. Ensuing investor activity was fairly modest with some servicer convexity-related buying but not to any large extent, Mr. Frank said.

Kroll Factual Data and MIAC Analytics formed an alliance at the MBA Technology Conference in Las Vegas to provide whole loan collateral risk assessment to mortgage investors and risk managers. The alliance provides real-time risk metrics to help MIAC's clients measure fundamental risks, said Paul Van Valkenburg, principal at MIAC. He said it also provides customers with current loan value and borrower credit information that allows them to manage portfolio risk accurately and in a timely manner. Specifically, the alliance can deliver information within hours that once took days or weeks, Mr. Van Valkenburg said. Kroll Factual Data assesses consumer data to help clients evaluate loan characteristics and transfer risk. MIAC Analytics' software products assist with deriving loan loss reserve calculations, pricing and valuation of mortgage-based assets and other-than-temporary impairment for securities.

Fannie Mae and Freddie Mac officials are expressing concerns that the American Securitization Forum's efforts to draft consensus secondary market standards could potentially create another mortgage identification standard outside of the MERS Mortgage Identification Number and cause confusion in the industry. ASF has been seeking comment on delivery standards that are still under construction and may or may not include the MERS MIN. The ASF declined to comment on the issue. Each loan registered on MERS is given a unique MIN that identifies that loan. At present, the MIN and registering the e-note on MERS is mandated by both GSEs if they will accept an e-mortgage from any lender. Speaking at the Mortgage Bankers Association's Technology Conference in Las Vegas, Ted Adams of Freddie Mac stressed, "The MIN works and we're using it. The introduction of another loan identification number as purposed by ASF would be confusing." To combat the potential of the MIN being rendered obsolete by anything the ASF creates, R.K. Arnold, president and CEO at MERS, urged lenders to adopt e-processes and use the MIN, arguing that if usage is mainstream, the ASF will have to recognize the validity of the current MIN.

The chairman of the Mortgage Bankers Association, David Kittle, said there are changes coming to the organization that will make it a "lean mortgage machine going forward." He told attendees at the Regional Conference of Mortgage Bankers Associations in Atlantic City those changes will make MBA run like an entrepreneurial business. Details will come by the end of this month. Mr. Kittle made the theme of his speech, "If not now, when?" Speaking to the power of what one person can do, he noted the number of people in the room equals the gap in the disputed U.S. Senate race in Minnesota. As for issues with warehouse liquidity, MBA is meeting with the U.S. Treasury Department looking for the establishment of loan participation programs by Fannie Mae, Freddie Mac and/or the Federal Home Loan Banks. Such a program will reduce capital requirements for lenders and free up funds to be used to originate loans, he said. He addressed the cramdown issue, calling for members to fight for changes to the law. If the industry does not do something about it, "they will do something to us," Mr. Kittle said. He also said he is working with other housing trade groups to go to get a $15,000 tax credit for home purchases, and he called on the administration to drop plans to limit the mortgage interest deduction, declaring, "President Obama, don't kill it, expand it."

Fannie Mae's refinancing volume jumped to more than $41 billion in February, nearly three times the refis the company experienced during the month of January and the largest refinancing volume in nearly a year. Fannie also said more than 100,000 borrowers have accessed its online mailbox to inquire about their eligibility for refinancing under the Obama administration's refinancing plan, and about 50,000 callers have contacted Fannie's national hotline since the plan made its debut on March 4. The government-sponsored enterprise — currently held in government conservatorship — said it has launched a new addition to its website that will allow borrowers to quickly determine if they have a Fannie Mae-held mortgage. This is a determining factor in whether a borrower is eligible for the program, Fannie said.

The FHA is experiencing "a large number of zero payment defaults" in which borrowers fail to make even one payment on their new government-insured mortgages, a Department of Housing and Urban Development official said at the Mortgage Bankers Association's annual National Fraud Issues Conference in Las Vegas. The trend, which Lisa Gore, the assistant special agent in charge of the criminal investigation division in HUD's inspector general's office, called "a huge red flag" that some type of fraud has been committed, is similar to the one experienced in the 1999-2001 housing market turndown. Ms. Gore's remarks confirm a front page Washington Post report earlier this month that many FHA borrower's are defaulting as quickly as they close. The newspaper's analysis of FHA data found that more than 9,200 loans insured by the agency in the past two years have gone delinquent with either one payment or no payments being made. The analysis found that the pace of what the Post called "instant defaults" has tripled in the last year, and more than two dozen loans are defaulting in this manner every week, the newspaper reported. Ms. Gore said the IG's office has stepped up the number of investigations into the "large number" of these and other cases of possible fraud. One investigation involves "more than 100 loans," she told MortgageWire.

Fannie Mae and Freddie Mac officials are expressing concerns that the American Securitization Forum's efforts to draft consensus secondary market standards could potentially create another mortgage identification standard outside of the MERS Mortgage Identification Number and cause confusion in the industry. ASF has been seeking comment on delivery standards that are still under construction and may or may not include the MERS MIN. The ASF declined to comment on the issue. Each loan registered on MERS is given a unique MIN that identifies that loan. At present, the MIN and registering the e-note on MERS is mandated by both GSEs if they will accept an e-mortgage from any lender. Speaking at the Mortgage Bankers Association's Technology Conference in Las Vegas, Ted Adams of Freddie Mac stressed that, "The MIN works and we're using it. The introduction of another loan identification number as purposed by ASF would be confusing." To combat the potential of the MIN being rendered obsolete by anything the ASF creates, R.K. Arnold, president and CEO at MERS, urged lenders to adopt e-processes and use the MIN, arguing that if usage is mainstream, the ASF will have to recognize the validity of the current MIN.

There are two different recommendations regarding the common stock of PMI Group Inc., Walnut Creek, Calif., after the company announced both a fourth quarter loss and its search for new capital.Zacks Equity Research, Chicago, has upgraded its recommendation on the shares of PMI to a 'hold.' Zacks said "the shares have already yielded more than a 99% return since we recommended them as a sell in September 2007. At this point, we think that the downside potential is rather limited, and we would advise the investors to book profits on their positions." Meanwhile, FBR Capital Markets analyst Steve Stelmach said in a new research report that PMI's capital structure and ultimate loss development "remain very much in question. Without improved visibility on either metric, we believe investors are better served shying away from the risks associated with PMI and the mortgage insurance stocks generally." FBR maintained its 'market perform' rating on PMI while lowering its price target for its common stock from $5 to $1, reflecting the company's significant cost of capital relative to its need for some form of capital relief.