Servicing

Fannie Mae and Freddie Mac increased the pace of loan modifications in the fourth quarter, but repayment plans continue to represent over 75% of the GSEs' workout efforts, according to a Federal Housing Finance Agency report. The GSEs completed nearly 23,780 loan modifications in the fourth quarter, compared to 13,500 in 3Q. In December, the GSEs initiated 29,100 workout plans compared to 8,700 loan modifications. The FHFA report shows Fannie is continuing to deploy its 'HomeSaver Advance' program, which allows the agency to make small, unsecured loans to homeowners so they catch up on their payments. These advances immediately cure delinquent loans and Fannie does not have to absorb the cost of purchasing the loans out of securitized pools. Fannie made 9,300 HomeSaver advances in December, compared to 8,760 in September when the GSEs were was placed in conservatorships. Freddie does not have a similar program. Meanwhile, GSE loans 90 days or more past due (including those in bankruptcy and foreclosure) rose to 2.14% in December from 1.52% in September. "When adjusted for the suspension of foreclosure sales, the rate would have been 2.1%," the GSE regulator said. Fannie and Freddie suspended foreclosure sales in late November and December for the holidays.

Thornburg Mortgage, once a top ranked originator of "super jumbo" loans, said Tuesday it may file for Chapter 11 bankruptcy protection and has hired the law firm of Kirkland and Ellis to advise it on restructuring options.A REIT that is publicly traded on the "pink sheets," Thornburg said its lenders — which include such names as Citigroup, Credit Suisse, JPMorgan Chase, and Greenwich Capital — have agreed to give it certain forbearances on its loans "through March 31." The company was de-listed by New York Stock Exchange late last year. Its shares trade for just 2 cents compared to an all time high of $140. It has an on-balance sheet portfolio of roughly $20 billion that it services on a monthly basis and needs to finance.

Fitch Ratings, New York, expects that in the near to medium term, retail will represent a growing proportion of overall defaults in the commercial mortgage-backed securities sector. The rating agency said, "declining retail performance was chiefly responsible for a 13 basis point increase in delinquencies in February" when Fitch's U.S. CMBS loan delinquency index was 1.28%. "The rate of increase is consistent with Fitch's expectations that loan defaults will increase to at least 3% by year-end 2009," Fitch said.

U.S. commercial real estate loan collateralized debt obligation delinquencies may increase faster than expected this year, according to Fitch Ratings, New York. "With CREL CDO delinquencies increasing 1.3% on average over the last two months, the default rate for year-end 2009 could exceed Fitch's initial base expectation for the life of the transactions if this pace continues," said Fitch senior director Karen Trebach. U.S. CREL CDOs delinquencies increased to 5.4% in February from 3.8% in January, according to Fitch Ratings, New York.

Senate Democratic leaders want to pass a bankruptcy cramdown bill in the next three weeks, but it could get bottled up in the Senate Banking Committee, which has no jurisdiction over the bankruptcy code. "We're trying to get it adopted in the next couple of weeks," Banking Committee chairman Christopher Dodd, D-Conn., told the Consumer Federation of America. The House-passed bankruptcy bill (H.R. 1106) was referred to his committee because it includes provisions to strengthen the federal deposit insurance system and enhance the effectiveness of a Federal Housing Administration program to restructure underwater mortgages. Even opponents of allowing bankruptcy judges to reduce the principal amount of a mortgage say Sen. Dodd has been placed in a difficult spot because his committee cannot amend the bankruptcy provisions in H.R. 1106. "If anything, it slows up the process," one financial industry lobbyist said. The Senate may leave for its spring recess on April 6 with the bankruptcy bill still in limbo, he added. Meanwhile, consumer groups remain optimistic the Senate will pass a bankruptcy loan modification bill but there are concerns that Democratic senators are not united on the issue and their leaders lack a clear strategy for passing a bill.

Senate Democratic leaders want to pass a bankruptcy cramdown bill in the next three weeks, but it could get bottled up in the Senate Banking Committee, which has no jurisdiction over the bankruptcy code."We're trying to get it adopted it in the next couple of weeks," Banking Committee chairman Christopher Dodd, D-Conn., told the Consumer Federation of America. The House-passed bankruptcy bill (H.R. 1106) was referred to his committee because it includes provisions to strengthen the federal deposit insurance system and enhance the effectiveness of a Federal Housing Administration program to restructure underwater mortgages. Even opponents of allowing bankruptcy judges to reduce the principal amount of a mortgage say Sen. Dodd has been placed in a difficult spot because his committee cannot amend the bankruptcy provisions in H.R. 1106. "If anything, it slows up the process," one financial industry lobbyist said. The Senate may leave for its spring recess on April 6 with the bankruptcy bill still in limbo, he added. Meanwhile, consumer groups remain optimistic the Senate will pass a bankruptcy loan modification bill but there are concerns that Democratic senators are not united on the issue and their leaders lack a clear strategy for passing a bill.

Jack Ferm, a former radio talk show host in Las Vegas, was arrested on two counts of felony theft and related charges in connection with the operation of U.S. Justice Foundation, a mortgage rescue firm. Mr. Ferm is the president and owner of U.S. Justice Foundation, a document preparation business that allegedly misled customers into believing his service would stop ongoing foreclosures on their homes without the need to retain an attorney. His company website indicates he has a participated in successful litigation against numerous large corporations. The Nevada Attorney General's office received numerous complaints about alleged misrepresentations made by Mr. Ferm, including several clients who paid thousands of dollars to the U.S. Justice Foundation with no legal documents having been prepared or filed on their behalf. In many cases, Mr. Ferm required the victims to pay a monthly charge — in addition to the original retainer.

Credit unions in Wisconsin and elsewhere are adding up the costs of the recent failure of Central States Mortgage Corp. of Wauwatosa, and the current tab appears to be $5 million and counting. In the fourth quarter the 25 credit union owners of CSMC charged-off almost $3 million of stock they held in the 25-year-old company, according to call report data submitted to the National Credit Union Administration. In addition, several CUs are taking hits on Central States loans they participated in. The Wisconsin CU League, also an owner, is believed to have charged-off the value of its shares.

Goldman Sachs & Co. is scaling back the lending operations of Senderra Funding, Fort Mills, S.C., in particular its wholesale division, sources told National Mortgage News. A spokesman for Goldman Sachs in New York declined to comment. Goldman acquired Senderra a few years ago when it was known primarily as a subprime wholesaler. Today, Senderra is originating FHA-backed loans, Fannie Mae products and some jumbos. (For the full story see the Monday edition of National Mortgage News.)

The New York Federal Reserve Bank ramped up its purchase of GSE mortgage-backed securities the past two weeks due to an increase in refinancings and agency issuance of MBS.MBS issuance by Fannie Mae, Freddie Mac and Ginnie Mae increased to $97 billion in February, compared to $61 billion in January. A new Credit Suisse report says issuance could reach $130 billion in March. "The Fed's purchases of agency MBS have been very effective in lowering rates, improving liquidity in the market and spurring refis," said CS mortgage strategist Mahesh Swaminathan. From February 26 through March 11, the New York Fed purchased $57.2 billion in agency MBS compared to $44.9 billion for previous two-week period. Meanwhile, Treasury said it purchased $12.7 billion in Fannie and Freddie MBS in February, down from $22.6 billion in January.