Servicing

New homes sales jumped 4.7% in February from January and it could be a sign that the housing market is finally bottoming out. "We have been looking for a bottom to form sometime in the first half of the year and it looks like things have firmed up a little bit," said Scott Anderson, senior economist at Wells Fargo & Co. The U.S. Census Bureau reported that sales of new single-family homes rose from a seasonally adjusted annual rate of 322,000 in January to 337,000 in February. The bureau revised the January sales number upward from 309,000. The new home sales report combined with the 4.4% jump in sales of previously owned homes is "very encouraging at this point," Mr. Anderson said. But he wants to see a couple more months of good reports before calling a bottom. "Now that the Federal Reserve is trying to push down mortgages, we are seeing a refi boom and it seems like it is helping to give some confidence to buyers to go ahead with a purchase."

Freddie Mac purchased $40 billion of mortgages in February, an 84% increase from the previous month as declining interest rates led to increased business for the government-controlled giant. However, compared to the same month a year ago, purchases fell 16%. According to new figures released by the company, Freddie now holds $123 billion of whole loans (not securitized) in its portfolio, a 43% increase over 12 months. The GSE ended the month with a retained portfolio of $822 billion, a 16% increase compared to February 2008. But there was some negative news in the new numbers: its mortgage "purchase and sale agreements" fell to $4 billion in February, from $17 billion the prior month. Fannie Mae has not yet released its February numbers.

The Mortgage Bankers Association on Monday laid off about 16% of its workforce — about 20 full-timers — including four of its vice presidents.A spokeswoman for the trade group said the layoffs "were across the board" affecting all of its departments, including communications, government, marketing and research. Since last year MBA has lost about 30% of its staff. After the cutbacks the organization will employ about 110. Recently, mortgage technology vendors said MBA would eliminate its annual technology trade show to save money, but the spokeswoman shot down such talk in part. Sources say it is unlikely the MBA will hold a standalone technology show and may fold it into other shows or hold smaller regional conferences. MBA's membership ranks have been hurt by the worst housing downturn since the Great Depression, resulting in hundreds of non-banks and depositories closing their doors over the past 18 months.

Federal Deposit Insurance Corp. officials are ready to begin discussions with banks that want to sell pools of troubled real estate loans under its new "Legacy Assets" program, but it could be three or more months before the agency is ready to conduct the first competitive sealed bid auctions. FDIC intends to solicit public comments on the new program, which is designed to cleanse banks of high-risk residential mortgages and commercial real estate loans. Although the comment period will be very short, FDIC officials want to "nail down" the structure before they begin marketing the program to private investors who will be asked to take a 50% equity position in the loan pools as part of a public-private investment fund. FDIC also has to provide private investors time for due diligence to evaluate the assets before they submit bids. FDIC chairman Sheila Bair estimates that the Legacy Asset program could remove $500 billion in high-risk mortgages from the banking system if private investors put up $50 billion in capital. There are "huge challenges of implementing a program of this magnitude quickly," Ms. Bair said. "We intend to move forward with this program in a methodical and a transparent fashion."

Market reaction to the government's public-private programs for troubled MBS and commercial loans has put upward pressure on the benchmark 10-year Treasury yield as of midday Tuesday, partially reversing the steep drop it saw less than a week ago.The 10-year yield at noon Tuesday was at about 2.7%, up from a recent drop to a low near 2.5% from a point close to 3.0%. That decline had marked the largest one-day drop in the 10-year yield since Oct. 20, 1987, according to Freddie Mac chief economist Frank Nothaft. A Federal Reserve plan to buy longer-dated Treasuries and purchase more agency mortgage-backed and debt securities had triggered the earlier decline in the benchmark yield.

Triad Guaranty Inc., the parent of the nation's smallest mortgage insurer, said in a new public filing that it may not continue as a going concern.Its MI affiliate, Triad Guaranty Insurance Corp., has been in run-off since last July, and as a result, the company has been operating under a regulatory corrective order with the Illinois Department of Financial and Professional Regulation, Division of Insurance. "This uncertainty is based on the ability of Triad to comply with the run-off provisions of the corrective order, the company's recurring losses from operations and a deficit in assets at Dec. 31, 2008," it says in a new SEC filing. Triad has a deficit in assets of $136.7 million as of Dec. 31, 2008. It expects to report a deficiency in policyholders' surplus starting with the first quarter 2009 and running through 2011. "Management is currently working with the Division to structure a revised corrective plan in a manner that is expected to provide for a solvent run-off. If the revised corrective plan is unsuccessful, the Division may be forced to place (the mortgage insurance subsidiary) into receivership which would effectively compel the parent, Triad Guaranty Inc., to declare bankruptcy," it says.

Jim Clapp, senior vice president in charge of warehouse lending at Guaranty Financial Group, is leaving the bank, industry sources told National Mortgage News.Mr. Clapp declined to comment on the matter. He is expected to take a job with a mortgage banking company based in Texas. The Austin-based GFG is winding down its warehouse lending business but will continue to fund lines that are not set for expiration until 2010. GFG, whose shares trade for less than $1, is trying to shrink its balance sheet in an effort to preserve capital. In a recent filing with the Securities and Exchange Commission, the depository said it would not file its annual report and 10-K on time. The thrift has been hit by large markdowns on its MBS and commercial real estate portfolios.

Even though the mortgage insurance business is in the tank, the former head of the Radian Group is in the process of forming a new MI firm that also will act as a reinsurer, industry executives confirmed to National Mortgage News.The company, whose CEO and co-founder is former Radian chief Mark Casale, is called Essent U.S. Holdings and is based in suburban Philadelphia. Mr. Casale could not be reached for comment. One MI source said Mr. Casale "has recruited a number of people from Radian, PMI and other MIs." He noted that Essent is not yet rated and is waiting on state approvals to write insurance. (See next Monday's NMN for the full story.)

Federal Deposit Insurance Corp. officials are ready to begin discussions with banks that want to sell pools of troubled real estate loans under its new "Legacy Assets" program, but it could be three or more months before the agency is ready to conduct the first competitive sealed bid auctions. First FDIC intends to solicit public comments on the new program, which is designed to cleanse banks of high-risk residential mortgages and commercial real estate loans. Although the comment period will be very short, FDIC officials want to "nail down" the structure before they begin marketing the program to private investors who will be asked to take a 50% equity position in the loan pools as part of a public-private investment fund. FDIC also has to provide private investors time for due diligence to evaluate the assets before they submit bids. FDIC chairman Sheila Bair estimates that the Legacy Asset program could remove $500 billion in high-risk mortgages from the banking system if private investors put up $50 billion in capital. There are "huge challenges of implementing a program of this magnitude quickly," Ms. Bair said. "We intend to move forward with this program in a methodical and a transparent fashion."

The Mortgage Bankers Association on Monday laid off about 16% of its workforce - about 20 full-timers - including four of its vice presidents. A spokeswoman for the trade group said the layoffs "were across the board" affecting all of its departments, including communications, government, marketing and research. Since last year MBA has lost about 30% of its staff. After the cutbacks the organization will employ about 110. Recently, mortgage technology vendors said MBA would eliminate its annual technology trade show to save money, but the spokeswoman shot down such talk in part. It is unlikely the MBA will hold a standalone technology show, but rather fold technology into its other shows or do smaller regional technology shows. Its membership ranks have been hurt by the worst housing downturn since the Great Depression, resulting in hundreds of non-banks and depositories closing their doors over the past 18 months. The trade group has been criticized by members and past employees for two large, somewhat recent blunders: building a new $100 million headquarters in Washington and then struggling to lease out its empty floors. It also merged with a subprime lending trade group, most of whose lending members have failed. Discussing the office building, one former MBA executive said, "They basically traded paying the rent for bodies." The executive, requesting anonymity, said the staff cuts "will impact a lot of long-term projects they have."