Servicing

MGIC Investment Corp., the nation's largest mortgage insurer, said it will still cover broker-sourced loans but come March 9 will eliminate other products from its menu, including cash-out refinancings. According to a company bulletin, MGIC also will no longer insure second homes, and notes on manufactured housing units. The MI also will not cover any condominium mortgages with LTVs north of 90% in certain "restricted" markets where home prices have fallen dramatically. In regard to broker-sourced loans, the company will continue coverage but is capping LTVs at 90% and FICOs at a minimum of 720. Also, wholesalers must track their MGIC brokers by providing an identification number on these third-party originators. Earlier this week, The PMI Group, said it would no longer cover any type of broker-sourced mortgages.

House and Senate conferees raised the first-time homebuyer tax credit to $8,000 (a $500 increase) during last-minute negotiations on the pending economic stimulus bill. Also, the effective date of the credit was increased by three months to December 1. The final stimulus bill (H.R. 1) also raises the maximum GSE loan limit to $729,720. At press time the House was voting on the $800 billion package. A Senate vote on final passage could come as early as Friday evening or during the weekend. As reported earlier, the conferees cut a $15,000 homebuyer tax credit approved by Senate in half and limited the tax benefit to first-time homebuyers. The final version of H.R. 1 also restores the maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans for the rest of this calendar year. (The current limit is $625,500.) Reinstating the higher loan limits will "help to reduce inventory and improve liquidity in the overall mortgage market," said Charles McMillan, president of the National Association of Realtors. Although the $8,000 first-time homebuyer tax credit is a disappointment to many in the industry, the tax writers made it a real tax credit so homebuyers do not have to repay it like an interest-free loan. Eliminating the repayment provision should bring more buyers into the market, Mr. McMillan said. The final stimulus bill also raises the loan limit on FHA-insured reverse mortgages to $625,500 from $417,000 for the rest of the calendar year.

Standard & Poor's Corp. has upgraded its reverse mortgage servicing ranking for Celink - a company it said is the largest independent servicer of private label HECMs - based on improvements to its staff and operations. S&P raised the ranking to "above average" from "average," citing "the addition of new experienced management personnel, significantly improved proprietary systems environment, efficient internal controls, superior policies and procedures, additional staff, and an overall increase in the ability to effectively service reverse mortgage loans." S&P also said Celink "remains the fourth-largest servicer of Home Equity Conversion Mortgages."

Credit Suisse Group's saw 2.3 billion Swiss francs ($2 billion) in U.S. residential and commercial mortgage-related writedowns during the fourth quarter, a period when it took a net loss of 6 billion Swiss francs ($5 billion). The Zurich, Switzerland-based group said 1.3 billion Swiss francs ($1.1 billion) of the writedowns stemmed primarily from exposures to residential mortgages and subprime collateralized debt obligations and the remaining balance stemmed from warehouse exposures in the securitized commercial mortgage sector. The company said it is making progress reducing its exposure to these problematic asset classes.

The extensive foreclosure efforts on the part of lenders and government agencies appear to have impacted the January foreclosure numbers with REOs, which represent completed foreclosure sales, down 15% nationwide from December, according to RealtyTrac. In its January 2009 U.S. Foreclosure Market Report, the company showed foreclosure filings were reported on 274,399 properties, a 10% decrease from December but still up 18% from January 2008. CEO James Saccacio pointed out that the Fannie Mae and Freddie Mac moratorium on all foreclosure sales that was extended through the end of January had an impact on the data along with Florida's voluntary 45-day freeze on all new foreclosure actions. Nevada foreclosure activity in January decreased 4% from December, but the state continued to register the nation's No. 1 foreclosure rate. Filings were reported on 14,444 properties in January, up 137% from January 2008. California posted the second highest rate with one in every 173 housing units receiving a filing, and Arizona was third with one in every 182 housing units. Despite a 20% month-over-month drop in foreclosure activity, Florida posted the fourth highest rate, with one in every 214 housing units. Filings were reported on 76,761 California properties, the most of any state despite a 14% decrease from December. Florida's 40,770 properties receiving filings in January was the second highest total of any state.

Golden Globe and Grammy Award winner and Oscar nominee Queen Latifah joined multi-platinum recording artist and actor Wyclef Jean and New York and New Jersey radio personality and actress Angie Martinez to help raise awareness about foreclosure and homeownership issues through a bus tour sponsored by the Hope Now Alliance that started Tuesday in Newark, N.J. The campaign will continue in Atlanta, Miami and Cleveland and Hope Now executive director, Faith Schwartz stressed that such efforts are important in foreclosure risk mitigation because half of foreclosures happen to people who never ask for help and may not know to. The bus tour is combined with a roundtable discussion with industry insiders who will discuss how the crisis is affecting the area. It offers information about refinancing and loan modification options and how homeowners can contact HUD approved counselors in their area for advice. Information about online resource also is provided.

Reverse Mortgage Solutions, Spring, Texas, said it has grown notably over the last 18 months since it was founded to the point where it has become the largest privately-held subservicer of reverse mortgages. The company said it recently has been boarding in excess of 22,000 loans, which suggests this is relatively high volume in the government program-dominated and demographically-promising but complex market for these loans, which are designed to allow seniors to derive cash flow from their properties while still living in their homes. In addition to its acting as a subservicer, RMS offers a Web-based front-end loan origination system and a secondary market structure through which it said it has provided servicing, subservicing and master servicing on over 40% of the Ginnie Mae securitizations of government reverse mortgages that have been issued to date.

Subsidiaries controlled by BlackRock Financial have increased their stake in PHH Corp., Mt. Laurel, N.J. -- a top 10 ranked residential servicer -- to 9.67%, according to a new filing with the Securities and Exchange Commission. Previously, BlackRock affiliates controlled about 5% of PHH's outstanding common stock. The new SEC filing says the investment-banking firm now owns 5.27 million shares of PHH's common stock. Previously they owned 2.5 million common shares. At press time spokespersons for both PHH and BlackRock had not returned telephone calls about the investment. The publicly traded BlackRock owns the stake on behalf of five different advisory subsidiaries, all of which carry the BlackRock name. PHH Mortgage, the nation's largest private label lender, services about $146 billion in home mortgages. Based in New York, BlackRock is headed by Larry Fink, a pioneer in the mortgage-backed securities market.

Moody's/Economy.com is forecasting the housing market will hit bottom by the end of this year and house prices will remain flat in 2010. "By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation's metro areas. In about 10% of metro areas, price declines will exceed 30%," according to the Moody's latest forecast. Senior director for housing economics Celia Chen noted many of the imbalances in the housing market have corrected. The excess supply of unsold homes for sale has nearly stabilized and housing affordability has been restored in most markets. The Obama administration is working on foreclosure mitigation, she said, which should keep foreclosures at 1.5 million in 2009, compared to 1.4 million in 2009. In addition, the housing market will benefit from the economic stimulus package in terms of adding jobs and boosting confidence. "Policy makers are fully engaged and working hard to turn the economy around with the stimulus package," Ms. Chen said. At the same time, the Federal Reserve and Treasury Department are working to "pull down" mortgage rates.

Foreclosures across the U.S. plummeted by more than 25% in January, with many of the hardest-hit states seeing dramatic drops in the number of homes repossessed by lenders, according to the latest U.S. Foreclosure Index released by the Sacramento-based ForeclosureS.com. Nationally, the number of completed foreclosures dropped from 97,841 in December to 72,694 in January 2009. Pre-foreclosure filings also dropped 12% from 190,467 in December to 166,860 in January. Foreclosures in California dropped more than 31% in January to 14,351, less than half the 31,851 properties foreclosed in the peak month of September 2008. In Florida, there were 10,007 foreclosures completed in January, down from 12,786 in December. Nevada fell from 4,039 in December to 3,207 in January. Arizona, Texas, Georgia, and Ohio also experienced declines in completed filings. Among states with the most pre-foreclosure filings, only Texas and Michigan saw increases. "Efforts last year by government and industry to lay the groundwork for housing recovery finally are yielding the hoped-for slowdown in the foreclosure hemorrhage," said Alexis McGee, president of ForeclosureS.com. With the amount of both state and federal government foreclosure intervention programs and mortgage lenders who are finally starting to be more accommodating on their loan modifications to avoid foreclosure, Ms. McGee expects the growth of 2009 foreclosures to be much less than many experts are predicting.