Servicing

Wachovia Securities, which services $413 billion of commercial mortgages as either a master or primary servicer, tops the commercial real estate servicing list just released by the Mortgage Bankers Association. Following Wachovia is PNC Real Estate/Midland Loan Services, with $310 billion, Capmark Finance, with $261 billion, and Wells Fargo, with $183 billion. The MBA also collects data about "special servicers," who are named to take over management of delinquent loans. The top special servicers named in securitized loan transactions are LNR Partners, CWCapital, Centerline Servicing and PNC/Midland.

The Federal Reserve on Friday released details on how it will jump-start the asset-backed securities market but for now is excluding real estate-backed receivables from the program. Initially, the central bank will provide financing on consumer debt including auto, credit card and student loans but not commercial or private label mortgages. At press time a spokesman from the Fed had not returned a telephone call about the matter. The private label residential mortgage market ground to a near halt almost a year ago. When the $200 billion ABS program was announced late last year commercial real estate loans and private label mortgages were supposed to be included in the effort, at least according to comments made by then Treasury secretary Henry Paulson. According to the outline released Friday, the Fed will provide non-recourse financing to ABS issuers on only AAA rated collateral. If the borrower/issuer does not repay the loan to the Fed the agency will sell the note to a special purpose vehicle whose job it will be to collect on the debt.

Treasury secretary Timothy Geithner is slated to present the Obama administration's plan to stabilize the financial section and address the foreclosure crisis on Feb. 10. It appears Mr. Geithner will offer banks a menu of options so they can apply for new capital infusions, sell bad assets to the government and receive assistance in modifying troubled single-family loans. The new secretary has been rushing to put this plan together and it is unclear how soon the various parts can be implemented. Secretary Geithner is expected to unveil the plan at a Treasury Department event in the morning and testify before the Senate Banking Committee later in the afternoon about the plan.

As the Senate moved closer to passing an $827 billion economic stimulus bill, lawmakers added language that directs the Treasury Department to use at least $50 billion of the Troubled Asset Relief Program funds for loan modifications. Obama administration officials had stated several times that they plan to use $50 billion to $100 billion of the TARP to prevent foreclosures and the administration might unveil its plan on Feb. 10. But the sponsor of the amendment, Sen. Christopher Dodd, D-Conn., said the Bush administration refused to use TARP for loan modifications and he doesn't want to be burned again. Sen. Dodd's amendment also includes changes to Hope for Homeowners to make the Federal Housing Administration refinancing program more attractive to borrowers and servicers. The Senate is slated to vote on stopping a Republican filibuster of the stimulus bill this evening and vote on Feb. 10 on passage of the compromise stimulus bill put together by Sens. Susan Collins, R-Me., and Ben Nelson, D-Neb. The $15,000 homebuyer tax credit is part of the compromise bill. But the National Association of Home Builders and other supporters are concerned the tax credit could be pared back when House and Senate conferees sit down to hammer out a final bill. "One of the most damaging - from a stimulative impact - would be to knock it down to first time homebuyers," NAHB chief executive Jerry Howard said.

The value of homes nationwide will be more than a third lower when prices bottom out late this year, predicts Moody's Economy.com. Already, prices are down 25% and they will fall another 11% before stabilizing late this year, Moody's predicts. And even that prognosis for a bottom late this year is contingent upon the government enacting "strong action" to resuscitate the economy. Moody's says that before the carnage from the housing downturn is over, prices will fall 36% from their peak in 2006. On the bright side, Moody's said that three years into the housing correction, inventories of homes for sale are flattening, prices are coming "back down to earth," and sales are approaching stability. But Moody's Economy.com chief economist Mark Zandi said that so far, "Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures."

Modifications of loans owned or guaranteed by Fannie Mae and Freddie Mac were up 50% in the first two months after regulators seized control of the government-sponsored enterprises. The Federal Housing Finance Agency said mortgage servicers modified 5,600 GSE loans in October and 8,291 in November. The November figure was 68% higher than the monthly average for the previous 10 months of 2008. However, FHFA also found that serious delinquencies in the Fannie and Freddie portfolios are still rising. In November, 1.88% of the GSEs' loans were 90-days or more past due, up from 1.00% as of March 31, 2008. But foreclosure starts dropped late last year, possibly reflecting increased loss mitigation efforts. FHFA director James Lockhart noted that a foreclosure moratorium implemented by the GSEs only affected two business days of November, but he said the moratorium will have a big impact on delinquency and loss mitigation data for December and January.

Fannie Mae said Thursday that it would no longer require an appraisal or property inspection of some borrowers trying to refinance a Fannie-owned mortgage. Some analysts said the change would have a marginal impact. Starting April 4, Fannie said, its Desktop Underwriter system will validate property values for refis of Fannie loans by means of automated models instead of requiring an appraisal or property inspection. Brian Faith, a Fannie spokesman, said the change and several others would let "potentially millions of current mortgage holders" take advantage of historically low interest rates and "break the logjam in mortgage refinancing." A report by UBS analyst Jena Curro notes that the impact on prepayment speeds will be limited but says, "there are still some possible effects (pressure from lenders and third parties, origination) that should not be overlooked."

Senate Republicans are trying to revive and refine an interest rate buy-down proposal that would create a 4% mortgage even though the Senate shot down the language on a 35-62 procedural vote. The original buy-down amendment offered by Sen. John Ensign, R-Nev., provided low-rate mortgages to 40 million borrowers at an estimated cost of $300 billion. A majority of senators refused to waive budget procedures to add such an expensive program to the economic stimulus bill. In opposing the Ensign amendment, Sen. Charles Schumer, D-N.Y., said it would not help borrowers with underwater mortgages, adding that a refi surge would not reduce the glut of unsold homes on the market. "It is a totally flawed proposal," he said. One source said Sen. Ensign might pare down the buy-down program and possibly limit it to homebuyers. Sen. Patty Murray, D-Wash., is expected to offer an amendment on Friday that raises the maximum loan limit on Fannie Mae, Freddie Mac and Federal Housing Administration loans back to $729,750 for the rest of this calendar year. A similar loan limit provision is contained in the House-passed Economic Stimulus bill.

The Mortgage Bankers Association -- whose members have been decimated by the credit crisis and rising residential delinquencies -- is making contingency plans to cut staff and re-engineer its organization for leaner times. A spokeswoman for the trade group, which currently employs about 134 full-timers, stressed that no decision on layoffs is imminent. "We are going through a general re-engineering exercise," she told MortgageWire. "We want to make sure MBA is the right size and strong going forward." Former MBA employees said the trade group continues to struggle from poor leasing on its new 10-story headquarters in downtown Washington. The 160,000 square-foot building, which was completed last year, is about half leased. "The building is an albatross around their neck," said one former MBA executive.

Employment in the mortgage industry fell 18% in 2008 as nearly 60,000 full-time workers lost their jobs, according to new government figures released Friday. In December alone 4,800 full-timers were let go even though interest rates fell and refi applications began to pile up at month's end. Mortgage companies are using increased productivity to substitute for hiring people, according to Orawin Velz, director for economic forecasting at the Mortgage Bankers Association. "Some lenders are managing their pipelines by quoting higher rates," she said. "Unless they see a sustained increase in volume they don't want to hire right now," she said. The mortgage banking and brokerage segments now employ about 280,000 workers compared to more than 500,000 two years ago, meaning the industry is off 44% from its peak. Meanwhile, the U.S. Bureau of Labor Statistics made a huge annual adjustment -- of 52,800 jobs -- in its mortgage employment figures for 2008. BLS originally reported that employment in the mortgage banker/broker sector was 337,600 in November. But it then revised downward that number to 284,800 in Friday's jobs report. The revision shows that BLS under-estimated the amount of job losses early in the recession for all workers, not just those employed in housing finance.