Servicing

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.

Patricia Cook, the former executive vice president and chief business officer of Freddie Mac, has been hired by Green Tree, a provider of loan servicing solutions, capital markets, and industry expertise headquartered in St. Paul, Minn., as executive vice president, business development. Ms. Cook will be responsible for directing Green Tree's business development effort as well as launching new business initiatives that are complementary to Green Tree's core servicing platform. Prior to joining Freddie Mac in August 2004, she served as managing director and chief investment officer for fixed income at JP Morgan Fleming Asset Management. Prior to that, she held similar positions at Prudential Investment Management and Fisher Francis Trees & Watts.

REO asset management firm, Bank Owned Services in Orlando, Fla., has appointed Joyce Kindsvogel as chief operating officer. In her new position, Ms. Kindsvogel is responsible for the oversight of all client REO portfolios. Ms. Kindsvogel has over 20 years of REO operations management and bank-related experience. Her area of expertise is in real estate asset management and disposition of residential and commercial properties. Prior to joining Bank Owned Services, she was vice president of Real Estate Owned at the Impac Companies. Ms. Kindsvogel also served in similar capacities at ABN AMRO, Select Portfolio Services, Wilshire Credit Corporation, and U.S. Bank. The company can be found online at www.bankownedservices.com.

American Home Mortgage Servicing, the servicing platform of a failed subprime lender that was acquired by turnaround specialist WL Ross in 2007, is buying servicing rights on 185,000 loans from Citi Residential Lending. "With this acquisition, we have increased the number of loans we service to approximately 575,000, an increase of 45%," said David Friedman, CEO of WL Ross. AHMSI was established in April of 2008 and is based in Irvine, Texas. The firm also acquired the servicing assets of Option One, a subprime lender, in 2008. At the end of 2008, the firm serviced more than $85 billion of mostly alt-A and subprime loans. WL Ross is a private equity firm founded by Wilbur L. Ross. The firm currently oversees more than $8 billion in private investments. Citigroup earlier announced plans to dispose of "non-core" assets, including much of its subprime mortgage business.

The House Financial Services Committee approved three bills that could be merged into a bankruptcy cramdown bill the House might vote on soon. The three bills would revamp the Federal Housing Administration Hope for Homeowners refinancing program, protect servicers that modify mortgages from investor lawsuits and strengthen the Federal Deposit Insurance Corp. Committee chairman Barney Frank, D-Mass., told this newspaper the three bills could become part of the bankruptcy package House leaders want to pass. The mortgage industry continues to oppose the bankruptcy bill that recently cleared the House Judiciary Committee by a party-line vote of 21-15. Industry lobbyists are sure there are not enough votes in the House to pass the bankruptcy bill (H.R. 200) as a stand-alone measure. By packaging H.R. 200 with the FDIC bill that makes the temporary hike in the deposit insurance limit to $250,000 permanent, the legislation could garner more support.

Researchers at investment management and research firm Winans International, Novato, Calif., predict that housing prices will not recover in 2009. "This bear market will probably not end in 2009. Past real estate markets ended when the average time it took to sell a new house dropped to three and a half months. Currently, it is taking over nine months for transactions to close due to tight credit conditions," said president and founder Ken Winans. Furthermore, home prices nationally have fallen 23% since March of 2007, according to The Winans International Real Estate Index. Sales are down 71% since that time and listings have contracted 34%, according to the index. The firm said that the inventory of new homes on the market reached a record time to sell high of 16.5 months in December.

Under a pilot program involving reduced documentation loans from California, Nevada and other high delinquency states, Freddie Mac is turning calls over to third-party servicers to perform loan workouts. Ingrid Beckles, Freddie Mac's senior vice president for default asset management, said the strategy is designed to help lenders manage "unprecedented call volume" by directing calls to a specialist in handling alternative-A credit mortgages and other high-risk loan products. Under the pilot, a selected portfolio of 5,000 loans that are at least 60 days delinquent will be given to a specialty servicer that can implement a Freddie Mac workout option, including a streamlined loan modification. Ocwen Financial Corp. is one of the servicers Freddie Mac has selected for the pilot. Freddie Mac said that alt-A mortgages account for half of its seriously delinquent home loans.

The number of vacant houses for sale edged up 2.3% in 2008 and remains stubbornly high at 2.23 million units, according to the U.S. Census Bureau. The number of vacant houses on the market rose above 2 million in the fourth quarter of 2006 and has not retreated due to distress in the housing market and rising foreclosures. Earlier in the decade, the number of vacant homes for sale averaged 1.25 million. This inventory of vacant new and existing homes is concentrated in the most troubled housing markets - Arizona, California, Florida, Nevada, Michigan and Ohio. The National Association of Home Builders estimates that builders reduced their inventory of unsold homes by 100,000 units since December 2007. But they still have an inventory of 400,000 to 450,000 of newly constructed and vacant homes, despite a precipitous drop in building over the past 18 months. The Census Bureau report also shows the nation's homeownership rate dropped to 67.8% in the fourth quarter from 68.9% in the same period in 2007.

Senate Republicans want to attach several housing amendments to an economic stimulus bill that would expand a homebuyer tax credit and create an interest rate buydown program that would reduce mortgage rates to 4%. "We must stabilize home values if we are going to reverse this deep and precipitous slide in our economy," said Sen. John McCain, R-Ariz. The mortgage rate buydown program would stimulate home sales and soak up excess inventory, according to Sen. John Ensign, R-Nev. It also would help 40 million creditworthy homeowners save $400 per month, the Nevada senator said. "This is like a permanent tax cut, which economists believe is the best stimulus for our economy," he said. Republicans also are proposing to expand a $7,500 first-time homebuyer tax credit to $15,000 or 10% of the purchase price that would be available to all buyers. The tax credit could be used in one year or spread out over two years. To facilitate loan modifications, the Republicans want to shield servicers from investor lawsuits. The amendments also would change a one-time $1,000 fee for loan modifications to $60 a month over the life of the loan.