Servicing

House prices fell by 2.2% from September to October and prices are off by 18% over the previous 12 months, according to Standard & Poor's/Case-Shiller housing price index that tracks existing home sales in 20 major metropolitan areas. "The bear market continues with home prices back to their March 2004 levels," said David Blitzer, chairman of S&P's index committee. Since the peak in house prices in mid-2006, the 20-city HPI is down 23.4% as of October 30. Over the previous 12 months, 14 of the 20 cities are reporting price declines in excess of 10%. Even Seattle and Portland are reporting annual rates of decline of 10.5% and 10.2% respectively. IHS Global Insight economist Patrick Newport expects house price declines will accelerate over the next few months. "Although prices are near equilibrium in many cities, they are likely to undershoot the equilibrium price on the way down-just as they overshot on the way up-because the number of homes on the market remains high," Mr. Newport said.

Subservicer Ofori Lender Services, Southfield, Mich., plans to service all of its loans through a new system in January in a move it said is slated to save it $2,500 in telecommunication costs. Ofori said it plans to service its loans through the Southfield, Mich.-based McDonald Computer Corp.'s Web-based system during the upcoming month. "By greatly reducing our cost on technology and management portfolios, we will become a more competitive subservicer," said Karen Heller, Ofori Lending Services' servicing manager.

Distressed sales in Florida during November continued to boost the state's existing home market on a year-to-year basis but Realtors say buyers there and nationwide have yet to fully return to the market. The Sunshine State saw existing home sales rise 4% year-to-year to 8,751 during the month when the median price, at $158,300 was down 27% compared to a year ago, according to the Florida Association of Realtors. "Market conditions nationwide continue to vary with solid sales gains in some areas, including many Florida markets," said the National Association of Realtors. "We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need (to return to the housing market)," said NAR chief economist Lawrence Yun.

A Freddie Mac report shows the agency expanded its mortgage portfolio by over $40 billion in November, but its issuance of mortgage-backed securities remains relatively meager. The secondary market agency said it purchased $10 billion of its own MBS in November for its investment portfolio, which totaled $805.4 billion as of Nov. 30. However, Freddie issued only $14.5 billion in MBS in November, up slightly from $13.5 billion in October. Ginnie Mae issued $27 billion in single-family MBS in November. Freddie's monthly report also shows that single-family mortgage defaults continue to rise at a fast clip. Since October, loans 90-days or more past due are up 18 basis points to 1.52% as of Nov. 30. In November 2007, only 0.6% of Freddie guaranteed loans were seriously delinquent.

Fraud prevention firm National Loan Auditors, Walnut Creek, Calif., is now offering an online resource portal aimed at providing clients with up-to-date information on statutes and case law pertaining to lending and foreclosure. The portal includes status updates on all federal, state and municipal legislation, the company said. "NLA Law Portal adds value to our forensic loan audit by providing support for its findings and information on how to effectively use the audit report in legal proceedings," said August Blass, CEO of National Loan Auditors. "Users are given summaries and guidelines that distill lending and foreclosure law into a short manageable synopsis, saving hours in research." Once access has been granted, clients have the ability to search various summary topics such as alternatives to workout agreements, Truth in Lending Act summary, and Home Ownership and Equity Protection Act action steps. State legislation topics also are available. By selecting a state, users will receive current case law and statues in that state. Litigation tools also will be displayed when applicable.

Home price declines are showing signs of easing but it's too early to declare a bottom, according to preliminary figures compiled by First American CoreLogic. The company released an early preview of its November findings, showing that prices declined at a rate of 9.6% in November, compared to 10.4% and 11.2% in October and September, respectively. "The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines," said Mark Fleming, chief economist for First American CoreLogic. But the economist cites continued job layoffs and a huge inventory of unsold homes as major negatives weighing on the housing market. Roughly $2 trillion in home equity has been wiped out over the past year. California cities continue to lead the pack in terms of price declines, according to the company. Salinas has suffered the most among California cities with values falling by almost 30%.

A new report shows that banks and thrifts are more successful at modifying mortgages they own than the loans they service for other investors and Fannie Mae and Freddie Mac. Only 51% of bank-owned modified loans had missed a payment after six months, compared to 61% for private investors, according to a third quarter mortgage metrics report issued by the Office of the Comptroller of the Currency and Office of Thrift Supervision. The joint report noted that 58% of Freddie modified loans were 30-day past due after six months and 57% of Fannie loans were delinquent. "The lower re-default rate for loans held by servicers may suggest that there is greater flexibility to modify loans in more sustainable ways when loans are held on the servicer's books than when loans have been sold to third parties," the report says. OCC and OTS collected the data from nine national banks and five thrifts with the largest servicing portfolios.

Hope Now servicers are planning to step up their loss mitigation efforts in 2009 and modify two million loans -- double the number of modifications this year, according to the private sector alliance. The alliance said servicers completed 107,800 repayment plans and 99,800 loan modifications in November to help homeowners avoid foreclosure. Hope Now projects the tally for modifications for all of 2008 will be 950,000. "We expect to double that to two million for 2009," said Steve Bartlett, president and chief executive of the Financial Services Roundtable. Mortgage Bankers Association chief operating officer John Courson stressed Hope Now will be more aggressive and employ new strategies to help troubled homeowners. "Stay tuned," he told reporters. The two trade group executives said they would welcome federal funding for foreclosure prevention efforts. And they support a FDIC plan would provide federal loan guarantees for modified loans.

The White House is pulling the plug on the Federal Housing Administration's "FHA Secure" refinancing program at yearend, according to industry sources. FHA Secure has helped at least 460,000 subprime borrowers refinance into Federal Housing Administration-backed loans. The Bush Administration launched the program in August 2007 as part of President Bush's first response to the subprime crisis which later morphed into a global financial meltdown. FHA Secure was meant to be a temporary program that expired at the end of 2008. However, lender and consumer groups have urged the Department of the Housing and Urban Development and the White House to extend it through 2009. "The expanded loan options offered by FHA Secure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers," according to a November letter signed by several trade groups. Under the program, FHA loosened its underwriting standards to allow borrowers with adjustable-rate mortgages to refinance into fixed-rate FHA mortgages. The program was expected to help refinance borrowers who were behind on their payments, but only 4,000 delinquent borrowers were refinanced.

General Growth Properties Inc., Chicago, has gotten a forbearance and waiver agreement from the syndicate of lenders for the $900 million Fashion Show and Palazzo mortgage loans. The agreement lasts until Feb. 12, 2009. The loans had a maturity date of Dec. 12, 2008. Furthermore, GGP's syndicate of lenders for the 2006 senior credit agreement has entered into a forbearance and waiver agreement that extends until Jan. 30, 2009. In connection with this agreement, GGP has agreed to certain restrictions and covenants with this syndicate during the forbearance period.