Servicing

According to the Zillow Mortgage Marketplace, consumers were being offered 30-year, fixed-rate mortgages for rates below 5% on Monday. Zillow.com said that the average rate for 30-year FRMs offered on the Zillow Mortgage Marketplace dipped to 4.98% on Monday, Dec. 15. That is contributing to a spike in loan applications for refinancing. Refinancing during the first half of December was up 230% from the first half of November, Zillow.com said. Refinancing accounted for more than half of home loan applications in the December period.

Over the next 12 months, 15% of loans pooled into residential mortgage-backed securities between 2005 and 2007 will be modified, Fitch Ratings predicts. The projection is based on the number of loans that banks have modified from their own portfolios, the rating agency said. Fitch said the 14 largest banks and thrifts modified 187,000 mortgages in the first half of 2008. "There will be increases in securitized loan modifications if only to ensure that borrowers in a securitized pool are being treated equally to borrowers whose mortgages are held by a bank, as well as to fulfill the servicers' duties to maximize returns to the trust," said Huxley Somerville, group managing director for RMBS at Fitch. Because modifications to avert foreclosure can benefit the investor as well as the borrower, Fitch said it plans to "confirm current ratings when proposed changes in the deal documents" allow servicers broader authority to modify loans.

The FDIC board of directors has approved a 7-basis point hike in deposit insurance premiums for 2009 to address the high cost of bank failures and a declining reserve ratio. The across-the-board premium hike will raise assessments for most healthy banks from 5 basis points to 12 basis points and doubled first quarter assessment revenue to $2.3 billion. Federal Deposit Insurance Corp. staff estimate that bank failures in 2008 will cost the Deposit Insurance fund $18.9 billion. And, its reserve ratio has sunk from 1.19% on March 31 to 0.76% as of Sept. 30. Meanwhile, the agency is boosting its operating budget by nearly 85% to $2.2 billion to deal with a rising number of bank failures and receiverships in 2009.

Hilco Real Estate LLC, Northbrook, Ill., has named Neil R. Aaronson as its new chief executive and Gregory S. Apter as its new president. Mr. Aaronson replaced Mitchell P. Kahn, 48, who has decided to pursue opportunities outside the Hilco family of companies. Most recently Mr. Aaronson had been executive vice president with Hilco Trading LLC, the parent company of Hilco Real Estate. Mr. Apter was promoted from chief operating officer and will now formally lead Hilco Real Estate's agency transactions group, managing owned and leased property disposition and lease restructuring services. Hilco Real Estate provides comprehensive real estate repositioning services. For more information about the company, visit http://www.hilcorealestate.com.

Fitch Ratings, New York, has downgraded to RPS4 the primary servicer, master servicer and special servicer ratings for Residential Capital LLC, Minneapolis. The rating downgrades are due to ResCap's deteriorating financial condition, specifically the continued pressure on ResCap's liquidity position and financial flexibility and the potential impact on the company's servicing operations. A company's financial condition is an important component of Fitch's servicer rating analysis, the rating agency explained. As of June 30, 2008, ResCap serviced 3.1 million loans for $437 billion. The servicing portfolio was comprised of 14.3% non-agency prime first and second liens, 9.7% subprime first and second liens, 8.1% Alt-A, 2.4% HLTV, and 9.5% HELOC products, with the balance consisting of conventional conforming, FHA, VA, and manufactured housing loans. ResCap's master servicing portfolio was comprised of over 592,000 loans for $119.3 billion.

GMAC Financial Services - which is trying to become a bank holding company and tap the Treasury's TARP program - has extended the deadline for its $38 billion note exchange program until Dec. 26, 2008 at 11:59 p.m. The "early" delivery portion of the note exchange was extended to Dec. 16 at 11:59 p.m. from this past Friday. GMAC, the parent of Residential Capital Corp., the nation's sixth largest servicer, is offering investors $0.55 to $0.85 on the dollar in cash or in the form of new bonds and/or preferred shares. It needs a 75% participation rate from note holders to reach its goal of amassing $30 billion in regulatory capital to form a bank holding company. Late last week, its participation rate was about 25%. ResCap controls roughly $400 billion in mortgage servicing rights. If GMAC does not become a BHC (and tap TARP funds) it may be forced into bankruptcy protection.

Thornburg Mortgage Inc., Santa Fe, N.M., on Friday reached an agreement with several of its reverse repurchase counterparties allowing for it to make the interest payment on its 8% senior notes that was due last month. The past-due payment will be made within the 30-day grace period allowed under the indenture. The counterparty lenders agreed that during the override period, which expires on March 16, 2009, they will not invoke any margin calls on the jumbo investor. Thornburg's common shares have been delisted but continue to trade on the "pink sheets." Thornburg agreed to pay the counterparties the remaining $110 million out of the liquidity reserve fund except for $41.2 million, which the company can utilize to make the foregoing senior notes interest payments and for forecasted operating expenses and debt service payments through March 2009. The company has also agreed to pay to the counterparties all of the principal and interest collected on the underlying collateral subject to the override agreement to further reduce the outstanding financed balance on an accelerated basis. The reverse repurchase agreement counterparties and their affiliates who entered the override agreement include JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland PLC and UBS AG.

Federal Deposit Insurance Corp. researchers estimate that 839,000 single-family mortgages fell into the 60-days-plus late category during the third quarter, up 14% from the second quarter. Mortgages entering foreclosure fell 10% from the previous quarter to 574,000. "It is still the second highest quarterly number of foreclosures, double the number of two years ago," said FDIC chief economist Richard Brown. He attributes the slowdown in new foreclosures to state moratoriums, delays in processing, and more attempts by servicers to engage in workouts. "Even though foreclosures slowed to 574,000 during the quarter, the number of loans 60-days to 90-days past due rose by almost 265,000, and now total 1.9 million," Mr. Brown said.

Republic Mortgage Insurance Corp., Winston-Salem, N.C., has handed over the keys to its mergers and acquisitions unit to its founder, Larry Charbonneau. Mr. Charbonneau said the former Republic Strategic Advisory Inc., Houston, will now carry the name Charbonneau & Associates. He said there was no animosity between him and RMIC but that the company wants to concentrate on its core business of mortgage insurance. Besides M&A work, Charbonneau & Associates will focus on advisory work and warehouse lending consulting. Last decade, Mr. Charbonneau ran a well-regarded M&A boutique called Charbonneau-Klein Inc. He joined RMIC four years ago. The MI is a subsidiary of the publicly traded Old Republic International of Chicago. On Thursday, Old Republic paid its regular quarterly dividend of 17 cents a share.

R&G Mortgage Corp. has completed the sale of servicing rights and advances on $5.1 billion of agency and government-backed home loans to Banco Popular de Puerto Rico. The sale involved $3.8 billion of Freddie Mac mortgages and $1.3 billion of Ginnie Mae loans. Both companies are based in San Juan, Puerto Rico. R&G Financial is a bank holding company that specializes in banking, mortgage banking, consumer finance and insurance through its various subsidiaries.