Servicing

Lend America, Melville, New York, on Monday plans to begin offering direct to qualifying consumers with subperforming mortgages in 44 states the lower-payment government-backed 'Home for Homeowners' refinance loans it previously made available only through alliances with institutional investors. The Federal Housing Administration lender and Ginnie Mae issuer will market the 'H4H' product to consumers through a series of 30-minute television infomercials that run under the name "The Mortgage Network." The company is continuing to offer the loans through its institutional investor program as well. Michael Ashley, chief business strategist of Lend America, said its mortgage specialists, who have received certified training in the relatively new government program, can educate borrowers, assess their affordability and refinance their loans in as little as 10 days, usually by phone.

Title insurance giant Fidelity National Financial has agreed to purchase one of its top competitors, LandAmerica Financial Group, for $126 million in stock. The sale announcement comes a day after LandAmerica said it would delay its third quarter earnings release. The purchase is subject not only to shareholder approvals but needs to be sanctioned by the antitrust division of the Justice Department. The two companies say they will save at least $400 million in expenses by reducing their combined debt loads by $250 million and cutting another $150 million in costs. Fidelity, a large player in servicing technology, is based in Jacksonville, Fla. LandAmerica is headquartered in Richmond, Va. Shareholders of LandAmerica, the nation's third largest title insurer, will receive 0.993 shares of Fidelity common stock for each share held.

Mortgage companies hired 2,900 full-time workers in September -- even though all U.S. business trimmed their employment roles by a surprising 284,000 workers, according to new government figures. The mortgage number, unfortunately, lags the national unemployment rate by a month. On Friday the U.S. Bureau of Labor Statistics said the unemployment rate spiked to a 14-year high of 6.5% in October as another 240,000 jobs were cut -- far worse than many economists expected. Unemployment is a key determiner of loan delinquencies. According to the government, 352,200 workers made their living off of mortgages (lending, servicing, brokerage) in September, compared to 349,300 in August. Employment in the mortgage industry has been relatively stable since January with most of the new jobs being added in servicing and loan modifications. Wachovia Corp. chief economist John Silva expects to see negative job and weak personal income reports until the spring of 2009, which will make it difficult for consumers struggling to make their mortgage payments. "Delinquencies and foreclosures will be rising for the next three to five months," Mr. Silva told MortgageWire. The housing market will go through a "tough winter," the economist said, but conditions should improve by spring with the help of government spending to revive the economy. "Most of the U.S. economy should have a decent housing recovery in 2009," he said.

Genworth Financial Inc., Richmond, Va., had a loss for the third quarter of 2008 of $258 million, or $0.60 per share, compared with income of $339 million, or $0.76 per share one year prior. This reflected net investment losses of $478 million, net of tax and amortization of deferred acquisition costs, including $321 million of credit and/or cash flow related impairments, $55 million of impairments related to a change of intent to hold securities to recovery, and $86 million of net realized losses from asset sales associated primarily with portfolio repositioning activities. Of total impairments, $153 million, net of tax, related to subprime and alt-A residential mortgage and asset-backed securities, and $145 million, net of tax, in corporate bonds concentrated among several large financial services issuers. Genworth has suspended its common stock dividend, which it said would generate approximately $175 million per year in available capital. It said it is evaluating several additional capital flexibility alternatives including potential asset sales, continued review of the U.S. mortgage insurance business, and the potential to raise private or public equity, or debt capital. The U.S. mortgage insurance business had a $121 million net operating loss as 16% earned premium growth and higher lender captive reinsurance coverage were more than offset by higher incurred losses and higher expenses. Earnings in the quarter benefited from $169 million pretax of lender captive reinsurance coverage.

Exposures to problematic second-lien mortgage assets contributed to significant third-quarter net losses at bond insurers Ambac Financial Group Inc., New York. Further, MBIA Inc., Armonk, New York took a big loss as well. Ambac took a $2.4 billion third-quarter net loss that it said was "primarily due to recording net mark-to-market losses on credit derivatives, increased loss provisioning primarily related to second-lien residential mortgage-backed securities insurance transactions and market losses on RMBS" that were "partially offset by increase accelerated premiums from refundings." Moody's Investors Service subsequently downgraded its rating of Ambac Assurance Corp., a move Ambac protested as it has in the past, saying it may set back positive steps it has been taking to improve its liquidity. Separately, MBIA suffered an $806.5 million net loss that it said was "driven primarily by increases to loss reserves on the company's second-lien residential mortgage exposures and net realized and unrealized losses attributable to the company's asset liability management business."

California Governor Arnold Schwarzenegger has proposed a 90-day moratorium on owner-occupied homes where a 'notice of default' has been filed. The moratorium is part of a larger relief package for the ailing California housing market, the largest in the nation in terms of loans outstanding at roughly $1.8 trillion, or 19% of the national market, according to figures compiled by the Quarterly Data Report. The governor wants his proposals considered during a special session of the legislature he will call to deal with the state's budget crisis. Even if the moratorium becomes law, lenders can gain an exemption if they can demonstrate to state officials they have "an aggressive" loan modification program in place, according to a statement released by the governor's office. However, the loan modification model is based on a maximum housing debt-to-income ratio of 38%. The model outlined by the state aims to reduce monthly mortgage payments by 25% to 30%.

Champion Mortgage of Dallas is expanding out its REO financing program to include servicing firms that are trying to sell foreclosed properties. Champion, a brand owned by Nationstar Mortgage, is focusing its retail-only effort on what it calls its "partners," which hold about 50,000 REO (real estate owned) properties. Up until recently it was only funding REO held in its own portfolio. The company declined to name the firms. "These are servicers and asset managers," said company EVP Steve Hess. "We respect their privacy." Champion's loan of choice is a Federal Housing Administration-backed mortgage where the buyer of the REO has a FICO score of at least 650.

Centerline Holding Co., a New York-based alternative asset manager with a focus on real estate funds, said it has reduced its workforce by about 20%. "A significant part of the company's restructuring includes shifting resources to enhance its special servicing and asset management functions," the company said. The company has been struggling to manage debt load and recently saw Moody's Investors Service downgrade its corporate family rating to B2 from B1 as a result of a payment deferment. Centerline said it is in "active negotiations" with its lenders to implement a debt-financing package that will stabilize its finances.

GMAC Financial Services expressed some doubt about its ResCap's mortgage unit's future in preliminary third-quarter results that show a substantial net loss at ResCap is likely to be the main contributor to an even larger net loss for the company as a whole. "Adverse market conditions have made it difficult for ResCap to maintain adequate capital and liquidity levels," GMAC said. "As a result, absent economic support from GMAC, substantial doubt exists regarding ResCap's ability to continue as a going concern." ResCap's estimated $1.9 billion 3Q loss actually represents a relative improvement over last year's $2.26 billion decline, but overall, GMAC's preliminary $2.5 billion 3Q loss this year is greater than last year's $1.6 billion 3Q net loss for the company as whole.

TCF Financial, the banking parent of a mid-sized residential servicing company, has received preliminary approval from the Treasury Department to participate in the agency's capital purchase program. In a statement, TCF of Wayzata, Minn., said the government will buy $361 million worth of preferred stock in the depository and receive a warrant to buy 3.2 million shares of its common. At mid-year, the bank's subsidiary, TCF Mortgage of Minneapolis, ranked 54 among residential servicers with $6.7 billion in housing receivables, according to the Quarterly Data Report. The capital purchase effort is part of the government's new Troubled Asset Relief Program, legislated into law by the Emergency Economic Stabilization Act.