Servicing

President-elect Barack Obama signaled that he wants the Treasury Department to move ahead with a loan guarantee program advocated by the FDIC that could facilitate loan modifications, but so far the Treasury and the White House are not on board. "It is absolutely critical that Treasury work closely with the FDIC, HUD and other government agencies to use the substantial authority that they already have to help families avoid foreclosure and stay in their homes," Mr. Obama said during his first press conference on Nov. 7. As part of the $700 Troubled Asset Relief Program bill, Congress provided Treasury with the option of purchasing or guaranteeing troubled mortgage loans. And section 109 of the bill allows the use of loan guarantees to facilitate loan modifications. Section 109 has "tremendous potential," a banking consultant said, but the Treasury Department hasn't "bought" into the Federal Deposit Insurance Corp.'s loan modification program. "As a result, the 109 authority, even if not deployed now, could prove formidable in the next Administration," said Karen Shaw Petrou, managing partner of Federal Financial Analytics.

The National Credit Union Administration has approved a new charter for Realtors FCU of Orlando, which will be an Internet-based credit union for an estimated 1.2 million members of the National Association of Realtors. Service will be provided by a 24/7 call center in addition to the Internet support, according to Michael Brodie, who will chair the start-up. "Realtors Federal Credit Union will be sensitive to the work habits and lifestyles of Realtors, most of whom are independent contractors who are compensated by commissions," said Brodie. Among its products, the new CU will offer first mortgages and HELOCs. -- <1>Credit Union Journal

JPMorgan Chase & Co., the nation's third largest mortgage lender, is warning that additional deterioration in the performance of its $117 billion home equity portfolio and $107 billion mortgage portfolio is likely. In a filing with the Securities and Exchange Commission, JPM said its initial analysis shows that "a substantial portion" of the consumer loans acquired from Washington Mutual are "credit impaired," and that fourth quarter results will show more details about the impact of falling home prices are having on "risk layered" loans. Chase's year-to-date loss provision includes $1.2 billion for home equity loans and $1.3 billion for prime and subprime mortgages. The company said that its non-interest expense also has increased to reflect higher mortgage reinsurance losses and increased servicing expense.

The usually positive National Association of Realtors struck a decidedly downbeat chord at its annual convention in Orlando, predicting that housing prices would fall this year by the largest percentage since the Great Depression. Lawrence Yun, NAR's chief economist, said the average sales price of existing homes would slide 9.8% in 2008, "by far" the sharpest decline since the group began keeping records in 1968 and "probably" since the Depression. The record for the largest decline was set last year, when the average slipped a mere 1.4%. For 2009, NAR is expecting prices to go back up by 1.1%. But Mr. Yun told reporters that the slight increase is akin to "essentially no change." By 2010, though, the group is expecting price appreciation to return to the historical norm of 4-5% as the inventory of unsold houses returns to normal. "We have hit bottom, we believe, in terms of sales activity," he said. "But not prices. The only way to stabilize prices is to get inventory down, and we're not there yet."

Kinecta Federal Credit Union of Manhattan Beach, Calif., has hired Jess Lederman, a former Bear Stearns executive who recently departed as chief risk officer of Countrywide Financial Corp. According to a press release issued by the CU, Mr. Lederman will serve as senior vice president and chief credit officer. On July 1 CFC was bought by Bank of America. Mr. Lederman will oversee Kinecta's credit policy, analytics, and loan underwriting for commercial, real estate and consumer lending. He also will have responsibility for portfolio management and secondary marketing.

Six servicing companies that process loans in Maryland have agreed to provide foreclosure relief to struggling homeowners in the state. Under an agreement announced by the governor's office, the six -- which service 23% of all outstanding mortgages in Maryland -- will halt foreclosures and not assess late fees for 75 days as long as a borrower files a loss mitigation package with them. The six include: AmeriNational Community Services, CitiMortgage, GMAC Mortgage, HSBC Mortgage, Litton Loan Servicing, and Ocwen Financial. (Litton is owned by Goldman Sachs.) Maryland already has one of the longest foreclosure timelines in the nation -- 150 days.

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.