Servicing

The loss mitigation tools available to Federal Housing Administration lender/servicers have helped 36,500 thousand families who were behind in their mortgage payment keep their homes during the first half of fiscal year 2007, according to the Department of Housing and Urban Development."FHA lending relief measures continue to help families around the nation work through difficult times, stay in their homes, and avoid foreclosure," HUD Secretary Alphonso Jackson said. HUD is urging Congress to pass an FHA reform bill that would allow the federal mortgage insurance program to finance more subprime borrowers. "Modernizing the FHA would provide more hard-working families with a strong alternative to risky mortgages," the secretary added. In fiscal 2006, the FHA loss mitigation program helped 75,000 delinquent borrowers keep their homes. However, FHA foreclosures totaled 51,600 in fiscal 2006. In addition, 4,900 defaults resulted in pre-foreclosure sales.

Fitch Ratings has assigned LoanCare Servicing Center Inc., Virginia Beach, Va., an RPS3-plus residential subservicer rating for prime loans.In addition, Fitch affirmed the company's RPS3 residential primary servicer rating for prime loans. "The subservicer rating is based on the company's client branding technology, interim servicing, and loan boarding and new loan set-up expertise," Fitch said. "Both the subservicer and primary servicer ratings reflect the company's effective loan administration procedures and established formal training programs as well as the financial strength of LoanCare's parent, LandAmerica Financial Group, which is rated BBB with a Stable Outlook by Fitch." Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

American Home Mortgage Investment Corp., Melville, N.Y., has announced that it expects lower income in the first quarter and in 2007 overall than previously forecast due to conditions in the secondary-mortgage and mortgage-backed securities markets.Conditions in those markets "changed sharply" in March, with "far few buyers offering materially lower prices," said Michael Strauss, American Home's chairman and chief executive officer. "These changes had a significant, adverse impact on our company's first-quarter results, reducing our gain-on-sale revenue and causing mark-to-market losses in our portfolio," he said. The company, a real estate investment trust, said its earnings will probably range from $0.40 per share to $0.60 per share in the first quarter and from $3.75 per share to $4.25 per share for the year. The mortgage REIT can be found online at http://www.americanhm.com.

Foreclosure sales jumped 27% in California last month and now represent 15% of home sales in the state, according to Foreclosure Radar, a foreclosure listings and software company based in Discovery Bay, Calif.The company reported that 5,316 California foreclosures were sold at auction in March, representing a 264% increase in foreclosure sales over the past six months. Of the $2 billion worth of properties sold in March, 4,796 ($1.82 billion) went back to the lender after receiving no bids, the company said. "Foreclosures sold at auction now account for 15% of all home sales in California and continue to rise," said Sean O'Toole, founder and chief executive officer of Foreclosure Radar. "This isn't just a story about failing subprime lenders and their customers. At the current pace, foreclosures will be a significant part of the real estate economy." The company can be found on the Web at http://www.foreclosureradar.com.

Mortgage companies added 3,000 full-time employees to their payrolls in February after laying off 16,400 workers over the previous three months.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banking/broker sector rose from 488,300 in January to 491,300 in February. Considering the meltdown in the subprime sector, the sudden hiring may be explained by increasing demands on servicers to deal with rising delinquencies and foreclosures. The subprime default rate hit 10.52% in January, up 40 basis points in one month, according to a recent report by the investment banking firm Friedman, Billings, Ramsey & Co. Defaults on alternative-A loans rose to 1.86% in January, up 20 bps in one month.

CitiMortgage has renewed its partnership with America's Community Bankers' for-profit subsidiary to continue providing ACB members with secondary-market execution and services."This agreement rewards our members for delivering high-quality loans, giving them a competitive edge in the marketplace," said William Kroll, ACB Business Partners president and chief executive. In other news, ACB has appointed Barbara L. Shyoff to be senior vice president/ legislative counsel and run the trade group's lobbying shop. She was previously special counsel in the Office of Thrift Supervision's regulation and legislation division.

RealtyTrac, an online marketplace for foreclosure properties, has announced a redesign of Yahoo! Real Estate Foreclosure Center that integrates three key functions: foreclosure searches, trend analysis, and education about buying properties in foreclosure.In the current slowing real estate environment, potential buyers can realize substantial discounts on homes that are in foreclosure while helping out homeowners in default and cutting costs for foreclosing lenders, RealtyTrac said. The redesign "incorporates some of the most advanced tools and analytical features from RealtyTrac, and is a major leap forward in providing millions of consumers who access Yahoo! Real Estate with data on foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac. The company can be found online at http://www.realtytrac.com, and the Yahoo foreclosure center can be found at http://realestate.yahoo.com/foreclosures.

Lenders are already using a number of tools to help financially stretched borrowers avoid foreclosure, but these cases need to be addressed individually rather than with a blanket moratorium, according to the Mortgage Bankers Association.Lenders and servicers have developed loss mitigation tools to help borrowers who are at risk of losing their homes, MBA chairman John Robbins said in response to calls for an immediate six-month moratorium on foreclosures. Mr. Robbins acknowledged that a credit crunch in the subprime market has left some borrowers "trapped" and unable to refinance into a more affordable loan. "They are trapped, and we are doing everything we can to help them, including looking at new products designed to help troubled borrowers," Mr. Robbins said. Four civil rights groups have called for a moratorium. Allen Fishbein, director for housing policy at the Consumer Federation, said "unprecedented action" is needed. "We certainly think the situation is serious enough that it warrants consideration of all possible solutions, including a moratorium," he said.

Civil rights group are calling for an immediate six-month moratorium on foreclosures so that borrowers with subprime hybrid mortgages can transition to a more affordable loan product."If lenders, servicers, Wall Street, and policymakers allow the flood of subprime foreclosures to continue rising unchecked, years of economic progress in communities of color will be wiped out," NAACP Washington bureau director Hilary Shelton said. The Leadership Conference on Civil Rights, the National Fair Housing Alliance, the National Council of La Raza, and the Center for Responsible Lending joined the NAACP in calling for a moratorium. These groups contend that subprime lenders targeted minority communities with reckless and unaffordable adjustable-rate 2/28 mortgages, and now the borrowers are losing their homes on a massive scale. "Those responsible for these mortgages have a duty to fix the broken product they sold just like everyone else," CRL president Mike Calhoun said. "The industry must work quickly."

Fannie Mae says it will reduce its work force by several hundred full-time employees as part of an effort to cut operating expenses by $200 million in 2007."While determinations are still being made as we undertake this restructuring, we anticipate that the company will have several hundred fewer full-time employees at the end of this year," Fannie spokesman Brian Faith said. The publicly traded company has 6,500 full-time employees, and its operating expenses have ballooned in the aftermath of an accounting scandal that has forced it to restate earnings. Now the government-sponsored enterprise is trying to catch up and file timely financial reports with the Securities and Exchange Commission. Fannie's administrative expenses totaled $3.1 billion in 2006, including $850 million in costs associated with the restatement process and related regulatory examinations, investigations, and litigation defense, according to a Feb. 27 SEC filing. The GSE also wants to cut back on contractors who are working on the restatement process. Fannie Mae can be found online at http://www.fanniemae.com.