Technology

The Treasury Department could move faster in modifying second liens, a mortgage securities analyst says, by requiring servicers to conduct their own internal matching of first and second liens. Using their internal systems, Home Affordable Modification Program servicers could "capture approximately half of the second liens backing modified first liens," according to an Amherst Securities Group report. However, Treasury has contracted with Lender Processing Services to build and maintain a database of second liens that may be eligible for the HAMP second lien modification program (2MP). Servicers are required to use LPS to identify eligible matches. The LPS matching project is "far more cumbersome than it needs to be," said ASG senior managing director Laurie Goodman. "This unnecessarily delays the implementation of the 2MP program to the benefit of the second lien investors which are the largest banks," Goodman said.

At a briefing of state housing counselors, Congressman Steny Hoyer and Maryland Department of Housing and Urban Development Secretary Raymond Skinner both expressed their support for HOPE LoanPort, the new counselor Web-based tool that streamlines submission of completed loan modification applications, including those used for the Home Affordable Modification Program. This effectively makes Maryland the first state in the nation to publicly endorse the HOPE LoanPort program. In a room full of Maryland housing counselors, mortgage servicers, state officials and others; Congressman Hoyer praised housing counselors for their efforts and Secretary Skinner discussed the need for improved technology in assisting at-risk homeowners with loan modifications. HOPE LoanPort currently has eight mortgage servicers and more than 100 nonprofit counseling organizations across the country committed to its program.

HOPE LoanPort, the new counselor Web-based tool that streamlines submission of completed loan modification applications, including those used for the Home Affordable Modification Program, has named six people to serve on its board of directors. The organization also named its CEO. There are plans to expand the Board in the near future to reflect the diversity of the organizations involved with this web portal initiative. Larry Gilmore, currently the deputy director of the HOPE NOW Alliance, will assume the day-to-day management of HOPE LoanPort. The following individuals will make up the board of directors: William Longbrake, an executive in residence at the Robert H. Smith School of Business at the University of Maryland where he works on a variety of business, policy and governance issues; John Dalton, former Secretary of the Navy in the Clinton administration; John Courson, the president and CEO of the Mortgage Bankers Association; Faith Schwartz, the executive director of HOPE NOW; Kenneth Wade, the CEO of NeighborWorks America, a public nonprofit corporation established as the Neighborhood Reinvestment Corp. by an Act of Congress in 1978; and Camillo Melchiorre, senior vice president of loss management for Radian Guaranty Inc.

CitiFinancial, a nonbank that was once a powerhouse in subprime lending, Wednesday agreed to pay a $1.25 million fine for not correctly reporting its residential origination data to the Federal Reserve via the Home Mortgage Disclosure Act. The settlement, however, was not between the Fed and CitiFinancial but instead was worked out by state banking supervisors who discovered the reporting problems as part of a probe into compliance with consumer protection laws. The deal was worked out between CitiFinancial, an affiliate of Citigroup, and The Conference of State Bank Supervisors/American Association of Residential Mortgage Regulators. (Roughly 35 states were party to the agreement.) The reporting violations occurred on 91,127 loans between 2004 and 2007. Prior to that, the lender was in compliance, regulators said. According to CSBS, CitiFinancial of Baltimore, failed to report the loans in its HMDA filings. The lapse was caused by "internal system errors" at the nonbank, said CSBS. CitiFinancial eventually submitted HMDA reports on the loans in question. Regulators said that even though the loans were omitted by CitiFinancial the lender's behavior "does not in any way demonstrate a pattern or practice of discriminatory lending." The loans accounted for about 10% of CitiFinancial's production volume during the time in question.

MRG Document Technologies in Dallas, a provider of mortgage document preparation, has been named a RegulatorConnect Certified Partner by ComplianceEase, which means that lenders can use the company's solutions to prepare loan data for industry standard electronic submission to state regulators for examinations. MRG's Miracle Online was certified by ComplianceEase due to its examination data export functionality as well as its integration with ComplianceEase's ComplianceAnalyzer product. This enables the electronic transfer of compliance audits to state regulators. "As the regulatory landscape continues to become more complex, it is vital for lenders to have automated processes in place in order to comply with state and federal regulations," said Laura LaRaia, an attorney and director of customer service at MRG.

Certain deficiencies in the reconciliation process for AH Mortgage Advance Trust 2009-ADV have led Moody's Investors Service to put the servicing advance facility's ratings on watch for possible downgrade. Potentially affected are up to $225 million in securities issued in the deal, which are backed by reimbursement rights for servicing advances that America Home Mortgage Servicing Inc. makes on certain residential mortgage-backed securities. The rating action reflects concerns about "a significant number of aged reconciliation items outstanding" in AHMSI's custodial bank accounts. AHMSI said reporting inconsistencies between two different technology systems are involved and at the time of this writing it had most recently estimated it would be able to fix the problem in four to six months. Reconciliation items, or discrepancies between cash book/loan level records and those shown on monthly bank statements, are "not uncommon," Moody's said. But "servicers will typically resolve such items within 30 days of being identified," the rating agency said. "As items age beyond 30 days or more, the probability that either the servicer or the SAF may suffer a loss increases, although there has been no evidence of this from items cleared to date," Moody's added. In addition to the age and number of the items, the rating agency is concerned that "even as AHMSI has cleared a large number of outstanding items, new reconciliation items have been created."

Jacksonville, Fla.-based LOS MortgageFlex Systems Inc. has formed a strategic alliance with secondary market analytics firm Precision Risk Management Systems Inc. Through this partnership, MortgageFlex customers will gain new financial capabilities, including point-of-sale and delivery of loans into the secondary marketing through a fully managed lender pipeline. Precision Risk also offers what the company calls a "Precision Managed Hedge Service," for lenders who would like to improve their secondary marketing execution and extend their expertise without adding staff.

Lender Processing Services has launched a new short-sale service to help mortgage firms handle their growing caseload of REO properties. The Jacksonville, Fla.-based vendor is offering the service through its Asset Management Solutions division. The company oversees a network of asset managers to market and sell distressed and depository-owned properties. The unit performs such functions as reviewing title, resolving junior liens and reviewing property values against short-sale offers. In other short-sale news, Loan Resolution Corp., Scottsdale, Ariz., said it is hiring 100 new workers this month to meet demand for the Treasury Department's new Home Affordable Foreclosure Alternatives program. LRC says it needs the additional workers to meet "unprecedented growth as demand for short sales and deed-in-lieus skyrockets." The vendor moved into a 30,000-square-foot office in North Scottsdale in September 2009. The new positions range from executive slots down to entry-level positions including asset managers.

First American Corp., Santa Ana, Calif., in preparation for the split of its title and information services businesses into separate publicly traded companies, has named Anand K. Nallathambi as chief executive and Buddy Piszel as chief financial officer of its information solutions group. Mr. Nallathambi, who was appointed president and chief operating officer of the ISG in December, will continue to serve in those capacities. Mr. Piszel will continue to serve as the parent company's chief financial officer. The company's Financial Services Group will commence a search for Mr. Piszel's replacement as its chief financial officer. The target date for the split is June 1. Mr. Nallathambi previously served as chief executive and president of First Advantage Corp., which, until November 2009, was a majority-owned public subsidiary of the company and a business segment within the Information Solutions Group. Mr. Piszel joined the company as chief financial officer in January 2009. Prior to that, he was executive vice president and chief financial officer for Freddie Mac. In a separate announcement, First American said it would purchase the remaining 18% of First American CoreLogic that it does not already own. Parker S. Kennedy, chairman and chief executive of First American, said the purchase of the outstanding shares will simplify the structure as the information solutions group, which First American CoreLogic is a part of, moves toward being spun off. "This acquisition will result in an extra measure of flexibility and operational efficiency that will be beneficial as we develop our next-generation analytic capabilities for the financial services and capital markets industries," he added.

Mortgage vendor Lender Processing Services Inc. is requesting nearly $3 million in city and state incentives to add 350 full-time jobs in Jacksonville, Fla., according to a report in the Jacksonville Business Journal. The city is being considered along with three other areas in the nation for the jobs. The newspaper reported that the publicly traded LPS is requesting the incentives from the Jacksonville Economic Development Commission. If the JEDC recommends it, it will then go to the City Council for approval. The 350 jobs would have an average wage of $44,807 plus $11,202 in benefits, totaling an annual payroll of $15.7 million, according to LPS. "The proposed project will increase the visibility of Jacksonville as a financial services center, further strengthening a targeted industry and continue the redevelopment of downtown Jacksonville," the company said in its application to the JEDC. LPS would hire 175 people by the end of 2010 with the rest coming sometime next year.