Contact: Corinne Russell (202) 414-6921
Stefanie Johnson (202) 414-6376
April 28, 2011
Fannie Mae and Freddie Mac to Align Guidelines for Servicing
Delinquent Mortgages Updated Framework to Include Servicer Incentives and Penalties
Washington, DC – Federal Housing Finance Agency Acting Director Edward J. DeMarco has directed Fannie Mae and Freddie Mac (the Enterprises) to align their guidelines for servicing delinquent mortgages they own or guarantee. The updated framework will establish uniform servicing requirements as well as monetary incentives for servicers that perform well and penalties for those that do not.
“FHFA’s directive to align Enterprise policies for servicing delinquent mortgages should result in earlier servicer engagement to identify the best solution available for homeowners, given their individual circumstances,” DeMarco said.
The updated guidelines also address the so-called “dual track” by requiring servicers to contact borrowers as soon as they become delinquent and focus solely on remediating that delinquency. The foreclosure process may not commence if the borrower and servicer are engaged in a goodfaith effort to resolve the delinquency. The servicer must conduct a formal review of each case to ensure a borrower has been considered for foreclosure alternatives before the loan is referred for foreclosure. Even after foreclosure processing begins, financial incentives are provided to encourage servicers to continue to help borrowers pursue a foreclosure alternative.
Consistent with statements recently issued by federal and state regulators, this initiative is intended to deal with identified problems in mortgage servicing. The updated framework will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties. Fannie Mae and Freddie Mac will each issue detailed guidelines to their servicers
in the second and third quarters of 2011.
“Once fully implemented by the servicing industry, the Enterprises’ aligned policies should give homeowners a greater understanding of the process and faster resolution by requiring earlier contact, more frequent communication, and prompt decisions,” said DeMarco. “Equally important, the newly aligned policies will minimize taxpayer losses by ensuring that Enterprise loans are serviced efficiently and fairly.”
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets and financial institutions.
By RICHARD WILNER NYPost Last Updated: 1:03 AM, May 30, 2010 Posted: 1:03 AM, May 30, 2010
A new gold rush is sweeping the country — only this time the speculators are looking to get fat off the $4 billion home foreclosure industry by promising banks a streamlined and low-cost method to kick folks out of their homes. DinSFLA: Last time I heard the word “speculators” was in the CONDO BOOM!
In the last two years, as the mortgage meltdown intensified, four companies have gone public or filed papers to go public — each looking to get their hands on cash to help grow into a national powerhouse quickly to take advantage of the soft housing market.
Buying shares of these companies is like shorting the housing market — sort of giving the average investor a chance to be a mini-John Paulson, the hedge fund mogul who made billions betting against the housing market in 2007. There were roughly 2.9 million foreclosures in 2009 and there are currently 6 million homeowners 60 days or more delinquent on their mortgage.
The companies — DJSP Enterprises, which saw revenues grow 31 percent last year, Altisource Portfolio Solutions, which reported a 182 percent jump in profits last year, and Lender Processing Services, whose $2.4 billion in revenue was up 29 percent last year — each offer a technology platform that links mortgage lender clients on one end and law firms clients on the other.
A fourth company, Prommis Solutions, which swung to a $7.9 million profit in 2009 from a loss in 2008, recently filed papers to go public.
The four companies profit, in large part, from the high volume of mortgage defaults — collecting fees from banks for each referral and from law firms, which file the foreclosure actions. In fact, the companies warn that a turnaround in the housing market or additional mortgage-modification plans from Washington could chill their profits.
Last week, shares of DJSP Enterprises got slammed, falling 25 percent on Friday, to $6.46, a 52-week low, after the company lowered its guidance for 2010 in the wake of a drop in the number of foreclosures.
It’s a strange, new sector of the housing finance sector, where bad news for America fattens the bottom lines for these companies, and good news for beleaguered homeowners knocks the stuffing — and dollars — from their bottom lines.
All I can say is get the pantry ready with canned food. We are facing major problems!
by DIANA GOLOBAY housingwire.com
Tuesday, May 4th, 2010, 8:16 am
The delinquency rate among commercial mortgage-backed securities (CMBS) topped 8% to yet another historical high in April, according to the latest data from analytics firm Trepp.
The percentage of loans 30+ days delinquent, in foreclosure or real estate owned (REO) status jumped 41 basis points (bps) to an overall 8.02%, from 7.61% in March. The share of loans considered “seriously delinquent” — 60+ days delinquent, in foreclosure or REO status climbed 48bps to its own record-high of 7.14%.
The share of CMBS loans past due has marched higher and higher over the last year:
In April 2009, the 30+ day delinquency, foreclosure and REO rate was only 2.45%. Six months ago, that rate nearly doubled to 4.8% in October 2009.
The rate of growth is more pronounced in the seriously delinquent bucket. At the same time last year, 1.78% of CMBS loans were 60+ days delinquent, in foreclosure or REO status. That more than doubled to 3.91% by October 2009.
Despite the new records, the rate of growth in delinquency slowed somewhat from what Trepp called a “breakneck pace” in March.
“Last month, the market was taken by surprise when delinquencies shot up 89 basis points. About 40 basis points of that increase was due to the massive Stuyvesant Town loan becoming delinquent,” Trepp said in e-mailed commentary. “Even so, the 49 basis point net increase was more than twice the increase posted in February.”
Multifamily loans within CMBS were the only collateral type to post a decrease in delinquency in April. Trepp found this sector eased 13bps to 13.06% delinquent. Office loans grew to 5.37% delinquent, from 4.73% in March.
Retail delinquencies grew 41bps to 6.44%, while industrial delinquencies gained 5bps to 5.44%. Hotel delinquencies swelled 27bps to 17.16%, Trepp found.
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