Loss Mitigation

REO asset management firm Green River Capital announced Monday that it has launched a company that will focus exclusively on short sale program management, Green River Financial (GRF). In response to growing market interest, the West Valley, Utah-based company is offering a pre-foreclosure short sale and deed-in-lieu program.

Liquidation and modification rates on Countrywide-serviced residential loans have edged higher in the past few months, with a larger percentage of mortgage restructurings encompassing principal forgiveness, according to a study just released by Barclays Capital. The research firm examined loans within residential mortgage-backed securities (RMBS) serviced by Countrywide, now Bank of America Home Loans, and found that while historically, the once-subprime leader claimed lower-than-average mod rates and long liquidation timelines, that has begun to turn around in the past few months.

The number of loans pooled in commercial mortgage-backed securities (CMBS) that require a ""special"" touch as they edge dangerously close to default is rapidly increasing. Fitch Ratings reported Friday that the risk of default is spreading so quickly through the secondary commercial market that the volume of specially serviced CMBS loans grew to approximately 5,000, totaling $81.7 billion during the first quarter.

In a letter to New York Attorney General Andrew Cuomo, Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said Fannie Mae and Freddie Mac will deploy a complaint process for violations of the Home Valuation Code of Conduct. This process will be implemented in lieu of funding for the Independent Valuation Protection Institute, which was called to be established and funded by Fannie Mae and Freddie Mac under the cooperation agreements between Attorney General Cuomo's office, the Office of Federal Housing Enterprise Oversight (now FHFA), and the government-sponsored enterprises.

Windermere Services of Northern California announced this week a partnership and merge of the Schubb Group, a three-office real estate brokerage specializing in REO properties. The Schubb Group operates out of Northern California offices in Pleasant Hill, Stockton, and Nice. Windermere also plans to launch a new default services division, which will be run out of the newly acquired business.

With home loans going bad at a still-staggering pace and losses mounting for the GSEs, the nation's two largest mortgage financiers are pursuing several avenues to recover money, including returning poorly underwritten loans to lenders. During the first three months of this year, Fannie Mae required lenders to buy back $1.8 billion in loans. Freddie Mac sent $1.3 billion in faulty home mortgages back to the loan sellers during that period. The two companies have said they expect to return as much as $21 billion in home mortgages to banks in 2010.

Representatives from more than a dozen mortgage servicers, along with local HUD-approved housing counselors, were on hand last week in Anaheim and San Bernardino, California to help struggling homeowners with their mortgages. The four days of events saw 2,576 at-risk homeowners come through the doors to learn what they can do to lower their mortgage payments and avoid foreclosure.

A survey by Trulia and RealtyTrac shows that only 1 percent of homeowners with a mortgage say walking away would be their first choice if they were unable to make their payments, while 59 percent would not consider a strategic default no matter how much their mortgage was underwater. With walking away off the table for most homeowners, the survey found that only 5 percent of borrowers would opt for a short sale as their first choice if facing foreclosure, while 69 percent would pursue a loan modification to save their home.

Sending letters of notification to homeowners throughout the delinquency life cycle is a requirement to meet insurer, investor, and state guidelines. Failure to send mail to a valid address can invalidate a foreclosure action and result in penalties. Technology provider IndiSoft has added U.S. Postal Service address verification to its RxOffice platform to help its clients address this issue.

Further expanding its existing range of default management services, the business outsourcing firm Zenta announced Wednesday that it has successfully implemented an end-to-end short sale program that is fully compliant with the administration's Home Affordable Foreclosure Alternatives (HAFA) program. According to the company, this workflow-based process management system is customized to adhere to the latest HAFA guidelines and timetables.