Loss Mitigation

The Seattle-based law firm Perkins Coie has opened a new office in Dallas. The firm says the expansion will allow it to better serve the interests of national clients in Texas. Former Greenberg Traurig shareholder, Steven R. Smith, has joined the firm and will be partner in charge of the office, focusing his practice on commercial real estate workouts and lending.

In response to the notable first quarter profits reported by Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, the Association of Mortgage Investors (AMI) released a statement saying these four banks need to stop shifting their mortgage losses to investors in first-lien mortgages and confront their conflicts of interest. While the big banks have aggressively modified first mortgage debt, AMI says they have done little to nothing on second liens. As a result, homeowners remain deeply in debt with second mortgages that exceed the current value of their home.

Regulators have repeatedly warned that failures of small and mid-sized banks are expected to escalate. While many have gotten a handle on problems arising from the housing crisis, top officials say losses from commercial real estate loans now threaten to topple nearly 3,000 of the nation's community banks. It's true that bank failures and government seizures continue at a pace not seen since the savings and loan crisis, but a new study shows that community banks appear better positioned to weather further economic deterioration than their larger competitors.

While some are already touting improvements in the commercial real estate sector, Fitch Ratings is expecting widespread deterioration in commercial mortgage performance to rear its ugly head. In a special report issued Wednesday, the ratings agency warned that loan defaults will continue to escalate for U.S. commercial mortgage-backed securities (CMBS). Fitch is projecting the default rate to rise another 4.4 percent in 2010, pushing the overall rate past 11 percent by the end of the year.

IndiSoft, LLC has enhanced its RxOffice platform to meet the new Home Affordable Modification Program (HAMP) request and income documentation requirements announced by the Treasury. Beginning June 1, HAMP servicers will be required to verify a borrower's income and gather all the necessary paperwork prior to initiating a trial mod period. Officials say this change will speed the pace of permanent mod conversions.

The FDIC has completed sales of $2 billion in notes backed by real estate loans seized from two big bank failures - Corus Bank in Chicago and Franklin Bank in Houston, Texas. According to the FDIC, the structured note sales - the first from the agency since the early 1990s - will increase recoveries for the two bank closings and return substantial funds to the deposit insurance fund, which has taken repeated hits with the elevated number of bank failures over the past two years.

Freddie Mac said Wednesday that its full menu of mortgage relief options is being extended to families whose homes were damaged or destroyed by the recent floods in Rhode Island, Massachusetts, New Jersey, and West Virginia. Specifically, the mortgage giant is giving servicers the discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie Mac-owned mortgages.

The Federal Home Loan Bank of Pittsburgh (FHLBank Pittsburgh) recently announced that it is contributing $500,000 to the Pennsylvania Housing Finance Agency (PHFA) to assist the agency in its foreclosure prevention efforts. This grant will allow PHFA to reach more homeowners under its Homeowners' Equity Recovery Opportunity (HERO) program, which aims to help borrowers not eligible for a traditional mortgage refinance product, due to credit issues or owing more on their home that its current appraised value.

Private equity investment funds, in collaboration with the U.S. Treasury, have relieved the market of $10 billion in souring real estate assets, purchased through the federal government's Legacy Securities Public-Private Investment Program (PPIP). About 88 percent of the portfolio holdings, or $8.8 billion, are non-agency residential mortgage-backed securities (RMBS). Twelve percent, or $1.2 billion, are commercial mortgage-backed securities (CMBS). Of the RMBS assets, nearly half fall into the Alt-A loan category.

In the first quarter of 2010, Wells Fargo earned $2.5 billion, or $0.45 per common share, according to the San Francisco-based bank's earnings report released Wednesday. Wells Fargo said all business segments contributed to the strong earnings results. The bank specifically pointed to improvements in home retention efforts and credit quality, which it described as having ""turned the corner.""