News

Delinquencies and losses on commercial real estate loan collateralized debt obligations (CREL CDOs) increased notably in April, according to the latest U.S. CREL CDO index results from Fitch Ratings. Asset managers reported approximately $164 million in realized losses from the disposal of defaulted and credit-impaired assets, which is substantially higher than March's total of $73 million. The agency says many of the realized losses stemmed from foreclosure or deed-in-lieu actions that wiped out subordinate positions.

Scott McNulla is the new director of regulatory compliance at Allonhill, an independent third-party review firm specializing in mortgage due diligence and credit risk management. McNulla will work with executive management to define Allonhill's review requirements related to regulatory compliance to ensure they meet all federal and state regulations and Allonhill standards.

The Michigan Court of Appeals has ruled that MERS does not meet the requirements under state statute to foreclose by advertisement because the company does not own any interest in the debt. The judgment does not apply to judicial foreclosures conducted by MERS, but observers warn the decision could void thousands of foreclosures in the state, including properties that have already been sold to new buyers. Local reports say title companies are canceling closings on some bank-owned homes in light of the ruling.

President Obama has made a public call for mortgage lenders and servicers to provide struggling homeowners with longer-term modifications and principal reductions when it fits the situation. Referring to the bailout of the banking system, which the president described as probably the most unpopular thing the government has ever done, Obama said American taxpayers were there for the banks when they got into trouble, and now it's time for the banks to be there for the American people.

Sales of previously owned homes - which in recent months have been buoyed by a growing share of distressed REO and short sales - are expected to remain on an upward, albeit uneven, track through this year and next, according to economists at the National Association of Realtors' midyear meeting. Lawrence Yun says if the first-quarter sales pace holds, the year will close with 5.1 million completed transactions, 4 percent above last year. Frank Nothaft expects the increase to be at least that much, perhaps a bit higher.

House lawmakers have introduced a bipartisan plan that would replace Fannie Mae and Freddie Mac with a group of private firms to fill the role of issuing government-guaranteed mortgage-backed securities. The bill's authors say it would not only protect taxpayers but would ensure financing for home loans and products like the 30-year fixed-rate mortgage remain available to middle-class families. Market observers say the proposal is the only one so far that could win sufficient support from both sides of the aisle.

Nearly twice as many underwater borrowers think it is okay to walk away from their mortgage than harbored this sentiment a year ago, according to the results of a survey conducted by Fannie Mae. A separate academia study, however, found that the number of cases in which the homeowner defaulted even though they cold afford their payments - at least as perceived by their neighbors - appears to be trending down. The researchers also asked about respondents' feelings on robo-signing penalties.

Indiana Governor Mitch Daniels recently signed legislation to restrict Wall Street home resale fees, also known as private transfer fees. Indiana is the 28th state to ban the use of these fees. The fees require that a private third-party receive a percentage of the final sale price of a home every time the property is sold, typically for 99 years. The Federal Housing Finance Agency has issued a proposed rule that would prevent the GSEs from investing in mortgages with these fees.

BlackRock, Inc. recently hired Jack Chandler as global head of real estate. Chandler will oversee BlackRocks global real estate capabilities, which extend across the capital market structure and include both equity and debt investment products. Chandler is the former global chief investment officer and executive chairman, Asia, for LaSalle Investment Management. At BlackRock, he succeeds Paul Audet, senior managing director, who assumed interim leadership for the firm's real estate business in 2008.

Mortgage servicing in general, and default servicing in particular, is in for its own form of modification. Based on testimony given before a Senate subcommittee Thursday and comments from the senators themselves, national mortgage servicing standards are in the cards. The topic has taken center stage in light of recent documentation errors related to foreclosures, and a growing number of industry analysts and mortgage banking groups are voicing their support.