News

The headline business news Monday was Standard & Poor's notice that its outlook for the United States has turned negative. The agency maintained its AAA rating but warned that there is a one-in-three likelihood the long-term rating could be lowered over the next two years. The main culprit is the nation's growing debt and discord in Washington over the budget, but the agency also cited outlays to mortgage giants Fannie Mae and Freddie Mac as a substantial risk, warning that taxpayer support for the two firms could go as high as $685 billion.

CoreLogic Credco, a provider of merged credit reports, recently integrated its FinalCheck suite into the Ellie Mae Encompass360 mortgage management solution. FinalCheck is an automated Fannie Mae loan quality initiative (LQI) compliance suite that assists lenders in verifying credit, application, and fraud data. The company says the technology can help lenders uncover undisclosed debt prior to loan submission and mitigate repurchase risk to avoid loan buy-backs from the GSE.

Mortgage servicing practices have taken center stage on Capitol Hill, with a flurry of bills being penned to make servicing reforms the law of the land. Rep. Maxine Waters of California has revised a bill she's brought to the table several times before that would compel lenders to engage in what she says are ""reasonable loss mitigation activities"" for all delinquent homeowners. The legislation would place responsibility for modifying first and second liens with the servicer of the primary mortgage and would institute several reforms outlined in recent settlements with regulators.

Foreclosure sales accounted for roughly 43 percent of home sale closings in the Twin Cities metropolitan area of Minnesota last month, and 40 percent of pending home sales contracts. While those market shares are in line with recent trends, Brad Fisher, president of the Minneapolis Area Association of Realtors, says they're still higher than what he'd like to see. While overall purchase activity in March was down 17 percent, the foreclosure segment saw a 30 percent jump in closed sales.

State and federal regulators closed the doors of six community-based lenders on Friday - two in Alabama, two in Georgia, and one each in Minnesota and Mississippi. This latest round of closings brings the total number of FDIC-insured bank failures to 34 for the year, and represents the most shut-downs in a single day since mid-December. Birmingham's Superior Bank was the largest of the closings and marks the first multi-billion dollar bank failure of 2011.

Ginnie Mae, which provides a guaranty on mortgage securities backed by Federal Housing Administration loans, has announced a new policy regarding the pooling of past-due loans. For single-family securities with an issue date of June 1, 2011, and after, servicers can no longer package loans that are delinquent by more than the monthly installment of principal and interest that is due on the issue date. This fall, the federal agency will also begin requiring issuers to supply new data elements, such as loan-to-value ratios and pre-modification qualities.

MountainView Capital Holdings has announced the hiring of Robert Wellerstein as a managing director in its mortgage and fixed income sales and trading units. Wellerstein is an industry veteran with a broad range of experience in sales and trading of mortgage loans, mortgage servicing rights, and fixed income securities. He joins MountainView from Banc of Manhattan Capital, after 17 years with Countrywide Securities Corporation.

Washington Governor Christine Gregoire recently signed legislation to restrict Wall Street home resale fees - also known as private transfer fees. The new law, sponsored by Sen. Nick Harper, places a ban on these fees. Rep. Roger Goodman sponsored the companion bill in the state's House of Representatives. Washington is the 25th state to restrict the use of these fees.

Lawmakers in both the House and Senate are seeking to legislate changes to servicing practices. On the heels of the cease and desist orders issued by federal regulators to a handful of mortgage servicers to address process deficiencies uncovered by robo-signing investigations, four bills have been introduced aimed at reforming the way delinquent borrowers are handled industry-wide and aligning servicer incentives with those of investors and homeowners.

Bank of America said Friday that it turned a profit of $2.0 billion for the first quarter of 2011. That's down 39 percent from the lender's earnings a year earlier, largely due to continuing losses tied to its legacy mortgage business. Bank of America took a $4.9 billion hit related to foreclosure delays and other out-of-pocket expenses that the company does not expect to recover, as well as higher litigation costs and loss mitigation expenses. The bank has also confirmed plans to lay off 1,500 mortgage employees.