Secondary Market

State and federal regulators stepped in late Friday to shut down two lenders - First Commercial Bank of Tampa Bay in Florida and McIntosh State Bank in Jackson, Georgia. The closings bring the number of financial institutions on the FDIC's failed bank list to 47 for the 2011 calendar year and are expected to cost the federal agency $108.5 million.

As it peels back the layers of the secondary market to delve deeper into the trading of the subprime mortgage bonds reputed for setting off the financial crisis, the Securities and Exchange Commission (SEC) has set its sights on major credit ratings agencies. The SEC is considering bringing civil fraud charges against Standard & Poor's and Moody's Investors Service for their role in positioning mortgage-backed securities that held a high risk of default as grade-A investments.

Oklahoma-based a la mode announced this week that CoreLogic chose to connect its ValuEdge platform with Mercury Network for receipt of the Native XML appraisal data needed for compliance with Fannie Mae and Freddie Mac's jointly established Uniform Mortgage Data Program (UMDP). A custom plugin will connect CoreLogic with the Mercury Network of real estate appraisers. The plugin will run an extensive set of quality control rules against the report prior to delivery.

Ongoing deterioration in real estate markets and rising levels of distressed residential and commercial properties are areas of acute concern for officials at the Federal Reserve, as banks' performance and capital continue to be adversely affected. Renewed concerns have surfaced about the health of the mortgage market and home equity loans in particular, while high vacancy rates and declining rents still plague the commercial sector. The Fed says it will take time to make progress on the overhang of distress, and banks should expect continuing losses.

The Federal Housing Finance Agency (FHFA) issued its third report to Congress Monday, detailing the regulator's 2010 annual examinations of Fannie Mae and Freddie Mac. The GSEs' losses last year totaled $28 billion, versus $94 billion in 2009. The amount of taxpayer support needed by the two mortgage giants also narrowed, but FHFA says both Fannie and Freddie remain ""critical supervisory concerns,"" primarily because of continuing credit losses from loans originated during 2005 through 2007.

According to a notice from Fannie Mae, all future foreclosures in Hawaii must be commenced as judicial foreclosures due to Hawaii's recently passed legislation, SB 651. In addition, the GSE directed servicers to dismiss and convert all pending Fannie Mae non-judicial foreclosures that have not proceeded to sale to judicial foreclosures. Some recent REO acquisitions may also need to be re-foreclosed due to potential title insurance issues.

Prices on credit default swaps (CDS) involving subprime mortgages more than doubled their increase from last month, extending the rally to an unprecedented seventh straight month, according to the latest index results from Fitch Solutions. Subprime CDS prices rose 1.7 percent overall, though price increases were not uniform across vintages, with the 2007 leading the surge. Fitch says most vintages are in the black for the year. The lone negative outlier is the 2006 vintage.

Freddie Mac announced new leadership this week for its three lines of business, including its new single-family and operations and technology unit. The new division consolidates previously separated single-family business lines as well as the technology unit. Anthony Renzi has been named EVP to head up the new division. In addition, David Brickman was named SVP in charge of the multifamily division, Carol Wambeke was promoted to SVP and chief compliance officer, and Devajyoti Ghose will assume the roles of SVP of the investments and capital markets division and company treasurer.

Delinquency rates among different groups of commercial and multifamily mortgage investors were mixed in the first quarter, the Mortgage Bankers Association (MBA) reports. Delinquency loans held in commercial mortgage-backed securities (CMBS) reached their highest level since 1997, but MBA says the climb was slower than in recent quarters. On the other hand, delinquency rates for other investors, including Fannie and Freddie, remain below levels seen in the last major real estate downturn - some by large margins.

Pro Teck Valuation Services, a real estate collateral valuation provider, announced Tuesday that Basil G. Pallone has joined the company as CFO. Basil will be responsible for all aspects of the company's financial operations, and has more than 25 years of financial management experience in public, private, and venture-backed companies.