Secondary Market

Bank of Internet USA, a nationwide savings bank operating primarily via the Internet, is now a preferred investor of Lenders One Mortgage Cooperative, a national alliance of community mortgage bankers, correspondent lenders, and suppliers of mortgage products and services. According to Lenders One, the partnership offers several advantages to its members, including special pricing and access to customized portfolio jumbo and super jumbo loan products.

The industry is abuzz with news that the federal government could unveil its proposal for overhauling Fannie Mae and Freddie Mac as early as Friday. The GSEs haven't had a profitable quarter in over three and a half years and were placed under government control in 2008 to avert their collapse. Since then, Treasury has pumped more than $150 billion into the two GSEs and cries for their reform have grown louder. The forthcoming proposal is expected to lay out three recommendations that call for phasing out the nation's two largest housing-finance companies.

Bruce M. Witherell resigned from his position and responsibilities as chief operating officer of Freddie Mac on Wednesday, according to a regulatory filing with the Securities and Exchange Commission (SEC). The GSE says Witherell is stepping down ""for personal reasons."" His resignation is effective immediately. According to the SEC filing, Witherell will not receive any termination benefits. A former Morgan Stanley and Lehman Brothers executive, Witherell joined Freddie Mac as COO just 17 months ago.

Fannie Mae announced Monday that it provided $16.9 billion in debt financing for the rental housing market in 2010, through around 2,300 multifamily mortgage loans for 306,000 rental units across the nation. About 91 percent of the multifamily units financed by the company last year were affordable to families who were at or below the median income of their communities.

DecisionReady, a provider of default servicing compliance solutions based in California, announced this week that it has reviewed 1 million delinquent residential mortgage loans for loss mitigation and foreclosure process and policy compliance for leading servicers. DecisionReady technology offers compliance for early stage delinquency through loss mitigation, foreclosure, and the post-sale process to ensure regulatory rules and investor guidelines are met.

Two entities charged with setting accounting standards for financial instruments have released a proposal that would require lenders to account for anticipated losses on loans earlier, in what is being described as a fundamental shift from current practices. The International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) have published a joint proposal that entails moving to an 'expected loss model' from the current 'incurred loss model.'

Barclays Capital says that as servicers perform complicated modifications and other actions, remittance reporting has been found wanting. A recent study by the research firm examines typical remittance reports and points out flaws in the process, aiming to make a case for a complete overhaul. Barclays says current procedures sometimes make it difficult to understand where money is coming and going, and with some transactions the math gets fuzzy very quickly.

Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010 - an increase of 36 percent from 2009, according to the Mortgage Bankers Association. A separate report from Jones Lang LaSalle corroborates the trade group's assessment of a resurgence in the financing market and indicates even stronger growth in 2011, even without the predicted surge is distressed sales. Wells Fargo is ranked as the largest servicer of commercial and multifamily mortgages.

With loan modifications on a steady decline, the analysts at Fitch Ratings say the common thread running through the industry has become when will the servicer foreclose as opposed to how can a distressed borrower stay in their home. Fitch's analysis of loan mod trends shows little improvement in success rates. While alternatives like short sales are modestly improving loss severities, the agency says servicers report borrowers are electing to remain in their property longer by staying on through the extended foreclosure process.

Bank of America has set up a new operational division to service all defaulted residential loans. It will be led by Terry Laughlin, who will oversee the bank's mortgage modification and foreclosure programs, and is charged with resolving investors' mortgage repurchase claims. The decision to establish a new, separate division to handle the company's problem loans came out of the bank's ""self-assessment of default servicing"" following the robo-signing scandal.