Refinance Free Credit

Congressional Democrats’ efforts to push through a housing aid bill that would expand the Federal Housing Adminstration’s authority to insure refinancing of troubled mortgages hit a snag Friday morning, with Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-CT) tabling a planned May 6 markup of his FHA bill and a long-stalled proposal to revamp regulation of mortgage finance giants Fannie Mae and Freddie Mac.

Dodd’s FHA proposal is an analog to a similar proposal by House Financial Services Committee Chairman Barney Frank (D-MA) that was approved by a 46-21 margin earlier in the week.

The roadblock in this case appears to be primarily one man: Sen. Richard Shelby (R-Ala.), the ranking Republican on the Senate Banking Committee, who is either the last bastion of sensibility or a troublesome holdout, depending political affiliation.

Numerous media outlets reported Friday that Dodd chose to stall the planned mark-up because, in the words of his spokesman, he wants “to work toward a bipartisan consensus.”

It’s also likely that he wants to bundle the Frank/Dodd FHA insurance expansion effort with any effort to reform the GSEs, according to HW’s sources on Capitol Hill. Many Republicans and the White House have softened their previously hard stance towards Fannie and Freddie amid the housing crisis — with the notable exception of Shelby, we’re told. The House long ago passed its version of GSE reform, which received White House support, but Shelby’s staunch opposition has kept the Senate’s version of the bill stuck in the Banking Committee.

With Republicans largely balking at the proposed $300 billion FHA refi program — whether House or Senate versions — our sources suggested that a complex effort is now taking place behind the scenes in the hopes that bundling the two proposals will generate strong bipartisan support among both the House and Senate.

“Shelby has been an obstacle, but I think the pressure to get something done here will eventually rule the day, even within the GOP,” said one source, a lobbyist in Washington, DC. “Republicans and Democrats in Congress need to be able to tell their respective voting blocs that they’ve done something.”

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Countrywide announced the migration closing of 16 wholesale fulfillment centers in a consolidation move in the wholesale channel.  While I wouldn’t call it winding down, they definitely are a) responding to reduced demand and b) to the retail-centric strategy that is kicking butt for Bank of America and surely being evangelized/driven-down by the new ownership.

From Countrywide:

Dear Valued Business Partner: 

Thank you once again for your valued business and continuing support of Countrywide^®, America’s Wholesale Lender^®. Despite the widespread change that our industry has faced over the past year, one thing remains constant – Countrywide’s commitment to providing responsible lending solutions to ensure that more Americans have the opportunity to achieve and preserve homeownership.

Optimizing Our Business Model 

Consistent with modifications that we have made in the past to evolve the scale of our organization to the changing lending environment, we continue to focus on optimizing our business model for long-term success. As a result, we announced earlier today that we are adjusting our loan fulfillment operations as follows:

• Effective immediately, 16 of our loan fulfillment locations will be migrated into our remaining distributed fulfillment network comprised of 26 Wholesale Fulfillment Centers.
• Our Sales Management and Account Executives will continue to be located in the impacted markets to help ensure that we retain our local presence and uphold our commitment to serving our Business Partners and mutual borrowers within those markets.
• Dedicated fulfillment teams have been added to the remaining fulfillment center locations to provide immediate support for our Business Partners and Account Executives in the impacted markets.

It is important to note that many of our Business Partners will not be directly impacted by these changes. If you are impacted by this move, however, a follow-up communication will be sent to you shortly with detailed information on your new loan fulfillment location and team members. In addition, you may log on to cwbc.com to view a list of the impacted loan fulfillment sites along with the corresponding new fulfillment locations and contacts. 

If you are currently served by one of our consolidating fulfillment locations, I assure you that we are taking measures to quickly and carefully migrate loan files in progress to your new loan fulfillment team. Your Account Executive and your new loan fulfillment team are standing by, ready to assist you with both existing and new loan submissions. 

Committed to Your Success 

The consolidation of these fulfillment locations enables us to better serve our Business Partners and mutual borrowers under a more efficient and sustainable loan fulfillment operating structure.

Though these changes are necessary to optimize our business model, I can assure you that they do not alter our focus on homeownership or our commitment to your success. 

Thank you once again for choosing Countrywide. 

Todd A. Dal Porto 
Senior Managing Director and President 

Countrywide, America’s Wholesale Lender 

In the literary world, it’s called the denouement — the series of events that serve to wrap up a dramatic turn or climax of a story. After a public row with Radian Group Inc. (RDN: 6.13, -0.81%) late last year over a ratings downgrade that the mortgage insurer didn’t feel was appropriate, Fitch Ratings said Friday that it had withdrawn its ratings of the company and its subsidiaries. Which, in some ways, serves as the rather anti-climactic conclusion to the saga between the two.

“Fitch believes information available to it is no longer adequate to maintain credible ratings under its existing methodologies used in the mortgage insurance and financial guaranty industries,” the rating agency said via a press statement, “which involve the use of capital models that employ detailed, non-public information on Radian’s insured portfolios.”

Fitch noted that Radian ceased working with the agency altogether last September.

At the time, Radian said the downgrade created “unmerited uncertainty” about the insurer’s future, and charged Fitch with being inconsistent relative to competing agencies Standard & Poor’s and Moody’s Investors Service. Fitch, for its part, has steadfastly maintained that its criteria are simply more stringent, leading to a more conservative ratings approach.

The fight became somewhat of a moot point in early April, when Standard & Poor’s cut Radian’s insurer financial strength rating below the level required by each GSE to maintain so-called Tier I status. Radian made no such public protest of S&P’s move, and sources told HW that at least some Fitch execs saw the S&P cut as vindication for what was characterized by one source as “more conservative modeling.”

Radian this week said it had reached amended terms with creditors that would keep the ratings downgrade from causing the it to default under debt covenants it had previously agreed to.

Disclosure: The author owned no positions in RDN when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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Standard & Poor’s Rating Services said late Thursday that it cut ratings on 184 classes of U.S. residential mortgage-backed securities from 52 transactions backed by prime jumbo loan collateral. All affected deals were from the 2006 vintage, and none of the cuts reached up to the AAA level.

At least not yet. S&P also put 110 ratings of mostly AAA-rated prime jumbo RMBS classes on negative ratings watch, after announcing the downgrades. The warnings represent the first signal from any major rating agency that prime jumbo mortgages — usually pretty vanilla mortgages given to prime borrowers, for purchases that exceed the traditional conforming loan limit of $417,000 — may be running into greater problems than originally expected.

Thursday’s cuts totaled an issuance amount of nearly $3.5 billion, S&P said — a fraction of the prime jumbo market, to be sure, even within the 2006 vintage. But an unnerving trend, nonetheless.

Housing Wire reported on what appeared to be emerging problems in prime jumbos a few weeks ago, when reviewing S&P’s latest remittance summaries. Total delinquencies for prime jumbos originated in 2006 rose 15.4 percent during March, while the 2007 vintage saw DQs ratchet upward by 15.5 percent — keep in mind, that’s on a monthly comparison basis, to boot. Serious delinquencies rose even higher, jumping 22.6 percent for the 2006 vintage and 18.8 percent for the 2007s.

So far, S&P has limited its downgrades for prime jumbos to the 2006 vintage, and noted Thursday that serious delinquencies for prime jumbo RMBS deals in that year have risen more than 68 percent since December of last year. The agency said that it had based its current round of downgrades on benchmarks from 1999 — but also said that it expects losses “in 2006 to significantly exceed those experienced in 1999.”

Considering that 2006 is likely to be worse than 1999 — and that 2007 is already performing worse than 2006 — it’s not too much of a stretch to consider that further downgrades are more than likely already in the offing within the prime jumbo sector.

And with downgrades to Alt-A hitting a full and stunning stride in the past few weeks, news of fresh downgrades to prime jumbos is not the sort of thing investors likely want to be seeing right now.

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Mortgage loans are a big problem right now in the U.S. real estate market. So is a refinance mortgage a viable solution if you have this problem? What is a refinance mortgage anyway? Is it the magic panacea that will cure your ills?

Let Us Define

A refinance mortgage is actually a way of using your existing property as collateral, usually for the purpose of paying a debt. It can also be considered as a security interest over a piece of property that is conceded to pay some sort of debt. In this aspect, a refinance mortgage is very similar to a lien. In fact, it is actually a type of lien on a piece of real estate. It allows a creditor to secure the repayment of a mortgage loan. Any legal mortgage would not be a problem because they can be paid off before the transfer of ownership. Mortgage loans are quite common and are accepted as liens even if they are high-risk.

Any given piece of property may be under several liens. These include tax liens, judgment liens and different types of mortgages. If you fail in your refinance mortgage payments, the creditor can enforce the lien and collect payment. You should assess your property honestly to see if it is worth the effort at all.

Take These Steps

Check your local tax and financial laws. Find out if the state can cancel any liens other than government liens when various situations arise. If it can, you should just ignore mortgages. With these types of laws, the property is more likely to be redeemed because the lienor will not let the property go for taxes.

When buying direct, ask detailed questions about the mortgage loans. No matter how great the home looks, it should have value that is worth the effort of purchasing it. You can get this type of information easily by getting a letter from the seller and then talking to the lender about it. As part of your deal, you can actually pay off the mortgage loan and subtract it from the purchase price.

Why Do It At All?

Through a refinance mortgage, you will get a lot of help in paying off a previous loan. When picking a home and successfully applying for a mortgage, you can easily refinance and change to a different type of mortgage. An adjustable rate means your loan conditions will vary depending on market conditions. Payments may increase or decrease accordingly.

As you can see, there are a lot of things to take into consideration when going for a refinance mortgage. You should look into the financial background of a piece of property to determine whether it is worth all the effort. If it is, you can take a variety of approaches with regards to a refinance mortgage arrangement. The important thing is you take your time and find the one that best fits your situation. You will benefit by applying due diligence and making the right decision in the end.

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Thinking of a refinance mortgage? Use a refinance calculator to get the best mortgage rates home deal. Visit WhatAboutLoans.com today.

Standard & Poor’s Rating Services on Thursday did something that very few market participants expected: the agency said it would stop rating RMBS backed by so-called closed-end seconds altogether, whether prime or subprime.

Home-equity loans, as closed-end seconds are more commonly referred to outside the Street, were a huge part of the recent housing market run-up. HELs were a huge boost to consumer spending during the housing boom, and also made it possible for many homeowners to skirt private mortgage insurance by piggy-backing a second lien that covered up to 20 percent of a home’s purchase price.

“After reviewing and analyzing the performance data available for U.S. closed-end second-lien (CES) mortgage loans and the related residential mortgage-backed securities (RMBS), Standard & Poor’s Ratings Services believes that this market segment does not allow for a meaningful analysis of new issuance and securitization,” the agency said in a press statement late Thursday.

No kidding. Most second lien holders finding loss severity to be at least 100 percent, if not greater. And with price declines showing no sign of letting up, S&P said that an “unprecedented level of loan
performance deterioration” has essentially made it impossible to rate second-lien RMBS going forward.

Apparently, there simply isn’t enough credit enhancement in the world to account for losses that reach that high — and while S&P said it will continue surveillance on existing CES deals, sources said that S&P’s announcement underscores just how heavy losses really are in an area of mortgage finance that was once among the industry’s hottest.

How hot? Consider that S&P rated nearly $18 billion in CES deals druing 2007 alone.

Investment Dealers’ Digest, which interviewed S&P spokesperson Adam Tempkin, noted that S&P is seeing borrower behavior that Tempkin characterized as “anomolous and unprecendented” — a reference to a growing number of borrowers simply walking away from their homes.

Neither Moody’s Investors Service nor Fitch Ratings responded immediately to a question from HW regarding whether each competing agency intends to follow suit.

Regardless, sources told HW that the move by S&P essentially puts the nail in the coffin for much of the home equity loan marketplace, and comes as many banks are tightening the screws on outstanding HELOCs, as well.

“The home ATM is officially out of cash, and has been for some time,” said one source, a bond analyst who asked not to be identified by name.

For more information, visit http://www.standardandpoors.com.

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Many professional mortgage services organizations help process mortgages and loans for fixed rates, process first time home loans, variable rate mortgages, and land loans as well as assist in debt reorganization. Debt reorganization, or debt restructuring, is an arrangement involving both the creditor and the debtor that change the original terms for servicing an existing debt. Debt reorganization usually involves relief for the debtor from the existing terms and conditions of a debt obligation. This may be in response to liquidity issues, such as when the debtor does not have the cash needed to meet upcoming payments.

There are four main types of debt reorganization:

1. Debt forgiveness: a reduction or complete suspension of a debt obligation by the creditor via a contractual arrangement with the debtor.

2. Debt rescheduling or refinancing: a change in the terms and conditions of the amount owed. The change may result in a reduction in present value terms.

3. Debt conversion, debt-for real-estate swaps, debt-for-development swaps, debt-for-nature swaps, and debt prepayment: the creditor exchanges the debt claim for something of economic value on the same debtor.

4. Debt assumption: when a third party is also involved.

A debt reorganization package may involve more than one of the types mentioned above. For example, most debt reorganization packages that include debt forgiveness also result in a rescheduling of other outstanding debt. Debt refinancing transactions also include a balance of payment portion that is similar to debt rescheduling in that the debt being refinanced is extinguished and replaced with a new financial instrument or instruments.

Chapter 13 Bankruptcy is referred to as debt reorganization or debt consolidation. It is designed to stop a foreclosure on a home allowing for a homeowner to catch up on back payments usually over the course of sixty months. Chapter 13 can also be used to pay off an automobile, lower credit card payments, and pay back debt with no interest or penalties. Homeowners who have filed Chapter 13 in order to stop a foreclosure are still eligible to refinance their home. After filing for Chapter 13 and stopping foreclosure, the homeowner will often enter a credit repair program and refinance their home after the having made 12 consecutive, on-time payments in the Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy stays on a credit report for seven years.

Debt reorganization is usually accompanies a bankruptcy filing, but not always. A reorganization proposal can be agreed upon by the creditors, with agreements in writing so that all parties know their rights and obligations. All attorneys and accountants involved should make every effort to have the agreement satisfy the requirements of a disclosure statement under the Bankruptcy Code in the event Chapter 13 Bankruptcy is filed. This is often referred to as a prepackaged bankruptcy.

When a homeowner is facing unexpectedly higher mortgage payments it pays to talk to credit counselor who can assist the homeowner in arranging to make lower payments and defer unpaid interest. Debt reorganization options include arranging for lower payments on other debt obligations so that higher mortgage payments are more manageable. Professional credit counselors can also approach lenders to come to an agreement regarding a pending forbearance.

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There are many reasons to refinance your mortgage. You may need lower repayments or maybe you can obtain a lower interest rate. Whatever the reason it's a good idea to get educated on refinancing before taking action. Get home refinance education here.

A new memo from Fifth Third notifies recipients that effective immediately (with a little time to fund the existing pipeline) that the bank is out of the Alt-A business entirely. And in a refreshing turn - all sales channels are affected. Retail and wholesale alike will lose Alt-A products previously offered by the “super-regional” bank.

Here’s a copy of the announcement:

Important Announcement
Please circulate as appropriate

BULLETIN

Announcing Alt A Lending Program Discontinued
Effective In All Channels

To: All Mortgage Sales and Operational Personnel

Fifth Third Mortgage is announcing they are discontinuing offering Alt A lending programs in all Channels.

What needs to happen in managing your pipeline:

Retail/Direct:

• All Alt A applications in the pipeline dated on or before Monday May 5, 2008, must be locked by close-of-business Monday May 5, 2008 by 5PM Eastern Standard Time.
• All loans must be closed by May 23, 2008

Wholesale:

• All Alt A applications in the pipeline must be registered and locked by close-of-business Friday May 2, 2008, by 5PM Eastern Standard Time.
• No registrations will be accepted after 5PM Eastern Standard Time, May 2, 2008
• All loans must be closed and funded by May 23, 2008

NO EXTENSIONS WILL BE GRANTED TO CLOSE/FUND BEYOND MAY 23, 2008 (ALL CHANNELS)

Thank You,
Fifth Third Mortgage Company

(Update 1: adds Fitch Ratings downgrade to junk)

Triad Guaranty Inc. (TGIC: 2.48, +4.20%) said Friday that it has entered into exclusive negotiations with Lightyear Capital LLC, a New York-based private equity firm, to create a new monoline mortgage insurance company. Triad CEO Mark Tonneson said on April 11 that the company would look to clone itself in the wake of a recent ratings downgrade, establishing a new mortgage insurer and putting its existing MI portfolio into run-off.

An investor group led by Triad would tentatively provide up to $400 million to fund the new mortgage insurer, Triad said, with “certain key members of Triad’s current management and many of its employees” joining the new company. Triad would not initially have a stake in the new company.

“We believe the transactions that we are now actively negotiating with Lightyear offer the best outcome for our customers, policyholders, stockholders and employees given the current industry conditions and capital-raising environment,” said Mark Tonnesen.

“In addition to the benefits to the industry from fresh capital, we believe the new company and our clients will benefit from Lightyear’s deep understanding of the financial services market and its extensive network of relationships in the worlds of mortgage finance and insurance.”

Lightyear manages roughly $3 billion in capital, and owns a stake in New York-based Athilon Group Holdings Corp., which provides credit risk protection for structured finance vehicles. The private equity firm also held a controlling stake in former home equity lender Deep Green Financial, which abruptly shut its doors in January of last year as the mortgage crisis was just gaining momentum.

Fitch Ratings was clearly not amused, however, and downgraded Triad’s insurer financial strengh rating to BB from its previous perch at BBB- — that’s junk status — saying that Triad likely wouldn’t have enough capital to meet its policyholder obligations for 2006 and 2007 should it attempt to reinvent itself rather than recapitalizing.

“Without the prospects of profitable future business to offset the likely increase in losses created by the 2006 and 2007 vintage years, or a meaningful capital infusion, Fitch believes that Triad’s margin of safety to meet policyholder obligations could become pressured if delinquency and loss development continue at a sustained pace,” the agency said in a press statement.

For more information, visit http://www.triadguaranty.com.

Disclosure: The author owned no positions in TGIC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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On the heels of earlier data suggesting at least some encouraging trends for investors, it turns out that April was a very good month for at some investors in the MBS marketplace — and the first strong sign of life in a secondary mortgage market that has been all but locked up since the middle of last year.

The proof? Merrill Lynch said that excess returns for MBS over Treasuries were the highest they’ve been since at least 1997, Reuters reported Friday morning:

Merrill Lynch said the excess return of the MBS index in April was 1.546 percent, the highest one-month result since the company started calculating excess returns in January 1997, Carrie Gray, spokeswoman for the company, said in an e-mail.

The stellar performance was largely due to robust buying from an array of investors, particularly government-sponsored enterprises Fannie Mae and Freddie Mac. Overseas demand from Asia, in particular, also played a pivotal [role], analysts say.

Part of the reason for outsized returns, sources told HW, has as much to do with Treasuries as it does with some resumption of buying activity in the MBS market. Merrill Lynch’s bond indexes show, for example, that Treasuries lost 1.7 percent in April — the first monthly loss since June of last year.

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