Refinance Free Credit

We’ve all done it: hit “reply” to an email instead of hitting “forward.” It’s just that not all of us are Countrywide Financial Corp. (CFC: 4.58, -3.78%) CEO Angelo Mozilo, and not all of us made that sort of mistake when dealing with a troubled homeowner. (And, of course, not all of us are quite that, um, tan.)

Mozilo, and by extension the company he runs, found themselves in renewed hot water Wednesday after the Countrywide CEO mistakenly replied directly to a troubled homeowner’s form hardship letter, characterizing it as “disgusting.” Specifically, in response to a form hardship letter from one Daniel Bailey, Mozilo wrote:

This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.

Bailey picked up the form letter off of the Web site LoanSafe.org, a borrower advocacy site started up to ostensibly help troubled borrowers navigate the maze of loss mitigation procedures. The site does not advocate sending hardship letters via email directly to a company CEO, and instead lists direct phone numbers for Countrywide’s loss mitigation department.

It’s currently unknown why Bailey attempted to spam more than 20 Countrywide email addresses with his hardship request; he did not respond to requests for comment from HW.

LoanSafe.org’s founder, Moe Bedard, writes posts that are often critical of the lending industry at a related blog, LoanWorkout.org. Recent fare at his blog includes posts featuring the titles “Fight Your Mortgage Servicer With This Knock Out Punch” and “The issuing power of money should be taken from the bankers and restored to Congress and the people to whom it belongs.”

Bedard was quick to post Mozilo’s reply on his blog, and to reach out to media with news of the flap, which has created a firestorm of criticism from consumers pointing to Mozilo’s reply as proof of what they see as a lack of concern for troubled borrowers. The LA Times first reported on the story Tuesday afternoon, after being contacted by Bedard.

Not all of the furor was from borrowers upset by Mozilo’s comments. Others weighed in suggesting the Countrywide CEO’s frustration was over a lack of sincerity from many borrowers pursuing hardships.

“There are a lot of people copying the examples on LoanSafe’s forums almost verbatim,” one commenter wrote. “While I wouldn’t have added the word ‘disgusting’, I can understand his frustrutation at everyone being ‘coached.’ Using your own words to tell your situation and story will make your situation seem more believable, IMO.”

For its part, Countrywide issued a statement Wednesday: “Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes.”

Mozilo’s mistake isn’t one that consumer groups are likely to let the Calabasas-based lender live down anytime soon; the groups have been long been critical of what they see as predatory lending and servicing practices at the nation’s largest independent mortgage banking operation. Countrywide is set to be acquired by Bank of America Corp. (BAC: 34.63, -2.15%) later this year, and has become a lightning rod for industry criticism due to its commanding market presence.

Disclosure: The author was long CFC and held no other positions of interest when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

In what should be good news for both troubled borrowers and servicers alike, the American Securitization Forum said Tuesday afternoon that it had released operational guidelines for mortgage servicers and counseling organizations, designed to help both parties implement procedures for reimbursing expenses associated with borrower credit counseling services.

The ASF represents the interests of third-party/private-party securitization in the secondary mortgage market. Its guidelines apply to a vast number of subprime and Alt-A mortgage pools that were structured into bonds by issuers other than those named Fannie Mae (FNM: 27.41, -1.19%), Freddie Mac, (FRE: 26.16, -0.57%), or Ginnie Mae.

“Servicers are legally obligated to mitigate losses and maximize recoveries on each mortgage loan, acting in the best interests of the investors in a securitization trust comprised of these loans,” said Tom Deutsch, deputy executive director of the American Securitization Forum. “Borrower credit counseling is one of several tools servicers can use to preserve homeownership and prevent foreclosure, which is the best solution for borrowers and investors alike.”

The ASF had first signaled in October of last year that credit counseling fees should be interpreted as “servicing advances,” and considered for reimbursement out of a securitization trust, but did not at the time establish formal policies and procedures surrounding when and how trusts would cover the fees. The upshot, HW was told, was that servicers couldn’t really act on the notion that counseling fees would be reimbursed.

“It really depended on whatever trust was involved in the deal,” said one source, who asked not to be named.

Fannie Mae introduced a formal policy for HOPE Hotline referrals by servicers in January, in a move that signaled an industry-wide shift towards support for credit counseling — especially in the face of loss mitigation departments that have been simply overwhelmed by calls from troubled borrowers.

“This should come as a help for some servicers,” said HW’s source, a servicing exec who asked that his name not be used. “Knowing what is considered an advance, when, and how much is allowable sets some sort of standard going forward.”

Most of the subprime mortgages that comprise the lion’s share of default activity thus far are involved in so-called private-party securitizations that fall outside of the purview of the GSEs — in fact, during the go-go years of 2005-2007, the third-party securitization market actually trumped the GSE-led MBS market in terms of issuance volume.

The new ASF guidance recommends that servicers reimburse up to $150 out of securitization trust proceeds for any approved counseling session. Other specific recommendations include “contracting with quality and trusted counseling organizations,” ensuring that the counseling organization involved help servicers collect information relevant to loss mitigation evaluations. Counseling expenses should be reimbursed regardless of the outcome of a loss mitigation effort, as well, the ASF document says.

Loans are eligible for counseling reimbursement if they are in delinquency, current but where default is imminent or reasonably foreseeable, in loss mitigation with extenuating circumstances such as a rate reset coming in six months, within 30 days of a foreclosure sale, or where the servicer documents the individual counseling expense had a net present value benefit, the ASF said.

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

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

http://ScottChristiansen.com helps folks with their Laguna Beach Mortgage (949) 887-6672 Laguna Beach CA Home Loan, Laguna Beach California Refinance, Orange County http://www.ScottChristiansen.com

The Federal Reserve minutes showed that the members of the board are unlikely to act with further monetary policy easing even if weakness continues or worsens.  Is the Fed officially out of ammo or are they just putting rate cuts behind “break in case of emergency” glass?

From Market Watch on the Fed minutes:

There was a lack of desire expressed at the Federal Reserve policy meeting for additional rate cuts in June or beyond, especially in light of the inflation outlook, according to an official summary of the meeting released Wednesday. Even more signs of weakness would not be a reason for addition cuts, the minutes said. “[S]everal members noted that it was unlikely to ease policy in response to information that the economy was slowing further,” according to the summary.

Fed officials did vote to cut rates at quarter-point at the April 29-30 meeting, but that was viewed as a “close call.” FOMC members were clearly worried about the inflation outlook. Their forecast for headline inflation as measured by the personal consumption index jumped to a range of 3.1 to 3.4%, much higher than their previous forecast of a 2.1 to 2.4% rise.

The risk of higher inflation was just about even with the risks of an economic downturn, members said. Fears of an economic meltdown from a credit crunch had lessened, members added.

Share This

A March agreement between Fannie Mae (FNM: 27.41, -1.19%), Freddie Mac (FRE: 26.16, -0.57%) and New York Attorney General Andrew Cuomo on appraisal practices is coming under fire by Senate Republicans, sources told Housing Wire Wednesday afternoon.

The so-called Home Valuation Code of Conduct, or HVCC, has been widely attacked by appraisers as one-sided and harmful to the industry, as well as lacking proper controls that are really needed to help ensure appraiser independence; it’s also variously been characterized as a state-level power grab by industry trade groups and other Federal-level regulators who say they weren’t involved in the process.

American Banker reported Wednesday that a possible amendment that would have essentially upended the agreement, backed by Senator Elizabeth Dole (R-NC), was never introduced or considered in yesterday’s Senate Banking Committee mark-up session of a housing relief package. (See earlier coverage).

Dole’s amendment would have specified that appraisal rules must be set federally, rather than at the state level. The decision to pull the amendment from debate came as a small surprise to a few observers on Capitol Hill that spoke with Housing Wire on condition of anonymity.

“I thought this was at least going to be negotiated, even if I didn’t think it would be added in,” said one source, an industry lobbyist. “I’m not sure why she [Dole] didn’t pull the trigger.”

Democrats’ reception to the proposal has been predictably cool thus far. An earlier American Banker story from Tuesday carried the reaction of Senator Chuck Schumer (D-NY):

“This would snatch defeat from the jaws of victory in the fight against predatory lending practices,” the Democrat said in an e-mail to American Banker. “This settlement was a major breakthrough in rooting out the inflated appraisals that fueled the subprime mortgage mess. An attempt to totally undo this deal would represent a step backwards.”

Cuomo has characterized the agreement as an attempt to “clean up appraisal fraud in the mortgage industry,” but banking representatives said the agreement will instead have unintended consequences for borrowers and the industry alike. Both Bank of America Corp. (BAC: 34.63, -2.15%) and Wachovia Corp. (WAC: 0.00, N/A), in particular, have said they oppose the current HVCC agreement.

Terry Franscisco, a spokesman for BofA, has said in published reports that the HVCC is “overly broad” and would have “unintended consequences” for borrowers — namely higher mortgage costs — as currently constructed. (The bank does support the spirit behind the agreement, however.) For its part, Wachovia has suggested that it already has policies and procedures in place to ensure independent appraisals, and argued that the agreement would have the effect of pushing good appraisers out of the business.

The committee’s ranking Republican, Senator Richard Shelby (R-AL), has suggested support for the bill, and suggested the committee take up the debate, according to media reports. Whether the Senate will ultimately take up the appraisal issue “is tough to predict at this point,” Housing Wire’s source said.

Disclosure: The author held no positions in the publicly-traded firms mentioned in this story when it was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

Once an Alt-A powerhouse, Impac Mortgage Holdings Inc. (IMH: 1.12, -10.40%) said Wednesday that it lost $2.05 billion during 2007, or ($27.10)/share, in a delayed filing with the Securities and Exchange Commission. The annual loss compared with a $75.3 million loss recorded one year earlier.

Estimated taxable loss available to common stockholders for 2007 was $136.0 million, or $(1.79)/share, compared to estimated taxable income of $79.5 million or $1.05 per diluted common share for 2006, the company said.

Driving the loss was a huge $1.4 billion provision for loan losses, which Impac said was the “result of deteriorating market conditions, higher delinquencies and higher severities.” The Alt-A lender shut down all origination activity in September of last year, and said in its SEC filing that “the capital markets remain very volatile and illiquid and have effectively been unavailable.”

The company will now look to compete its first quarter earnings report, which is also expected to show substantial and continuing losses for the Irvine, Calif.-based lender. It continued to shed staff in the first quarer, as well: Impac said that by the end of March, it employed 137 full-time employees, compared to 827 at the end of 2007.

Mounting credit costs, including skyrocketing loss provisions, kept Impac’s shareholder equity in the red, with the lender reporting negative equity of $1.1 billion at the end of last year, with the company warning that “further deterioration in the mortgage industry” would like put it at risk as a going concern.

REO auctions, and an SEc inquiry
Given company CEO Josef Tomkinson’s involvement in an ongoing dispute involving REO auction firm REDC, it was certainly eye-opening to see a disclosure in the 10-K filing that disclosed a new partnership with the auction firm — one that delivered $1.1 million to Impac’s benefit in the first quarter of this year, and $1.7 million in gains during 2007.

Impac said that in March, it had entered into an agreement to help with business development for REDC in exchange “for a percentage of the firm’s gross profit.”

The lender also said that the Securities and Exchange Commission had begun an inquiry into the company’s internal operations.

“During 2008, pursuant to informal requests from the SEC, we have provided certain information … about our business operations and related accounting policies and methodology,” the company’s 10-K filing read. The company did not elaborate further on the requests from SEC officials, and in a conference call with analysts Wednesday, company officials declined to provide further specifics.

Reuters and other news agencies said Wednesday that the SEC has not provided further details, either.

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

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

Well, after over an hour of talking with the phone company they have given me until Friday to pay off the bill. It really helped that I was able to pay over half of it off.

Not sure what I'm gonna do now, but it's a step in the right direction. If it gets shut off, I'll still be paying over $200 in reconnect fees. Ug.

I have 4 checks coming, but they won't be here for another 3 weeks or so. If I get disconnected, I won't be back until July. I'll try to keep updating from the library if I can. My library seems to block a lot of things, so I'm not sure I'll even be able to get here.

Looks like this summer is going to be a bumpy one and not in the ways I expected.

Friday is the finalization of the house refi. That's a good thing. Then I can really start making decisions and working on things.

Have a great day.

J

The Big Picture highlights the New York Times piece on the booming business that is the boat repo trade as boat-owners, many who used cheap credit to buy their dreamboat, let their payments lapse in the face of rising credit and gas costs.

From the New York Times article on the newest economic proxy:

“Boating was traditionally the pastime of the well-off, but the long housing boom and its gusher of easy credit changed that. People refinanced their homes and used the cash for down payments on a cruiser, miniyacht or sailboat. From 2000 to 2006, retail sales for the recreational boating industry rose by more than 40 percent, to $39.5 billion, while the average loan amount more than tripled to $141,000.

Last year, as real estate faltered, the gears went into reverse. The number of boats sold fell 8 percent. Many boats are fuel hogs, and rising gasoline and diesel prices meant a weekend jaunt could cost hundreds or even thousands of dollars. Owners found they could not sell a boat for what they owed and could not refinance either.

Latrell Sprewell, the former NBA star facing foreclosure recently had his $1.2 million yacht repoed has to be one of the more famous boating delinquents.

This reminds me of one of the last times I was in Irvine, California, the center of the mortgage-lending universe, and I saw a huge car-carrier full of repo’d Ferraris, Mercedes and Porches being towed to impound.  The same fate for the cars as it is for the boats, I’m sure.

Share This

Mortgage applications fell 7.8% this week according to the Mortgage Bankers Association weekly survey.  The application rate is 10% lower than the same week a year ago.  The mortgage application activity tracked by the MBA is holding mostly steady over the past 4 weeks with a .6% declining moving average.

From Market Watch on mortgage application activity:

Compared with the same week in 2007, applications were down 9.4%, the MBA said.

Applications to refinance an existing mortgage decreased 8.7% last week, compared with the previous week. Home-purchase applications declined a seasonally adjusted 6.9% last week.

The four-week moving average for all loans was down 0.6%.

The share of applications for refinance mortgages was 48.2%, down from 48.7% the previous week. The adjustable-rate mortgage share was 10.0%, up from 8.3% the previous week.

The average interest rate on a 30-year fixed-rate mortgage was 5.9% last week, up from 5.82% the previous week. The 15-year fixed-rate mortgage averaged 5.42%, up from 5.38%. And 1-year ARMs averaged 6.71%, up from 6.60% the previous week.

Share This

The execs of now-defunct subprime lender Delta Financial Corp. are planning a comeback, according to former Delta CEO Hugh Miller. A group of senior execs from the bankrupt lender are forming Reliance First Capital, LLC, with an eye towards FHA lending as well as some “alternative products,” Miller said in a notice posted to former employees on a company Web site.

“We are starting the company from scratch, which means we will need to obtain various state banking licenses and the like,” Miller wrote at DFCConnect.com, a Web site used to communicate with former Delta employees. “As such, we will have only a very small group of employees for approximately the first six months while we are working on getting all set up.”

Delta Financial went bankrupt in late December of last year, after being one of the last independent subprime mortgage banking operations to survive the industry meltdown. The company was widely regarded as one of the more conservative subprime lenders in the industry, industry sources told HW at the time.

Reliance will start in a “smaller capacity,” Miller said, and is backed by $7 billion private equity fund Wexford Capital.

“I needn’t tell any of you that the markets are still in terrible condition,” he said.

Sources close to the company told Housing Wire Wednesday morning that Reliance will originate for FHA to start, while also offering a more limited array of third-party subprime products. The company’s core executive team believes it knows how to manage risk in subprime lending, and that starting with a clean slate will provide the flexibility needed.

Via Newsday, who also reported on the rebirth of Delta:

Dean Hartman, chief planning officer of Continental Home Loans in Melville, said Miller’s “alternative products” sound like subprime, but it could work because most lenders have run away from subprime.

“There’s a void in the market,” he said. “They can do pretty well if they’re careful and not become cowboys again.”

It’s certainly an intriguing idea, given that so many have written off subprime lending altogether: is there still a viable market in lending to those with less-than-perfect credit?