TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/113472
local edition s e c on da r y m a r k e t a na ly t ic s Se r v ic i ng Or ig i nat ion SERVICING Obama proposed expanding access to refinancing through FHA, a program that would draw funding through a tax on banks. He also proposed a program to allow borrowers whose loans are not backed by Fannie Mae or Freddie Mac to refinance through the GSEs. Both programs required congressional approval, and both programs were denied. Gardner suggested FHA's current financial state "makes it almost impossible politically that it would be a vehicle for any mass-refi program." However, Gardner does not anticipate the FHA will require a draw from Treasury this year. Sens. Barbara Boxer (D-California) and Bob Menendez (D-New Jersey) introduced the Responsible Homeownership Refinancing Act to extend HARP for one year and expand eligibility. The bill was held up in Congress last year, but Gardner believes the senators will push for its passage again this year. "While we think there is a modest chance that MenendezBoxer may pass the Senate, we think chances of the bill passing the House are quite low," Gardner stated. According to Gardner, housing market assistance measures that can be passed without congressional approval have the best chances of being implemented. CRE Loan Prices Stagnant to Start the New Year According to research from DebtX, commercial real estate activity in the secondary market stalled in December 2012, following a strong pattern of growth. Massachusetts // Measuring the prices of loans sold through its platform, Boston-based DebtX found commercial real estate (CRE) loan prices rose over the 68 | The M Report year in 2012 but ended the year with little change in December. "2012 was a very strong year in the CRE secondary loan market," said Will Mercer, managing director at DebtX, a marketplace for CRE loans. During the year, prices for impaired performing loans DebtX estimated whole loans making up the commercial mortgage-backed securities market are priced at 89 percent as of December, down from 89.4 percent in November but up from 86.1 percent a year ago. DebtX also calculates the liquidity of loans sold through its increased 9.1 percentage points. Prices for nonperforming loans increased an even higher 11.5 percentage points. However, in December impaired performing loan prices showed no change, remaining at 80.5 percent. Nonperforming loans, which also showed strength over the year, ended the year at 52.6 percent, a slight increase from the 52.2 percent recorded in November and a somewhat significant increase from the 41.1 percent recorded in December 2011. platform with the Loan Liquidity Index. Like prices, liquidity dropped slightly in December, falling from 180.4 in November to 108.2 in December. However, loans sold through DebtX are more liquid than they were a year ago when the index charted 94.9. USMI Debuts New Underwriting Guidelines Designed to mitigate credit-related limitations and geographic restrictions, Genworth's insurance unit rolled out updated rules for underwriting. Virginia // Genworth's U.S. Mortgage Insurance (USMI) unit unveiled a new set of underwriting guidelines designed to allow lower credit scores and eliminate nearly all geographic restrictions. Genworth USMI's "Simply Underwrite" guidelines collapse several current sets of underwriting guidelines—based on institution type, origination channel, and other factors—into one expanded national underwriting standard for loans approved by Fannie Mae and Freddie Mac's automated underwriting systems. "Simply Underwrite provides expanded guidelines that are easy for customers to understand and use, while maintaining prudent underwriting standards that allow us to appropriately manage risk," said John Clifford, SVP of commercial operations for Genworth USMI. The expanded Simply Underwrite guidelines allow FICO credit scores as low as 660 or most borrowers purchasing a home with a 5 percent down payment, giving lenders a greater opportunity to support the recovering market. The guidelines also will remove geographic and property-type restrictions in all markets except for attached housing units in Florida, which will still require Genworth USMI to underwrite to determine insurance eligibility. According to a release from the company, the simplified guidelines will also allow debtto-income ratios of up to 45 percent. While Genworth USMI will closely monitor loan performance under the new guidelines, the company noted that "loans from customer segments already using similar expanded guidelines have a history of good performance." Genworth USMI is one unit of Genworth Financial, based in Virginia.