Clarification
September 5, 2008
In response to a story on loan production at GMAC's Residential Capital LLC unit, a company spokeswoman has asked to clarify her statements to MortgageWire.
Her statement follows: "ResCap is not making predictions about how our loan volumes will be impacted due to the closure of the retail and wholesale channels. However, we are excited about continuing to originate loans through our ditech.com, GMAC Mortgage direct and correspondent channels." Originally, the spokeswoman said that despite the elimination of the firm's broker channel and traditional retail branches, origination volumes would not decline by much.
Fitch Downgrades Beazer's IDR, Debt
September 5, 2008
Fitch Ratings has downgraded the Issuer Default Rating and outstanding debt ratings of Beazer Homes USA Inc. and removed them from Rating Watch Negative.
The downgrades were as follows: IDR, from B to B-minus; senior notes and convertible senior notes, from B-minus/RR5 to CCC-plus/RR5; and junior subordinated debt, from CCC/RR6 to CCC-minus/RR6. The downgrades reflect "the current difficult housing environment and Fitch's expectations that the housing environment remains difficult for the remainder of the year and that new-home activity will still be on the decline well into 2009," the rating agency said. They also reflect "negative trends in Beazer's operating margins, further deterioration in credit metrics ... and erosion in tangible net worth from noncash real estate charges," Fitch added. The companies can be found online at http://www.beazer.com and http://www.fitchratings.com.
ECC Reports $68.7M Loss for First Half
September 5, 2008
ECC Capital Corp., a real estate investment trust headquartered in Irvine, Calif., has reported a net loss of $68.7 million for the six months ended June 30.
In a document posted on the company's website, ECC attributed the loss to high levels of delinquency and loss severity on mortgage loans held for investment. After realizing losses of $43.1 million in its mortgage portfolio for the six months ended June 30, ECC increased its loan loss allowance to $97.3 million, compared with $62.5 million at Dec. 31, 2007. It also cited a decline in the market value of its interest rate swaps and caps of $3.6 million for the six months ended June 30. Additionally, ECC was required to pay $2.5 million under its swap agreements, resulting in a loss on derivative instruments of $6.1 million for the six-month period. (For the first six months of 2007, ECC lost $62.3 million.) In a news release announcing the posting of the six-month 2008 data, ECC said that as it assesses its cost structure, "it cannot provide assurance that it will post third-quarter 2008 financial information." The company can be found online at http://www.ecccapital.com.
Columbia Shutting Mortgage Banking Ops
September 5, 2008
Columbia Bancorp, The Dalles, Ore., is shutting the in-house mortgage banking operation at its subsidiary Columbia River Bank.
The closure will affect approximately 39 employees over the next 60 days as the unit winds down. "Columbia's decision to no longer operate an in-house mortgage lending service was necessary because of the uncertainty in the mortgage markets and the risk associated with the industry," explained Roger Christensen, president and chief executive of Columbia. "This will allow us to focus on our core business services, a central point of our management team's vision for the future." CRB has also fired 20 other employees and eliminated 15 others through attrition. Columbia lost $206,000 ($0.02 per share) in the second quarter, which included a loan loss provision of $5.7 million due to increased risk in its residential construction portfolio. The bank can be found online at http://www.columbiariverbank.com.
FirstAm Units Unveil Vacant-Property Service
September 4, 2008
First American Field Services and First American Real Estate Tax Service have announced the availability of a new vacant-property registration service aimed at helping lenders and servicers comply with changing municipal ordinances.
The service identifies properties in a lender's servicing or real-estate-owned portfolio that require vacant-property registration and then manages the registration process, including the disbursement of fees. "As new ordinances are passed in various jurisdictions, our vacant-property registration database is updated and we are able to revise the registration information on behalf of our clients as needed," said Paul Dauterive, president of First American Field Services. ".... This new service reduces the lender's risk of compliance-related penalties by ensuring that all necessary properties remain properly registered throughout the default process." The First American Corp., the Dallas-based parent company of the two units, can be found online at http://www.firstam.com.
Beige Book: Housing Weakened Further
September 4, 2008
Residential lending and housing activity weakened in August, while commercial real estate activity showed more signs of softening, according to the Federal Reserve's Beige Book.
Federal Reserve district banks reported that "residential mortgage lending fell in New York and Richmond [Va.], remained slow in Chicago and Dallas, but gained slightly in Philadelphia." The Atlanta and Dallas district banks reported that inventories of unsold houses have edged down since July when the last Beige Book was issued. Meanwhile, CRE activity "moved down or remained weak in all districts, except Dallas," the Beige Book says. "Boston, New York, Philadelphia, Atlanta and Chicago reported signs of softening demand, including declining leasing activity, rising vacancies and decreasing construction."
Extreme Housing Overvaluation Deemed Nil
September 4, 2008
Extreme overvaluation in the nation's housing market was "essentially nonexistent" in the second quarter, an indication that "the nation's housing 'bubble' has popped and house prices reflect a healthy balance in relation to long-term fundamentals," according to an analysis released by Global Insight Inc., Waltham, Mass.
The quarterly housing valuation analysis, House Prices in America, found that prices fell in 152 of the 330 covered metropolitan markets in the second quarter, representing 46% of all single-family units in the United States. "Although the markets that were extremely overvalued two years ago are seeing expected price declines, other areas are seeing price declines due to weak economic conditions," said Jeannine Cataldi, senior economist and manager of Global Insight's Regional Real Estate Service. "The market has a lot of inventory to work through before prices will change course." The analysis is a joint effort of Global Insight and National City Corp., Cleveland. More information can be found online at http://www.globalinsight.com/housingvaluation and http://www.nationalcity.com/housevaluation.
GMAC Pulls Plug on Branches, Homecomings
September 4, 2008
GMAC Financial Services shocked the market Wednesday, announcing that it will close all 200 of its retail residential branches and cease table funding through its broker division, Homecomings Financial.
According to figures compiled by National Mortgage News and the Quarterly Data Report, GMAC's mortgage division, Residential Capital LLC of Minneapolis, ranks sixth nationwide among all home mortgage originators. The company said it will still fund loans on a correspondent basis and through what it calls "direct lending channels." In total, 5,000 mortgage jobs (60% of the work force) will disappear. "While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," said new ResCap chairman and chief executive Tom Marano. "Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk." ResCap is also the nation's 10th-largest servicer, with $449 billion in receivables. ResCap can be found online at https://www.rescapholdings.com.
GMAC: Loan Production May Not Drop Much
September 4, 2008
GMAC Financial Services says its overall residential loan production may not drop by much despite the fact that it is closing its wholesale and traditional retail branches [see item below].
A company spokeswoman said Residential Capital will aggressively market its Ditech direct-to-consumer brand and maintain a presence as a correspondent buyer of mortgages. Asked about origination volume, she cautioned, "I don't want to make any predictions, but volumes may not drop much." In the first quarter, ResCap funded $20.8 billion in home mortgages, a 44% decline from the level of a year earlier, according to the Quarterly Data Report. In the first quarter, roughly half its production came through the correspondent channel, with retail and wholesale accounting for about 25% each. (Second-quarter results were not available.) In addition, no breakouts were available for Ditech. "We hope to do a lot of volume," she added. "We stand behind these two channels."
GMAC Pulls Plug on Branches, Homecomings
September 3, 2008
GMAC Financial Services on Wednesday shocked the market, announcing that it will close all 200 of its retail residential branches and cease table funding through its broker division, Homecomings Financial.
According to figures compiled by National Mortgage News and the Quarterly Data Report, GMAC's mortgage division, Residential Capital LLC of Minneapolis, ranks sixth nationwide among all home mortgage originators. The company said it will still fund loans on a correspondent basis and through what it calls "direct lending channels." At press time no further details were available. Public relations officials could not be reached for comment. In total, 5,000 mortgage jobs (60% of the workforce) will disappear. "While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," said new ResCap chairman and CEO Tom Marano. "Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk." ResCap is also the nation's 10th largest servicer with $449 billion in receivables.
