Exec Advises Laid-Off Loan Officers to Look to Specialty Servicing

As mortgage rates climb and the refinance boom comes to a close, the origination sector is in flux.

Last week, mortgage applications declined 8 percent, according to the Mortgage Bankers Association’s Weekly Mortgage Application Survey, while the average interest rate for a fixed-rate, 30-year mortgage rose from 4.56 percent to 4.68 percent.

Also evidence of declining refinance volumes, Ellie Maereported last month that purchase originations outpaced refinances for the first time since Ellie Mae began recording origination data about two years ago.

With declining volumes, the industry cannot support the number of loan officers it has had on staff of late, and many originations shops are shedding employees. Wells Fargo, for example, is reportedly cutting 2,300 production jobs.

However, this glum news may have a silver lining, according to at least one industry executive.

“There’s a huge opportunity for former loan originators taking their existing skill set and industry knowledge and applying them in specialty servicing,” Patrick Norton,SVP of Fay Servicing, based in Chicago, told DS News.

“There’s enormous opportunity, and I don’t think it’s going to fade away in the near future,” Norton said.

Loan officers already have a broad and deep understanding of the mortgage industry. They are used to working with customers with challenging credit profiles, and they are adept at relationship-building, according to Norton.

These skills “translate very nicely to a career in specialty servicing,” Norton said.

In fact, Fay Servicing is expanding, and the company “targets exclusively former loan originators,” according to Norton.

Unlike refinancing, which experienced a recent boom and is now on the decline, Norton says specialty servicing will not likely see a decline any time soon.

Even after the industry works through the current backlog of delinquent and troubled loans, specialty servicers will remain an integral part of the industry, according to Norton.

The biggest adjustment for loan officers transitioning to servicing is the “distinct regulatory environment,” according to Norton. Fay Servicing offers new employees transitioning from the originations sector a two-week course to familiarize them with industry regulations and best practices.

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Fannie Mae Recognizes Top Performing Servicers with STAR Results

The results are out for Fannie Mae’s program that recognizes top performing servicers.

Known as the Servicer Total Achievement and Rewards, orSTAR, the program was created to establish servicing standards and acknowledge Fannie Mae servicers that stand out for their performance, customer service, and foreclosure prevention efforts, according to a release.

Only servicers with STAR scorecard results that are at or above median levels compared to those in their peer group receive recognition. Servicers were broken down into different peer groups based on portfolio composition and size. Servicers in peer group one have more than 215,000 Fannie Mae loans, group two has more than 75,000 loans, while group three has at least 500 seriously delinquent Fannie Mae loans.

Servicers recognized for the first half of 2013 in peer group one were Green Tree Servicing, Nationstar Mortgage, Ocwen Financial, PHH Mortgage, PNC Financial Services Group, Seterus, and Wells Fargo.

In peer group two, Fannie Mae gave a nod to Fifth Third Bank and Regions Bank.

Meanwhile, servicers acknowledged in the third group were Capital One, Colonial Savings, M&T Bank, Navy Federal Credit Union, Sovereign Bank, and Third Federal Savings and Loan.

For the first time, the 2013 midyear results also included key metrics to measure servicer performance and foreclosure prevention efforts.

“Our mortgage servicers’ efforts are critical to keeping people in their homes, preventing foreclosures and stabilizing communities,” said Leslie Peeler, SVP of Fannie Mae’s national servicing organization. “With our expanded 2013 mid-year assessment, we continue to recognize servicers that are on track to meet overall performance scorecard goals while also recognizing more servicers that are top performers in specific operational areas. We are working hard to share more information regarding ourSTAR assessment process so the industry can more easily identify and adopt best practices for the benefit of homeowners.”

The specific metrics used to examine performance and foreclosure prevention results were ability to assist 90-plus delinquent borrowers; efficiency when helping borrowers retain their homes; and liquidation efficiency when handling short sales and deeds-in-lieu.

Among those three metrics, Fannie Mae recognized servicers who showed leading performance when compared to their peer groups.

Three servicers were recognized for their ability to handle 90-plus delinquent accounts: Seterus, Regions Bank, and Branch Banking & Trust Company.

Seterus also stood out for retention efficiency, along with OneWest Bank and Colonial Savings.

The servicers that were acknowledged for liquidation efficiency were GreenTree Servicing, Fifth Third Bank, and Navy Federal Credit Union.

Report: Mortgage Industry Nets Nearly 3K Jobs Losses in Q2

As declining refinance volumes hurt the market for loan officers, decreasing delinquencies are also prompting the need to cut back on mortgage jobs.

According to Mortgage Daily’s Mortgage Employment Index, the number of mortgage layoffs surpassed the number of newly added jobs by nearly 3,000 in the second quarter.

From April to June of this year, the mortgage industry experienced 9,950 job losses, while newly filled positions totaled 6,969, leading to a net 2,981 layoffs. The near 10,000 job cuts in the second quarter represents the biggest total since the first quarter of 2009.

The second quarter statistics are a significant letdown when compared to the first quarter of this year, when mortgage companies added a net 5,129 jobs, with layoffs at just 2,930, Mortgage Daily reported.

With a net 1,509 mortgage layoffs, California experienced the most drastic decline, according to the index. New York followed after netting 1,280 job losses, with South Carolina (-515 jobs), New Jersey (-435 jobs), and Texas (-354 jobs) also in the top five.

Florida, a state known for its high foreclosure rate, came out with the highest number of new jobs, with a net 574 new hires.

Arizona had the second highest number of net jobs added, at 300, followed by Missouri (+242 jobs), Indiana (+162 jobs), and Illinois (+159 jobs).

When comparing servicers, Mortgage Daily reported Bank of America suffered the highest number of job cuts in the second quarter, at 5,000. JPMorgan Chase ranked second, with a net 1,826 layoffs.

On the other hand, the index revealed Nationstar Mortgage led with the most hires, netting 2,300 jobs in the first quarter and zero layoffs, while Walter Investment Management Corp. also saw no layoffs, but added 1,400 new jobs.

Despite the layoffs, one executive at Fay Servicing advised there are still plenty of job opportunities with specialty servicers in a recent article.

Home Sales Stage a Comeback in July

After observing a slowdown in sales throughout June—typically the peak selling month for the year—online brokerage Redfin reported a rebound in July, though other market indicators continue to cool.

According to Redfin’s data, “this July saw a healthy jump in homes sold throughout most of the 19 markets covered in this report,” improving 3 percent month-over-month and 17.6 percent year-over-year from a rather disappointing July 2012.

In fact, according to the Seattle-based brokerage, July 2013 saw the highest number of homes sold in the past four years, with the 19 markets together seeing about 94,000 sales.

“July’s numbers are probably the result of buyers shaking off the impact of mortgage interest rate increases, and opting to lock in rates before they rise further,” explained analyst Tommy Unger. “Chicago led the nation with

nearly 12,000 homes sold, up a strong 5.7 percent in July, and 36.9 percent year over year.”

While sales numbers picked up, Redfin believes the gains won’t last.

“With less inventory, higher interest rates and continued buyer fatigue, August won’t see the same 7 percent month-over-month sales increase as in 2011 and 2012,” Unger said. “In fact, based on current closed and pending sales, we expect a slight month-over-month drop in home sales for next month.”

At the same time, reports on home price growth and inventory were less positive in July.

Nationally, home prices per square foot were up 1.1 percent from June and 19.3 percent from July 2012, Redfin reported. However, a closer examination shows four of the 19 areas tracked posting monthly price decreases: Austin (-2.6 percent); Washington, D.C. (-2.5 percent); Philadelphia (-1.5 percent); and Boston (-0.9 percent).

Meanwhile, the number of homes for sale in July fell 4.6 percent month-over-month, outdoing the 4 percent drop recorded at the same time last year. Year-over-year, inventory fell 30.6 percent. With the exception of San Jose (which reported a 7.1 percent monthly increase in for-sale homes), inventory was down on a monthly basis in all tracked markets.

“The slight increase in inventory from May to June was partially attributable to the lower sales volume,” Unger said. “Now, it looks like inventory is back on its seasonal decline heading into fall.”

Home Prices in Texas, Colorado Hit New Highs in June

As national home prices recover, Texas and Colorado are already busy setting new highs, data from Lender Processing Services, Inc. (LPS) revealed.

In June, national home prices rose to $229,000, representing a 1.2 percent gain from May, and a sharp 8.4 percent increase from a year ago, according to LPS’ Home Price Index (HPI). When compared to the index’s 2005 peak of $270,000, prices are still down 15.2 percent.

However, Colorado and Texas moved ahead of the national trend and hit new highs of $256,000 and $182,000, respectively.

On the other hand, California saw a 19.6 percent annual jump in prices, but remains 26.3 percent below its peak. Arizona also saw a significant increase over the last year in June. Prices in the state rose 13.9 percent, but are 32.8 percent away from the peak value.

Out of the 40 large metro areas LPS tracks, three in Texas reached new highs: Austin ($237,000), Dallas ($182,000), and Houston ($181,000). Denver also established a new high-water mark of $265,000.

At the same time, San Antonio is just 0.3 percent below its August 2007 peak, while Honolulu sits 2.1 percent below its 2007 peak.

Overall, nearly half, or 19, of the 40 large metro areas experienced double-digit annual gains, LPS reported.

Las Vegas led with a 27 percent increase, followed by San Francisco (+23.9 percent), Sacramento (+23.9 percent), San Jose (+20.1 percent) and Riverside, CA (+19.8 percent).

When factoring in distressed sales, LPS found short sales sold for a discount of 25 percent, while REOs were marked down by 26 percent. Discounts varied greatly by state, with Nevada seeing REO discounts of only 8 percent compared to 36 in New York.

Delinquency Rate Back on Downward Course After Seasonal Increase

The national mortgage delinquency rate resumed its downward trend in July after experiencing a seasonal uptick in June, Lender Processing Services, Inc. (LPS) reported Monday.

The delinquency rate, which includes loans 30 days or more past due, slipped to 6.41 percent in July after increasing to 6.7 percent in June. The decrease represents a monthly and yearly decline of 3.96 percent and 8.76 percent, respectively.

Foreclosure inventory also fell in July, dropping to 2.82 percent, down from 3.46 percent in June. Compared to a year ago, the decrease is much steeper, at 30.76 percent.

According to LPS, the foreclosure inventory rate is at the lowest level since February 2009.

When totaling past due loans, including delinquencies and foreclosures, LPS found about 4.6 million mortgages are behind on payments.

Of that total, 3.19 million are 30 days or more past due but not in foreclosure, while 1.41 properties are in foreclosure inventory. About 1.35 million of the delinquent loans are 90 days or more past due, but not yet in foreclosure.

Florida, as usual, took the top spot for the highest percentage of past due loans. Mississippi followed, with New Jersey, New York, and Maine rounding out the top five.

Wyoming held the lowest percentage of non-current loans, followed by Montana, Alaska, South Dakota, and North Dakota.

Trump’s Real Estate School Deemed a ‘Scam’ by NY Attorney General

Donald Trump and Trump University, a real estate investment school in New York, face a lawsuit charging Trump and his school defrauded consumers of $40 million.

Trump University functioned as a real estate school, luring students with promises that they would learn Trump’s personal real estate methods and ensuring their success in real estate investment.

However, according to New York Attorney General Eric T. Schneiderman, who filed a suit against Trump Saturday, the school did not deliver on its promises.

“Mr. Trump used his celebrity status and personally appeared in commercials making false promises to convince people to spend tens of thousands of dollars they couldn’t afford for lessons they never got,” Schneiderman said in a press release Sunday.

Instead of the real estate education they were promised, Schneiderman says more than 5,000 students “got a hard lesson in bait-and-switch.”

Trump adamantly denies the charges and says he will not settle the case but instead will fight it in court “on principle.”

During a phone interview on TODAY Monday, Trump said the attorney general is a “total lightweight,” calling him “very unpopular” and accusing him of soliciting campaign funds from Trump’s staff and attorneys during the investigation into Trump University.

Ads for Trump University featured Trump’s image and signature, promising students would learn “from Donald Trump’s handpicked instructor a systemic method for investing in real estate that anyone can use.”

Schneiderman says his investigation into Trump University revealed the instructors were not “handpicked” by Trump, and Trump was not involved in curriculum development.

Furthermore, during initial seminars, students were encouraged to participate in “Elite mentorship programs costing $10,000 to $35,000,” according to Schneiderman.

“While consumers were encouraged to call their credit card companies during breaks, to increase their credit limits to have access to funds to do real estate deals, the real reason Trump University asked consumers to request higher credit limits was so they could use the credit to pay for the expensive Elite programs,” according to Schneiderman’s press release.

Schneiderman also called attention to issues with the school’s name. In 2005, the New York State Education Department demanded Trump University discontinue the use of its name as it did not have the accreditation to call itself a “university.”

Schneiderman said the school continued to call itself “Trump University” until 2010, and “[a]s a result, many students believed they were attending a University, when they were not.”

Trump countered the students “knew exactly what they were doing and what they were getting,” during his interview on TODAY. He also said he was very involved with developing the school and its curriculum.