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Housing Wire Magazine says: Direction of Mortgage Applications Clouded by Data Differences

July 2, 2008    Two different indexes tracking mortgage activity yielded wildly different conclusions Wednesday, leaving some investors to conclude that the number of distressed borrowers may yet be understated in key industry statistics. A widely-watched index released by the Mortgage Bankers Association Wednesday morning found that overall application activity — fueled by both purchase and refinance applications — bounced up 3.6 percent last week, off of a six and one-half year low recorded the previous week. But did it really? A separate index maintained by Mortgage Maxx LLC, a company that provides prepayment data to Wall Street researchers, reached a much different conclusion on Monday: applications fell 5.4 percent and marked new 2008 low. Applications in

California

fell even further, Mortgage Maxx reported, plummeting 7.7 percent. All of which is enough to leave the most staid prepayment researcher somewhat vexed. “The two data sources will usually vary in magnitude but not as often in direction,” said one ABS analyst that spoke to HW. “We’ve been seeing plenty of situations this year where the Max shows a decline while the MBA shows a bump.” Such trending might be explained by the one salient feature that has tended to keep the Max index favored among ABS analysts, despite its more limited geographic sampling: correction for multiple applications on the same address. HW’s Linda Lowell, a 20 year ABS/MBS market veteran, noted in a previous story that analysts found out the hard way during the recent housing boom that the MBA data tended to overstate increases in loan demand, as brokers encouraged borrowers to shop around for the best rate (such shopping yielded multiple applications for a single loan).  Loan application data is used in prepayment calculations by research, a vital statistic in the secondary mortgage market for pricing activity.  That same demand overstatement problem that plagued MBA application data during the boom now appears as if it could be a problem in the downturn, however, as troubled borrowers hurriedly attempt to qualify for any mortgage, and brokers encourage borrowers to apply as many times as possible to ensure that they are approved for a loan. With programs changing every day, it’s also likely that many borrowers are falling out and being forced to reapply in some cases.  Of course, that evidence is entirely anecdotal at this point, but it seems to be the only plausible explanation for why the two indexes can diverge so starkly in the current market. Given that application data is used to predict housing demand, understanding the reasons both indexes split should be of key importance to anyone serious about remaining in the mortgage market. Worth noting: The MBA reported that its data showed refinance applications representing just 36.8 percent of the overall application activity; FHA applications jumped 3.4 percent … Mortgage Maxx CEO Paul Desclous noted that new grant deeds appear to have peaked on the heels the spring selling season, and likely pressure on future home sales activity was likely to follow.

Housing Wire Magazine says: CDO Managers Raising Distressed Mortgage Funds: Report

July 2, 2008 There really isn’t anything quite like Wall Street, where second and third chances often abound for money managers that have seen prior investments fail — and often in spectacularly blinding ways. The latest proof of this hidden rule comes courtesy of various CDO managers, whose former investment vehicles imploded along with the private-party mortgage boom that they helped fuel; many such managers are now behind distressed mortgage funds that will look to clean up the mess they helped create, according to a published report Wednesday. Bloomberg News’ Jody Shenn and Jonathan Keehner found that the two firms topping the list of managers of failed CDOs — TCW Group Inc. and Harding Advisory LLC — have raised more than $4.3 billion to invest in distressed residential mortgages. Half of the 20 largest subprime mortgage-led CDO managers are now building funds in the distressed mortgage space, according to the story. Of course, other large private equity players managed CDOs as well, including BlackRock Inc. (BLK: 169.57, +0.87%), the biggest publicly traded

U.S.

asset manager. It said in March it was backing a new company called Private National Mortgage Acceptance Co. LLC, also known as PennyMac, that will buy mortgages at a discount and look to make money in the so-called scratch-and-dent business. PennyMac has a $2 billion war chest to step in and start buying, and will bankroll its own in-house servicing platform; in May, BlackRock also negotiated a deal to snap up $15 billion in subprime mortgage exposure from Swiss bank UBS AG (UBS: 20.32, +2.47%). Nonetheless, the fact that many of the largest CDO managers will potentially profit both from the run-up in

U.S.

mortgages and the historic crash has left some market participants rolling their collective eyes. “Why is it that in finance, nothing succeeds like failure?,” asked Yves Smith, who authors the well-read Naked Capitalism blog, calling the move by CDO managers towards distressed mortgages “the latest chapter in trying to trade in on a dubious track record.” Bloomberg’s sources, including a senior managing director at the sixth-largest manager of mortgage-tied CDOs, cited the collapse of Drexel Burnham Lambert Inc., the now-infamous Michael Milken-led junk bond flame-out, as an example of Wall Street’s rebirth mantra — many former Drexel bankers and investors helped clean up the mess left in the firm’s wake. Not that everyone buys the logic, however, that today’s failed CDO managers are akin to Drexel cast-offs. “[T]he Drexel guys were always specialists in junk bonds,” said Smith. “The CDO managers were supposed to be buying good assets but it was later revealed that what they had bought was junk … we are supposed to trust someone with demonstrably failed credit judgement [sic] as skilled in recognizing value in distressed assets?” Regardless of personal take on the matter, it’s becoming clearer and clearer that the market for bad mortgages is hot right now on many different fronts — both bonds as well as whole loans.

VCAOnline.com News: MountainView Capital Receives Significant Investment

DENVER, November 7, 2007-- MountainView Capital Holdings, LLC announced today that it has closed on a $65 million common equity capital raise. The investors are comprised of Union Square Partners, CLAC Industries and MountainView management. The funds will be used primarily to make principal whole loan investments in the secondary residential mortgage market. Led by Michael Morgan, President and Chief Executive, and Chris Rooker, Managing Principal and Head of Sales and Trading, MountainView provides a full range of services focused on the residential mortgage market, including whole loan sales and trading, brokerage of mortgage servicing rights and mortgage-related analytic/valuation services. Additionally, to augment its existing business, concurrent with the new capital raise, MountainView has acquired an existing mortgage servicing platform. In connection with the capital raise, MountainView plans to opportunistically purchase pools of residential mortgage product in the secondary market ranging from performing and “scratch and dent” loans to non-performing mortgage assets. MountainView has already begun investing the new equity capital in mortgages and mortgage servicing rights. To the extent the current market conditions continue for an extended period of time, the investor group is prepared to commit further equity capital to MountainView to further support existing operations, as well as develop complementary lines of business. Michael Morgan, CEO, commented, “The current disruption in the residential mortgage market provides a great opportunity for the MountainView team to couple its 18 years of experience in the mortgage space with the talent and capital of the investor group to build an opportunistic and dynamic company. We are extremely excited by the new alliance with the investor group and the potential we see for the new MountainView.” Chris Rooker, Managing Principal and Head of Sales and Trading, commented, “We have been looking forward to building our balance sheet and becoming a more significant principal investor since operating as Matrix Bancorp Trading. We are going to continue to concentrate on our core business of trading, brokering mortgages and mortgage servicing rights, as well as continuing to be the leading provider of mortgage servicing rights valuation services. We are seeing opportunities in the mortgage space unprecedented since the days of the Resolution Trust Corporation some 15 or 20 years ago and we believe that these opportunities will continue to exist over the next several years.” Bob Spass, Senior Partner of Union Square Partners, commented, “The flexibility of MountainView’s business model allows it to direct resources and capital to those mortgage asset classes where the potential for profitability is greatest. Having reviewed numerous mortgage-related investment opportunities over the last twelve months, we believe MountainView has the right platform at the right time to benefit from the current turmoil in the residential mortgage environment.” Union Square Partners is a leading global private equity firm focused exclusively on the financial services industry. Together with its predecessor funds, Union Square has been making financial services investments since 1990, investing over $2.5 billion in over 50 transactions worldwide. CLAC Industries is a privately held investment company controlled by David Ducote and Daniel Conwill IV. CLAC’s affiliate, Tchoupitoulas Partners, has been an active investor in distressed commercial mortgages over the past decade. For more information: www.mvcg.com Contact: MountainView Capital Holdings, LLC Media Contact Michael Morgan, 303-633-4735 mpmorgan@mvcg.com

Celink Teams With IBM To Expand Reverse Mortgage Servicing Platform

May 22nd, 2008  |  by admin Published in News, Reverse Mortgage, Servicers    Celink recently announced they successfully implemented the second generation of its proprietary reverse mortgage servicing platform, ReverServ™.  Celink teamed with IBM and migrated their system to IBM’s DB2 to ensure continued scalability and reliability of its core systems. The new Java web-based servicing platform supports FHA HECMs, Ginnie Mae HECM securitizations, Fannie Mae Home Keepers, and numerous other proprietary and private label reverse mortgage products. “This initiative opens the door for future enhancements in reverse mortgage servicing and borrower care services,” said LaRose. “We think of technology a tool used to serve clients, investors and borrowers. And we select and implement technology that fits our borrower care model for protecting clients’ investments and reputations,” says LaRose. he new Java (J2EE) web-based interface uses IBM rational tools for reporting.

Mortgage Servicing News Reports “Company Closes Ginnie Reverse Deal”

July 1, 2008 Reverse Mortgage Solutions, Houston, has reported the completion of a $25 million Ginnie Mae fixed-rate home equity conversion mortgage-backed securitization on which it served as issuer, servicer, and master servicer. Bob Yeary, chief executive officer of RMS, told MortgageWire that Ginnie Mae has identified the transaction as the first reverse MBS on which a single company has taken on all three of the aforementioned roles, something the Houston-based firm's automation helped it to do. World Alliance Financial, the Melville, N.Y.-based affiliate of KBC Bank, Brussels, originated the reverse mortgages in the transaction, Mr. Yeary said.

News Release: "BlackRock and Highfields Capital Management Launch New Company"

Led by Mortgage Industry Leaders, Private National Mortgage Acceptance Company, LLC

(PennyMac) Seeks to Help Troubled Borrowers Remain in Their Homes New York, March 24, 2008 – BlackRock, Inc. (NYSE: BLK) and Highfields Capital Management today announced that they have sponsored a new company that will acquire and restructure distressed residential mortgage loans in response to the ongoing dislocation in the United States mortgage market. The new company, Private National Mortgage Acceptance Company, LLC (PennyMac), has been formed by BlackRock, Highfields, and a management team of mortgage industry veterans led by Stanford L. Kurland, PennyMac’s Chairman and Chief Executive Officer. PennyMac will raise capital from private investors, acquire loans from financial institutions seeking to reduce their mortgage exposures, and seek to create value for both borrowers and investors through distinctive loan servicing. Mr. Kurland was President and Chief Operating Officer of Countrywide Financial Corporation until his departure in October 2006. The PennyMac management team also includes David Spector, Chief Investment Officer, who is former Co-Head of global residential mortgages for MorganStanley  “We are pleased to sponsor PennyMac, a company that seeks to bring patient capital to the unprecedented distress in residential mortgages,” said Laurence D. Fink, BlackRock Chairman and Chief Executive Officer. “Stan Kurland and his team have enormous talent and experience in the mortgage business, making them well equipped to develop effective solutions for sellers of mortgage assets and homeowners alike.” “There has been intense market focus on write-downs of mortgage-related securities, but whole loan losses have barely begun to materialize,” said Jonathon S. Jacobson, Highfields Co-Founder and Senior Managing Director. “Over the next two to three years, we anticipate that the volume of bank-held non-performing mortgages will grow dramatically. PennyMac will be extraordinarily well positioned as both a buyer and servicer of these assets.” “Our intent is to combine fresh capital with deep mortgage portfolio management and servicing expertise,” said Mr. Kurland. “We are delighted to have the support of BlackRock and Highfields Capital as we expand our business and work to help both lenders and borrowers as one step in

addressing the United States mortgage crisis.” “PennyMac’s strategy is to avoid foreclosures, and instead restructure the loans of struggling borrowers so they can continue paying and stay in their homes,” he said. “As a specialty servicer without the burden of a legacy portfolio or business practices, we have the flexibility to offer individual borrowers unique solutions to address their needs.” PennyMac’s loan servicing activities will be managed through a proprietary servicing operation based in southern CA Mr. Kurland is recognized for his leadership in developing the strategic direction, risk management activities, financial management and organizational development of Countrywide

Financial Corporation during his 27-year tenure at the company, ending in 2006. While at

Countrywide, he also served as Chief Financial Officer and President of Countrywide Home

Loans  Both BlackRock and Highfields will serve as strategic partners, enhancing PennyMac’s relationships with global financial institutions and providing valuable input in structuring PennyMac’s investment management activities. PennyMac will also utilize BlackRock’s capital markets and mortgage expertise, including risk management analytics. As one of the world’s largest investment managers, BlackRock manages more than $500 billion in fixed income assets, including approximately $175 billion in mortgage related assets. In addition, more than $1 trillion in mortgages are valued and analyzed daily on the BlackRock Solutions® platform, which incorporates industry leading, proprietary mortgage

analytics. * * *

About Private National Mortgage Acceptance Company, LLC

Private National Mortgage Acceptance Company, LLC (PennyMac or PNMAC) is a financial services

firm created to address the dislocations in the mortgage market. PennyMac’s focus is investing in and servicing residential mortgage assets on behalf of private investors. The company is managed by a team of mortgage industry veterans led by Stanford L. Kurland, and is based in Calabasas CA PennyMac’s strategic partners are BlackRock and Highfields Capital Management. For additional information, please visit the Company’s website at  www.pnmac.com.

About BlackRock

BlackRock is one of the world’s largest publicly traded investment management firms. At

December 31, 2007, BlackRock’s AUM was $1.357 trillion. The firm manages assets on behalf of

institutions and individuals worldwide through a variety of equity, fixed income, cash

management and alternative investment products. In addition, a growing number of institutional

investors use BlackRock Solutions® investment system, risk management and financial advisory

services. Headquartered in New York City as of December 31, 2007, the firm has approximately 5,500 employees in 19 countries and a major presence in key global markets, including the United States Europe, Asia Australia and the Middle East For additional information, please visit the Company's website at www.blackrock.com.

About Highfields Capital Management LP

Highfields Capital Management, founded in 1998, is a value-oriented investment firm focused on

achieving long-term capital appreciation by investing in public and private companies. It invests

over $11 billion of capital worldwide, across a wide variety of industries, security types and

geographies. Highfields has invested over $1 billion in private investments and approximately $2

billion in mortgage and real estate securities. For further information, see

www.highfieldscapital.com.

Mortgage Servicing News Reports that "CIT Selling Subprime Ops to Lone Star Funds"

July 1, 2008 CIT Group, New York, has cut a deal to sell its residential subprime business -- including a $9 billion servicing portfolio -- to Lone Star Funds for $1.5 billion in cash and the assumption of $4.4 billion in debt. Among subprime servicers, CIT ranks 18th nationwide, according to the Quarterly Data Report. In a separate transaction, CIT agreed to sell a $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance for $300 million. CIT said the two sales will bring in $1.8 billion in cash. Even so, it will book a $2.5 billion pretax loss in the second quarter.

Mortgage Servicing News Reports that "Hilco Forms Distressed Property Fund"

June 30, 2008  Hilco Real Estate LLC, Chicago, has announced the formation of Hilco Residential Partners LLC, a residential real estate investment fund chartered to purchase distressed residential properties and debt. The size of the investment fund, a joint venture with Chicago-based Real Estate Principal Solutions LLC, was not disclosed. Hilco said three classes of distressed assets will be acquired from lenders: real estate owned portfolios of single-family and multifamily properties, condominiums, and senior housing; closeout units in a residential development; and nonperforming notes on single-family and multifamily projects. "Our goal is to provide immediate balance sheet relief for lenders and eliminate their further involvement with the costs of real estate ownership," said Navin Nagrani, vice president of Hilco Real Estate. "Our nationwide property management and marketing infrastructure enables us to monetize acquired assets more quickly and with less cost, which means the fund can pay more for distressed portfolios." Hilco can be found online at http://www.hilcorealestate.com.