Delinquencies continued to climb at Freddie Mac last month.
The government-sponsored enterprise said in its monthly summary Tuesday that the past-due portion of its single-family mortgage book grew 21 basis points from September and 220 percentage points from a year earlier, to 3.54%. Multifamily delinquencies increased a basis point from September, and jumped twelvefold from October 2008, to 0.12%, Freddie said.
Fannie Mae, which like Freddie is operating under federal conservatorship, reports its delinquency numbers on a one-month lagging basis. Its single-family delinquency rate jumped 300 basis points from a year earlier, to 4.72% in September.
Meanwhile, Freddie is trying to make sure that $595 million of borrower payments on mortgages it owns or guarantees does not get lost in the vortex of Taylor, Bean & Whitaker Mortgage Corp.
That Ocala, Fla., lender had serviced the mortgages in question until August, when Freddie had the servicing rights transferred to three other companies. The monies the GSE is worried about — which include payoff funds, principal and interest payments, and escrowed taxes and insurance premiums — were already in Taylor Bean's hands when it filed for bankruptcy protection on Aug. 24.
Further complicating matters, Taylor Bean held the cash in accounts at Colonial Bank of Montgomery, Ala. — which regulators seized in August. The GSE said late Monday it had filed a proof of claim for the funds with the Federal Deposit Insurance Corp., the receiver for Colonial.
Freddie has previously disclosed a separate Taylor Bean headache: $500 million of faulty loans the GSE had expected the lender to buy back before it failed. Freddie said Monday that it still did not know its total exposure to Taylor Bean.
Score One for the JV
A jury in Minneapolis decided against Fair Isaac Corp. in its suit against VantageScore Solutions LLC and two of the credit bureaus that own the scoring venture, Experian Information Solutions Inc. and TransUnion LLC.
VantageScore was launched in 2006 and Fair Isaac initiated its lawsuit that year, claiming violations of antitrust laws and trademark infringement, among other things. Last year Fair Isaac settled with Equifax Inc., the other partner in the joint venture.
In July the U.S. District Court for Minnesota dismissed Fair Isaac's antitrust claims.
Investors have been out of the loop when it comes to getting data on individual loans that are packaged into mortgage-backed securities.
Because of privacy issues, investors often have no idea whether a borrower has negative equity or undisclosed debt, making it difficult to project the probability of default or value the securities.
To address the issue, Standard & Poor's Corp. said Monday that it has teamed up with Experian to provide consumer credit data on collateral in securitized pools.
Last month S&P announced an alliance with Veros Real Estate Solutions, a provider of property valuations, to give access to information on loan-to-value ratios and home price forecasts.
David Goldstein, a managing director of fixed-income risk management services at S&P, said the data from Experian and Veros is needed to figure out the credit risk of the borrower and the underlying value of a property.
"What happens if you've got a great borrower but the property is underwater and located in Las Vegas?" Goldstein said. "If the borrower loses their job, the investor can't collect. There are investors out there who need this data to truly understand the value of the loan."
"Negative equity is the No. 1 reason for default and banks are ill-equipped to handle it."
Frank Pallotta, an executive vice president and managing partner at Loan Value Group LLC, a risk management firm in Rumson, N.J.