Big Blue: No REO?

Wilshire Credit Corp., the mortgage servicer that International Business Machines Corp. is buying, is said to be shutting down its arm for managing and marketing repossessed homes.

REO Insider reported Wednesday that the company will close those operations after March 1, citing a letter that Wilshire, of Beaverton, Ore., sent to real estate brokers late last week.

Once its purchase of Wilshire closes (which is expected to happen this quarter), IBM plans to board roughly 30,000 loans on the Wilshire platform, REO Insider said, citing anonymous sources. The owners of these loans will manage and market their real estate owned, making Wilshire the only servicer without an REO platform, the story said.

IBM referred all questions to Wilshire, which did not return calls.

Bank of America Corp. agreed to sell Wilshire to IBM in October. The Charlotte company had inherited the business from its 2009 takeover of Merrill Lynch & Co., which had bought Wilshire in 2004. B of A has said it would keep the servicing rights on the roughly $18 billion of loans in the Wilshire portfolio.

Respa Benchmark

To help mortgage applicants compare offers — the same goal as the new federal disclosure rules — a nonprofit has begun publishing average closing costs and interest rates for every ZIP code.

Consumers can get their local averages local averages for free by typing their ZIP codes into the Fair Mortgage Collaborative's Web site. The information is meant to help them determine if a price quoted by a lender is "significantly out of line with the local marketplace," the Washington group said Wednesday.

The averages, compiled by Mortgage Grader of Laguna Nigel, Calif., are updated daily and based on certain assumptions — among other things, that the borrower has a credit score of 700 and is seeking a $200,000 loan. Howard Banker, the nonprofit's executive director, acknowledged that these assumptions limit the tool's usefulness.

"Our initial focus is for average credit risk primary-home applicants," he said. "For cash out refi, investor loan or other high credit risk borrowers this tool is not as useful yet."

Jeff Lazerson, Mortgage Grader's president, said some third-party settlement providers have been reluctant to provide precise pricing information.

"Nobody wanted to give us the information because the settlement providers were scared of the liability," he said. "They think if they post some generic price, they're going to be held to it."

But being held to estimates is the new reality in the industry.

Under the Real Estate Settlement Procedures Act rule that took effect Jan. 1, the good-faith estimate of closing costs that lenders present applicants must be reliable. Fees for third-party services like title insurance cannot be more than 10% higher at closing when the lender picks the provider. Otherwise, the lender eats the difference.

Some have speculated that the big lenders will use their clout to negotiate contracts with third-party vendors putting them on the hook when charges exceed estimates. Experts have also predicted that lenders will simply overestimate third-party charges on the good-faith estimate. But if only a few lenders do this, they risk losing business.

Lenders "have to be on their toes because if they build too much buffer [into the fees] they won't be competitive enough," said Craig Doriot, the chief technology officer at LoanSifter Inc., a provider of pricing and underwriting tools.

Eye on Applications

Refinancing applications jumped more than 10% last week as the average interest rate on 30-year-fixed-rate mortgages dipped, the Mortgage Bankers Association said Wednesday.

The trade group’s index of refi requests rose 10.7% in the week ended Jan. 15 from the prior week. MBA’s seasonally adjusted purchase index increased 4.4%. The share of refinancing activity was roughly unchanged at 71.7% of total applications.

The average interest rate on 30-year-fixed-rate mortgages with 80% loan-to-value ratios fell 13 basis points to 5%.

Separately, Mortgage Maxx LLC said Tuesday that its index of refi and purchase applications in eight key U.S. markets climbed 10.1% during the week ended Jan. 15 to 109.3. That’s still below the index’s average of 157.2 since its inception in April 2006.

The index measures applications in California, Arizona, Florida, Michigan, Ohio, Washington, Illinois, and Indiana.

The data firm's component index for California applications rose 9% from the previous week.

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