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Mortgage Headlines
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Last Updated Friday, February 21, 2003 10:38 AM CST
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2002 Thrift Production Record $536 Billion
The thrift industry set a loan origination record during the fourth quarter and the year, the Office of Thrift Supervision (OTS) announced. The industry also experienced an increase in troubled assets during the year, however. Thrift mortgage originations totaled in the fourth quarter totaled $177.4 billion, and they finished the year at $536.0 billion. One-to-four family originations took up the bulk of that, setting their own record of $160 billion during the fourth quarter and $472 billion in 2002. These production records were due to refinancing activity jumping about 45% during the year and 55% in the fourth quarter, the OTS said.
How Historical Can They Go?
The 30-year fixed-rate mortgage averaged a new low of 5.84% for the week ending Feb. 21, according to Freddie Mac's weekly survey. "Current record breaking low mortgage rates are keeping demand for housing strong, even as the overall economy stumbles sluggishly into the first part of the new year," said Freddie's chief economist. The 15-year averaged 5.21%, also a record low. Also a record was the one-year Treasury-indexed adjustable-rate mortgage, which dipped down to 3.81%.
FHA Insurance Still High Risk for HUD
Single-family mortgage insurance from the U.S. Department of Housing and Urban Development (HUD) continues to be a high-risk area even though HUD has been working at improvements, the United States General Accounting Office (GAO) said in a recent report. HUD still needs to improve management and oversight of its Federal Housing Administration (FHA) single-family mortgage insurance programs, which would reduce risk of losses from defaults and fraud, the report said. The good news is that the GAO has redefined and reduced the number of HUD programs deemed to be high-risk because of the improvements HUD has made to FHA programs.
Personal Bankruptcies at Record Level
Bankruptcy filings jumped 5.7% in calendar 2002 from the previous year and continue to break historic records, according to the Administrative Office of the U.S. Courts. Bankruptcies filed during the year totaled more than 1.5 million, the majority of which -- 97.6% -- were personal filings. Chapter 7, which almost totally wipes out an individual's personal debt, rose 5.2% during calendar year 2002, and chapter 13, which allows individuals to keep their house while repaying creditors in installments, increased 7.2%.
More to Honesty Than Avoiding Fraud
In his industry commentary, Dave Hershman notes that there is no characteristic that is more important and more misunderstood than simple honesty. Honesty is more than avoiding mortgage fraud. Honesty is being truthful with ourselves regarding where we need to improve. Honesty is also not promising more than we can deliver. Honesty is also not proffering advice when we are not qualified. So honesty is more than staying out of jail. Honesty is not trying to be something that we are not.
Former Texas House Candidate Pleads Guilty to Mortgage Fraud
Two Houston mortgage brokers, one a former state House candidate for the GOP, have pleaded guilty in a case the government says involved more than $11 million in loans on flip real estate transactions. According to case documents provided by the Department of Justice, the two engaged in a scheme where fake documents enabled them to obtain loan approvals on properties used in flip transactions. Each face up to five years in federal prison and a $250,000 fine. Beaird lost the Republican nomination for a Texas House District seat in 2000 to the incumbent, the government said in its announcement.
January Purchases $57.2 Billion at Fannie
Fannie Mae purchased a total of $57.2 billion in mortgages in January, compared with almost $67.9 billion in December and almost $36.4 billion in January 2002. Fannie's gross mortgage portfolio stands at almost $811 billion, up from almost $791 billion in December. Its effective duration gap was still off, at -4 months. It was at -5 months in December and +2 in January 2002.
Rate Outlook Unclear
Mortgage applications came in at 1083.1 for the week ending Feb. 7, down 5.1% from the previous week, according to Mortgage Bankers Association of America's weekly index. Freddie Mac's weekly survey found the average to be 5.86% for the week ending Feb. 14, down just slightly from last week's 5.88%.More than half of Bankrate.com's mortgage experts polled in its weekly survey said rates should hover over the next 30 to 45 days. The 10-year Treasury note yield was up a whopping 9 BP during late-morning trading, but its yield still remained below four percent at 3.87%.
CA, MO Among States With Most Fraud Activity Recently
Mortgage fraud decreased nationally overall during the fourth quarter, according to the quarterly National Fraud Report from a fraud-prevention company. Affinity Corp's index maps shows California, Georgia, Missouri, and Nevada had the consistently highest suspected fraud activity during the quarter. The "good" states on Affinity's index maps were Indiana, Kentucky, Michigan, and New Jersey, which had the consistently lowest fraud index levels during the quarter.
Subprime Fundings Edge Down at Countrywide
Countrywide Financial Corporation reported subprime fundings reached $1.1 billion last month, just shy of December's $1.2 billion. Home Equity Fundings also reached $1.1 billion during January, up from $0.8 billion a year ago.
FHA Risk Management Improvements Sought by Coalition
To help beat the current affordable-housing crunch, a coalition of nine national housing organizations recommended to Congress on Monday that new authorities be established to improve risk management at the Federal Housing Administration and Ginnie Mae. The National Housing Conference formed the coalition, which comprises Fannie Mae, Freddie Mac, and the Mortgage Bankers said new authorities are needed to separate human resources, contracting, legal assistance, budgeting, and earnings management. Doing so would improve the risk management of these federal housing delivery programs, the group said. The group supports President Bush's proposals in his 2002-2004 fiscal budgets that Congress create a tax credit to drive affordable housing production.
Florida Mortgage Company First to be Charged for Violating OK Telemarketer Act
Oklahoma's attorney general filed suit Monday against Mortgage Investors Corp. for violating the state's new Telemarketer Restriction Act. The company is the first to be charged with breaking the state law. Attorney general Drew Edmondson accused Mortgage Investors of making at least eight unsolicited telemarketing calls to Oklahomans who've registered with the state's Don't Call program. "Mortgage Investors Corp. has failed to purchase the Don't Call registry and continues to contact Oklahomans on the list. This must stop," he said. Wes Bailey, a lawyer for Mortgage Investors, said it was too soon to comment because the court hadn't notified the company of the lawsuit as of Tuesday evening.
January Production off at Countrywide
Countrywide Financial Corporation produced $33.7 billion in loan fundings last month, a hair off from December's $35.2 billion. The lender's servicing portfolio hit a record $469 billion. Its mortgage loan pipeline closed at $48.2 billion by January's end, which more than doubled last year's $23.0 billion.
New Century Production Falls From Record Levels
New Century Financial Corporation reported almost $1.5 billion in production, compared with the $1.7 billion all-time high of December. Last month's production is an almost three-quarter increase from the volume in January 2002, however.
Cendant Production Jumps
Cendant Corporation reported almost $19.2 billion in production for the fourth quarter, which includes loans closed to be securitized and other production loans closed. This represents a more than one-fourth jump from the third quarter's production. Its servicing loan portfolio reached $112.3 billion by fourth quarter's end, a $4 billion growth from the previous quarter.
Record $16.5 Billion 4th Quarter Production at Principal
Principal Financial, Inc. reported its production reached $16.5 billion during the fourth quarter, almost 50% more than third quarter originations. Principal grew its servicing portfolio to $107.7 billion during the fourth quarter, up from third quarter's $102 billion.
Option One Took $2.3 Mil Loss on Fraud Loans
When Robert J. Amico applied for a mortgage in 1998, Option One turned him down because the house's size and appraised value had been inflated. But throughout the next year, the same lender gave mortgages to Amico's father, brother, and an associate for 13 new houses built in suburban Rochester, N.Y., according to the Democrat and Chronicle in Rochester. The company said it couldn't turn applicants down for a loan simply because of their association with Amico, but had to consider each loan on its own merits. Option One posted a $2.3 million loss on Amico-related loans, of which some had to be foreclosed with the properties resold at prices far below the balances.
Rates Holding Steady
The 30-year fixed-rate mortgage averaged 5.88% for the week ending Feb. 7, according to Freddie Mac's weekly rates survey. The ARM averaged 3.89%, the same record low as last week and better than last year's 5.04%. According to the Mortgage Bankers Association of America's seasonally-adjusted survey, which runs a week behind Freddie's rate survey, applications came in at 1141.4 the week ending Jan. 31. That's a 2.5% decrease from the previous week. The mortgage experts on Bankrate.com's weekly poll revealed their feelings on where rates are headed over the next 30 to 45 days: only 6% said rates will go up, 53% said rates will decrease, and 41% said rates will remain unchanged, within 2 bps.
What Unemployment?
About 413,000 people held those mortgage positions last month, according to the seasonally adjusted report by the Bureau of Labor Statistics. That's an increase from the 407,000 jobs in December and 16% jump from the number of mortgage broker and banker jobs during the same time last year. The employment figures reported are based on preliminary estimates, which the bureau doesn't consider complete until two successive revisions. The bureau doesn't report the final figures until later in the month.
Federal Charter to Keep Wells Funding Calif Mortgages After License Suspension
California's finance authority announced that it's intending to revoke the residential mortgage lending license of Wells Fargo Home Mortgage, Inc. because of repeated violations of state code, according to the Department of Corporations. The agency says Wells charges borrowers interest one day prior to closing and has not fully disclosed finance charges. Wells said it doesn't have to respond to the agency's instruction because Wells is a federally chartered bank, and federal law preempts state law. Wells also stated that it discloses all settlement fees to its customers, and it disagrees with the agency that all such fees are required by the federal Truth in Lending Act to be included in the finance charge.
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