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Mortgage Headlines
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Last Updated Monday, March 03, 2003 09:05 AM CST
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Production Falls at World
Golden West Financial Corporation originated $2.3 billion in loans, a dip from December's almost $2.7 billion production. At Dec. 31, Golden West's servicing portfolio had reached $5.4 billion, a spokesman said. Its total assets reached $69.7 billion in January.
COFI Hows?
The Federal Home Loan Bank of San Francisco reported that COFI, or the11th District monthly weighted average cost of funds index, fell to 2.308%. COFI, which is at its lowest point in decades, was reported at 2.375% in December. A year ago, the index was at 2.823%.
Record Rates Resume
Freddie Mac's weekly rates survey found the 30-year fixed-rate mortgage averaged 5.79% this week, setting a new record. For the week ending Feb. 21, applications increased 5.5% to 1142.8, according to the Mortgage Bankers Association of America's weekly index. Refis took up 72.5% of the previous week's applications and slightly less than half last year's. Most of the mortgage experts on Bankrate.com's weekly panel said they expect rates to drop within the next 30 to 45 days -- 46% said rates will decrease, 18% said they'll increase, and 36% said they'll go unchanged, within 2 basis points.
$4.5 Billion Quarterly Production at Option One
For the three months ending Jan. 31, Option One Mortgage Corp. produced $4.5 billion in mortgage loans, a 55.2% increase from the $2.9 billion the same time last year. Option One, a mortgage subsidiary of H&R Block, Inc. experienced a 27.3% increase over last year in its servicing portfolio during its third quarter to $28.9 billion.
Fed Cautions in Valuation of Servicing Assets
The Federal Financial Institutions Examination Council, which includes agencies such as the Federal Reserve and the Office of Thrift Supervision, issued the letter to warn of mortgage banking risks, mostly in the valuation, accounting, and hedging of MSAs. It also suggests ways to deal with those risks. The use of unsupported prepayment speeds, discount rates, and other assumptions in MSA valuation models is a red flag. When seeking to decrease hedging activity risk, the letter suggests not forgetting to hedge accounting policies and procedures, as well as getting products and strategies approved by management.
Freddie Business Falls
Freddie Mac's new business purchases totaled $55.1 billion, compared with $91.2 billion in December. Freddie's total participation certificates reached $1.079 trillion in January, down a bit from December's $1.082 trillion. Freddie announced its duration gap in January has remained an even zero, the same as December.
Lenders Lose FHA Lending Authority
Four single-family Federal Housing Administration (FHA) lenders lost the approval of the U.S. Department of Housing and Urban Development (HUD) and will pay fines for violating agency requirements, according to the federal records administration. The violations of these companies range from using false documentation to process loans, allowing others besides FHA employees to process loans, and not filing or keeping complete origination reports. Seven other companies settled with HUD for violations and were fined but can remain FHA lenders. These companies' violations ranged from allowing non-company employees to originate FHA loans, charging borrowers fees that are not allowed by HUD, and failing to make sure that gift letters meet HUD requirements.
Fannie's Bid for Conseco Servicing Portfolio Draws Concern
Fannie Mae's bid last week on the manufactured housing servicing platform of bankrupt Conseco, Inc. has the mortgage industry worried about the government entering the competitive marketplace. But Fannie says it would win the bid only in the unlikely event that no one else wants the loans, and even then Fannie intends to find an outside servicer. FM Watch, a watchdog group that monitors Fannie and Freddie Mac's activities, said they know that the industry is opposed to them going directly to the consumer, which is what servicing would enable.
$13.6 Million December Closings at Cambridge
Cambridge Realty Capital Companies funded $13.6 million in loans during December, compared with $36.9 million in November. Cambridge's fourth quarter closings totaled $56.9 million, an almost one-third increase from third quarter. The company says it finances nursing homes, assisted living facilities, and multifamily apartments related to retirement or senior housing.
CA Company, Executives Banned from Brokering in Washington
The Washington Department of Financial Institutions accused a broker at Nationscapital Mortgage Corporation of Orange, Calif. of violating a Washington state law by alleged bait-and-switch practices, failing to make disclosures, engaging in deceptive practices, and imposing prohibitive overcharges. After the charges were upheld earlier this month, the state's financial agency ordered the company to pay fines and consumer restitution totaling more than $1 million. The agency has prohibited the company, it's president, and four other executives and employees from conducting mortgage broker business in Washington, according to an agency release.
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.
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