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Mortgage Headlines
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Last Updated Friday, March 12, 2004 07:06 AM CST
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More Mortgage Industry Job Losses
The Bureau of Labor Statistics reported that the non-seasonally adjusted number of people employed in mortgage-related jobs totaled 432,500, down from the previous month's revised total of 439,800. Since last August, the agency said credit intermediation, which includes mortgage banking, has lost 22,000 jobs.
Refi's Rise & So May Rates
The Refinance Index increased 5.1% from the previous week to 3532.2 -- the highest level its been at since the week ending Aug. 8, 2003 -- the Mortgage Bankers Association of America reported. The 30-year fixed-rate mortgage averaged 5.59% this week, up only 1 basis point from last week, according to Freddie Mac's Primary Mortgage Market Survey. "The current federal funds rate is accommodative...at some point, it will have to rise back to a more neutral state, because it is inconsistent with general long-term stability," Federal Reserve Chairman Alan Greenspan recently said.
Appraisal, Debt Ratio Still At Issue in Kerry Campaign
Questions are being asked by reporters, opponents and political watchdogs about Presidential contender John Kerry's recent mortgage loan. Did Kerry get a favorable investment and sweetheart deal? And how, on a Congressman's salary of $158,000, will he be able to make the $15,000 monthly interest payments his campaign has confirmed? "One issue is the house worth enough to take about a $6 million mortgage based on only half the value of the house," a political watchdog group said. A Kerry campaign spokesman has been quoted as saying that the bank valued the home at about twice what public records show.
Greenspan Clarifies Fixed Rate Stance
Federal Reserve Chairman Alan Greenspan recently said "many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade." This week he backtracked a bit saying, "I did not mean to disparage the 30-year self-amortizing mortgage." In his previous speech, he said, he had been focusing on a "narrow segment" of the market that might prefer an alternative to the 30-year fixed-rate, either variable rate or perhaps a variable maturity mortgage.
GMAC Relents on Widow's Foreclosure
After being allegedly duped by a home improvement contractor, a Pennsylvania widow saw her mortgage passed from servicer to servicer -- only to wind up on the verge of foreclosure. However, Friday she received a letter from GMAC Mortgage Corp. confirming that her mortgage debt had been forgiven. It all began when the contractor stopped by the widow's aging home shortly after she and her husband had purchased the place, she said. While she got a home improvement loan, her roof was not repaired as promised. During the process of reconciling the repairs, the loan became delinquent and was passed from servicer to servicer. However, heeding the widow's claims of fraud, GMAC, the final servicer, ultimately sent the letter indicating the debt had been forgiven.
Management, Procedural Changes Drive Improvement in Fairbanks' Servicer Rating
The servicer ratings of Fairbanks Capital Corp., which last year agreed to a $40 million settlement with the federal government over consumer complaints, has been removed from rating watch negative by Fitch Ratings. Fitch said Fairbanks has replaced senior managers, reviewed and changed procedures and "aggressively initiated many process improvements in an effort to correct the problems that had been identified.
DiTech or E-LOAN?
Internet ads are the dominant media in used in the "First Learn or Awareness" phase of the mortgage purchase process, according to a study by DoubleClick. Online resources are having a dramatic impact on later phases of the purchase process. The survey also found that news and financial sites have the greatest impact on mortgage applicants, closely followed by company Web sites.
Broker Going to Jail for Role in Marijuana Case
A former Oregon mortgage broker received a 15-month prison sentence for being an accessory after the fact to laundering. The broker, who reportedly built his company into a regional leader during the mid-1990's, took title on a property back from a real estate broker knowing it had been searched and that a "marijuana grow" was found within it, said the mortgage broker's attorney. By recording ownership under his name, he was "telling the world that he owns the property," said the prosecuting attorney, and "he takes the property back knowing that to do so will further conceal the identity of the wrongdoer -- that's what he plead guilty to."
FTC Says Broker YSP Disclosures Bad
The FTC released a study that suggests the additional yield spread premium disclosures required of brokers in mortgage transactions only hurt, not help, loan applicants. "Disclosures confuse consumers, are likely to lead a significant number of consumers to choose more expensive loans by mistake, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans, which could lead to reduced market competition and increase the cost of all mortgages," said the FTC. Consumers mistakenly paying more for their mortgages could overspend by $400-$800 million per year, according to the study.
COFI Drops to Lowest Level Ever
The 11th District average cost of funds index declined to 1.811% in January, according to the Federal Home Loan Bank of San Francisco. Published reports say the average is at its lowest level since the government sponsored housing enterprise began reporting the index nearly 23 years ago.
FTC Testifies on Predatory Lending
While acknowledging that many honest lenders exist, the FTC highlighted that the dramatic increase in subprime lending in recent years has also generated lenders and loan servicers who have acted to the detriment of borrowers. "For the subprime market to operate efficiently for the benefit of consumers, it is critical that it be free of deception and other illegal practices," said the director of FTC's consumer protection division in recent senate testimony. "The many settlements that the FTC has obtained from subprime lenders provide a deterrent to others who might consider engaging in this type of conduct," he added.
Lenders Don't Look to Brokers to Prevent Fraud
Mortgage lenders are pretty much on their own when it comes to fraud -- i.e., identifying perpetrators, preventing exposure and chasing culprits into jail according to mortgage executives speaking at the recent Subprime Summit conference. And, don't look to brokers for help in avoiding nefarious ploys, adds a NovaStar executive. "Even though they may have given blank verification forms to the consumer, their attitude is they didn't do anything (wrong). It's a case of ignorance, she said, but not an acceptable defense. "I tell them (brokers): 'If it came out of your office, you're responsible'."
Business at Freddie Falls
Freddie Mac's new business purchases of $36.9 billion fell well below December's $44.2 billion, according to the company's latest monthly summary. The total mortgage portfolio, including net PCs and retained portfolio, had an ending balance of $1.4 trillion. The single family 90-day delinquency rate rose to 0.86% in December from 0.76% the previous month.
Apps Edge Up
The Market Composite Index rose 2.1% from the previous week to 854.5, according to the latest Weekly Mortgage Applications Survey by the Mortgage Bankers Association of America. The 30-year fixed rate mortgage remained unchanged from last week's average of 5.58%, according to Freddie Mac's latest survey of 125 lending thrifts. Bankrate.com's panel of mortgage industry experts were split in their predictions -- 50% forecast an increase in rates while the other 50% said rates will remain unchanged.
ABN AMRO Monthly Production Down to $3.4 Billion
ABN AMRO Mortgage Group Inc. reported its January production totaled $3.4 billion, which is down from $5.5 billion in the previous month. Compared to January 2003, volume plummeted 70% from $11.4 billion.
Convicted Fraudster Does It Again
Police in Tampa and Clearwater, the FBI and the Florida Office of Financial Regulation are investigating how a former mortgage broker, who had already been convicted of federal and state charges for mortgage fraud, was able to pull off a whole new scam that involved at least 21 properties and $2.7 million in mortgage loans. The man was able to secure several loans on the same piece of property using fictional buyers and bogus information, a police detective said. "This is a very active, very complex investigation," the detective said in an interview. "We're looking at fraudulent identities, stolen identities ... and multiple people involved, and we're investigating how more than one method was utilized."
Option One Activity Off
Option One Mortgage Corp. originated $5.2 billion in nonprime loans during the third quarter ending Jan. 31, the parent company reported. The total is down from the previous quarter's $6.1 billion. The company said it serviced 308,305 loans, with the size of its servicing portfolio ending at $42.2 billion
Processor's Murder Linked to Affair, Suicide
A Philadelphia-area mortgage processor was found by her son murdered at her office -- stabbed at least ten times. The man suspected of killing her attended her funeral with his father, then quickly fled to Europe. On Jan. 20 he was arrested in Grenoble, France -- where he is being held awaiting extradition to America. After returning to the states, the suspect's father and his wife were found dead in their apartment of an apparent suicide. Police have testified in court that the suspect's parents left a suicide note saying they were ashamed of what their son had done. Several published and television news reports have indicated the processor and the suspect were having an affair.
Subprime Share of Mortgage Market to Rise
While refinance activity is slowing and total originations are expected to deflate by half this year, industry predictions point towards a higher demand for subprime loans. Subprime volume is expected to reach within the $355 billion to $371 billion range this year, surpassing 2003's level of $323 billion, said SMR Research Corp. in an e-mailed statement to MortgageDaily.com. The subprime sector should do reasonably well, but performance in 2004 depends on how the individual company executes, a Piper Jaffray analyst recently told MortgageDaily.com.
Greenspan Says: ARMs
"American homeowners clearly like the certainty of fixed mortgage payments," said the Federal Reserve Board Chairman at a conference Monday. He made his comments after pointing out that fixed-rate mortgages are popular because they offer borrowers protection against payment increases when interest rates rise, as well as the right to refinance when rates drop. However, these mortgages require that consumers pay a higher amount of money in exchange for these benefits, the chairman said.
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