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Mortgage Headlines
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Last Updated Friday, March 26, 2004 08:58 AM CST
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Preventing Mortgage Fraud
Mortgage fraud can cost a company millions. It happens before the loan is closed, and it happens on mortgages that were funded years ago. One scheme involved people who were buying Pennsylvania properties by the hundreds in tax upset sales, according to a MARI executive. The buyers then filed quiet title actions to transfer title on the properties, in hopes that the actions would go unanswered by the lien holders. If servicers didn't respond within a limited time, they lost their liens. MARI says it reported the scheme to its network -- helping prevent losses.
Mortgage Activity Soars as Rates Stay Put
Overall mortgage applications surged 25.6% from the previous week, bringing the Market Composite Index to 1117.1 -- the highest level since July 2003, according to the latest Survey by the Mortgage Bankers Association of America. Freddie Mac averaged the 30-year fixed-rate mortgage average this week at 5.38%, down 3 basis points from last week. Forty-two percent of the mortgage panel surveyed by Bankrate.com said rates would remain unchanged over the next month and a half, while another 42% forecast an upturn.
Owner, Loan Officers Banned from Mortgage Industry
A Washington mortgage firm, its top two owners and several of its employees have been booted from the mortgage industry by state regulators for allegedly defrauding lenders and borrowers. The Washington Department of Financial Institutions said a two-year investigation uncovered a pattern of employees and owners at the mortgage company overvaluing properties and falsifying papers to defraud lenders and borrowers with inflated property values, phantom second mortgages and false down payments. None of the owners or employees admitted any wrongdoing in an agreement with the state.
Subprime Bubble?
In an analysis of mortgage credit and the housing market, the FDIC said "Subprime borrowers and homebuyers in high-priced home markets tend to rely heavily on adjustable-rate mortgages, leaving them vulnerable to rising debt service costs once short-term interest rates begin to rise." The trend, said FDIC, "suggests that at least some homebuyers were stretching to keep their monthly payments manageable in the face of rising home prices." This is especially true for borrowers in high-priced housing markets. Credit losses may in turn affect nonmortgage consumer lenders if households prioritize paying their mortgage over paying unsecured consumer credit, such as credit cards, said the FDIC.
FHA Scorecard Goes Automated
Fannie Mae announced Monday that FHA approved lenders using its automated underwriting system can now use the TOTAL Mortgage Scorecard to determine FHA insurance eligibility. FHA's Scorecard works with DU to provide a recommended level of underwriting and documentation and enables the automated underwriting system to determine eligibility, said the mortgage giant.
Law Firm Settles in VA, HUD Overcharging Case
The partners of a Chicago law firm have settled a federal lawsuit that accused them of overcharging federal agencies that hired the firm to foreclose on property. While the firm has admitted no wrongdoing, it did agree to pay the significant settlement within 10 days, according to a copy of the settlement filed in U.S. District Court. The firm and its principals were sued for submitting false claims for payment and receiving "payments to which they were not entitled."The loans being foreclosed on were guaranteed by the VA and HUD, the settlement states.
More Good News for Mortgage Industry
The Mortgage Bankers Association of America said that mortgage originations will amount to $2.5 trillion this year, up from last month's prediction of $2.0 trillion. MBA said the key driver of the new forecast is its latest outlook that mortgage rates will remain low longer than previously expected. The average 30-year fixed mortgage is expected to remain around its current level of 5.41% into the second quarter and then increase slowly.
Fannie Business Continues Decline
According to its latest monthly summary, Fannie Mae's February business volume totaled $50.8 billion, dropping from January's $53.1 billion. The total has declined each month since September. The conventional single-family delinquency rate -- reported on a one month lag -- reportedly rose one basis point from the prior month to 0.61% in January.
Economists Issue Upbeat Forecast for Mortgage Rates, 2004 Production
A pair of economists at Fannie Mae predict long term mortgage rates will not climb above six percent until the end of the year and are raising their forecast for total industry production this year. In their economic and market update, the economists said mortgage volume will climb to $2.43 trillion in 2004. "Long-term interest rates responded to the weaker-than-expected February employment data by dropping to the lowest levels since last July," said the economists.
SEC Accuses Former Conseco Finance Execs of $400 Mil Fraud
In a lawsuit filed by the SEC, two of the top former executives at Indianapolis-based Conseco Inc. have been accused of inflating earnings at its former mobile home lending unit by nearly $400 million. During the year of the alleged fraud, the combined bonuses of two were in excess of $5 million. Fourth quarter and year end earnings in 1999 were "inflated" by $378.3 million, according to the lawsuit.
Subprime Delinquency Falls as FHA Rate Climbs
According to the National Delinquency Survey released Thursday by the Mortgage Bankers Association of America, the seasonally adjusted delinquency rate for one-to-four-unit residential properties dropped 16 basis points from the third quarter to 4.49%. The highest seasonally adjusted delinquency rate was seen in FHA loans, which rose 10 BPS to 12.23%. It is the first time the FHA rate is above the subprime delinquency rate, which fell from 12.69% to 11.59%.
Record Low 1-Year ARM as Fixed Rates Fall
Freddie Mac reported the average for the 1-year Treasury ARM fell 6 BPS from last week to 3.41% -- the lowest level since it began tracking these figures 20 years ago. The 30-year fixed-rate mortgage average came in at 5.41% this week -- a whopping 18 BPS lower than last week, according to Freddie. Forty-six percent of the mortgage panel surveyed this week by Bankrate.com voted rates would remain unchanged.
Mortgage Firm Squanders $1 Mil of Investors' Money on Gambling
The SEC has filed a federal lawsuit against the Rose Fund and its principals, accusing the firm of running a fraudulent Ponzi scheme that squandered at least $1 million of about $3.3 million raised from investors. The firm spent "hundreds of thousands of dollars at a horse racing track located a few minutes from the company's office," the SEC said in a written statement. Earlier this month, the company's president was held in contempt of court after he was accused of gambling another $33,183.
Nevada Nails Four More Mortgage Companies
In a crackdown on unlicensed lending activity, four mortgage lenders were recently disciplined by the state of Nevada for allegedly conducting unauthorized practices within the territory. The state said the violations ranged from employing an unregistered mortgage agent to sending direct mail to Nevada residents without holding a license. "All lenders must comply with Nevada statutes or face disciplinary actions," said the Nevada Mortgage Lending Division commissioner.
Countrywide Closings Climb
Countrywide Financial Corporation reported $23.3 billion in loan fundings during February, up 13% from the prior month. The company reported a servicing portfolio of $669 billion at February's end, while delinquency ended at 3.71% -- unchanged from January.
Saxon, Aames Going REIT Route
Saxon Capital and Aames Financial Corp. are pursuing conversions to real estate investment trusts, or REITs, to raise millions in cash through stock offerings. The new companies will not only continue their traditional roles as mortgage lenders, but will also use money raised by the sale of stock to finance real estate deals. Saxon's CEO told analysts during a recent conference call the company hopes to raise $500 million through the public offering.
'Mortgage' Still Among Top 10 Spam Subjects
Mortgage-related subject lines were among the most often used in spam e-mails during 2003, according to America Online. The Internet service provider said that among the top 10 most widely recognized subject lines in unsolicited e-mails was "Lowest mortgage rates." Other popular real estate finance headers were "lower your mortgage rates," "refinance" and "refi."
Principal Mortgage May Be On the Block
Word among equity analysts and industry watchers is that Principal Financial Group is already shopping its Principal Residential Mortgage unit. A Principal spokeswoman said in a brief interview that she could not comment on the rumors of a sale or on the company's plan for the mortgage unit. But in a Feb. 25th research report prepared by Credit Suisse First Boston Equity Research, a top Principal Financial Group executive raises the possibility of a sale.
New Century Production Holds Up
New Century Financial Corp. reported February loan production of $2.5 billion, the same as January. However, volume is up 79% compared to $1.4 billion a year ago. The Irvine, Calif.-based lender said its secondary marketing subsidiary, NC Capital Corp., has entered six deals for the sale of $6 billion in mortgage loans through June.
Packer Turned Loan Officer Still Plays Minor League Football
Once a Green Bay Packer, Mark McCutcheon is currently a loan officer for Household Financial Corp. Still, six months out of the year he is a strong safety for the Central Penn Piranha. McCutcheon began his loan officer career at a friend's brokerage business, where he went almost six months without closings "because I basically didn't know what I was doing." Once he picked up on the terminology, "and the ins and outs of the industry, then I started making some money. I liked what I saw so I just stayed with it."
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