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Mortgage Headlines
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Last Updated Monday, April 22, 2002 08:48 AM CST
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Applications Down 16% From Year-Ago Levels
According to the weekly application survey of mortgage bankers, commercial banks and thrifts by the Mortgage Bankers Association of America (MBA), loan applications edged up from the prior week by nearly two percent. In its weekly survey of 125 thrifts, commercial banks and mortgage lending companies, Freddie Mac said the average 30-year fixed rate mortgage (FRM) fell 0.05% -- or five basis points (BPS) -- from last week to 6.94%. The average 1-year adjustable rate mortgage (ARM) was 4.95%, down five BPS from last week, according to Freddie. Half of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect for rates to stay within two BPS of their current levels over the next five weeks, while 36% expect rates to rise and 14% expect rates to fall.
Wells Fargo Q1 Production $68 Billion
Wells Fargo & Company said in its first quarter earnings announcement that its mortgage origination volume was $68 billion during the period, a 134% increase from the first quarter of last year. The company reported that total loans averaged $172 billion for the quarter, eight percent higher than the same period last year and six percent higher when adjusted for acquisitions. Wells said during the quarter its mortgage servicing portfolio surpassed the half trillion dollar milestone, ending the quarter at $513 billion.
$59.16 Billion 1st Quarter Production At Washington Mutual
In its announcement of first quarter earnings, banking giant Washington Mutual, Inc. said it had record loan volume of $65.27 billion, including $59.16 billion in single-family residential (SFR) mortgage loan production. Mortgage loans were 187% higher than the first quarter of last year and 8% better than the fourth quarter. The company attributed the increase in loan volume to a 29 percent rise in adjustable-rate mortgage volume over the fourth quarter.
$8.5 Billion 1st Quarter Production At Cendant
Mortgage production reached $8.5 billion during the first quarter at Cendant Corporation -- up 45% from the first quarter of 2001 -- according to an announcement of first quarter results. Cendant Mortgage, which says it is one of the leading retail originators and inbound telemarketers of mortgages in the U.S., originates, sells and services residential mortgage loans. Cendant also reported that its average servicing portfolio reached $99.1 billion, 22% higher than the same time last year.
$33 Billion 1st Quarter Production At JPMorgan Chase
In its announcement of first quarter results, J.P. Morgan Chase & Co. said mortgage originations were $33 billion. While this was down from $50 billion in the prior quarter, it was an increase from the first quarter of 2001. The company said its commercial loans fell 3% from year-end and are down 10% from the first quarter of 2001. Its Tier 1 capital ratio increased from year-end 2001 to 8.5%.
Citigroup 1st Quarter Mortgage Banking Income Up 24%
Citigroup Inc. reported in its first quarter earnings announcement that income from its mortgage banking operations was up 24% from last year to $93 million. Income at the CitiFinancial unit jumped 45% to $320 million. Citigroup said that the improvement in earnings at the subprime unit was due to an 11% increase in revenues combined with a 17% decrease in expenses. Citigroup said its overall core income for the quarter of $3.86 billion included an $816 million pretax, or $519 million after-tax, charge reflecting the impact of the economic conditions in Argentina.
Bank of America Mortgage Banking Income Up 59%
In its announcement of first quarter earnings, Bank of America Corporation reported that its mortgage banking income grew 59 percent from last year, led by continued strength in origination volume and margins. The company said that a reported 15% decrease in nonperforming assets from a year ago is due to the exit from the subprime lending business and an aggressive program to shed problem credits. Bank of America said its net earnings were $2.18 billion during the quarter. The company said that the impact on net income of new accounting rules -- requiring the elimination of goodwill amortization -- was $159 million.
Mortgage Originators To Meet In California
Mortgage loan originators will gather in Universal City, California for the upcoming Mortgage Originators Conference and Expo. The event is organized by the Mortgage Bankers Association of America (MBA) and the California Mortgage Bankers Association. Housing finance giant Freddie Mac is a key sponsor for the event. The conference takes place from Wednesday, May 29th until Friday, May 30th. Among the speakers at the conference will be MBA chairman-elect John Courson, IndyMac Bank CEO Michael Perry and Countrywide Credit Industries Chairman Angelo Mozilo. The publisher of MortgageDaily.com, Sam Garcia, has said he plans to attend the event.
Subprime Banks Biggest Risk, FDIC Says
The biggest single near-term risk to insured institutions appears to be subprime consumer lending, according to a report by the Federal Deposit Insurance Corporation (FDIC). "Economic Conditions and Emerging Risks in Banking" was delivered to the FDIC Board of Directors last week. In its announcement, the FDIC said that around 160 FDIC-insured institutions representing 6.3% of the industry's assets have been identified as having subprime consumer or mortgage loans greater than 25% of Tier 1 capital. The FDIC said this group has contributed disproportionately to recent bank failures and additions to the FDIC Problem Bank List. The FDIC said that in addition to experiencing higher loan losses than prime lenders, subprime lenders have recently been noted by FDIC examiners and other regulatory sources to be using credit models that underpredict actual losses.
Fixed Rates Improve
According to government sponsored housing enterprise Freddie Mac, the average 30-year fixed rate mortgage (FRM) fell 0.14 percent -- or 14 basis points (BPS) -- from last week to 6.99%. While fixed rates are within 5 BPS of their year-ago levels, loan applications -- which the Mortgage Bankers Association of America (MBA) says fell nearly five percent from last week -- were down 25% from the same time last year. Adjustable rate mortgages (ARM's) were nearly unchanged, rising just one BPS from last week to five percent, Freddie said. According to Bankrate.com's survey of mortgage bankers, mortgage brokers and other industry experts , half of the respondents think rates will remain at their current levels while one-third see rates increasing more than 2 BPS during the next five weeks.
Guilty As Charged
Former PinnFund USA, Inc. CEO Michael Fanghella has pled guilty to Justice Department charges, according to a recent announcement from the U.S. Attorney in San Diego, California. Fanghella and others allegedly conspired to devise and perpetuate one of the largest fraud schemes in Southern California history. The Justice Department said that Fanghella, 50, pled guilty to a six-count Superseding Information -- filed after the original indictment was filed. The Superseding Information included one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, three counts of tax evasion, and once count of filing a false entry with HUD. The Justice Department said that in a recent proceeding, Fanghella admitted PinnFund started losing money in 1996, and that he used new investor capital contributions of $200 million to pay existing investors falsely reported earnings and capital repayments.
How Low Can It Go?
According to the Federal Home Loan Bank of San Francisco (FHLBSF), the monthly weighted average COFI was 2.744% in February, down from 2.823% the prior month. The FHLBSF has not reported a lower COFI average.
ARM Becoming More Attractive
According to Freddie Mac, the average 1-year ARM was 5.11%, unchanged from last week. At the same time, Freddie said that the average 30-year fixed rate was up four basis points (BPS) -- or 0.04% -- to 7.18 percent. The resulting spread between the rising 30-year and the unchanged ARM was 2.07%, up 4 BPS from 2.03% last week. Applications continued to reflect the increasing attractiveness of the ARM, with the Mortgage Bankers Association of America (MBA) reporting that ARM applications represented 16.50% of total applications, up slightly from last week. MBA said that purchase applications were up more than six percent from last week, and refinance applications nudged up 3.15%. Nearly two-thirds of the industry experts surveyed by Bankrate.com expect for rates to remain within 2 BPS of current levels during the next five weeks.
Applications, Rates Worsen
Rates climbed for the third straight week, with the average 30-year fixed rate mortgage (FRM) rising 0.06%, or six basis points (BPS) from last week to 7.14%, according to Freddie Mac's latest primary mortgage market survey. The average 1-year adjustable rate mortgage (ARM) edged up just 3 BPS to 5.11%. In its survey mortgage bankers, commercial banks and thrifts, MBA said that refinance applications tumbled more than 21% from last week and were down more than 31% from last year. Refinances represented nearly 41% of total applications, down from more than 46% last week. MBA said overall applications were down 11% from last week. Fifty-four percent of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect rates to stay within 2 BPS of their current level during the next five weeks, while the remaining forty-six percent expect rates to rise.
Bankrupt Subprime Lender Settles With FTC
The Federal Trade Commission (FTC) announced that it has reached a settlement in a predatory lending case with First Alliance Mortgage Company and its chief executive officer, Brian Chisick. First Alliance is accused of using a sophisticated sales presentation, known as the "Track," to gain the trust of customers and hit them with 10%-25% in fees. The company also allegedly misled customers about increases in the interest rate and the amount of monthly payments on adjustable rate mortgage (ARM) loans, and failed to provide the ARM booklet required by the Truth-in-Lending Act.
Fanghella Faces Trial In May
Former PinnFund USA, Inc. chief Michael J. Fanghella is scheduled for criminal trial in May, according to U.S. Attorney spokeswoman Deborah Hartman. Fanghella is accused in a civil case by the Securities and Exchange Commission (SEC) of misappropriating nearly $110 million -- which was raised for the purpose of funding subprime mortgages -- to pay for extravagant personal living expenses, including at least $10 million spent on his former adult film actress girlfriend. The SEC alleges that since 1993, Fanghella and Hillman raised at least $330 million from at least 166 investors through the funding companies purportedly for funding subprime residential home mortgages. However, instead of using those funds as intended, the defendants allegedly used the proceeds to pay for Fanghella's lavish lifestyle, to fund PinnFund's operational losses, and to make repayments to investors as part of a Ponzi scheme.
30-Year Climbs Past 7%
Mortgage applications tumbled this week as rates jumped -- with applications for refinance mortgages falling more than 24% from last week -- according to the Mortgage Bankers Association of America (MBA). In its most recent weekly survey of mortgage bankers, commercial banks and thrifts, MBA reported that overall applications were down 16%. Freddie Mac said that according to this week's rate survey, the average 30-year fixed rate mortgage (FRM) was 21 basis points (BPS) higher than last week and 12 BPS higher than the same week last year. The average 1-year adjustable rate mortgage (ARM) edged up 1 BPS from last week to 5.08%. Only 10% of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com this week believe rates will decrease more than 2 BPS over the next five weeks. Half of Bankrate's respondents think rates won't change while 40% think rates will increase.
Freddie Fights Fraud With Technology
Freddie Mac announced this week that it will offer a new quality control technology tool which can identify inflated property values in connection with fraud or misrepresentation. Among other features, Freddie says its "Home Value Calibrator" can identify potential predatory loans, evaluate a batch of mortgages originated by third parties and review large pools of mortgages. Using a scoring system, Freddie's technology examines home values generated by an automated valuation model (AVM), borrower data and loan data to predict whether a loan is at high risk, moderate risk, or low risk of a faulty assessment.
Seven indicted in Internet mortgage fraud scheme
The U.S. Attorney has filed two indictments against seven defendants in 2 cases related to a bankrupt online mortgage lender. One indictment accuses the defendants of deceiving investors and warehouse lenders, manipulating the publicly traded shares of bankrupt AppOnline.com, Inc. and using warehouse funds -- intended for loan fundings -- for daily operations. A second indictment accuses AppOnline.com of directing warehouse lenders to wire mortgage funding proceeds to escrow accounts secretly controlled by AppOnline.com and its principals. That indictment went on to say that accounting improprieties enabled AppOnline.com to provide financial statements to the Securities and Exchange Commmisiion and to its warehouse lenders that allowed it to remain in business far longer than it would have with legitimate financial statements.
Refi's Jump
Applications for refinance mortgage loans jumped 22% from last week, according to the Mortgage Bankers Association of America (MBA). In its weekly survey of mortgage bankers, commercial banks and thrifts, MBA said that overall applications were up nearly 15%. Freddie Mac reported in this week's survey of 125 lenders that the average 30-year fixed rate mortgage (FRM) rose seven basis points (BPS) to 6.87 percent. While the southwest saw the biggest increase -- 13 BPS -- the 30-year FRM was still lowest in that region, at 6.83 percent. The average 1-year adjustable rate mortgage (ARM) jumped 13 BPS to 5.07 percent. The spread between the one-year ARM and the thirty-year FRM fell to 1.80% from 1.86% last week. A year ago, the spread was only 0.68%. Most of Bankrate.com's mortgage experts surveyed think rates will not fall during the next 30-45 days.
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