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Mortgage Headlines
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Last Updated Tuesday, May 07, 2002 01:11 PM CST
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I See You Baby -- Visualization techniques help originators ascend
to top producer levels
You can increase your loan originations by learning how to maintain higher levels of focus and intensity on demand. According to a recent teleconference organized by the Mortgage Bankers Association of America (MBA) entitled "Ultimate Guide to Mental Toughness," the Mark McGuires and Tiger Woods of the sports world work with sports psychologists to learn how to increase these levels. The event was presented by moderator Dan Teitelbaum. Certain triggers raise personal motivation. For instance, a new home, a higher net worth or a new sports car might be personal triggers. Business triggers include top performer recognition or establishment of new referral sources such as real estate agents and builders. Instead of focusing on "being in the new house in one year," focus on the more emotional event of the housewarming party. Citigroup announced that it will purchase Golden State Bancorp, the indirect parent of First Nationwide Mortgage. Citigroup will pay about $16.40 in cash and 0.5234 Citigroup shares for each share of Golden State. The company said the acquisition will make its conforming mortgage business the 7th largest loan originator, up from the tenth spot currently. Citigroup also said it will become the nations 6th largest servicer of these loans, up from number nine. The transaction is expected to close in the fourth quarter of this year.
Rates Fallings, Apps Rising
Freddie Mac reported in its weekly survey of 125 thrifts, commercial banks and mortgage lending companies, that the average 30-year fixed rate mortgage (FRM) fell 0.10% -- or ten basis points (BPS) -- from the prior week to 6.78%. The average one-year adjustable rate mortgage (ARM) fell sixteen BPS to 4.75 percent. MBA said overall applications rose 9.2%. Refinance applications jumped 16% and represented 38.7% of total applications. Bankrate.com said 66% of the respondents expect for rates not to change more than 2 BPS over the next 30-45 days, while the remaining respondents were evenly split between rising and falling rates.
COFI Anyone?
According to an announcement from the Federal Home Loan Bank of San Francisco (FHLB), the monthly weighted average COFI fell to 2.653% in March from 2.744% the prior month. The COFI reflects the interest paid by 11th District savings institutions in Arizona, California, and Nevada on their various sources of mortgage money. The COFI average is reported by the FHLB about 30 days after the end of each month.
10+ Year Sentences In Mortgage Fraud Case
Kenneth Bradford and Jo Ellen Bryant received respective prison sentences of 12 and 10 years' for three counts of felony theft by taking, and both sentences will be followed by at least 18 years' probation. The two were convicted in the DeKalb County Superior Court on March 31st. The Attorney General said the pair, who held themselves out as a married couple under the fictitious names of Ken and CJ Taylor, owned a company called Prime Plus which bought and sold residential property to individuals seeking to own "investment" property. Investors were promised full property management services, including the finding of tenants that were to include business people and athletes. According to the Atlanta Journal-Constitution, Teresa Harriss -- the mortgage broker who facilitated their crimes -- has pled guilty and was sentenced to two years in prison.
Flagstar Reports $9.3 Billion 1st Quarter Production
Flagstar Bancorp, Inc. reported record first quarter mortgage loan production of $9.3 billion, according to its announcement of earnings this week. This is more than seventy percent higher than the $5.4 billion production during the first quarter of last year. Flagstar, which says it operates 73 loan origination centers and 15 correspondent lending offices across the U.S., reported record levels of mortgage banking income.
Judge Ran Mortgage Company From Bench
A Georgia judge ran his mortgage company out of his courtroom for 18 months in broad daylight, according to the National Law Journal (Journal). David F. Crenshaw ran The Mortgage Team of Georgia, Inc. from his Twiggs County courtroom on Main Street in Jeffersonville, the Journal said in its annual look at misdeeds from the bench. Commissioners let Crenshaw hire an extra employee in 1998 when he said he needed more help. However, Crenshaw allegedly used the employee mostly for his mortgage company, which had the same address as the court. "I filed some tickets one time," the employee was quoted as saying, describing her official work. "That took maybe 15 minutes. I worked on two elections. Maybe five or six hours."
$24.62 Billion Q1 Production At ABN AMRO
ABN AMRO Mortgage Group's first quarter production was $24.62 billion, an 83% increase from the first quarter of last year, according to an announcement this week from the company. For the month of March, the group's production was $8.74 billion, up 10% from February and 51% higher than March last year. The company said it expects strong production through the end of the second quarter to be enhanced by the "ramp up" of its InterFirst wholesale construction lending unit.
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.
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