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Mortgage Headlines
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Last Updated Thursday, July 10, 2003 09:56 AM CST
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Economists Predict Rest Of Year To Be a Busy One For Housing Industry
In a conference call presented by the Homeownership Alliance Wednesday, five industry experts agreed that the residential housing sector of the economy would continue its robust activity for the second half of 2002. Paul Merski, chief economist for the Independent Community Bankers of America, noted the explosive activity in the mortgage industry, adding that there are "very few signs of that slowing in the months ahead." David Berson, Fannie Mae's chief economist, agreed that the market was poising itself for growth and a sustained low federal funds rate.
Are Refis Headed for Crash Landing?
David Berson, chief economist for secondary lender Fannie Mae, predicted a more than 200 percent drop in refinancing activity for 2004, compared to the current year. "We're looking for refinance originations this year to come in at about 2.6 trillion dollars, which is a record. But next year we think that's going to tumble to only about 850 billion dollars," he said during a conference call presented by the Homeownership Alliance Wednesday.
Countrywide Loan Biz Soars To New Heights In June
In its latest production statement, Countrywide Financial Corporation announced several new highs for the company's record books. Loan fundings, for instance, were reported at $48 billion for the month. According to the statement, that number represents a 23 percent increase over May's numbers and a new company record. Another record-breaker was the average of $3.2 billion in applications per day, the statement said.
Flagstar Unfurls Record Production
Flagstar Bancorp reported a record $6.5 billion in production for residential mortgage loans for the month. Production was 22 percent higher than May's $5.3 billion in reported production and dwarfed, by 171 percent, last June's reported $2.4 billion in production.
New Century Sees Upswing In Production
New Century Financial Corporation reported $1.96 billion in production for June, soaring over May's $1.918 billion as well as April's $1.926 billion. The company said that its $5.8 billion in production for the second quarter is a new record, smashing the old one, set in the prior quarter, by 23 percent.
Unemployment Climbs in June But Financial Sector Adds Jobs
The "financial activities" sector of the nation's workers continues to show growth, employing 68,000 new workers during June, even as unemployment overall hit 6.4 percent, according to the Bureau of Labor Statistics. The numbers represent non-seasonally adjusted totals. According to the report, 2,799,800 employees now work in the credit intermediation sector.
Rates Head Higher, Freddie Says
Thirty-year fixed rates averaged 5.40 percent, up 16 basis points over the prior week, according to Freddie Mac's Primary Mortgage Market Survey. The 15-year fixed rate averaged 4.75 percent, the survey said, up 12 basis points. More than half of Bankrate.com's experts predict rates will continue to rise. The Market Composite Index of mortgage applications came in at 1635.5 on a seasonally-adjusted basis for the week ended June 27, up from 1554.5 the prior week, according to the Mortgage Bankers Association of America. Refinances as a percentage of total applications fell slightly, comprising 75.6 percent of all applications, off from 75.8 percent the prior week, MBAs survey said.
Ratings Services Review New Kentucky Lending Laws
Fitch Ratings and Standard and Poor's both recently reviewed the state's new predatory lending legislation and reassessed the risk posed to investors in light of the new Kentucky law. According to Fitch, in addition to loans that are clearly high cost loans and marked as such, the new Kentucky law could allow for unlimited assignee liability on loans that were marked in error as not being high cost loans. In light of the new risk, Fitch said that they would require third-party verification on any RMBS transactions that include Kentucky-originated loans. Standard and Poor's said they would allow for rating RMBS transactions that include high-cost home loans originated in Kentucky, but only with stringent review that will verify that the high-cost home loans are in compliance with the predatory lending statute.
Countrywide Co-founder Dies at 79
David S. Loeb died Wednesday, according to a statement released by IndyMac Bank, where he had recently retired as chairman. The company said he died in his Sparks, Nevada home and was 79. "I was 21 years old when I first met David in 1960 when our two companies merged," Angelo Mozilo, Countrywide Financial Corporation's chairman, recalled fondly in a statement. "We worked together for more than four decades, including 30 years as co-founders and leaders of Countrywide, and I have always deeply respected David as a business partner, mentor and friend."
Freddie Reports Growth, Portfolio Totals Still May be Revised
Freddie Mac reported a total mortgage portfolio of $1.3 trillion at the end of May. This total represents a net gain of almost $10 billion over April, but the total is still lower than 2002 year end's total of 1.31 trillion, the statement said. Freddie reported $77.4 billion in new business purchases and $67.5 billion in liquidations for May. Currently, Freddie is reporting May 2002's mortgage portfolio balance at $1.23 trillion, with a net gain for that month of $10.3 billion.
Mortgage Fraud Among Charges that Land Former Texas Attorney General in Jail
Dan Morales is charged in a twelve-count indictment returned by a federal grand jury with making false statements on a loan application, mail fraud, conspiracy and filing a false tax return, said U.S. Attorney Johnny Sutton of Austin, Texas. Morales, 47, a Democrat who in 2000 ran unsuccessfully for governor, has pleaded innocent to the charges and is in jail in Austin awaiting an Oct. 7 trial. Attorneys for Morales, who left office in 1999, could not be reached to comment. Morales was first elected in 1990, and then won a second term as Texas' top law enforcement officer in 1994.
HUD-Commissioned Study Recommends Property Standards Phaseout
A recent study commissioned by the U.S. Department of Housing and Urban Development (HUD) recommends that the agency eliminate its minimum property standard (MPS) regulations. According to the study, the remnants of the once all-inclusive construction and technology standards are causing confusion at the state and local level and are no longer necessary. In addition to eliminating MPS, the study recommends doing away with the Technical Suitability of Products (TSP) program, which is rooted in the 1937 Technical Circulars issued by the FHA.
COFI Falls for 12th Straight Month
The monthly Cost of Funds Index -- or COFI -- hit another record low for May, sinking to 2.13 percent. May marks 12 straight months of decline for the index, which has, in each of its last 12 months, reached a new record low, hovering below any number recorded since the index's inception in July of 1981. May's rate is 78 basis points lower than April's 2.208 percent.
Predatory Lending Laws Get Attention of S&P
Standard and Poor's (S&P) held a conference call last week to explain and answer questions about how they are approaching the new predatory lending laws that are springing up across the country. A residential mortgage group director explained in the call that the company only reviews legislation that has been passed and enacted. She said that S&P works to finish their review and complete their conclusions on new law before it goes into effect, but that they do not make a practice of analyzing potential legislation. The company has evaluated predatory lending laws in New York and Georgia and issued credit ratings or withheld ratings on certain loans based on their evaluations of the new laws, according to the April 15 statement.
Treading Shallow Water
In its Primary Mortgage Market Survey, Freddie Mac reported the average 30-year fixed rate at 5.24 percent, three basis points higher than last week. Applications continued their slowdown, with the Market Composite Index finishing the week ending June 20 at 1554.5 on a seasonally adjusted basis, down from 1701.7 the prior week, according to the Mortgage Bankers Association of America. Bankrate.com's weekly prediction concerning mortgage rates was split again. This week, half of the industry experts said rates would head back down, 40 percent said they would go up.
Fraudster Used Many Names While on the Run
William Lee Cranston was recently sentenced to seven years in prison by a U.S. District Judge in California, according to an announcement from the FBI. Cranston was accused by the government of submitting more than 100 fraudulent loans for over $20 million to 26 lending institutions between 1990 and 1993. The bad loans allegedly resulted in $3.5 million in losses. The FBI said it began investigating the case in 1993, at which time Cranston fled to Mexico and lived under the alias Oswaldo Ochoa. Cranston then moved to Florida, Las Vegas, and back to southern California, where he was arrested at Los Angeles International Airport upon returning from a Memorial Day 2002 trip to Cabo San Lucas.
LendingTree Faces Lawsuit
Century 21 Real Estate Corporation, Coldwell Banker Real Estate Corporation, and ERA Franchise Systems, Inc. filed the complaint in U.S. District Court earlier this month against LendingTree.com. The online mortgage broker service stands accused by the Cendant trio of violating several sections of the Trademark Act of 1946. At issue is LendingTree's referral system, Lending Tree Realty Services. According to the lawsuit, the referral service recommends real estate brokers to potential customers if the broker has agreed to split up to 35 percent of commissions with the website. The Cendant subsidiaries contend that LendingTree "provides the illusion that LendingTree participates in a network of real estate companies that includes Century 21, Coldwell Banker, and ERA."
NAMB Names Broker of the Year
J.J. Sims, the chief financial officer/broker at ABC Mortgage in Bloomington, Minnesota, was named Broker of the Year by the National Association of Mortgage Brokers (NAMB). Sims' wife, Jayne Sims, was also honored at the annual convention -- held last week in Baltimore, Maryland -- as NAMB's "Volunteer of the Year."
Farm Credit Administration Seeks Input on New Rules
The Farm Credit Administration (FCA) has proposed a reconsideration and possible alteration of some of its regulations regarding borrowers from Farm Credit System institutions. In a press release, the FCA said that the to be addressed include whether to change the definition of a "bona fide farmer and "part-time" versus "full-time;" if limits should be placed on other credit needs of farmers; and whether "moderately priced" rural housing should be redefined.
Portfolio Loans Outperforming CMBS
Office-space vacancies continue to rise, continuing a climb that includes eight of the last nine quarters, according to a new industry report. This condition of increasing vacancies is a phenomenon that prior to 2001 had never even occurred during the 20 years measurements have been taken, said the report, issued by the Federal Deposit Insurance Corporation. Despite this unprecedented glut of office space, the commercial real estate (CRE) loan market seems to be weathering it well, showing just a slight increase in noncurrent loans. The report also noted that CRE loans are outperforming commercial mortgage-backed securities (CMBS). Subprime lending and its attendant higher risk of default was noted as a factor in CMBS performance.
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