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MortgageChronicle.com Archives
July, 2011
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Founder of Former FHA Firm Faces Lawsuit
A civil complaint has been filed by the Department of Justice against the founder and president of MDR Mortgage Corp., a news release said.
The government alleges that the defendant hid from the Department of Housing and Urban Development that he had been indicted.
Had HUD known about the indictment, his company would have been disqualified to originate FHA loans that subsequently defaulted.
NY Judge Threatens HSBC CEO Over Foreclosures
A State Supreme Court justice in New York is threatening sanctions against the chief executive officer of HSBC Bank USA -- blaming her personally as head of the bank for filing what he called false and misleading documents involving "robosigning" in a home foreclosure case.
But HSBC is only the trustee on the loan.
For its part, the bank said the CEO was not required to attend a hearning on the matter and that it believes the law does not authorize sanctions on nonparties such as HSBC senior management.
$2 Billion Bank Among 3 to Fail
The Federal Deposit Insurance Corp. was appointed receiver of three failed banks last week.
Included among the trio was Integra Bank, N.A.
Integra had $2.2 billion in total assets.
MetLife Lifts Production
MetLife Home Loans closed around $195 million more in production during the second quarter than in the first quarter.
Among lenders tracked by MortgageDaily.com, MetLife is the only company so far to report an increase in production from the first quarter.
The company also added 200 mortgage employees during the latest quarter.
PHH Sees Improvement Ahead
PHH Corp. said in its second-quarter earnings report that its share of the mortgage origination market fell from the first quarter.
But it still projects a bigger full-year 2011 share -- suggesting a big second-half improvement.
"Heading into the third quarter, we believe our application volume is trending higher than that of our largest competitors and we are working actively with our partners on sales and account penetration initiatives to drive profitable volume," the report stated.
16th Consecutive Month of Lower Delinquency for Fannie
Fannie Mae reported that the 90-day residential delinquency rate fell 6 basis points between May and June.
Delinquency was down 91 BPS from a year earlier.
In fact, Fannie's delinquency has declined each month since February 2010.
COFI Slips
The Cost of Funds Index slipped 2 basis points between May and June, according to data from the Federal Home Loan Bank of San Francisco.
The decline followed a small increase the prior month.
COFI came in 46 BPS better than a year earlier.
Business Strengthens as Rates to Plummet
The most recent U.S. Mortgage Market Index was up about 10 percent from a week earlier.
The biggest boost came from inquiries of adjustable-rate mortgages, which jumped 19 percent.
Mortgage rates are likely to be roughly 18 basis points better by the next report based on trading in the 10-year Treasury note.
Fannie Suspends Mortgage Insurer
In North Carolina, mortgage insurers are required to maintain a minimum policyholders' position of no less than 1/25 of aggregate insured risk outstanding.
Since 2010, Republic Mortgage Insurance Co. has not met the minimum policyholders' position required under state law, Fannie Mae said in an announcement.
So the secondary lender has suspended Republic and an affiliate.
Hundreds of FHA Lenders Hit With Actions
A notice from the Department of Housing and Urban Development indicated that the Federal Housing Administration Mortgagee Review Board has taken action against 240 mortgagees.
The actions were taken because the mortgagees failed to meet the board's requirements over the past year.
More than 2,300 administrative actions have been taken against FHA lenders since 2009.
Countrywide Catastrophe Continues
The subprime litigation nightmare that Bank of America Corp. inherited with its acquisition of Countrywide Financial Corp. has been compounded.
A new lawsuit has been filed on behalf of 16 investors over being allegedly misled about the quality of residential mortgage-backed securities.
The plaintiffs in the latest suit were among nearly three dozen investors who opted out of a separate $624-million settlement that BofA reached with shareholders last year.
M.I. Business Picks Up
Members of the Mortgage Insurance Companies of America insured 23 percent more in policies during June than they did in May.
New mortgage insurance applications rose 18 percent last month.
It was the highest month of the year for endorsements and new applications.
Burst of Mortgage Mergers
PSM Holdings Inc. has announced four mortgage acquisition deals this year.
Wintrust Financial Corp. recently acquired seven mortgage companies.
First Community said that the purchase of Palmetto South was its fifth acquisition.
$16 Texas Property: Suburban Myth?
Using an "affidavit of adverse possession," a Texas man filed the form at the county courthouse for a total cost of $16.
He moved into the home and expects to obtain title to the abandoned property after three years.
But an attorney in Texas has indicated that the actual term he'll have to reside in the property is at least 10 years, and it is highly unlikely that the company with title to the property will do nothing over the next decade.
Jumbos and ARMs Improve as 15-Year Grows More Attractive
Jumbo pricing recently became less expensive, with the spread between the jumbo 30-year mortgage and the conforming 30 year falling to 41 basis points from 47 BPS a week earlier in the U.S. Mortgage Market Index report.
Freddie Mac reported that the spread between the 30 year and the 15 year widened to 89 BPS this week from 86 BPS a week earlier.
Freddie said that both the one-year Treasury-indexed adjustable-rate mortgage and the five-year Treasury-indexed hybrid ARM fell 2 BPS.
Thrifts Struggle to Find Place in New Economy
Nationally, the thrift industry was profitable in 2010, ending a three-year string of losses.
Ranks of thrifts supervised by the Office of Thrift Supervision fell, however, from 765 in 2009 to 731 in 2010.
"We've made the thrift industry irrelevant by regulatory shifts, and while this initially led to a more competitive landscape for depositors and more liberal terms for home loans, it also led to a much less stable system that benefits Wall Street more than it benefits Main Street," a thrift industry consultant said.
Repurchase Losses at Biggest Banks Could Exceed $30 Billion
Fitch Ratings reported that the biggest banks could wind up eating more than $30 billion in repurchase expense on private-label mortgage-backed securities.
Fitch revised earlier estimates based on economics from the Bank of America Corp. settlement.
"Fitch believes that the recent uptick in litigation and settlement activity could potentially increase the incentive for the largest banks to settle private-label rep & warranty claims," the report said.
FHA Claim Denials Prompt Downgrade Warning
Moody's Investors Service said that it placed $3.5 billion in residential mortgage-backed securities backed by government loans on watch for a downgrade.
Among the ratings agency's concerns is uncertainty about whether the claims will be covered by the Department of Housing and Urban Development.
"The increased scrutiny by HUD and the uncertainty pertaining to HUD ultimately paying claims have led to high volatility of our expectations on the losses that will be covered by FHA," the ratings agency stated.
Wholesaler's Exit to Cost 70 Jobs
A restructuring by Yadkin Valley Financial Corp. affects its wholly owned mortgage subsidiary.
The move will result in the closing of the wholesale mortgage business.
The decision to exit the third-party originations will result in the elimination of more than 70 jobs.
Small Decline in Regions Production
Regions Financial Corp. funded 13 less in mortgage production during the second quarter than it did in the prior period.
The decline was more moderate than the one-third drop at both BB&T and U.S. Bancorp and the 29 percent reduction at Bank of America Corp.
But it was a more severe than the 5 percent contraction at JPMorgan Chase & Co. and 6 percent at Flagstar Bancorp Inc.
$4.5 Billion in Soured RMBS Investments at Issue in Lawsuit
A lawsuit was filed by the Federal Housing Finance Agency against UBS Americas Inc. and related defendants.
FHFA is the regulator in control of Fannie Mae and Freddie Mac.
The lawsuit alleges that the two government-controlled enterprises were deceived on more than $4 billion in non-agency residential mortgage-backed securities they acquired.
Flagstar Turns in Mixed Performance
First-mortgage originations at Flagstar Bancorp Inc. were down around $0.3 billion between the first and second quarters.
But rate-lock commitments were up approximately $0.9 billion.
Earnings, meanwhile, were worse than three months earlier but much better than a year earlier.
Biggest Lender Shakes Up Organization
Wells Fargo & Co. announced that it has created Wells Fargo Consumer Lending.
Included in the new group are Wells Fargo Home Mortgage and the company's home-equity division as well as other consumer lending businesses.
Avid Modjtabai has been placed in charge of the new organization.
Formal UAD and UCDP Policies Issued
Fannie Mae issued a bulleting outlining formal policies for the Uniform Appraisal Dataset and the Uniform Collateral Data Portal.
UAD requirements apply to appraisals with effective dates of Sept. 1.
The UCDP is mandatory on loans with application dates after Nov. 30 and delivery dates after March 18, 2012.
Lender Closes Wholesale Division
Sidus Financial LLC said in a statement that it has closed its wholesale channel.
The move was made on June 30.
The mortgage lender blamed "changing market demand" for its decision.
New Mods Give Investors Equity in Properties
Ocwen Financial Corp. announced a shared appreciation modification for delinquent borrowers.
The new program reduces outstanding principal on the mortgage to 95 percent of the home's current market value.
In return, investors earn 25 percent of any appreciation up until the time the property is sold or refinanced.
Uptick in Freddie Purchases
June purchases and issuances at Freddie Mac were more than $3 billion higher than in May, according to a monthly operational summary.
But volume fell nearly $5 billion from June 2010.
From Jan. 1 through June 30, business at Freddie totaled $178 billion.
MA AG Could Opt Out of Servicer Settlement
Massachusetts' attorney general has told registers of deeds around the state that she is investigating potential misconduct by mortgage lenders.
She also told registers in a letter that she will not be a party to any proposed settlement between major lenders and the states that absolves the banks of liability for the misconduct.
"We have made clear that Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct," the letter said.
FDIC IG Analyzes Bank's Failure
The Federal Deposit Insurance Corp.'s Office of Inspector General conducted an in-depth review of USA Bank's failure.
The review was done because the IG had "determined that there were unusual circumstances pertaining to the bank's activities as a de novo institution and the actions of a dominant official."
The report concluded that the chief executive officer's deviation from the bank's original business plan went unchecked by the board of directors and was responsible for the bank's failure.
Inside Jobs Net Prison Time
A former Citigroup Inc. vice president is suspected of swindling $19 million from his employer, according to a complaint and affidavit filed in support of application for arrest warrant.
A criminal information filed last month charges the former president of mortgage banking at Citizens First Savings Bank with making a false statement to the Federal Deposit Insurance Corp., the Department of Justice announced.
A former Northland National Bank vice president and a mortgage broker were indicted along with three other defendants in an alleged mortgage fraud scheme.
CT Firm Recruiting 50 LOs
Total Mortgage Services LLC announced a recruiting campaign for loan originators.
The jobs being filled are retail originators.
Total is hiring in the 23 states where it is licensed.
Billion Dollar Bank Done
The Colorado Division of Banking closed down Bank of Choice.
The failed bank had a whopping $1.07 billion as of March 31.
Deposits were $925 million.
TARP IG Probes Bank LO's Conflict of Interest
Subpoenas for a grand jury are being administered by the Special Inspector General for the Troubled Asset Relief Program as part of an investigation into Sonoma Valley Bank.
The failed bank received nearly $9 million in TARP capital.
The investigation will address allegations that the same week a bank loan officer approved a $4 million loan, he received a $50,000 investment for a company he co-owned from the wife of the man whose company received the $4 million loan.
Purchase Volume Forecast Lowered
Total residential originations by U.S. mortgage bankers will fall from $237 billion in the third quarter to $181 billion during the final three months of 2011.
The prediction came from Fannie Mae in its July outlook.
In its prior forecast, production was predicted to fall from $232 billion to $192 billion.
Extension for Distressed Borrower Funds
On July 4, NeighborWorks America said in a joint announcement with the Department of Housing and Urban Development that the deadline for the Emergency Homeowners' Loan Program was July 22.
In a subsequent joint announcement from HUD and NeighborWorks, the two organizations said that the program has been extended to July 27.
The program provides eligible distressed borrowers with as much as $50,000 towards mortgage payments.
BofA Mods, Short Sales at Brisk Pace
Bank of America Corp.'s chief executive officer said that his bank is now resolving the cases of seriously delinquent borrowers faster than new delinquencies are arising.
"Most importantly, the stuff's moving through the system," Moynihan said in an LA Times interview.
"We're modifying and short-selling and other things faster than they're coming in."
Big Improvement in Jumbo Spread as Refis Retreat
Refinances fell 13 percent from the prior week in the U.S. Mortgage Market Index report for the week ended July 22.
The jumbo 30-year fell 6 BPS from the last week.
The movement cut the jumbo-conforming spread to 41 BPS from 47 BPS a week ago.
Declining CMBS Delinquency Could Turn
Morningstar Research reported that delinquency on securitized commercial mortgages in June improved 13 basis points from May.
But much of the improvement was the result of $1.3 billion in liquidations during June with an accompanying loss severity rate of 48 percent.
Morningstar said that CMBS delinquency could wind up exceeding 9 percent this year.
Chicago a No-Win for Servicers
Mortgage servicers are calling for a shorter foreclosure process in Illinois.
Foreclosure proceedings drag on between 18 months and 2 years in a clogged Cook County court system, which has taken in 92,000 cases since January 2010.
But a proposed Chicago ordinance would put additional pressure on mortgage servicers by defining them as "owners" of vacant properties, making them liable for upkeep.
MetLife to Maintain Reverse Business
MetLife Inc. disclosed its intention sell its MetLife Bank, N.A., subsidiary.
While the insurance company noted that it plans to hold on to the MetLife Home Loans business, reverse mortgages are originated through the bank.
However, a spokesman confirmed that MetLife Inc. plans to also hold on to the reverse-mortgage operation.
Retail Share Up at SunTrust as Fundings Fall
Residential fundings during the second quarter were down 19 percent from the prior period, SunTrust Banks Inc. reported.
Production was down a third from a year earlier.
The bank noted that the retail share of its originations has climbed to 70 percent from just 54 percent a year prior.
5/3 Grows Portfolio Despite Falling Originations
The third-party mortgage servicing portfolio at Fifth Third Bancorp increased around $600 million between the first quarter and the second quarter.
Mortgages owned by the bank were up around $300 million during the same period.
The growth came despite that mortgage originations declined more than a quarter.
Mortgage Earnings, Originations Down at BB&T
BB&T Corp. reported that home-loan production fell 33 percent between the first and second quarters.
Volume was down 22 percent compared to a year earlier.
Mortgage banking income fell to $83 million from the first quarter's $95 million.
For Sale: Biggest Reverse Lender
In June, MetLife Bank, N.A., became the biggest originator of home-equity conversion mortgages.
On Thursday, the parent of MetLife Bank said that it decided to put the bank for sale.
The decision to unload the company was made as a result of the parent company's desire not to be subjected to bank regulation.
Rates Move Within Narrow Range
The average 30-year fixed-rate mortgage inched up 1 basis point in Freddie Mac's latest weekly survey.
The 15-year mortgage was also up a basis point.
The one-year Treasury-indexed adjustable-rate mortgage increased 2 BPS.
Forecast for Refi Share Bumped
The forecast for refinance originations during the second-half 2011 was raised by the Mortgage Bankers Association by $10 billion from last month's forecast.
MBA has third-quarter refinance share at 60 percent.
The trade group raised the expected share from 55 percent in the prior report.
FHA Purchase Originations Leap
The Federal Housing Administration reported that it endorsed 6 percent more loans in June than in May.
But the improvement was more pronounced for just purchase-money financing.
FHA said that purchase volume increased 12 percent in June.
Weak Mortgage Performance at PNC
Second-quarter home-loan originations at The PNC Financial Services Group Inc. were down 19 percent from the first quarter, earnings data indicate.
The mortgage servicing portfolio contracted, falling by $2 billion between the two periods.
Residential delinquency of at least 30 days deteriorated by 10 basis points.
Delinquency Takes Turn for Worse
Residential delinquency of at least 30 days during June was 20 basis points worse than in May, Lender Processing Services Inc. reported.
Still, the rate came in 103 BPS better than in June 2010.
The deterioration was concentrated in early-state deliquency, as the foreclosure rate was up just a single basis point.
Record Penalty Against Wells
Wells Fargo & Co. was hit with a cease-and-desist order and an $85 million civil money penalty, the Federal Reserve Board announced.
The action stems from allegations that employees at Wells Fargo Financial Inc. committed mortgage fraud and unnecessarily put prime borrowers into more expensive subprime loans.
According to a Fed statement, the civil money penalty was "the largest the board has assessed in a consumer-protection enforcement action."
U.S. Bank Production Down a Third
In its second-quarter earnings release, the Minneapolis-based company reported that mortgage production was down 33 percent from the first quarter.
Compared to a year prior, production was off 24 percent.
Subprime mortgage production declined 33 percent.
MetLife Takes Top Reverse Spot
It's official. MetLife Bank has become the biggest originator of federally insured reverse mortgages.
The parent of MetLife Home Loans closed more than 1,200 home-equity conversion mortgages during May -- the most of any lender. Business jumped 47 percent from April.
MetLife's new standing reflects the exit of Bank of America, N.A., and Wells Fargo Bank, N.A. -- the former reverse leader.
Multifamily, Hotel Delinquency Lead CMBS Delinquency Lower
Moody's Investors Service said that delinquency on loans included in commercial mortgage-backed securities conduit-fusion transactions was down 16 basis points between May and June.
The improvement was led by securitized hotel mortgages, which improved 59 BPS.
An even better performance was turned in by multifamily loans, were were down 63 BPS.
Wells Reports Falling Originations, Rising Delinquency & Record Earnings
Second-quarter production at Wells Fargo Home Mortgage was down $20 billion, according to earnings data.
Delinquency including foreclosures was up 22 basis points.
But the good news is that Wells Fargo & Co. earned a record $4 billion.
AMC Hiring Hundreds
StreetLinks Lender Solutions said it will open a new facility in Tampa, Fla.
The new location will serve as a secondary disaster recovery facility.
The appraisal management company said that it expects to add 250 jobs at the new facility during the next two years.
Defaults Down 125 BPS During Past Year
U.S. delinquency of at least three months on first mortgages was 7 basis points lower in June than during May, according to the according to the S&P/Experian Consumer Credit Default Indices.
The rate was 125 basis points below June 2010.
The second-mortgage rate has fallen 101 BPS over the past year.
NMLS Reports # of Lenders, Brokers & LOs
A first-quarter report indicated that the number of unique first-mortgage lenders registered in the Nationwide Mortgage Licensing System & Registry exceeded 3,300.
Mortgage brokers registered to make first mortgages were in excess of 13,200.
Loan originators, meanwhile, numbered more than 100,000.
Massive Mortgage Loss as Originations Sink at BofA
Second-quarter losses at Bank of America Corp.'s consumer real estate services business were more than $14 billion.
Losses accellerated from over $2 billion three months earlier.
Home-loan originations, meanwhile, were down nearly 30 percent between the two periods.
Carrington Evolves from Whole Loan Seller to Issuer
Carrington Mortgage Services LLC said that it has been approved by the Government National Mortgage Association to securitize government mortgages.
Until now, Carrington has sold all of its originations on a whole-loan basis.
"The approval allows Carrington to pool and securitize FHA loans, and provides an avenue for increasing growth by adding those FHA loans to the servicing portfolio," Carrington said in the news release.
NCUA Files Another MBS Lawsuit, More to Come
The National Credit Union Administration disclosed that it has filed a lawsuit against RBS Securities Inc.
The complaint alleges that RBS violated federal and state securities laws and misrepresented the sale of mortgage-backed securities.
Including two similar cases previously filed, the NCUA says the total number of MBS lawsuits could reach 10.
2012/2013 Origination Outlook Eases
U.S. residential originations be $0.85 trillion in 2012 based on Freddie Mac's latest mortgage forecast.
But production will rise the following year to $1.00 trillion.
Freddie's prior forecast had 2012's volume at $0.90 trillion then increasing to $1.10 trillion in 2013.
34 Events Scheduled for September
There are 34 mortgage-related events listed on MortgageDaily.com's conference calendar so far.
Among the events is MISMO's September 2011 Trimester Meeting.
Another conference scheduled during the month is the Mortgage Bankers Association is holding its Quality Assurance and Residential Underwriting Conference 2011.
Realtors Exempted from Mod Rule
The Mortgage Assistance Relief Services Rule was issued in 2009 in response to a rash of loan modification firms that promised to negotiate better loan terms or short sales with mortgage servicers.
But the rule could wind up hindering short-sale transactions.
So the Federal Trade Commission said Friday that it will not enforce most provisions of the MARS rule against real estate professionals who meet certain requirements.
NY's Closing Costs Highest, Foreclosure Process Longest
The most expensive state in which to finance a home purchase is New York, according to Bankrate.com.
Closing costs -- including origination, title and closing fees -- are in excess of $6,000 on a $200,000 loan.
New York also has the distinction of being the state where the foreclosure process takes the longest: 966 days, according to RealtyTrac.
Week's Bank Failures to Cost Over $120 million
Four banks were seized by state bank regulators last week.
Assets at the failed institutions totaled $679 million.
The Federal Deposit Insurance Corp., which was named receiver of each of the four banks, expects that the aggregate cost to its Deposit Insurance Fund will reach $128 million as a result of their failures.
Obama Picks CFPB Chief
President Barack Obama plans to announce his nomination for the director of the Consumer Financial Protection Bureau.
Obama's pick: Richard Cordray, who is currently the director of enforcement for the CFPB.
Cordray was the attorney general for the state of Ohio before losing the job in last November's elections.
Quicken Unit to Issue HMBS
One Reverse Mortgage LLC said that it has been approved by Ginnie Mae to issue mortgage-backed securities containing home-equity conversion mortgages.
By issuing HMBS, One Reverse clients will gain access to the best available pricing, the statement said.
"We will now be able to leverage the relationships we have forged with the investment community, as well as those we have made through our relationship with Quicken Loans," One Reverse's president said in the statement.
2-State MBS Probe Could Expand to 3
California is considering joining New York and Delaware in a wide-ranging investigation into Wall Street's role in the mortgage meltdown that could lead to criminal charges against financial executives.
California's attorney general met with her New York counterpart to discuss cooperating on the investigation.
California would represent a vital addition to the investigation because it was the location of a vast number of the mortgages and foreclosures that fed into the crisis.
CA Law Prohibits Short-Sale Deficiency Judgments by Secondary Lenders
California's governor has signed legislation impacting short-sale transactions.
The new law prevents secondary lenders from collecting deficiency judgments from borrowers in short sales.
In October 2010, the state passed a law requiring primary mortgage lenders to release borrowers from the deficiency after agreeing to a short sale.
Head of Mortgage Firm Might See Shorter Sentence
The U.S. Attorney's Office is asking a judge to give John Robert Miller a lesser sentence.
Miller is the former head of American Mortgage Link.
He reportedly aided in the prosecution of a recently sentenced bank executive.
Bill Would Extend Temporary Jumbo Limit
A U.S. congressman from New York has introduced a bill that would allow the federal government to keep insuring mortgage loans of up to $729,750.
The temporary loan limit expires on Oct. 1.
The legislation proposes to extend the limit until Oct. 1, 2013.
CFPB to Open Leaderless
When the Consumer Financial Protection Bureau formally launches on July 21, it will be without an appointed director.
The lack of leadership has real consequences.
The CFPB won't have power, for instance, to crack down on mortgage brokers.
Refis Surge as Rates Relent
Mortgage pricing inquiries rose 31 percent this week based on the U.S. Mortgage Market Index.
Refinances led the way, rising 44 percent from last week's index.
The average 30-year conforming mortgage fell 11 basis points.
Mixed Performance at Citi
Second-quarter home-loan originations fell 22 percent from the first quarter at Citigroup Inc.
Excluding government-guaranteed and agency mortgages, delinquency of at least 30 days at the consumer banking operation improved 8 basis points.
Real estate lending generated $1.6 billion in second-quarter losses, deteriorating from a $1.2 billion loss in the previous quarter.
Gov Report Calls for National AMC Standards
The Government Accountability Office released a study on appraisal management companies.
The report said that wider use of AMCs has raised concerns about AMC oversight.
"GAO recommends that federal banking regulators, the Federal Housing Finance Agency and the Bureau of Consumer Financial Protection consider addressing several key areas, including criteria for selecting appraisers, as part of their joint rulemaking under the act to set minimum standards for states to apply in registering AMCs," the study said.
Chase to Eliminate Mortgage Portfolio
An analyst asked JPMorgan Chase & Co.'s chairman and chief executive officer in a conference call how long the roughly $30 billion year-over-year reduction in the home-lending portfolio might continue.
"Forever," the CEO answered.
"It's gonna go around 10 or 15 percent a year until it's close to zero."
Wachovia Lobbied to Include Whole Loans in TARP
Soon after the Treasury Department proposed buying up distressed mortgage assets in September 2008, a Wachovia Corp. lobbyist was working to make sure whole loans would be included, an e-mail said.
In a message to a staffer for then-Sen. Elizabeth Dole, lobbyist the lobbyist asked for Dole's help in making sure "whole loans" were part of the plan.
Wachovia likely wanted its struggling adjustable-rate mortgage portfolio to be eligible for the government bailout, a mortgage expert said.
Rates Improve
The average 30-year fixed-rate mortgage fell 9 basis points in Freddie Mac's latest weekly mortgage rate survey.
The 15-year fixed-rate mortgage was down 10 BPS.
Even the one-year Treasury-indexed adjustable-rate mortgage was 6 BPS better.
Originations Off at Chase
Earnings data from JPMorgan Chase & Co. indicated that total mortgage originations were down $2.2 billion between the first and second quarters.
But volume was up $1.8 billion from the second-quarter 2010.
The decline was driven by a drop in correspondent production.
Judge Denies Request by Former Mortgage Chief
Frederick Darren Berg will not be released from federal detention as he has requested, a federal judge ruled.
Berg was charged with defrauding investors of about $100 million in an alleged Ponzi scheme.
He requested the release to get better computer access to the voluminous financial records in the case.
500-Day Foreclosure Process
RealtyTrac reported that foreclosures took 318 days to complete in the second quarter.
The timeline lengthened from 277 days during the same quarter in 2010.
The report also indicated that once mortgages moved into real-estate-owned status, it took an average of 178 days to sell during the second quarter.
Nonconforming Programs Hit Market
New Penn Financial LLC has launched a portfolio mortgage program.
Dubbed the "core product series," the programs target borrowers with strong credit, disposable income and significant reserves but don't qualify based on guidelines from the Federal Housing Administration, Fannie Mae or Freddie Mac.
"What we're trying to do is develop a product that we think, quite honestly, is a real good credit risk," New Penn Chief Executive Officer Jerry Schiano said in a phone interview.
New Credit Rule Take Effect Next Week
A new rule takes effect on July 21 requiring that consumers be supplied with their credit score if they're turned down or offered anything but the best possible interest rate.
It's a tweak to the current law that requires creditors only to supply a reason for denying credit.
But the new rule is a "frustration," according to the American Bankers Association, because it often will require banks to send out two notices on almost-identical forms for the same credit application.
Leadership Changes at Mortgage Firms
Brian Frame was hired as vice president for the Mortgage Partnership Finance division of the Federal Home Loan Bank System.
Susan Malpocker has been promoted from western regional manager to national sales director of Lenders One Mortgage Cooperative.
The new chief executive officer of Caliber Funding is Brian Simon.
Ginnie Ekes Out a Monthly Gain
Ginnie Mae issued $0.7 billion more in June than in May.
But volume was down $7.3 billion from June 2010.
Residential activity was better, but commercial issuance was softer.
Top-10 FHA Lender Settles Allegations of Sham JVs
The Department of Housing and Urban Development announced a $3.1 million settlement with Prospect Mortgage LLC.
"Prospect operated as a 'series limited liability company,' a business structure unauthorized by FHA, and ... used this business structure to create hundreds of sham joint ventures," HUD alleged in its statement.
The joint ventures were allegedly operated with real estate brokers, mortgage firms and other settlement service providers.
Wells' Master Servicer Rating Lowered a Notch
The servicer quality rating on residential loans for Wells Fargo Bank, N.A., as a master servicer was cut to SQ1- by Moody's Investors Service.
Moody's attributed its downgrade decision to regulatory scrutiny of servicer practices.
Also at issue is inadequate review of the underwriting done by primary servicers for loan modifications.
Brokers Blast Unnecessary Regulations
Mortgage brokers plan to tell Congress that new regulations are raising costs for prospective borrowers while placing mortgage bankers in a much more competitive position than mortgage brokers.
Also on the list of grievances are the loan originator compensation rule and the appraisal code.
These have reportedly led to higher appraisal costs, lower quality reports and underpaid appraisers.
BofA Settlement Relieves 1 of Many Issues
MBIA Inc. and Bank of America Corp. have jointly agreed to dismiss a lawsuit.
The litigation was one of many headaches for BofA following its acquisition of Countrywide Financial Corp. and Merrill Lynch during the financial crisis.
MBIA had filed the lawsuit against Merrill Lynch.
Bank Regulators Expand
Federal bank examiners are beefing up their staffs as they work to prevent another financial meltdown.
The three major bank regulators boosting staff are the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp.
In many cases, the examiners are working side by side in the offices of the bankers they're regulating, a process known as "embedding."
Regions Mortgage Chief Departs
Todd Chamberlain has left Regions Financial Corp., a spokeswoman confirmed in a statement.
He was head of Regions Mortgage.
The spokeswoman, however, was not at liberty to disclose Chamberlain's new employer.
Weak Delinquency Outlook
A survey of 272 bank risk managers was conducted on behalf of FICO.
According to the study, 46 percent of the respondents expect residential delinquency to increase over the next six months.
Just 18 percent forecasted a decline.
Real Estate Broker to Head FHA
The Barack Obama administration has named Carol Galante acting commissioner of the Federal Housing Administration, according to a statement from the Department of Housing and Urban Development.
The new chief most recently served as deputy assistant secretary for multifamily housing at HUD.
She is a licensed real estate broker.
Servicers Get Help Complying With Consent Orders
The nation's largest mortgage servicers have until July 13 to meet conditions of consent orders with the Office of the Comptroller of the Currency.
A day ahead of the deadline, Commerce Velocity unveiled enhancements to its Optimizer solution that will reportedly help the servicers meet the requirements of the consent orders.
The enhanced service promises to help servicers systematically implement regulatory policies across their operation and monitor the timeliness and completion of default or foreclosure processes.
$1 Billion Lawsuit Over Bad FHA Loans from MortgageIT
Out of 39,000 government-insured mortgages originated by MortgageIT Inc., 12,500 went into default.
So the government is suing MortgageIT-parent Deutsche Bank AG for $1 billion in U.S. District Court.
Deutsche has moved to have the case dismissed.
The U.S. Foreclosure Fiasco
Sloppy foreclosure documentation prevented Deutsche Bank National Trust Co. from foreclosing on a Florida property.
A problem with Deutsche's service process held up a foreclosure on a Mississippi property.
In a Nevada case, the Supreme Court of Nevada forced Wells Fargo to mediate with a borrower who didn't even sign the note.
Refis Back In Play as 10-Year Yield Sinks
The yield on the 10-year Treasury note was 2.95 percent during trading on Monday.
The yield had been exceeded 3.20 percent as of July 1.
The recent decline suggests a similar move for mortgage rates and higher refinance activity.
PMI Paying Upside-Down Borrowers to Stay Current
RH Rewards has been launched by Homeowner Reward Co.
The program is available to borrowers in a negative-equity position whose loans are insured by The PMI Group Inc.
RH Rewards offers eligible homeowners a cash reward for staying current on their mortgages.
Dozens of East Coast LOs Wanted
TD Bank has plans to increase its East Coast mortgage footprint.
Around 100 loan originators are being recruited by the bank, a news release said.
The "residential mortgage specialists" will work from the field.
Nevada Courts Block 3 Foreclosures
The Nevada Supreme Court ruled against a foreclosure filed by American Home Mortgage Servicing Inc. because adequate assignment documentation and an excecutive with modification approval authority were not at the mediation.
The Clark County District Court ruled in another case that Wells Fargo Bank didn't provide an adequate assignment.
A third case had the Nevada Supreme Court sending a case back to District Court to determine if HomEq Servicing Inc. made someone available during the mediation who had the authority to negotiate the borrowers' loan.
Big Texas Plans for BB&T
BB&T Corp. entered the Texas market in 2009 with its takeover of failed Colonial Bank.
Since then, deposits have grown by 15 percent.
BB&T has applied to open a Dallas-area branch and is likely to acquire a financial institution with a heavy Texas presence.
Broad Opposition to QRM's Required 20% Down
Under the Dodd-Frank act, lenders who want to sell non-agency mortgages on the secondary market without investing in the loan will have to meet the "qualified residential mortgage" standards requiring 20 percent down payments.
So far, more than 320 House and Senate members have written regulators expressing their concerns about the 20 percent down payment requirement.
A coalition of more than 40 consumer organizations led by the National Association of Realtors has also been vocal in its opposition.
From Blue Chip to Problem Bank
At one time, Marshall & Ilsley Corp. was the "gold standard" of banking.
But following the retirement and death of the company's long-time chief in the 1990's, the company's new leaders moved away from the conservative approach that had been the bank's hallmark and became more aggressive lenders.
Now, as the bank is stuck with billions of dollars in bad loans in Arizona and Florida, it has been taken over by the Bank of Montreal.
FDIC Chairman Exits With a Bang
Shelia C. Bair has officially stepped down as chairman of the Federal Deposit Insurance Corp.
Bair served through a tumultuous period during which 376 federally insured banks failed.
On the day she stepped down, the agency announced that three bank failures that same day would cost the Deposit Insurance Fund $590 million.
Business Bounces off Bad Week
The latest U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com was 179.
The index increased from 162 a week earlier.
The prior week saw a big decline ahead of a holiday weekend.
Valuation Insights
Nationwide Appraisal Network reported in May that it had become certified as an appraisal management company in each of the states that require AMC registration.
Lenders can use Mercury Network as an appraisal-submission platform for Fannie Mae's and Freddie Mac's Uniform Collateral Data Portal, a recent news release indicated.
Veros Real Estate Solutions said that its VeroSELECT and Valuation Risk Management platforms were fully functional and ready to deliver appraisals that were compliant with the UCDP.
MBS Settlement to Cost Wells $125 Million
Wells Fargo & Co. has reached a settlement with mortgage-backed securities investors.
Wells Fargo agreed to pay $125 million but did not make any admission of wrongdoing.
The proposed settlement still requires judicial approval.
Surprise Jump in Mortgage Jobs
The number of people employed in the mortgage sector rose by 2,500 jobs in May, the Bureau of Labor Statistics reported.
The strength was concentrated in jobs classified as "real estate credit," with the number jumping by 4,200.
Across all industries, nonfarm payrolls edged up 18,000 during June.
Bankers Report Higher Delinquency
First-quarter delinquency of at least 30 days on closed-end home-equity loans was up 7 basis points from the fourth-quarter 2010, the American Bankers Association reported.
Late payments on home-equity lines of credit were 7 BPS higher than the prior quarter.
ABA's composite delinquency index, which reflects eight categories of loans, was up 3 BPS from the final three months of last year.
FHA Servicer Wanted
A forward bulk/co-issue of Ginnie Mae I and II mortgage servicing rights is being offered by MountainView Servicing Group.
All of the loans in the portfolio are insured by the Federal Housing Administration.
The seller is open to securitizing on a co-issue/forward bulk basis all of its monthly FHA production.
HUD Extends Required Forbearance
Loans qualifying for the Federal Housing Administration's special forbearance program will now require servicers to extend the forbearance period to 12 months, according to an announcement from the Department of Housing and Urban Development.
The required forbearance period was previously just four months.
A similar requirement is planned for servicers participating in the Making Home Affordable Program.
Chase Servicer Rating Downgraded
The servicer quality ratings of JP Morgan Chase Bank, N.A., and Chase Home Finance LLC were lowered by Moody's Investors Service.
In addition, the ratings were place on watch for a further downgrade.
Chase's primary servicer ratings for prime and subprime residential loans were both downgraded.
Rates Jump
A 9-basis-point increase from last week was recorded for the average 30-year fixed-rate mortgage in Freddie Mac's Primary Mortgage Market Survey for the week ended Thursday.
The 15-year rate climbed 6 BPS from seven days prior.
The one-year, Treasury-indexed, adjustable-rate mortgage increased 4 BPS from a week earlier.
Agency MBS Investments by Treasury Prove Profitable
The Department of the Treasury spent $225 billion to buy agency mortgage-backed securities to help stabilize the housing market during the Great Recession.
Since launching an effort to cut its holdings, the department has recovered about 65 percent so far.
"Based on current market conditions, Treasury expects to make a profit for taxpayers on this investment," the Treasury's assistant secretary for financial markets said.
Bank Exec Given 18-Month Sentence
Philip Coon will serve 18 months in a federal penitentiary, a federal judge has ruled.
Coon was a former executive of Coast Bank.
The government alleged that Coon used borrowers' construction loans in a fraud scheme that generated more than $1.5 million.
LOs Indicted in Reverse Fraud Scheme
Three loan originators used bogus appraisals to take out reverse mortgages on behalf of unwitting borrowers, federal prosecutors allege.
Genworth Financial approved loans for 14 properties in six states based on inflated appraisals from the defendants.
In one deal, the trio convinced Genworth that a condominium which had been appraised at $31,000 was worth $275,000.
Lower FHA Limits Won't Hurt Low End Market
Allowing the Federal Housing Administration's temporarily higher loan limits to expire will not prevent the agency from helping to provide home financing to first-time and low- to moderate-income borrowers.
That was according to a study from George Washington University School of Business.
A GW economist noted in the report that higher FHA limits "don't reflect current market conditions and are unlikely to assist the FHA in reaching its historical constituencies."
Varied Actions in MBS Litigation
A class action against Merrill Lynch & Co. Inc. was certified by the U.S. District Court for the Southern District of New York.
The Court of Appeal of the State of California, Second Appellate District, reversed a lower-court decision in favor of Countrywide Financial Corp.
A news release indicated that a class action was filed in federal court on behalf of an institutional investor against Deutsche Bank.
CMBS Delinquency Lower
Delinquency of at least 30 days on loans included in commercial mortgage-backed securities was 23 basis points lower between May and June, Trepp LLC reported.
The improvement "marked the first time since the credit crisis began in 2008 that the CMBS delinquency rate fell for two consecutive months."
The biggest monthly improvement was in the lodging sector.
HAMP Activity Increases
Permanent loan modifications completed under the Home Affordable Modification Program climbed to nearly 25,000 during May, the Department of the Treasury reported.
Volume exceeded the nearly 21,700 permanent modifications processed in April.
Leading all servicers was Bank of America, N.A., which completed more than 9,300 loan modifications in May.
Monthly HECM Volume Up Thanks to Wells
The Federal Housing Administration endorsed 13 percent more home-equity conversion mortgages during June than in May, according to data reported by Reverse Market Insight.
But the increase was primarily the result of one-half jump in business at Wells Fargo Bank, N.A.
However, Wells Fargo is in the process of abandoning the reverse mortgage business.
FDIC v. WaMu Settlement Comes Undone
Talks over possible settlement have ended between three former Washington Mutual Inc. executives and the Federal Deposit Insurance Corp., a lawyer in the case said.
WaMu executives are accused in the FDIC lawsuit of "gross mismanagement."
Their actions allegedly led to the giant thrift's demise.
Managing Branch Options
A franchise branching model was unveiled last month by LenderCity.
The first branch in the state of Maine has been opened by America's Choice Home Loans.
Pro Mortgage Branching Solutions ran a recent marketing campaign touting itself as a profitable way to get paid following the April 1 implementation of the loan originator compensation rule.
Bankruptcies Climb
Consumers filed 4 percent more bankruptcies in June than during May, the American Bankruptcy Institute reported.
But activity eased 5 percent from June 2010.
Chapter 13 filings acounted for 28 percent of June's total filings.
MTA Sets Another Record
The Monthly Treasury Average was 0.25 percent in June, according to an analysis of Federal Reserve data.
The index fell one basis point from the previous month.
The latest quote had MTA at the lowest it's ever been based on data going back to 1953.
Servicer Acquired
The acquisition of GTCS Holdings LLC was completed by Walter Investment Management Corp., a news release said.
Walter services and invests in nonprime, nonconforming and distressed mortgages and manages $1.8 billion in assets.
GTCS provides high-touch, third-party servicing for credit-sensitive consumer loans.
New Business Plunges Ahead of Holiday
The latest U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com plummeted 27 percent from a week earlier.
During the same week during 2010, the index was 355.
The biggest decline was the more than one-third drop in refinance inquiries.
Reverse Lenders Prominent Among Mortgage Exits
During the first-six months of this year, 74 mortgage-related firms have failed or closed down, based on events tracked by the Mortgage Graveyard.
At the same point last year, the count was 109.
This year's numbers reflect 10 non-banks -- including four reverse mortgage businesses.
$1 Billion in Distressed Borrower Funds
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets was established.
In June 2010, $1.5 billion was provided to five heavily impacted states.
In all, $7.6 billion has been made available from the hardest-hit fund.
Critics Pummel Servicers
A growing number of lawsuits, investigations and studies indicate that mortgage servicer mistakes are common.
Borrower advocates and regulators say the system is effectively broken.
"Servicers ... have been so understaffed that they are incredibly sloppy in their record-keeping," a Chapman University law professor said.
HUD Grapples With HECM T&I Defaults
The Department of Housing and Urban Development's inspector general's office reviewed loans from four home-equity conversion mortgage servicers.
The report found that the number of defaults on taxes and insurance shot up 173 percent from May 2009 to March 2010.
It estimated the government could be on the hook for at least $1.5 billion in the event the roughly 20,000 loans identified in the study ended up in foreclosure.
Huge WaMu Settlement Possible
Court filings indicate that a settlement has been reached between former executives and directors of Washington Mutual Inc.
The amount of the agreement is $105 million.
The payment for the settlement will come from WaMu's insurance company.
M.I. Requirements Revised by Fannie
Sellers are required to obtain mortgage insurance policies on loans before delivery to Fannie Mae if the mortgage has a loan-to-value ratio in excess of 80 percent.
When M.I. coverage isn't in place, Fannie said that it could require that the seller repurchase the loan or remit a "make-whole" payment.
The move can occur regardless if the lender is working to reinstate M.I. coverage.
Fannie Triples Repurchase Response Time
Currently, Fannie Mae allows up to one month to respond to repurchase demands.
But in an announcement, the secondary lender said it is temporarily extending the amount of time to 90 days.
The move was made because of "current and unprecedented market conditions."
Agencies Lift Volume from 2.5 Year Low
Issuers of Ginnie Mae, Fannie Mae and Freddie Mac fixed-rate MBS managed to securitize $6 billion more than in May.
However, issuance during May was the lowest level of activity since January 2009.
New conventional origination activity edged up slightly between May and June, according to the Mortgage Market Index -- suggesting July issuance will likely come in around the same level as June.
COFI Rally Over?
The Cost of Funds Index has fallen each month since June 2010.
But that changed in May.
According to the Federal Home Loan Bank of San Francisco, COFI nudged up one-tenth of one basis point from April. |
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CFPB to Open Leaderless
July 15, 2011
WASHINGTON -- The Consumer Financial Protection Bureau won't have a director appointed by the time it opens in six days. Without a chief, the regulator can't regulate mortgage brokers, as well as other types of entities.
When it opens its doors next week, the federal government's new agency to protect consumers from financial fraud won't be quite the aggressive watchdog promised a year ago.
Because of political squabbling, the CFPB formally will launch without an appointed director. And the lack of leadership has real consequences.
<MortgageDaily.com subscribers read full story>
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Surprise Jump in Mortgage Jobs
July 8, 2011
Despite a drop in the number of mortgage broker employees, the mortgage industry managed to hire more people than it laid off. But overall U.S. unemployment has been worse for three months in a row.
The number of people employed in the mortgage sector was 241,500 during May based on data released Friday from the Bureau of Labor Statistics.
Mortgage staffing expanded from a revised 238,900 in April.
<MortgageDaily.com subscribers read full story>
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