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Last Updated Wednesday, October 09, 2002 09:16 AM CST
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$25.3 Billion September Production at Countrywide
Countrywide Credit Industries, Inc. announced that September fundings of $25.3 billion overshadowed the August record by $4.1 billion. The lending giant also funded $63.6 billion during the third quarter, another company record according to the report.
Mortgage Jobs Jump
Employment numbers in the mortgage industry continued to rise in the month of September, according to the monthly employment report from the Bureau of Labor Statistics. About 381,000 people were employed in the industry in September, which is up from 375,000 in August and 372,000 in July, according to the seasonally adjusted report. That's also 44,900 more mortgage jobs than September 2001.
Freddie Nixes Georgia High Cost Loans
Freddie Mac announced that it's revising its requirements for purchases of mortgages in Georgia. The Georgia Fair Lending Act (GAFLA) went into effect Oct. 1. Freddie Mac's new requirements for mortgages purchased there will be effective Nov. 1. The GAFLA intends to restrict high-interest loans targeted mainly at the elderly and poor, and other abusive home loan practices. Based on this legislation, the government-sponsored housing enterprise will not purchase any mortgage secured by a primary residence with one to four units in Georgia if it has a note date on or after Oct. 1 and the terms equal or exceed the annual percentage rate or the points and fees threshold for "high-cost home loans" as defined by GAFLA.
Household May Settle With States for Up to Half Billion
According to the Wall Street Journal, Household International Inc. may be near a settlement with state attorneys general that could total $350 million to $500 million -- far bigger than the recent record $215 million settlement between Citigroup and the Federal Trade Commission. Sanford Bernstein Research analyst Howard Mason raised the prospect of the settlement in a new research report, the Journal said, and reportedly said he believes Household has the cash to make a restitution payment of $350 million to $500 million.
Biggest Refi Wave From Here to Kingdom Come
According to the Mortgage Bankers Association of America, (MBA), refinance applications jumped 11.61% from the prior week to their highest level ever. Refinances made up about 77% of all applications started. Freddie Mac reported that the average 30-year fixed rate mortgage crept up two basis points (BPS) -- or 0.02% -- from the prior week's record low to 6.01%. More than half of the mortgage bankers, mortgage brokers and other industry experts surveyed by Bankrate.com expect no change in rates during the next five weeks, while about a third see rates falling further.
A Penny Saved and a Loan Denial
Key findings recently released from Fannie Mae's third annual Mortgage Focus study confirmed the best ways lenders can keep the cash and up the output -- by using automated underwriting (AU). However, this comes on the cusp of a discrimination lawsuit based on the company's credit scoring system, which lenders must use if they want to sell their mortgages to Fannie. The lawsuit says its goal is to correct what it says are racial disparities in Fannie's underwriting guidelines, Dow Jones Newswires reported. The plaintiff, Safiyyah Rahmaan, who is African-American, was denied a $95,000 mortgage loan with a 6.75% interest rate from the Cornerstone Bank in Wilson, N.C., based upon a credit score produced by Fannie's Desktop Underwriter software. She eventually obtained a home loan at 10.5% from American Fidelity Finance Company.
Broker Caught With Cocaine in Mortgage Fraud Raid
Todd H. Charske, 32, is the president and operations manager of Kemper Financial Inc. located in the Dayton, Ohio area. Charske and Gregory B. Romer, 27, are accused by FBI special agent Steven M. Darragh, of operating a flipping scheme and defrauding Meritage Mortgage Corporation. When lawmen raided Kemper's offices, according to the Dayton Daily News, the mortgage fraud case turned unexpectedly into a drug case when Charske fled out the back door -- allegedly with 328 grams of cocaine in a small plastic bucket -- into the arms of an FBI agent.
Happy Days Are Here Again
New Century Financial Corporation announced Friday that it projects the fourth quarter's earnings per share (EPS) to be better than or equal to the third quarter's forecasted EPS. Because of this elevated fourth-quarter forecast, New Century is raising its annual EPS guidance for fiscal year 2002 to $6.75 to $6.85 a share, up from its earlier projection of $6.35 to $6.55 a share, the announcement said. "Our production remains very strong, the secondary market remains robust and our production is sold through October in committed forward sales," said Robert K. Cole, chairman and chief executive officer. "Consequently, we expect favorable financial results for the balance of 2002."
That's One Small Step for e-Kind
Online customers at Quicken Loans are now able to sign loan applications via their Web browser instead of installing software, downloading digital certificates, or waiting for the loan application package to be mailed to their homes, the company announced Monday. Customers applying for loans on the company's Web site "click to sign" within their Web browser to give their electronic John Hancock. ApproveIt Web Server then works behind the scenes to secure the transaction and provide a legally enforceable process, the announcement said. Officials from some competing companies do not see the value in such a system until it can be applied to the entire loan process.
Please Check One
Most MortgageDaily.com readers work in loan origination, which was defined as: "Includes loan officers, loan originators, loan reps, loan sales, mortgage brokers and anyone else that earns commissions for originating and closing mortgage loans."Loan production" -- which includes all positions involved in the loan production process from origination to closing, except loan originators -- was chosen by 7% of readers. Examples include loan processors, sales managers, underwriters, and closers. With a close 6%, the next most popular position was wholesale lending, which included all occupations at a wholesale lender except those in loan production. Examples include account executives and their sales managers, and quality control personnel.
COFI Talk
The Federal Home Loan Bank of San Francisco announced yesterday that the monthly weighted average cost of funds index (COFI) for 11th District savings institutions fell 0.058%, or 5.8 basis points from the prior month to 2.763%. COFI reached its lowest point in decades last March, falling to 2.653%. The index has fallen in all but three months since December 2000.
ABN AMRO Growth Outpaces General Marketplace, Says Exec
ABN AMRO Mortgage Group, Inc. reported August 2002 production of $10.75 billion with 67,327 loans funded. This represents a $1.94 billion increase from July, or 22%. For YTD from Jan. 1, 2002 to Aug. 31, 2002, the company reported a production total of $65.74 billion, a 36 percent increase from YTD August 2001's $48.33 billion. InterFirst Wholesale Mortgage Lending led the way in ABM AMRO production with a reported August 2002 total of $9.06 billion, a 19% increase from July.
OTS Grants States More Authority Over Lenders
The Office of Thrift Supervision (OTS) announced last week that it is removing prepayment and late fee rules from the list of OTS regulations that apply to state housing creditors under the Alternative Mortgage Transaction Parity Act. OTS is the primary regulator of all federally chartered and many state-chartered thrift institutions, which include savings banks and savings and loan associations. The change, affects state-chartered housing creditors, including state savings associations, state savings banks, mortgage bankers, certain HUD lenders, and others who make mortgage loans, and they would once again be subject to state rather than OTS prepayment and late fee rules, according to the OTS announcement. The new rule will be effective on January 1, 2003.
I've Fallen And I Can't Get Up
The benchmark 30-year fixed rate mortgage fell six basis points (BPS) from last week to 5.99% -- the lowest its been since at least 1971, Freddie Mac reported. New applications maintained their near-record pace, rising 4.8% from last week, according the survey of mortgage bankers, commercial banks and thrifts by the Mortgage Bankers Association of America (MBA). Lioninc.com reported that the 10-year note was trading up 12/32 near midday to yield 3.72%.
Refi Woes
Cendant, which says it is the world's largest real estate brokerage franchisor and hotel franchisor, said that it will take a $175 million write-down on the carrying value of its mortgage servicing rights asset. The noncash write-down was attributed to a steep decline in the interest rates that caused mortgage loan prepayments and refinancings to increase to record levels. Cendant said it determined that the servicing rights asset will be reduced in accordance with generally accepted accounting principles -- which require a revaluation to the lower of cost or market value at each quarter end.
Celebration
The Hyatt Regency Chicago will host this year's Mortgage Bankers Association of America 89th Annual Convention & Expo. The state and local workshop is scheduled for Oct. 18-19, and the 2002 Fall Commercial/Multifamily Executive Forum is scheduled for Oct. 21-22. Former President George H.W. Bush will speak at the opening general session Oct. 21. Other keynotes scheduled through the weekend are Rudy Giuliani; Mike Ditka, to be interviewed by On the Record's Greta Van Susteren; and Mel Martinez, secretary of the U.S. Department of Housing and Urban Development. Themed "Decades of Discovery," the convention will feature workshops, such as Management Track: Dealing With Conflict in the Workplace; Technology Track: Bridging the Information Gap: On the Road to Achieving 100% Electronic Mortgages; and Business Strategies Track: Trends in Production. Entertainment throughout the convention will include a Great Gatsby Roaring '20s reception, a Big Band Bash, "Happy Days" at the Sock Hop, and performances by Kool and the Gang and Beatles tribute band The Fab Four. For more information, visit http://events.mbaa.org/89th_annual/index.cfm.
Seesaw
Cambridge Realty Capital Companies reported almost $40 million in closings for the first six months of 2002. This most recent figure for the commercial mortgage company is up from the $33.5 million in production for the first half of 2001, but down from the $118.8 million in closings for 2001's second half, according to prior figures from Cambridge reports.
Conforming Cash-out Changes
Fannie Mae said it will raise its pricing on cash-out refinance loans. The price increases on cash-out loans, which have been recently cited as a source of strength in an otherwise weak economy, range from 0.25% to 0.50%. In addition, Fannie said loans where a first lien and nonpurchase-money second lien are consolidated will now be treated as cash-out. Previously, these loans were treated as limited cash-out refinance loans. This change also takes effect on February 1st of next year. On the upside, Fannie said it will expand the loan-to-value ratios on limited cash-out refinances to the same level as purchase money mortgages, which are as high as 100%.
In Re. Heimmermann vs First Union
The 11th Circuit Court of Appeals ruled last week that the clarification issued by the Department of Housing and Urban Development (HUD) last October is retroactively applicable in a case against First Union Mortgage Corporation. As a result, a previous ruling in another landmark case, Culpepper vs Inland Mortgage Co., was vacated. In the Culpepper case, the plaintiffs argued that a YSP payment to the mortgage broker violated RESPA because no specific services performed by the broker were tied to the YSP payment. The appeals court, however, said "the lender and the broker need not be able to tie the YSP payment to specific services provided." According to the appellate court's ruling, the district court in the Culpepper case abused "its discretion in granting class certification" and that HUD's clarification, or Statement of Policy as it is also known, effectively overruled the district court's decision. The appellate court concluded that a case-by-case analysis is necessary to determine whether YSP payments constitute unlawful referral fees under RESPA.
Record Rates (Again!)
Freddie Mac said the average 30-year fixed rate mortgage was 6.05% -- the lowest its been since at least 1971, when Freddie began tracking it. The 30-year was 0.13% -- or 13 basis points (BPS) -- better than last week, and about 75 BPS better than a year ago. The majority of mortgage bankers, mortgage brokers and other industry experts Bankrate.com surveyed expect for mortgage rates to head lower during the next five weeks. MBA, which surveys mortgage bankers, commercial banks and thrifts, reported that loan applications eased slightly from record levels -- falling 8.7% from last week. Refinance applications were down nearly eight percent while purchase activity was down 11%. Refinance applications represented 73.6% of total activity.
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