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Mortgage Headlines
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Last Updated Friday, October 10, 2003 10:13 AM CST
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Rate Rally Short-Lived
Freddie Mac reported the average 30-year loan at 5.95%, an increase of 18 basis points from the prior week. Overall mortgage applications increased 15.6%, bringing the Market Composite Index to 817.3, the MBA said in its Weekly Mortgage Applications Survey. According to MBA reports, borrowers refinanced their applications nearly 20% more this week, with the Refinance Index coming in at 3005.5. The refinance share of mortgage activity edged up by about two percent to 55.0. Bankrate.com reported 28% of its mortgage industry panelists expect rates to decrease, and although 36% expected no change and 36% expected an upturn, the publication advised people to lock on loans for chance of a slight rise.
Flagstar Fundings Fall Further
Flagstar Bancorp reported residential mortgage loan production of $3.3 billion in September, a decrease from $5.5 billion the prior month and from $4.1 billion volume a year ago. While reported monthly and quarterly production fell, year-to-date volume almost doubled for the company.
More Bad News From FHLB System
The Federal Home Loan Banks (FHLBs) in Atlanta and Pittsburgh revealed Wednesday that each will report multimillion dollar losses for the third quarter. The loss in Pittsburgh for the quarter ending Sept. 30 will be approximately $6.5 million, and the Atlanta FHLB loss is expected to come in at about $9 million, president and CEO Raymond B. Christman said in a letter to his shareholders. The Pittsburgh and Atlanta bank executives said the losses can largely be attributed to the Financial Accounting Standard Board's rules, known as SFAS 133 and FAS 113, that dictate how derivatives are booked.
Texas Investigating WaMu
Washington Mutual Inc. is under investigation since last April by the Texas Attorney General's office (AG). According to the AG's office, since April 2002, approximately 200 customer complaints have been filed with the state agency. Apparently, a story covered by a local news station in the Dallas/Ft. Worth area prompted the investigation, said WaMu spokeswoman Libby Hutchinson. The news story revolved around unhappy WaMu mortgage customers who revealed their complaints, Hutchison said. Complaints vary from lost payments, bad customer service, to threats of and improper foreclosures, the AG's office said. The themes resonate in WaMu's list of lawsuits, which has accordingly grown with the lender's business acquisitions.
Beverly Hills 140-6-0's
An alleged $140 million mortgage scam involving flashy real estate developers Beverly Hills Estates Funding resulted in some bad loans being dumped on Lehman Brothers Holding Inc. and repurchased from the Federal Home Loan Bank of San Francisco. Lehman repurchased $60 million in "problem loans" from the bank in May, according to an Oct. 2 letter the bank's CEO sent to shareholders. According to court documents in Lehman's civil fraud, two Beverly Hills' principals masterminded the fraud scheme on 86 upscale residential properties in California. People close to the firm would buy houses for approximately $1 million but would then file property transfers -- claiming they paid more than $2 million, Lehman's lawsuit alleges.
Record Production at Venture West
Venture West Funding Inc. reported total volume of $758.5 million during the first nine months of 2003, resulting in a 20.3% increase from the same time last year. The record figure includes residential fundings. Multifamily and commercial volume contributed $520 million to the total production, an increase from $458.2 million last year.
Record $3.4 Billion New Century September Production
New Century Financial Corporation reported third quarter production of $8.6 billion, a 49% increase from the prior quarter. September broke August's funding record with a 16% increase to $3.4 billion, said New Century.
NorthMarq Says Acquisition Gives it Top-3 Spot
NorthMarq Capital Inc. announced that the mortgage banking and mortgage consulting services division of Legg Mason Real Estate Services is officially under its direction. The Minneapolis-based subsidiary of Marquette Financial Company claimed the title of third largest commercial real estate investment banking firm since acquiring LMRES last week. NorthMarq reported the unison upgrades its mortgage-servicing portfolio from $11.9 billion to $21 billion. Plus, annual transaction volume now exceeds $6.5 billion, of which LMRES contributes approximately $2.5 billion, a NorthMarq spokeswoman said in a phone interview.
Allied Settles With HUD Over Credit Report Upcharging
HUD announced Allied Home Mortgage Capital Corp. agreed to a settlement involving allegations of "upcharging" credit report costs for loan borrowers -- a violation of RESPA. HUD alleged Allied violated Section 8(b) and other applicable RESPA laws -- by charging certain borrowers more for credit reports than had been charged by the provider of those reports. "Allied does not agree with HUD's interpretation of the RESPA rules," said company spokeswoman Mary McCue. But, "Allied wants to have good relationships with its regulatory agency so the company decided to settle the matter...to avoid further costs and extents, and get on with the business of providing service to its customers."
Mortgage Employment Sector Off
The Bureau of Labor Statistics reported in its most recent monthly employment report that as of August, people working in the Real Estate Credit category total 308,800. The non-seasonally adjusted figures represent a decrease from the prior month's 311,400. The "Mortgage and Nonmortgage Loan Brokers" category employee numbers increased to 113,300 from 111,800 the prior month.
Falling Rates Finally Spark Uptick in Apps
Refinance applications increased by 3.2%, bringing the Refinance Index to 2506.8, reported the Mortgage Bankers Association of America (MBA). Overall applications followed the upward path, according to MBA's Weekly Mortgage Applications Survey. MBA's Market Composite Index stood at 707.2, an increase of 1.1% from last week's 699.6. The average 30-year fixed rate fell 21 basis points (BPS), according to Freddie Mac's Primary Mortgage Market Survey. According to Bankrate.com's surveyed panel this week, 42% anticipate rates will fall, 33% expect higher rates, and 25% said rates will remain the same.
Subprime Lender's Woes Hit FHLB System
American Business Financial Services, a subprime lender active in the manufactured housing market, disclosed in a Securities and Exchange Commission filing last week it must borrow $450 million to continue making loans. The company said it has had cash flow problems since June, when a potential investor was scared away by questions the U.S. Justice Department has raised about its lending practices concerning the collection of delinquent loans. The Federal Home Loan Bank of New York became intertwined in the saga last week when it revealed it lost $183 million on the sale of $1.033 billion in uninsured bonds "collateralized by manufactured housing receivables" that had been downgraded from 'AAA', according to a Sept. 24th letter from bank President Alfred A. DelliBovi to its shareholders.
WA, NJ Mortgage Firms Seek Bankruptcy Protection
Partner Mortgage Corp., a Mercer Island-based private mortgage fund, reportedly petitioned for Chapter 11-bankruptcy protection Friday in the U.S. Bankruptcy Court in Seattle, Wash., due to a rugged commercial real-estate market. Meanwhile, Milestone Capital Inc., a self-described diversified financial services company, also filed a Chapter 11 petition in the U.S. Bankruptcy Court in Newark, N.J. The company said it sought bankruptcy protection for itself and that of its subsidiary, Elite Agents Mortgage Services Inc., after suffering capital losses over two years of unfinished merger negotiations.
WaMu Top Mortgage Exec Out
Washington Mutual Inc. announced the retirement of seven-year employee Craig S. Davis, president of the Home Loans and Insurance Services Group. The decision was announced along with a company realignment done to unify the business and focus on its primary customer groups. His retirement follows WaMu's disclosure last month that problems in hedging the rising rate environment, led to third quarter losses in the sale of home mortgages.
COFI Cracks 2% Floor
The Federal Home Loan Bank of San Francisco reported that the average interest paid by its member savings institutions for their various sources of funds during August fell. According to the government sponsored enterprise, its cost of funds index -- also known as COFI -- fell about seven basis points from the prior month to 1.946%.
Lender Settles RESPA Violations With HUD
Znet Financial, an online and traditional mortgage lender, agreed to a settlement involving alleged violations of the Real Estate Settlement Procedures Act (RESPA), HUD reported. Real estate broker ReMax of Atlanta and 14 ReMax agents also agreed to the settlement after HUD, which enforces RESPA, determined all violated the anti-kickback and unearned fee provisions of RESPA. The agency said investigators found Znet was paying ReMax agents $400 for each referral sent to the company and was representing the agents as employees. HUD said the agents did little or no work beyond filling out a loan application.
Originator Claims Success From Financial Counseling
East Bay Mortgage Inc., a company that reportedly targets physicians, attorneys and other affluent individuals, practices a four-step approach to financial planning that can increase borrowers' net worth (assets increase more than debt). Upon the purchase of a home, instead of giving a large down payment, Tane Cabe of East Bay said clients should be advised to use it toward debt. The first step recommends establishing a cushion of cash for at least two to three months. Secondly, all debt outside the home should be paid. The third step requires the borrowers to save at least one year's income, which helps accomplish the fourth step -- pay off their mortgage in eight to ten years.
No-Point Reverse Program Available to Brokers
Financial Freedom Senior Funding Corp. announced the introduction of its Zero Point Cash Account. According to the company, the program is the first no-origination fee reverse loan with capped third party closing costs and will benefit jumbo borrowers with homes valued over $450,000. "It is available wholesale to mortgage brokers but, in order to take an application, they have to be HUD approved or work with someone who is licensed," said Tom Scabareti, a spokesman for Financial Freedom, which claimed 50% of the reverse mortgage market share in June.
Doses of Falling Rates Fail to Stimulate Refi Recovery
The average 30-year fixed rate mortgage fell 0.03% from the prior week to 5.98%, according to Freddie Mac's Primary Mortgage Market Survey. Total loan applications were off 3.7% from the prior week, according to the Mortgage Bankers Association of America (MBA). While refinance activity was level with the prior week, falling purchase applications pushed the share of refinances up to 51.9% from 49.9% the prior week. Half of the mortgage bankers, mortgage brokers, and other industry experts surveyed by Bankrate.com expect no change in rates over the next 30-45 days, while 30% see rising rates and 20% expect rates to fall.
Business Purchases Jump at Freddie
Freddie Mac reported new August business purchases of $99.5 billion, up from July's $80.1 billion and the highest level this year. A retained portfolio of $616 billion and net mortgage participation certificates of $697 billion made up the total mortgage portfolio of $1.3 trillion, Freddie reported. The government sponsored housing enterprise said July single-family delinquency was 0.75%, slightly higher than June's 0.73%.
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