MortgageChronicle.com -- Free Mortgage Industry News Archives December 30, 2004

Mortgage Headlines

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Last Updated Thursday, December 30, 2004 10:32 AM CST

Apps, Rates Quiet
The 30-year fixed-rate mortgage averaged 5.81%, up six basis points from last week, according to Freddie Mac's latest Primary Mortgage Market Survey. During the shortened Christmas week, the Mortgage Bankers Association said mortgage activity decreased about 2%, bringing the Market Composite Index to 677.4.

FHA Limit Bumped
The U.S. Department of Housing and Urban Development announced it will increase the loan limit on Federal Housing Administration-insured single-family mortgages to $312,895, up about 8% from a year ago. In low cost areas, the limit will be raised to $172,632.

Fugitive Chronicles Mortgage Crimes in 'Fiction' Book
According to evidence uncovered by federal agents, the 317-page, unpublished manuscript was apparently a blueprint for a multimillion-dollar series of white-collar crimes that so far has spread across two states. The fictional protagonist in the book leaves a $26,000-a-year insurance sales job to make it big in the mortgage business, finds himself in hot water with the FBI and executes an elaborate plan to defraud lenders of millions before making his getaway. The author, himself a former art student, started his own mortgage company, was charged with fraud in Tampa, then, according to court records, masterminded a scheme to use phony identities and falsified records to make a fortune with fraudulent loans on dilapidated properties in Tampa Heights. He is now a fugitive.

Allied Educates Outside Originators
Allied Home Mortgage Capital Corp. announced it will now provide training for FHA, Rural Development, and Reverse Mortgages to all brokers and loan officers in the residential-lending market. The instruction, which it says is economically priced, reportedly satisfies mortgage brokers' needs for continuing education credits on various topics and products available to prospective borrowers.

PA Firm Fined Nearly $1 Million
The Pennsylvania Human Relations Commission has ordered a black-owned Philadelphia mortgage broker to pay $910,000 in damages and fines for targeting African Americans with high cost subprime loans. The commission ruled that the firm charged inflated interest rates, established loan terms without the borrower's knowledge, charged unnecessary fees that were not disclosed to clients and took a portion of the loan proceeds.

Blog IDs Bad Wholesalers
A blog created just for loan officers and brokers to rant and rave promises to be a clearing house for bad wholesaler experiences. Among the possible postings are comments about account executives that miscommunicate information about programs, procedures or closings.

MortgageIT Ups Warehouse Line
MortgageIT Inc.'s credit line has grown to $400 million, according to a Form 8-K filed with the Securities and Exchange Commission. The increase was reportedly one of several other changes made last week in its warehouse and security agreement.

L.A. Probing Mayor's Link to Mortgage Scam Defendants
The Los Angeles County district attorney's office has opened an informal inquiry into $30,000 made to L.A.'s mayor's campaign by a pair of once high-flying Beverly Hills developers now accused of mortgage fraud. "At this point we're not doing a criminal investigation," L.A.'s deputy district attorney said in an interview with MortgageDaily.com. "What we are doing is doing an informal inquiry to determine if we proceed with a criminal investigation."

Processing Outsourcer Adding Jobs
National Real Estate Processing Services LLC, which claims to be the nation's largest full-service fulfillment center, plans to add at least 150 employees to its staff throughout fiscal year 2005. National Real Estate is an outsource loan fulfillment company recently formed through Bundled Broker Services Inc.'s acquisition of Mortgage Processing Services LLC.

Study Compares Foreclosure Process at Servicers
S&P announced its updated U.S. Loss Severity Model captures servicers' performance in foreclosure initiation procedures, management, and cost controls, to provide investors of residential mortgage-backed securities with more accurate calculations of a loan's potential loss severity. Data reportedly showed that it typically takes 130 days for a servicer to initiate foreclosure proceedings.

Increasing Originations By Branding
Developing a fortuitous career in the mortgage industry requires the loan originator to rise above the competition by establishing a successful brand name, as an expert, and by becoming a resource to the community, as explained in the book, the Little Red Book of Selling. Personal branding is the process of getting prospective clients to have confidence in you, being seen and known as a leader, and building your image. The book's author believes that building a successful personal brand will lead to loyal clients and an abundance of referrals.

Husband Kills Originator, Self
A southern California mortgage loan originator who worked at a Newport Beach, Calif., mortgage company, is the fourth person in the mortgage industry to recently die a violent death. What's tragic about her death is that she apparently died at the hands of her husband in what Newport Beach police have described as a murder-suicide.

Bankruptcy a Possibility at American Business Financial
In a FORM 8-K filing with the SEC, American Business Financial Services Inc. said its limited ability to sell subordinated debt during its fiscal 2005 second quarter -- during which the level of subdebt redemptions seriously depleted its cash -- leaves it vulnerable to voluntary or involuntary bankruptcy.

November Business at Fannie Falls
Fannie Mae reported business volume of $52.7 billion -- about $9 billion lower than October. Single-family delinquency, which is reported on a one-month lag, edged up from the previous month to 0.62% in October.

1-Year ARM Heading Higher
The 1-year Treasury-indexed adjustable-rate mortgage averaged 4.17%, Freddie Mac reported, just one BPS lower than the prior week. Fannie Mae's December forecast has mortgage rates rising only modestly next quarter, but has the 1-year ARM average jumping to 4.57% midyear 2005 and ending the year at 4.90%.

Freddie Business Nudges Up
Freddie Mac's new business purchases of $34.6 billion nudged up from October, according to its latest monthly volume summary. But the total is lower than last November.

Big Shake Up at Fannie
Fannie Mae's board of directors announced Tuesday the retirement of chairman and chief executive Franklin D. Raines and the resignation of chief financial officer J. Timothy Howard. The board also announced that the audit committee dismissed KPMG as its independent auditors and has started a search for a replacement. OFHEO announced it classified Fannie as "significantly undercapitalized under OFHEOs capital standards" as of Sept. 30.

Delta Secures Additional $200 Million Warehouse Lines
Delta Financial Corp. announced it had increased its warehouse financing capacity by $200 million. Delta said its total lines are provided through three separate financing providers.

Branch Manager at Former BoA Unit Sentenced for Fraud
Eleven people -- including an EquiCredit branch manager -- have been sentenced by a U.S. District judge for their roles in a $3 million fraud scam. Court records, show that the branch manager and others were scamming EquiCredit and Bank of America by processing phony mortgage loans and then keeping the money for themselves.

Strategic Positioning
From Florida to Texas, recent merger and acquisition news included Webster Financial Corp.'s acquisition of First City Bank; Collateral Mortgage Capital's acquisition of CareyKramer Co.; and Franklin Bank Corp.'s closing of its acquisition of Seven Points.

This mortgage news summary reprinted with permission of