MortgageChronicle.com -- Free Mortgage Industry News Archives January 4, 2008

Mortgage Industry News Headlines

Summary of stories published by
| The Mortgage Graveyard

Last Updated Friday, January 04, 2008 06:34 PM CST

Mass. Exodus
Section 8 of what is known as the Unfair and Deceptive Acts and Practices Act went into effect in Massachusetts on Jan. 2. The new law prohibits, as conflicts of interest, any increases in brokers' compensation that are tied to higher interest rates and less favorable terms. Most subjective is the requirement that lenders and brokers must reasonably assess the borrower's ability to repay the loan, including the ability to repay an adjustable-rate mortgage at the higher adjusted rates, even when the initial adjustment does not occur until the fifth, seventh or tenth year. Wholesale lenders including IndyMac and Wells Fargo told MortgageDaily.com that they are making changes to their broker programs, while other wholesalers are reportedly curtailing business in the state.
State Mortgage Licensees Tumble
Ohio has seen its mortgage licensees drop by more than one-third during the past year, a spokesman with the Ohio Department of Commerce told MortgageDaily.com. In Pennsylvania, a spokeswoman told MortgageDaily.com that first mortgage lender licenses were down 29 percent from last year. The director of licensing for the Texas Department of Savings & Mortgage Lending told MortgageDaily.com that mortgage banking licenses, which are reported on a fiscal-quarter basis, have dropped from 431 on Aug. 31, 2007, to 399 as of Jan. 3, 2008.
Bankruptcy Filings Soar
During 2007, more than 800,000 personal bankruptcies were filed, the American Bankruptcy Institute reported. The figure represents nearly a 40 percent increase from 2006, the statement said. The group predicts that the mortgage credit crisis will drive filings even higher this year.
High Rises Find Financing
Holliday Fenoglio Fowler LP announced it arranged $163.5 million in acquisition and pre-development financing for a 1.1 million square foot condominium interest in 375 Pearl Street located in downtown Manhattan, N.Y. The adjustable-rate, first mortgage and mezzanine financing was placed with Apollo Real Estate Advisors LP and M&T Bank. A non-recourse construction loan of $114.4 million was secured by The Tower Residences at the Ritz-Carlton in Dallas, Texas. Phase II of the Ritz-Carlton luxury hotel and condominium development is due for completion in 2009 and will consist of a 23-floor tower with 96 units and four exclusive townhomes, according to Holliday.
Mortgage Job Losses Grow
During November, mortgage jobs totaled about 392,000, the Bureau of Labor Statistics reported. Mortgage employment tumbled by nearly 10,000 jobs from October, according to the data. Jobs in the sector are down more than 100,000 from a year earlier.
Foreclosure Solutions or Problems?
Outreach Housing LLC announced it is going after mortgage lenders whose practices it says "have led to the massive rise in foreclosure rates." The group claims it is offering $1.2 billion in legal assistance to help delinquent borrowers avoid foreclosure by exploiting Truth In Lending and RESPA errors by lenders. Its resources reportedly include in-depth mortgage analysis, a nationwide legal team and a state-of-the-art data system.
Class Action Crisis
During the second half of 2007, 100 companies were sued in securities fraud class action litigation, according to the Stanford Law School and Cornerstone Research Release Annual Securities Fraud Class Action Filings Report announced this week. The figure compares to 66 actions filed in the first half of last year and 116 cases for all of 2006. "The unfortunate reality is that we are seeing more class actions filed against lenders as a result of the subprime crises," Mitch Kider, Managing Partner at the Washington, D.C.-based law firm of Weiner Brodsky Sidman Kider PC, told MortgageDaily.com.
Wachovia Cuts Texas Jobs
Wachovia Corp. recently eliminated more than 200 jobs at a Texas site, according to a Workers Adjustment and Retraining Notification letter reviewed by MortgageDaily.com. More than 100 of the layoffs were mortgage related positions, a spokesman indicated. The move was part of Wachovia's ongoing review and integration of business units.
Rates Better, Apps Worse
The 30-year fixed-rate averaged 6.07%, according to Freddie Mac's latest weekly survey. The 30-year fell from the prior week and from a year earlier. Meanwhile, mortgage loan applications, seasonally adjusted to account for the Christmas holiday, were down 12% from a week earlier, according to the Mortgage Bankers Association's survey of mortgage bankers, commercial banks and thrifts for the week ending Dec. 28.
HELOC Delinquency at 10-Year High
Delinquency on home equity lines-of-credit was 0.84 percent during the third quarter, the American Bankers Association reported. HELOC lates were higher than the prior quarter and the prior year, ABA said. HELOC delinquency is at the highest level since 1997, according to ABA's data.
New State Laws on Lending
In Nevada, state regulators are now required to draft regulations regarding nontraditional mortgage products. Two other states -- California and Colorado -- have also enacted new laws dealing with so-called nontraditional mortgages. In Illinois, a new law allows homeowners and renters to stay in a property during foreclosure proceedings. And finally, a new mortgage law in Minnesota designed to crack down on fraud and foreclosures may be cutting some legitimate borrowers out of the market.
States Implement License Registry
The Nationwide Mortgage Licensing System went live on Jan. 2 in seven states, a news release said. The Internet-based system was initially developed in 2004 to streamline the regulatory process and create more uniformity across state lines in mortgage supervision. The registry reportedly tracks licensure, affiliations, employment history and enforcement actions against originators.
MTA Improves Again
The Monthly Treasury Average was 4.52% in December, according to U.S. Treasury data. The index was lower than in November and than one year earlier. December marked the eighth consecutive month that the MTA was down.
Expanding Loan Prospects
The down cycle during the past few years has included lower credit scores for the average American coupled with fewer mortgage programs to serve those with low scores, lower real estate values and a slowing economy. The boom has turned into a slump and only an expanding economy and growing population has kept us from coming to a complete standstill. It makes sense that in order to "cycle-proof" your business, you must serve a greater portion of the population. The model says that your services must not only encompass a greater portion of the population, they must strengthen your primary business as well.
Merger Collapses, 2 Companies Launched
A deal where GE Capital Corp. was to acquire PHH Corp. then sell the mortgage operations has collapsed, PHH said in a statement Tuesday. Express Capital Mortgage Inc. launched operations in Chandler, Ariz., according to an announcement Friday. Hatteras Financial Corp. has launched in Winton-Salem, N.C., according to a filing with the state.
COFI Lower
The cost of funds index was 4.17% in November, the Federal Home Loan Bank of San Francisco announced. The index fell from its level in October, the data indicated. COFI was also lower than it was during November 2006.
National City Quits Wholesale Lending
National City Mortgage is closing down its wholesale lending division, a spokesman told MortgageDaily.com. National City Corp. remains committed to retail lending, he said. In August, the company folded its home equity unit into its mortgage subsidiary. In October, National City shut down its correspondent lending operations.
Ocwen Criticized Over VA Foreclosures
A 59-page report from the Government Accountability Office blasted Ocwen Financial Corp.'s management of foreclosed properties for the Department of Veterans Affairs. "VA also has not been satisfied with Ocwen's performance in selling properties in the shortest time possible and at price levels established in the contract," GAO said. Among other concerns outlined in the report, Ocwen has failed to secure doors and windows, remove trash and debris, maintain lawns and make necessary repairs. "We believe we have maintained a generally positive working relationship with the VA during the execution of this contract," Ocwen's chief risk officer told MortgageDaily.com.
M.I. Volume Down, Defaults Up
During November, more than 160,000 mortgage insurance policies were written, the Mortgage Insurance Companies of America reported. The dollar volume of policies written was $24 billion, MICA said. Volume fell from October but was higher than Novebmer 2006.
Negative Ratings Actions hit $4 Billion RMBS
Ace Securities Corp. saw $243 million in classes of 2006-SL2 downgraded by Fitch. Changes to Fitch's subprime loss forecasting assumptions led to downgrades on $145 million in classes of HASCO Series 2007-HE2, while another $648 million was placed on Rating Watch Negative. The forecasting changes also led Fitch to downgrade $974 million of classes from Securitized Asset Backed Receivables Series 2007-BR2 and place another $974 million on negative watch. Two SASCO deals from 2007 were also impacted by Fitch's changes, with $338 million in classes downgraded and $747 million placed on Rating Watch Negative.
New England Wholesaler Done
Webster Bank N.A. will reorganize its mortgage banking unit, its parent company announced. As a result of the changes, the company will close its wholesale lending operations, the statement said. In addition, the correspondent channel will be closed down.
Q4 Write-Downs May Spike
Goldman Sachs released an analyst report indicating fourth quarter write-downs at investment banking firms are likely to be significantly larger than investors are anticipating. "Financial firms' marks will come under intense scrutiny in the fourth quarter as investors have already seen some aggressive write-downs from other firms in recent weeks," the report said. "As a result, many of the December year-end firms are likely to be more aggressive with their marks, in our view, particularly those with high levels of exposure."
Wholesaler Finished
Heartland Wholesale Mortgage said it will end operations in a message posted on its Web site. A veteran account executive, who had been with the company just three months, told MortgageDaily.com he found out about the closure on Wednesday. "They told everybody we're closing down as of Friday," he said.
States Push, Pass Mortgage Legislation
Massachusetts enacted new legislation designed, officials and regulators say, to reduce the foreclosures that have become emblematic of the subprime mortgage meltdown. In Kentucky, a state Senator has filed what he calls a "homeowner protection" bill. A New York legislator has filed the Fairness in Lending Act, a bill that "creates additional duties of mortgage brokers," according to Lotstein Buckman. The state of Washington has enacted a law that helps homeowners avoid foreclosure by giving them temporary relief from property taxes.
Mortgage Market Weakens
The average 30-year fixed-rate mortgage was 6.2 percent in Freddie Mac's latest Primary Mortgage Market Survey. The 30-year rose slightly from a week earlier but was 1 basis point lower than a year earlier. The Mortgage Bankers Association said in its latest Weekly Mortgage Applications Survey that loan applications were lower than the prior week.

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