Mortgage Broker News Archives January 9, 2009 from MortgageChronicle.com

Mortgage Industry News Headlines

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Last Updated Sunday, January 11, 2009 01:58 PM CST

Four Firms Fail
The National Credit Union Administration announced last month that West Hartford Credit Union Inc. was shut down. The regulator also said that it was appointed receiver of Valley Credit Union. Thacher Proffitt & Wood LLP announced last month that a departure of most of its key personnel forced it to begin an orderly dissolution. BankUnited Financial Corp. warned in a filing with the Securities and Exchange Commission about its ability to continue as a going concern.
5,000 Layoffs Reported
E-LOAN Inc. reported that it laid off nearly 300 California employees in December. JPMorgan Chase & Co. said it planned to layoff 300 Florida employees in January. Washington Mutual notified the state of Washington that it would terminate 3,400 employees in January.

Deceptive ARM Ads Lead to Settlements
The Federal Trade Commission has entered consent orders with three mortgage companies. The firms are accussed of using misleading advertisements for adjustable-rate mortgage programs. The three companies are American Nationwide Mortgage Co., Good Life Funding and Innova Financial Group.
Mortgage Jobs Lower
The Bureau of Labor Statistics reported that during November, there were 4,300 fewer people employed in mortgage lending than in October. The bureau said mortgage positions were down 37,000 from a year earlier. November employment levels were impacted by layoffs at several companies including Citigroup Inc., Fortes Financial Inc. and Washington Mutual Inc.
Reverse Production Higher
The National Reverse Mortgage Lenders Association reported today that reverse lending originations during calendar 2008 up 6 percent from the prior year. The top market in calendar 2008 was Miami, NRMLA said. The group's president speculates that this year's volume will grow even more.
Citi Supports Cramdowns
Citigroup Inc. has agreed to support cramdown legislation proposed by congressional Democrats, a press release said. The legislators said Citi's support of the bill increases the chance it will be included in the economic recovery package currently being drafted by Congress. Citi first approached its home state senator last month about supporting the bill.
Bad Underwriting at Heart of Mortgage Meltdown
A survey conducted by Grant Thornton LLP found that bankers most often blamed "lax underwriting standards" for the credit crisis. The survey included more than 300 responses. The second most cited reason for the credit crisis was "political emphasis on increasing home ownership."
Moratorium Emporium
Fannie Mae said that its suspension of foreclosures on owner-occupied single-family properties will be extended to Jan. 31. Freddie Mac also announced an extension of moratoriums on its loans. The Pew Center on the States reported last month that nine states have either instituted a foreclosure moratorium or increased the waiting period after a notice-of-default filing. Fitch Ratings said in December that few banks had so far announced foreclosure moratoriums and modification programs that will impact securitized mortgages.
Another Record Low for 30-Year
The average 30-year fixed-rate mortgage dropped 9 basis points from the prior week in Freddie Mac's latest Primary Mortgage Market Survey. Compared to a year earlier, the 30-year was down 86 BPS. The 30-year has never been this low since Freddie started tracking mortgage rates in 1971.
FHLBs Could Face Massive Losses
The Federal Home Loan Banks held around $76 billion in private-label securities as of Sept. 30, 2008, Moody's Investors Service said in a report. But the market value of the portfolio was only $63 billion. Moody's said GAAP accounting rules might require the FHLBs to account for the securities as other-than-temporary impairments in the short term.
GMAC Cautiously Optimistic About ResCap
In a filing with the Securities and Exchange Commission, GMAC LLC called Residential Capital LLC "an important subsidiary." It noted that progress has been made in adapting ResCap to current market conditions. "If ResCap were to need additional support, GMAC would provide that support so long as it was in the best interests of GMAC stakeholders," the filing said.
Wells Halts Wholesale Jumbo
Wells Fargo Home Mortgage temporarily suspended non-conforming program offerings through its wholesale channel, a spokesman told MortgageDaily.com in a statement. Wells cited low market demand and higher risks in its decision. The Wells spokesman said no employees were impacted by the suspension.
Net Branch Failed Without FHA
Liberty One Lending has shut down. "Effective immediately, Liberty One is ceasing all operations," Liberty One's chief executive officer and owner said in an e-mail to employees. An Arizona branch manager told MortgageDaily.com that they did not receive FHA approval in some states until early 2008. "It cost us not to be approved when we needed to be," the manager stated.
Record HELOC Delinquency
Third-quarter 2008 delinquency of at least 30 days on home-equity lines-of-credit was 1.15 percent, the American Bankers Association reported. HELOC delinquency was seven basis points higher than in the second quarter and 35 BPS higher than a year earlier. HELOC delinquency during the most recent period was the highest ever recorded, ABA said.
FDIC Sells $500 Million Portfolio
An affiliate of Private National Mortgage Acceptance Company LLC acquired more than $500 million in residential loans from the Federal Deposit Insurance Corporation, a press release said. The loans were previously owned by a bank that was shut down in July 2008. FDIC was appointed receiver of the failed institution.
Alt-A Ratings Downgraded
Standard & Poor's Ratings Services recently announced that it lowered ratings on 158 classes from seven Alt-A residential mortgage-backed securities. The actions were a result of current and projected losses and defaults. Higher-than-anticipated levels of delinquency, foreclosures and REOs prompted Moody's Investors Service to downgrade classes on around 100 Alt-A securities. Fitch Ratings announced last month revisions to its methodology in analyzing Alt-A RMBS including the implementation of ResiLogic on all vintages of Alt-A transactions.
CPP Insider
A report from the U.S. Department of the Treasury indicated more than $25 billion in senior preferred shares was purchased from U.S. financial institutions under the capital purchase program during December. The Treasury said investments were made in162 banks. A statement issued by the American Bankers Association explained that the investments are expected to earn the Treasury more than $30 billion.
Securities Class Actions Level Off
During 2008, the number of securities class action lawsuits filed in federal court increased nearly 20 percent from 2007, a report announced by the Stanford Law School said. The report indicated that an expected surge in new class actions during the second half of 2008 never materialized. One executive speculated that volatile activity in overall trading made it difficult for prospective plaintiffs to make a case about the poor performance of a specific stock.
Saxon Subprime Servicer Rating Lowered
Moody's Investors Service lowered Saxon Mortgage Services Inc.'s primary servicer quality rating for subprime residential loans. Moody's cited a deterioration in Saxon's collection performance as a factor in its decision to issue a downgrade. Also impacting the action was the downgrade of the long-term senior debt ratings of the parent company.
LoanCare Servicer Ratings Downgraded Again
Moody's Investors Service said that it lowered LoanCare Servicing Center Inc.'s servicer quality rating for prime mortgages to SQ4+. Moody's attributed the downgrade to the bankruptcy filing of the company's parent. Last month, Fitch Ratings announced it lowered LoanCare's prime servicer rating.
Fed Becomes Mammoth Secondary Player
The Federal Reserve Bank of New York said that it has begun purchasing agency-guaranteed mortgage-backed securities. The plan calls for the purchase of up to $100 billion in direct obligations and up to $500 billion in MBS. The fed also created an operating subsidiary to acquire nearly $40 billion in residential MBS from American International Group Inc.'s U.S. life insurance companies, a recent press release said.
Bankruptcy Activity Mixed
During 2008, consumer bankruptcy filings were one-third higher than in 2007, the American Bankruptcy Institute reported. Fourth-quarter 2008 filings were up around 4 percent from the third quarter. But December filings fell 15 percent from November.
The Modification President
A stimulus plan was proposed to Congress by President-elect Barack Obama. The upcoming administration is calling for existing cabinet members to use their existing authority to step up loan modifications. He is recommending clarification of servicers' legal liability when they modify loans. Obama is also advocating bankruptcy-code reform that would enable bankruptcy judges to modify mortgages.
GreenPoint Brokers Targeted by New York
An investigation by New York's attorney general into discriminatory lending practices at GreenPoint Mortgage Funding Inc. prompted the state to launch an investigation into mortgage brokers. So far, two mortgage brokers have settled with the state, while a third has been sued. "The office is continuing its investigation into potential discriminatory pricing by other mortgage brokers," an announcement from the attorney general said.
MTA Descends Deeper
The monthly Treasury average was down nearly one-quarter percent from November to December, according to data published by the Federal Reserve Board. MTA was down 270 basis points from December 2007. MTA has fallen each month since April 2007.
New PHH CEO
Mark R. Danahy was named president of PHH Mortgage, a press release said. He was also appointed chief executive officer of the unit. Danahy originally joined PHH in 2000.
Financing for the Financiers
GMAC Financial Service sissued a statement indicating that it had completed separate private-exchange and cash-tender offers to purchase or exchange $17.5 billion in outstanding GMAC notes and $3.7 billion in notes of Residential Capital LLC. An agreement has been reached between PHH Mortgage Corp. parent PHH Corp. and lenders in its Chesapeake Funding LLC program to extend the expiration date of the notes. Flagstar Bancorp Inc. said last week that the audit committee of its board of directors has approved for the company to bypass shareholder approval to issue convertible participating voting preferred stock as part of an investment by MP Thrift Investments L.P.
Credit Union Originates Nearly $6 Billion
Navy Federal Credit Union reported 2008 mortgage production of $5.7 billion. The level of lending was the second highest ever. During 2009, Navy has committed to $6.0 billion in originations.
New CEO at MBA
John A. Courson has been appointed president and CEO of the Mortgage Bankers Association, a press release said. The appointment was originally announced in July 2008. Courson replaces Jonathan L. Kempner.
Deal Reached on IndyMac Sale
IndyMac Federal Bank FSB will be sold to IMB HoldCo LLC, an announcement from the Federal Deposit Insurance Corporation today said. IMB is owned by a consortium of private-equity investors. The sales price has been negotiated at almost $14 billion.

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