MortgageChronicle.com -- Free Mortgage Industry News Archives January 11, 2008

Mortgage Industry News Headlines

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Last Updated Friday, January 11, 2008 08:42 PM CST

NovaStar at End of Rope
NovaStar Financial Inc. plans to eliminate all but 30 positions, the lender said in a Securities and Exchange Commission Form 8k filing. The cuts began Tuesday and are expected to be completed by the end of the first quarter. The company said it is discontinuing retail and brokerage operations. The remaining employees are being retained to handle loans held in its books after the Nov. 1 sale of servicing rights and advances.
First NLC Folding
Friedman, Billings, Ramsey Group Inc. announced it would liquidate subsidiary First NLC Financial Services LLC. The unit will file for Chapter 11 bankruptcy protection. Continued deterioration of the nonprime market was blamed for the collapse.
Alt-A, Commercial Deals Downgraded
Since Thursday, Moody's Investors Service has announced ratings downgrades on 32 Alt-A deals by five issuers in 2007. The negative actions reflect higher-than-anticipated rates of delinquency, foreclosure, and real estate owned in underlying collateral relative to credit enhancement levels, plus Moody's updated methodology for non-delinquent portions of the transactions. Three classes worth $27 million from Greenwich Capital Commercial Funding Corp. Commercial Mortgage Trust, Series 2006-GG7, were downgraded because of loan loan-to-value dispersion and $16 million in projected losses, Moody's said.
Broker Programs Flourish
Lender Lead Solutions announced it's first fixed-rate Home Equity Conversion Mortgage product. Financial Freedom Senior Funding Corp. announced Thursday the availability of its HECM Monthly LIBOR 75 and HECM Monthly LIBOR 85. Midwest Capital Corp. said it has a new, national, correspondent commercial lending program that is designed to give brokers the ability to originate commercial loans that are often better than traditional financing options. Next week, Right Stop Mortgage LLC expects to go live, inviting potential brokers clients to take a "test drive" with the company's pre-qual engine.
Mortgage Leads Marketplace
On NameYourLoan.com, originators compete with other originators for prospective borrowers by providing one of the five lowest quotes. Through direct mailing campaigns, Survey Resource Center gathers leads for adjustable-rate mortgage borrowers who face a reset within a four-month period, according to an e-mail. Loanbright and Ellie Mae announced they entered into an agreement designed to give Ellie's Encompass users a "simple, affordable and easy way" to buy locally-targeted leads from prospective purchase-money borrowers.
BoA Agrees to Acquire Countrywide
Bank of America Corp. has agreed to acquire Countrywide Financial Corp., BoA announced. Both companies' boards of directors have approved the deal. "The purchase will make Bank of America the nation's largest mortgage lender and loan servicer," BoA boasted.
Losses, Mergers & Alliances
Capital One Financial Corp. announced it expects to report diluted earnings per share below what it previously anticipated primarily due to increased provision expense of $1.9 billion and additional legal reserves established in the fourth quarter. Southwest Bank bought BMC Mortgage Services Inc., according to an announcement. Rutgers Investment Group Inc. announced it has inked a deal to provide mortgage processing and fulfillment services on an outsource basis for HomeLoanAdvisors.Com.
Rates, Apps Better
The 30-year fixed-rate mortgage averaged 5.9%, according to Freddie Mac's latest Primary Mortgage Market Survey. The 30-year rate tumbled from the prior week and was well below its level a year ago. Overall mortgage application volume jumped 33% from the previous week, the Mortgage Bankers Association reported.
BoA Negotiating Countrywide Acquisition
The Wall Street Journal reported Bank of America Corp. is in advanced discussions to acquire Countrywide Financial Corp. BoA had already made a $2 billion investment in Countrywide last summer. One year ago, the two were rumored to be in talks about a possible merger.
Layoffs from Citi Consolidation Not Yet Known
Citi Residential Lending has been merged into CitiMortgage, according to a company memo to employees. The combined operation is expected to be "an end-to-end U.S. residential mortgage business that includes origination, servicing and capital markets securitization execution." A spokesman would not comment on potential layoffs or charges associated with the move, noting they are just beginning the integration process.

Countrywide, IndyMac Shut Out by Warehouser
Southwest Securities FSB is removing Countrywide Home Loans and IndyMac Bank from its approved investor list, the company told MortgageDaily.com. The move was made in light of movements in the share prices the two companies, an executive said. "We started to believe that the stock price is mimicking the movements of some of the other lenders that imploded," he said.
Technology Enhancers
Titan Lenders Corp. announced its Cerberyx closing and post-closing platform now features compliant document delivery solutions. ServiceLink has fully integrated the technology and products acquired from ATM Corporation of America. Brokers and correspondents now have available DocVelocity, an online end-to-end paperless office solution launched by Paperless Office Solutions Inc., parent Flagstar Bancorp Inc. announced.
Alt-A RMBS Get Slammed
Moody's Investors has announced negative ratings actions on 39 Alt-A deals from five issuers in 2007 because of higher-than-anticipated rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels. The actions also reflected Moody's methodology updates to the non-delinquent portion of the transactions. Issuers of the affected deals included Bear Stearns, Countrywide and Goldman Sachs.
Multifamily M.I. Premium Increase Nixed
The Mortgage Bankers Association announced that the Department of Housing and Urban Development rescinded a notice published in October 2007. The notice would have increased mortgage insurance premiums on multifamily properties. The trade group said it provided HUD with data that indicated programs providing affordable housing were affected by the increased fee.
Foreclosure Relief Widens
Countrywide Financial Corp. and ACORN plan to jointly hold a teleconference outlining an agreement to expand foreclosure prevention plans beyond those announced last month by the Bush administration, according to an ACORN announcement. HomEq Servicing has joined a partnership to provide struggling borrowers with alternatives to foreclosure, NeighborWorks America announced. Fannie Mae announced it is reimbursing its servicing partners when they refer delinquent borrowers to the HOPE Hotline for counseling. The Bush administration could possibly expand the efforts of the HOPE Now Alliance to other borrowers besides those in a subprime mortgage, Treasury Secretary Henry Paulson said in an interview Tuesday with CNBC.
Record State Settlement
Nationstar Mortgage LLC settled with the Kentucky Office of Financial Institutions, according to an announcement from the state. "During the examination and investigation, we concluded that Nationstar had employed numerous unregistered loan officers," the state said. As part of the settlement, Nationstar reportedly agreed to contribute $105,000 to support the Nationwide Mortgage Licensing System.
Lender Broker Merge, Countrywide Denies BK Rumors
American Lending Group recently acquired Premier Mortgage Group. American Lending is a lender while Premier is a mortgage broker. Countrywide Financial Corp. issued a statement denying marketplace rumors that it may file for bankruptcy protection. Bear Stearns Co.'s announced the appointment of a new chief executive officer.
Wholesalers Hit With Giant Judgment
A judgement for $99.0 million in punitive damages was issued against Wachovia Equity Servicing, Residential Funding Co. LLC and Household Finance Corp. III. The jury found the three companies liable for illegal fees collected by a now defunct mortgage broker who sold them the loans. Residential Capital LLC told MortgageDaily.com the company will appeal the verdict.
Mixed Volume, Worse Delinquency at Countrywide
Fourth quarter residential production was $69 billion, according to operational data released by Countrywide Financial Corp. While quarterly volume was down from the prior period and a year earlier, December originations climbed from November. Delinquency rose from the prior month to around 7.2 percent on Dec. 31, 2007.
McCain Supports Mortgage Investors
Sen. John McCain recently expressed his concern with providing government aid to real estate speculators and predatory lenders. "But I'm also worried about the investor class," he said in a video interview with the Wall Street Journal last month. "If government changes terms of a contract, then what is going to be their motivation in the future to be involved in that kind of investment."
Bankruptcy Documents Questioned
In a U.S. bankruptcy case, Countrywide Home Loan Inc. is accused of re-creating escrow letters to show that a borrower owed nearly $5,000 in payments, according to court documents. "All of these letters -- there were three of them, and they were all re-created," the borrower's attorney said. The judge raised concerns after hearing the allegations of re-created documents. But Countrywide said in a statement, "It is not Countrywide's policy to create or 'fabricate' any documents as evidence that they were sent if they had not been."
Net Branch Growing
Last year, First Houston Mortgage added more than 100 employees, a spokeswoman told MortgageDaily.com. This year the company plans to add more positions. The Houston-based mortgage banker attributed its success to staying out of the subprime market, focusing efforts on utilizing affiliated net branches and boosting efficiency through technology.
Outsourcing Costs Mortgage Jobs
Citizens Bank advised Michigan that more than 60 employees would be displaced at an operations office in Farmington Hills, Mich. The reason cited was, "plant closing." The company has apparently outsourced functions previously performed at the office.
Service Prevents Multi-Closings on 1 Property
A service from First American CoreLogic prevented more $40 million dollars in mortgage fraud during the year since it was launched, according to an announcement. The service is reportedly used by nine of the largest residential lending institutions. It targets fraud where a borrower attempts to close multiple liens on a single residential property during a short period of time.
FHA Appraiser Approvals
The U.S. Department of Housing and Urban Development has brought FHA appraiser approval requirements more in line with appraisal approval requirements utilized in conventional lending, according to a Federal Register notice. A final rule on the subject becomes effective on Feb. 7. HUD said its updated and streamlined appraisal reporting procedures and policies, including relaxing requirements on property repairs and inspections, to ensure estimated values won't materially differ between FHA loans and conventional loans.
Marketing to Baby Boomers
Baby boomers represent about one-quarter of the population, Jupiter Research said in a recent report. They are slightly more likely to make online purchases than their non-boomer counterparts, the report said. However, this sector of the population is more established and less likely to research some new financial products because they already have existing ties with financial institutions.
RMBS Downgrades Down
Fitch Ratings announced downgrades to nearly $47 million in classes of Meritage Mortgage Corp. 2004-1. Fitch also downgraded nearly $6 million of classes from five deals issued by Wells Fargo in 2006 and backed by prime adjustable-rate mortgages. But despite the downgrades, negative ratings actions from both Fitch and Moody's Investors Service were well off the pace during December.
Wachovia Lays Off But Boosts Salesforce
Wachovia Corp. laid off 120 employees at a California call center last month, a spokesman told MortgageDaily.com. The layoffs were done to make operations more efficient in the current economic climate and mortgage industry conditions, he said. But almost half of those laid off were hired for sales jobs.
Execs Shuffled as Losses Mount
As part of its planned restructuring into five different entities, IAC named President and Chief Operating Officer Doug Lebda as chairman and chief executive of its financial services and real estate businesses. The top executives of bankrupt HomeBanc Corp., Patrick S. Flood and Kevin D. Race, are being sued by investors. Regions Financial Corp. said it is planning on increasing its loan loss provision to $360 million for the fourth quarter. Irwin Financial Corp. said it expects mortgage- and housing-related credit costs to cause fourth quarter losses of $15 million to $20 million.
Mortgage Technology Journal
Informative Research announced it has completed over 20 million Fannie Mae transactions. Sollen Technologies touted Assured Mortgage as a new customer in an announcement. MRG Document Technologies and Encomia announced a partnership where users can obtain secure e-disclosures that can be electronically executed. CitiMortgage extended its it affinity agreement with PCLender, a press release indicated.
Lenders Losing Lawsuits
Maryland's Court of Appeals has ruled against Provident Bank for charging closing costs on home equity lines-of-credit when the loan was paid off three years after it was made. A Hamilton County Common Pleas court held that Wells Fargo Bank couldn't foreclose on a home because it did not prove that it had owned the mortgage. Servicers currently holding mortgages involved in a scam by bankrupt Personal Financial Management have agreed to hold off on foreclosure and collection activities against the borrowers through the end of January and many lenders have indicated they are willing to extend the foreclosure moratorium until May.

Mortgage Job Analysis by State and Company
MortgageDaily.com analyzed layoffs and hirings involving at least 50 people at 205 mortgage companies during 2007. Included among the layoffs were employees from companies that have collapsed or closed down. Among the companies analyzed, Countrywide saw the biggest reduction in employees. California saw more mortgage job losses than any other state.

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