Mortgage Broker News Archives January 16, 2009 from MortgageChronicle.com

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Last Updated Friday, January 16, 2009 05:55 PM CST

Another 800 Laid Off
JPMorgan Chase & Co. laid off more than 600 mortgage employees during the fourth quarter, a spokesman told MortgageDaily.com in a statement. A Bank of America Corp. spokesman confirmed to MortgageDaily.com that more than 100 layoffs reported to the State of Pennsylvania were part of 7,500 layoffs planned over a two-year period. HFF Inc. announced the elimination of more than 50 jobs, while Genworth Financial told MortgageDaily.com that nearly 50 of the 1,000 layoffs it announced last month were tied to mortgage insurance operations.
First Horizon Originations Evaporate
First Horizon National Corp. announced fourth-quarter originations of less than $0.1 billion. Volume plunged from more than $6 billion a year earlier. The decline reflected the sale of most of its mortgage operations to MetLife Bank, N.A., in August 2008.
Advertising Mistakes
The Federal Trade Commission recently settled with three mortgage firms over allegations they violated Regulation Z and the Federal Trade Commission Act. Among disclosure deficiencies were that the advertised low monthly payment amount applied only for a limited period of time. The FTC also asserted that the FTC Act was violated because one of the advertisements represented, expressly or by implication, that the advertised rate was fixed for the life of the loan -- even though that was not the case.
Originations Down by Half at Citi
Fourth-quarter 2008 residential production was less than $17 billion, Citigroup Inc. reported in its earnings data. Originations were down nearly one-quarter from the prior period. Compared to the fourth-quarter 2007 -- fundings fell by nearly half.
BoA Earnings & Originations Worse, Apps Higher
Bank of America Corp. reported that fourth-quarter residential originations were down nearly $9 billion from the third quarter. But BoA noted that "mortgage application volume increased significantly following the November Treasury announcement." A fourth-quarter loss was $3.0 billion worse than the prior period.
Hard Money Lender Says Did Nothing Wrong
OneCap Mortgage said in an announcement today that despite its extraordinary efforts to protect the direct lenders on the loans it manages, it has been falsely accused of mismanagement and deceit. State regulators issued a cease-and-desist order against the company in 2007 after investors complained about mismanagement and deceit. OneCap said it has "finally had enough over the misinformation and blatant mistruths being spoken about the company."
Outsourcing Scrutinized
A difficult mortgage environment has pushed an increasing number of servicers to utilize outsourcing, Fitch Ratings reported. Functions that are outsourced have grown to include collections, loss mitigation and bankruptcy and foreclosure processing. But Fitch questioned whether or not customer-facing functions such as collections and loss mitigation can be successfully handled offshore.
30-Year Cracks 5%
Freddie Mac reported in its survey of 125 thrifts, commercial banks and mortgage lenders for the week ending Jan. 15 that the 30-year fixed-rate mortgage averaged 4.96 percent. The 30-year fell from more than 5 percent the prior week. "The 30-year fixed-rate mortgage has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971," the announcement stated.
Chase Originations, Earnings Tumble
Fourth-quarter 2008 residential originations at JPMorgan Chase & Co. fell 40 percent from the fourth-quarter 2007, earnings data indicated. Full-year 2008 production was down 11 percent from the previous year. Earnings at JPMorgan last year were down nearly two-thirds from 2007.
Countrywide Sued Over Denied Modification
A Vermont couple is suing Countrywide Home Loans because the lender denied their modification request for a lower interest rate. Countrywide foreclosed on their mortgage after they became delinquent in 2007. The plaintiffs allege that although Countrywide presents a public face suggesting it is pursuing a diligent modification strategy, the company privately has no inention of pursuing such a strategy.
2008: A Foreclosure Nightmare
RealtyTrac reported that 3.2 million foreclosures were filed during 2008. Around 2.3 million U.S. properties were impacted by the filings. Foreclosure filings surged from 1.8 million in 2007. Foreclosures were up 225 percent from 2006 -- when loan performance first began deteriorating.
Regulation Under Fire
A report released from the Government Accountability Office said the 150-year-old U.S. financial regulatory system is a fragmented and complex arrangement of federal and state regulators that is incapable of keeping up with major market developments during recent decades. "As the nation finds itself in the midst of one of the worst financial crises ever, it has become apparent that the regulatory system is ill-suited to meet the nation's needs in the 21st century," the report said. Nevada's Division of Mortgage Lending was criticized in a state audit for failing to perform annual licensee examinations during 2007.
Inside The CPP
The U.S. House Financial Services Committee heard testimony about the capital purchase program established within the Troubled Asset Relief Program. An official with the Federal Deposit Insurance Corporation testified that the "highest and best use by banks of CPP capital in the present crisis is to support prudent lending activity." But the chairman-elect of the National Association of Home Builders criticized banks for not using CPP funds to increase lending. The American Bankers Association's president testified that healthy banks which utilize CPP investments are being publicly lumped together with troubled institutions -- "a source of great frustration for banks." The Treasury recently reported that CPP investments were made over the prior week in 43 banks for $14.8 billion.
Over 2 Million Foreclosures in 2008
Last year, 2,089,051 pre-foreclosures were filed, ForeclosureS.com reported. Pre-foreclosure filings soared 62 percent from the revised 2007 level. Pre-foreclosure actions included notices-of-default and foreclosure actions leading up to the actual foreclosure.
Reverse Firm Plans 200 Hires
LoanWell America Inc. has grown from just 12 employees at the beginning of last year to around 75 now, according MortgageDaily.com's interview with, and statements from, its president and chief executive officer. By June, the CEO expects headcount to jump by 200. The employee additions are expected to support business growth in home-equity conversion mortgages, with volume expected to nearly triple current originations by the third quarter.
Bank Consolidation in Full Swing
Billionaire Wilbur Ross expects to make a bank acquisitions at some point, he said in a television interview. PlainsCapital Corp. said that it completed its acquisition of First Southwest Holdings Inc. First Chester County Corp. announced the completion of its acquisition of American Home Bank, N.A. Gateway Financial Holdings Inc. has been acquired by Hampton Roads Bankshares Inc.
Chase Closing Wholesale Business
Chase announced plans to shed its mortgage broker origination channel. An official company statement indicated that retail loans perform better than broker-originated mortgages because borrowers are better informed. In addition, the company's retail lending force has grown significantly with its recent acquisition of Washington Mutual Bank.
Countrywide Sued Over Rates on Active Duty Borrowers
A class action lawsuit against Countrywide Financial Corp. claims the company violated the Servicemembers Civil Relief Act of 2003. The lead plaintiff in the case alleges that the lender didn't lower his interest rate after he was called to active duty. But Countrywide responded that it never received sufficient proof that he was on active duty and actually verified with the U.S. Department of Defense that he was not on active duty.
The FHA Times
The U.S. Department of Housing and Urban Development issued mortgagee letters that outlined requirements of the HOPE for Homeowners Program and spelled out new FHA appraiser approval requirements. HUD also noted that the FHASecure program has ended. The head of the Mortgage Bankers Association testified before Congress that mortgage brokers should face a bonding requirement and increased net worth requirements before being approved to originate FHA loans.
Kansas Company Settles Fax Lawsuit
Mortgage Depot LLC has settled a class action lawsuit. The settlement has been preliminarily approved by the U.S. District Court. Mortgage Depot allegedly sent "thousands of unsolicited facsimile advertisements" in violation of the Telephone Consumer Protection Act.
GMAC Unit Among Defendants in Patent Lawsuit
Ramsden Inc. announced that it has filed a federal lawsuit against CMG Mortgage Services. Also named as a defendant is GMAC Bank. The defendants are accused of infringing on a U.S. patent for a system that pays down consumer debt through credit lines.
Another Net Branch Operation Closes
Sunshine Mortgage Corp. recently ended all loan fundings. In an e-mail sent to employees, Sunshine's chief executive officer blamed the sudden closing on the company's failure to obtain an increased line-of-credit. In addition to Sunshine, MortgageDaily.com has covered the closings of eight net branch operations since January 2008.
Several Entities Make Changes at the Top
J. Ezra Merkin resigned as chairman of GMAC Financial Services, according to a filing with the Securities and Exchange Commission. Kelly S. King has assumed the role of chief executive officer at BB&T Corp., an announcement said. Sandy Spring Bancorp Inc. promoted Daniel J. Schrider to CEO and president, a press release said. David H. Chafey Jr. was named president and chief operating officer of Popular Inc., an announcement said.
The Modification Report
The American Bankers Association issued a statement opposing Citigroup Inc.'s support of cramdown legislation. A report from Columbia University proposes that servicers should be compensated for modifying mortgages utilizing funds from the Troubled Asset Relief Program. Jefferson Financial Consortium is recruiting mortgage brokers as loan modification agents, an announcement said.
Over 300 Mortgage-Related Failures
During 2008, 116 mortgage bankers and financial institutions were closed down, according to the Mortgage Graveyard. Failures fell from a revised 160 tracked for the prior year. Including two operations that wound down this year, the Mortgage Graveyard has tracked 305 mortgage-related firms that have ended independent operations since the beginning of the credit crisis in 2006.
Bank and Credit Union Failures Soar in 2008
Data from the Federal Deposit Insurance Corporation indicate that 25 federally insured institutions failed during 2008. The number of bank failures soared from just three during 2007. A rising number of credit unions have also been failing, with 14 failures reported last year by the National Credit Union Administration. In 2007, just seven credit union closures were announced.
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.

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