MortgageChronicle.com -- Free Mortgage Industry News Archives January 18, 2008

Mortgage Industry News Headlines

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| The Mortgage Graveyard

Last Updated Friday, January 18, 2008 07:07 PM CST

The Net Branch Journal
Allied Home Mortgage Capital Corp. announced it added three branches to its network since December. Another net branch reporting growth is First Houston Mortgage, as it will add 100 positions this year after having hired 135 last year. Primary Residential Mortgage Inc. announced it funded $1.74 billion in loans through about 160 branches in 2007, off 13 percent from the previous year.
Wells Cuts Mortgage Tech Jobs
Wells Fargo Home and Consumer Finance Group issued 60-day advance layoff notices to roughly 130 Iowa employees, a spokeswoman told MortgageDaily.com. The job cuts include managers, lending experts and technology developers who worked in a unit dedicated solely to a technology project, she said. The layoffs were not related to market conditions.
Global Subprime Losses May Top $450 Billion
A recent report from Advisen LTD pegged international losses from the U.S. subprime mortgage meltdown so far at $173.2 billion as of Jan. 8. The New York-based firm estimated the 112 companies analyzed might have as much as $1.2 trillion in subprime-backed CDOs and other securities. The Japan Research Institute has released a report projecting potential international losses from U.S. mortgage woes could reach $464 billion and not subside until later this year, Dow Jones Newswires reported.
Foreclosure War Rages On
Considering that community development corporations are experts in real estate development for low-income communities and that affordable housing shortage is at an all-time high, the corporations should play a lead role in foreclosed property disposition if economic stimulation legislation moves forward, the National Alliance of Community Economic Development Associations suggested in an announcement. To stem foreclosures in Maryland, the governor recently announced a package of initiatives, including the Bridge to HOPE loan program that will provide small gap loans at zero percent interest to troubled borrowers and will be handled by the Maryland Department of Housing and Community Development. To help "hundreds of thousands" of borrowers who face rate resets and at risk of foreclosure, the California Home Ownership Preservation Initiative will contribute $4.6 million to mortgage counseling agencies, the California Reinvestment Coalition announced Monday.
Tech Advances Go on Despite Decreased Spending
A 2007 survey on 330 mortgage lenders indicated that information technology spending this year will be much lower than previously anticipated, according to an announcement by the survey's publisher, MORTECH LLC. "Technology vendors will not escape the decimation of the lending market," MORTECH's owner said in the written statement. But despite the drop in technology spending projected for the mortgage industry, innovations, alliances and other activity have recently continued.
WaMu Originations Tank
Fourth quarter residential mortgage production was $24 billion at Washington Mutual Inc., according to earnings data. Volume tumbled from the prior period and from a year earlier. The fourth quarter reflected the discontinuance of all remaining subprime lending, WaMu said.
Embezzlement Topples Net Branch
Maverick Residential Mortgage has ceased funding loans and stopped paying employees. The Texas-based company is missing $4 million. "I've sat here for three days, hoping for light at the end of the tunnel," Michelle South, a branch manager, told MortgageDaily.com. She noted that reports have been circulating around the company that the chief financial officer has embezzled the $4 million.
Rates, Apps at Best Levels in Years
At 5.7% this week, the 30-year fixed-rate mortgage spiraled down 18 basis points from a week earlier, according to Freddie Mac's latest survey of 125 mortgage-lending companies, thrifts and commercial banks. The 30-year and 15-year are at their lowest levels since July 2005, Freddie said. The Market Composite Index, a measure of mortgage application volume, soared to the highest its been at since the week ending April 2, 2004, a Mortgage Bankers Association spokeswoman said.
Aurora Exits Third Party Originations
Aurora Loan Services has posted a message on its Web site that it will no longer accept new business from mortgage brokers and correspondent lenders. The unit will, however, continue direct lending originations and mortgage servicing, the notice indicated. "It was necessary for us to structure our mortgage origination businesses in the U.S. to reflect the change in industry dynamics," an announcement from Aurora's parent company stated.
First Horizon Performance Declines
First mortgage originations were $6 billion during the fourth quarter, First Horizon National Corp. announced. Production fell from the prior period and a year earlier. Delinquency of at least 30 days on the consumer real estate portfolio rose from three months earlier, the company said.
Alt-A Ratings Continue to be Slammed
Since Monday, Moody's Investors Service announced negative ratings actions on 66 Alt-A deals issued in 2007. The moves were made due to higher-than-expected rates of delinquency, foreclosure, and real estate owned in underlying collateral relative to credit enhancement levels, as well as updated methodology on non-delinquent portions. Twenty of the deals were primarily backed by first lien, Alt-A loans. Forty-six of the transactions were backed by option adjustable-rate Alt-A loans.
Huge Subprime Writedowns at Merrill
Merrill Lynch announced a $9.8 billion fourth quarter loss. The massive loss was the result of an $11.5 billion writedown related to U.S. collateralized debt obligations and subprime residential mortgages aside from its U.S. bank-related investment securities portfolio. Credit valuation adjustments of $2.6 billion related to hedges with financial guarantors on U.S. ABS CDOs were also taken.
M&A, Losses & Stock Sales Accelerate
Wells Fargo & Co. will acquire five banks in Wyoming and eastern Idaho owned by United Bancorporation of Wyoming Inc., according to an announcement. Hypo Real Estate Group took a charge of nearly $580 million in the fourth quarter due to exposure to U.S. collateralized debt obligations. Thornburg Mortgage Inc. raised $212 million in concurrent public offerings of 7 million common stock shares and 8 million shares of its existing 10 percent Series F Cumulative Convertible Redeemable Preferred Stock, the Santa Fe, N.M.-based company said.
U.S. Bancorp Business Better
Fourth quarter mortgage originations were nearly $8 billion, U.S. Bancorp announced. Business was up $0.5 billion from the third quarter, the Minneapolis-based company reported. Volume was up almost $2 billion from a year earlier.
Secondary Newswire
Northsight Inc. recently received a $10 million credit facility from Jaguar Group LLC to facilitate loans for distressed homes, Northsight parent Navidec Financial Services announced. Mortgage Assistance Center Corp. started the year announcing its purchase of a $3.3 million pool of residential assets, containing properties in 12 states. Oxford Funding acquired a $1.5 million portfolio of performing first-lien loans from an unnamed national lender, the Houston-based company said on Thursday.
Wells Production Down
Residential real estate originations were $56 billion at Wells Fargo & Co. during the fourth quarter, according to earnings data released this week. Fundings were down $12 billion from the third quarter, the San Francisco-based company reported. Production was also down $14 billion from a year earlier.
Chase Activity Holds Up
Residential mortgage volume, including home-equity activity, was $50 billion during the fourth quarter, JPMorgan Chase & Co. reported. Business was almost unchanged from the prior quarter and better than a year earlier, the report said. Full-year earnings were a record $15.4 billion.
Record Reverse Originations
Over 100,000 home equity conversion mortgages were endorsed last year, the National Reverse Mortgage Lenders Association reported. The level of activity represented a 27 percent increase over 2006, the group said. Last year's volume also represented an all-time high.
IndyMac Cuts Another 2,400 Jobs
IndyMac Bancorp Inc.'s chairman and chief executive officer warned employees the company would eliminate 2,403 jobs during the first quarter. The latest round of layoffs amounts to nearly one-quarter of the company's remaining workforce. Following the job cuts, 7,535 employees will remain.
Commercial Mortgage Bonanza
Prudential Mortgage Capital Co. announced it closed a three-year, fixed-rate bridge loan of $19.5 million secured by the Mountain Crest Apartments in Denver, Colo. AEGON USA Realty Advisors Inc. funded a 10-year fixed-rate $21.5 million first mortgage loan at 5.95 percent with 30-year amortization collateralized by the Golden Triangle Shopping Center in Lancaster, Pa., property owner Cedar Shopping Centers Inc. announced. Apollo Real Estate Advisors LP and M&T Bank provided an adjustable-rate $163.5 million acquisition and pre-development loan for a condominium interest of nearly 1.1 million square feet in Manhattan.
Broken ARMs
During the first year, 3/1 hybrid ARMs were discounted 17 basis points, Freddie Mac reported in its 24th Annual ARM Survey. A year earlier, the initial rate discount was 180 BPS. "Disruptions in the capital markets beginning in August and an increase in delinquencies on ARM product has led to a sharp decline in interest-rate discounting and a tightening of credit underwriting on ARMs in recent months," Freddie's chief economist explained in the report.
Three More Out of Business
Maryland-based First Madison Mortgage has closed down. 1st Choice Mortgage's parent has pulled the plug on the California-based operation. Eastern American Mortgage of New Jersey has also gone out of business.
Citi Scrambling to Shore Up Capital
Citigroup Inc. said in an earnings announcement that fourth quarter net income was a negative $9.8 billion. In an effort to maintain adequate levels of capital, Citi said a host of international investors would invest $12.5 billion in a private offering. The company also plans a $2 billion public offering. Another move to shore up capital was a cut in the company's quarterly dividend.
Chase Wholesale Exits Alt-A, Eliminates Programs
JPMorgan Chase & Co. notified its brokers that it is eliminating its Alt-A suite of products effective Wednesday. The company cited declining home prices, rising delinquency on reduced documentation and high LTV mortgages, and little interest from investors on non-conforming loans. "Declining home prices have affected many markets across the country and are forecasted to continue declining in the upcoming months," the notice stated. "Policy changes on declining markets are necessary to manage risk in this volatile market."
Alt-A Performance Continues Deterioration
Higher than anticipated rates of delinquency, foreclosure, and real estate owned in underlying collateral relative to credit enhancement levels resulted in Moody's Investors Service announcing negative ratings actions on 51 Alt-A deals issued in 2007. The re-ratings also reflected Moody's updated methodology to non-delinquent portions. Thirty-one of the affected deals were backed by first lien, adjustable-rate and fixed-rate Alt-A mortgages.
Originations to Continue Decline Through 2009
Residential originations are projected at $1.96 trillion this year, the Mortgage Bankers Association said in an economic outlook. Production will be down from an estimated $2.34 trillion during 2007. Next year, the Washington, D.C.-based group sees originations sliding to $1.88 trillion.
Lenders Warn of Q4 Charges
Provident Bankshares Corp. wrote down the value of eight securities it holds in its real estate investment trust portfolio that will result in a $28.9 million charge in the fourth quarter, plus it has increased the provision for loan losses by $6 million to reflect the inherent increase in loss rates in its real estate loan portfolios. CIT Group Inc. boosted loan-loss reserves by $300 million in the fourth quarter primarily due to "continued weakness in home lending markets." Downey Financial Corp. said it will reclassify $99 million in loans as non-performing at Sept. 30, 2007 because of changes in accounting standards after a review of the retention program plan it implemented in last year's third quarter.
Cleveland Suing Securitizers, Lenders
A lawsuit was filed last week by Cleveland against 21 defendants that include investment banking firms and mortgage lenders. The lawsuit alleges the defendants caused the current foreclosure crisis in the city by routinely making loans to borrowers who had no ability to pay them back. "The purveyors of subprime mortgages could have and should have (and in all likelihood actually did foresee) a foreclosure crisis as the inescapable consequence of their conduct," the city alleges.
Baltimore v. Wells Fargo
A lawsuit was filed in the U.S. District Court last week by Baltimore's mayor and the city council of Baltimore against Wells Fargo Bank, N.A. and Wells Fargo Financial Leasing, Inc. The city alleges Wells Fargo targeted Baltimore's minority neighborhoods with mortgage loans that are unfair and discriminatory. "We do not tolerate illegal discrimination against or unfair treatment of any consumer. Our loan pricing is based on credit risk." a Wells Fargo Home Mortgage spokeswoman told MortgageDaily.com.

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