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MortgageChronicle.com Archives
week ended Jan. 22, 2010
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2nd Upgrade for Subprime Servicer
Moody's Investors Service announced an upgrade to Green Tree Servicing LLC's servicer quality rating for subprime mortgages. In addition, the company's rating for second liens was also upgraded. In February 2009, Moody's also increased the servicer's ratings
Mortgage Fraud Growth Slows
Suspicious Activity Reports tied to mortgage fraud increased just 1 percent between the first half of 2008 and the first half of 2009, data from the Financial Crimes Enforcement Network indicated. FinCEN is a division of the U.S. Department of the Treasury. The latest activity contrasts a 39 pecent increase between 2007 and 2008.
California Firm Launches Wholesale Operation
New American Funding announced that it is opening a wholesale lending division. The company is based in Irvine, Calif. The mortgage banking firm said it plans to initially roll out its conventional, FHA and jumbo offerings in California.
Great Ginnie Performance
Ginnie Mae guaranteed 19 percent more mortgage-backed securities during December than in November, according to monthly date. Full-year issuances were more than two-thirds higher than in 2008. Meanwhile, delinquency during November of at least 90 days fell 18 basis points from October.
Mixed Results at BB&T
Fourth-quarter 2009 residential production at BB&T Corp. fell by nearly one-fourth from the third quarter, the company reported. But annual originations were up more than 70 percent from 2008. Earnings increased from the third quarter but fell from the prior year.
SunTrust Delinquency Improves But Fundings Fall
SunTrust Banks Inc. reported that fourth-quarter 2009 residential delinquency of between 30 and 89 days declined 5 basis points from the third quarter. Home-loan late payments have fallen each quarter since the last quarter of 2008. But residential originations fell for the second consecutive month.
PNC's Residential Business Deteriorates
Residential lending fell by 36 percent during the fourth quarter, PNC Financial Services Group Inc. reported. Residential delinquency of at least 30 days was up 12 basis points from the third quarter. Residential mortgage-banking earnings were down nearly three-quarters on a linked-quarter basis.
Quicken Business Doubles
During 2009, retail volume at Quicken Loans Inc. increased 108 percent from 2008, according to data from the company. Fourth-quarter 2009 residential production by retail originators increased 48 percent from the third quarter. But business more than doubled from the fourth quarter a year earlier.
GMAC Funding Improves, Mortgage Volatility Declines
GMAC Inc. saw its issuer default ratings upgraded by Fitch Ratings, an announcement indicated. By re-classifying a large portion of its mortgage-related assets as held-for-sale and taking significant write-downs in the process, Fitch said GMAC has significantly reduced the volatility of the mortgage business. Fitch noted that GMAC's funding has improved as a result of its ability to fund a greater portion of its business through Ally Bank.
10-Year Yield Sinks as Obama Restricts Banks
Following President Barack Obama's call for Congress to restrict the size and scope of U.S. financial institutions -- the Dow Jones Industrial Average tumbled more than 200 points. In response, the 10-year yield fell to 3.60 percent during trading today. The 10-year was 3.76% a week ago.
Sweeping Actions Against Hundreds of FHA Lenders
The U.S. Department of Housing and Urban Development said in a public filing that it immediately withdrew the FHA approval of 67 mortgagees for one year because they were not in compliance with annual re-certification requirements. Another 41 firms faced a $3,500 civil money settlement over allegations that they failed to meet annual re-certification requirements. In addition, 104 mortgagees failed to meet annual re-certification requirements but subsequently cured the violations. Each of the firms, without admitting guilt, agreed to a $1,000 administrative fee and to cure the violations within 30 days.
FDIC Adding Hundreds of IL Contractors
A temporary satellite office will be opened by the Federal Deposit Insurance Corporation in the Chicago area, a press release indicated. The new office will manage receiverships and liquidate assets from failed Midwestern banks. Up to 500 non-permanent staff and contractors will be housed at the new office.
Fundings, Delinquency Deteriorate at US Bank
Residential production at U.S. Bancorp declined $3.7 billion from the third quarter, according to earnings data. But business was better than in 2008. Residential delinquency of at least 90 days, including nonperforming loans, jumped 73 basis points from Sept. 30, 2009.
Sweeping FHA Changes
Borrowers who make a 3.5 percent down payment in connection with an FHA-insured loan will be required to have a credit score of at least 580, according to a new HUD letter. The up-front FHA mortgage insurance premium will be raised 50 basis points, the letter said. In addition, maximum seller concessions will be reduced to 3 percent on FHA loans.
Wells Retakes Lead
Fourth-quarter home-loan production was $94 billion, according to earnings data released by Wells Fargo & Co. Business declined from $96 billion in the prior quarter. But a bigger increase at rival Bank of America Corp. likely left Wells Fargo as the biggest residential lender during the fourth quarter.
BoA Originations Slip, Mixed Mortgage Earnings
Fourth-quarter 2009 residential production fell $9.0 billion from the third quarter, Bank of America Corp. reported. Consolidated mortgage banking income rose to $1.7 billion from the third quarter's $1.3 billion. But net income before taxes at the home loans and insurance unit was a $1.6 billion loss -- though an improvement from the prior quarter.
Former Fannie Execs Find New Firms
PHH Mortgage announced on that former Fannie Mae executive Michael J. Dirrane was named executive vice president of sales. Charles V. Greener left his job as chief communications and marketing officer at Fannie to take a similar position at Walgreens, a recent announcement indicated. Another executive to recently leave Fannie was Theresa M. Messina, who was named chief accounting officer of Webster Financial Corp.
Bank Regulators Face Off Over Exec Compensation
The Federal Deposit Insurance Corporation said it is considering whether the deposit insurance assessment program should consider the risks that employee compensation structures pose. The government insurer approved an advance notice of proposed rulemaking, and public comment will be available for 30 days after the proposed rule is published in the Federal Register. But the Comptroller of the Currency said in a recent statement that executive compensation was already addressed in the legislation passed by the U.S. House of Representatives. The comptroller also doesn't "believe that a sufficient basis has been demonstrated to support the approach in the draft advance notice of proposed rulemaking."
Executives In, Out at Service Providers
In a Securities and Exchange Commission filing, Ambac Financial Group Inc. agreed to a severance package for senior director Robert G. Shoback. Another SEC filing indicated Ambac's managing director and controller, Robert Eisman, was appointed senior managing director and chief accounting officer. John F. Woodhead recently became a senior management consultant at Applied Facts, a news release indicated.
Refis to Tumble, ARM Share to Soar
An economic outlook released by Fannie Mae projected that refinances will account for just 38 percent of second-quarter U.S. production. During the fourth-quarter 2009 -- refinances represented nearly two-thirds of residential originations. But Fannie projects that the share of applications that are for adjustable-rate mortgages will increase by nearly half during the same period.
The Regulatory Story
Financial institution failures are often preceded by cease-and-desist orders from banking regulators. The Office of the Comptroller of the Currency reported that it recently issued four cease-and-desist orders. When a bank regulator determines that a particular institution is showing signs of trouble, a formal agreement might be reached with that institution. The agreements often require improvements to lending operations, changes to management and regular progress reports. The OCC and the Federal Reserve announced that 11 formal agreements were recently reached. In addition, the two bank regulators issued 10 other regulatory orders.
Google Launches Loan Comparison Service
Mortech Inc. and PriceMyLoan separately announced a strategic alliances with Google. The search-engine behemoth is expanding AdWords to include a loan comparison feature for prospective borrowers. Prospects don't need to provide any personal data in order to receive offers from lenders.
Secondary, Servicing and Investor Lawsuits
First Catholic Federal Credit Union filed a lawsuit in against CUSO Mortgage Inc., according to court documents. First Catholic seeks to void a 2 percent being charged by CUSO to transfer its servicing portfolio to another servicer. A class action was filed against Sterling Savings Bank and parent Sterling Financial Corp. by employees who invested in the company's 401(k) Plan. ECC Capital Corp. filed a lawsuit against the two law firms that it engaged to draft a 2007 agreement in which it sold its origination business. ECC claims the firms should have drafted a document that releived it of repurchase liabilities.
The Bankruptcy Journal
Wells Fargo Home Mortgage Inc. recently lost an appeal to maintain its secured credit status in a bankruptcy case even though it neglected to record the mortgage. In another case, a refinance loan made by Quicken Loans Inc. mistakenly overlooked a junior lien. Countrywide Home Loans Inc., which acquired the loan from Quicken, however was successful in bankruptcy court securiring its lien position over the missed junior lien holder.
3 Face Sentences for Mortgage Crimes
The U.S. Department of Justice announced that Jeffrey L. Levine pleaded guilty to cooking the books of Omni National Bank. He faces sentencing in March. Jodie Hoang was sentenced prison for allegedly stealing $1 million from her employer, Standard Mortgage Corp., a government news release indicated. Former mortgage broker John McTaggart was sentenced to prison over allegedly stealing more than $100,000 in reverse mortgage proceeds from an 86-year-old woman.
Utah Bank Failure to Cost $0.3 Billion
The Utah Department of Financial Institutions seized and closed Barnes Banking Co. The Federal Deposit Insurance Corporation was named receiver. The FDIC projects that losses will reach $271 million as a result of the failure of Barnes.
Hotel Delinquency Soars
Delinquency on hotel loans that are part of commercial mortgage-backed securities jumped 160 basis points in December, Moody's Investors Service reported. The prior month, hotel delinquency was up 160 BPS. Overall CMBS delinquency was nearly a half percent worse.
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Former Fannie Execs Find New Firms
The prominent trade group representing U.S. mortgage brokers announced the resignation of a top officer, and new executives were named at three mortgage banking firms. Three former executives at the Federal National Mortgage Association have found senior executive positions at other firms.
Marc Savitt resigned as immediate past president to the National Association of Mortgage Brokers' board of directors, the trade group said in a statement today.
George Hanzimanolis will out the remainder of Savitt's term -- including his role as chairman of NAMB's nominating committee.
MortgageDaily.com subscribers read full story
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3 Face Sentences for Mortgage Crimes
A former mortgage broker who stole more than $100,000 from a reverse mortgage borrower has been sentenced to six years in prison despite showing up at his sentencing with a $50,000 check for his victim. In another case, a Texas woman was sentenced for cleverly diverting proceeds from loan closings to her personal accounts. A third case has a former bank executive admitting that he cooked the books and facing sentencing along with two other related defendants who are accused of mortgage fraud.
The U.S. Department of Justice announced that Jeffrey L. Levine pleaded guilty to cooking the books of Omni National Bank -- which left the government with $290 million in losses and 144 employees without a job when it failed in March 2009.
The guilty plea was the result of a collaborative effort between the Justice Department, the Federal Deposit Insurance Corporation's inspector general, the Atlanta postal inspector, the special inspector general for the Troubled Asset Relief Program and the U.S. Department of Housing and Urban Development's inspector general.
MortgageDaily.com subscribers read full story
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Consumer Group Takes on Broker YSPs
A consumer group is at odds with mortgage brokers over the use of yield spread premiums.
On Christmas Eve, the National Association of Mortgage Brokers said it issued a letter to the Federal Reserve Board asking for a delay in the implementation of a final rule that would prohibit broker compensation on closed-end mortgages based on the loan's terms or conditions.
The McLean, Va.-based trade group claims the rule doesn't fairly regulate all compensation for all types of mortgage originators.
MortgageDaily.com subscribers read full story
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Huge Broker Acquiring Wholesaler
A California mortgage broker with nearly $3 billion in annual originations announced a deal to acquire a wholesale lender.
The broker, First Priority Financial Corp., said in a news release yesterday that it reached an agreement to acquire privately held Austin Perry Financial Corp.
Terms of the transaction, which is expected to close by Dec. 31, weren't disclosed.
MortgageDaily.com subscribers read full story
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MD Firm Loses FHA Approval
The Federal Housing Administration announced the suspension of a Maryland mortgage broker over allegations of overcharging borrowers and failing to disclose yield spread premiums.
The agency said Equitable Trust Mortgage Corp. can no longer originate and underwrite FHA-insured mortgages.
The suspension will last a minimum of six months.
MortgageDaily.com subscribers read full story
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