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Mortgage Industry News Headlines
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Last Updated Friday, February 15, 2008 05:54 PM CST
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Broker Sued for $6 Million in Fraud
1st Mariner Bank filed a lawsuit against East West Mortgage Company Inc. 1st Mariner, a wholesale lender, alleges employees and agents of East West provided it with fraudulent loan applications. Nearly $6 million in loans went into default soon after the closings as a result of the mortgage fraud, according to the complaint.
Wholesalers Tout Subprime, Hard Money & YSPs
Accredited Home Lenders is promoting 80 percent loan-to-value for borrowers with 30-day mortgage lates and for self-employed borrowers with stated-income. Charter Bank Specialty Lending Group said it recently closed a transaction with a seller second where the borrower put 5 percent down and had a 498 credit score. Wachovia Bank said its yield spread premiums go as high as three points.
Countrywide Delinquency, Production Worse
Residential production was $22 billion during January, Countrywide Financial Corp. announced. Volume fell from $37 billion a year earlier. Delinquency rose for the 10th consecutive month to end January at 7.47 percent.
Over $30 Billion in Subprime Downgrades
Changes Fitch Ratings made to its subprime loss forecasting assumptions that better capture deteriorating performance from residential mortgage-backed securities pools issued from 2005 to 2006 affected over $30 billion in classes of subprime securities. Among the actions were downgrades to $1.4 billion in classes from four NovaStar subprime deals issued in 2006, with $0.5 billion placed on Rating Watch Negative. Fitch downgraded $11.3 billion in classes from 16 Morgan Stanley transactions from 2006 as result of its updates and put $4.0 billion on Rating Watch Negative.
Nearly 300 Subprime Lawsuits in 2007
Last year, 278 subprime-related cases were filed in federal courts, according to a study released by Navigant Consulting Inc. During the first half of 2007, 97 cases were filed, Navigant said. But the figure jumped to 181 lawsuits in the second half.
Fannie Accused of Illegal Escrow A/C Earnings
A lawsuit against Fannie Mae claims the company unjustly made gains "by secretly taking their money from mortgage escrow accounts, investing and using their money as its own, and keeping the hidden profits for its own benefits." The suit is currently in the hands of a U.S. District Court judge who is set to rule on whether to grant class action status. Fannie, in its initial response to the complaint, maintained that HUD rules and regulations "did not include an affirmative duty to invest escrow account balances" and that "the relationship between Fannie Mae and the named plaintiffs does not qualify for fiduciary status under the common law."
Credit, Appraisal & Servicing Technology
Advantage Credit announced a Webinar available for viewing online that explains the five scoring factors that the FICO scoring model uses. Mortgage companies searching for new appraisers can find resumes, appraisal fees, coverage areas, and license and E&O insurance information at AppraisalPort. Wells Fargo Home Mortgage extended its mortgage servicing package contract with Fidelity National Information Services Inc., a press release indicated.
Mortgage Activity Worse
The average 30-year fixed rate mortgage was 5.7 percent for the week ending Feb. 14, Freddie Mac reported. The 30-year rose from the prior week. Mortgage loan applications edged 2 percent lower during the latest week, the Mortgage Bankers Association announced.
Losses Continue
Ocwen Financial Corp. reported a loss of $13.1 million in the fourth quarter. MGIC Investment Corp. reported a $1.5 billion fourth quarter loss. UBS reported a fourth quarter loss of $11.3 billion.
Mixed Bag for Mortgage Leads
FHA verified leads are now available from Low.com, according to an announcement. LeadPoint reported it purchased 81 percent more leads last year than in 2007. A $476 million impairment charge related to goodwill and intangible at LendingTree led to a fourth quarter operating loss of $508.1 million, its parent company announced.
Morgan Stanley Cuts 1,000 Mortgage Jobs
Morgan Stanley announced it would scale back U.S. residential mortgage operations. In addition, the company said it would close its U. K. lending business. As a result, about 1,000 jobs will be eliminated, the company said.
FHA, Conforming Limits Boosted
H.R. 5140, the Economic Stimulus Act of 2008, has been signed into law by President Bush. Under the legislation, the conforming limit will be temporarily increased to $729,750. The limit will be effective from July 1, 2008, until Dec. 31, 2008.
Downgrades Hit Servicers, Bond Insurers
Moody's Investors Service downgraded the servicer quality rating of First Tennessee Bank National Association as a primary servicer of second lien loans. Moody's also said it cut the servicer rating of Bayview Loan Servicing. Fitch Ratings announced downgrades to over 100 residential mortgage-backed securities classes as a result of the downgrading of Ambac's and MBIA's Insurer Financial Strength.
Worst Foreclosure Metros
During 2007, the Detroit-Livonia-Dearborn area had 4.9 foreclosure filings for every 100 households, higher than any other, according to RealtyTrac. The most foreclosure filings occurred in Riverside-San Bernardino, Calif., which had over 100,000 filings. The Riverside metro also saw the highest number of properties affected by foreclosure filings last year, the report said.
Chase Still Sees Subprime Opportunities
JPMorgan Chase & Co.'s chairman and chief executive said is still putting subprime and jumbo loans on its balance sheet and will take advantage of "very attractive opportunities" for its investment portfolios and investment bank. He made his comments at an investor conference last week. "I personally think that subprime is not a bad thing," he said. "It's something that went to excess, and we'll continue grow and offer the product in hopefully a much safer way."
Reverse Production Continues to Climb
From Oct. 1, 2007, through Dec. 31, 2007, the Federal Housing Administration insured 24,686 home equity conversion mortgages, according to data provided by the National Reverse Mortgage Lenders Association. The latest figures bring total volume for the 12 months ended Dec. 31 to a record. Activity during the government's fiscal year ended Sept. 30 was also a record.
Firm Fights Originator Lawsuit
A lawsuit was filed against American Equity Mortgage. Plaintiffs in the case are former loan originators. The loan officers are seeking alledged unpaid wages and overtime.
M.I. Companies Lower LTVs
Mortgage Guaranty Insurance Corp. will begin requiring at least 5 percent down by borrowers purchasing properties in markets it deems "restrictive," a spokeswoman told MortgageDaily.com. The change becomes effective during March. The PMI Mortgage Insurance Co. is also cutting back on LTVs.
Modification Plan Expanded
The secretary of the Treasury and the secretary of the Department of Housing and Urban Development announced Project Lifeline at a news conference. The program is intended to help Alt-A, prime and subprime borrowers who are already facing foreclosure. Among participating servicers are Bank of America Corp., Countrywide Financial Corp., Citigroup, JPMorgan Chase, Washington Mutual and Wells Fargo & Co.
Profit at REIT Contrast Mortgage Sector Losses
IndyMac Bancorp Inc. reported a fourth quarter loss of $509 million. National City Corp. deceived shareholders about its business and financial results, according to Holzer Holzer & Fistel, LLC. Capstead Mortgage Corp., a Dallas-based REIT, reported last week its fourth quarter net income climbed to $15.9 million from $2.4 million a year earlier.
Direct Mail Advertising Falling
Last year, mortgage lenders sent out 2.6 billion direct mail pieces, Mintel Comperemedia announced. The activity fell from 3.7 billion during 2006. Looking at just pieces for adjustable-rate mortgages, mailings were down 72 percent, according to the report.
HUD Makes FHA Proposals
The Department of Housing and Urban Development secretary wrote a letter to Congress about his concerns with pending FHA legislation. He said FHA does not support provisions of the existing bills that would limit the agency's ability to give lower premiums to borrowers with better credit histories, which would benefit a significant number of low income borrowers, or impose a 12-month moratorium on HUD's proposed modifications to the current premium structure. He also called for an end to seller funded DPA's, which he said push default rates higher.
More Foreclosure Plans Emerge
The Federal Home Loan Bank of San Francisco held a foreclosure workshop recently with U.S. Rep. Barbara Lee (D-Calif.), California State Assembly Member Sandre Swanson (D) and Housing and Economic Rights Advocates Director Maeve Elise Brown. ForeclosureS.com announced it helps line up delinquent borrowers with "White Knight" investors. Countrywide Financial Corp. and the Association of Community Organizations for Reform Now formally announced plans to help a wide array of subprime borrowers avoid foreclosure.
Originations Boosted by Technology
Flaherty Funding has reportedly implemented PriceMyLoan's online automated underwriting and loan pricing system. PriceMyLoan's ability to extract live credit report data was a deciding factor in Flaherty's decision. First Mortgage Corporation of Arizona has abandoned lead providers by capturing prospective borrowers itself through a new Web site from Astonish Results, according to an announcement.
2007 Mortgage Litigation Report
During 2007, 53 cases were reviewed where mortgage companies were accused of misleading investors, according to a new report from MortgageDaily.com. Mortgage fraud was alleged in 25 cases. Another big area where mortgage bankers faced litigation was secondary marketing. Mortgage employment cases reportedly numbered 16. The report was prepared with the assistance of the Washington, D.C.-based law firm of Weiner Brodsky Sidman Kider PC.
Cashout Transaction Volume Tumbles
Cashouts represented 81 percent of all refinances during the fourth quarter, according to Freddie Mac's latest quarterly refinance review. By dollar volume, fourth quarter cashouts were $37.8 billion, down from $58.3 billion the prior quarter, the report said. The volume was less than half the level a year earlier.
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Copyright © 2007 MortgageDaily.com
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Bank Regulator Praises Brokers
Most mortgage brokers have acted responsibly in originating loans, a banking regulator said today. And while many parties -- including borrowers, Realtors, investment bankers and originators -- are responsible for the current chaos, inaccurate reports of failing companies have only made things worse.
Brokers accounted for $1.7 trillion of 2006 originations, John M. Reich, director of the Office of Thrift Supervision, said today. He said broker share of originations that year was 58 percent.
He made his comments at the National Association of Mortgage Brokers' Legislative & Regulatory Conference in Washington, D.C., according to a transcript of his prepared testimony released by OTS.
MortgageDaily.com subscribers read full story
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Net Branch Companies Tout Growth
As firms collapsed and more than 100,000 employees left the mortgage industry last year, three net branch companies are reporting growth.
Since the beginning of 2007, MortgageDaily.com has tracked the demise of more than 150 mortgage firms -- including several net branch companies.
In addition, approximately 114,600 people employed in mortgage lending exited the industry last year, according to data from the Bureau of Labor Statistics.
MortgageDaily.com subscribers read full story
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Mass. Exodus
A new law in Massachusetts that took effect on Jan. 2, which limits fees and yield spread compensation and imposes other restrictions on mortgage broker originations, has at least 15 wholesale lenders modifying or curtailing operations and has brokers scrambling.
But the reasons why lenders, which include Wells Fargo and IndyMac, are taking these steps and the impact on mortgage originations and employment is in dispute.
"It's going to curtail the availability of credit for all mortgage lending -- subprime, prime, refinances, equity loans," Paul Richman, vice president for state government affairs at the Mortgage Bankers Association, told MortgageDaily.com.
MortgageDaily.com subscribers read full story
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State Mortgage Licensees Tumble
Mortgage regulators in several states have reported a significant drop in the number of mortgage broker licensees.
Ohio has seen its mortgage licensees drop by more than one-third.
Licensed mortgage brokers, which numbered 2,239 on Jan. 1, 2007, have declined to 1,611 as of Tuesday, Dennis Ginty, a spokesman with the Ohio Department of Commerce, told MortgageDaily.com in an e-mail Thursday.
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WaMu Employee Admits to Bribes
A former loan coordinator at Washington Mutual F.A.'s subprime unit was bribed with $100,000 in payments from a mortgage broker to help process fraudulent loan packages. He also was paid by in-house loan officers to fund mortgages with fraud.
John Ngo pleaded guilty Monday to lying under oath to a grand jury in September about whether he had received money from a mortgage broker while he was a senior loan coordinator at WaMu subsidiary Long Beach Mortgage, according to an announcement from U.S. Attorney McGregor W. Scott.
Ngo, who worked at Long Beach from September 2001 through May 2006, was responsible for verifying information from packages submitted by brokers and inside originators.
MortgageDaily.com subscribers read full story
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