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Mortgage Industry News Headlines
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Last Updated Sunday, March 04, 2007 07:00 PM CST
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Criminal Inquiry at New Century
New Century Financial Corp. filed a 10-K with Securities and Exchange Commission Friday. A letter was received from the U.S. Attorney's Office by New Century on Feb. 28, according to the filing. The letter reportedly indicates the government is conducting a criminal inquiry into the real estate investment trust.
Fremont Exiting Res Lending
A proposed cease and desist order was received by Fremont General Corp., according to an announcement late Friday. The order reportedly required a host of changes to the company's subprime business. Fremont said it is shopping its mortgage business.
300 New Century Job Cuts
About 300 New Century Financial Corp. employees received layoff notices yesterday, according to a New Century e-mail statement to MortgageDaily.com. The job cuts amount to 5 percent of the subprime giant's workforce. New Century blamed the current turbulent environment for the layoffs.
Finding High Quality Leads
There are five imperative questions to ask your current or potential mortgage lead provider. The first is determine what they are doing to ensure you're targeting the right consumer. Another is to find out if you have complete ownership of the data.
Subprime Standalone Seconds
Creative Mortgage Lending announced Friday new junior lien products. Borrowers discharged from bankruptcy for less than 24 months can obtain up to 90 percent loan-to-value, Creative noted. Debt ratios go as high as 55 percent, according to the wholesaler.
IndyMac Impresario Offers Outlook
In a letter to shareholders, IndyMac's chief executive officer expressed he was disappointed with how 2006 ended and with the outlook for 2007. He noted that the thrift segment saw a fairly dramatic decrease in the ROEs it was earning in the fourth quarter. Among the steps IndyMac is taking to improve performance for shareholders in the short term is adjusting mortgage underwriting guidelines.
Nonprime Delinquency Soars at Countrywide
Delinquency on nonprime mortgages was 19 percent at the end of 2006, according to Countrywide Financial Corp. Delinquency was higher than in the third quarter and a year earlier. Foreclosures pending were also up at the Calabasas, Calif.-based company.
MI Volume Tumbles
Primary new mortgage insurance written during January was $16.1 billion, the Mortgage Insurance Companies of America announced Wednesday. The latest month's activity tumbled from December. The decline was driven by a steep dropoff in bulk activity, MICA reported.
EMC Adding Employees
EMC Mortgage Corp. announced Thursday it is opening a new servicing center in Irvine, Calif. It expects to employ a 250 people at the site within the next 12 to 18 months. The new facility will enable additional hours of service.
Mortgage Market Improves
The 30-year fixed-rate mortgage averaged 6.18%, Freddie Mac said its latest weekly mortgage survey. It was the second consecutive week that the 30-year was down. Mortgage originators completed more applications in the week ending Feb. 23 than the prior week, the Mortgage Bankers Association reported on Wednesday.
National City Moving Jobs Offshore
National City Corp. informed some Ohio employees Wednesday their work will be outsourced to India, a company spokesman told MortgageDaily.com. The jobs at issue relate to back-office functions, he said. There are about 2,200 employees in the affected office.
Nationstar Acquires Champion
Nationstar Mortgage LLC announced Thursday it acquired Champion Mortgage. The unit will reportedly become an operating division of Nationstar. Champion was originally founded in 1981.
Regional Loan Performance Varies
Mortgage loan performance at FDIC-insured banks across the nation has slipped only slightly from record levels, according to an FDIC region-by-region examination of banking conditions. Most optimistic were the views of the four-state Southwest region, the 11-state San Francisco region and the six-state New England region. But FDIC-insured institutions in auto-dependent states are reporting rising delinquent rates, the report said.
COFI Down
The average 11th District Cost of Funds Index was 4.39% in January, the Federal Home Loan Bank of San Francisco announced Thursday. The index was off slightly from the prior month, according to the statement. However, COFI was more than 1% higher than a year earlier.
Citi, ACC Deal
Citigroup's markets and banking division has agreed to infuse working capital to ACC Capital Holdings, according to an announcemnt Wednesday. Citigroup will become ACC's primary warehouse lender, the statement said. The deal also gives Citigroup an option to acquire Argent Mortgage Co.
Citi Still Haunted by Associates
The Securities and Exchange Commission is conducting an investigation into accounting related to Citigroup Inc.'s acquisition of the Associates several years ago. The treatment of certain specific tax reserves and releases is at issue. Citigroup said it is cooperating with the SEC.
Subprime Relief from Fannie
Fannie Mae said it will develop rescue mortgage products for subprime borrowers who will experience difficulty making payments when their rates adjust. "We believe the best course of action is to receive [the nontraditional] guidance, develop a full compliance plan and act accordingly," a Fannie director said in a statement sent to MortgageDaily.com. Subprime loans reportedly make up less than 4 percent of Fannie's total book of business.
Bank Delinquency Highest Since 2002
The rate of past due residential mortgages at commercial banks was 2.11 percent in the fourth quarter 2006, according to Federal Reserve data. Delinquency rose from the third quarter, the Fed said. Delinquency for all U.S.-chartered commercial banks and has not been that high since the fourth quarter 2002.
Tighter OH Subprime Lending Regulations
The Ohio Homebuyers' Protection Act took effect Jan. 1. The new law enables enforcement against originators who practice predatory and deceptive lending. Mortgage brokers and non-bank lenders now have to undergo criminal background checks.
No Subprime Recovery Soon
Lehman Brothers Holdings Inc. said now is time to "take profits," according to a research note provided to MortgageDaily.com. "We recommend taking profits on our short BBB-position," a Lehman analyst wrote in the note. He indicated that although prime delinquencies have risen, the increases have been nowhere near the levels seen with subprime.
LIBOR Retreats
The 6-month London Interbank Offered Rate was 5.37% in February, according to Fannie Mae data Tuesday. The index was down from the prior month, the data indicated. However, the 6-month LIBOR was higher than a year earlier.
Central Pacific Shuts Down
Central Pacific Mortgage notified its employees it has shut down, according to a copy of a letter reviewed by MortgageDaily.com. The company ran out of capital, according to the letter. The CEO of Central Pacific was previously the chairman of the Mortgage Bankers Association.
Mismanagement Kills Mortgage Firm
Eagle First Mortgage consented to the Arizona Department of Financial Institutions' order to surrender its mortgage broker license, according to an order. The department said it's investigation of Eagle around mid-2006 found that the company was insolvent. The brokerage will officially be closed on March 14, according to a statement posted on Eagle's Web site.
Investors Sue NovaStar
An Arkansas law firm announced Tuesday it filed a class action lawsuit against NovaStar Financial Inc. NovaStar issued "a series of material misrepresentations," the law firm claims. NovaStar's Feb. 20 announcement that it expected "to earn little or no taxable income in the next five years" caused shares of the company to fall 42 percent, the firm alleges.
Freddie Tightens Subprime
Freddie Mac announced Tuesday it will only purchase certain subprime hybrid ARMs where borrowers were qualified at fully-indexed rates. It will also limit Alt-A underwriting. The Virginia-based company said it will commit significant capital to the acquisition of new, more moderate, hybrid ARMs.
Fannie Purchases Fall
Fannie Mae acquired $51.1 billion in new business during January, according to its latest monthly summary. Business was down from the prior month, the report said. However, purchases were almost unchanged from a year earlier.
Groups Disagree About Subprime Hybrids
Massive payment shocks built into subprime 2/28 and 3/27 adjustable-rate mortgages could cause a foreclosure crisis, 80 consumer groups wrote in a letter to banking regulators. They have asked that a supplement to last fall's nontraditional mortgage guidance be issued to include noprime hybrids. But the Mortgage Bankers Association told MortgageDaily.com that such a move might curtail the ability of nonprime borrowers to graduate into lower rate conforming loans.
Unlicensed Software Kills Firm
Applied Business Software Inc. announced it won a summary judgement against Freedom Financial & Trust LTD. Applied had sued Freedom for breach of contract and copyright infringement claims over its mortgage software. As a result, Freedom will wind down its operations.
Fixed Rate Defaults Jump
Defaults on adjustable-rate subprime securities continue to trend at a "whopping" pace compared to recent years, according to a report from Friedman Billings Ramsey & Co. And defaults on fixed rate loans are also rising, according to the investment banker."The 2006 origination year of fixed-rate (originations) also experienced weaker credit performance than earlier origination years at the same age," the firm reported.
Business Settled
NetBank Inc. announced that its provisions for the nonconforming channel were $30.3 million in the fourth quarter. Tribeca Lending completed the purchase of certain wholesale mortgage assets of the New York Mortgage Company LLC, according to an announcement Friday. Fieldstone Investment Corp. said it paid former shareholders $10.6 million to settle litigation.
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Copyright © 2005 MortgageDaily.com
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Mismanagement Kills Mortgage Firm
Arizona regulators are shutting down a mortgage company with over 80 branches because of extremely lax hiring practices, poor record keeping and incompetent management.
Eagle First Mortgage consented to the Arizona Department of Financial Institutions' order to surrender its mortgage broker license and that of all of its branches, which -- according to the state -- number around 82.
The department's investigation of Eagle around mid-2006 found that the company was insolvent, failed to adequately reconcile their checking accounts and provide documentation to support financial status of such accounts, and engaged in over 80 illegal acts, including some relating to Truth-in-Lending laws, according to the order.
MortgageDaily.com subscribers read full story
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| Mortgage Broker Plans
In a conference call outlining its upcoming plans, the country's mortgage broker trade group criticized the use of trigger leads and projected the recent nonprime meltdown will have little impact on the broker share of business.
The National Association of Mortgage Brokers is pushing for an independent, government-sponsored study of the causes of foreclosures, including any abusive lending practices that may lead to foreclosures, in order to work toward effective solutions to fight such problems, according to a conference call Thursday.
While abusive lending practices and mortgage reform have been discussed in or around Washington, D.C., since the mid-1990s, the issues have been "crystallizing in these past several months due to the unfortunate rise of foreclosures that appear to be spreading around the country," said Joe Falk, the group's legislative chair.
MortgageDaily.com subscribers read full story
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| State Licensee Actions
Several states have taken a range of actions against individual and company mortgage licensees.
In Georgia regulators have issued cease and desist orders to three brokers and one brokerage firm.
A final order from the Georgia Department of Banking and Finance has been issued to PFS Mortgage of Alpharetta, Ga.
MortgageDaily.com subscribers read full story
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| Brokers Better for Subprime Borrowers
Subprime borrowers who use mortgage brokers pay less than when obtaining their mortgage from a mortgage banker, according to a joint study from economists at George Washington and Oklahoma State Universities. But a mortgage banking group questions the consistency of the findings.
This was the conclusion from data analyzed from the third quarter of 1995 through the end of 2003 from the subprime mortgage subsidiaries of 10 large financial institutions, the report said.
"The results indicate that broker-originated mortgages are not more costly and generally less costly to the borrower than lender-originated mortgages after holding other loan terms and borrower characteristics constant" the economists reported. "They are consistent with hypotheses that brokers may be more efficient than lenders in originating loans and may be better able to match borrowers' and lenders' reservation prices."
MortgageDaily.com subscribers read full story
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