MortgageChronicle.com -- Free Mortgage Industry News Archives March 9, 2007

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Last Updated Friday, March 09, 2007 04:21 PM CST

Subprime Wholesaler Winding Down
FMF Capital LLC will wind down operations, its parent announced late Friday. The company reportedly originated loans through a network of mortgage brokers in 39 states. FMF said the decision was made as a result of the continuing deterioration of the U.S. nonprime mortgage industry.
WMC Laying Off
WMC Mortgage laid off about 450 employees Thursday, a WMC spokeswoman told MortgageDaily.com. The job cuts were spread nationally, she said. The company is aligning itself correctly for the industry.
Feds Warned About Foreclosures
Three Federal Reserve governors as well as the Fed chairman listened to a set of recommended actions to "combat discriminatory lending and unequal access to fairly priced credit." The Board's governors were all very engaged and participated in the discussions, a council member told MortgageDaily.com. The recommendations were contained in a research study of lending patterns by major mortgage lenders.
Mortgage Jobs Tumble
There were 489,200 people employed in mortgage lending during January, the Bureau of Labor Statistics reported Friday. The latest numbers reflect a loss from the prior month, according to the bureau, a division of the U.S. Department of Labor. January figures were also way down from a year earlier.
AE Crowned Mrs. World
Diane Tucker has been crowned Mrs. World 2007. The event finished up yesterday in Russia. Tucker is an account executive for Argent Mortgage who was named Mrs. America last year.
Jobs Coming to Texas
Avelo Mortgage has plans to expand in Irving, Texas. The company plans to grow its employee base there to approximately 400, according to an announcement by the Greater Irving-Las Colinas Chamber of Commerce. The new jobs "will be high-quality positions, offering superior compensation levels," the chamber said.
New Century Stops Taking Apps
New Century Financial Corp. has only been able to fund a portion of its loans this week, according to an 8-K filing with the Securities and Exchange Commission. Its capacity to fund new originations is substantially limited, the filing went on. As a result, it has stopped accepting new applications effective Thursday.
Stated, 100% Programs Fading
Appraisal reviews are the No. 1 unexpected issue to crop up since the recent nonprime consolidation started, according to a mortgage broker survey by Campbell Communications. One California broker told MortgageDaily.com he is seeing stricter standards with subprime stated-income loans. Stated-income and high loan-to-value loans are "starting to go away," a Florida broker told MortgageDaily.com.
Mortgage Market Continues Improving
The 30-year fixed-rate mortgage average slipped 4 basis points from the prior week, according to Freddie Mac's latest mortgage survey. The 30-year was nearly one quarter percent better than a year earlier. Refinance application surged, according to the Mortgage Bankers Association's latest weekly survey.
Most Admired Lenders
FORTUNE magazine released its list of America's Most Admired Companies 2007, which it refers to as "the definitive report card on corporate reputations." In the mortgage services industry, the most admired company was LandAmerica Financial Group. Washington Mutual placed second, according to FORTUNE's annual ranking.
States Crack Down on Licensees
The Nevada Division of Mortgage Lending rescinded a $30,000 fine levied against SURE Development and Real Estate. In Maine, two mortgage lenders paid more than $44,000 in fines and restitution to settle claims made by the state's Office of Consumer Credit Regulation. The always busy Georgia Department of Banking and Finance took recent action in three cases involving allegations against brokers.
New Scores ID Likely Defaults
TowerGroup recently analyzed VantageScore to determine whether the model should be used. The VantageScore is better than the classic FICO at predicting loan performance, TowerGroup said in its study. But another study indicated FICO Expansion Scores consistently assigned lower scores to consumers who later had more delinquencies and charge-offs, while it gave higher scores to those who later had fewer delinquencies and charge-offs.
Wachovia Closes Correspondent Channel
A copy of a letter from a Wachovia senior vice president was sent to, and reviewed by, MortgageDaily.com. The letter revealed the bank stopped taking new correspondent registrations Tuesday. Wachovia said any registered loans must be purchased and funded by April 16.
New Century's Survival in Doubt
Fitch Ratings announced Wednesday it lowered the subprime servicer ratings of New Century Mortgage Corp. The action reflects uncertainties over New Century's ability to maintain adequate funding and remain viable over the near term, the statement read. Moody's Investor Service announced Monday it lowered New Century's primary subprime servicer.
Lender Loses Lawsuit to Government
The U.S. Department of Justice was awarded control of a Tennessee property by a federal judge. The attorney for first lienholder SunTrust Bank told MortgageDaily.com the government can not trump legal title even under criminal forfeiture laws. But a U.S. Attorney told MortgageDaily.com lienholders lose the right to foreclose after the filing of a criminal forfeiture action.
MTA Sustains Rise
The Monthly Treasury Average was 5.014% in February, Federal Reserve data showed. The MTA was higher than the previous month, the data indicate. February represents the 34th consecutive month the index has risen.
LTVs, Debt Ratios Declining
Investors of collateralized debt obligations backed by pools of subprime mortgages are pulling back, USC's Lusk Center for Real Estate announced Wednesday. The loss of investor interest is pushing LTVs and debt ratio requirements lower, the center said. At the same time, mortgage rates are being pushed higher.
Former Citi Chief Regrets Associates Deal
The Real Deal: My Life in Business and Philanthropy was written about former Citigroup chief Sandy Weill. In the book, he talks about the company's 2000 acqusition of Associates First Capital. He said he considers it one of the worst acquisitions of his career.
Subprime Lender Reports Profits
Net income was $8 million during the fourth quarter, Delta Financial Corp. announced Wednesday. The Woodbury, N.Y.-based lender said earnings were up from a year earlier. Residential mortgage originations reportedly reached a record.
Liquidity Crisis Costs Wholesaler
Domestic Bank has shut down its wholesale division. A managing director at the bank confirmed the move when contacted by MortgageDaily.com. The move was made because of low bids -- or the lack of bids -- on some of its nonconforming loans that are coming from Wall Street investors.

Wholesaler to Be Acquired
Citadel Investment Group LLC has agreed to acquire certain assets and satisfy certain liabilities of ResMAE Mortgage Corp., according to an announcement Tuesday. ResMAE filed for bankruptcy protection last month. The deal will cost Citadel $22 million, the statement said.
Possible $1 Billion GM Mortgage Charge
The pre-tax "true up" cash contribution GM may need to pay to close on the GMAC sale may be between as much as $950 million, a Lehman Brothers analyst estimates. His findings come in light of recent profit warnings and loan loss allowance increases by some subprime players. He believes one cause for the delay of GM's fourth quarter 2006 earnings announcement is because the sale price of GMAC needs to be adjusted.
FBI Mortgage Fraud Report
The FBI released its Financial Crimes Report to the Public - Fiscal Year 2006. The report said the increased reliance on mortgage brokers has created opportunities for organized crime groups focusing on fraud. Mortgage industry insiders are involved in 80 percent of all reported fraud losses, and the FBI said.
Western Companies Best
Western-based financial service firms -- which lead companies around the rest of the nation in shareholder performance, according to an analysis by Mercer Oliver Wyman. California-based institutions outperformed the rest of the country by 90%, it said. The firm attributes the strong performance to several factors, including particularly favorable regional economic growth; a focus on consumer and business banking; and strong operational management.
Women Dominate Subprime Borrowing
The Consumer Federation of America said it released the results of an analysis of 4.4 million mortgages. The study reportedly found that women earning more than double the area median income were twice as likely to receive subprime loans than men with similar earnings. The larger subprime share occurred in spite of women having higher credit scores, the report said.
We're Not Subprime!
Impac Mortgage Holdings Inc. issued a seven-point press release Monday. The announcement attempted to distance Imapc from the U.S. subprime sector meltdown. "It is unfortunate for our stockholders that the company continues to be put in the same category as subprime lenders," the company's chairman and chief executive said in the statement.
Travel Time At Issue In Settlement
Watterson-Prime LLC and its president have agreed to a settlement with the U.S. Department of Labor, according to an announcement. The firm agreed to pay $766,334 in overdue wages and compensation. The department said the company did not compensate workers at the applicable federal minimum wage and overtime rate primarily for travel time.
New Century Ratings Downgraded
New Century Mortgage Corp.'s primary subprime servicer rating was lowered, Moody's Investor Service announced Monday. The new rating is SQ4, the ratings agency reported. Moody's cited the REIT's announcement that it is facing several regulatory inquiries and is out of compliance with covenants of several of its warehouse lines.
Foreclosures Fall
In February, foreclosure filings numbered 106,074, ForeclosureS.com announced Monday. Filings were lower than December's level, the foreclosure listing service reported. But foreclosures rose from February 2006.
Jumbo Performance Continues Slide
Delinquencies up to 60 days on jumbo mortgages was 0.672 percent during December, according to Moody's Investor Service. The ratings agency released a report on jumbo performance Monday. Delinquency was higher for the sixth consecutive month, Mooody's said.
Subprime Market Correction
Standard and Poor's Rating Services released a new report today, U.S. Subprime Market Continues Correction As Issuers Strengthen Underwriting Standards. Seeking evidence that underwriting standards are now being tightened, S&P said that while some documentation improvements have occurred -- "other results remain mixed." A decline in subprime securitizations is expected to continue as the sector goes through a period of consolidation and strives to toughen underwriting standards.
Foreclosure Scam Advertised on Gospel Radio
A lawsuit was filed the Illinois Attorney General against three Chicago-area mortgage companies. They are charged with violating Illinois' Consumer Fraud and Deceptive Practices Act and the Credit Services Organization Act. According to the complaint, one of the companies advertised mortgage foreclosure rescue services on a gospel radio show in Chicago.
Subprime Fallout Astounds Analyst
The rate at which the subprime market has fallen is "astounding," wrote an analyst for Countrywide Securities Corp. in a resarch note. He also noted that few pools of subprime whole loans had gone out to bid in the previous week. Meanwhile, delinquency on Countrywide's prime loan servicing portfolio was nearly double the year earlier figure.
Regulators Recommend Subprime Changes
The federal financial regulatory agencies seek comment on a proposed Statement on Subprime Mortgage Lending issued Friday. The agencies seek to address certain risks and emerging issues specifically related to lending practices in hybrid subprime adjustable-rate mortgages that may cause borrowers payment shock down the road and ultimately foreclosure. "The proposal addresses concerns that subprime borrowers may not fully understand the risks and consequences of obtaining these products, and that the products may pose an elevated credit risk to financial institutions," according to an announcement by the agencies, which consist of the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration.
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.

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