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February 2008 Archive


COFI Down Again
The Cost of Funds Index was down for the fourth consecutive month.

Mixed Results at PHH
PHH Corp. saw quarterly mortgage originations ease, delinquency rise and mortgage employee count drop. But earnings improved and its private label business is poised to grow.

Foreclosure Prevention Activity Soars
As hundreds of millions of dollars are poured into foreclosure prevention programs, public and private entities by the dozen are promoting products and services to help delinquent borrowers deal with pending foreclosures.

Record Mortgage Insurance Defaults
Mortgage insurance defaults increased for the sixth straight month to the highest level on record. The volume of new business, however, was mixed compared to the prior month and prior year.

Countrywide Accused of Inflating Foreclosure Fees
A unit of Countrywide Financial Corp. has been sued for allegedly inflating foreclosure expenses. Plaintiffs are seeking class action certification.

Bankruptcy Modification Bill Rejected
Following a veto threat by President Bush, the U.S. Senate has backed off legislation that would enable bankruptcy judges to modify mortgages.

First Franklin Winding Down
Subprime lender First Franklin Financial Corp. will wind down operations, insiders are saying.

Advancements in Mortgage Technology
Recent technology offerings promise to reduce costs for originators and servicers. In addition, technology is emerging that focuses on delinquent loans and distressed portfolios.

30-Year Yield Soars, Apps Tumble
Although the 30-year fixed rate yield soared this week, it may head lower. Loan applications responded to rising rates by contracting.

Alt-A Liquidity Worsens
Thornburg Mortgage Inc. is facing margin calls on its Alt-A investments.

200-Branch Operation Closing
A Kansas-based bank is shutting down a net branch subsidiary with around 200 offices. But some branch managers are baffled by conflicting messages from the company as well as another mortgage lending subsidiary the bank recently opened.

Fannie Earnings, Purchases Deteriorate
Fannie Mae saw its secondary purchases tumble last month and delinquency rise. While it reported a massive quarterly loss, its regulator was so pleased with the timeliness of its financial reporting that it has agreed to lift the company's portfolio caps.

Wholesaler Closes While Another Opens
Two separate banking mergers in the Midwest advanced, while a new wholesale lender was launched. Meanwhile, another wholesaler has closed down.

Subprime Investors Misled by Ratings
The comptroller of the currency said investors hit hardest by the subprime meltdown put too much confidence in ratings. He called on ratings agencies to do a better job of clarifying the expected performance of asset-backed securities they rate and suggested investors should rely more on their own risk analysis.

Fannie Updates Prices
Fannie Mae has issued pricing updates that are effective next week.

Layoffs Continue in California
Nearly 1,000 mortgage jobs have been eliminated in California so far this year. The level of activity suggest the pace of layoffs has fallen significantly since last year.

Subprime, 2nd Lien & Commercial MBS Downgraded
As more than $8 billion in subprime residential mortgage-backed securities were downgraded, a number of classes from second lien and commercial MBS also saw negative ratings actions.

Bush Opposes Bankruptcy Modifications
The Bush administration is threatening to veto a bill that would enable bankruptcy judges to modify mortgages.

Servicer Ordered to Halt Mass. Foreclosures
A former subprime lender has been prohibited from foreclosing on some of its Massachusetts borrowers.

Bank Earnings Sink, Delinquency Soars
As quarterly bank earnings tumbled to the lowest level in more than 15 years, an increase in delinquency was the highest on record. The deteriorating activity was attributed to current housing and credit conditions which are expected to continue.

Foreclosures Resume Rise
A New England state saw just one foreclosure filing last month, giving it the lowest foreclosure rate in the country. But the figures weren't so good for more populated areas of the country -- where rising foreclosures are being fueled by falling values.

Banks Face Orders, Contraction & Expansion
The wholesale lending unit of one bank is closing down while another bank is expanding its presence in the Southeast. And while a government insurance fund takes actions against a number of banks, a ratings agency is taking actions against bond insurers.

140 Florida Layoffs
Morgan Stanley has begun executing its plan to scale back its U.S. mortgage workforce.

Florida Lender Cuts 75 Jobs
A Florida-based mortgage banker is adopting a new business model and plans to eliminate 75 positions by July.

Weakest Mortgage Insurers
A deteriorating mortgage market has led to negative ratings actions on the debt of the weakest mortgage insurance companies -- which aren't expected to be healthy again for one to two years. Policies written on bulk acquisitions have disproportionately contributed to problems in the sector.

Sales Steps
A successful salesperson starts with a vision then creates a blueprint, according to the latest sales book reviewed by MortgageDaily.com. A focused execution completes the sales process.

$6 Billion in Subprime Downgrades
The last few days have seen ratings downgrades on over $6 billion in subprime residential mortgage-backed securities. A GMAC commercial deal saw the only upgrade.

2 Wholesalers Close Shop
The closing of two wholesale lending operations topped the latest corporate activity this week.

Firm Touts Growth
Despite an industry slump, one West Coast mortgage banker is anticipating originations this year will come in higher than last year. Custom technology and attention to customer service were credited for making the optimistic outlook possible.

Indiana Layoffs at Citi
Nearly 200 Indiana employees will be laid of from Citigroup, though some will may find other positions at the company.

Foreclosure Prevention Advances
As the modification process becomes more automated, HOPE NOW members and another industry group are making it easier for delinquent borrowers to contact or deal with their servicers. Maryland's governor announced several initiatives to combat rising foreclosures, while California consumer groups are calling for the acquisition of Countrywide Financial Corp. to include provisions to protect past due borrowers.

Freddie Boosts Delivery Fees
Freddie Mac advised its approved sellers and servicers of further fee increases and tighter guidelines.

FHA Limits May Rise in March
Borrowers may be able to apply in March under the expanded loan limits for mortgages insured by the Federal Housing Administration.

Leads for FHA Loans in Demand
Activity on mortgage leads for government-insured mortgages is surging. Meanwhile, a Texas-based lead generator claims more than $1 billion in loans have been funded from its leads in just over a year, and a Pennsylvania-based company is selling a service it says eliminates the need to buy mortgage leads.

Over $7 Billion RMBS Downgraded
Residential mortgage-backed securities saw tranches for more than $7 billion downgraded as a result of new loss forecasting assumptions for subprime deals. Activity was mixed on ratings for commercial deals.

ARMs Attractive as Fixed Rates Soar
Fixed rates soared and applications tumbled. But the share of adjustable-rate applications was pushed higher.

Freddie Purchases at Lowest Level in Years
Freddie Mac saw its monthly purchases drop to the lowest level in at least six years, while delinquency was up for the seventh straight month.

Michigan Firm Sees Success
A Michigan-based mortgage company says it is on pace this year to originate $1 billion in loans and hire 50 people. In addition to picking the right products, the firm operates a real estate brokerage, has lending relationships both as a broker and a mortgage banker and is able to quickly close loans in a squeeze, according to the owner.

Automated Operations
A wholesale lender has acquired the technology it needs to provide mortgage brokers with automated underwriting for a host of loan programs. And originators can find free mortgage calculators for their Web sites among the latest mortgage technology offerings.

Community Bankers See Acquisitions
A survey of community bankers indicate many expect to make an acquisition.

Fund Established for Displaced CA Workers
A $5.6 million fund has been established by the federal government to help former employees of California mortgage companies.

Thrifts in the Red
U.S. thrifts had a record quarterly loss of more than $5 billion as originations eased and delinquency climbed.

Foreclosed Borrowers Destroy Homes
Vindictive borrowers who have lost their homes to foreclosure have left mortgage lenders with properties stripped of all fixtures, destroyed yards and hungry Dobermans.

Executive and Earnings Shakeups
U.S. mortgages continued to destroy corporate earnings domestically and abroad. The latest turmoil has left one firm facing a class action lawsuit and cost one chief executive his job.

Accredited CEO Out
After guiding the company through the subprime storm of the century, Accredited Home Lenders Holding Co. announced its co-founder will step down.

Reducing Foreclosures
In addition to funds that have been made available for foreclosure prevention in the most desperate U.S. cities, some New Yorkers will benefit from funds donated to help them after a foreclosure. Other foreclosure prevention activity includes a proposed change to the Community Reinvestment Act that would include areas with high foreclosure rates and $200 million in loans earmarked for struggling Illinois borrowers.

$17 Billion in Subprime RMBS Downgraded
Changes to subprime loss assumptions led to another wave of downgrades on more than $17 billion in residential mortgage-backed securities. But there were some upgrades to commercial tranches.

Biggest Online Mortgage Advertisers
Mortgage lenders are disappearing from the ranks of the biggest Internet advertisers. But spending by mortgage lead generators and their parent companies is keeping them placed prominently on the list.

Credit Reporting Liability
An acquisition by Fifth Third Bank last year left thousands of borrowers with errors on their credit reports. At least one borrower is suing over allegations that a more than 150 point drop in his credit score cost him at least $80,000 -- despite one Federal Reserve Bank's findings that Fifth Third acted satisfactorily.

Broker Sued for $6 Million in Fraud
A Maryland-based wholesale lender has sued a Virginia-based mortgage broker over claims it fabricated and altered files on nearly $6 million in mortgages. A judgment of more than $15 million is sought.

Wholesalers Tout Subprime, Hard Money & YSPs
Wholesale lenders are offering programs that include 80 percent loan-to-value with stated income, refinances for borrowers in foreclosure or Chapter 13 bankruptcy, and rebates up to 3 percent. Other subprime and hard money products are also being marketed. One wholesaler is training mortgage brokers how to originate commercial loans.

Countrywide Delinquency, Production Worse
The bad news at Countrywide Financial Corp. is that delinquency rose for the tenth consecutive month, foreclosures have nearly doubled over the past year and home equity, nonprime and commercial originations have all but disappeared. The good news is that government lending is soaring and its pipeline of loans in process has surged.

Over $30 Billion in Subprime Downgrades
While securitizations backed by second liens, home equity lines and commercial mortgages all saw recent downgrades, the activity was completely overshadowed by a massive wave of subprime downgrades. On one of the subprime deals, one-third of the loans are at least 60 days past due, while cumulative losses on another deal are expected to exceed 40 percent.

Nearly 300 Subprime Lawsuits in 2007
A new report indicates nearly 300 subprime-related lawsuits were filed last year -- with around half of the suits filed in just two states. The report said subprime cases may eventually surpass the number of cases filed in the savings and loan crisis by a wide margin.

Fannie Accused of Illegal Escrow A/C Earnings
A lawsuit filed nearly four years ago against Fannie Mae now faces the possibility of being certified as a class action. The plaintiffs allege the company illegally took millions of dollars in interest on escrow funds for itself instead of providing them to apartment developers, as required by the U.S. Department of Housing and Urban Development.

Credit, Appraisal & Servicing Technology
Property valuations have been made easier through two technology providers while an origination software provider is touting $187 billion in activity through its system. One credit vendor has created an online seminar that it says will help originators understand the essentials of credit scoring.

Mortgage Activity Worse
Fixed rates rose as 1003 applications declined.

Losses Continue
International losses from U.S. subprime mortgages continue to mount. Domestically, mortgage insurer losses have prompted Freddie Mac to make operational changes.

Mixed Bag for Mortgage Leads
FHA mortgage leads and warm leads are among the latest offering touted by lead generation companies. Meanwhile, one major lead generator had a quarterly charge of nearly $500 million.

Morgan Stanley Cuts 1,000 Mortgage Jobs
Morgan Stanley announced it would eliminate around 1,000 mortgage jobs. The move follows nearly $10 billion in mortgage-related charges.

FHA, Conforming Limits Boosted
President Bush has signed into law emergency legislation that will temporarily increase the conforming limit by 75 percent. In addition, the limit for loans insured by the Federal Housing Administration will also see a temporary boost.

$729,750 limit effective July 1 to Dec. 31

Downgrades Hit Servicers, Bond Insurers
Two mortgage servicers had their ratings downgraded because of volatile mortgage market conditions, while weakening bond insurer strength led to negative actions on the ratings of over 100 residential mortgage-backed securities classes. Commercial MBS, however, saw mixed activity.

Worst Foreclosure Metros
In the Detroit area, nearly one out of every 20 households had a foreclosure filed last year -- the worst of any metropolitan area. It was a California area, however, that saw the highest number of filings.

Chase Still Sees Subprime Opportunities
JPMorgan Chase & Co.'s top executive said the company is still buying subprime and jumbo mortgages, though he warned the economy is going to get worse.

Reverse Production Continues to Climb
The latest quarter saw reverse activity continue to climb despite a drop in equity.

Firm Fights Originator Lawsuit
A Missouri-based mortgage company has been sued by former loan originators in three states who claim they are owed unpaid wages and overtime.

M.I. Companies Lower LTVs
Two mortgage insurers are cutting back on the maximum loan-to-value for loans they will insure.

Modification Plan Expanded
The Bush Administration announced that mortgage lenders have agreed to expand a fast track modification plan from just subprime borrowers who are current on their loans to Alt-A, prime and subprime borrowers who are 90 days past due.
Project Lifeline announced

Profit at REIT Contrast Mortgage Sector Losses
As earnings at companies including IndyMac Bancorp Inc. continued to be pounded by mortgage-related charges, one mortgage company reported an increase in net income.

Direct Mail Advertising Falling
Mortgage lenders have been backing off direct mail advertising.

HUD Makes FHA Proposals
The Secretary of the U.S. Department of Housing and Urban Development warned that without higher premiums for higher risk borrowers, the Federal Housing Administration could be driven into insolvency in the current mortgage market environment. He opposes less stringent requirements proposed for mortgage brokers to originate government-insured loans and wants to do away with down payment assistance programs funded by sellers.

More Foreclosure Plans Emerge
Countrywide Financial Corp. announced plans to help a wide array of subprime borrowers avoid foreclosure, though other foreclosure prevention programs were also announced by private and government organizations.

Originations Boosted by Technology
Mortgage companies are improving originations and closings through self generated leads, credit reporting services that can determine automated underwriting conditions and pricing engines that generate credit reports.

2007 Mortgage Litigation Report
Mortgage lawsuits last year were dominated by investors accusing companies of financial fraud, according to a new mortgage litigation report. Other types of lawsuits frequently filed against lenders involved mortgage fraud, secondary marketing and employment.

Cashout Transaction Volume Tumbles
The dollar volume of cashouts during the latest quarter fell by more than half from a year earlier.

Wholesaler Hiring, Growing
A California-based wholesale lender should have no problem finding qualified employees for its planned expansion this year.

Foreclosure Prevention Data, Resources
Two reports have been released on foreclosure prevention detailing recent activity and projecting the impact of proposed legislation. Meanwhile, resources for delinquent borrowers continue to expand.

Servicer Sued Over Fees, Hazard Policies
A GMAC mortgage subsidiary has been sued for allegedly charging illegal fees and force placing homeowners insurance. Attorneys for the plaintiffs say the case is a nationwide class action.

MBS Downgrades Spread
Securitizations backed by prime jumbo loans and second liens saw several classes downgraded, while nearly $9 billion in collateralized debt obligations were impacted by downgrades on subprime residential mortgage-backed securities. Meanwhile, ratings were mixed on commercial MBS, which performed well last year but may deteriorate this year.

Regulators Call for Tighter GSE Oversight
Among concerns that the regulator of Fannie Mae and Freddie Mac has about raising loan limits at the two government sponsored housing enterprises is the level of debt they guarantee exceeds that of the United States. His calls for tighter oversight of the two companies were supported by a Treasury Department official in congressional hearings today.

Firms Manage Earnings, Liquidity
Several financial firms continue to grapple with mortgage-related losses and liquidity.

Purchase Apps Up
Mortgage rates were mostly unchanged during the latest week, though purchase activity picked up.

Employee Claims Fired for Reporting Fraud
A former SunTrust Banks employee alleges in a lawsuit that he was fired in retaliation for alerting superiors to occurrences of mortgage fraud and other illegal activities -- a violation of the state's Whistleblower Act. The suit is one of two filed since December alleging a large U.S. lender fired an employee for reporting fraud.

Federal Licensing Bill Proposed
A Democratic Senator and a former Bush administration Republican have come together to propose federal licensing for mortgage brokers and lenders.

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.

Jumbo Activity Stabilizes
Third quarter securitizations of jumbo mortgages held up, according to a new ratings agency report. And while a major jumbo lender is optimistic about upcoming activity, activity at one luxury home builder suggests further softening is ahead.

MTA Continues Lower
The Monthly Treasury Average was lower again -- the ninth consecutive month it has fallen.

Technology Integrates
Technology providers for financial services firms continue to integrate multiple services into single platforms. Among the latest activity is an enhanced ability to analyze loan modifications, the integration of a customer relationship management and loan origination system, and the addition of online payment options for transaction platform providers.

MBS Downgrades Accelerate
The ratings agencies began implementing new loss assumptions that recently resulted from deteriorating loan performance. Among the impacted deals were those backed by prime, Alt-A, subprime, home equity and second lien mortgages.

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.

Foreclosure Prevention Resources Continue Expanding
As millions of dollars flow into foreclosure prevention programs nationally, other efforts also include workshops, booklets and resource centers. But despite the collaborative environment, two organizations are battling over what is being done by servicers to avoid foreclosures.

ResCap Production Tumbles
Residential Capital LLC's quarterly originations were down by nearly one-quarter. The company had a quarterly loss of nearly $1 billion -- though that was a significant improvement over the prior period.

Servicers Short on Modifications
Servicers need not be concerned about potential legal liability to investors based on any loan modifications they make, according to the chairman of the Federal Deposit Insurance Corporation. But they might have to worry if they continue to deal with delinquent borrowers as they have been.

Biggest Commercial Servicers
The biggest servicer of commercial mortgages serviced more than 30,000 loans for more than $400 billion.

Corporate Struggle Goes On
Commercial real estate lending is emerging as an area where losses are growing -- prompting one regulator to take steps to head off problems. And Countrywide Financial Corp. is facing opposition to its proposed acquisition by Bank of America Corp.

Banks Offer Gloomy Outlook
Despite tighter guidelines on mortgage loans, banks are seeing less demand. Meanwhile, while they plan to offer delinquent borrowers more options to keep their homes, many banks expect more borrowers to walk away from their properties.

Commercial Originations Off
A new report indicates commercial mortgage originations fell. The decline was led by a drop in securitizations -- which are projected to tumble by more than 50 percent this year.

Groups Debate Foreclosure Solutions
A basic mortgage that would be offered to everyone unless they choose to opt-out and a basic mortgage disclosure form that would be provided to all borrowers were among the proposals presented to U.S. senators at a hearing on foreclosure prevention Thursday.

Fraud Exceeds $4 Billion in 2007
Mortgage fraud activity jumped past $4.0 billion last year -- with California and Ohio leading the way.

Negative Ratings Actions on Over $139 Billion MBS
A third major ratings agency has taken sweeping negative actions on subprime residential mortgage-backed securities from 2006 and 2007. Meanwhile, commercial activity also deteriorated.

Offices & Apartment Deals Arranged
Among the latest commercial mortgage loans tracked by MortgageDaily.com were $150 million in multifamily mortgages and $132 million in loans secured by office buildings. In addition, a Canadian company financed a New York industrial property.

photo of Dallas office building

Beazer Mortgage Done
Embattled Beazer Mortgage Corp. is calling it quits.

COFI Down Again
The Cost of Funds Index fell for the third consecutive month.

Mortgage Jobs Continue Contraction
Driven by more industry consolidations and closings, mortgage jobs declined by more than 5,000 in December from 30 days earlier -- though they were down by more than 100,000 from the prior year.

Countrywide Accused of Firing Whistleblower
A former regional vice president of a Countrywide Financial Corp. affiliate has filed a lawsuit against the company alleging that he was fired for alerting executives that he wouldn't approval fraudulent loans.

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