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February 2009 Archive


COFI at 4-Year Low
The cost of funds index fell to its lowest level in nearly four years.

Record Low Fannie Purchases
Business sank at Fannie Mae last month -- to the lowest level on record -- and delinquency continued to rise.

Mortgage Job Journal
As JPMorgan Chase & Co. wrangles with thousands of layoffs, it is also adding employees in some mortgage operations. Meantime, the recent closing of an FHA wholesale lender will end up costing more than 500 people their jobs.

PHH Reports Weak Q4
Fundings fell, delinquency deteriorated and losses lingered at PHH Corp. But the company reported signs of life in December. As the industry has all but abandoned adjustable-rate mortgage originations -- PHH still sees a significant share of ARM business.

Miami Firm Collapses After Line Lost
A Miami-area mortgage banking firm, which shut down its wholesale operations last summer, has closed its remaining retail operations -- leaving more than 100 employees out of work. Like other recent casualties, the company's demise was tied to the loss of a credit line.

Banking Is Tanking
The banking industry is in worse shape than it has been for more than a decade. Losses increased to a 19-year high, failures reached the worst level in 16 years and rising delinquency boosted the number of problem institutions. But losses slowed at thrifts.

Jumbo Warnings Intensify
Performance has been deteriorating more rapidly on non-agency prime jumbo loans that back residential securitizations than any other loan types. Ratings agencies have consequently taken negative actions on thousands of tranches recently.

FDIC Sells $1.5 Billion Loan Portfolio
The Federal Deposit Insurance Corporation has unloaded a giant portfolio of distressed loans.

Subprime Losses Accelerate
Nearly three-out-of-four subprime loans backing securitizations issued in 2005, 2006 and 2007 are expected to ultimately default. The resulting increase in expected losses has prompted downgrade warnings on nearly $700 billion in subprime residential mortgage-backed securities.

GMAC Adding 1,000 Jobs
GMAC Mortgage LLC is beefing up its servicing staff and adding production positions.

Mortgage Market Reverses Course
As mortgage rates edged higher, refinance activity tumbled -- contrasting last week's activity. The market's response to a massive budget unveiled by the Obama administration suggests mortgage rates may head higher.

Delinquency, Purchases Worsen at Freddie
Freddie Mac's secondary mortgage purchases sank last month, while delinquency surged.

Mixed Mortgage Outlook
A revised origination forecast is calling for a big increase in this year's refinances as a result of recently passed legislation. But the report also warned that service levels will be strained and rates will head higher by the end of the year.

Mortgage Fraud Concentrated at Few Banks
A new report suggests that more than half of suspected mortgage fraud activity is concentrated at just 10 financial institutions. In many cases, the institution did not learn about the fraud until the loan became a buyback.

Fannie Servicer Updates
More monthly data will be required from servicers that do business with Fannie Mae. In addition, the secondary lender is also looking at its servicers' disaster recovery plans.

FHA Limit Raised
The U.S. Department of Housing and Urban Development released temporary loan limits for mortgage insured by the Federal Housing Administration.

Merger Madness
A billionaire with a growing servicing business will add a bank to his mortgage-related holdings, while two other bank mergers involve recipients of the Troubled Asset Relief Program. Two of last year's big acquisitions advanced through the integration cycle.

Warehouse Influenza Claims Another Casualty
Another mortgage banker has been squeezed out of business by the loss of its warehouse line. A former rival that is on the prowl for potential acquisitions has stepped in to help the failed firm's stranded borrowers and has already hired some of its 200 former employees.

Chase Closes Warehouse Unit
JPMorgan Chase & Co. has shut down a warehouse lending division. While the move impacts relatively few employees, it comes at a time when many mortgage bankers are struggling to find financing for new originations.

More Mortgage Metrics
Data released by federal banking regulators showed that nearly one-third of mortgages outstanding were approved with less than full documentation. Around one-fifth had credit scores below 660, and more than 90 percent were serviced by a third party.

Reverse Limit Jumps
The most recent round of emergency economic legislation included an increase in maximum reverse mortgage amounts.

Trade Groups Weigh In on Mortgage Rescue Plan
While mortgage-related trade groups appear to be mostly behind the Homeowner Affordability and Stability Plan, a number of issues need to be clarified.

Net Branch Dies
Following the collapse of its wholesale subsidiary earlier this month, a New Jersey-based net branch operation is throwing in the towel.

Brokers Sue Over HVCC
Mortgage brokers claim that the new appraisal code places them at a severe disadvantage with their mortgage banking brethren and have filed a lawsuit to protect their interests. The lawsuit is the second filed by brokers in the last three months against a government entity over compliance issues that are crippling their ability to compete.

Obama Still Supports Private Banks
A joint statement from federal banking regulators indicated President Barack Obama still supports a private U.S. banking system.

Conforming Limit See Saws
After emergency economic legislation enacted under President George Bush last year temporarily pushed the conforming limit to $729,750, it fell back this year to $625,500 in high-priced areas. But emergency legislation under President Barack Obama has the limit higher again.

Secondary Valuations
Several firms have cropped up to provide distressed portfolio valuations. Meanwhile, two commercial mortgage portfolios are on the market, and a subprime servicing portfolio has traded hands.

Platform Options
Mortgage technology firms have been touting their platforms that they say improve communication, reduce transaction turn times and increase closings. A developing yardstick appears to be the number of service providers within a given network.

Wholesaler Pulls Back on Refis
Just two week ago, NetMore America Inc. -- which added more than 150 new employees last year -- was on track to originate $1.5 billion this year. Now, the company is laying off employees and curtailing third-party refinance business as its lending capacity has been exceeded.

Bank Casualties to Exceed 1,000
A banking analyst projects more than 1,000 bank failures during the next five years, while the Federal Deposit Insurance Corporation expects the cost of failures to exceed $40 billion. The latest mortgage-related casualties include an Oregon bank and an FHA wholesaler.

Junior Lien RMBS Downgraded
More than 175 residential mortgage-backed securities backed by second-liens, home-equity loans and home-equity lines-of-credit saw tranches recently downgraded by all three major ratings agencies. One of the agencies noted surging losses on junior lien collateral.

Reverse Mortgage Resources
A host of new reverse mortgage offerings aim to increase originations and inform originators and their prospective borrowers about the fast-growing sector. A recent magazine article about a reverse mortgage lawsuit was attacked by at least one reverse mortgage lender.

HVCC Help is Here
Several firms are vying to help mortgage companies comply with an appraisal rule that goes into effect on conforming loans in less than 90 days.

Lead Business Finds New Avenues
Earnings and lead volume were down last year at mortgage lead generation companies. But loan modification leads, reverse mortgage leads and refinance leads are helping to turn the business around this year.

Mortgage Market Brighter
Refinances surged, mortgage rates dropped and a new government plan is likely to hold interest rates down.

BoA Hiring 1,000
Bank of America Corp. is hiring originators and loan processors as it retires the Countrywide brand.

CPP Accountability
The focus of the Troubled Asset Relief Program has shifted from how much banks are receiving to what they are doing with the capital and how they are compensating their senior executives. Testimony on Capitol Hill, meantime, was mixed on the government's bank investments.

Executive Decisions
A range of mortgage-related entities saw changes at or near the top.

Treasury Fortifies Fannie & Freddie
As part of today's massive foreclosure plan announced by the U.S. Department of the Treasury, the Obama administration has taken steps to lower mortgage rates by boosting confidence in Fannie Mae and Freddie Mac.

Massive Foreclosure Plan Unveiled
The Obama administration plans to throw $75 billion at the country's foreclosure problem. As many as 9 million mortgages could be impacted, including conforming loans that have been paid on-time and at-risk mortgages. The plan -- which could be a boon for laid-off mortgage employees -- includes loan-to-value exceptions on conforming refinances, bankruptcy cramdowns and cash payments for successful modifications.
Homeowner Affordability and Stability Plan unveiled by Obama administration

Loan Modification Business is Busy
Several organizations agree that loan modifications have failed so far -- though barometers vary. Bank regulators plan to use new data to analyze the level of success. Meanwhile, an online merger is expected to increase the supply of modification leads and a number of firms are courting delinquent borrowers with help.

Cutting Losses on Loan Defaults
New government policies for loss mitigation were announced, while Freddie Mac disclosed plans to rely more on special servicers for high-risk loans. But when foreclosures can't be avoided, a number of companies claim to help servicers minimize their losses on real estate owned.

Lenders One No. 8 in Volume
Originations eased at Lenders One Mortgage Cooperative. But still, the company ranked as the No. 8 residential lender last year.

FHA Wholesaler Ending Operations
A wholesale lender that once claimed to be the 12th largest U.S. nonprime lender is calling it quits after an apparent failed attempt at government lending. The company was originally acquired from Regions Financial Corp. two years ago by a unit of British banking giant Barclays Bank Plc.

Credit Unions Scramble Following Lender's Collapse
A company that handled mortgage originations for more than 30 credit unions suddenly halted originations -- leaving its credit union customers scrambling to find alternatives for their pipelines of loans-in-process. A nearby competitor, however, is stepping in to provide help.

The Compliance Chronicle
Three compliance service providers are bragging about more than 200 new customers they collectively added last year. In other recent compliance news, one group is asking for changes to updated Regulation Z requirements while a New York firm is warning about complying with federal licensing requirements.

5 Financial Institutions Fail Friday
Including the closure of a bank in Oregon and a credit union in West Virginia, five financial institutions failed Friday.

'Bailout Tax' Angers Credit Unions
Federal credit unions are fighting to keep off their books nearly $5 billion in charges that regulators have assessed to bail out their largest "corporate" credit union. The charges could leave some smaller institutions insolvent.

3 More Dead Banks
Three financial institution casualties today bring to 12 the number of federally insured banks to fail so far this year. The failures are projected to cost the bank insurance fund more than $300 million.

Fannie, Freddie Join Moratorium Fray
For the second time in as many months, Fannie Mae and Freddie Mac have halted foreclosures. The latest moratorium is a bridge to an upcoming modification plan.

UK Knight Plans to Conquer US Wholesale Lending
Less than two years after launching his U.S. mortgage venture, Sir Richard Branson wants to conquer the country's ailing wholesale lending sector. But his firm is keeping mum about its lending capacity.

Virgin Money commits to broker business

Moratoriums Are In
Two financial giants announced plans to suspend foreclosures until details of a federal modification plan can be finalized -- a move advocated by at least one banking regulator. Meanwhile, a sheriff in Michigan has decided to take foreclosure matters into his own hands and has implemented an indefinite moratorium in his county.

New Reporting Requirements at Fannie
Fannie Mae wants to know more about the loan officers and appraisers on loans it acquires. New reporting will help the company better identify crooked players by analyzing mortgage fraud patterns by originator and appraiser.

Alt-A Slaughter Continues
Last week, downgrades were reported on nearly 4,000 tranches of Alternative-A mortgage-backed securities. This week, casualties exceeded 4,000.

IndyMac Servicer Ratings Upgraded
Among the few mortgage servicers to see upgrades recently is a company that is operating under government control.

Florida Regulators Seize Lender
An order has been issued against a Florida mortgage lender, its chairman and her two sons for allegedly illegally issuing mortgage securities.

Ginnie Growth Goes On
Business keeps getting better at the Government National Mortgage Association.

WA Firm Projects $1.5 Billion in '09 Originations
A mortgage banker based in the State of Washington expects originations to triple this year. Last year, the company added more than 150 employees.

Increase Expected in Originations, Interest Rates
The latest economic forecast from Freddie Mac has fixed mortgage rates rising one-quarter percent by the second quarter. Originations are expected to improve for the second consecutive year in 2010.

Mixed Mortgage Activity
Jumbo mortgage spreads tumbled as purchase activity fell to a seven-year low and declining fixed rates stood nearly 1.50% lower than last summer.

Foreclosures Ease
Helped by a temporary moratorium on agency loans, U.S. foreclosure activity declined in January. The rate of filings in Nevada far outpaced any other state, while Oregon has emerged as one the five worst states.

Lender Halts Wholesale
A 56-year-old mortgage firm is exiting its wholesale operations.

MetLife Originations Strengthen
Home loan fundings have picked up steam at MetLife Inc.'s new mortgage unit.

Mortgage Fraud Cases Double
Losses tied to mortgage fraud were in the billions of dollars last year as open fraud investigations nearly doubled from two years earlier, according to FBI testimony today. Losses from the current financial crisis are expected to dwarf losses from the savings and loan crisis.
FBI's Pistole testifies before Senate committee

Decline in Commercial Originations Accelerates
A deterioration in commercial mortgage production gained steam in the fourth quarter. 

Mortgage Insurers Eliminate Programs, Tighten Guidelines
Two big mortgage insurers will either restrict their guidelines or stop issuing policies altogether on third-party originations, construction-to-permanent loans and financing for manufactured homes. In addition, the number of restricted markets has jumped and mortgage insurance on condominiums has become more difficult to obtain.

National City's 2nd Lien Servicer Rating Downgraded
Despite improvements to servicing platform, National City Bank's second-mortgage servicer rating was downgraded.

Failed Lender's Employees Get Help From Countrywide
Countrywide Financial Corp. has taken steps to help employees of a failed Mississippi-based lender receive their final payroll checks. The company closed after Countrywide cut off its line-of-credit.

Recovery Plan in the Trillions
The Obama administration is scrapping the Bush administration's economic recovery plan and has unveiled a financial stability plan that includes further stabilization of the banking sector, expanded modifications and a revival of the secondary market. Execution of the plan will involve trillions of dollars.

Nonprime Ratings Upgraded at Green Tree
High-touch collections and effective technology led to an upgrade of Green Tree Servicing LLC's nonprime servicer ratings. The upgrade is the second in as many months.

Mortgage Employment Daily
As banking institutions lay off thousands of employees -- temporary staffing agencies, mortgage service providers and some lenders are hiring.

Jumbo Lender Funds $4 Billion in 2008
A small California bank with a focus on jumbo programs reported more than $4 billion in residential originations last year.

Lender Seeks Loans
An East Coast mortgage banker said it has $4 billion sitting in its general account available to fund commercial mortgages. Another $3 billion is available through financing.

U.S. Regulatory System Stressed
Dozens of U.S. financial institutions have recently faced the wrath of regulators. But financial services regulators are inadequately prepared to tackle the problems of today's financial markets, a new government report said.

Fannie Expands Investor Limits
Fannie Mae has increased the number of financed properties an investor may own. Reserve requirements, however, have been tightened.

Biggest Commercial Servicers
With its acquisition of Wachovia Corp., not only has Wells Fargo & Co. become the biggest residential originator -- but it now ranks as the biggest commercial mortgage servicer. Commercial mortgages held by banks appear to be performing worse than other types.

Mortgage Fraud Surges
Mortgage fraud reached a new high last year. Quarterly activity more than doubled from the prior period and was nearly 300 percent higher than a year earlier.

2 California Banks Fail
California banking regulators shut down two banks. Losses from the two failures are expected to cost the federal government more than $300 million.

Regions Assumes Deposits of Failed GA Bank
Georgia banking regulators seized a small institution today. Regions Bank has agreed to assume the deposits of the failed bank and acquire a small portion of its assets.

Class Action Tsunami
A growing number of investor class actions are increasingly being filed by investors of mortgage-backed securities.

The Cramdown Journal
A number of varying entities have varying opinions about proposed legislation that would empower bankruptcy judges to modify mortgages on primary residences. Other activity in the loan modification business includes an increase in monthly modifications on agency mortgages.

Obama Administration Adjusts Mortgage Employment Data
The first monthly employment data reported by the Obama administration reflected a downward adjustment of more than 50,000 mortgage-related jobs.

Lender Sues Former Executives
A Wisconsin-based mortgage company has sued its former management team. The defendants are accused of secretly operating their own mortgage business and warehouse lending facility while they were still responsible for running the plaintiff firm. Resulting losses are alleged at more than $15 million.

Credit Line Loss Kills Company
A 20-year-old Mississippi-based company with nearly 300 employees operating out of offices in five states halted originations and plans to file bankruptcy after losing its line-of-credit. But around 70 Tennessee employees hope they already have a new home.

Rates, Refis Rise
Stronger-than-expected economic news has pushed mortgage rates higher. Loan applications, fueled by a surge in refinance activity, also increased. But the share of borrowers applying for adjustable-rate mortgages fell to an all-time low.

American Home Expands Servicing Portfolio
American Home Mortgage Servicing Inc. increased its servicing portfolio by 45 percent with a purchase from a Citigroup Inc. subsidiary.

Mortgage Executive Daily
Top executive changes at U.S. financial institutions used to be a rare event. But battered financial markets and a stinging economy have created a nonstop stream of resignations, retirements and replacements.

The Earnings Journal
A sour economy has many of the nation's mid-sized banks reporting big-sized losses.

Net Branches Focus on FHA and Purchases
Two net branch companies indicated that the surge in business during December involved more purchase transactions than refinance transactions. A New York-based firm reported that it added a dozen new branches in the last quarter, while a Utah-based company is luring new recruits with broad support for government originations.

Bankruptcies Keep Climbing
The first month in 2009 saw an increase in bankruptcy filings.

Lenders Plead for Help on Warehouse Lending
Mortgage bankers testified before Congress that U.S. warehouse lending capacity has declined by 90 percent over the past year -- a change that threatens the mortgage sector.

ResCap Production Declines
Loan fundings continued to decline at Residential Capital LLC. But quarterly losses eased and its parent reported a big quarterly profit tied to massive gains from a recent corporate bond exchange.

PNC to Cut 6,000 Positions
PNC Financial Services Group Inc. plans to eliminate nearly 6,000 jobs now that it has taken over National City Corp. The acquisition makes PNC a player in the residential mortgage market.

Nearly 4,000 Alt-A Tranches Downgraded
Deteriorating performance on Alternative-A mortgages prompted two ratings agencies to recently downgrade nearly 4,000 classes from Alt-A securitizations.

BoA Servicer Ratings Downgraded
Concerns over Bank of America, N.A.'s, financial condition led to servicer ratings downgrades at the banking behemoth and its mortgage subsidiary. The actions impacted servicer ratings for prime mortgages, Alternative-A loans and home-equity lines-of-credit.

Bank Tightening Eases
The share of banks that continued to tighten their mortgage lending guidelines has begun to diminish, a new government report indicated. Last year's shutdown of the commercial mortgage securitization markets pushed lending higher at some banks.

SunTrust Staying in FHA Wholesale
SunTrust Mortgage is not suspending its wholesale FHA programs -- though a newsletter from one of its account executives suggests otherwise. The company is, however, adjusting it pricing and evaluating the mortgage brokers it does business with.

MTA Lowest Since '04
The monthly Treasury average fell for the 21st consecutive month to its lowest level since September 2004.

Ginnie Volume Continues Higher
As the monthly volume of mortgage-backed securities issued by the government sponsored enterprises tumbled from a year earlier, Ginnie Mae saw a healthy increase.

Biggest U.S. Mortgage Lenders
Residential mortgage originations during 2008 at Wells Fargo & Co. were higher than at any other U.S. lender. Rankings, which factored in home-equity activity, were shaped by last year's mega-mergers.

Freddie Boosts Fees
Freddie Mac has increased post-settlement delivery fees on various programs including loans secured by condominiums, cashout transactions and mortgages with higher risk characteristics. The move was made as distressed real estate markets are expected to worsen.

3 Banks Fail, 1 Ends Originations
As bank regulators shut down three more banks, one struggling institution has shut down its mortgage lending operations.

Cashouts Contract
Quarterly cashouts accounted for a diminishing share of refinance transactions as cashout dollar volume sank. Declining mortgage rates influenced cashout patterns.

M.I. Volume, Defaults Surge
While 2008 proved to be a dismal year for mortgage insurers, volume improved in December and appears to be headed even higher. New defaults, however, soared.

COFI Reverses Course
For the first time in four months, the cost of funds index headed lower.

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