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May 2009 Archive


Another Record Low for COFI
After reaching the lowest level on record, the Cost of Funds Index set another record.

LOS Offerings Packed With Features
Providers of loan origination systems continue to load additional services on to their software. Many of the ancillary features are compliance-related, though one consolidates marketing, point-of-sale and closing with the LOS platform. Two others incorporate mortgage fraud prevention and loan servicing.

HUD Clarifies Tax Credits
The U.S. Department of Housing and Urban Development has clarified how tax credits under recently passed legislation can be monetized in home purchase transactions.

Foreclosed Borrower Terrorizes Loan Officer in Movie
Christine Brown thought she'd seen the last of an elderly woman whom she denied for an extension on her mortgage loan. But the enraged borrower had plans for a horrific retaliation.

Drag Me To Hell opens today

M.I. Volume Down, Defaults Ease
Mortgage insurance volume fell last month and was off more than half from last year. But defaults improved.

Freddie Business Weaker
Monthly business fell and delinquency rose at Freddie Mac.

GMAC Board Elects New Chairman
Three directors were added to GMAC Financial Services' board -- which elected a new chairman.

ARM Improves, Apps Off
Variable rates declined, but fixed rates rose and new loan applications dropped.

Mixed Performance at Credit Unions
As loan performance and returns deteriorated at the nation's credit unions -- assets, membership and deposits grew.

Record U.S. Delinquency
Quarterly delinquency on residential loans jumped nearly 125 basis points to the highest level on record. New foreclosure filings were up by more than one-fifth.

Chase Adding Hundreds of NY Mortgage Jobs
JPMorgan Chase & Co. is hiring hundreds of employees in New York.

Financial Firms Fight Class Actions
New investor class actions include two filed on behalf of mortgage-backed securities certificate holders and one accusing a Puerto Rican institution of fraud. Two class action settlements were reached, and five cases against a mortgage insurer were consolidated into one.

Bank Earnings, Delinquency Higher
Quarterly earnings increased at institutions insured by the Federal Deposit Insurance Corporation. But so did delinquency.

TILA, H4H Updates
The Helping Families Save Their Homes Act of 2009 includes a new requirement for assignees of certain mortgage loans to provide a notice to the borrowers.

10-Year Yield Surges
Mortgage rates are being pushed higher by heavy issuance of U.S. debt.

Improvement in Subprime Performance Continues
Subprime delinquency improved for the second consecutive month, while the number of subprime repossessions has fallen 42 percent from last year. New subprime foreclosure filings were down from the prior month and the prior year.

Mod Success Hurt By Borrowers Who Abandon
Capable borrowers are abandoning their loan obligations on underwater properties -- a trend that is expected to grow if home values keep falling. The deterioration could lead to defaults on as many as three-in-four loans after they are modified.

PennyMac Plans IPO
PennyMac plans an initial public offering for a newly created entity that will invest in residential assets.

Biggest Reverse Originators
The same two lenders that dominated first-quarter residential originations also dominated home-equity conversion mortgage production last month.

FHA Renewal Process Changes
The U.S. Department of Housing and Urban development is making changes to the annual renewal process for lenders approved to make loans insured by the Federal Housing Administration.

The Regulatory Insider
Among several recently issued regulatory orders were two cease-and-desist orders and one prompt corrective action. The regulator of the country's credit unions, meanwhile, wants a say in the supervision of huge financial institutions.

MBS, Foreclosure Lawsuits Jump
Investors of mortgage-backed securities led an increase in mortgage-related litigation, according to the First Quarter Mortgage Litigation Report. An increase in the number of foreclosure lawsuits also contributed to the rise in legal activity.

2 IL Banks Fail
Late Friday, federal and state banking regulators seized two Illinois institutions. In all, last week's bank failures are expected to cost the Federal Deposit Insurance Corporation more than $5 billion.

The FHA Report
Actions against more than 100 lenders were not enough, according to a report on the oversight board for lenders that originate loans insured by the Federal Housing Administration. In other FHA news, one program reportedly uses a single loan to finance a home purchase and up to $35,000 in improvements.

$15 Billion Government Package for GMAC
GMAC Financial Services has gained access to more than $15 billion from the U.S. government -- which now sits on its board.

BankUnited Failure is Biggest This Year
On most Fridays lately, the Federal Deposit Insurance Corporation assembles its teams of FDIC agents and takes over banks in all parts of the country. On the rare occasions when larger institutions are involved -- like Washington Mutual Bank -- the agency takes control on a Thursday. The FDIC seized control of BankUnited, FSB, Thursday.

Modification Business Gets Litigious
Pennsylvania has issued cease-and-desist orders against six out-of-state modification companies, while the operator of a modification Web site that appears to be government related is facing legal action in a federal court. A mortgage servicer is accused in a California lawsuit of slandering a firm that was negotiating a modification for one of its borrowers.

FHA Mfg Housing Guidelines Updated
The U.S. Department of Housing and Urban Development issued updated lending guidelines for manufactured homes financed with loans insured by the Federal Housing Administration.

10-Year Treasury Yield Soars
Fixed rates eased during the past week but are likely to jump based on a surge today in the 10-year Treasury yield. As indices used for adjustable-rate mortgages tumbled, the yield on the one-year ARM jumped. One forecast calls for mortgage rates to begin a steady ascent next quarter as refinance share begins a steady descent.

Flurry of Florida Mergers
As is the case with the temperature, mortgage-related mergers in Florida are heating up -- with four deals closed or announced since last month. One firm is looking for mortgage brokers. Merger transactions were also identified in three other states.

Mortgage Bill Now Law
New legislation signed into law today improves the Hope for Homeowners Program, increases protections for servicers and makes it harder for bad actors to originate loans insured by the Federal Housing Administration. It also makes it easier to modify FHA loans.

Flood of Mortgage Fraud Cases Expected to Continue
The number of mortgage fraud cases being investigated by the Federal Bureau of Investigation increased by more than one-third last year, and no signs of easing are on the horizon. But the chief of the agency said it is deploying new methods and leaning on old ones to fight mortgage fraud.

FBI director testifies before House committee

U.S. Originations to Double
A surge in conventional activity pushed quarterly U.S. originations higher, but an increase in government business is expected to lead an annual increase. Third-quarter residential originations are expected to double from the first quarter.

1st Met Converting to Mortgage Banker
With the potential imposition of limitations on yield spread premiums and limitations imposed by the Home Valuation Code of Conduct, 1st Metropolitan Mortgage said now is the perfect time to evolve from a mortgage broker to a mortgage banker as it is acquired by a Dallas-based firm. Once the deal is done, 1st Metropolitan plans a recruitment campaign for mortgage brokers.

Boardroom Battle Brewing at PHH
The parent of PHH Mortgage is battling with an investment group that wants to replace its chairman and strip its president of his directorship. The group is proposing its own directors, including the former chief executive officer of Freddie Mac. But PHH claims "serious questions" cloud the record of the former Freddie executive.

Distressed Portfolios Finding Buyers
Two California investment funds -- including one launched today -- are targeting distressed residential portfolios. In other secondary news, mid-sized banks are being targeted for a new warehouse lending platform, and Freddie Mac outlined revised requirements for conforming jumbo loans.

New Venture to Acquire REOs
A revolving loan fund has been established to acquire foreclosed properties. Some of the country's biggest mortgage companies are working with the new venture.

Cleveland Appeals Subprime Judgment
A federal judge has dismissed a lawsuit filed by the City of Cleveland against several investment bankers that allegedly helped create the city's foreclosure crisis by securitizing risky subprime loans. The city has since appealed the judgment.

NC Settles With Parent of Defunct Mortgage Unit
The parent company of a mortgage lender that shut down last year will pay $2.5 million to settle a lending investigation by North Carolina regulators. But a federal investigation into mortgage fraud on government originations lingers.

Membership Grows at 'Net Lender'
Lenders One Mortgage Cooperative -- which acts as sort of a net branch for mortgage bankers -- reported continued growth in its membership.

Regulatory Compliance Made Easy
Several trade groups are asking the chief of the U.S. Department of Housing and Urban Development to reconsider his decision to move forward with a new rule even though pending legislation could suspend it. The government is offering help for some companies impacted by the Red Flags Rule. Meanwhile, a host of service providers are eager to help mortgage lenders comply with a host of other regulations.

Loan Search Technology Proliferates
Prospective customers are being given one month to try out the loan pricing technology of one provider. Another offering enables originators to provide a loan search function on their own Web sites -- a feature that generates mortgage leads. A California company claims its pricing technology helps loan officers maintain mortgage compliance.

Treasury Reports Biggest Lenders
The biggest recipients of the Troubled Asset Recovery Program increased quarterly residential originations by $134 million. Even monthly originations jumped. But the news wasn't so good from commercial mortgage production or for purchases of mortgage-backed securities.

Ailing Bank List
Regulatory actions against U.S. financial institutions increased during the latest quarter. Many of the banks that faced actions also face possible failure.

2 Casualties
So far today, one financial institution has been seized. Earlier this month, a small commercial mortgage unit was closed by a Wells Fargo & Co. subsidiary. The closing of more than 70 mortgage-related operations have been tracked to date during 2009.

MGIC Strategy Lands Another Insurer In Court
MGIC Investment Corp. is considering a move that would avoid a break in new mortgage insurance business by splitting up into a good insurer and a bad insurer. But another insurer is being sued by several major financial institutions over a similar move.

Executive Shakeups Spread to Boardrooms
Three firms replaced their chief executive officers and four firms elected new chairmen for their boards. The death of the former Federal Deposit Insurance Corporation chairman drew condolences from bankers and from his successor.

Recent mortgage executive activity
Fidelity Acquiring Servicer
Fidelity National Financial Inc. will acquire a mortgage loan servicer.

Jumbo Performance Rapidly Deteriorating
As home prices continue to fall, performance on prime jumbo loans backing residential mortgage-backed securities is rapidly deteriorating. Jumbo mortgages securitized last year are expected to suffer the greatest losses.

Bank Settles Allegations YSPs Higher for Hispanics
A $1 million settlement by a Maryland bank marks the second recent action by federal regulators tied to firms accused of earning higher yield spread premiums on mortgages to Hispanics.

ARMs Out, Refis & 15-years In
Adjustable rates fell but still sit higher than fixed rates, which rose. A widening spread between 15-year and 30-year fixed rates is making the 15-year more attractive. Refinances continue to drive 1003 activity.

1st Metropolitan Sale
As it closes branches, reduces headcount and battles litigation in three states, 1st Metropolitan Mortgage has agreed to be acquired by a Texas firm.

Banks Keep Cutting Jobs
U.S. financial institutions have notified several states about more than 2,000 upcoming layoffs.

Commercial Fundings Continue Deteriorating
The volume of commercial mortgages financed through securitizations has come to a virtual standstill. Overall, commercial mortgage originations have fallen nearly 90 percent since their peak in 2007. But one bright spot was mortgage production for industrial properties -- which shot up from the fourth quarter.

Record F/C Rate, But REOs & CA Improve
The rate of foreclosures reached the highest on record last month as filings increased. But activity in California, as well as U.S. repossessions, improved from the previous month.

FHA Originations Continue to Skyrocket
Origination of loans insured by the Federal Housing Administration tripled last year, and this year's activity is projected to more than quadruple from just two years ago. At the same time, credit quality has substantially improved.

Conforming Credit Union Originations Surge
Fannie Mae business at U.S. credit unions has more than doubled.

Production Triples at Community Banks
Residential originations at a secondary mortgage company that caters to community banks have tripled over the past year.

Government DPA
Borrowers will be able to use the first-time homebuyer tax credit toward their downpayments on loans insured by the Federal Housing Administration.

HUD secretaries announces monetization of the tax credit

Lawsuits, Lawsuits, Lawsuits
A net branch operator has been ordered by a judge to pay more than $700,000 to a former vice president who claims she was sexually harassed then fired for complaining. Among several other pending mortgage-related cases are predatory lending actions, fraud lawsuits and appraisal litigation.

New RESPA Rule Set to Go Live
After some adjustments, the U.S. Department of Housing and Urban Development said it is ready to move forward with mortgage reforms under the Real Estate Settlement Procedures Act.

PNC Hiring Hundreds
PNC Financial Services Group Inc. is adding hundreds of mortgage positions.

Net Branch Sued Over YSPs to Hispanics
A net branch firm based in California has been sued by the government over allegations that its originators charged higher yield-spread premiums to Hispanic borrowers. The 45-branch operation says it originates $2 billion annually.

Goldman Agrees to Mass. Modification Deal
Goldman Sachs & Co. has agreed to write down $50 million in principal on Massachussetts subprime mortgages.

MDIA Analysis
On May 8, 2009, the Federal Reserve Board issued a final rule implementing changes to the Truth in Lending Act made by the Mortgage Disclosure Improvement Act of 2008. The final rule advances to July 30, 2009, the compliance date for early disclosure requirements adopted by the board in a July 2008 rulemaking, and expands the requirements.

Foreclosure Rescue Legislation, Lawsuits Balloon
As Congress debates legislation intended to curb foreclosure rescue fraud, the Federal Trade Commission and attorneys general in several states have filed lawsuits against numerous firms accused of preying on delinquent borrowers and, in some cases, stealing their properties and stripping the equity.

Biggest Mortgage Lenders
As residential originations have soared, one mortgage lender was able to leverage an acquisition from last year to grab a bigger share of the market. Meanwhile, another acquisition in 2009 enabled MetLife Bank to become a top-10 originator.

2 Casualties Rise From Dead
The mortgage casualty list increased by at least one last week. But the bad news was more than offset by the resurrection of two prior casualties.

Westsound fails, Chase to continue warehouse lending

FDIC Prepares for Increased East Coast Failures
The Federal Deposit Insurance Corporation is establishing a temporary satellite location in the East to deal with the volume increased bank failures in the area. The operation will be staffed with up to 500 new positions.

Appraisers Vs. Wells
Appraisers have filed a lawsuit against Wells Fargo Bank, N.A., and its appraisal management company alleging that the bank blacklisted them from future orders because they wouldn't fraudulently inflate their estimated values. Two key issues in the lawsuit, however, are resolved by the recently implemented Home Valuation Code of Conduct.

Revised Disclosures Go Live in July
Revised disclosure requirements under the Mortgage Disclosure Improvement Act will become effective this summer.

Layoffs Still Outpace Hirings
Despite thousands of hirings, new government data indicate mortgage jobs continued to diminish in March.

Ginnie Ties Record
Monthly issuance of Ginnie Mae mortgage-backed securities reached yet another high.

Biggest Subprime Lenders: Where Are They Now?
Nine of the ten biggest subprime lenders between 2005 and 2007 have vanished from the landscape.

Nearly 50,000 Mortgage Jobs Open
Mortgage employers have recently filled more than 6,000 positions are looking to fill 46,000 more.

Mortgage Rates, Treasury Yields Rise
Mortgage rates rose from record lows.

Small Vs. Big Bank Regulation
A former banker has been banned by the Office of the Comptroller of the Currency from the banking business because of "severe" sexual harassment. As the head of the bank insurance fund discussed options for overseeing institutions deemed too big to fail, more than 50 small institutions faced regulatory actions -- including a number of final warnings.

The Modification Movement
U.S. lawmakers have been busy hearing testimony on loan modifications, killing a cramdown amendment and passing legislation that would protect servicers that modify loans. Meanwhile, servicers and service providers are positioning themselves to capitalize on the federal modification plan.

More Compliance Deadlines Loom
As third-party lenders outline new procedures for the new Home Valuation Code of Conduct, one new online service for mortgages brokers promises to reduce some of the stress of complying. But following HVCC rules is not the biggest compliance issue facing mortgage lenders this year.

Originations Double at MetLife
MetLife Home Loans has emerged as a top-10 residential originator. Quarterly production doubled and its servicing portfolio is nearing $100 billion.

Layoffs, Branch Closings at AIG Finance Unit
American International Group Inc. is cutting hundreds of jobs at its unit that handles mortgage lending.

S.C. Halts Conforming Foreclosures
A South Carolina supreme court judge has halted foreclosures on Fannie Mae and Freddie Mac loans. The moratorium is targeted at loans that qualify for modifications under a federal program. Two other big states have also recently extended the time needed by lenders to foreclose.

Biggest Reverse Markets, Lenders
Home-equity conversion mortgage originations managed a gain last month and are up more than 20 percent from last year. A metropolitan area in Florida saw more reverse mortgage volume than any other U.S. market.

Fannie Revises Credit Score Requirements
Fannie Mae has made changes to its requirements for using nontraditional credit scores.

Results Tank at Commercial Lender
Originations, earnings and headcount deteriorated at commercial mortgage lender Holliday Fenoglio Fowler LP. But its servicing portfolio ended higher.

GMAC Earnings, Originations Improve
GMAC Financial Services reported a significant improvement in its mortgage operations. The company said it continues to support subsidiary Residential Capital LLC.

Consumer Bankruptcies Up 100% From 2007
Over the past two years, consumer bankruptcy filings have more than doubled.

Bank Lending Trends
As U.S. bankers continue to tighten their residential lending, demand for prime mortgages is rising and some signs of life are emerging in commercial mortgage lending. But most bankers expect further deterioration in their portfolios.

No Bottom for MTA
May 2004 was the last time that the Monthly Treasury Average has been this low.

Public and Private Financing
Two organizations are touting their ability to get better deals in the secondary mortgage market for their members, while three firms are capitalizing on private funds to boost market liquidity. Among several services available for investors looking at portfolio purchases are performance forecasting, portfolio valuation and analysis of ability to refinance.

Thornburg Bankrupt, Utah Bank Fails
As state banking regulators closed a Utah institution, Thornburg Mortgage Inc. reached the end of the line.

Mortgage Hiring Surge
Quarterly mortgage hirings shot up. But persistent layoffs outnumbered hirings -- leaving a net job loss in the sector.

Accredited Bankrupt, $3 Billion in Bank Failures
Losses from one of two financial institutions shut down by bank regulators today are projected to deplete the Deposit Insurance Fund by more than $1 billion. Meanwhile, one of the last remnants of the subprime mortgage sector filed for bankruptcy today.

Investor Litigation Remains Elevated
While new class action filings show no signs of relenting, some are beginning to settle, be dismissed or drop defendants.

Delinquency, Originations Improve at PHH
Unlike many in the industry, PHH Mortgage pushed delinquency lower and broker production higher. Still, the company cut its mortgage headcount by more than 300.

Record Ginnie Issuance as Fannie, Freddie Falter
As monthly issuance at Fannie Mae and Freddie Mac tumbled, Ginnie Mae saw a new record.

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