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December 2007 Archive


National City Quits Wholesale Lending
National City Mortgage will no longer do business with mortgage brokers.

Ocwen Criticized Over VA Foreclosures
A recent government report blasted Ocwen Financial Corp.'s management of foreclosed properties for the Department of Veterans Affairs. The report recommended increasing VA's ability to hold Ocwen accountable for deficient performance and pointed to better processes utilized by the government sponsored housing enterprises to monitor their own foreclosures.

M.I. Volume Down, Defaults Up
Mortgage insurance activity declined last month as defaults continued to rise.

Negative Ratings Actions hit $4 Billion RMBS
Negative ratings actions were taken on more than $4 billion in nonprime residential mortgage-backed securities during the past two days. But at least one subprime deal saw some classes upgraded.

New England Wholesaler Done
Following a major downsizing earlier this month, a New England wholesaler is calling it quits.

Q4 Write-Downs May Spike
As mortgage-related losses continue to mount, one analyst's report projects fourth quarter write-downs will be much more than investors expect. As mortgage-related losses continue to mount, one analyst's report projects fourth quarter write-downs will be much more than investors expect. But the current environment didn't stop at least two mergers from progressing.

Wholesaler Finished
A national wholesaler based in Missouri abruptly announced this week that it was shutting down by today.

States Push, Pass Mortgage Legislation
States are pushing and passing legislation designed to stiffen oversight of originators and stem foreclosures.

Mortgage Market Weakens
Mortgage rates were mixed this past week, though loan applications were clearly lower.

The State of Foreclosures
Mortgage loan servicers have partnered up with local governments and charitable organizations to help delinquent borrowers avoid foreclosure. Among potential solutions are loan modifications and short sales.

Billions to Bankruptcy
A New York-based mortgage banking firm that just two years ago handled nearly $2 billion in loans annually has closed and filed for bankruptcy.

$3.1 Billion in 2005 RMBS Downgraded
Changes to subprime forecasting assumptions led Fitch Ratings to downgrade more than $3 billion in classes from residential mortgage-backed securities issued in 2005. But deals from 2006 and even 2007 were also impacted from the move.

Losses Continue
As two banking mergers managed to progress, a number of other financial institutions disclosed losses while one ratings agency took negative debt ratings actions in response to losses.

Branch System Shutting Down
A Florida mortgage company that at one time topped the list of fastest growing mortgage companies, operated nearly 300 branches and employed nearly 1,000 people, will close its doors on New Year's Eve.

Over $1 Billion in Recent Commercial Deals
Apartment properties financed by the dozens racked up over $260 million in loan deals recently. But it was one $500 million hotel transaction that trumped the rest in this latest journal of commercial mortgage activity.

Market Drastically Altered in Past 14 Months
In prophetic comments delivered just over a year ago, Freddie Mac's chairman and chief executive officer warned mortgage bankers that too much capital was chasing too little product. Since that time, the residential subprime sector has unraveled -- destroying an industry that, during the past quarter century, had gone from the shadows of mortgage lending to the forefront. Losses, which have spread far beyond U.S. subprime lenders and have wiped billions of dollars off the balance sheets of international financial institutions, may continue into 2009.

OH Servicers to Face Barrage of Lawyers
An Ohio chief justice is pleading with lawyers in the state to offer their services free to assist in that state's foreclosure crisis.

M.I. Class Action Against Wells
A California lawsuit against Wells Fargo alleging the company illegally referred borrowers to its affiliate for mortgage insurance has been certified as a class action.

Fannie Business Declines
Fannie Mae announced a monthly decline in secondary loan purchases, though there was a healthy gain from a year earlier. Delinquency worsened, however.

Mixed Mortgage Data
A new report on mortgage activity during the first half of this year indicated that while the subprime share of overall originations has tumbled, the proportion of subprime loans with higher loan-to-values and lower credit scores has risen. Meanwhile, total loan volume has risen from the second half of last year -- though the number of loans fell.

Freddie Purchases, Delinquency Edge Higher
Monthly secondary purchases inched higher at Freddie Mac, though so did delinquency.

RMBS, CMBS & CDO's Downgraded
Negative ratings actions have been taken on residential mortgage-backed securities and residential collateralized debt obligations, while negative actions are likely on $376 million in commercial mortgage-backed securities that have seen rising delinquency on the underlying loans secured by Texas multifamily properties. But $680 million in CMBS deals saw upgrades.

Massive Wave of 2nd Lien Downgrades
Based on worsening performance recently, Standard & Poor's Ratings Services lowered ratings on more than $20 billion in second lien deals.

Impac Shareholder Equity Wiped Out
Impac Mortgage Holdings Inc. reported a quarterly loss of more than $1 billion -- completely wiping out shareholder equity.

Debt Forgiveness Now Law
Legislation temporarily waiving income tax liability for borrowers who have been foreclosed on is now law.

Alt-A Performance Rapidly Deteriorating
A new ratings agency report indicates the performance of Alternative-A loans backing recently issued residential mortgage-backed securities is "deteriorating rapidly." The study analyzed the best and worst performance by issuer.

Apps Tumble, Rates to Improve
Mortgage application activity sank as fewer borrowers sought refinances amid a slight increase in rates. But a forecast of falling rates may stimulate activity in the new year.

FHA Lender Successful and Growing
A Colorado-based mortgage banker that focuses on loans insured by the Federal Housing Administration has increased its approved brokers, staff and originations -- and is poised to continue growing. The company's chief attributes its success to helping its brokers become FHA approved, paying its originators 100 percent commission and avoiding nonprime products.

Earnings, Ratings Continue to Suffer
As negative outlooks, enforcement actions and lawsuits continue plaguing mortgage market participants, two more companies warned their bottom lines will be hurt by higher loan loss provisions.

Big Executive Shakeup at NovaStar
One of the founders of NovaStar Financial Inc. has been booted as chairman and chief executive officer.

Debt Forgiveness Bill Approved
Congress has approved legislation that would waive tax liability for borrowers whose mortgage balance is reduced through foreclosure or loan modification.

Bear Cuts More Mortgage Jobs
Bear Stearns & Co. Inc. is denying rumors that it has closed its residential mortgage unit -- though it has laid off 150 people.

Mortgage Technology Improves Profits
Microsoft has joined the list of technology providers promising to help originators improve sales. Several other companies are touting their ability to help lenders boost profits, production and productivity.

Foreclosure Prevention Business
Programs in several states aim to keep delinquent borrowers out of foreclosure, while a mortgage service provider is making it easier for servicers to modify loans.

Huge Mortgage Writedown at Morgan Stanley
Morgan Stanley took a mortgage related quarterly charge of more than $9 billion and has received a capital injection from China.

Foreclosures Fall
Led by a decline in real estate owned, foreclosures fell last month. Filings in the Golden State were down twice as much as they were nationally.

Meltdown Stokes Privacy Violations
Two mortgage companies are facing government legal actions for failing to adequately secure the private information of former borrowers and applicants. The case of one of the companies, which shut down this summer, is likely to be repeated across the country given the scale of the mortgage meltdown. And if branch managers of local operations fail to secure files upon the closing of local offices -- officers and directors could be held criminally liable.

Fed Proposes Sweeping TIL Changes
The Federal Reserve Board has proposed sweeping changes to rules governing high-cost loans and prime loans. Among the changes are a ban on stated income and stated asset programs, mandated escrow accounts and limitations on yield spread premiums paid to mortgage brokers.

WaMu Employee Admits to Bribes
A former loan coordinator at Washington Mutual F.A.'s subprime unit was bribed with $100,000 in payments from a mortgage broker to help process fraudulent loan packages. He also was paid by in-house loan officers to fund mortgages with fraud.

Thornburg Dividend Reinstated
Thornburg Mortgage Inc. has named a new chief executive officer and reinstated its dividend.

Mortgage REIT Shines
Amid a landscape of losses, bankruptcies and debt ratings downgrades, one mortgage real estate investment trust is increasing its dividend in response to higher earnings.

Massive Alt-A Downgrades
Two ratings agencies took negative ratings actions on dozens of deals backed by Alt-A originations. Meanwhile, negative actions continued on subprime transactions and spread to commercial mortgage-backed securities.

Colorado Bans ARM Prepayment Penalties
Colorado has issued an emergency rule banning prepayment penalties on adjustable-rate mortgages. The state alleges mortgage brokers who originate these loans with prepayment penalties are not acting in the best interest of borrowers.

Branch Programs Expand
As some net branch companies have added staff and new divisions to grow business, others are soliciting prospective branch partners with new reverse program offerings, debt relief products and 100 percent splits.

National City HELOC Business Soars
Closed end loan originations tumbled last month at National City Corp., though the decline was more than offset by an increase in new home equity lines-of-credit. The company cut its mortgage employee force by nearly 500 from the prior month and warned of a $700 million loan loss provision.

Higher Conversion Leads
A number of lead companies are promising that their services help originators experience higher conversions. But one company is originating loans in addition to selling leads -- bringing into question the quality of the leads it keeps versus those delivered to competing originators.

LendingTree Continues Layoffs
LendingTree LLC has laid off a fifth of its staff -- bringing its employee count to just half the size it was seven months ago.

Senate Passes FHA Modernization Bill
Legislation that would modernize the Federal Housing Administration has been passed by both the U.S. House of Representatives and the U.S. Senate and could soon be on its way to the president.

Net Branch Insolvent
A California-based net branch operation that had closed as much as $4 billion annually is now insolvent.

Foreclosure Prevention Programs
A mortgage service provider has developed standard forms to help servicers implement interest rate freezes for borrowers who qualify for fast track modifications under the plan recently brokered by the Bush Administration. And help is on the way for some of the borrowers who fall outside the framework of the plan.

Commercial Storm Brewing in TX
A Texas multifamily operator is in danger of defaulting on close to $1 billion in securitized commercial mortgages. The company's problems started when its headquarters was wiped out by Hurricane Katrina.

HUD Touts Mortgagee Actions
The U.S. Department of Housing and Urban Development announced several actions taken against approved mortgagees. The companies agreed to fines that collectively exceeded $700,000.

Apps, Rates Rise
As application activity ticked up following last week's drop in interest rates, mortgage rates jumped following the release of some positive economic news and may be headed higher.

Commercial Mortgage Debt Rises
Commercial debt outstanding increased during the latest quarter.

e-Lending Advances
As loan search engine updates and an origination activity analysis tool were launched, one company is seeking lenders who want to join in on a co-development initiative to build an unprecedented enterprise lending solution.

D.C. Hearings Spotlight Reverse Loans
WASHINGTON, D.C. -- Legislators heard testimony yesterday about reverse mortgage lending and called for higher limits and more government funding for counseling.

Senate committee hears testimony Wednesday

Countrywide Pushes Fundings Higher
Countrywide Financial Corp. saw its monthly originations improve. But the story was a different one for delinquency.

Losses to Drive M&As
H&R Block Inc., PNC Financial Services Group Inc., Wachovia Corp. and Bank of America Corp. reported significant mortgage related losses, while Washington Mutual Inc. and Freddie Mac will utilize public offerings to boost capital. The wave of losses is helping to build momentum for a wave of mergers and acquisitions in 2008, according to one report.

Modification Bill Passes Committee
Legislation from Democrats that would enable bankruptcy judges to modify subprime mortgages has narrowly passed a House committee -- drawing concern from mortgage bankers.

Lawsuit Alleges Predatory Servicing
In a lawsuit filed this week, Bear Stearns Companies and its servicing subsidiary are accused of charging frivolous fees, losing payments and mismanaging escrow accounts on loans with nonprime minority borrowers.

Wholesaler Done Funding
A California wholesale lender that had originated as much as $5 billion annually is throwing in the towel.

Mixed Foreclosure Data
California maintained its status as the state with the highest number of foreclosed properties, though the number of filings fell from October. Texas, meanwhile, saw its real estate owned filings more than double.

Best Mortgage Companies
An annual study of mortgage originators identified the best companies and found that borrowers are more satisfied when dealing with a direct lender than with a mortgage broker or online lead generation company.

Syron Says
Freddie Mac's chairman and chief executive officer projects the housing market to get worse before it improves. The company anticipates its credit losses to be as much as $7.5 billion during the next two years.

Meltdown's Losers & Winners
Citigroup Inc. has a new chairman and a new chief executive officer, Washington Mutual Inc. and IndyMac Bancorp have lower debt ratings and two foreign firms have less capital as a result of losses tied to U.S. mortgage loans. And as one Florida lender ends operations, a Connecticut firm has launched to take advantage of current market conditions.

Secondary Marketing Wire
Recent secondary marketing activity included an increase in fees for agency loans and the launch of due diligence services for reverse mortgage portfolios.

Office, Apartment & Retail Deals
More than $700 million in recent commercial mortgage activity was tracked in this latest edition of commercial mortgage financing.

Recent commercial mortgage activity

Litton Sold
Litton Loan Servicing has been sold -- helping its troubled parent avoid bankruptcy.

Most Litigious States
A new report has identified the states where mortgage companies are most likely to be sued.

Nonprime Ratings Thrashed
All three ratings agencies were busy updating ratings on a number of prime and nonprime deals -- and none of the activity was positive.

Massive WaMu Layoffs, Charges
Washington Mutual, Inc. will cut thousands of mortgage jobs, close nearly 200 mortgage offices and take more than $5 billion in charges at its home loan unit. Additionally, the company appears to be steering away from mortgage brokers.

Testimony on Modifications, Assignee Liability
A hearing held by a House committee last week focused on servicer liability in loan modifications and investor liability in assignments.

Distressed Mortgage Portfolios Sought
A California company is looking for distressed mortgage portfolios to acquire.

Freddie to Slow Repurchases
In an apparent effort to conserve capital, Freddie Mac announced today it will hold off on repurchasing some delinquent loans from mortgage-backed securities investors.

Massive Subprime Losses at UBS
UBS will write down its U.S. subprime mortgage holdings by $10 billion and has obtained a massive infusion of foreign capital.

Wholesaler Reduces Operations, Jobs
A Connecticut-based lender with assets of $17 billion is scaling back its wholesale mortgage operation by closing offices and cutting jobs in three states.

Mortgage Troubles Mount
Standard & Poor's warned the short term outlook for structured investment vehicles is not good, and IndyMac Bank warned it won't be profitable until late next year at the earliest. In the meantime, American International Group Inc. and the Royal Bank of Scotland have racked up more than $6 billion in mortgage losses between them. But at least one company was able to take advantage of the market turmoil.

Mortgage Job Decline Slows
The rapid decline in mortgage job losses slowed in October, though employment in the sector was still down more than 100,000 from last year. Brokers were responsible for the latest monthly decline.

Chicago Bank Sued for Poor Underwriting
The plaintiff in lawsuit against an Illinois bank alleges the bank is liable for fraud committed by partners of an elderly borrower. But the bank says the claims are frivolous and suggests the timing of the lawsuit is politically motivated.

Mortgage Technology Secrets
As one mortgage company has adopted a loan origination system because of its secondary marketing capabilities, new pricing technology has been launched and automated valuation models have been enhanced. Digital improvements have also been made to licensing, compliance and servicing systems.

Delta to File Bankruptcy
Seven months ago, Delta Financial Corp. was touting how its disciplined underwriting left it profitable with record originations. Today, the company said it will probably collapse and file bankruptcy.

Falling Rates Spark App Rally
As mortgage rates continued descending to levels not seen for more than two years, mortgage hunters, especially those seeking to refinance, raided originator shops. But variable rate loans continued to lose their appeal.

Investors, Servicers & Regulators Launch Foreclosure Plan
A plan to streamline loan modifications for subprime adjustable-rate borrowers was unveiled today. The framework, designed by investors of mortgage securities, was endorsed by a number of groups and regulators but had mixed support from ratings agencies.

5 year rate freeze for some subprime ARM borrowers
Delinquency Surges
Quarterly delinquency reached the highest level in more than 20 years, while foreclosures reached the highest level ever. Variable rate subprime loans were responsible for most of the rise in foreclosure activity.

Uncovering Prospective Customers
A good marketing plan includes identifying sales prospects. Among prospects are people within a salesperson's sphere, and this may go way beyond what he or she realizes.

Sector Shakeup Continues
As financial services firms continued to see their earnings pounded by mortgage related charges, National City Mortgage Co. named a new chief executive officer. Meanwhile, NovaStar Financial Inc. got a break from one of its lenders while Impac Mortgage Holdings Inc. got a warning from the New York Stock Exchange.

Georgia Lender Closes Wholesale
A Georgia-based lender has stepped out of the wholesale market and will focus on retail operations.

Net Branch Emporium
While a Utah-based net branch recently regained a branch that had closed doors, the nation's self-proclaimed largest branch operator extended its footprint into all 50 U.S. states and a debt settlement services provider is seeking brokers who wish to offer such services as a net branch.

Foreclosure Fight Forges Forward
As California and Michigan unveiled further initiatives to help troubled borrowers, calls for a federal foreclosure moratorium and freeze on mortgage rate resets continued.

Nonprime Ratings Assault Continues
All three major ratings agencies continued their assault on ratings of several nonprime deals and one commercial deal, while two commercial transactions saw upgrades.

Maryland Foreclosure Process Challenged
A Maryland borrower who lost his property to foreclosure after refinancing because the closing agent allegedly failed to forward proceeds to Washington Mutual Home Loans Inc. is looking to the state's highest court for help. Attorneys say the lawsuit could dramatically change the lender-friendly rules governing foreclosures in the state.

Alt-A Dismay
Moody's Investors Service has taken negative ratings actions on nearly $12 billion in Alternative-A transactions from 2005 and 2006.

HUD Terminates FHA Approvals
The U.S. Department of Housing and Urban Development terminated approval for two Southwestern companies to originate mortgages insured by the Federal Housing Administration.

Nonprime Ratings Rampage
Moody's Investors Service downgraded 280 classes of subprime, second lien and Alt-A transactions and warned about dozens more tranches that are under review for downgrades. But the ratings agency did upgrade seven classes of one residential deal, while Standard & Poor's Ratings Services upgraded 13 classes of two commercial securitizations.

MTA Looking Good
The Monthly Treasury Average descended for the seventh consecutive month.

Option One Done
The sale of Option One Mortgage Corp. has been terminated and its origination operations will be permanently closed -- leaving over 600 people unemployed. Meanwhile, the servicing unit up for sale.

Mortgage Fraud Eases
Civil and criminal mortgage fraud case activity eased during November from October -- although activity jumped from a year earlier.

Mergers and Litigation
A Florida mortgage lender may exit an involuntary bankruptcy, while a California-based lender faces class action lawsuits by New York City and New York state. One bank merger closed and another moved a step closer to consummation.

$1.5 Billion NYC Property Financed
Commercial mortgage deals were tracked during the latest week for office buildings, apartment complexes and hotels worth over $1.6 billion -- though one property accounted for more than $1.5 billion.

Recent commercial mortgage activity

Administration Touts Foreclosure Progress
Nearly half of subprime borrowers who have applied for relief under the FHASecure program so far will have closed or been approved by the end of this month, according to the secretary of the U.S. Department of Housing and Urban Development. And the head of the U.S. Treasury is working with servicers and investors to quickly develop a wide scale plan for loan modifications.

Biggest Multifamily Lenders
While multifamily fundings rose last year, they are likely to head lower according to a new industry report. Nearly half of last year's volume was funded by less than 50 lenders.

Fannie Business Maintains
Monthly business purchases held up at Fannie Mae, which saw its massive book of business climb closer to $3 trillion.

COFI Better
Following the lead of two other indices used for variable rate loans, the Cost of Funds Index improved during the latest month.

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