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December 2009 Archive


Modification Litigation Explodes
State and federal regulators continued to crackdown on loan modification firms -- filing more than 50 lawsuits since November. Ohio has sued a servicer it claims gave unfair modifications to its borrowers, while Nevada is slapping two firms with criminal indictments.

Credit Union Regulator Seizing Lawsuit
The nation's credit union regulator is attempting to oust plaintiffs in a lawsuit against a failed corporate credit union and take the lead in the litigation as the new plaintiff.

Mortgage Insurance Performance Improves
The dollar volume of mortgage insurance written last month increased as defaults decreased.

Cap Lifted on FHA Origination Fees
The Federal Housing Administration has updated disclosure requirements and limits on loan origination fees.

1-Year Finishes 2009 Lower, 30-Year Higher
The 30-year fixed-rate mortgage finished this year 4 basis points higher than it started. But the one-year adjustable-rate mortgage was 47 BPS better. Meanwhile, refinances tumbled during the latest week.

GMAC Gets $4 Billion More from Government
GMAC Financial Services received nearly $4 billion more from the government. Much of the new capital was plowed into Residential Capital LLC -- positioning it for a possible sale.

2 Wells Fargo Units Face Lawsuits
In two recent lawsuits, subsidiaries of Wells Fargo & Co. are accused of targeting minorities for predatory loans, causing increased foreclosures and violating a law protecting military personnel. In other mortgage-related litigation, a Texas-based company is being sued by North Carolina, while another Texas mortgage firm is suing former employees over alleged fraud.

Mortgage Graveyard Litigation
Several lawsuits involving failed or acquired mortgage firms have seen a good deal of activity lately. Issues involved include privacy, credit and deceit.

Criminal Mortgage Actions
A Colorado firm and its top originator are accused of deceiving prospective borrowers and committing mortgage fraud, while a Pennsylvania woman is accused of stealing appraisal fees from her employer. A New York attorney has joined a law firm where he hopes to help white collar defendants.

Consumer Group Takes on Broker YSPs
A consumer group is at odds with mortgage brokers over the use of yield spread premiums.

New Rules for Credit Union Membership
The federal credit union regulator is proposing to make it easier for credit unions to determine whether new and expanded charter applications have a good chance of being approved. Proposed requirements focus on who can be targeted for credit union membership.

Deterioration Deepens at Fannie
Secondary activity sank to an 11-month low at the Federal National Mortgage Association, and residential delinquency continued its trek deeper into record territory. Multifamily delinquency, however, improved.

Investor Lawsuits Include Criminal Actions
Among several investor lawsuits to recently see legal action were cases where criminal charges were filed. In one case, the defendants are also accused of more than $100 million in mortgage fraud.

MBS Litigation Ledger
In addition to issuers of mortgage-backed securities, auditing firms and investment advisors -- ratings agencies have become the target of several lawsuits filed by injured investors.

GSE Losses Could Cost Gov Over $400 Billion
The federal government has committed to cover in excess of $200 billion in losses each at Fannie Mae and Freddie Mac. In addition, compensation packages of $6 million each have been approved for the two companies' top executives.

Citi Done With TARP
Citigroup Inc. has repaid government investments under the Troubled Asset Relief Program.

Mortgage Market Deteriorates
Mortgage rates rose, while applications and average loan amounts declined.

BoA Servicing Unit Deteriorating, Downgraded
A mortgage servicing subsidiary of Bank of America Corp. saw its servicer ratings downgraded over high executive turnover and increased use of contract employees.

MGIC Accused of Denying Valid M.I. Claims
Two Bank of America Corp. units have sued a subsidiary of MGIC Investment Corp. over allegations that the company is denying perfectly valid mortgage insurance claims.

Wells Done With TARP
Making good on a promise last week, Wells Fargo & Co. repaid Troubled Asset Relief Program investments by the U.S. government.

Firm to Add 1000 NC Jobs
A financial services outsourcing firm plans to take advantage of the rich pool of employee prospects in North Carolina and add more than a thousand jobs there.

More Record Delinquency at Freddie Mac
Freddie keeps breaking records -- just not the right ones.

New Risk-Based Pricing Requirements
Lenders who charge some borrowers more than others will face new requirements next week.

HELOC Activity Sinks, Delinquency Climbs
As the volume of new home-equity lines-of-credit has fallen, delinquency has risen. But the share of HELOC borrowers with good credit scores has improved.

FHA Volume, Delinquency Worse
The production of loans insured by the Federal Housing Administration has fallen four months in a row. FHA delinquency also deteriorated.

New Player Emerges
With its recent acquisition of a failed Ohio bank, New York Community Bank is poised to become one of the nation's top 15 residential lenders.

US Bank Adding KY Jobs
U.S. Bank, N.A., is expanding its mortgage staff in Kentucky.

MetLife Biggest Reverse Lender
The latest monthly data indicate that reverse mortgage volume shot up at MetLife Bank -- making it the biggest reverse originator in October. But the increase at MetLife came despite an overall industry decline.

Court Voids U.S. Bank Loan
A state appeals court has voided a loan made by U.S. Bank, N.A. The case involves a deceased borrower, a bungled loan application and a widow who never signed the loan.

2nd Upgrade This Month at Specialized
For the second time this month, Specialized Loan Servicing LLC saw its servicer rating upgraded.

Gov Delinquency, Prime REOs Worse
Quarterly foreclosure activity on prime mortgages serviced by U.S. financial institutions fell as subprime filings climbed. But repossessions on prime loans shot up. Meanwhile, government mortgages are performing worse than overall mortgages -- though government loans in foreclosures are lower.

OneWest Joins Moratorium Club
Delinquent borrowers of OneWest Bank, FSB, will get a brief reprieve during the holidays. The move follows similar actions at three other mortgage firms.

Banks Face Dozens of Regulatory Actions
More than 40 regulatory orders and actions against financial institutions and their employees have been reported by federal banking regulators during the past three weeks.

Trade Group Warns About Implementing New Booklets
A mortgage trade group is warning the U.S. Department of Housing and Urban Development that two weeks are not enough time to implement a new booklet required under the new Real Estate Settlement Procedures Act rule.

FDIC Finds No Buyers for 3 Failed Banks
Seven federally insured financial institutions with assets in excess of $14 billion failed on Friday, including three seized by the Office of Thrift Supervision and three for which no acquirers were found. Projected losses from the failures exceed $1.7 billion.

Failed Bank Restarts Originations
An Ohio-based bank that halted loan production after it failed and was taken over by another institution has resumed originations.

Mortgage Executive Journal
Several of the latest mortgage executive appointments were driven by growth and expansion. ABN AMRO Mortgage and Chase are among the former employers of some of the executives.

Recent mortgage executive activity

Banks Replace CEOs, CFOs and Chairmen
In addition to shuffling senior executives, financial institutions have also been busy replacing their chairmen. Even the chairman in charge of insurance for bank deposits is moving on.

Recent bank executive activity

Service Providers Align Executives
An executive was able to use his relationship with a friend he knew from high school to help score a senior position at a loan origination system developer. Meanwhile, two other mortgage service providers also announced changes at the top.

Recent executive activity at mortgage service providers

National City Vet Might Head Ginnie
President Barack Obama has identified the next head of the Government National Mortgage Association.

Fannie, Freddie Follow Citi
In an apparent move by the Obama administration, government-controlled Fannie Mae and Freddie Mac announced plans to suspend foreclosure evictions during the holidays. The moves follow a similar action by Citigroup Inc. -- which the government has a big stake in.

Per-Loan Profits Plunge
In addition to putting a dent in quarterly mortgage banking production, falling refinance activity boosted the cost to originate by half. But mortgage banking firms were able to squeeze out a little more profit on warehoused loans.

Some Short Sale Borrowers Blocked From FHA Financing
Guidance has been provided on when borrowers who have utilized a short sale can quality for a Federal Housing Administration loan.

New Mortgage Report Launching
A new mortgage report provides a snapshot of weekly activity. The inaugural edition indicated that the country's average loan amount was just over $200,000, and the biggest jumbo loans were in the Show Me State.

Citi Gives Gift to Delinquent Borrowers
Citigroup Inc.'s mortgage units said they will hold off on foreclosures and evictions during the holidays.

Rates Higher, Outlook Mixed
Mortgage rates jumped, though the country's central bank has no plans to raise rates any time soon. In forecasting mortgage rates, activity in long-term Treasury bonds points a different direction than the prediction of a panel of professionals. Weekly mortgage activity barely changed, though fewer applicants opted for adjustable rates.

New BoA CEO
Bank of America Corp. has found a new leader from within its own ranks.

Brian Moynihan named president, CEO

Subprime, Prime Performance Diverge
Late payments and foreclosure activity on subprime mortgages fell. But it was a different story for prime home loans.

Ginnie Delinquency Improves
The Government National Mortgage Association reported that serious delinquency has improved. The government-owned corporation also reported stronger monthly issuance.

Growing Lender Headed Past $1 Billion
A growing Connecticut firm is on its way to reaching $1 billion in annual originations.

Over 5k Mod Counselors at Chase
JPMorgan Chase & Co. is adding two dozen locations where borrowers can come in and try to workout delinquent and potentially delinquent mortgages. More than 5,000 loan modification counselors are employed by the company.

Ellie Acquires Compliance Firm
A mortgage compliance service provider has been acquired by Ellie Mae.

Foreclosure Issues Litigated
A New York judge who invalidated a mortgage is now calling the parties back to court, while a Massachusetts judge agreed to leave a mortgage lien as invalid. Meanwhile, Wells Fargo & Co.'s banking subsidiary appears to have won the judge's sympathy in a Maryland foreclosure case.

Foreclosure Scams Use Mortgage Fraud
In a typical foreclosure rescue scheme, delinquent borrowers are advised to convey title to an investor located by the foreclosure rescue firm. But instead of rescuing the borrowers, the firms line up fake borrowers with fraudulent documentation and extract all available equity -- leaving the borrowers still facing foreclosure. A federal and state initiative has been launched to stop such schemes.

Lenders Oppose Ratings Rule
The government is planning to require that preliminary ratings on securitized loan pools be disclosed in registration statements -- a move opposed by mortgage bankers.

Wells Repaying TARP
Wells Fargo & Co. will follow the lead of three U.S. rivals and redeem stock issued under the Troubled Asset Relief Program.

Banks Dominate Mortgage M&As
Most of the latest mergers and acquisitions involving mortgage lenders were bank deals, though a mortgage servicer is being spun off. One financial institution wants to unload three of nine failed banks it recently acquired.

Service Provider M&A Frenzy Still Going
An acquisition that closed today creates a one-stop shop for servicers and lenders, while the recent purchase of a mortgage insurance platform has a new mortgage insurer up and running. Two mortgage processing service providers were also acquired.

Citi to Repay TARP
Citigroup Inc. announced that it would repay government capital invested under the Troubled Asset Relief Program and issue stock in lieu of cash for nearly $2 billion in employee compensation.

CMBS Lender Restarts Originations
A California company has jumped back into commercial real estate loan originations funded through commercial mortgage-backed securities. The company claims the program is the first CMBS program launched since the credit crisis hit.

The Graveyard Journal
More than $150 million in government insurance losses are expected from three bank failures Friday. A California company said it abandoned plans to operate as a smaller firm and has ended operations altogether, while a Hawaii-based bank disclosed plans to shutter its California lending operations.

Capmark Sale Done
Billionaire Warren Buffet now shares control of the country's third biggest commercial mortgage servicer.

Mortgage Bankers Worry Over Bill
Legislation approved by the U.S. House of Representatives could leave mortgage lenders battling a patchwork of state and local laws. Another provision could force many mortgage bankers out of business.

Huge Broker Acquiring Wholesaler
A California mortgage broker with nearly $3 billion in annual originations announced a deal to acquire a wholesale lender.

Hotels Lead CMBS Delinquency Higher
Defaults on hotel-secured loans jumped last month, pushing the delinquency rate on securitized commercial mortgages nearly 50 basis points higher. Multifamily delinquency also leapt.

WA Wholesaler Expanding to East Coast
A growing wholesaler is entering the East Coast market through Maryland. The wholesale expansion will be followed by an expansion at its net branch unit.

GMAC Top HAMP Modifier
Less than 35,000 modifications have been made permanent under the Home Affordable Modification Program, and a GMAC Financial Services unit accounted for a bigger share of them than any other servicer.

FHA Funding Approved
U.S. legislators in one chamber approved a bill that will provide funding for technology at the U.S. Department of Housing and Urban Development. The bill also includes funding for the prevention of mortgage fraud.

United Guaranty Enhances Guidelines
United Guaranty has eased its requirements for properties in markets with an oversupply of inventory or a six-month marketing time. The change is among several updates by the mortgage insurer.

Biggest Issues in 2010
Among next year's biggest issues are skin-in-the-game proposals, regulatory compliance and cloud computing -- according to one mortgage technology provider. Google's entry into mortgage lead generation is also expected to have a big impact.

Record Low Fixed Rates Depart
After reaching the lowest levels on record, fixed mortgage rates rose. But improvements were reported for refinance activity, purchase applications and a popular adjustable-rate product.

Improving Foreclosure Trend Developing
Fewer borrowers lost their homes to foreclosure last month than in either the prior month or the prior year. In addition, overall foreclosure filings fell for the fourth consecutive month.

BoA Repays TARP
Bank of America Corp. has broken free of the government's grip.

Freddie Updates Underwriting Requirements
Among a host of underwriting updates from Freddie Mac are revised employment verification requirements, data about the loan originators and state information on appraisers.

Servicer Rating Upgraded at Specialized Loan
Specialized Loan Servicing LLC saw its second-lien servicer rating upgraded.

FHA Appraisal Form Updated
The Federal Housing Administration announced an updated form that enables an appraisal report to be extended.

Credit Union M.I. Firm's Future Uncertain
The outlook for a mortgage insurance company that caters to credit unions has been downgraded.

Hospital Infected With Mortgage Fraud
An underwriter on a psychiatric hospital loan insured by the U.S. Department of Housing and Urban Development has settled allegations that he committed mortgage fraud.

ResCap Cutting Over 100 Jobs
As part of a cost-cutting strategy, Residential Capital LLC is eliminating more than 100 positions in Connecticut and North Carolina. But jobs are being added in Pennsylvania and California.

Bill Threatens Mortgage Firms
Mortgage bankers are warning legislators that skin-in-the-game requirements included in pending federal legislation will put some mortgage firms out of business.

PHH Picks Up Portfolio
PHH Mortgage has scored a contract to service a residential portfolio. But the outsourcing arrangement will leave 150 servicing employees looking for new jobs next year.

Delinquency Outlook Improves
A new forecast has residential delinquency improving next year.

SEC Suing Subprime Execs
Three former executives of failed New Century Financial Corp. face a lawsuit by the Securities and Exchange Commission. The trio is accused of defrauding investors.

MD Firm Loses FHA Approval
The Federal Housing Administration announced the suspension of a Maryland mortgage firm over allegations of overcharging borrowers and failing to disclose yield spread premiums.

MTA Cracks Half Percent
The Monthly Treasury Average fell below 0.50% for the first time ever.

CMBS Delinquency Leaps
Late payments on securitized commercial mortgages have shot up more than 300 basis points during the past year -- more than on commercial real estate loans owned or managed by banks, life insurers or government sponsored enterprises.

Wells Wholesale Cuts LTVs, Increases Doc Requirements
Wells Fargo Home Mortgage's broker unit recently scaled back on loan-to-values as a result of changes by mortgage insurance companies. In addition, documentation requirements have increased.

FHA Appraisal Webinar Planned for Jan. 20
A Webinar on changes to the Federal Housing Administration's appraisal process has been planned for Jan. 20, 2010. Panelists include officials from the Appraisal Institute, the U.S. Department of Housing and Urban Development and an appraisal management company trade group.

Georgia Bloodbath
Six financial institutions were seized Friday including three Georgia banks. Friday's failures are expected to cost the bank insurance fund more than $2 billion. In addition, non-bank closings last week included a credit union and a Massachusetts firm with 160 employees.

AmTrust Fails
AmTrust Bank, a big wholesale lender, has failed. Its regulator blamed a high concentration of loans in hard-hit states for its demise. The institution had weathered the Great Depression, but the Great Recession was more than it could handle.

HUD Holding Free RESPA Rule Webinars
Mortgage lenders unsure about how to handle upcoming changes under the new Real Estate Settlement Procedures Act rule can participate in a series of online events hosted by the U.S. Department of Housing and Urban Development.

Valuable Lesson from Overturned Foreclosure
An overturned foreclosure case in New York offers some valuable insight for mortgage firms that want to avoid the same fate.

3rd Option for ARMs
Borrowers on adjustable-rate mortgages with payment options normally can choose between a higher and lower payment. But a third option has emerged, a new ratings agency report indicates.

Mortgage Employment Continues Contraction
Despite falling mortgage rates, mortgage jobs fell -- as they have for most of 2009.

Growing Wholesaler Enhances Technology
With nearly a billion dollars in projected annual originations, a Georgia-based wholesaler is beefing up its technology platform.

Bankruptcies Fall
Consumer bankruptcy filings fell more than 15 percent last month.

MGIC Expands Retail Guidelines
Mortgage Guaranty Insurance Corp. has loosened up on loans originated by retail lenders.

Lowest Fixed Rates in U.S. History
Fixed mortgage rates have fallen to the lowest level on record -- though they might not stay there for long. Still, fewer new loan applications are being completed.

Reverse Volume Tumbles
Home-equity conversion mortgage originations have plummeted one-third over the past seven months. The biggest retail reverse lender closed twice as many loans as No. 2 last month.

No Foreclosure Relief Yet
Two reports indicate late payments and foreclosures on home loans have not eased. A troubling statistic from one of the reports is that more than a quarter of loans that have been in foreclosure for a year have yet to be listed for sale.

More FHA Reforms Ahead
Lenders that originate loans insured by the Federal Housing Administration face increased accountability, while FHA borrowers will be expected to have more invested in the loans, according to Congressional testimony today. Other reforms on the table include increased mortgage insurance premiums, higher credit scores and lower seller-paid costs.

The Warehouse Wire
A huge financial institution and an investment banker agreed to provide new credit lines to a national home lender, while a warehouse lending consultant made a move intended help him reach more mortgage bankers.

Secondary Transaction Journal
Among several recently announced secondary transactions are performing and non-performing commercial and residential portfolios. Meanwhile, a new buyer of mortgage-backed securities has emerged, and a mortgage marketplace has grown by one player.

Higher Credit Scores, Lower DTIs Among Agency Updates
Changes to agency lending include higher credit scores, lower debt-to-income ratios and technological enhancements.

Foreclosures Forecasted to Fall
A new report predicts that the number of foreclosures will fall next year. But until then, "housing markets will continue to take a beating."

Lenders One Production Eases
Quarterly residential fundings by members of Lenders One Mortgage Cooperative fell 15 percent -- though aggregate originations nearly doubled from last year.

Agency Issuance Weaker
Agency issuance has fallen for several months in a row.

Lend America Ends Business
Lend America has discontinued operations.

FHA Volume Stronger, HECM and Delinquency Worse
Monthly endorsements by the Federal Housing Administration have risen over the past year, but reverse mortgage volume has declined. Serious delinquency on FHA-insured loans continued to deteriorate.

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