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March 2008 Archive

COFI Sinks to 2-Year Low
The cost of funds index fell to its lowest level in more than two years.

Groups Weigh In on Treasury Blueprint
Mortgage bankers threw their support behind a plan announced by the U.S. Treasury Department today. Mortgage brokers were a bit more skeptical in their endorsement.

Company Acquiring Lender, Brokers
Fortress Financial Group Inc. is assembling a subprime consumer finance products group with the acquisition of a lender and a bank and the large-scale acquisition of mortgage brokers.

M.I. Apps, Delinquency Improve
Monthly mortgage insurance activity was mixed.

Jackson Steps Down
It's official. Housing and Urban Development Secretary Alphonso Jackson announced he'll be stepping down.

Becoming, Staying FHA Approved
As secondary market investors tighten conventional lending requirements and costs, government-insured programs are expanding to cover the shortfall -- with recent program changes benefiting a wider pool of borrowers. But these programs can only be tapped by approved mortgage lenders and brokers or by approved net branch correspondents who operate under strict arrangements.

HUD Secretary May Resign
President Bush's chief of the U.S. Department of Housing and Urban Development may resign today.

WSJ reports announcement to be made

Appraisal Changes Impact Fidelity
At least one major mortgage technology vendor may be hurt by upcoming changes to real estate appraisals for conforming loans.

FHA Firm Seeks Experienced Employees
After adding 150 new employees since last August, a Michigan-based mortgage company that specializes in loans insured by the Federal Housing Administration is looking to fill another 100 positions.

Branch Acquisition Binge Turns Sour
Following a two-year acquisition and growth binge, a Las Vegas-based "branch consolidator" has halted business and is attempting to survive through a restructuring.

Mortgage Fraud Losses Could Top $10 Billion
A new report suggests losses from mortgage fraud could top $10 billion over the next five years.

Radian Exits Stated Loans
Mortgage insurer Radian Guaranty Inc. has stopped insuring stated programs.

Philly Halts Foreclosure Sales
Philadelphia is suspending sheriff sales on owner-occupied properties with adjustable-rate mortgages for 30 days. Mortgage banking lawyers are expected to intervene swiftly.

Maine Lender Shutting Down
A major mortgage lender in Maine is shutting down. Some of the company's former executives have launched their own company and picked up some of its former business.

Refis Soar, Rates Ease
Following last week's big drop in mortgage rates, refinance loan applications soared. This week, rates eased just slightly.

Chase Cutting Over 450 HEL Jobs
JPMorgan Chase & Co. has continued slashing mortgage jobs.

Hundreds of Subprime RMBS Classes Downgraded
Hundreds of classes from dozens of residential mortgage-backed securities were recently downgraded. The downgraded deals were mostly subprime. Meanwhile, commercial MBS saw upgrades and downgrades.

Boom to Bust in 1 Month
Just one month after Millennium Mortgage Corp. said its wholesale division was embarking on an "extensive market expansion," the company halted all new broker business.

Foreclosures, Negative Equity to Grow
Secretary of the Treasury Henry M. Paulson Jr. projects foreclosures and negative equity will get worse before getting better. He called capable borrowers who walk away from a negative equity situation "speculators" and noted most borrowers, including those who are upside down, are current on their mortgages.

5 Steps to Better RMBS Performance
Moody's Investors Service has identified five areas where issuers of residential mortgage-backed securities can improve and, in the process, boost the performance of those securities.

Net Branch Advantages
A number of net branch operations are still reporting growth. Among strengths recently touted by some of the companies were strong executive teams, aggressive secondary marketing departments and 100 percent commission programs.

Mortgage Advertising Drops
As mortgage-related companies cut back their spending on advertising last year, so did most other types of advertisers. But one bright spot was spending on Internet ads.

McCain On the Mortgage Crisis
Sen. John McCain offered a comprehensive explanation of how the current credit crisis occurred. He noted borrowers, as well as lenders and investors, share responsibility for the crisis and called for higher down payments and more help from lenders.

Falling LIBOR May Decrease Defaults
The recent sharp decline in the London Interbank Offered Rate has significantly reduced payment shock on some hybrid adjustable-rate mortgages and may lead to lower subprime and Alt-A defaults.

Argent Exec Charged in Massive Fraud Scheme
A former vice president of Argent Mortgage Co., an account executive and two mortgage brokers have been charged in a mortgage fraud scheme involving hundreds of loans.

Foreclosure Mitigation Goes On
Two states announced foreclosure prevention programs, and a mortgage technology company has automated the modification process.

Subprime Financing for Jumbo Lender
Thornburg Mortgage Inc. is offering notes to come up with capital that will keep it in business. But the cost of the funds is far from prime.

Freddie Business Better, Delinquency Worse
Secondary marketing purchases jumped at Freddie Mac, though so did delinquency.

N.Y. Foreclosure Case Sends Shockwaves
New York's Supreme Court has blocked a mortgage lender from foreclosing on a borrower who committed mortgage fraud because of violations to the state's predatory lending laws by the originating mortgage broker.

Subprime Layoffs at Chase
JPMorgan Chase & Co. has laid off more than 50 people at a Florida subprime wholesale operation.

Clinton Blasted Over Mortgage PACs
Sen. Hillary Clinton today proposed a number of steps to mitigate rising foreclosures. The plan was attacked by her Democratic rival over contributions she has accepted from mortgage industry lobbyists.

More Steps Taken to Boost MBS Liquidity
The government has taken steps today that are expected to provide up to $100 billion in additional liquidity to the ailing mortgage securities market.

Hedge Funds Back New Mortgage Co.
A mortgage company recently launched by former executives of Countrywide Financial Corp. was sponsored by two hedge funds looking to capitalize on distressed mortgage portfolio values.

Subprime Shakeups
Residential Capital LLC's chairman resigned, NovaStar Financial Inc. has averted bankruptcy for the time being, and Fieldstone Mortgage Co. may have found an acquirer that could help it emerge from bankruptcy.

Commercial Mortgage Deals Arranged
Among the latest commercial mortgage loans tracked by were four transactions totaling more than $57.0 million arranged by Meridian Capital Group LLC and a $60.0 million loan funded through Babson Capital Management LLC for a new property in Chicago.

Recent commercial mortgage activity

FTC Touts Subprime Servicer Settlement
The Federal Trade Commission released to Congress a report on enforcement actions last year against third-party collectors. Among the actions was a modified settlement with a subprime servicer.

LOS Enhancements
Loan origination systems have been recently enhanced to handle reverse mortgages, loan documents and wholesale program and pricing searches. Other activity in mortgage technology included the donation of a patent for industry use.

Former Countrywide Exec Launches New Co.
A former senior executive of Countrywide Financial Corp. has launched his own company to acquire mortgage portfolios from stressed mortgage lenders.

Alt-A, Subprime RMBS Ratings Downgraded
Ratings on classes from dozens of Alternative-A deals were assailed by Moody's Investors Service. Subprime residential mortgage-backed securities continued to see negative ratings actions by Fitch Ratings, while activity was mixed on commercial deals.

Mortgage Leads Conference
One company is offering to pay $500 for dead files, another is selling text message customer relationship management, and a third is targeting government-insured loan prospects. Meanwhile, a lead generation conference is being held in Las Vegas early next month.

Fixed Rates Tumble, ARMs Mixed
Fixed rates tumbled as variable mortgage rates were mixed. Loan applications worsened, though fixed-rate activity is likely to fuel a jump in next week's reported applications.

Lender Halts Biz as 2 More Teeter
Two real estate investment trusts are struggling to survive, while a construction lender advised mortgage brokers that it ran out of money to lend. The acquisition of a New Jersey bank was canceled -- though another suitor has emerged, and investors of an East Coast mortgage operation project a bright future.

State Seeks $20 Million from Broker
California's attorney general has arrested several individuals and shut down businesses connected to a Los Angeles mortgage broker, who along with his sister and his mother, has been accused of bait-and-switch tactics and fraud on thousands of loans. The state is seeking $20 million in penalties and restitution.

Secondary Secrets
Larger loans insured by the Federal Housing Administration under H.R. 5140, the Economic Stimulus Act of 2008, will be eligible for submission to the Government National Mortgage Association next week. Two other companies are looking to bid on less liquid loan pools, though at steep discounts, while agency securities were recently sold at a 3 percent discount.

Commercial, Reverse Programs Proliferate
As one wholesale lender said it would eliminate lender-paid mortgage insurance and another cut loan-to-values on properties with waning values, broker propaganda proliferated for commercial, reverse and hard-money mortgages.

Fannie, Freddie to Provide $200 Billion in Liquidity
A new initiative launched by Freddie Mac and Fannie Mae is expected immediately to provide $200 billion in liquidity to the ailing mortgage-backed securities market.

Foreclosure Tours Generate Loan Prospects
Mortgage lenders with growing backlogs of foreclosed properties are teaming up with real estate brokers to unload those properties and generate loan prospects by hosting foreclosure tours.

Some Relief for Battered Lenders
While earnings of financial services companies continue to be pounded by a difficult market, two mortgage companies got a reprieve from their creditors while two acquisitions moved further through the mergers and acquisitions pipeline.

Mortgage Investors Diminish
DALLAS -- The number of investors acquiring new loans from mortgage banking firms has tumbled by two-thirds, according to one warehouse technology firm. At the same time, as activity is redistributed among warehouse lenders, vast opportunity is being created for new warehouse players.

Technical Success
DALLAS -- The first quarter of 2008 is turning out to be the best ever during Data-Vision Inc.'s 15-year history. The mortgage technology provider has seen a surge in refinance activity.

Alt-A Performance Prompts Negative Ratings Actions
Ratings on Alternative-A residential mortgage-backed securities are being re-evaluated based on the deteriorating performance of the underlying loans.

Ameriquest Founder Dead
Roland Arnall, founder of what was once the biggest subprime lender, has died of cancer.

Freddie Suspends Delivery Fee
Freddie Mac has suspended its recently implemented delivery fee and revised fees on cashout loans with high loan-to-values.

Citi Cuts HEL Jobs
Nearly 500 CitiMortgage employees will be laid off as the company significantly reduces its home-equity loan originations.

Conference Prompts Flurry of Tech Activity
The annual mortgage technology conference hosted by the Mortgage Bankers Association in Dallas has prompted a plethora of announcements from mortgage technology providers. Among services being touted are digital documents and signatures, loan origination systems and wholesale pricing engines.

HEL Exposure Hurts Big Lenders
A number of lenders recently saw their debt downgraded due to home equity loan exposure -- though Countrywide Financial Corp. is in the worst position.

Billionaire to Acquire Option One Servicing
The billionaire who picked up the servicing operations of failed Alt-A lender American Home Mortgage Investment Corp. has nailed down a deal to acquire the servicing unit of defunct subprime lender Option One Mortgage Corp.

RESPA Overhaul Proposed
The U.S. Department of Housing and Urban Development is proposing an overhaul of mortgage disclosures required under the Real Estate Settlement Procedures Act. Mortgage brokers, who have been on a campaign to eliminate disparity in disclosures between brokers, lenders and bankers, embraced the changes.

Lender Halts Nonconforming Business
The mortgage lending subsidiary of a Dallas-based home manufacturer has halted new nonconforming loan applications.

FHA Lender Adds 300 Employees
A New York-based company has ramped up its staff as it prepares to handle an onslaught of government-insured mortgage originations.

Firms Struggle With Volatile Environment
Delayed financials, executive exits, margin call defaults and debt ratings downgrades are among the latest issues facing U.S. financial institutions. Meanwhile, as one subprime analysis says the worst is behind us, mergers appear to be the only way to sound footing for at least two firms.

Online Advertising's Biggest Spenders
Fewer mortgage-related companies were among the 10 biggest online advertisers last month. Mortgage lead generation spending was down 20 percent.

Understanding Mortgage Fraud Today
CHICAGO -- Mortgage fraud today is characterized by new twists on old games with new players -- including violent criminals, crooked sellers and desperate home builders. And by making more payments on fraudulent loans before defaulting, their schemes are continuing longer before being detected, according to speakers at a fraud conference this week.

Brokers, Bankers at Odds Over YSPs
Mortgage bankers support recommendations announced today by the Bush administration to increase regulation of mortgage brokers and are calling for better disclosures of yield spread premiums paid to brokers. But mortgage brokers are warning that they will be driven out of the market if banks and lenders aren't forced to make the same disclosures.

Worst Mortgage Fraud States
Four of the five states with the highest level of mortgage fraud last year were also among the five states with the highest foreclosure rates. And an analysis of recent loan applications indicates fraud activity is still very heavy.

Apps, Rates Worse
Mortgage rates and loan applications were worse this week. But indices for variable-rate loans improved as did government loan applications.

Mortgage Firm to Liquidate
A fund that invests in triple AAA-rated mortgage-backed securities from Fannie Mae and Freddie Mac has seen the value of those securities fall -- likely forcing it to liquidate and casting a shadow over other mortgage firms.

Countrywide Fundings Improve, Foreclosures Worsen
February residential originations rose from January, delinquency dipped from a month earlier and government loan production has tripled over the past year at Countrywide Financial Corp. But home equity business tumbled and foreclosures climbed.

February Foreclosures Fall
Fewer days in the month of February helped bring the number properties with foreclosure filings down.

Commercial Mortgages Grow $356 Billion in 2007
Commercial mortgage debt outstanding grew last year, with record growth in multifamily.

Net Branch Shuffle
Growth is still occurring at some net branch operations -- despite a number of recent failures in the sector.

Cross product integration was dominant among the latest mortgage technology advances. One new offering projects defaults by zip code while another automates the initial disclosure process.

Mortgage Market on Roller Coaster
Panic market conditions have been soothed by the Federal Reserve's plan to provide liquidity to the mortgage securities market. Still, mortgage firms continue to struggle.

Death of a Branch Operation
A Florida-based net branch operation that previously promoted itself as a haven for mortgage brokers looking to avoid companies that would eventually collapse has itself collapsed.

Morgan Stanley Wins Repurchase Lawsuit
Morgan Stanley Mortgage Capital Inc. has won a lawsuit against a Maryland-based lender over repurchase demands that were not honored.

Most Admired Mortgage Companies
A number of troubled firms rank among the top ten most admired mortgage-related companies.

OTS Plan Refinances Negative Equity Borrowers
The Office of Thrift Supervision is floating a plan to help borrowers with negative equity avoid foreclosure. Meanwhile, as resources for foreclosure prevention continue to grow, subprime loan modifications are increasing.

Commercial Delinquency Low
Despite a surge in residential loan delinquency, commercial mortgages have been performing well -- especially those held by life insurance companies. Commercial loans held by banks and thrifts were among the worst performers.

Mortgage Investment Fund Facing Margin Calls
Carlyle Capital Corporation LTD has warned that it is in default on its financing agreements.

MBS, Servicer Upgrades and Downgrades
Subprime, Alt-A and commercial mortgage-backed securities saw classes downgraded while one servicer and one CMBS saw ratings upgrades.

States Advance Mortgage Legislation
Recent state legislative activity includes more thorough reporting procedures, stiffer broker licensing requirements and tougher loan qualifications for subprime and variable-rate loans.

MN Borrowers Challenge MERS Foreclosures
The Minnesota Supreme Court will decide whether or not MERS violates state law by instituting non-judicial foreclosures without recording or registering all mortgage assignments and without listing all assignees in notices of sale.

Financial Sector Struggle Accelerates
As one small bank was shut down and two other firms face collapse, negative ratings actions were taken on a number of larger banks because of deteriorating home equity loan performance. But one banking giant managed a record profit despite hefty loan charges. Meanwhile, Countrywide Financial Corp. is under investigation over its financial reporting.

Thornburg Facing Collapse
Thornburg Mortgage Inc., which today said it will restate financial results for last year, has indicated it may not be able to continue in business.

Conforming Jumbos Retroactive
Jumbo mortgages originated last year may be eligible for purchase as conforming loans as early as next month.

Validity of Repurchase Agreements
American Home Mortgage Investment Corp., a residential mortgage loan originator and Chapter 11 debtor in Delaware Bankruptcy Court, became the first originator to seriously pose the question, 'When is a repurchase agreement not a repurchase agreement?' It also presented the first challenge to the safe harbor provisions of the Bankruptcy Code that were specifically broadened in recent years to include mortgage loan repurchase agreements --otherwise known as mortgage loan repos.

Execs Defend Compensation
Congress today heard testimony from chief executive officers who defended their hefty compensation packages as their firms faced massive losses on subprime mortgages. The executives seemed to find support among Republican lawmakers as Democrats were on the attack.

Mortgage Employment Edges Lower
A drop in the number of brokers pushed monthly mortgage employment lower.

Rapid Alt-A Deterioration
Alternative-A loans behind residential mortgage-backed securities have seen a sharp increase in defaults as home prices continue falling, available loan programs contract and delinquent borrowers become more willing to walk away.

Mortgage Market Better
Mortgage rates improved this week and may continue to fall. New loan applications also were better.

Citi Shrinking Mortgage Business, Assets
Citigroup is reducing its mortgage holdings, consolidating mortgage operations and tightening mortgage guidelines.

Increased FHA, Conforming Limits Published
The new maximum loan amount that can be insured by the Federal Housing Administration will apply in 14 California counties, one Florida county and 10 counties in New York. In addition, FHA limits have been raised to a lesser degree in numerous other counties and also impact conforming limits.

Delinquency Continues Deterioration
More than one-in-five subprime adjustable-rate mortgages were delinquent at the end of last year, while more than one-in-ten subprime ARMs were in foreclosure. Subprime activity helped push overall delinquency to the highest level in more than 20 years and foreclosures to the highest level ever.

Mortgage Fraud Investigations Soar
Active mortgage fraud cases at the Federal Bureau of Investigation have recently ballooned, according to congressional testimony yesterday.

LOS, Documentation Enhancements
Dominant among recent mortgage technology innovations were enhancements to loan documentation, though advances were also made in loan origination systems. In addition, technological improvements were made to wholesale loan search and pricing, mortgage fraud prevention and refinance marketing.

Crisis Deepens at Thornburg
Thornburg Mortgage Inc. has reported that one of its lenders will begin liquidating some of its assets because the company defaulted on a credit line -- triggering cross-defaults with other lenders.

Higher FHA Rolled Out in Some CA Counties
The U.S. Department of Housing and Urban Development has already confirmed some of the California counties that will qualify for the temporary increase to maximum limit on loans insured by the Federal Housing Administration.

First Franklin Closing Confirmed
The parent of First Franklin Financial Corp. has confirmed it will shut down the subprime lender.

The Lead Pool
Mortgage lead companies are using blogs, free leads and property-specific promotions to generate and sell loan leads. One recent offering focuses on prospects who qualify for recently raised loan limits.

RMBS Ratings Still Suffering
The latest ratings activity included downgrades to more than $14 billion in classes of subprime residential mortgage-backed securities and billions more dollars in classes placed on watch for downgrades. But one Alt-A RMBS saw classes upgraded -- a rare action lately.

Secondary Marketing Journal
Recent secondary marketing activity included the acquisition of a $1.5 billion portfolio, the formation of a hedge fund to buy distressed portfolios and additional options for sellers of government-insured mortgages.

Builder's Mortgage Unit Settles with N.C.
Ryland Mortgage has agreed to pay more than $300,000 to settle allegations it used unlicensed originators and overcharged borrowers who purchased a home from its parent company.

Fed Advocates More Write Downs
The head of the Federal Reserve is calling for more modifications involving a write down of principal on mortgages for borrowers with negative equity. He explained how investors may actually come out ahead by allowing such modifications when compared to foreclosures.

Brokers May Fight New Appraisal Requirements
Mortgage brokers are threatening to file legal action in response to new appraisal guidelines on conforming mortgages.

Judge Rules in Favor of DPA Firm
A federal judge has ordered the U.S. Department of Housing and Urban Development hold off on implementing a rule banning seller funded downpayment assistance.

Downgrades Pile Up
Over $24 billion in classes of subprime residential mortgage-backed securities were recently downgraded, while another $14 billion in classes of Alt-A RMBS were placed on watch for a downgrade. And the small amount of activity that occurred on commercial MBS was mixed.

IndyMac Performance Deteriorates
Monthly mortgage originations tumbled at IndyMac Bancorp Inc., which said delinquency and foreclosures spiked.

Subprime Debacle to Shrink US. Credit by $2 Trillion
Outstanding credit in the United States will contract by around $2 trillion as a result of the subprime mortgage market meltdown, a new study estimates.

MTA Keeps Getting Better
The Monthly Treasury Average was undeterred in its trek lower. The index stands at its lowest point in nearly two years.

Servicers Required to Report Foreclosure Data
Nine large national banks have been required to provide monthly servicing data to the government.

Conforming Appraisal Overhaul
In an effort to curb the use of inflated appraisals, sweeping changes have been made to residential appraisal requirements on conforming mortgages. Among the changes is the prohibition of appraisals ordered by mortgage brokers and loan originators.

Liquidity Crisis at Thornburg
Jumbo mortgage lender Thornburg Mortgage Inc. warned today it is facing margin calls that could materially impact its ability to carry on.

Losses Driving Downgrades to Debt Ratings
As reports of massive mortgage-related losses continue to pour in, ratings agencies are busy downgrading the debt of financial services companies.



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