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June 2009 Archive

COFI Skyrockets
Interest expenses for Western financial institutions shot up -- yanking the Cost of Funds Index well off of its record low.

Mortgage Jobs Open in Several States
Several FHA jobs are open in Michigan, while a Florida-based financial institution is adding servicing and processing positions. A report on Texas employment found activity within the mortgage sector there.

Chase Hires 1,000s as Mod Activity Leaps
JPMorgan Chase & Co.'s banking business has approved more than 100,000 trial loan modifications during the past three months, and the company is pleased so far with first-payment activity. Thousands of new employees have been hired to handle increased modification and origination activity.

U.S. Modification Analysis
Federal bank regulators have released details about loan modification activity during the first quarter. Among the findings were a surge in the number of modifications completed, a high rate of re-defaults and better performance on modified loans that are owned by the servicers.

Residential Delinquency Mixed at Banks
Residential delinquency improved during the latest quarter, though serious delinquency deteriorated, according to an analysis of mortgage data from the country's biggest banks.

M.I. Defaults Rise, New Business Declines
Mortgage insurance defaults increased and new business decreased as policies in force fell for the fifth straight month.

Serious Delinquency Soars at Fannie
Fannie Mae saw a jump in new monthly business. But serious residential delinquency climbed to a new high, while multifamily delinquency has quadrupled over the past year.

Study Finds Misleading HECM Marketing
A new government report indicated that counselors for reverse mortgages often fail to meet all required counseling requirements. The report also highlighted concerns about reverse mortgage advertisements.

Supreme Court Rules on Pre-emption
The U.S. Supreme Court has made a decision on whether states can investigate federally regulated financial institutions.

Forms 1003, 1008 Revised
Fannie Mae has updated the Uniform Residential Loan Application and the Uniform Underwriting and Transmittal Summary.

Friday's 5 Failures to Cost Over Quarter Billion
The closing of a Los Angeles bank brought to five the number of federally insured banks that failed Friday. In all, the government expects to lose more than a quarter billion dollars as a result of the five failures.

4 Failed Financial Institutions
After several weeks of relatively few bank failures, four banks in three states were seized today by state regulators. tracked regulatory orders against all four of the institutions prior to their failures.

Reverse Market Update
Regulators and reverse mortgage lenders hope to relieve pressure on borrowers who feel obligated to purchase ancillary financial products in order to close on their reverse mortgage. A trade group has addressed lead generation practices in developing reverse prospects, and Fannie Mae is discontinuing an adjustable-rate home-equity conversion mortgage program.

Record Delinquency at Freddie as Business Drops
Freddie Mac delinquency has increased each month for the past two years and stands at an all-time high. New business, meanwhile, was down from the prior month and the prior year.

Regulators Seize Hard-Money Lender
A 10-year-old Arizona hard-money lender was seized this week by state regulators. The company was founded by a "second-generation money lender" who started in the business as a teen.

Bill Proposes HVCC Moratorium
Lawmakers have introduced federal legislation that would suspend the Home Valuation Code of Conduct.

Loan Mod Daily
A growing number of firms are promoting the use of attorneys by borrowers seeking loan modifications. In other modification news, the nephew of Angelo Mozilo has co-founded a modification company and agency modifications increased.

Mortgage Insurers Expand Refi Programs
Two mortgage insurers have expanded their guidelines on refinance transactions.

HUD Hiring Thousands
The secretary of the U.S. Department of Housing and Urban Development said the agency plans to hire thousands of new employees during the next few years.

Donovan announces 6,000 potential openings

15, 30-year Spread Balloons
The spread between the 15-year and 30-year fixed-rate mortgage has not been this wide for more than a year. Reflecting last week's improvement in rates, 1003 applications improved.

Investor Litigation Falling
While investor lawsuits tied to the credit crisis more than doubled from 2007 to last year, quarterly filings have been trending down. Cases against mortgage lenders have tumbled.

Bad Appraisals, HVCC Hindering Recovery?
Home builders and Realtors claim bad appraisals are stifling the real estate recovery, though appraisers say their reports only reflect further deterioration. As appraisal management and software firms enhance their Home Valuation Code of Conduct offerings, a former state regulator calls the new code a disaster.

Direct Mail Volume Stabilizes
After two years of declines, direct mail volume by U.S. mortgage lenders might be near a bottom.

MBS Agreements Challenged in Bankruptcy Case
Senior investors in a commercial mortgage securitization are attempting to bypass the terms of the trust and obtain more favorable terms for themselves in a huge bankruptcy case. Meanwhile, an Arizona-based lender has settled its part in a $1 billion lawsuit.

Citi Suspends Correspondent
Citigroup's mortgage subsidiary has suspended new correspondent business while it overhauls the unit's quality control procedures.

AIG Unit Cutting Mortgage Jobs
American International Group Inc.'s mortgage insurance subsidiary is reducing its workforce.

New Warehouse Chief at Chase
A new chief has been tapped to run JPMorgan Chase & Co.'s warehouse lending unit.

Executives In, Executives Out
Much of the recent executive activity tied to financial services has occurred at the federal government -- though at least three private firms and one trade group announced changes at the top.

24 Federal Orders Issued
The latest round of federal regulatory actions included formal agreements with a dozen institutions, four cease-and-desist orders and four civil money penalties. Another three firms faced federal directives, and a bank employee was hit with a removal-prohibition order. Still, four cease-and-desist orders were terminated.

Mortgage Compliance Wire
The implementation of the new appraisal code has devastated borrowers, destroyed appraisal quality and increased loan expenses, according to two groups. In other mortgage compliance activity, a new study found that banks are more closely monitoring compliance by their business partners.

ResCap Ratings Raised
Residential Capital LLC's servicer ratings have been upgraded.

Originations Surge at Texas Bank
Mortgage originations have exploded at Colonial Savings F.A.

Taylor Bean Settles With 13 States
Allegations of mortgage fraud on nontraditional loans have led to a $9 million settlement with 13 states by Taylor, Bean & Whitaker Mortgage Corp. As part of the agreement, the company will implement a federal modification program.

Origination Forecast Slashed
Mortgage bankers have scaled back on their projections for originations this year by more than $700 billion.

United Guaranty Updates Pricing
United Guaranty Residential Insurance Co. is updating its pricing for borrowers with credit scores below 700.

Record Ginnie Issuance
Business at the Government National Mortgage Association climb to an all-time high.

Chase Sued Over Suspended HELOCs
JPMorgan Chase & Co. is being sued because it allegedly shut down a self-employed couple's home-equity line-of-credit even though their income hadn't changed. Another class action alleges that faulty appraisal values were used in decisions to close HELOCs.

2009 Death Toll: 80
The failure of three banks on Friday brought to 80 the number of mortgage-related closings this year. Two of Friday's casualties were more than a century old.

The Lead Journal
Mortgage leads companies are using new technology to increase activity, improve efficiency and boost customer retention. A growing number of lead providers have added loan modification leads to their menus.

Collection Calls Lead to Judgment
A federal judge has awarded a New Hampshire woman $200 per telephone call for hundreds of calls allegedly made by Ameriquest Mortgage Co. after she asked the company to stop harassing her. But the judge dismissed claims by the woman -- who represented herself in federal court -- that Ameriquest should have stopped her from a bumbling attempt to develop her own property and from borrowing more than she knew she could afford.

Wave of CMBS Servicer Downgrades
Fitch Ratings revised its criteria for servicers of loans that back commercial mortgage-backed securities -- leading to downgrades at 10 companies. But three servicers saw their ratings upgraded.

PHH Fires Chairman, CEO
Following a bitter battle between PHH Corp. executives and a group of shareholders, the company's chairman and the chief executive have been given the boot.

BNY Mellon's Servicer Rating Upgraded
The Bank of New York Mellon saw it servicer rating upgraded for the third time in one year.

Study Finds Relationship Between Securitizations, Defaults
New research suggests mortgages perform better when originators are better capitalized and when they keep some skin in the game.

Rates Fall, ARM Share Continues Rising
Mortgage rates declined for the first time in four weeks. Meanwhile, the share of borrowers opting for an adjustable rate has risen for six consecutive weeks.

FHA Hearings Address Broker Net Worth
In testimony before Congress today, mortgage bankers warned that the Federal Housing Administration and the Government National Mortgage Association need more resources to keep up with rapidly increasing government originations. The group also called on lawmakers to increase minimum FHA net worth requirements -- though mortgage brokers argue that an increase won't make a difference.

Banks Increase Share of Commercial Mortgage Holdings
Commercial mortgages owned by life insurers or held in securitization slipped during the latest quarter. But holdings at commercial banks and savings institutions picked up the slack.

AR Lender Leaps Past $1 Billion in Loan Fundings
An Arkansas-based mortgage banking firm has already originated more than $1 billion in home mortgages this year and is on track to double its regular annual volume.

4 States Pass License Laws, 1 Closes 87 Companies
Four states have passed legislation in conjunction with federal mortgage licensing laws signed last year by President Bush, while another state awaits its governor's signature. Nearly 90 Massachusetts mortgage companies faced cease-and-desist orders because they didn't comply with stiffer approval requirements in the state.

Sweeping Regulatory Overhaul
Mortgage lenders and financial institutions face the biggest overhaul of financial regulation since the Great Depression. A plan outlined today by the president calls for the creation of a powerful new regulator to oversee all aspects of mortgage lending, continued lender liability on securitized loans and the elimination of the Office of Thrift Supervision.

Sweeping Regulatory Overhaul

First American Acquires Mortgage Fraud Firm
A unit of The First American Corp. has acquired a firm that specializes in mortgage fraud prevention.

MetLife's Servicer Rating Downgraded
MetLife Home Loans' servicer rating was downgraded. The company plans to overcome deficiencies in its telephone communications by hiring more staff.

2004 Alt-A Ratings Slammed
Two ratings agency downgraded ratings on hundreds of Alternative-A residential mortgage-backed securities -- with one of the agencies being especially hard on the 2004 vintage.

Secondary Insight
Two companies are providing online auction houses for individual mortgage notes, while bids are being accepted offline on nearly $0.5 billion in loan portfolios secured by properties in several states. Fannie Mae adjusted its pricing on condominiums, and one group is calling for loan limits on mortgages acquired by Fannie and its secondary cousin Freddie Mac to be lifted to $1 million.

Mortgage Insurer Changes TPO Requirements
One mortgage insurer is changing requirements tomorrow for loans originated by third parties, and another has developed special guidelines for a special refinance program.

U.S. Originations Off
Just two of the top five residential lenders saw an increase in originations during April, according to government data on the biggest recipients of the Troubled Asset Recovery Program. Collectively, the top TARP recipients saw home loan fundings fall.

Mod Firms Face Growing Legal Actions
Federal and state officials are taking legal action against a growing list of loan modification companies -- with New York subpoenaing 14 firms. Among violations frequently cited are charging illegal up-front fees and claiming falsely high modification success rates.

27 Cease-and-Desist Orders Issued
The Obama administration has plans to overhaul the U.S. regulatory system -- including forcing mortgage originators to maintain at least some interest in securitized loans. Meanwhile, 27 federally regulated financial institutions recently faced cease-and-desist orders.

FASB Revisions to Materially Impact Bank Accounting
A change to the way banks account for mortgage-backed securities will materially impact their balance sheets. While the changes are expected to improve transparency, bankers worry the revisions will only create more confusion.

Subsidiaries of Failed Firms Revived
A small bank subsidiary of American Home Mortgage Holdings Inc. is being acquired out of bankruptcy, and the former retail brand of New Century Financial Corp. is looking for a partner. In other mergers and acquisitions news, the merger of two Wisconsin mortgage companies will reportedly create a top-10 lender in the region.

Servicer's Rating Upgraded
Fidelity National Financial Inc. saw its new servicing subsidiary's servicer rating upgraded by a second ratings agency.

CMBS Delinquency Soaring
Delinquency on loans behind commercial mortgage-backed securities is projected to climb as high as 5 percent this year from less than one-quarter percent in 2007.

FHA Condo Rules Revised
The U.S. Department of Housing and Urban Development is implementing new project approval requirements for condominiums financed with loans insured by the Federal Housing Administration.

Report: April Delinquency Data
Data from First American CoreLogic indicate the increase in monthly real estate owned filings is tapering off -- though cumulative REOs during the past 12 months have more than doubled.

Secondary Scam Netted Exec Over $100 mil
The former president of mortgage lender that collapsed earlier this year has admitted to fraudulently selling mortgages to Fannie Mae in a scheme that netted him more than $100 million.

Over 1,000 N.C. Jobs Being Added
Mortgage employees in Mecklenburg County, N.C., who have faced their share of layoffs, are getting support from the state -- which is helping to fund more than 1,000 new mortgage positions.

The Mortgage Litigator
Mortgage lenders and financial institutions are battling a barrage of lawsuits -- with many filed by state or federal government agencies. Several of the actions are tied to mortgage fraud.

Originations Still Projected to Increase
Although mortgage applications have declined by more than half during the past two months, Freddie Mac is still projecting that third-quarter originations for U.S. lenders will jump by more than 20 percent from the current quarter.

Rates Rapidly Rising
As mortgage rates climb, 15-year mortgages are becoming more attractive, adjustable-rate loans are rising in popularity and refinance activity is weakening.

Foreclosure Filings Fall
The number of U.S. foreclosures fell from April -- with California seeing its second consecutive decline. U.S. repossessions improved on a year-over-year basis, the foreclosure rate was fell from the prior month and year and Vermont had the best record of any state.

PHH Boardroom Battle Over
A battle between executives at PHH Corp. and an investment group over who will sit on the company's board of directors has been decided.

3 FHA Lenders Suspended
Three lenders approved to originate loans insured by the Federal Housing Administration were suspended by the U.S. Department of Housing and Urban Development over "serious" violations.

Banking and Lending Go Wireless
A growing array of financial calculator applications have been developed for the iPhone, while technology for banking applications is being designed for all types of wireless phones. In mortgage lending, originators can access at least one loan pricing engine through their mobile phones.

Older Subprime Vintages Deteriorating
Recent rounds of downgrades on subprime securitizations reached back to the 2000 vintage.

Citi Deal Fortifies Capital
Citigroup Inc. said today that an agreement with the government to convert preferred shares into common shares will make it one of the "best capitalized banks in the world."

Servicer Seized
Michigan regulators seized a mortgage servicer accused of pocketing investors' payments and siphoning off escrow funds.

OTS at Heart of Bank Crisis
BankUnited, IndyMac Bank F.S.B. and Washington Mutual Bank had one thing in common; they were all failed institutions overseen by the Office of Thrift Supervision. The agency admitted it was asleep at the wheel in its role as lead regulator for American International Group Inc.

Commercial Delinquency Deteriorating
Between the end of last year and the end of this year, commercial mortgage delinquency is projected to more than double.

Cantor Expands Whole Loan Acquisitions Unit
Cantor Fitzgerald & Co., which literally rose from the ashes of the World Trade Center, has expanded its whole-loan acquisition program to meet growing demand from hedge funds.

Flagstar CEO Out
The president and chief executive officer of Flagstar Bancorp Inc. is stepping down.

Foreclosure Litigation
Servicers in three states must contend with a growing army of lawyers who are offering pro bono services for borrowers facing foreclosure. In some cases, borrowers are successfully fending off foreclosure by demanding a copy of the note.

Mortgage Insurance Bulletin
Several mortgage insurers have tightened their credit score and debt ratio requirements. One mortgage insurance company is requiring that loans originated by mortgage brokers have credit scores 40 points higher than retail-originated mortgages.

Lender Acquires Branch Operation
An Arizona-based mortgage banker that shut down its wholesale channel three months ago has been acquired. The transaction adds a branch network and healthy lender relationships to a growing full-service mortgage operation.

Executive Weekly
A warehouse lender has named replacements for its chairman and chief executive officer, a Massachussetts bank chief is leaving his job after less than a year and Bank of America Corp. has beefed up its board with bank veterans.

Recent mortgage-related executive activity

Illinois Bank Seized
The failure of an Illinois bank founded in the fifties brings to 37 the number of federally insured banks to fail this year. The latest casualty was heavily weighted in construction-and-land-development loans -- as many victims were.

Freddie Eases Refi Rules
Freddie Mac has eased up on some of its requirements for the Home Affordable Refinance program. But rising rates are quickly diminishing the benefit of the program.

Bank Originators to Participate in National Registry
Six federal regulators have laid the groundwork for requiring loan originators at federally regulated institutions to join the national license registry. Meantime, several new offerings aim to help lenders meet a growing number of mortgage compliance requirements. But some firms are looking for ways to exploit compliance errors by lenders.

First Tennessee Servicing Ops Deteriorate
Deterioration in the servicing platform at First Tennessee Bank National Association, which is just a shell of its former self, prompted a downgrade to the company's servicer rating for junior liens.

Surprise Drop in Mortgage Jobs
Despite an increase in the number of brokers and thousand of open positions, monthly mortgage employment deteriorated in the latest government report.

Commercial Production Down by Over Half
Commercial mortgage originations dropped by nearly two-thirds last year and might fall further.

SEC Sues Countrywide Founder
Privately, Angelo Mozilo was warning Countrywide Financial Corp. executives about the company's "dangerous" subprime programs and "serious" lack of compliance, according to a lawsuit filed by the government today. But publicly, Countrywide was telling investors that it was a prime lender. The lawsuit offers a peek into a conflict between Mozilo and his top lieutenant over the danger of subprime seconds with 100 percent loan-to-value.

Fidelity Completes Acquisition of Servicer
The acquisition of a mortgage loan servicer by Fidelity National Financial Inc. prompted an immediate upgrade of its servicer rating.

Hearings on Fannie's, Freddie's Future
While nobody disputes the need in the mortgage market for Fannie Mae and Freddie Mac, much debate has emerged about whether the two government sponsored enterprises should be government-owned, government-sponsored or completely private.

Spread Between 30-yr & 15-yr Soars
As the 30-year fixed rate jumped to a six-month high, the spread between the 15-year and the 30-year reached its widest level in more than a year. Refinance activity tumbled, while purchase applications increased.

Chapter 13 Bankruptcies Grow
As consumer bankruptcy filings eased, Chapter 13 filings increased.

Bank Mergers Balloon
Firms are lined up around the block for Federal Reserve approval of proposed banking acquisitions, while dozens of federally insured institutions were acquired in the first quarter. Two mortgage company acquisitions -- including one servicer -- were also recently completed.

Wells Adding Texas Mortgage Jobs
Wells Fargo Home Mortgage is recruiting 200 processors and servicing employees in the Lone Star State. A job fair is planned for tomorrow.

It's a Mod, Mod World
The modification industry continues to be shaped by federal regulators and secondary marketing giants. Modification firms in three states faced legal actions by federal and state regulators, with one attorney general claiming many of the companies are "nothing more than rip-off artists."

Reverse Volume Sinks
Originations of home equity conversion mortgages tumbled 28 percent last month.

Thrift Earnings Improve
Headcount, assets and the number of approved thrifts decreased during the latest quarter. But earnings and loans serviced for investors increased.

ABCs of VA
A few years back, during the height of the housing boom, the VA loan program was feeling pressure from the mortgage industry to ease its credit underwriting conditions and allow lenders to select the appraisers rather than letting the VA do it.

Commercial Mortgage Delinquency More Than Doubles
Delinquency on commercial mortgages owned by U.S. financial institutions or held in securitizations is at the highest level since 2001. During just the past year, commercial mortgage delinquency has more than doubled.

MTA at 54-Year Low
It's been more than half a century since the Monthly Treasury Average has been this low.

Executive Alignment
As one presidential nominee was confirmed by the U.S. Senate to oversee legislative and regulatory issues tied to financial institutions, another awaits confirmation. Meanwhile, three chairmen are bowing out and two government-sponsored enterprises have appointed senior executives.

4 Firms Adding Over 2,000 Mortgage Jobs
Among more than 2,000 people being hired for mortgage positions at four companies are originators, production personnel and servicing employees.

Hawaii Hurting, But Signs of U.S. Recovery
Delinquency is rising faster in Hawaii than in any other state. On a national basis, however, quarterly delinquency rose at a slower pace -- indicating that the worst of the recession may soon pass.

MBS Issuance Soars at Fannie
Monthly issuance of mortgage-backed securities fell at Freddie Mac, grew at Ginnie Mae and flourished at Fannie Mae.

Lenders One Fundings Nearly Double
If members of Lenders One Mortgage Cooperative were one company, they would have ranked as the No. 5 residential lender in the country.

Alt-A Ratings Raised at BoA Servicing Unit
A Bank of America Corp. servicing subsidiary saw its Alt-A servicer rating upgraded.

April Activity Worse at Fannie
Monthly business volume eased at Fannie Mae, while delinquency ventured further into record territory.

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