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August 2008 Archive

Regulators Tackle Mortgage Issues
State mortgage regulators met in Minnesota last week ahead of the GOP to discuss important regulatory issues. Licensing was among the top issues.

Western Banks' Interest Expense at 3-Year Low
The cost of funds for western banks continued to fall, dragging down a mortgage rate index with it.

M.I. Volume Sinking Fast
Mortgage insurance activity has fallen by half over the past year, is at its lowest level in nearly a decade and is headed lower. But as mortgage insurers tighten their guidelines, the quality of new business is likely improving.

FHA Wholesaler Seeks Brokers, Employees
An FHA mortgage lender based in New York has launched a wholesale lending division and is adding employees.

Digital Pricing, Closings and Compliance
Recent mortgage technology improvements have been concentrated in loan pricing engines, closing services and mortgage compliance. But appraisal and servicing technology has also been enhanced.

MGIC Raises Pricing, Tightens Guidelines
MGIC has tightened its guidelines and raised its pricing. Some of the moves appear to be aimed at negative equity borrowers who plan to abandon their current properties for lower-priced properties.

Competition Balloons for Reverse Mortgages
The growth in reverse mortgage originators is far outpacing the growth in reverse mortgage production. But a new newsletter suggests that fallout from the imbalance may be impacting new companies -- who rarely surpass five loans per month -- more than seasoned veterans.

Rates Mixed, Apps Firm
Fixed mortgage rates slipped, while the 1-year adjustable-rate mortgage moved higher. New loan applications reversed two weeks of declines and government activity continued to improve.

The FHA Wire
As FHA lenders grapple with changes to premium prices, one company is helping mortgage companies comply with government loan requirements while another has published a 1,000-page guide for originating, processing and underwriting FHA-insured loans.

Net Branch Winding Down
Former executives of Carteret Mortgage Corp. met in December to discuss a strategy for survival. But the company's chief executive officer has decided to throw in the towel. While managers and originators are finding new homes, Carteret's CEO is done with the mortgage business.

Carteret to close down next month
Exec Shakeup at Fannie
Fannie Mae has replaced three senior executives.

Thrift Performance Sinks
Residential originations at U.S. thrifts fell as delinquency soared and earnings soured. There were no failures in the sector during the first half of this year, but problem institutions rose.

Jumbo RMBS Performance Pulled Down With Nonprime
The declining performance of loans backing securitizations from 2006 and 2007 shows no signs of abating. Alternative-A, junior-lien and subprime transactions continue to be the worst performers, but recent jumbo activity is raising flags on nonconforming issuances.

Foreclosures, Workouts Continue Higher
While the number of foreclosures is rising, so is the number of workouts by mortgage servicers.

More Thornburg Warnings
Thornburg Mortgage Inc. paints a bleak picture of the current state of the mortgage market and its own ability to continue as a going concern. The jumbo lender has stopped originating new business, faced massive downgrades on its mortgage-backed securities and been hit with ongoing margin calls.

Mortgage Leads Times
The latest mortgage lead offerings include FHA trigger leads and loan modification leads. Among advancements in mortgage leads is a system that promises to convert dead leads into funded loans for $100 each. Other loan lead activity includes a lead powerhouse that has launched as a publicly traded independent firm and lawsuits against two firms that use telephone calls to generate loan prospects.

Troubled Banks Rise, Delinquency Doubles
Bank earnings fell as the number of troubled institutions rose, delinquency doubled and the sector consolidated.

Compliance on HELOC Suspensions
The regulator of thrifts reminded companies about rules and recommended practices for cutting or suspending home-equity lines-of-credit.

Delinquency Soaring, Purchases Tumbling at Freddie
Secondary purchases tumbled at Freddie Mac, which saw delinquency rise to the highest level in at least seven years.

Fannie Purchases at 3-Year Low
Secondary purchases by Fannie Mae fell to their lowest level in nearly three-and-a-half years, while delinquency is at its highest level in more than a year. The secondary lender's book of business, however, continued further past $3 trillion.

Corporate Maneuvers
The boardrooms of mortgage-related corporations have been busy dealing with stock exchange listings, capital conservation and legal actions. Large losses continued to plague the sector, while a failed bank was taken over and another firm was spun off.

Wells Mortgage Chief Leaving
The head of Wells Fargo Home Mortgage has disclosed plans to retire.

Fastest Growing Mortgage Companies
A few mortgage-related companies remain among the nation's fastest growing private companies. Commercial mortgage companies and credit repair firms dominated the sector.

Fifth State Sues Countrywide
An investigation by Indiana's attorney general has led to a lawsuit against Countrywide. Indiana, which alleges mortgage fraud and customer deceit, is the fifth state to sue Countrywide since June.

Florida Leads Rising Fraud
Led by an increase in new mortgage fraud cases along Florida's coast, U.S. fraud activity has risen significantly since last year.

Accredited Closes Wholesale
Wholesale lending operations were halted last week at Accredited Home Lenders Inc.

Some Improvements on HELOC Performance
Residential mortgage-backed securities issued last year and backed by home-equity lines-of-credit are performing better than the 2006 vintage, while HELOC issuances from 2005 and 2007 have seen foreclosures decline. Meanwhile, Bear Stearns, GreenPoint and IndyMac are the worst performing major HELOC and second-lien issuers.

Schumer Investigation Denied
A request by former employees of IndyMac Bank FSB to investigate Sen. Charles Schumer over the collapse of the company has been denied.

CA AG denies request by former IndyMac employees
Broker's Business is Booming
A St. Louis mortgage broker, who is on track to increase his originations this year by nearly 40 percent, attributes his success to strategic networking.

CitiMortgage Closing Wholesale Office
CitiMortgage is closing an Iowa site, impacting nearly 200 wholesale lending employees.

The MBS Ratings Journal
The latest ratings downgrades on residential mortgage-backed securities were dominated by Alternative-A transactions -- though two Alt-A deals saw upgrades. Commercial MBS ratings activity continued to be mixed.

2006 Subprime Performance Bad, 2007 Getting Worse
Total delinquency on subprime residential mortgage-backed securities issued in 2006 is above 40 percent and headed higher -- with securitizations from Long Beach Mortgage Co. among the worst performers. But delinquency on last year's deals is poised to surpass 2006's level.

Jumbo Performance Falling Fast
Jumbo mortgages backing residential mortgage-backed securities issued in 2006 have seen foreclosures and cumulative losses more than double, while total delinquency has also surged. Still, at 12 months' seasoning, it is the 2007 vintage that is performing the worst.

Growing Lender Adding Employees
A mortgage lender with wholesale and net branch operations has added more than 100 employees this year and plans to add another hundred.

Alt-A Deterioration Led by 2007 Vintage
Performance on Alternative-A loans behind residential mortgage-backed securities issued in 2005, 2006 and 2007 continues to deteriorate, with the biggest increase occurring with the 2007 vintage.

Erratic 1-Year Activity as Apps Ease
Longer term mortgage rates improved, but applications were still off. The 1-year adjustable-rate average surged, however, while its underlying index tumbled.

Foreclosure Class Action Against WaMu
A Massachusetts couple claim they were just following the advice of Washington Mutual Bank when they stopped making their mortgage payments so they could qualify for an assistance program being promoted by the bank. But following the foreclosure of their home, they became lead plaintiffs in a class action against the company.

LendingTree Settles Lawsuit
LendingTree LLC has settled a four-year-old lawsuit in which it was accused of the unauthorized use of technology from another company for its online exchange between borrower and lenders.

HUD Eases Loan Modification Procedures
The U.S. Department of Housing and Urban Development has made it easier for servicers to modify delinquent loans insured by the Federal Housing Administration.

IndyMac Pursues Wide-Scale Alt-A Modifications
The chairman of the Federal Deposit Insurance Corporation, who has been calling on servicers to make more loan modifications, is putting U.S. and investor money where her mouth is.

N.C. Trade Group Clarifies YSPs Under New Law
A mortgage trade group in North Carolina has warned its members that news reports indicating yield spread premiums are prohibited under a new state law are wrong. The new law does, however, place limitations on mortgage broker income earned on high-cost loans.

Best California Broker
California mortgage brokers have recognized a San Francisco broker as being the best in the state.

CAMB names Ed Craine broker of the year

Commercial Mortgage Volume Down
While quarterly commercial mortgage production has tumbled from last year, volume has recently stabilized. Meanwhile, fundings for health care properties have soared. Commercial loan securitizations have all but disappeared, though commercial banks have recently begun picking up some of the slack.

Massive Foreclosure Prevention Efforts Underway
Members of Congress are prodding servicers to hold off on foreclosures while new legislation is implemented, while a group of nonprofits is working to ensure foreclosure funds designated by the new law are put the highest and best use. In Chicago, the price of holding a vacant property rose, and the cost for foreclosure consultation from a Phoenix attorney fell. Two firms have automated the process of identifying foreclosure prospects and recommending solutions.

Routine Examination Turns Costly
When New Hampshire regulators were given loan files for a routine examination of a mortgage brokerage, they became suspicious about missing documents. With a little more work, they found the missing documents in a shredding bin and reconstructed them only to find altered documents on loans from that state and from Massachusetts. In addition to fining the broker $400,000, they alerted Massachusetts regulators -- who then took their own actions.

Fannie Halts N.Y. Subprime Purchases
Fannie Mae has followed Freddie Mac's lead on New York subprime mortgages.

Florida Firm Growing, Hiring
A Florida-based company that helps servicers with real estate owned has added nearly 100 employees this year and has plans to add more.

Bank Sued Over Failed Firm
A mortgage banking joint venture between a Colorado firm and a Kansas bank appeared to be weathering the financial markets storm until March, when the bank pulled the plug on the operation. Now the bank is being sued for millions of dollars by its former partners.

Wachovia Cutting PA Jobs
Wachovia Corp. plans to eliminate mortgage jobs in Pennsylvania.

Broker, Bank Exec Busted
A mortgage broker has pleaded guilty to helping a former executive of a Florida bank overcharge the banks borrowers. The two pocketed the difference while the bank wound up embroiled in lawsuits.

Help With Rising FHA Activity
The volume of loans insured by the Federal Housing Administration has spiked this year, new data indicate. Two firms are helping mortgage companies that are struggling to understand and comply with recent changes to the FHA program while trying to keep up with increased activity.

Firm Reports Success in Secondary Sales
A New York firm reports that it has brokered the successful sale of more than $6 billion in mortgage portfolios during the past year.

California Mortgage Layoffs
Hundreds of California employees were laid off earlier this month by Fremont Investment & Loan.

BoA Lays Off Illinois Employees
Bank of America Corp. has begun the painful process of eliminating 7,500 jobs in connection with its recent acquisition of Countrywide Financial Corp. The first round involved Illinois employees.

Positive IndyMac Update
IndyMac Federal Bank FSB, which still employs many of the people who worked there before it was taken over by government regulators, is operating under the Federal Deposit Insurance Corporation with fewer capital restraints in an environment with higher morale than in its final days as an independent company. Fewer layoffs are currently planned as the FDIC is apparently managing the company under a strategy that seeks to preserve value in the company's business units as ongoing entities.

Impaired Loan Secondary Market Expands
The market for impaired mortgages continues to grow as investors and servicers see opportunity to bring defaulted loans into a re-performing status. Other secondary marketing activity includes the development of warehouse lines for home-equity conversion mortgages.

Citi's Warehouse Unit Cuts More Jobs
More layoffs are planned at Citigroup Inc.'s warehouse lending unit.

New Jersey Layoffs at ResCap Unit
A Residential Capital LLC unit is laying off employees in New Jersey. The latest job cuts bring to more than 6,000 the number of layoffs since last year.

Pricing, Credit and MISMO
An enhancement to one pricing engine exponentially improves the offering, the developer claims. In other technology news, a recent improvement to credit scoring brings authorized users back, while mortgage technology standards have taken a giant step forward.

NovaStar Finds New Niche
NovaStar Financial Inc., which exited its mortgage production business in January, has invested in an appraisal business.

Actions Against Oregon Violators
Oregon is taking action against four mortgage companies over allegations of mortgage fraud, incomplete licensing and inadequate supervision of originators.

Rates, Apps Edge Lower
Mortgage rates eased, but so did 1003s.

ResCap Suing to Force Repurchases
In several lawsuits filed by an affiliate of Residential Capital LLC, loan correspondents are accused of failing to repurchase loans as required by the contracts they signed. In at least one case, the company is going after an individual who signed a personal guarantee.

Foreclosures Up Over 50% From 2007
Monthly foreclosures jumped, while filings are up more than 50 percent from a year ago.

Government Originations to Double
As rates rise and conventional originations slide, government mortgage originations are projected to more than double.

ResCap Closing Offices
Residential Capital LLC is closing two offices and eliminating more wholesale and retail positions.

Federal Regulators Busy
As reports of massive mortgage-related losses continue to pour in, federal regulators are busy investigating and issuing orders against financial firms. One thrift reported that a recent increase in withdrawals has subsided -- though a resumption could have a negative impact on capital.

Another State Sues Countrywide
West Virginia has joined a host of other states suing Countrywide Financial Corp.

Record Foreclosure Activity
The latest foreclosure report indicates filings have reached the highest level ever.

Alt-A Meltdown
Ratings on Alternative-A securitizations took another pounding this week -- with downgrades hitting classes of deals as far back as 1995. Meanwhile, activity on commercial mortgage-backed securities was mixed.

Direct Mail Volume Mixed
Marketers of mortgages and home-equity loans have cut their combined direct mail advertising in half since last year, a new report indicates. But two companies drove a recent uptick for just mortgage lender activity.

Freddie to Stop Buying Some N.Y. Mortgages
A new mortgage law in New York has prompted Freddie Mac to quit buying some loans in that state.

Foreclosure Prevention Becomes More Lucrative
Following a similar move by Freddie Mac last month, Fannie Mae said it would increase incentives to servicers that successfully avert foreclosures.

Wachovia Job Cuts Grow
Wachovia Corp. has increased to 11,350 the number of jobs it plans to eliminate.

ResCap Taps Former Exec of Bear Unit
Residential Capital LLC has hired a former executive of a Bear Stearns & Co. Inc. unit to head its high-risk mortgage servicing unit. He follows the company's chairman and chief executive officer, who also came from a Bear unit.

Layoffs at First American Unit
A unit of the First American Corp. has laid off employees at a Texas facility that services mortgage lenders.

Stiffer Underwriting at Banks
A new survey from the Federal Reserve indicated more banks continued to constrict mortgage guidelines. The report indicated the number of banks that make subprime loans has fallen by more than half during the past 12 months.

Another Blow to Battered Alt-A Market
Fannie Mae, which owns or guarantees more than $300 billion in Alt-A mortgages, said such loans are responsible for a disproportionate share of its losses -- leading to its decision to halt further Alt-A purchases. The move by Fannie is just another nail in the coffin of limited-documentation programs.

FDIC Fighting Subprime Repurchases
A pending federal lawsuit seeks to force the Federal Deposit Insurance Corporation to repurchase more than 1,000 subprime mortgages that have defaulted since they were acquired by a Texas-based bank more than five years ago. The loans were originated by a failed Illinois bank.

Recovery In Process at Lenders One
After a steep decline in the last quarter of 2007, Lenders One Mortgage Cooperative is seeing a recovery in loan originations.

Reverse Lender Seeing Success
The company that claims to be the biggest privately held reverse mortgage originator sees more hiring ahead.

Freddie Raises Fees
Freddie Mac has followed the lead of its Washington, D.C.-based counterpart and raised its delivery fees.

Wachovia Laying Off Originators
Wachovia Corp. is changing its retail lending model in several states in a move that will shift retail mortgage originations from the field to centralized origination centers. As a result, originators in those states are being eliminated.

Massive Losses, Legal Actions & 1 Done
Around $8.8 billion in mortgage-related losses were reported by U.S. firms this week. Other recent corporate activity included the issuing of several orders against banks, the disclosure of a major securities investigation, the filing of another investor class action and a warning about liquidity from Residential Capital LLC.

Ohio Sues 2 Brokers
Two mortgage brokers and an appraiser have been sued by the State of Ohio. In addition to allegedly failing to provide required disclosures, the companies are being sued because they listed property values on appraisal orders.

Florida Wholesaler Finished
A Florida-based lender is shuttering its broker channel.

Mixed Results at PHH
PHH Corp. saw an improvement in servicing income and an increase residential originations, making it a top-10 lender during the latest quarter. Production earnings, delinquency and its servicing portfolio, however, deteriorated.

Firms Fined More Than $300k Over Ads
A mortgage broker and a rapidly growing FHA lender operating in Washington have agreed to pay fines totaling more than $300,000 over allegations of false advertising. The move is the latest in the state's crackdown on mortgage lending activity.

States With Highest, Lowest Closing Costs
The cost to close a mortgage loan varies by nearly $1,400 between the states with the highest and lowest closing costs, according to a new report.

Wachovia Servicer Rating Upgraded
Despite a massive quarterly loss at Wachovia Corp., the servicer rating at its mortgage subsidiary was boosted.

2007 Vintage Performance Far Worse Than Prior Years
Alternative-A, jumbo and subprime loans securitized last year are performing far worse than loans from any issuances since at least 2001. Prime jumbo loans are seeing the worst deterioration.

Bankrupt Branch Operation Dumps Wholesale
A California-based company has eliminated its wholesale operation, converted from a mortgage banker to a mortgage broker and eliminated more than 70 branches. It hopes to emerge from bankruptcy with a new reverse mortgage strategy.

Best Mortgage Broker
The group representing U.S. mortgage brokers has identified a VA broker as the country's best mortgage broker. Two commercial mortgage wholesalers were also recognized.

1-Year ARM & FHAs Improve, Purchases Worsen
As government loan applications and the 1-year adjustable-rate mortgage improved, purchase 1003s sank to their lowest level in more than five years.

Countrywide to Complete 7,500 Job Additions
Bank of America Corp. intends to honor a 2004 commitment by Countrywide Financial Corp. to add 7,500 Texas jobs.

Lawsuits Pile Up Against Countrywide
Countrywide Financial Corp. is facing its seventh lawsuit in three months. The latest action alleges overcharging, mortgage fraud and poor underwriting.

Hundreds of Indiana Brokers Done
More than 500 Indiana loan brokers can no longer do business in the state.

HUD Touts Foreclosures Prevented
Loan production under the FHASecure program continues to grow, with around 130,000 loans refinanced during the past three months.

Foreclosure Friends and Foes
A legal firm says it helps some delinquent borrowers stay in their homes up to eight months without making payments and helps others who have had no hardship but are upside down in their mortgages. Meanwhile, more companies are coming to the aid of overwhelmed servicers -- with two recruiting displaced mortgage professionals.

Bankruptcies Increase
Bankruptcy filings surged last month and are expected to top 1 million this year.

CMBS Issuance Sinks, Delinquency Stable
Commercial mortgage-backed securities issuance fell to the lowest level in more than a decade. But the performance of loans backing the securities is holding up.

Layoffs at ResCap Unit
A subsidiary of Residential Capital LLC is laying off more than 70 employees.

Licensees in 5 States Face Deadlines
Mortgage license holders in five states face a Sept. 1 deadline.

Fannie Boosts Fees
Fannie Mae has increased some of its delivery fees and pricing adjustments.

Pricing Engines Gain Prominence
As nonconforming wholesale lending programs diminish, technology that scours the few remaining programs is flourishing. Other recent mortgage technology activity includes advancements in origination systems and compliance services.

Negative Amortization Leads
Borrowers with negative amortization mortgages are the target of a new offering.

MTA at 3-Year Low
The monthly Treasury average index fell to its lowest level in more than three years.

Alt-A Ratings Crumble
Hundreds of Alternative-A residential mortgage-backed securities were downgraded during the past few days, though some commercial MBS saw positive activity.

2008 Origination Forecast
A new report said residential mortgage originations this year are expected to fall nearly 20 percent from last year and nearly 50 percent from their all-time high. A recovery may be as far off as four years.

Global Banking Woes
As U.S. banks manage the casualties of devastated credit markets, international financial institutions continue to feel the pain. Given the current state of the markets, the implementation of an accounting rule that impacts as much as $10 trillion in asset-backed securities was delayed for at least a year.

Legislation Aims to Bring DPA Back
Just as seller-funded downpayment assistance appeared to be on its way out the door, new legislation has been introduced to bring it back.

Chase Eliminates Wholesale Jumbos
JPMorgan Chase & Co. is eliminating its non-agency products for mortgage brokers.

Mass. Borrowers See Some Foreclosure Relief
A California-based investment fund that acquired distressed loans originated by Fremont Investment & Loan has agreed to a settlement with the Massachusetts attorney general that will help prevent foreclosure for 200 subprime borrowers. Meanwhile, monthly foreclosures in the state declined -- though the decrease may only be temporary.

Broker Employment Edges Up
Mortgage employment eased in June, but the number of brokers actually edged higher.

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