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September 2009 Archive

COFI Down Again
The cost of funds index has tumbled by nearly half during the past year and sits near its record low.

Servicer Rating Upgraded at Hedge Fund Unit
The servicing subsidiary of a Connecticut hedge fund saw its subprime servicer rating upgraded for the second time in less than a year.

BoA CEO Leaving
Bank of America Corp.'s chief executive officer has had enough.

Pace of Modifications Slowing
Financial institutions completed 25 percent fewer loan modifications in the second quarter than in the first quarter, though trial modifications are gaining steam, according to a new government report. Re-defaults improved for the second consecutive quarter, and portfolio loans had a re-default rate that was around half the level of the rate on loans serviced by third parties.

Foreclosures Ease, Delinquency Worsens
The number and volume of U.S. mortgages serviced by banks and thrifts is on the decline. Delinquency, however, in still on the rise -- though new foreclosure filings eased. Nearly one-in-three adjustable-rate mortgages with payment options were delinquent -- more than double the rate a year ago.

Record Low M.I. Activity
The volume of mortgage insurance policies written fell to the lowest level on record last month, and the worst is yet to come.

William Mills Scores Conexxus as New Client
William Mills Agency, the largest independent public relations firm serving the financial and transaction technology services sectors, announced that compliance solutions provider, Conexxus, LLC, has selected the agency to provide financial public relations for the company.

FHA RMBS Downgraded
As losses and delinquency have climbed on government-insured and government-guaranteed mortgages, residential mortgage-backed securities backed by government loans have been hit with downgrades. Still, government guarantees and insurance mitigate losses to investors.

CitiMortgage Shakeup
The residential lending unit of Citigroup Inc. is reorganizing -- leading to the resignation of two top executives and the appointment of two more.

Executive Pool Rapidly Changing
The ousted president of PHH Mortgage's parent has joined Fannie Mae, while a former Fannie executive has joined Ellie Mae's board of directors. Several other mortgage-related firms also shook up their senior management teams.

Recent mortgage-related executive appointments, resignations

Fannie's Business Deteriorates
Secondary activity at Fannie Mae was down by a quarter last month, while record delinquency has nearly tripled from last year. But the secondary lender's book of business increased.

OCC, Bankers Concerned Over Loss of Preemption
While the proposed consumer financial regulator has its supporters, bankers are concerned that the new regulator could have too much power. Another big related issue is the proposed elimination of federal preemption.

Number of Credit Unions Falling
As the number of federally insured credit unions has diminished, the assets, first mortgage holdings and deposits held by the remaining group have surged. Mortgage delinquency continued to deteriorate and was highest at the smallest institutions.

Long List of Orders
Banking regulators recently reported that more than 100 regulatory orders have been issued against U.S. financial institutions -- including 56 cease-and-desist orders, 34 civil money penalties and 27 removal-and-prohibition orders.

$2 Billion Bank Busts
A $2 billion Georgia bank with more than $900 million in construction-and-land-development loans failed and is expected to cost the government nearly $900 million. Financial institutions in Florida and California were also seized by regulators.

Servicing Tech Targets Agency, Non-Agency Issues
Many recent improvements to servicing technology have been made to meet the needs of secondary mortgage agencies and the servicers who handle their loans. Other enhancements address new escrow account requirements for non-agency mortgage servicers that previously had no escrowing capabilities.

Bomber Targets Wells Building
A Dallas skyscraper that houses employees of Wells Fargo Home Mortgage and Wells Fargo Bank was the target of a bomber who is now in custody.

Hosam Smadi tried to bomb Dallas tower
Purchases, Delinquency Higher at Freddie
Secondary marketing activity at Freddie Mac was stronger in August. But delinquency climbed further into record territory.

New Correspondent Lending Unit at GMAC
GMAC Financial Services is targeting community banks for a new correspondent lending business.

Secondary Transactions Listed, Sold
Over a billion dollars in mortgages have recently been put on the market or sold.

New PR Director at Huntington Bancshares
Elizabeth Heller Allen has been named executive vice president and director of corporate public relations and communications for Huntington Bank. Allen has expertise in global communications, brand management, government relations and banking. In her new role, she will be a member of Huntington's leadership team. Her appointment is effective Sept. 28, 2009.

Mortgage Loan Exchanges Launch
Three firms recently launched separate offerings that help connect sellers of mortgages to potential investors.

Warehouse Lending Opportunities
As one warehouse lender expands its territory, a warehouse lending consultant says banks are missing the boat by not jumping into the lucrative business.

Secondary Update
Two firms are educating individual investors about acquiring mortgages, while a new offering promises to predict performance on potential portfolio purchases. Mortgage bankers are working on a standard agreement for whole loan sales.

FHA Cutting Off Appraisers
Some appraisers are being removed from the Federal Housing Administration's Appraiser Roster.

Record Government Purchase Applications
The one-year adjustable-rate mortgage improved as a growing share of loan applicants are opting for ARMs. An increase in new mortgage applications was fueled by a surge in refinances and record applications for government purchase financing.

Commercial Mortgages Contract
Despite quarterly growth in multifamily mortgages, commercial mortgages outstanding declined.

Colorado Firm Projects $3 Billion This Year
A mortgage banker based in Colorado has grown from just $13 million in annual originations to more than $3 billion. An in-house customer relationship management solution is credited with enabling loan officers to originate more.

Firm Helps in Delivery of Agency MBS
A Wisconsin firm is helping mortgage bankers move conforming and government mortgages through the agency securitization process. The latest delivery included nearly $1 billion in loans for the Government National Mortgage Association.

Fed Continues Support for Mortgage Lending
The Federal Reserve will continue its steps to support mortgage lending, though at a slower pace.

Fannie Updates M.I., Credit Score Requirements
Fannie Mae unveiled a host of changes that impact minimum credit scores and mortgage insurance. The updates are being made in conjunction with the implementation of the latest version of Desktop Underwriter.

FHA Lender Seeks Salespeople
A New York-based FHA lender is hoping to hire a hundred new loan originators by the end of this year. The company is prepared to provide extensive training for salespeople who might not have any mortgage experience.

Wells Chairman Leaving
After more than two decades at Wells Fargo & Co., the company's chairman is stepping down.

Freddie Hires New CFO
Freddie Mac has found a new chief financial officer. The spot has been vacant since the suicide of a senior executive earlier this year.

The Conference Chronicle
Among nearly three dozen mortgage-related events scheduled during the next two months are user conferences and a virtual convention. Other upcoming events tackle legal, foreclosure and banking issues.

The Wholesale Scoop
While fewer wholesale lenders seem to be chasing fewer mortgage brokers lately, several recent offerings go beyond traditional conforming and government programs. Among those still pursuing third-party originations are commercial and reverse mortgage lenders.

Hard Money is History
Upcoming regulatory changes for high-cost loans spell the end of hard-money lending.

Servicer Rating Cut at Barclays Unit
The U.S. servicing unit of Barclays Bank plc saw its servicer rating cut because of deterioration in modification efforts.

FHA Business Down
An increase in purchase activity wasn't enough to offset a decline in refinance and reverse mortgage endorsements by the Federal Housing Administration.

SS Verification Fees Soaring
The cost of verifying borrower social security numbers will increase by nearly 800 percent, according to a firm that provides verification services for lenders. The higher fee is expected to lead to more mortgage fraud and have a global impact.

2 Bank Subsidiaries of Irwin Fail Friday
Two bank subsidiaries of Irwin Financial Corp. failed Friday. Irwin has been paring its mortgage holdings for more than four years. Some of the firms that acquired operations from Irwin along the way have themselves failed.

The FHA Newsletter
The annual process of renewing Federal Housing Administration mortgagee approvals has been completely digitized, while a nonprofit group has teamed up with two service providers to offer FHA fulfillment servicers for approved correspondents. In other FHA activity, banks are being encouraged to take advantage of a program for purchasing and rehabilitating properties, and a former Fannie Mae chief credit officer says the FHA is headed for a taxpayer bailout.

FHA Tightens Streamline Refi Requirements
An expected shortfall in the Federal Housing Administration's capital reserve ratio has prompted changes to the agency's credit policy and the hiring of a chief risk officer. Among the changes are new requirements for FHA streamline refinances.

FHA Mortgagees Face Stiffer Eligibility Requirements
Mortgagees approved to originate and close loans that are insured by the Federal Housing Administration face stiffer net worth requirements under changes planned by the U.S. Department of Housing and Urban Development. But mortgage brokers fared well under the changes -- with liability on loans they originate being shifted to approved mortgagees.

The Federal Housing Administration plans to implement its own version of the Home Valuation Code of Conduct.

HVCC's Impact on Falling Values Disputed
The Home Valuation Code of Conduct is dragging down U.S. home values, according to mortgage brokers. But appraisal executives have a different perspective.

Irwin On Brink of Failure
Irwin Financial Corp.'s bank subsidiary has consented to a seizure by federal regulators.

Complying With Wave of Regulation
Compliance executives warn that revisions to mortgage regulations are happening at an unprecedented level, and service providers are lining up to help lenders comply. A new rule on high-cost loans conflicts with the hard-money lending model -- which considers only the collateral.

LendingTree Drops Lawsuit
Just three weeks after filing a lawsuit over a deal between Google and Mortech Inc., LendingTree LLC is backing away.

Per Loan Profits Skyrocket
Mortgage banking profits shot up more than 600 percent in the first quarter as the share of profitable firms was up substantially. The dramatic improvement was attributed to a wave of refinances.

ARMs Strengthen
More prospective borrowers are eyeing adjustable-rate mortgages, and with this week's big decline in the one-year ARM -- the share is likely to rise. Mortgage rates improved and new loan applications fell, while indications are that fixed rates will head higher.

Wholesaler Launches
A new wholesale lender will begin accepting loan packages on Dec. 1.

FDIC Unloads $1.3 Billion Res Portfolio
The Federal Deposit Insurance Corporation announced the winning bidder on a $1.3 billion residential loan portfolio.

FBI Zeros in on Insiders
The director of the Federal Bureau of Investigation told Congress today that his agency is focusing on insiders in its mortgage fraud investigations.

FBI director testifies before Senate

NY Leads Nation in Mortgage Fraud
U.S. mortgage fraud cases mostly held steady during the latest quarter. Activity in California nearly tripled, while it nearly quadrupled in Massachusetts. But activity was up nearly 600 percent in New York -- where active cases exeeded all other states.

House Supports Warehouse Aid, Higher Multifamily Limits
One of two bills passed by the U.S. House of Representatives will boost limits on some multifamily mortgages insured by the Federal Housing Administration. Legislators are also calling on the Obama administration to provide warehouse lending help.

More Mortgage Lawsuits Filed
The latest activity in mortgage-related litigation focuses on home-equity lines-of-credit, payment history reporting to credit bureaus and subprime ratings. Ellie Mae responded to allegations that it used its monopoly in the mortgage transaction process to put a document preparation firm out of business.

Federal Programs Save Borrowers Over $2 Billion
Borrowers who refinanced their home mortgages during the first six months of this year are expected save more than $2 billion, according to a report that looked at the impact from special government rate cuts and programs.

Merger Activity Continues
More than a dozen financial institutions are the target of acquisitions in applications reported this month by the Federal Reserve Board. One recent transaction pairs up two firms tied to two failed mortgage lenders.

3 Chairmen Out, 3 Presidents In
A mortgage executive has been found to replace the spot left open by the new Federal Housing Administration Commissioner. A Texas-based net branch operation has hired an executive to recruit more branches, while the chairmen of two financial institutions and a commercial mortgage lender are stepping down.

Recent mortgage-related executive activity

Failed Institution a Viable Entity
A $34 billion corporate credit union that was seized earlier this year has been classified as a viable entity, according to newly released financial statements.

Servicer Reported Fraudulent Performance Data
A hard-money mortgage servicer in California is accused of hiding delinquency from investors and -- in a classic Ponzi scheme -- using new investments to fund interest payments to existing investors. In all, investors are expected to lose more than $100 million.

2 Wholesalers, 3 Banks Done
Three bank failures Friday are expected to cost the Federal Deposit Insurance Corporation more than $2 billion. One of the banks had more than $3 billion in construction-and-land-development loans. Two wholesale lenders recently called it quits, including a Goldman Sachs & Co. subsidiary.

Secondary Marketing Fraud
Last month's failure of a New Jersey mortgage firm initially appeared to the result of elevated repurchases. But firm's chief surrendered this week amid charges the company was selling the same loans to multiple investors.

Break for Unemployed Borrowers
Institutions that acquire mortgages from failed banks and receive government subsidies on losses tied to those assets are being asked to delay foreclosures on loans to out-of-work borrowers.

Ginnie Backs Off Record
Issuance of mortgage-backed securities at the Government National Mortgage Association retreated from a record July.

Fees Altered by Brokers on Closing Documents
Three California mortgage brokers have been arrested for doctoring up loan documents after they were signed -- and boosting their fees in the process.

Origination Forecast Cut
The outlook for quarterly mortgage originations has diminished, and the forecast for next year's government fundings was slashed. But the expected adjustable-rate share was boosted, while the projection for fixed rates was lowered.

AZ Firm Adding 200 Jobs
An Arizona company that helps borrowers with workouts and loan modifications plans to add 200 new employees by the end of the year.

Future For Fannie and Freddie
A study commissioned by Congress looked at the costs and benefits of Fannie Mae and Freddie Mac as well as the possible business models they might operate under. One option considers the termination of the government-controlled enterprises, while another looks at cooperative ownership by lenders. One plan calls for the creation of a federal mortgage insurer.

MGIC Updates Guidelines on Flips
MGIC will stop insuring properties that were recently purchased. The mortgage insurer has also updated its premiums and its restricted markets.

Litton's HAMP Performance Better Than Appears
As a new member to the HAMP club, Litton Loan Servicing LP says its standing is distorted when compared to more tenured brethren.

Refis, 5-year ARM Improve
Led by a spike in refinance applications and an 0.08% improvement in the five-year hybrid adjustable-rate mortgage, the mortgage market improved.

Chase's Massive Servicing Integration Going Well
JPMorgan Chase & Co. has so far been successful integrating the servicing operations of Washington Mutual Bank and The Bear Stearns Companies Inc. -- both which it acquired last year. The combined unit is operating with a staff of nearly 20,000.

DPA is Back
An Atlanta firm has launched an automated service that helps lenders find local downpayment assistance programs. The offering also acts as a lead generation tool.

New CEO at Big Reverse Lender
A top-10 reverse mortgage lender has hired a new president and chief executive officer.

REOs Improve
Repossessions by U.S. servicers fell in August and were down from a year earlier. New foreclosure filings also were lower than in July.

NC Law Could Delay Some Foreclosures 60 Days
Servicers of North Carolina mortgages could have to wait another two months to foreclose on delinquent loans, according to a new law.

CMBS Delinquency Skyrockets
During the second quarter, delinquency on securitized commercial mortgages shot up more than 200 basis points.

Small Players Lead HAMP Performance
Subsidiaries of Morgan Stanley and Fortress Investment Group LLC are the best performers among servicers participating in the Home Affordable Modification Program. But the mortgage servicing subsidiary of Goldman Sachs & Co. is among the worst performers.

Record MTA Likely to Head Lower
Just when it seemed the monthly Treasury average couldn't go any lower -- it tumbled and will likely fall further.

New RMBS Reps & Warranties Proposed
Originators, sponsors and issuers of residential mortgage-backed securities game the securitization system at the expense of investors, according to a Florida firm that is helping to bring back investors. A proposed model for new representations and warranties would shift some of the burden from investors.

SoCal Firm Recruits Former Production Personnel
A Southern California company is recruiting processors, underwriters and closers to help it deal with delinquent borrowers.

Improving Production
As several small firms announce big increases in loan originations, a number of companies are providing production support for fledging lending operations. One outsourcing deal focuses on FHA fundings.

PMI Praises AZ Law But Warns on New Biz
The State of Arizona has passed legislation that could help The PMI Mortgage Insurance Co. keep issuing policies -- though the insurer is still warning about its ability to write new business.

Banks Face Growing Regulatory Actions
Regulatory orders against federally insured financial institutions jumped 49 percent during the second quarter, according to an analysis of regulatory activity by A surge in civil money penalties, cease-and-desist orders and prohibition orders fueled the increase.

Mortgage Obituaries
Last week was exceptionally brutal, with the failure of five banks on Friday and a credit union on Monday. Two companies have apparently failed in their attempts to convert from mortgage bankers to mortgage brokers.

Alt-A Ratings Slaughtered
Thousands of residential mortgage-backed securities backed by billions of dollars in Alt-A loans were recently downgraded by all three ratings agencies. A new report indicated that half of Alt-A loans backing RMBS issued between 2005 and 2007 have loan-to-values above 100 percent.

The Foreclosure Litigator
Delinquent borrowers are attempting to stop servicers from foreclosing by targeting compliance mistakes, missing documentation and suitability. A California attorney recently touted his success at stopping lenders from foreclosing, while the government recently used litigation to prevent a Florida firm from promising it can stop foreclosures.

Mortgage Jobs Expand
Despite a decline in the broker population, the number of people working in real estate finance rose for the first time in 10 months. Servicing hires fueled the expansion. Overall U.S. employment, however, worsened.

Keeping High Producing Employees
A new banking study laid out a number of factors that inspire productive employees to stay with their current employers. The report suggests more needs to be done by banks to retain the best quality employees.

Investor Litigation Shifting to MBS
As class actions against two financial institutions were dismissed, new investor litigation is increasingly tied to mortgage securities.

Applicants Avoid ARMs
Mortgage rates improved, applications for new loans eased and the share of government activity continued to grow. While adjustable-rate mortgages have recently been declining more than their fixed-rate brethren, prospective borrowers showed less interest in ARMs.

Berkshire Unit in Deal to Acquire No. 3 Commercial Servicer
A unit tied to Warren Buffet's Berkshire Hathaway Inc. is in a deal that could make it the third biggest U.S. servicer of commercial mortgages.

Wholesale, Alt-A Analyzed in University Report
A report from Columbia University challenges the mortgage broker model and blames life experiences -- not lender discrimination -- for a disparity in delinquency between whites and minorities.

Bankruptcy Breather
The number of borrowers filing bankruptcy eased last month -- though filings remained elevated over last year.

Strategic Defaults More Likely With High Scores
A deterioration in credit scores has pushed the ranks of subprime borrowers up by a third in a new report. But the same report found that borrowers with higher credit scores are more likely to stiff their lenders given a negative equity position.

Texas Origination Fees Highest in Country
Loan originators in Texas collect higher average fees than in any other state, a new report indicates. The higher commissions also pushed the state's ranking on overall closing cost to No. 1.

Wells Dominates Reverse Lending
Though its home-equity conversion mortgage originations were down, Wells Fargo & Co.'s banking subsidiary is closing nearly twice as many loans as the next biggest reverse mortgage lender. Overall U.S. HECM activity was down from the previous month and previous year.

New MBS Proposed
A proposal by U.S. mortgage bankers calls for the creation of mortgage-backed securities issued through a hybrid model that utilizes the existing government sponsored enterprises as a foundation and incorporates features from securities issued by the Government National Mortgage Association.

Delinquency, New Foreclosures Ascend
As foreclosure sales eased for U.S. mortgage servicers, delinquency and new foreclosure filings climbed.

Mortgage Executives Shuffled
A new senior executive starts this month at Freddie Mac, and an Obama administration appointee has been confirmed to chair the agency that regulates credit unions. Several mortgage firms recently reported new senior executives.

Recent executive activity at mortgage-related firms

HUD Eases Multifamily Construction Requirements
The U.S. Department of Housing and Urban Development has relaxed one of its requirements for financing multifamily properties.
Subprime Documentary Paints Ugly Picture
A new movie chronicling subprime mortgage lending paints a sinister portrait of subprime lenders and suggests borrowers were completely innocent. But the film's director seems a bit extreme in his description of the devastation caused by subprime lenders.

American Casino extreme in portrait of subprime lenders

Agency MBS Issuance Eases
Ginnie Mae ended a string of record breaking months, while mortgage-backed securities issuance at Fannie Mae also fell. But Freddie Mac issuance turned higher.

ARM Indices Tumbling
The cost of funds index declined in July. If other ARM indices are any indicator, COFI likely fell further in August.

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