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October 2008 Archive

No. 17 Dies On Halloween
A Florida bank has become the 17th federally insured institution to fail this year. It has also become the 83rd company this year to land in the Mortgage Graveyard.

COFI Party Over
For the first time in more than a year, the Cost of Funds Index moved higher.

Chase Modifications to Top $110 Billion
Chase estimates it will have modified $110 billion in mortgages by 2011. An enhanced loss mitigation plan involves more than 400 new positions.

MetLife Reports Production
MetLife Inc. reported mortgage production for the first time since acquiring most of First Horizon National Corp.'s mortgage operations.

More Mortgage Insurance Deterioration
Mortgage insurance activity fell to the lowest point this decade. New applications were also down while defaults were higher.

Nationstar Parent Looking to Quicken for Help on Portfolio
Nationstar Mortgage LLC's parent has enlisted Quicken Loans Inc. to refinance and modify its mortgages holdings.

Fannie Q3 Results Deteriorate
Delinquency continued to deteriorate at Fannie Mae -- which manages more than $3 trillion in mortgage assets. Quarterly purchases declined, reflecting one of the most tumultuous periods in its history -- though new business improved during the latest month.

GMAC Discussing Bank Structure
GMAC Financial Services is looking to compete with the likes of Bank of America Corp. and JPMorgan Chase & Co.

Extracted Home Equity Down by Half
The share of quarterly cashouts increased, but year-to-date equity extracted is down by half from last year.

LendingTree Model Stressed
Fresh off an initial public offering, LendingTree LLC's parent said its business model is strained as business is limited to only conforming conventional loans or mortgages insured by the Federal Housing Administration.

Rates Higher, Apps Lower
Mortgage rates continued their roller coaster ride, dragging applications with them.

The Net Branch Insider
Two net branch companies have stepped up efforts to recruit mortgage brokers and expand. While branch operations have traditionally focused on loan originations, at least one company has emerged that focuses on loss mitigation.

Nonprime Rampage Continues
Moody's Investors Service continued slashing ratings on nonprime residential mortgage-backed securities.

Subprime Mods Offsetting Rising Rates
An increase in loan workouts and modifications will offset the impact of a recent spike in a widely used index for adjustable-rate mortgages on upcoming subprime resets, one ratings agency is predicting.

Income Not a Factor in Subprime Foreclosures
A new report found that income is not a factor in subprime foreclosures. It also found the most subprime mortgages were made outside of poverty-stricken areas.

The Secondary Marketing Report
Fannie Mae has launched a new program for purchasing residential loans and also indicated its interest in acquiring multifamily loans, while Ginnie Mae has issued parameters for purchasing HOPE for Homeowners loans. Meanwhile, a new consulting firm, new software and new alliance have launched to help loan buyers make better decisions.

Over 1,000 Recent Mortgage Layoffs
More than 1,000 mortgage-related employees have been notified during the past month that they will be laid off.

Growing Firm Now Bankrupt
A New York mortgage company, which had been rapidly growing and publicly traded, has filed for bankruptcy liquidation.

Mortgage Rules and Regulations
Mortgage brokers and lenders will have more time to comply with a new Red Flags Rule designed to reduce mortgage fraud, though a number of services have emerged to help ensure compliance. Two companies are touting technology that helps wholesale and retail lenders comply with requirements under a new appraisal ordering code.

Branch Operation Calls it Quits
At its peak, Ace Holding Co. operated retail and wholesale subsidiaries that originated more than $3 billion in mortgages annually and employed hundreds of employees at dozens of offices. But following a string a lawsuits and the collapse of its wholesale subsidiary, the company has now shut down its retail branch operations.

Nonprime RMBS Ratings Pounded
Moody's Investors Service went on a nonprime ratings rampage. More than 5,000 classes of residential mortgage-backed securities were impacted, with vintages from as far back as 2001 downgraded.

Reverse Mortgages for Purchase Transactions
Recently enacted federal legislation makes home purchases eligible for reverse mortgages that are insured by the Federal Housing Administration.

Credit Magic
The developer of a new system claims it helps originators turn declined applications into approved loans.

Hopeful Data from HOPE NOW
New and completed foreclosures on subprime mortgages declined during the latest month and the latest quarter, a report from HOPE NOW indicated. Even prime foreclosure starts were down during the latest month. Delinquency, however, worsened for all categories, while loan modifications picked up.

Mortgage Impact from a President McBama
The subprime debacle -- and its impact on the U.S. economy -- has placed mortgage lending at the center of the presidential race. has reviewed positions taken on mortgage issues by the two major contenders for the nation's highest public office.

Review of McCain, Obama mortgage positions

Mortgage Fraud Falls
Quarterly mortgage fraud activity dropped. Some of the states with the most fraud activity were also the states with the most foreclosures.

Georgia Bank Shut Down
Georgia banking regulators have shut down an Alpharetta bank. Nearly half of the bank's asset were bad.

6 Lenders Lose FHA Approval
Branches of six mortgage companies have lost their approval to originate loans insured by the Federal Housing Administration. One of the terminated lenders operates a rapidly growing FHA lending subsidiary.

GMAC Sues Fired Employees
GMAC Mortgage LLC is suing a group of recently laid off employees, alleging they stole customer data and company letterhead to solicit business for their new employer.

Freddie Activity Worsens
Monthly secondary volume edged higher at Freddie Mac, but quarterly business dropped by nearly half. Residential delinquency continued to deteriorate.

PNC Acquiring National City
A major consolidation of U.S. financial institutions picked up steam as a deal was reached for National City Corp. to be acquired by The PNC Financial Services Group Inc. The acquisition is effectively being financed by U.S. taxpayers under the U.S. Treasury's direct investment in domestic banks.

SunTrust Performance Deteriorates
Quarterly loan production fell, mortgage banking losses rose and delinquency worsened at SunTrust Banks Inc.

MGIC Tightens Guidelines
Next month, Mortgage Guaranty Insurance Corp. will roll out more restrictive underwriting guidelines.

Ratings Agencies in Hot Seat
Confidence in the rating agencies has disappeared because the agencies responded to the demands of security issuers for high ratings and ignored the demands of analysts for more mortgage data and additional staff, according to testimony from former and present rating agency officials at a House committee hearing in Washington.

Rates Continue to See Saw
Driven by last week's soaring rates, mortgage applications tumbled. But a big rate decline this week will likely lead to a surge in applications in the next report.

Foreclosures Temporarily Ease
A temporary decrease in the number of monthly foreclosures filed was the result of legislation in some states that delayed the inevitable. More than 2.2 million foreclosures have been filed so far this year, while servicers have taken back nearly 600,000 properties.

Explosion of Technology
This week's Mortgage Bankers Association Mortgage 95th Annual Conference and Expo in San Francisco prompted a plethora of mortgage technology news releases. Among announced enhancements were the integration of a loan origination system with a point-of-sale offering, improvements to automated appraisal technology and advancements in digital loan closings. One new credit offering increases the ability to forecast risk.

NVR Production Improves
Net income deteriorated at NVR Inc. But mortgage originations edged higher -- making it the only company to see an improvement so far this earnings season.

E-LOAN to Halt Mortgage Lending
E-LOAN Inc., one of the first online mortgage lenders, is getting out of the mortgage lending business. The move is one of many taken by the online lender's parent to disassemble its U.S. financial empire.

Losses Ease But Delinquency Soaring at Downey
Mortgage production fell at Downey Financial Corp. , but so did losses. Delinquency, however, continued its meteoric rise.

Wachovia Meltdown
Quarterly mortgage production dropped by more than half at Wachovia Corp. as the company saw its losses during the past 12 months shoot past $30 billion. Much of Wachovia's troubles emanated from its pick-a-payment portfolio.

Bank Capital Journal
Most of the latest corporate activity centered around bank capital, though a public offering was successfully completed, a class action was filed and an acquisition was approved.

U.S. Bancorp Performance Fair
Quarterly performance at U.S. Bancorp could have been worse.

Biggest Reverse Lenders
IndyMac Federal Bank's reverse lending subsidiary is still the leader in the sector, but two competitors are cutting its lead.

SBA Program Enables Easy, High-LTV Commercial Mortgage
Many banks today are terrified of making conventional commercial real estate loans. They are afraid of losing money.

Origination Outlook Diminished
Freddie Mac has lowered its projections for U.S. residential mortgage production.

National City Still Struggling
Mortgage production tumbled, delinquency jumped and layoffs continued at National City Corp. But the company managed to reduce losses.

Solutions for Default Servicers
With the Mortgage Bankers Association's annual conference happening this week in San Francisco, several firms that help servicers manage their defaulted loans are touting their wares. A common theme among many of the service providers is the utilization of technology.

The Problem and the Solution
Chase released a report today chronicling the mortgage meltdown and outlining necessary steps for the mortgage industry.

Best Neighborhoods for Loan Prospects
A new service uses old data to help mortgage originators find prospective borrowers.

Firm Exits Wholesale, But Warehouse Biz Strong
A California-based institution has shut down its wholesale lending unit and will instead focus on its correspondent lending business and thriving warehouse operation.

Alliance Aims to Ease Foreclosure Process
An alliance between two firms that handle different aspects of foreclosures for servicers promises to expedite routine filings while providing additional attention and care to contested and problem filings.

Best Originators
A new survey ranked the best mortgage originators and analyzed why they ranked highest.

Conforming Loan Limits
Fannie Mae, Freddie Mac and their regulator have issued updates on loan limits and fees.

Slimmed Down First Horizon Still Struggling
Reflect the recent sale of much of its mortgage operations, First Horizon National Corp. saw quarterly mortgage production tumble by half. Losses during the latest period worsened by $150 million.

Countrywide Banned From Illinois Lending
Countrywide Home Loans Inc.'s ability to originate new loans in Illinois has been suspended -- at least temporarily. But the ban on new lending may be immaterial.

Illinois Sheriff to Resume Foreclosure Evictions
A controversial move by a county sheriff in Illinois to halt all foreclosure evictions has been resolved. But servicers will have to wait as long as 120 days for non-borrower tenants to move out.

Florida Leads Federal Fraud Prosecutions
A report from Syracuse University found that federal mortgage fraud prosecutions this year have been concentrated in Florida.

Four companies reported improvements to their loan search and pricing engines, three companies announced enhancements to their automated valuation models and two companies boasted about advancements in their loan origination systems. Other mortgage technology activity included an expansion of available Web site designs and faster online income verification.

Appraisers Blame Countrywide for Lost Income
A group of appraisers has filed a class-action lawsuit against Countrywide Financial Corp. claiming the mortgage giant was responsible for damaging the business of thousands of appraisers.

Downey Done With Brokers
Struggling Downey Savings and Loan Association has shut down its wholesale operations and is scaling back its retail operations. Hundreds of employees are impacted.

Rates Soar, Refis Strengthen
Fixed mortgage rates shot up -- with the 30-year increasing more than it has in two decades. But the one-year adjustable-rate mortgage barely moved, and applications for refinances, reported on a one-week lag, were stronger.

Citi Hemorrhages as Activity Deteriorates
Quarterly mortgage production was off more than 20 percent at Citigroup Inc., which has reported more than $20 billion in losses over the past year as delinquency has doubled.

Wholesaler Done
A company that claims to be among the biggest U.S. lenders is pulling the plug on its wholesale lending operation.

Wells Sees Decline in Originations
Wells Fargo & Co. saw quarterly production fall -- but not nearly as much as two big rivals.

JPMorgan Results Deteriorate
JPMorgan Chase & Co. saw quarterly mortgage originations tumble. Earnings sank and are expected to worsen.

Credit Crisis Spawns 243 Mortgage-Related Failures
Since the beginning of the credit crisis in 2006, 243 mortgage-related operations have collapsed or closed down.

Mergers Pick Up Steam
At least four mergers are in the works -- including the acquisition of two mortgage firms and two banks. At the same time, there were plenty of regulatory orders, securities settlements and class actions to be found.

10-Year Treasury Tops 4%
The yield on the 10-year Treasury shot past 4% today, suggesting 30-year fixed mortgage rates have been pushed above 6%.

Reverse Volume Edges Higher
Reverse mortgage originations were among the few areas of mortgage lending to see an improvement, and upcoming program changes promise to boost business even more.

Multifamily Business Holds Up
Despite a decline in residential originations last year, multifamily production saw an increase. Meanwhile, the recent failure and potential acquisition of the two biggest multifamily lenders is creating a new world order in apartment lending.

Government to Invest in Banks
Some of the $700 billion Troubled Asset Relief Program will be used for the U.S. government to invest directly in U.S. banks. The rescue package also includes bank loan guarantees and provisions to stabilize the commercial paper market.

$250 billion of TARP funds targeted

Nonprime Ratings Pummeled
Downgrades recently accelerated on Alternative-A, second-lien and subprime residential mortgage-backed securities. Standard and Poor's Ratings Service alone downgraded more than $25 billion in securities.

Bankers Blast FASB Fair Value Guidance
The nation's bankers are calling on the Securities and Exchange Commission override a recent accounting pronouncement on mark-to-market accounting.

TARP Plowing Forward
The chief of the $700 billion Troubled Asset Relief Program told bankers today that implementation of the program is moving quickly.

Neel Kashkari updates bankers

Suit Against WaMu Seeks Foreclosure Moratorium
The City of San Diego has sued Washington Mutual Inc. in an attempt to halt foreclosures by the former lending giant. The case, which accuses the thrift of mortgage fraud and predatory lending, is the second recent lawsuit filed by the city against a major lender just after it was acquired by a major bank.

2 Midwest Banks Fail
State banking regulators have closed down a Michigan bank and an Illinois bank.

Analysis of HOPE for Homeowners Program (free report)
The law firm of Weiner Brodsky Sidman Kider PC has prepared a white paper on the HOPE for Homeowners Program created under as part of the Housing and Economic Recovery Act of 2008.

Lawsuit Dropped Against Illinois Sheriff
Accredited Home Lenders is backing away from a lawsuit against an Illinois sheriff that is refusing to perform evictions on foreclosed properties.

Inside Mortgage Fraud
An attorney for the U.S. Department of Justice recently provided an inside look at the process involved in prosecuting a mortgage fraud case. While the government is looking to lock up ringleaders of mortgage schemes, industry insiders are their biggest targets.

Asst. U.S. Attorney presentation to mortgage bankers

New No. 1?
With Citigroup Inc. out of the way, Wells Fargo & Co. is on its way to becoming the biggest U.S. mortgage orginator with its potential acquisition of Wachovia Corp. But a problem portfolio and a $60 billion lawsuit loom over the deal.
Move by Sheriff Threatens Chicago Lending
Bankers warn that a move by the sheriff's office to stop evictions on Chicago foreclosures could end up preventing new lending in the area.

Cook County sheriff suspends foreclosure evictions

Foreclosures Edge Lower
Loans entering the foreclosure process dipped last month, according to one foreclosure listing service. But filings were still nearly double the level a year earlier.

MTA at 30-Month Low
The monthly Treasury average now stands at its lowest point in three-and-one-half years.

Mixed Mortgage Market
Fixed rates fell, 1003 applications nudged higher and FHA activity jumped. As the yield on the 1-year adjustable-rate mortgage rose, the underlying 1-year Treasury yield tumbled.

TARP Gives Hope to Mortgage Sector
Combined with a recent improvement in subprime performance, the $700 billion plan for the U.S. Treasury Department to buy up mortgage assets has the potential to significantly help the mortgage business.

Default Servicing News
Several states are calling on subprime servicers to adopt streamline modifications that may cost one company more than $8 billion, while servicers of Federal Housing Administration loans are being warned about loss mitigation steps that are required to avoid damage assessments. And as some companies have emerged to help servicers deal with delinquent and foreclosed loans, one is looking to exploit lender compliance errors.

Judgment in Favor of Lenders on Escrow Interest
A recent opinion by Utah's highest court denied borrowers in a 33-year-old class-action case the right to earn interest on their mortgage escrow account. Federal preemption was cited in the decision.

Analysis of Economic Emergency Stabilization Act (free)
A new white paper analyzed the recently passed H.R.1424, the Emergency Economic Stabilization Act of 2008, which was signed into law on Oct. 3, and the Troubled Asset Relief Program that enables the U.S. Treasury Department to purchase, manage and sell up to $700 billion toxic mortgage assets.

Red Flag Alert
With less than a month until mandatory implementation, service providers are lining up to help lenders comply with the new Red Flags Rules. Other mortgage compliance activity includes opposition remains fierce to proposed Real Estate Settlement Procedures Act changes.

Credit Trends Morph
A new report shatters the conventional wisdom that borrowers with a mortgage do a better job paying other types of credit.

U.S. Subprime Losses Projected at $1.4 Trillion
Global turmoil brought the financial markets to their knees last month, according to a new report that estimates global losses from the U.S. mortgage meltdown will now reach $1.4 trillion.

CitiMortgage Reduces Broker Business
CitiMortgage is slashing the number of mortgage brokers it does business with -- leading to hundreds of layoffs. Business from a smaller and more productive group of brokers will ultimately be channeled through offices in Missouri and Texas.

Broker Share, Loan Profits Decline
A new trade group report indicated broker share fell last year as retail and correspondent share rose. Mortgage bankers saw losses climb more than $500 for each loan they originated, though servicing profits per loan nearly doubled.

Lack of FHA Kills Ohio Firm
A once-booming mortgage company that specialized in subprime refinances has shut down. The Ohio-based company's demise appeared to be tied to its lack of government loan programs.

Coldstream closes

BoA Originations Dive
If Bank of America Corp.'s originations are any indication, the latest quarter was a disaster for U.S. mortgage lenders.

Bad Loans, Bad Investments
Five Southern California mortgage brokers have been charged by the Securities and Exchange Commission with allegedly placing borrowers in unaffordable subprime loans to finance unsuitable securities -- earning commissions every step of the way.

Servicing Employees Eliminated
Popular Inc. continues to dismantle its U.S. mainland operations, with more than 160 servicing employees receiving pink slips.

Bailout Satire
Mortgage Lending has reached the pinnacle of pop culture. A skit on the latest Saturday Night Live provided a humorous but comprehensive overview of the mortgage crisis -- highlighting the roles of borrowers, Democrats and the former leaders of Golden West Financial Corp. The Sandler featured in this skit, however, was not Adam.

SNL does skit on bailout

Mother of All Settlements
Bank of America Corp. will spend mortgage than $8 billion to settle charges of predatory lending at Countrywide Financial Corp.

Over 9,000 Mortgage Layoffs in Q3
Employers slashed more than 9,000 mortgage jobs in the third quarter.

University of Mortgage Leads
One new lead service delivers live telephone calls and only charges for the lead if the call lasts more than 30 seconds. Other advancements in mortgage lead generation include guaranteed mortgage leads and a letter campaign for self-generated leads.

Consumer Bankruptcies Down
Monthly bankruptcy filings by consumers fell.

Bailout Bill Now Law
Legislation authorizing the U.S. Treasury Department's purchase of $700 billion in mortgage assets has been signed into law by President Bush.

H.R. 1424 signed by president

Fannie Cancels Adverse Delivery Fee Increase
Less than two months after doubling its adverse market delivery charges, Fannie Mae is reversing its decision.

Mortgage Jobs Off, Brokers Up
An increase in the number of brokers wasn't enough to push overall mortgage employment higher in a monthly government report.

Merged Wells-Wachovia Could Challenge No. 1
Wachovia Corp. has scrapped a deal to be acquired by Citigroup Inc. and will instead be acquired by Wells Fargo & Co. The W&W merger creates a formidable challenge to Bank of America Corp.'s potential standing as the No. 1 residential originator.

Originating H4H Loans
Guidelines have been issued for refinancing delinquent and current exotic loans using a government-insured program created under the recently passed housing legislation. Lenders that utilize the program will be held accountable for fraudulent appraisals.

Reverse Mortgage Updates
Counselor fee payments have been prohibited and loan limits are increasing on reverse mortgages.

Subprime Reset Defaults Low as Foreclosures Sales Fall
Subprime foreclosure sales fell in August, pushing overall foreclosure sales lower, according to a new report. Data indicate that subprime resets are not proving to be as big a problem as previously anticipated.

Erratic Behavior on ARM Indices
As the yield on the 1-year Treasury tumbled, the 6-month LIBOR yield soared. New 1003 activity deteriorated.

Banks Face Mergers, Regulatory Orders
A new real estate investment trust is being launched, an order was issued against a bank officer accused of mortgage fraud and Fannie Mae and Freddie Mac faced grand jury subpoenas and securities regulatory inquiries. Meanwhile, dozens of other banks faced a host of regulatory orders and a growing number of institutions face mergers.

Senate Passes Fatter Bailout Package
The U.S. Senate passed its own version of a $700 billion mortgage bailout package.

FHA Changes Effective Today
The timer on the home page of the Nehemiah Program's Web Site has expired -- indicating down payment assistance funded by home sellers is no longer available on loans insured by the Federal Housing Administration. But that isn't the only change on FHA loans effective Oct. 1.

Mixed Reviews on Mark-To-Market Guidance
Guidance on mark-to-market won't have much of a positive impact, according to one mortgage group. But bankers and mortgage bankers cheered the clarification.

Lenders One Boasts Record Activity
Lenders One reports record growth this year in originations and membership.

Thornburg Deal Falters, Lays Off Staff
Beleaguered Thornburg Mortgage Inc. has cut 16 percent of its staff. The company, which has halted originations, has failed to complete a much needed exchange offer and is struggling to survive, still calls itself "a leading single-family residential mortgage lender."

Fannie Purchases, Delinquency Deteriorate
Monthly business sank to it lowest level in more than three years at Fannie Mae, while delinquency reached its highest level in at least eight years.

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