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November 2008 Archive

COFI Jumps, 10-Year Yield Sinks
The cost of funds index continued its ascension. At the same time, a gauge for long-term mortgage rates plunged.

Subprime Ratings Journal
All three ratings agencies have been busy downgrading subprime mortgage-backed securities.

The Business of Mortgage Leads
Mortgage industry lead generation now includes loan modification prospects. One firm has reported a surge in demand for its leads while another claims its customers are getting more mileage out or their lead budgets by utilizing its low-cost offering.

Mod Squad Returns
Two government agencies are pressing mortgage servicers to adopt two streamlined loan modification programs in use at three failed institutions under government control. One private vendor has launched a unit to help servicers with modifications, while two other private firms are targeting delinquent borrowers directly.

Banks Hammered With Regulatory Orders
The Office of the Comptroller of the Currency recently doled out 25 regulatory orders to banks and individuals. Meanwhile, Fannie Mae and Freddie Mac have been warned that their shares have been trading so low that they face suspension from trading on the New York Stock Exchange.

Banks Jump On CPP Bandwagon
A stream of banks have recently reported being approved to sell nearly $1.5 billion in securities to the U.S. Department of the Treasury under the Troubled Asset Relief Program. Most of the participants indicated that they were already well capitalized.

Worst Mortgage Servicers
A small survey of delinquent borrowers has uncovered the worst U.S. mortgage servicer.

Riskiest Mortgage Markets
Mortgage loans secured by properties in Arizona, California and Florida continue to be among the riskiest, a new report today said. But despite home-price depreciation and a high risk of mortgage fraud, one Ohio market ranked as the second least risky mortgage market.

Rates, Apps Mixed
Mortgage rates were mostly lower this week, though the average 15-year fixed-rate mortgage increased. Purchase and government applications increased, while refinance activity fell.

FHA Fraud Costs Canadian Bank Over $10 Million
The Royal Bank of Canada's U.S. mortgage unit has agreed to pay more than $10 million to settle charges of mortgage fraud on loans insured by the Federal Housing Administration. The unit is being shut down.

Bank Sector Performance Sinks
Banks insured by the Federal Deposit Insurance Corporation saw their collective quarterly profits fall more than $25 billion from last year. The number of problem institutions rose by nearly half while the number of bank failures reached the highest level in 15 years. Mortgage delinquency soared.

Fannie Performance Worse
Delinquency spiked and secondary purchases fell to the lowest level in more than seven years at Fannie Mae.

Connecticut Layoffs at Wachovia
Wachovia Corp., which has laid off more than 2,000 mortgage employees so far this year, has decided to eliminate mortgage jobs in Connecticut.

Wells Laying Off Wholesale Employees
Wells Fargo Home Mortgage is trimming its wholesale staff.

Treasury Secretary to Hit Ground Running
President-elect Obama's choice for U.S. Treasury secretary has already worked under three prior presidents and has the support of the Bush administration. He has been involved in the creation of major bailout programs and is well suited to oversee the massive packages.

Tim Geithner nominated by Obama

Delinquency Jumps, Foreclosures Ease
Delinquency worsened but foreclosure activity eased in October, according to a new report from a private sector alliance of servicers, counselors and investors.

FHA Share at 17-Year High
Mortgage bankers issued a report indicating that the share of government mortgage activity is at the highest level in more than 17 years.

Fed to Buy $0.5 trillion in GSE MBS
The Federal Reserve will buy up to $0.5 trillion in mortgage-backed securities issued by the government sponsored housing enterprises.

Calif. Wholesaler Closes
Former wholesale lending employees of National City Mortgage were ecstatic when another company acquired much of the operation following its closure in the summer of 2007. Now those same employees are faced with the second closing of the unit.

Digital Notes Are Enforceable
A new white paper outlines the legal foundation for enforcing electronic mortgage notes.

Freddie Cuts Fees, Tightens Guidelines
Freddie Mac is cutting delivery fees, implementing a new appraisal form and restricting debt-to-income ratios, loan-to-values and credit scores. The secondary lender did ease up, however, on bankruptcy requirements.

BNY-Mellon Rating Upgraded
For the second time in two months, Bank of New York Mellon's master servicer rating was upgraded.

Freddie Purchases Sharply Lower, Delinquency Spikes
Secondary mortgage purchases and serious loan delinquency reached the worst level in at least seven years at Freddie Mac.

Citi Bailout Includes Streamlined Modifications
A bailout of Citigroup Inc. involves a government guarantee of more than $300 billion in assets and includes an agreement by the Wall Street giant to adopt the streamlined modification program utilized at IndyMac Federal Bank FSB.

PFF Finished, Downey Dead
The failure of two California-based thrifts will cost the government insurance funds more than $2 billion. Another institution will acquire the assets and deposits of both failed firms -- potentially creating a new No. 6 mortgage lender.

No. 20 Goes Down
The failure of a Georgia bank brings to 20 the number of federally insured banks to be shut down this year.

Portfolio Trading
Eight residential and commercial mortgage portfolios for $1.6 billion that were recently traded or offered were tracked by Ginnie Mae announced several updates, including an Internet-based payment system.

DLJ Buys $50 Million in Bogus Loans
In a lawsuit filed earlier this month, DLJ Mortgage Capital Inc. claims it was defrauded on $50 million in loans. The bad loans were not uncovered for several years because the defendants allegedly made payments on the fake loans. The mortgage banker who served as the ringleader is currently in prison for bribing a U.S. congressman.

Subprime Servicer's Ratings Upgraded
The company that now operates the former servicing platform of New Century Financial Corp. saw its servicer rating upgraded.

Thrift Industry Battered
Residential originations and mortgage holdings were down sharply at U.S. Thrifts, according to quarterly data reported by their regulator. The sector has had more than $10 billion in collective losses this year. One bright spot, however, was an improvement in late payments.

Over 500 Wholesale Citi Employees Spared Layoffs
Amid more than 50,000 casualties, 500 CitiMortgage wholesale employees were spared job losses. The company's parent is reportedly considering a major sale.

Conforming Foreclosures Suspended
Delinquent borrowers on conforming mortgages were given an early gift for the holidays.

Modification Nation
Two organizations praised improvements to modification programs for conforming and government-insured loans. Two other firms are warning about the modification process and its players, while two service providers are offering products to help make the modification process easier for servicers.

Banks Continue to Tap CPP
Utilization of the Treasury's capital purchase program continues to be brisk -- with most institutions promising to use the funds to strengthen community activity. The program taps into available funds from the $750 billion Troubled Asset Relief Program.

Yields on Treasuries Tumbling
Yields on long- and short-term Treasuries are tumbling -- pushing rates lower on fixed- and adjustable-rate mortgages. One forecast has the 30-year staying put through next year.

GMAC Submits Bank Application to Fed
Depositors and taxpayers could fund home loans and car loans if GMAC Financial Services' application to become a bank-holding company is approved. The move has the potential to positively impact the mortgage industry more than any other action under the Troubled Asset Relief Program.

FHLB Performance Holding Up
Quarterly earnings were down at the Federal Home Loan Banks. But compared to massive losses at rival government sponsored enterprises -- the FHLB looked pretty solid.

H4H Gets Better
The government's program to refinance delinquent mortgages into affordable government-insured loans has been enhanced. Among the improvements are increased loan-to-values, extended loan terms and immediate compensation for junior lienholders.

Wave of Subprime Downgrades Coming
Deteriorating performance on loans backing subprime residential mortgage-backed securities will likely lead to a new wave of ratings downgrade.

Lenders Testify Against Cramdowns
Mortgage bankers reiterated their opposition to cramdowns in testimony before Congress. They warned that allowing bankruptcy judges to modify mortgages could lead to tighter standards, higher interest rates and lower loan-to-values -- even on government programs.

Wrath of the Regulators
Bank regulators issued a cease-and-desist order against a German-based bank, filed a stipulation-and-consent order against the former chief of a Pennsylvania bank and reached agreements with two other banks. Fannie Mae was warned about its share price by exchange officials.

Thornburg Defaults on Notes
Thornburg Mortgage Inc. missed a Nov. 15 payments on some of its senior notes.

Purchase Production to Plummet
Purchase originations next year are expected to fall to their lowest level in more than a decade.

HSBC Closes Indirect Channels
HSBC's mortgage unit will no longer accept business from mortgage brokers and mortgage banking correspondents. More than 300 employees are impacted by the move.

Brokers Settle Deceptive Advertising Claims
Five mortgage brokers operating in Colorado have settled allegations of deceptive advertising. Another broker settled charges of mortgage fraud.

Banks Grab TARP Capital
More than 1,000 financial institutions have applied for or received capital investments from the Troubled Asset Relief Program, according to Congressional testimony. Funds from the program will be used to support lending and acquire other banks.

Paulson Explains Why Mortgage Purchases Abandoned
In a newspaper editorial, the U.S. Treasury Secretary explained why he decided to abandon a plan to purchase $700 billion in troubled mortgage assets.

Editorial written for New York Times

FHA Activity Doubles
In its latest fiscal year, Federal Housing Administration endorsements doubled. But rapid growth combined with a deteriorating housing market has cut the capital ratio of its primary fund in half.

RESPA Rule White Paper
Analysis of HUD's new rule under the Real Estate Settlement Procedures Act prepared by Weiner Brodsky Sidman Kider PC.

Alt-A Performance Sinks
Rapidly deteriorating performance on Alternative-A loans is prompting one ratings agency to warn that widespread downgrades are possible on Alt-A residential mortgage-backed securities.

Market Values for Less
A new home valuation service promises to save mortgage companies the cost of a full appraisal while providing a better value than automated valuation models or broker price opinions.

First American Restructuring
First American Corp. is restructuring its business lines, placing several of its operating units into two new divisions.

Origination Forecast Lowered
While forecasts for government originations this year have increased, projections for conventional production sank.

More Than 50,000 Citi Layoffs
Citigroup Inc. plans to lay off more than 50,000 people.

Biggest U.S. Mortgage Lenders
Mergers and acquisitions are shaking up the standings of the biggest mortgage originators and will continue to reshape rankings through next year.

JPMorgan Won't Stand Behind WaMu Repurchases
JPMorgan Chase & Co. is not honoring Freddie Mac's requests for Washington Mutual Bank to repurchase mortgages. Freddie reported recent mergers have created three major customers that account for around 60 percent of its business.

Fannie Updates Appraisal Procedures
Fannie Mae has updated its policies and procedures on appraisal procedures. Among the updates is a new appraisal form.

TARP Czar Defends Decision to Divert Funds From Mortgages
Despite the Bush administration's decision to divert Troubled Asset Relief Program funds from troubled mortgage assets to investments in banks, the Treasury's man running TARP promises help with loan securitzations.

Neel Kashkari testifies before House subcommittee

FDIC Gets Aggressive With Modifications
The Federal Deposit Insurance Corporation has proposed paying servicers $1,000 to modify delinquent loans and sharing in losses of modified loans that re-default. Around 1.5 million foreclosures would be prevented under the proposal.

$25 Billion Loss at Freddie
Freddie Mac reported a massive $25 billion quarterly loss.

Subprime Ratings Slammed
Moody's Investors Service's expectation that losses will be bigger on subprime mortgages than it had previously estimated led to downgrades on more than 2,000 tranches of subprime securitizations.

CMBS Originations Spike
Driven by a big decline in conduit activity, hotel production and financing for office properties -- commercial mortgage originations were down by more than half from a year ago. But conduit activity saw a spike from the second quarter, while retail activity is heating up.

LIBOR Tumbles as Fixed Rates, Apps Improve
Long-term mortgage rates retreated in the face of weakening economy as LIBOR tumbled. Meanwhile, a surge in refinance applications pushed overall activity higher.

CA REOs Tumble
RealtyTrac reported that foreclosure filings rose last month -- contradicting a report two days ago from California, which had more REO volume than any other state, still saw monthly REO filings tumble by a quarter.

Foreclosure Strategies Widely Varied
California is looking at establishing a three-month foreclosure moratorium, Massachusetts is suing servicers and Maryland is working directly with servicers to improve the mitigation process. One firm is scouring loan documents to find compliance errors for delinquent borrowers.

Revised RESPA Rules Released
The U.S. Department of Housing and Urban Development released its first revision to the Real Estate Settlement Procedures Act in 30 years. The new form requires disclosure of yield spread premiums paid to mortgage brokers.

Troubled Mortgage Asset Purchases Curtailed
The U.S. Treasury secretary said today that the Troubled Asset Relief Program will not be used to purchase troubled mortgage assets. He said the $700 billion fund would be better utilized for capital investment.

TARP purchases of distressed assets put on hold

Downey Outlook Bleak
Downey Financial Corp. warned that it might become No. 20.

Some Firms Saved by Mergers
Mergers have picked up steam as several mortgage companies teeter on the brink of insolvency. Some of the mergers are forcing changes at the top of the executive ranks. Meanwhile, losses continue to pound financial firms -- forcing regulator actions at some.

Streamlined Mods for Conforming Loans
Seriously delinquent mortgages under the management of Fannie Mae or Freddie Mac may qualify for modifications to the interest rate, remaining term or principal balance under a program unveiled today by federal regulators.

Fannie, Freddie to ease procedures

3 Brokers Elected to Fla Legislature
Three mortgage brokers were elected to Florida's legislature. The trio attribute their success to political activity, volunteer work and professional experience.

Ritch Workman, Debbie Mayfield and Nancy Detert win elections

Foreclosures Ease in October
As state legislation held off the inevitable, monthly foreclosure filings eased.

Foreclosure Strategy Strengthened at Citi
A host of foreclosure-prevention initiatives were announced by Citi -- a company with a serious delinquency rate that is more than double the rate of its peers.

2009 FHA Limit Set
Emergency economic legislation temporarily increased the limit on loans insured by the Federal Housing Administration. But that increase is set to expire this this year. However, other legislation made permanent increases to maximum FHA loans.

Most Influential Mortgage Women
Three women among the ranks of the top business women to watch have close ties with mortgage lending.

Most Influential Mortgage Women

Mixed PHH Results
Originations fell, delinquency climbed and foreclosures worsened at PHH Corp. But the servicing portfolio grew and mortgage production earnings improved compared to a year ago.

AIG Dips Into TARP
The U.S. Treasury will spend $40 billion from the Troubled Asset Relief Program, while the New York Federal Reserve has established a $23 billion credit facility secured by residential mortgage-backed securities in a new plan to shore up struggling American International Group Inc.

$29 Billion Loss at Fannie
Fannie Mae reported a staggering quarterly loss and may see its net worth turn negative by the end of the year.

2 Failures to Cost FDIC $1.7 Billion
A Texas bank tied to the father of mortgage-backed securities had hoped to strike a deal that would restore its capital standing. But instead, state banking regulators shut it down. California regulators also shut down a bank in that state. Between the two institutions, the federal bank insurance fund will take a $1.7 billion hit.

Commercial Originations Tumble 58% at Pittsburgh Firm
Quarterly commercial mortgage production at a Pittsburgh-based company has fallen by nearly $7 billion.

Higher Reverse Mortgage Limit in Place
Higher loan limits on home-equity conversion mortgages are now in place.

Billion Dollar Player Emerging
A Washington-based lender is becoming a $1 billion player. Business is generated through mortgage brokers and net branches.

2009 Conforming Limit Set
A federal regulator has set the 2009 conforming limit at the same level as in 2008. But a program created in recent legislation temporarily pushes the limit past $600,000 in some areas.

Mortgage Jobs Rise
Despite a bigger-than-expected drop in U.S. employment, mortgage lending saw a monthly gain. tracked more than 10 firms that may have contributed to the latest improvement.

CTX Winds Down Retail Branch Operation
The parent of CTX Mortgage Company LLC expects that the winding down of retail mortgage operations will cost nearly $20 million.

Lender Settles With FTC
The Federal Trade Commission announced a settlement with a Texas-based mortgage company over allegations the company enabled a home seller to regularly use its credit bureau access without establishing procedures to ensure private data was protected. A computer hacker eventually gained unauthorized access to dozens of credit reports and pulled hundreds more.

Big Payoff for Subprime Winners
Players betting on Subprime won big. But the players were gamblers and Subprime was the name of a horse.

Apps, Rates Drop
A decline in mortgage applications may only be temporary as rates moved lower.

Investor Law Firm Challenges Modifications
Bank of America Corp. is passing the expense of its recent $8.4 billion settlement on to investors of residential mortgage-backed securities -- a violation of the securitization agreements, according to a New York law firm.

Help for Originating FHA Loans
A wholesale lender and a consulting firm are offering help for mortgage companies seeking approval to originate loans insured by the Federal Housing Administration. Online training is now available for originating FHA loans through a popular loan origination system, while another offering provides production support for reverse mortgages.

FHA, Refi Share Growing
Mortgage originations during the first half of 2008 were dominated by prime loans, though refinances and government loans played a bigger role in the latest activity.

ResCap Results, Outlook Diminish
Residential Capital LLC's business continued to deteriorate as its parent warned the unit would fail without additional economic support. One bright spot, however, was the origination of loans insured by the Federal Housing Administration.

Obama Treasury Secretary
President-elect Obama's top cabinet priority is U.S. Treasury secretary. The new administration faces tumultuous financial markets but has a massive fund with which to deal with them.

The World of Default Servicing
Two firms have released new solutions to help mortgage servicers better manage delinquent accounts and real-estate owned. Two college professors are calling for trustees to replace master servicers in deciding whether to modify loans, while Fannie Mae was criticized for doing too little to help prevent foreclosures.

Foreclosure Moratoriums Reduce Available Credit
A Federal Reserve economist has issued a report indicating that states which place a moratorium on foreclosures temporarily lower foreclosure rates but force much needed lenders out of their states.

Mo. Firm Growing
Mortgage production at one Missouri firm is as good as it was during 2003 -- when industry originations reached a record. The company has hired more than 50 new employees and has plans to add 50 more.

Bankruptcies Surge
Consumer bankruptcies jumped 20 percent last month.

Banks Continue to Tighten Guidelines
The latest bank loan officer survey reflected no relief in the tightening of credit.

MTA Better Again
The cost of funds index may be rising, but the monthly Treasury average continued its descent.

Volatile Banking Sector Reshapes
As capital continued to be wiped out and dozens of small banks were hit with regulatory orders, some financial institutions have been approved to participate in the government's capital purchase plan. One mortgage company is shedding its real estate investment trust status, another is shutting down its commercial operations and a third will be acquired by a bank.

Firm Wages War Against Servicers
A consumer-protection firm is trying to get servicing employees to spill the beans about alleged abusive practices at their employers. But entities including Freddie Mac and HOPE NOW help prevent some of the abuses outlined.

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