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December 2008 Archive

PNC Acquisition of National City Done
Fresh with government funds, The PNC Financial Services Group Inc. completed its acquisition of National City Corp.

M.I. Business Bad
After reaching new lows in October, mortgage insurance activity deteriorated further. New business was down by more than three-quarters from a year earlier.

Rates Could Fall Another 50-100 BPS
Fixed mortgage rates eased, and one federal regulator said they could fall another 1%.

Revised Appraisal Code Irks Brokers, Appraisers
Mortgage brokers are unhappy with the revised appraisal code -- which they say won't stop crooked appraisers from fraudulently inflating fair market values. Appraisers, meanwhile, question the use of appraisal management companies and computer generated values.

Fannie Activity Deteriorates
New business acquisitions again sank to their lowest level on record last month at Fannie Mae -- contrasting results at secondary rival Freddie Mac. Fannie's delinquency worsened as its book of business declined.

Michigan Firm Hiring
A Michigan firm that specializes in FHA loans announced plans to hire 100 new production employees during the first quarter.

Class Action Madness
Two companies have settled investor class action lawsuits filed against them, while investors of residential mortgage-backed securities have joined the class action frenzy.

National City Settles Class Action
National City Mortgage Inc. has settled a West Virginia class-action lawsuit. The lender is accused of illegally returning partial payments and charging multiple late fees on rolling 30-day delinquencies.

Firm Hiring Thousands
A mortgage staffing firm is seeking to fill thousands of positions as mortgage activity has surged.

Lifeline Extended to GMAC
The parent of Residential Capital LLC has converted to a bank holding company and received billions of dollars in badly needed capital.

The LOS Digest
Developers of loan origination systems are stepping up their alliances with other mortgage technology vendors -- including document preparation and credit reporting firms. Another LOS trend is the migration from software to Web-based services.

Fannie Increases Fees
Fannie Mae has increased its pricing adjustments on some programs.

Institutional Musical Chairs
Several institutions -- including Freddie Mac, SunTrust Banks Inc. and Redwood Trust Inc. -- have recently shaken up their top management. Even the primary trade group for the mortgage industry announced executive changes.

The Loan Mod Ledger
As loan modification programs grow, so do the number of companies that prey on delinquent borrowers and the number of firms that exploit lender compliance errors.

Bank Acquisitions Funded by TARP
At least three institutions are in the process of using government bailout funds to make acquisitions. Among current merger activity is a transaction that closed last week, two that will close next week and two expected to close next year.

The CPP Express
Three big U.S. financial firms have received federal approval to become bank holding companies -- giving them access to billions of dollars being doled out under the capital purchase program. Nearly $5 billion in CPP funds were invested last week, while more than $150 billion has been utilized since the program was launched.

GMAC Approved to Become Bank Holding Co
GMAC LLC has received federal approval to become a bank holding company -- potentially increasing access to capital for its mortgage lending subsidiary.

Lender Hiring Hundreds
A Kentucky-based mortgage banker has hired more than 300 employees over the past 12 months and expects to add more than 300 new positions next year. Most of the company's business is government.

Mortgage Employee Terminated Over Pregnancy
After one day on the job, a Pennsylvania woman told her new employer that she was pregnant -- allegedly leading to her termination. The state's employment commission investigated the claims, issued an order against the mortgage company and imposed a fine.

LIBOR Sinks, Refis Soar
Subprime borrowers need only look to the market for a modification in their interest rates -- as a widely used index for subprime adjustable-rate mortgages sank. Fixed rates were also lower as refinance applications soared.

New Appraisal Guidelines Issued
A new set of appraisal guidelines and procedures has been unveiled for conforming mortgages. The new guidelines aim to prevent originators and mortgage brokers from pressuring appraisers to inflate fair market values.

Mortgage Compliance Issues Solved
Three technology firms have beefed up the compliance features of their loan origination systems. Meanwhile, servicers also saw compliance improvements to loss mitigation offerings.

Banking Regulators Busy
Several banks recently signed agreements with the Federal Reserve to conserve capital and improve lending practices. Other institutions faced more harsh actions.

Freddie Purchases, Portfolio Higher
Aside from worsening delinquency, Freddie Mac had strong activity last month.

American Home Servicer Ratings Upgraded
American Home Mortgage Servicing Inc. saw its servicer ratings upgraded.

Junior Lien RMBS Downgraded
Concerns over performance and financial guarantors led to recent downgrades on securitizations backed by home-equity lines-of-credit, home-improvement loans and second liens.

Regulators Report Deteriorating Performance
New foreclosure filings fell during the latest quarter, but delinquency, foreclosures-in-process and real estate owned filings rose, according to new government data. An even more troubling statistic -- a deterioration in re-defaults on modified loans -- was led by investor-owned loans and subprime mortgages.

BoA Shifts Staff to Manage Activity Surge
The biggest U.S. mortgage lender is shifting some of employees from home-equity lending to handle a surge in residential mortgage activity.

2 Million Modifications in 2009
HOPE NOW reported a monthly decline in foreclosure sales and projected that 2 million modifications will be executed next year.

Sovereign Cutting 8% of Workforce
Sovereign Bank disclosed plans to eliminate more than 8 percent of its workforce -- including some mortgage jobs.

Mortgage Brokers Sue HUD
Mortgage brokers are suing the U.S. Department of Housing and Urban Development over new yield-spread premium disclosure requirements under the Real Estate Settlement Procedures Act.

Countrywide Sued Over Stolen Leads
A class-action lawsuit has been filed against Countrywide Financial Corp. and some of its affiliates over personal customer data that was stolen and sold by a former executive. More than 2 million customers could potentially join the case.

Lawyers Call Modification Efforts a Failure
An attorney trade group has released a report that calls the voluntary effort by U.S. mortgage servicers to modify loans a failure. The structure of loan securitizations, threat of litigation and lack of cooperation from junior lienholders are creating roadblocks. The group is calling for cramdown legislation and court-supervised modifications.

Subprime Lawsuits Increase
Lawsuits tied to the subprime meltdown continued to increase. The heightened activity reflected a surge in investors lawsuits and contract disputes.

Fannie Tightens DTIs, Credit Scores
Fannie Mae will begin requiring minimum credit scores on government mortgages it acquires. In addition, the secondary lender has instituted a new maximum debt-to-income ratio on manually underwritten conventional loans.

Commercial Mortgages Outstanding Decline
The level of outstanding commercial mortgage debt declined in the third quarter, according to a new report. But Fannie Mae, Freddie Mac and finance companies actually increased their holdings.

Ginnie Volume, Share Surging
WASHINGTON, D.C. -- Driven by hungry foreign investors, the Government National Mortgage Association said it has become one of the principal players in the securitization market as virtually all securitization of private lending has stopped. But even with surging volume, the company's president said it has no plans to increase headcount.

2008 issuances jump 159% from prior year

Record Low for 30-year Fixed Rate
The 30-year fixed-rate mortgage tumbled to its lowest level on record, while the 15-year fell below five percent. Low rates kept refinance activity strong.

Master Servicer Rating Improved at BoA Unit
The master servicer rating of a Bank of America, N.A., subsidiary has been upgraded.

Nationstar Subprime Rating Downgraded
Nationstar Mortgage LLC's residential subprime servicer rating has been lowered as a result of its financial condition.

Merger Activity Strong
Two investment companies have purchased stakes in companies that capitalize on distressed mortgages. In other merger news, several financial institutions have acquisitions in the works.

FHA Originations Explode at MO Firm
A Missouri-based mortgage banking firm reported that its government business has soared and is on pace to reach $20 billion annually.

FHA Outlook Improves as Conventional Weakens
Despite the refinancing frenzy that has erupted with falling rates, Freddie Mac has again lowered its projections for U.S. residential originations. But the forecast for just government originations has improved.

Sales Super Stardom
The first step to becoming a sales superstar includes making a personal declaration to become successful and then removing the mental roadblocks that keep success at an arm's length, according to a book reviewed by Essentially, the mind of a sales superstar must first be created.

The Modification News Station
Modifications on securitized loans are projected to increase next year, and one servicer is reporting success with its modified loans. Meanwhile, BankUnited has denied any involvement in a modification deal announced by a Florida firm.

Net Branch Settles Discrimination Charges
A Pennsylvania-based net branch operation has settled charges that its originators earned bigger fees and yield spread premiums on loans to minorities. However, most of a multi-million dollar judgment against the company will be suspended due its financial condition.

10-Year Treasury Yield Tumbles
Movement in the 10-year Treasury yield today suggests fixed mortgage rates could fall below 5 percent. The activity was sparked by a big Federal Reserve announcement.

Broker Originated Through Unlicensed LOs
A California mortgage broker is accused by county prosecutors of originating loans through unlicensed loan officers.

Streamlined Conforming Modifications Go Live
Fannie Mae and Freddie Mac have released details on the recently unveiled streamline modification program for conforming borrowers.

Best HELOC Servicers
The best servicer of home-equity loans and home-equity lines-of-credit is a troubled institution that is in the process of being acquired.

ResCap Unit Modifies Prepayment Penalty Policy
A subsidiary of Residential Capital LLC has resolved a federal investigation into a prepayment penalty charged by the unit. The borrower was active in the military.

More ResCap Downgrades
Residential Capital LLC's servicer ratings were downgraded again.

Help With FHA Refis
Financial institutions have a simpler option for becoming approved to originate FHA-insured loans. Once approved, a number of services aim to help lenders with various FHA refinance programs -- including one that several trade groups are lobbying Congress to extend.

Orders Issued Against Institutions
Dozens of institutions have recently faced actions by banking regulators. Meantime, one big bank has agreed to sell some of the branches of another bank it is acquiring and a mortgage firm was delisted from the New York Stock Exchange.

2 More Banks Fail
On Friday, bank regulators seized two more banks, bringing to 25 the number of federally insured institutions that have failed this year. One of the firms was 101 years old, while the other is expected to cost the insurance fund $0.2 billion.

Obama Nominates HUD Secretary
President-elect Barack Obama has named a former commercial mortgage executive as his choice to head the U.S. Department of Housing and Urban Development. It's the second time around at HUD for the nominee.

Shaun Donovan currently head of NYC housing agency

Specialized Ratings Upgraded
Specialized Loan Servicing LLC saw its servicer ratings upgraded.

Bayview Exec Altered MBS Loan Data
A former executive of Bayview Financial LP has been accused by federal prosecutors of defrauding secondary investors and earning nearly $3 million in the process.

10-Year Anniversary at
When Sam Garcia registered the "" domain name 10 years ago, he had no idea that during the next decade U.S. mortgage originations would reach their highest levels ever or that the mortgage sector would subsequently be completely devastated.

Jumbo Storm
Ratings on jumbo-backed securitizations have recently been pummeled.

MortgageIT Wholesale Done
Following a reorganization of the unit earlier this year, MortgageIT Inc.'s wholesale lending division will be shut down.

Green Tree Servicer Rating Upgraded
Green Tree Servicing LLC's residential servicer ratings improved.

HSBC Retail Unit Halts New Business
A retail lending subsidiary of HSBC North America is scaling back operations and laying off staff.

Secondary Sources
Despite the U.S. Department of the Treasury's plan to abandon the acquisition of troubled mortgage assets, more than $5 billion in portfolios recently traded hands -- including a big servicing portfolio.

Mixed Mortgage Market
Fixed-rate mortgages fell, adjustable-rate mortgages rose and ARM indices decreased. Refinance activity held up, though purchase and FHA business tumbled.

Foreclosures Decline
U.S. foreclosure activity eased last month, though the reprieve isn't expected to last. At the state level, one-in-76 Nevada homes are in foreclosures, while rising new California foreclosure filings will likely cut short the decline in repossessions.

Modifications and Moratoriums
Credit unions may soon have more help providing loan modifications. Meanwhile Florida's governor and a Connecticut bank announced foreclosure moratoriums.

Servicer Ratings Lowered at LoanCare
The bankruptcy of a closing services provider has led to ratings downgrades at a mortgage servicing subsidiary.

The Capital Journal has tracked almost 50 of the nearly 90 institutions that have accessed or been approved to access the $700 billion Troubled Asset Relief Program. Two non-banks recently announced their intentions to become bank holding companies -- though a failed attempt by another firm to become a bank holding company could spell disaster for one of the country's biggest mortgage lenders.

Fed Proposes Reg Z Amendments
The Federal Reserve Board has proposed changes to Regulation Z.

Fannie Enhances Early Loss Mitigation
Fannie Mae has issued a servicer bulletin outlining enhancements to early loss-mitigation practices and clarifying procedures for delinquent loans, modified loans and foreclosed loans.

Merger Activity Strong
As a U.S. congressman attempts to block an acquisition of a struggling bank, several other mergers appear to be progressing smoothly.

HUD Clarifies Reverse Short-Pays
Confusion about short payoffs on reverse mortgages has prompted the U.S. Department of Housing and Urban Development to issue a clarifying letter.

CPP Journal
A new watchdog has been confirmed to oversee the $700 billion Troubled Asset Relief Program -- which has seen plenty of action recently.

Commercial Delinquency Worsens
Delinquency increased on commercial mortgages held by banks, life insurers and securitizations. But at least one government sponsored enterprise saw late payments on its commercial loans improve.

Foreclosure Filings Rise
Monthly foreclosure activity worsened, but at least two foreclosure hot spot states saw some improvement.

CitiMortgage Cuts MO Jobs
Citigroup Inc. has begun cutting some of the 52,000 positions that it announced last month it planned to eliminate.

Net Branch News
Mortgage brokers are being courted by growing net branch companies that promise to reduce administration, increase resources and give immediate access to government programs. One branching firm is promoting modification services while a branch of another firm is offering stated-income programs.

Over Half of Modifications Re-Default
More than half of borrowers default after modifying their loans, according to new government data.

Executives Shuffled
A new chairman has been elected by a banking trade group, while two banks have named new senior executives and a title insurance firm has restructured its management.

Recovery Seen in 2010
While mortgage delinquency is expected to nearly double by next year, the bottom of the delinquency cycle may occur by mid-2010.

Georgia Bank Becomes No. 23
The Federal Deposit Insurance Corporation has taken over its 23rd bank this year.

The Modification Insider
With a little help from modification vendors, mortgage companies are completing more mortgage modifications. One service, however, hopes to exploit compliance errors to extract more favorable modification terms from servicers.

Credit Suisse Closes Wholesaler Unit
The wholesale lending subsidiary of Credit Suisse has told mortgage brokers that it is done doing business. The move is part of a strategy to lay off more than 5,000 employees.

New Foreclosures Ease Temporarily
A decline in new foreclosure filings is expected to be only temporary, and residential loan performance is expected to worsen.

Mortgage Employment Could Turn Higher
The number of people working in the mortgage industry fell according to the latest government data. But a recent surge in mortgage activity will likely push employment higher by next month.

GMAC Servicer Ratings Lowered
Affiliates of Residential Capital LLC saw their servicer ratings lowered as a result of ongoing viability.

SC Home Counseling Firm to Add 300 Jobs
A foreclosure prevention counseling company has leased space in South Carolina where it plans to add 300 new employees.

NC Settlement to Cost Countrywide Over $15 Million
A settlement with North Carolina banking regulators will cost two Countrywide units more than $15 million -- including more than $11 million paid to nearly 5,000 borrowers and contributions to an interstate licensing organization.

Servicing Portfolio Analysis
Several offerings promise to help mortgage servicers analyze their portfolios and identify solutions for potentially troubled loans. One service helps prevent foreclosures using reverse mortgages.

Falling Rates Spark Rally
Mortgage rates continued lower as applications exploded.

Treasury Plan Creates 4.5% Rates
A plan being floated by the U.S. Treasury would push mortgage rates down to 4.5 percent.

Ratings Agencies Face More Oversight
Fitch Ratings, Moody's Investors Service and Standard & Poor's Ratings Services all face stiffer oversight from the Securities and Exchange Commission. Mortgage bankers were especially happy about one aspect of the changes.

Wilshire Servicer Rating Lowered
Wilshire Credit Corp.'s uncertain outlook under its parent's acquisition prompted a servicer rating downgrade.

Bankruptcies Ease
A reprieve in consumer bankruptcy filings is expected to be only temporary.

Refinances Triple
Applications for refinances shot up more than 200 percent. But with much of the industry's infrastructure wiped out, its capacity to process the inflated level of originations is greatly diminished.

Ratings Agency Requiring Due Diligence
One of the three major credit ratings providers is now requiring due diligence on all residential securitizations it rates.

The Compliance Ledger
An online library of state mortgage laws has been released by a mortgage education firm. Two alliances promise to help mortgage companies maintain better compliance, while SunTrust Banks Inc. has signed on to utilize a service that helps it comply with internal and regulatory requirements.

Growing Wholesaler Halts Business
A Massachusetts-based lender has been inundated with so much refinance business that its originations have exceeded its warehouse capacity. As a result, the company has suspended its third-party lending.

Few Mortgage Jobs Impacted by Massive WaMu Layoffs
Nearly 10,000 Washington Mutual Bank employees have been advised they will be laid off next year, though few of the impacted employees work in mortgage lending.

Mortgage Fraud Worsens
Reports of mortgage fraud jumped from last year, a new analysis indicates. Nearly half of all fraud took place in three states that also have some of the highest levels of foreclosures.

Firms Restructure to Tap TARP Funds
The U.S. Department of the Treasury has already disbursed $150 billion in funds from the Troubled Asset Relief Program to financial institutions and still has another $100 billion to go. The lure of cheap capital has prompted another five firms -- including a commercial financial company, a mortgage servicer and a mortgage insurer -- to initiate the process of converting to bank-holding companies. Three firms are making bank acquisitions as part of the conversion process.

Ginnie Volume Tops Fannie, Freddie
Monthly securitizations at Ginnie Mae more than doubled from a year ago and topped issuances at both Fannie Mae and Freddie Mac.

MBS Investors Sue Countrywide for $80 Billion
A class action filed today seeks to force Countrywide Financial Corp. to repurchase as much as $80 billion in securitized mortgages that it plans to modify. But Countrywide's parent company claims that investors will be better off after the modifications.

Yields on MTA, 10-Year Treasury Sink
Fueled a big drop in the 1-year Treasury yield last month, the monthly Treasury average fell for the 19th consecutive month to its lowest level in nearly four years. While the decline suggests short-term mortgage rates will be much more attractive, long-term mortgage rates are also tumbling.

Firms Fail, File Bankruptcy
As home builders warn that bank failures are causing more damage to their business, three firms went bankrupt.

Business Bad at Mortgage Insurers
Activity sank to another low for the mortgage insurance industry and is headed even lower. Defaults, meanwhile, reach a new high.

Mortgage Attorneys See Surge in Cases
Legal actions tied to mortgage compliance, mortgage fraud and regulatory orders have surged, according to the Third Quarter Mortgage Litigation Report.

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