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Febuary 2010 Archive

Morgan Stanley Chief Recounts Week Music Nearly Died
In an video that was apparently motivated by politics, Democratic congressmen and congresswomen are chronicled berating the former director of Fannie Mae's and Freddie Mac's regulator.

FDIC Accused of Sweetheart Deal With OneWest
The Federal Deposit Insurance Corporation is accused of giving OneWest Bank FSB an incredible deal in its March 2009 acquisition of IndyMac Federal Bank FSB.

COFI Eases
The cost of funds index dropped 4 basis points last month.

Record Low M.I. Volume Headed Lower
Last month, mortgage insurance volume fell to the lowest level on record. The outlook is for more record activity. But mortgage insurance defaults were lower than a year ago.

FDIC Warns About Continued CRE Losses
In testimony before Congress, the vice chairman of the Federal Deposit Insurance Corporation warned that commercial mortgages will continue to plague financial institutions for "the next several quarters."

Freddie to Dump Interest Only Loans
Severely higher delinquency on interest-only mortgages has prompted Freddie Mac to eliminate such loans from its purchases.

15-Year Loans Far Outperform 30-Year at Freddie
New business activity slid and delinquency worsened at the Federal Home Loan Mortgage Corp. The secondary lender is seeing the biggest problems on mortgages originated in 2006 and 2007 -- with the level of late payments on those two vintages riding around twice as high as other vintages. But less than 2 percent of borrowers with 15-year loans -- regardless of vintage -- are delinquent.

Appraisers Claim AVM Overvalues Properties
Residential appraisers are warning that property values obtained through's automated valuation model are no more reliable than an estimate directly from the homeowner.

Ginnie Has New Chief
President Barack Obama's nominee to head the Government National Mortgage Association has been sworn in.

Rates Worse But New Activity Better
New mortgage activity was higher this week despite that mortgage rates jumped. But a decline in the stock market today is likely to bring mortgage rates back down.

Mortgage Fraud Summit
The first of several events focusing on mortgage fraud was attended today by the U.S. Department of Justice, bank representatives and mortgage lenders.

Making Most of Distressed Assets
At the annual shin dig being held by mortgage servicers, default service providers have been busy touting an array of alliances, product enhancements and new services. The trade group hosting the show unveiled a forebearance plan to reduce payments for unemployed borrowers, while another group unveiled a plan to rent out government foreclosures.

Focus Shifts to Short Sales
Short sales are emerging as the next step in the real estate recovery, with two firms promising to help servicers comply with a new government program that provides incentives for preventing foreclosures by utilizing short sales.

Lower Losses at Freddie
While quarterly losses at the Federal Home Loan Mortgage Corp. remained in the billions of dollars, annual losses dropped by half.

Several States See Slipping Equity
New York borrowers have more equity than debt, giving the state the lowest loan-to-value in the nation, according to a new report. But the picture is much more bleak in several other states -- including one where total mortgages exceed total property values by nearly a quarter.

Disturbing Trend Identified
A new report outlines a disturbing trend where borrowers with high credit scores will default on their mortgage before defaulting on an unsecured credit card.

90-Day Delinquency Jumps at Banks
ueled by a 64 basis point jump in 90-day delinquency, late payments on residential loans rose at U.S. financial institutions. Late payments also increased on commercial mortgages. Earnings, however, improved.

FHA Premiums Rising, LTVs Falling
The secretary of the U.S. Department of Housing and Urban Development outlined to Congress a plan to increase premiums for borrowers with small down payments and decrease loan-to-values for borrowers with poor credit scores.

Shaun Donovan testifies before House committee

MGIC Updates Guidelines, Switching to Risk-Based Premiums
MGIC is tightening some of its underwriting requirements, loosening others and dumping its current pricing model for risk-based premiums.
Servicers Converge in California
U.S. mortgage bankers kick off their annual servicing conference today in San Diego. Several sessions offer insight into litigation issues faced by mortgage servicers.

MBA servicing conference opens in San Diego
Negative Jumbo Ratings Actions Persist
Just days after cutting the ratings on more than 5,000 Alt-A tranches, Standard & Poor's Ratings Service downgraded thousands of classes from similar vintages of jumbo residential mortgage-backed securities. Including recent activity by another ratings agency, more than 7,000 tranches of jumbo RMBS have seen some sort of recent ratings actions.

Default Service Providers Help Cut Losses
As mortgage servicers meet this week in California, default service providers are courting the group with promises of better results on the management and disposition of distressed assets. A new program that is set to go into effect in April provides servicers and borrowers with incentives to avoid foreclosures by using other loss-mitigation strategies.

All About Reverse Mortgage Lending
A bank that gave up on reverse mortgage lending at the beginning of the credit crisis has launched a new wholesale reverse lending channel, while another third-party lender hopes to help brokers focus more on the loan prospect's product education and less on sales. An originator and an issuer of reverse mortgages reported big growth, and a service provider is promoting a list of reverse mortgage prospects who are delinquent but have loan-to-values less than 60 percent.

FHA Activity Deteriorates
The monthly volume of Federal Housing Administration originations tumbled, while serious delinquency was up more than 200 basis points from a year ago. Reverse mortgage endorsements, meantime, fell and are headed lower.

Graveyard Journal: Broker Warns About Big Banks
An Oklahoma mortgage broker, who also is in the state's legislature, has closed his company and warns that big banks are benefiting from federal initiatives at the expense of small firms like his. As another casualty emerged from recent Federal Housing Administration actions against mortgagees, four bank failures last week are expected to cost more than $1 billion.

4 banks, 2 mortgage companies close

Mortgage Broker Running for Office
A West Virginia mortgage broker is running for political office. While he supports members of his profession, he had some harsh words to say about servicers and the appraisal code.

Eric Carper running for Berkeley County Council

Delinquency, New Foreclosures Decline
Seasonally adjusted residential delinquency improved as new foreclosure filings declined. But the inventory of foreclosed properties grew. Subprime delinquency tumbled more than 100 basis points.

Federal Funding to Help With 2nds
Some of the federal funding announced today by the White House will go toward second mortgages. One group quickly proposed allocating a portion of the funds for supplementing federal loan modifications but called on the government to rein in mortgage servicers and investors.

Fannie Raises, Freddie Lowers Origination Outlook
Economists at Fannie Mae raised their quarterly forecast for residential fundings by U.S. lenders, while Freddie Mac economists trimmed their expectations -- bringing the two firms' quarterly projections more in line. The disparity between their annual outlooks also fell. Meanwhile, nearly $200 billion in residential mortgage debt is expected to be wiped out this year.

Fannie Approves 4 New Mortgage Insurers
The Federal National Mortgage Association has approved four new mortgage insurance companies -- including one that emerged from the closing of another mortgage insurer.

Risk of Valuation Fraud Skyrockets in CA Areas
The risk of mortgage fraud is higher in several areas of California than any other metropolitan areas of the country -- pushing the risk of fraud in the Golden State higher than in any other state. In fact, the risk of property valuation fraud has more than tripled in four California areas -- the worst in the country.

Refi Share to Plunge
Mortgage rates eased, though some signs point to an increase. The jumbo mortgage spread, however, worsened. Mortgage activity declined, and refinance share is projected to drop by two-thirds this year.

Wells Fargo Top HAMP Producer
Wells Fargo & Co. has completed more modifications under the government's program than any other servicer. But Citigroup Inc. has reached the biggest share of its borrowers who are eligible under the program. Over at Bank of America Corp., the company has staffed up to improve its modification performance.

FHA Bulletin
Appraisal management companies say their clients are prepared for changes to the appraisal process on loans insured by the Federal Housing Administration. Recent updates to FHA guidelines impact recently sold properties, mortgage insurance premiums and multifamily financing. In other FHA news, a growing New England lender touted its new Full Eagle designation.

Ginnie Delinquency Sinks
Reverse mortgage securitizations dropped by nearly half, helping to push overall issuances lower at the Government National Mortgage Association. But delinquency improved.

HUD Delays SAFE Deadline Due to Weather
The U.S. Department of Housing and Urban Development cited recent weather conditions in its decision to extend a deadline for the Secure and Fair Enforcement Mortgage Licensing Act of 2008.

Over 5,000 Alt-A Tranches Downgraded
The lull in downgrades on Alternative-A securities has come to an abrupt end as a result of rising delinquency.

Conferences Cover Array of Issues
Topics covered at several upcoming and recent mortgage-related conferences include short sales, construction lending and housing. A net branch operation based out of New Mexico recently held an annual conference for its branch managers and some of their Realtor customers. Nearly 50 events are scheduled between February and April.

2010 Originations Expected to Fall 20%
The forecast for residential production has been cut, and U.S. originations are expected to fall by one-fifth this year.

M.I. Firms Manage Huge Losses, Capital Deficiencies
Two mortgage insurance companies recently updated their distressed markets lists. And as huge losses continue to plague insurers -- addressing capital deficiencies appears to be the biggest issue facing the mortgage insurance sector.

Shadow Inventory Casts Shadow Over Recovery
A new report from one of the three major ratings agencies warns that the "the mortgage crisis may be far from over." The culprit: shadow inventories. One piece of good news, however, is that re-defaults on modified loans have recently eased.

Record Home Loan Lates
Quarterly delinquency climbed to the highest level on record as the rate of increase accelerated. Still, there were pockets of the country that saw an improvement.

Lenders Navigate Litigious Foreclosure Process
Four foreclosure lawsuits against units of Bank of America Corp. include three where the company allegedly foreclosed on the wrong properties -- though the Charlotte, N.C.-based institution isn't the only servicer accused of erroneous foreclosures. Judges in two different states ruled against American Home Mortgage Servicing Inc. in two foreclosure lawsuits.

Foreclosure Firms Face Further Litigation
While most litigation against foreclosure firms focuses on foreclosure rescue operations that do nothing for their clients, three individuals are guilty of using of fraudulent bankruptcy filings to stop foreclosures. The latest legal actions included activity in five states.

Inside the Seizure of Fannie and Freddie
President George W. Bush's former Treasury secretary has provided a behind-the-scenes look at the seizure of Fannie Mae and Freddie Mac.

Mortgage Employment Expands in 09
Following three years of job losses when more than 100,000 positions were eliminated, mortgage employment expanded last year, according to the Fourth-Quarter 2009 Mortgage Employment Index.

Lenders One-Related Firm Acquired
The company that manages the Lenders One Mortgage Cooperative has been acquired by a firm that was previously part of Ocwen Financial Corp.

Banks Dominate Mortgage-Related Layoffs
U.S. financial institutions continued to cut thousands of jobs, while the figure was more modest for recent mortgage layoffs.

NY Broker Running for US Congress
A New York mortgage broker hopes to represent some of the voters in his city as a U.S. Representative. The Democrat supports more regulation of Wall Street, opposes the Home Valuation Code of Conduct and wants illegal immigrants brought out of the shadows.

Bruce Hirschfeld running for NY representative post
Mobile Phone Technology Accelerates
A new iPhone application provides a powerful financial calculator that had previously been widely used as an independent electronic device. Other new phone applications include programs that generate mortgage leads, determine home values and manage loan documents. Several banks announced new mobile capabilities.

Lenders One Production Doubles
Members of the Lenders One Mortgage Cooperative have doubled their mortgage fundings.

Activity Higher, Rates Fall But Heading Higher
Fixed mortgage rates fell this past week but are likely headed higher. The falling rates boosted mortgage activity this week. The spread on jumbo mortgages, meanwhile, improved.

Falling Foreclosures Forecasted to Rise
Despite a monthly decline in foreclosures, one forecast calls for an increase in filings during the near term.

Foreclosure Program Lets Citi Borrowers Sleep
Citigroup Inc.'s mortgage unit is letting delinquent borrowers stay in their homes for free if they hand over their titles.

Growing Firm Acquires $4 Billion in Agency Servicing
An Oklahoma-based lender that saw mortgage production more than double last year picked up the servicing on over $4 billion in agency mortgages.

Fannie Follows Freddie's Lead on Repurchases
Not long after government-controlled rival Freddie Mac announced plans to increase its repurchases, Fannie Mae made a similar announcement.

Licensees Face Legislation, State Actions & SAFE
As states adopt local and federal mortgage licensing legislation and implement criminal background checks, the Nationwide Mortgage Licensing System is holding a user conference in California. A mortgage company that was operating without a license in Michigan has been shut down.

Freddie to Step Up Repurchases
New accounting rules have made it more cost-effective for Freddie Mac to re-purchase seriously delinquent loans from its securitizations than to wait until final disposition.

Small Firm Sees Success in Recruiting
A small Connecticut firm has been hiring originators away from bigger competitors and has no plans to stop. The company's chief attributes its growth to a "loan officer centric model."

Appraisal Insider
A national coalition of appraisal trade groups has called on the government to fill a key appraisal post, while two associations have issued publications with detailed information about the appraisal process. In other activity -- appraisal management companies, management software providers and valuation technology firms are touting how they can help mortgage businesses improve their real estate valuation processes while maintaining compliance with government lending requirements.

Range of Lawsuits Confront Lenders
Issues that mortgage firms are currently confronting in court include the calculation of interest, reverse mortgage advertisements and violation of the Equal Credit Opportunity Act. Mortgage insurance and employment issues are also being litigated.

Mortgage Crimes Lead to Convictions, Prison
Several criminal cases against mortgage insiders involve the theft of loan files, the fraudulent use of a warehouse line-of-credit and embezzlement. One defendant plead guilty, while two others have been sentenced to prison.

Huge MBS Lawsuits
A recent bankruptcy court decision could have "profound effects on structured finance transactions," according to one ratings agency. Meantime, billions of dollars in other mortgage-backed securities cases continued.

BoA Target of 2 Investor Lawsuits
Recent investor litigation was dominated by two cases against Bank of America Corp., though Citigroup Inc. is being targeted by a Texas law firm.

2009's Biggest Reverse Mortgage Lenders
Reverse mortgage production exceeded 100,000 loans last year, and the biggest lender closed nearly one-fifth of the total. For the third month in a row, the title of biggest lender has changed hands, while the biggest reverse wholesaler relinquished its title.

Refis to Drag Down 2010 Originations
A mild decline in purchase financing this year will be overshadowed by a big drop in refinance transactions.

Further Deterioration in Jumbo Performance
For the second time in six weeks, a report has been released indicating a deterioration in the performance of jumbo borrowers with prime credit. The latest report predicts that the level of jumbo delinquency will soon cross a milestone.

The Mortgage Leads Ledger is attacking an anticipated decline in refinance volume with an increase in originator capacity. Two more firms announced their participation in Google's mortgage lead service, and lead companies are fine-tuning their Internet technology for maximum traffic and conversion rates -- while others are offering free resources to generate prospects.

Ditech to Continue Advertising
Ditech has robust advertising plans despite news that it has stopped advertising. But the online lender has changed its operating model.

1 Bank, 1 Mortgage Firm Fail
Compared to a week earlier, bank-failure costs were down more than $2 billion. A failed deal between an Illinois bank and a North Carolina mortgage company will impact 100 employees and has the mortgage firm's chief fuming.

Recent Mortgage Graveyard activity

3 DC-Area Organizations Add Executives
A mortgage technology group that operates near the nation's capitol named several executives to various posts, while new executives were hired at a public relations firm and a law firm both based in Washington, D.C. Three former agency executives landed in senior posts at service providers, and a company that fixes loan problems has a new technology chief.

Recent executive activity at mortgage service providers

Fed Among Banks Making Exec Appointments
Within recent executive activity at U.S. banks was the appointment of the chairman of the country's central bank and two other regulatory appointments.

Former NFL Quarterback Joins CA Mortgage Firm
A big mortgage servicing executive was named at Bank of America Corp.'s mortgage unit, while President Barack Obama disclosed his nomination for the chairman of the Federal Agricultural Mortgage Corp. But the most timely appointment -- given Sunday's championship game between the New Orleans Saints and the Indianapolis Colts -- was that of a former professional football player to a California mortgage firm.

LendingTree Production Earnings Overtake Leads
Quarterly originations at LendingTree Loans edged higher and were up 30 percent from a year ago. Earnings from loan production now exceed earnings from its lead generation unit even though the average loan amount at the lead unit is up more than a third.

Mortgage Job Losses
Mortgage firms trimmed 2,000 positions during December.

Fla. Mortgage Company Hires SEO Firm
"I've known about the benefits of being found on the first page of Google, Yahoo and Bing for a long time, the problem was we could never find an SEO Company that could deliver on its promises.

Federal Ban on Up-Front Mod Fees Proposed
The Obama administration is proposing a ban on fees charged to a borrower before a modification firm obtains a loan modification.

Mortgage Activity Falls as 10-Year Yield Down
Mortgage experts predict rates will rise, but a big decline in the stock market today is placing downward pressure on mortgage rates. Meanwhile, loan activity fell this week.

Compliance Solutions Address New Rules
As service providers team up to help originators with a complex array of revised mortgage regulations, a new report indicates that investors of residential mortgage-backed securities will see the value of their investments decline as a result of the revisions. One mortgage broker is calling for originators to go a step further than required in disclosing yield spread premiums.

MetLife Production Eases
Forward- and reverse-mortgage originations eased during the latest quarter at MetLife Home Loans, while mortgage headcount dropped by nearly 100.

GMAC Originations, Losses Rise
GMAC Financial Services was one of only three major mortgage lenders to report an increase in quarterly mortgage production. But just as originations rose, so did losses.

Jumbo Leads Overall Lates Higher
Declining performance on jumbo prime mortgages led overall mortgage delinquency higher.

GMAC Cuts CA, NC Mortgage Jobs
GMAC Financial Services will move back-office and sales positions out of California and North Carolina, leaving more than 300 displaced workers.

Analysis of Latest RESPA Rule FAQs
The U.S. Department of Housing and Urban Development on Jan. 29 issued another version of its frequently asked questions regarding the new Real Estate Settlement Procedures Act rule. The latest version is dated Jan. 28.

70 Banks Face Regulatory Orders
Around 70 financial institutions recently faced orders by U.S. bank regulators -- including one against Flagstar Bancorp.

Commercial Mortgage Originations Stronger
Quarterly production of loans secured by commercial real estate increased on a quarterly and annual basis. Among lenders, commercial banks led the rise, while the biggest increases were seen among loans secured by health-care properties.

Banks Buying Mortgage Firms
Out of three recent mortgage company acquisitions tracked by, two were made by banks. The third acquisition was made by a company that claims to the biggest independent lender in Washington.

Bank M&A Ledger
During the past month, the Federal Reserve received two dozen applications to acquire financial institutions. Meanwhile, three other banks are in deals to acquire bank branches, assets and deposits.

Service Providers Scooped Up
Several recent acquisitions of mortgage industry service providers include an agency delivery service, a commercial mortgage analysis firm and a mortgage industry public relations firm. Also being acquired is a company that claims to be one of the biggest default service providers.

Citi Bringing Back Some Brokers
Citigroup Inc.'s mortgage unit is re-establishing relationships with some of the same brokers it previously stopped doing business with. It's the second time the company has stepped back from an origination channel only to wade in the water again.

Bankruptcies Ease
This year started off with decline in consumer bankruptcies. But the head of a bankruptcy trade group warns that this year's activity will exceed the swift pace set last year.

Flagstar Inflates Fundings, Lowers Losses
Quarterly and annual originations increased at Flagstar Bancorp Inc., while quarterly losses fell. But delinquency and annual earnings didn't fare so well.

Agency Issuance Drops
Agency issuance of mortgage-backed securities fell last month but soared from a year earlier.

Banks Continue to Tighten Lending Standards
Although banks have eased up on increasing restrictions for many types of lending, mortgage guidelines continued to tighten. While fewer banks made fewer changes to restrict the issuance of home-secured credit lines, borrowers showed less interest in such products.

HUD Reports Rise in HECM Originations
During its last fiscal year, endorsements of reverse mortgages by the Federal Housing Administration jumped by a quarter.

Berkshire Unit New No. 3 Commercial Servicer
A recent investment by billionaire Warren E. Buffett's Berkshire Hathaway Inc. has prominently placed the company among the nation's biggest commercial mortgage servicers. The top servicer held on to its top ranking, and a single firm ranked as both the biggest government servicer and agency servicer.

2009 Mortgage Fraud Index Jumps
The number of mortgage fraud cases increased last year, though the dollar amount held steady, according to's fourth-quarter 2009 mortgage fraud index. Activity was worst in Florida and Nevada.

COFI Retreats
After surging more than 80 basis points the prior month, the Cost of Funds Index retreated.

Huge Losses From Friday's Failures
Six banks that failed Friday are expected to cost the nation's insurance fund for bank deposits more than $2.3 billion. In other Mortgage Graveyard activity, the head of a branch operation is calling it quits for his company and warns that the same fate faces similar firms, while two government lenders that recently faced government actions have halted new business.

Recent closings of mortgage-related operations

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