Servicing

The mortgage division of PNC Financial Services saw its residential originations fall by 44% to $3.6 billion in the third quarter with the company blaming the decline on a slowing refinancing market for government-backed loans. The unit includes National City Mortgage of Ohio which PNC bought (along with the bank's parent) late last year. Despite declining loan production — and a slight drop in the bank's mortgage servicing portfolio — PNC's residential mortgage banking division earned $91 million in the quarter, flat compared to the second quarter. The entire bank (including the mortgage group) earned $559 million in the third quarter, a 170% jump from the same period last year.

A federal court late Wednesday denied an injunction filed by the U.S. Attorneys' office in Brooklyn against Lend America, a development that will allow the nonbank — for now — to continue originating FHA loans. "The burden is high to get a judge to shut down a business instantly," said a spokesman for the Department of Housing and Urban Development. Spokesman Brian Sullivan noted that HUD still has a "notice of violations" against the Melville, N.Y.-based company which the company has less than a month to answer. He said HUD will continue to pursue action against the company. Almost all of the firm's production is FHA-backed. In a statement the lender said, "We are obviously pleased with the court's decision. We look forward to continuing our partnership with HUD and our mission of providing affordable financing for those borrowers in need." Earlier this week DOJ and HUD sought a court injunction to ban Lend America from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in production. (The company also does business as Ideal Mortgage Bankers Ltd.) The government also sought injunctive relief against company executive Michael Ashley who holds the title "chief business strategist." According to figures compiled by National Mortgage News, Lend America ranks 18th nationwide in terms of GNMA MBS issuance. It services about $850 million in GNMA-backed product. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production. According to Newsday, back in 1993 Mr. Ashley pleaded guilty to three counts of conspiracy to commit wire fraud while employed by Liberty Mortgage Banking of Long Island. Asked about the guilty plea, a spokesman for the company said, "In Michael's eyes all that is in the past."

The sale of low- to medium priced homes - aided by the $8,000 first time homebuyer tax credit - is helping to improve the nation's economic outlook, according to the Federal Reserve's new Beige Book report. The Fed says improvements in both residential real estate and manufacturing "continued a pattern of improvement" that emerged this summer. However, the report cautions that one of the weakest sectors of the economy is commercial real estate with the Fed's business contacts describing conditions as "weak or deteriorating." Also, the residential construction sector is still suffering, it says. Even though the Fed sees some improvement in housing, it cautions that sales are not booming anywhere. In the Boston and Cleveland Fed districts Realtors fear a downturn once the tax credit expires in late November. It notes that new and existing home sales were flat in the Philadelphia area and in St. Louis residential sales actually fell.

UnitedTech Lender Services of California has purchased the assets of LandAmerica OneStop, which includes the company's default services division and a related technology platform called "BackInTheBlack" for an undisclosed sum. The sale comes about a year after LandAmerica Financial Group, the title insurance parent of OneStop, filed for bankruptcy protection in Virginia. Tim Walsh, president of UTLS, said the acquisition would help the company offer integrated default and technology servicing solutions to mortgage bankers. The former LandAmerica business units will be remarketed as UTLS Default Services and UTLS BackInTheBlack.

U.S. Bancorp, Minneapolis, saw a $215 million increase in its mortgage banking income over the year prior as it had loan production volume of $14.8 billion and loan application volume of $15.5 billion during the third quarter of 2009. The bank had mortgage banking revenue of $276 million for the third quarter 2009, compared with $308 million for the second quarter 2009 and $61 million for the third quarter of 2008. Year-to-date mortgage banking revenues are $817 million, up from $247 million for the same period last year. However, the bank also saw $189 million in commercial real estate loan net chargeoffs for the quarter, up from $65 million one year ago, and $129 million in residential mortgage net chargeoffs, up from $71 million for the third quarter of 2008. Home equity loan and second mortgage chargeoffs were $89 million for the most recent quarter, up from $48 million for the same period a year ago. U.S. Bancorp has approximately $4 billion in total nonperforming loans, including $1.7 billion in commercial real estate and $383 million in residential mortgage loans. For the third quarter, U.S. Bancorp had net income of $603 million ($0.30 per share), up from $576 million ($0.32 per share) for the same quarter in 2008. The third quarter results included a $415 million loan loss provision.

Hudson City Bancorp, Paramus, N.J., a top ranked residential funder in the Northeast, originated $1.7 billion in new loans through its retail network during the third quarter, noting that it is poised to "capture additional" market share. Overall, the thrift - one of the nation's largest - grew its earnings 11% to $135 million. However, its ratio of nonperforming loans more than doubled to $518 million compared to yearend. Its allowance for loan reserves now stands at $114 million, more than double the Dec. 31 figure. Among all residential lenders, Hudson City ranks 22nd, according to the Quarterly Data Report.

The pressure from Home Affordable Modification Program requirements that has temporarily quelled modifications is letting up, but the number of trial period modifications that ultimately finalize remains to be seen, according to a Fitch report. The rating agency's current data indicate that the projection Fitch made at the end of 2008, that 65%-75% of defaulted mortgage loans would default again within 12 months, still stands. As the industry awaits the end of the loan modifications' trial period, servicers report that many borrowers are not providing the required documentation, and often do not make the required trial payment, said Fitch managing director Diane Pendley. A closer look of this projection, Fitch said, shows that 11% of all modified loans in residential mortgage-backed securities, including 17% of the loans modified in the third quarter, have failed their first modification and have received a second modification. The ultimate modification performance depends on both homeowners desire to keep the house and their financial ability to do so, Ms. Pendley said. "While the HAMP guidelines ostensibly allow for sufficient cash flow for the new modified housing payment, recent evidence is showing that borrowers may still be unable, if their other debts are excessive, or unwilling to continue making payments on a home where they will see little or no timely possibility for equity return."

The U.S. Attorney and the Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product. A spokesman for the company - which also does business as Ideal Mortgage Bankers Ltd. - issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed." In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General's office, the government says Lend America/Ideal "falsely certified" that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley. According to figures compiled by National Mortgage News, Lend America ranks 18th nationwide in terms of GNMA MBS issuance. It services about $850 million in GNMA-backed products. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.

Wells Fargo & Co. earned $3.1 billion from its residential mortgage banking business in the third quarter and is seeing lower than expected losses on the "Pick-a-Pay" ARM portfolio it inherited when it bought Wachovia Corp. last year. While its mortgage banking earnings increased by 243% (compared to the same period last year), it originated $96 billion in new home mortgages, a 25% decline from the second quarter but more than double what it produced in 3Q08 when the credit markets froze up and mortgage lending and housing went into a freefall. (The entire bank earned $3.2 billion in 3Q09).

The U.S. Attorney and Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product. The company issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed." In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General's office, the government says Lend America/Ideal "falsely certified" that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley. According to figures compiled by National Mortgage News, Lend America ranks 18th nationwide in terms of GNMA MBS issuance. It services about $850 million in GNMA-backed products. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.