Origination

Stronger than expected pending home sales are attributed to historically low mortgage rates and expiring federal tax credits pushing more buyers into the housing market during April, according to the National Association of Realtors' gauge of future home sales. NAR reported that its index of pending home sales, which is based on contract signings, rose 6% in April after rising 6.6% in March. Those signings should translate into mortgage closings in May and June. Also, NAR economists expect a surge in existing home sales to a seasonally adjusted annual rate of 5.69 million in the second quarter, up 11% from the prior quarter. The homebuyer tax credit expired on April 30, but applicants have until June 30 to close and still qualify for the tax credit. NAR is warning that two months may not be enough time for some homebuyers to reach the settlement table and is asking Congress for flexibility on the June 30 deadline for closing. In a research note, Barclays Capital cited the tax credits for the strong reading, but also said "underlying demand, coupled with the warmer weather in the spring season" played a role. Meanwhile, the Greek debt crisis has pushed yield on the 10-year Treasury down, and along with it U.S. mortgage rates. For the week ending May 28, 30-year FRMs were being offered at 4.8% to applicants with good credit. NAR economists lowered their forecast for mortgage rates in the fourth quarter to 5.4%—down from 5.6% in their forecast of just a month ago. NAR does not expect mortgage rates to rise above 6% in 2011.

Lenders considering making mortgages on so-called "green" houses might want to think twice before committing to loans on properties with solar panels and other "eco-bling," a leading architect in the field said at the National Association of Real Estate Editors' annual journalism conference in Austin, Tex. A building scientist with a life-long commitment to green building, Peter Pfeiffer of Barley & Pfeiffer Architects said he takes "a very pragmatic approach" to the field. "Tankless water heaters were crap 25 years ago and they're still crap," he said. "They require much more maintenance than the typical home owner wants to do." Ditto for active solar panels, which may add $20,000 to the cost of the house but save the occupant less than $50 a month. Such a system would need to be replaced before the owner recoups his investment, Pfeiffer said. The architect said sustainable green building is more about building smarter than it is building products. "Green by design is better than green by gadget," he said, noting that window and porch overhangs and the way the house is oriented on the building site are far better techniques than installing recycled stoned glass countertops and or solar panels. "R-value means little if the house leaks or the roof is a dark color," Pfeiffer told the realty reporters.

Liberty Mortgage Corp., a division of Branch, Banking & Trust, is exiting the wholesale channel, a move that will lead to the bank ramping up both its correspondent and warehouse lending divisions, National Mortgage News has learned. Late Wednesday, a spokeswoman for BB&T called the change a realignment of the bank's "resources" noting that it will bolster the warehouse unit it inherited when the bank bought Colonial Bank last summer. "We believe that now is the time to focus on growing that business," she said. At press time, no further details were available. BB&T already ranks ninth among correspondent funders, according to figures compiled by the Quarterly Data Report. NMN broke the news about Liberty exiting wholesale earlier in the day. Even though Liberty is exiting the channel, it will honor loan commitments as long as the mortgage closes before Aug. 1. "There will be no extensions beyond July 31," the memo says. Liberty and BB&T are based in North Carolina.

The average rate for a 30-year fixed-rate mortgage increased slightly while the 15-year rate inched down to another survey-record low in Freddie Mac's Primary Mortgage Market Survey for the week ending June 3. "The economy grew at a slower rate than originally reported in the first three months of the year," according to the Bureau of Economic Analysis, "which suggests inflation will remain tame near-term," said Freddie Mac chief economist and vice president Frank Nothaft, noting that this development kept rates at or near the historic lows they have been flirting with of late. The average 30-year FRM rate was 4.79%, up slightly from the previous week's 4.78% but down from 5.29% a year ago. Also in the latest week average fees for a 30-year mortgage, which have not risen above 0.7% in some time, edged up a bit to 0.8%. Average fees for other loan types tracked by Freddie Mac's survey-15-year FRMs, five-year Treasury indexed hybrid adjustable-rate mortgages and one-year Treasury ARMs-were 0.7 during the week ended June 3. The average 15-year rate during that week was 4.20%, down from 4.21% a week earlier but down from 4.79% a year ago. This is the second consecutive week this rate has been at a record low. Freddie has been tracking the 15-year rate since August 1991. The average five-year hybrid Treasury ARM rate in the most recent week was 3.94%, down from 3.97% the previous week and 4.85% a year ago. The average one-year Treasury ARM rate was 3.95%, the same as it was the previous week, remaining at a low not seen since the week ending May 27, 2004 when the average rate for this loan type was 3.87%. A year ago the average one-year Treasury ARM rate was 4.81%.

Nation Condo Advisors LLC, which helps approved condominiums for government and agency financing, has launched a new inspection subsidiary. National Condo Inspections aims to help provide all needed studies and inspections for projects being financed, including environmental site assessments, property construction assessments, noise studies, and flood zone support such as FEMA letter of map amendment services. Chad Heiser, previously chief operating officer at Coastal Ecology Group, has been named COO of the new National Condo Advisors unit.

The 30-day or more past due rate on securitized multifamily mortgages rose 28 basis points in May to 13.34%-dashing hopes that delinquencies in that sector of the commercial real estate market had stabilized. Last month, Trepp LLC reported the multifamily 30-day plus delinquency rate fell 13 bps to 13.06%—the first decline since May 2009. However, one month does not make a trend. Commercial mortgage-backed securities delinquencies overall set yet another new record high as they jumped 40 basis points to 8.42% in May, according to Trepp. Trepp said the monthly increase in delinquencies has been between 37 and 49 basis points for seven out of the past eight months when the anomaly associated with New York's Stuyvesant Town in March is removed. The one exception outside of this was February, when delinquencies jumped just 22 bps. Serious delinquencies of 60-plus days—a category that also includes loans in foreclosure, real estate owned, and nonperforming balloons—increased 41 bps to 7.55% in the past month.

CitiFinancial, the Baltimore-based consumer finance subsidiary of Citi Holdings, New York, has provided some details on how it is separating its business into two segments. One unit will include full service branches, focusing on originating and servicing personal, refinance and home equity loans. The other, CitiFinancial Servicing, will provide specialized service to customers who might benefit from expanded support, including a loan modification or restructuring. Once the reorganization is completed, new names will be picked for the divisions, likely by yearend. Over the past decade, Citi has been a major player in residential-based consumer finance, acquiring such brands as Commercial Credit, Associates Financial, and parts of the old Argent and Ameriquest brands.

Fannie Mae and Freddie Mac may have a statutory duty to serve low-income and rural homebuyers, but their regulator does not want the two involved in financing mobile homes. The Federal Housing Finance Agency says most manufactured housing loans are essentially personal property notes and the GSEs have no experience in financing "chattel" loans. "Thus, FHFA proposes that chattel loans on manufactured homes not be considered toward the duty to serve the manufactured housing market as these loans are inconsistent with the enterprise conservatorship and would require substantial new efforts by the enterprises to ensure safe and sound operations and sustainable homeownership for families," FHFA says. However, the regulator is issuing a proposed rule that encourages Fannie and Freddie to finance manufactured housing loans secured by land. The GSEs can best serve low-income families by purchasing loans on "manufactured housing titled as real property," the regulator said. The proposed affordable housing rule is being issued for a 45-day comment period.

Nearly three out of every four mortgage applications submitted during the week ended May 28 was for a refinancing, found the Mortgage Bankers Association's Market Composite Index. The MCI increased 0.9% on a seasonally adjusted basis from one week earlier, while on an unadjusted basis, the Index increased 0.3%. The dichotomy in the direction of the components of the MCI continued for the fourth consecutive week as the Refinance Index increased 2.4% from the previous week (remaining at its highest level since October 2009) as the seasonally adjusted Purchase Index decreased 4.1% from one week earlier, falling to its lowest point since April 1997. "Purchase applications are now almost 40% below their level four weeks ago, while the refinance share, at 74%, is at its highest level since December," said Michael Fratantoni, MBA's vice president of research and economics. "In addition, the ARM share dropped last week to its lowest level since March of this year, as borrowers took the opportunity to lock in at historically low fixed mortgage rates." The market share of adjustable-rate mortgage applications fell from 6.0% to 5.2%. The average contract interest rate for the 30-year fixed-rate mortgage increased by three basis points to 4.83% from 4.80% for the current week with points decreasing from 1.08 to 1.05 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs fell by 1 bp during the week to 4.24%. The average contract interest rate for one-year ARMs was up by 13 bps over the previous week, to 6.96% for this week.

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