Origination

Loan workout efforts conducted by the mortgage insurance business of Genworth Financial saved nearly $3.4 billion in mortgages from foreclosure in the 12 months ending March 31. Its Foreclosure Prevention Scorecard found the leading states for workouts, in order, were California ($347 million), Florida ($342 million), Arizona ($175 million), Texas ($173 million), Illinois ($167 million), Georgia ($164 million), New York ($152 million), New Jersey ($144 million), North Carolina ($122 million) and Maryland ($107 million). Mortgage dollars saved were up more than 81% from the same period last year. During the period, Genworth worked with its lender partners and servicers to complete more than 23,000 mortgage workouts nationwide. Loan modifications (33%), were the leading workout type, followed by the federal government's Home Affordable Modification Program (24%), repayment plans (19%) short sales (18%), and Fannie Mae's Homesaver Advance program (4%). Nationally, eight out of 10 workouts were classified as cures. Genworth's cure rate remains above 80% in 35 of 50 states nationwide.

The acceptance of e-mortgages by warehouse lenders is inevitable, but banks will have to get more comfortable with the product before it becomes a reality. According to panelists speaking at the Mortgage Bankers Association's trade show in New York—including Ken Logan, a managing director at Wells Fargo, and Elaine Batlis, senior vice president of Silvergate Bank—warehouse providers must be assured of their "senior" position in an e-mortgage. Such assurances must be perfected in the electronic documents so that banks know they will be repaid. A second issue, they both said, is the "rule of three." Logan explained that there need to be three primary investors (not including any scratch-and-dent investors) willing to buy any mortgage loan that is originated in order to assure the warehouse provider will be repaid. Currently, there are not three loan purchasers willing to buy these loans, he said. He added that consumers also have to get comfortable with the premise. Batlis said acceptance by warehouse providers of e-documents will take place when primary and scratch-and-dent investors come together on the issue.

DocMagic Inc. has filed an amended complaint against Ellie Mae that expands the initial charges the former company levied against the latter. The amended complaint was filed in United States District Court (San Francisco) and is Case No. 3:09-CV-4017-MHP. Back in August 2009, DocMagic filed two lawsuits against Ellie Mae: one in Federal Court for antitrust violations, intentional interference with contractual relationships, interference with prospective economic advantage and unfair competition; and one in San Francisco Superior Court seeking a permanent injunction against Ellie Mae arising out of Ellie Mae's alleged misuse of DocMagic's proprietary information in connection with the Ellie Mae Docs system. At the urging of the federal court judge, the parties have since agreed to consolidate the state case claims into federal court and to dismiss the state case without prejudice. The amended complaint sets forth 14 federal and state claims, expanding on the allegations and claims initially made against Ellie Mae. The amendments include expansion of antitrust allegations and claims, including explanation of market definitions, monopoly leveraging, attempted monopolization, refusal to deal, and denial of access to essential facility (all federal violations of Section 2 of the Sherman Act). Charges of unfair competition and false advertising; copyright infringement; and trade secret misappropriation were also included in the amended complaint. DocMagic is also seeking a declaratory judgment that DocMagic did not infringe upon Ellie Mae's copyrights and that Ellie Mae has no claim to the ownership of its client's loan data. When asked to respond to the amended complaint advancing the lawsuit Ellie Mae said that it had no comment.

Purchase mortgage applications dropped further, remaining at a 13-year low for the second week in a row while refinance applications rose to a high last seen in October 2009, according to the latest Mortgage Bankers Association's Market Composite Index. The MCI for the week ended May 21 increased 11.3% on a seasonally adjusted basis from one week earlier and it increased 10.3% on an unadjusted basis. The Refinance Index increased 17.0% from the previous week as the seasonally adjusted Purchase Index decreased 3.3% from one week earlier. "Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates," said Michael Fratantoni, MBA's vice president of research and economics. At the beginning of May, the survey found the market share of refi applications was just over 50%; the most recent survey shows refis make up 72.2% of total applications, an increase from 68.1% the previous week; this is the highest refi share observed in the survey since December 2009. The market share of adjustable-rate mortgage applications fell from 6.3% to 6%. The average contract interest rate for the 30-year fixed-rate mortgage fell three basis points from 4.83% to 4.80% for the current week with points remaining at 1.08 (including the origination fee) for loans with an 80% loan-to-value ratio, according to the association. The average contract interest rate for 15-year FRMs bucked the declining rate trend, increasing by 6 bps during the week to 4.25%. The average contract interest rate for one-year ARMs was up by 2 bps over the previous week, to 6.83% for this week.

New home sales jumped 15% in April to the highest level in nearly two years following a 30% surge in March. Most analysts attributed the strong performance to two homebuyer tax credits that hit an expiration deadline recently, saying consumers rushed into contracts, pulling these sales "forward." The U.S. Census Bureau reported that sales of newly constructed homes rose to a seasonally adjusted annual rate of 504,000, compared to a 439,000 rate in March. New home sales rose 48% compared to April 2009. Sales were "driven by looming expiration of the tax credit and cheap, cheap home prices," said Mike Larson of Weiss Research. He noted the median sales price "tanked" by 9.7% in April from the prior month. Barclays Capital analyst Theresa Chen said with the credits now off the table, "Some negative payback is likely in the coming months, but looking through the volatility, the underlying trend should remain mildly positive."

Have you ever noticed that as salespeople we sometimes just can't get out of our own way? I was on a call with my coaching group (if you don't have one, consider joining one, your productivity will certainly increase) and the topic of "closing the senior customer" came up. One person in the group lamented that many of his clients recently were talking to two and three other companies (to "compare") before making a decision. This comment, as you can imagine sparked a lively discussion. Why is it that we often don't close the deal when the senior is clearly ready to sign?

Valligent, a provider of appraisal review services, has introduced V-Cert, a new product which moves the quality control function to the front of the origination process. Jeremy McCarty, chief executive and chief valuation strategist of the Roseville, Calif.-based company, said one of the reasons he is attending the Mortgage Bankers Association trade show in New York is to meet with Wall Street investors and rating agencies to get them familiar with this concept. Issues over collateral are a major source for the lack of confidence in the market from an investor standpoint, he said. Doing the review before the loan closes will let secondary market purchasers know that if they buy a loan that eventually goes bad, at least the valuation was done properly. The V-Cert review includes an USPAP-compliant desk review, a fraud and foreclosure risk analysis and a value determination.

DebtX, Boston, is selling $500 million of mostly commercial real estate loans on behalf of three financial institutions. The first offering consists of $364 million in performing and nonperforming loans with the seller being a Northeastern regional bank. There are two separate bid deadlines on two separate dates. Bids for the first transaction are due June 15 by 2:00 p.m. Eastern. A total of $207 million in loans will be sold, including $76 million of CRE, $57 million of land/acquisition and development, $52 million of commercial and industrial and $22 million of loan participations. Bids for the second transaction are due June 21 by 2:00 p.m. Eastern. A total of $157 million in loans will be sold, including $69 million of CRE, $39 million of C&I, $36 million of land/A&D, $5 million of consumer and an $8 million loan participation. The second seller, an undisclosed bank in the South, is offering $97 million of nonperforming CRE loans for bidding on two separate dates. Both transactions include income-producing properties secured by condominiums and subdivisions throughout the U.S. Bids for the first transaction, which includes $90 million in loans, are due June 3 by 2:00 p.m. Eastern. Bids for the second transaction, which includes $7 million in loans, are due June 16 by 2:00 p.m. Eastern. The third seller, a financial services company in the South, has a portfolio of $39 million of nonperforming CRE loans for sale. The transaction includes loans secured by properties in South Carolina, Florida and Georgia. Bids are due June 8 by 2:00 p.m. Eastern.

Defaults on multifamily mortgages held by U.S. depositories climbed to a record 4.6% in the first quarter, almost twice the year-earlier level, as more borrowers failed to repay loans in a timely fashion, according to Real Capital Analytics Inc. Defaults on multifamily mortgages rose from 4.4% in the fourth quarter and from 2.4% during the same period in 2009, the New York real estate research firm said. Commercial mortgage defaults also rose in the first quarter for loans against office, retail, hotel and industrial properties.

The Kislak Organization, a real estate company based in Miami Lakes, Fla., is back in the residential mortgage business using what it calls a "two-pronged" approach to lending. J.I. Kislak Mortgage LLC is establishing brick-and-mortar offices to serve residential customers in Florida and the Southeast. It has also entered into the private-label business through Kislak Lending Solutions LLC, which is a wholly owned subsidiary of Kislak Mortgage. Kislak Mortgage is a joint initiative with Thomas Meyer, who will serve as chief executive. Meyer, a long-time Kislak associate, is the founder of HomeBuilders Financial Network, which he sold to Fidelity National Financial in 2002. "We believe that there is significant opportunity for a well-capitalized, well-managed and customer-driven mortgage lender in today's market. Consumers still need access to capital, still need smart lenders who can help them buy the homes of their dreams, and Kislak will once again be that company," said Meyer. Kislak exited the mortgage business in 1996 when it sold its servicing portfolio to a consortium of banks including NationsBank, Atlantic Savings and Loan, Glendale Federal Bank, GMAC and Leader Federal Bank, according to the company's website.