Origination

Homebuyers and investors have less interest now in buying foreclosed homes than they did a year ago, according to a new survey. If the attitude holds it will continue to raise concerns about who will buy all the repossessed homes coming on the market and the effect on a housing recovery. Consumers who would consider purchasing a foreclosure dropped to 45% this month from 55% last May, according to an online Harris Interactive survey conducted for Trulia.com and RealtyTrac.com. The Orange County Register reported that the survey shows that among those who cite a downside to buying a foreclosure-and there are actually somewhat fewer than last year: 78% vs. 85%-more are worried about the risk and possible loss of value than a year ago.

Rep. Carolyn Maloney, who represents part of New York City, voiced her support for mortgage bankers having "skin the game" but not a "one size fits all approach." Speaking at the MBA trade show in New York, Maloney noted that some commercial property values have decreased by at least 40% from their peak, voicing her concern about a lack of liquidity in the commercial mortgage market and underwater mortgages. The Democrat from the East Side of Manhattan said she sees a glimmer of hope in the market due to improving GDP numbers. More than 600 attendees are at the MBA show, up 200% from last year. The trade group recently reported improving commercial loan volumes. "With 8.4 million jobs lost during the Great Recession, it will take time while our economy recovers and the CMBS market returns," Maloney told lenders.

The Senate is slated to begin debate on an emergency appropriations bill Monday afternoon that includes a provision to get the Rural Housing Service program up and running again. The measure would allow the RHS to increase its current 2% upfront premium to 3.5% and make the single-family program self-funding. It would free RHS from the appropriations process and from seeking annual renewal of its loan commitment authority. RHS ran out of loan commitment authority on May 17. Some lenders are still using the program but only because the money has been committed, though not used. RHS is a key program for rural lenders of all stripes but also megabanks like Chase Home Finance. The emergency appropriations bill (H.R. 4899) includes funding for the wars in Iraq and Afghanistan and natural disasters stateside. Congress wants to pass this bill before the Memorial Day recess. It represents the fastest legislative vehicle to fix the RHS program. The House has already passed a RHS reform bill, sponsored by Rep. Paul Kanjorski, D-Pa., that increases the upfront premium to 4%, which means House appropriators likely will not object to the inclusion of the RHS provision in H.R. 4899.

Single-family existing home sales jumped 7.4% in April following a similar rise in March as buyers rushed to meet the deadline for a federal homebuyer tax credit. The National Association of Realtors expected the increase, noting that the tax credit required borrowers to sign a sales contract by April 30 and close June 30. NAR chief economist Lawrence Yun is forecasting that sales will be elevated in May and June with "some temporary fallback" in the following months. The Realtors reported that sales of previously owned single-family homes rose to a seasonally adjusted annual rate of 5.05 million in April from a 4.7 million rate in March. The April report shows more sellers are putting their homes on the market to take advantage of the stabilization in home prices and low mortgage rates. NAR also reported that the inventory of unsold homes rose by 390,000 units in April to 3.43 million, an 8.2-month supply at the current sales pace. A NAR spokesman said two-thirds of that increase is normal for this time of year. The last time the inventory was above 3.4 million was in November 2008. Weiss Research analyst Mike Larson said the rise in inventories casts a "pall over the recent improvement in supply trends." He also noted that purchase mortgage applications have "slumped to multiyear lows."

The Mortgage Bankers Association's chief economist is hopeful that last week's run-up in the Libor index could be the spark needed to light a fire under the refinancing sector. For the most part, borrowers with Libor-based adjustable-rate mortgages have been reluctant to trade in their loans for safer fixed-rate products because the interest rate on their ARMs is less than that currently available for fixed loans, even at the fully indexed rate. But now that the Libor benchmark is moving up, they could change their minds, Jay Brinkmann told National Mortgage News at the MBA's National Secondary Market Conference in New York. It's too early to tell whether the hoped-for increase in refis will be a "boomlet" or a "wavelet," Brinkmann said. But he reported that several MBA members told him their phones were "ringing off the hooks" Thursday and Friday of last week from callers who were worried that their next rate adjustments could drive their payments higher than if they were to refinance. The economist said he is watching the situation carefully. Meanwhile, on Monday the yield on the 10-year Treasury bond held steady at about 3.2%.

At the urging of their regulator, Fannie Mae and Freddie Mac are expanding their data collection on loans and appraisals using new uniform standards. "This initiative is a major step toward meeting industry requests for uniformity in appraisal and loan data," said Federal Housing Finance Agency director Edward DeMarco. "Improvements in data quality will benefit all mortgage market participants and strengthen the housing finance system." The new data standard will be phased in through a common platform and structured to use existing originator and appraiser technologies, FHFA said. Fannie and Freddie both issued statements in support of the new initiative. "We applaud FHFA on this important effort to improve appraisal and loan data quality," said Freddie chief executive Charles Haldeman. "The additional loan and appraisal data requirements, standard data definitions and a common framework for capturing these new data sets will support the mortgage industry's efforts to manage risk, reduce costs and respond more efficiently to market changes," he said.

Federal Housing Administration commissioner David Stevens urged mortgage bankers to "think a little less about your own wallets and more about integrity and responsibility" in their efforts to mold legislation to reform the nation's financial system. "Make your case, but make it for the right reason," he said at the Mortgage Bankers Association's National Secondary Market Conference in New York. After MBA president John Courson prodded members to deliver their message to lawmakers—"The issues before us will affect the very shape and form of lending in the future," he said—Stevens took to the podium to warn that advocating for the industry alone is the wrong message to take to their legislators on Capitol Hill. "Washington doesn't trust this industry at all," he told a crowd of about 1,500 at the Hilton New York. "It's not about protecting mortgage banking, it's about protecting the American dream. That's the only issue that has credence in Washington today." The FHA commissioner said that while there is plenty of blame to go around for the financial crisis, the "general consensus" in Washington is that housing finance "is the industry that brought the world to the brink of financial ruin." On a brighter note, Stevens also told the conference that most signs are pointing to a housing market turnaround. The sector is "slowly starting to come back," he said. "You can feel a growing confidence in the market, and you can sense more willingness to invest."

Branch, Banking & Trust had outstanding warehouse commitments of $3.2 billion at yearend, making it the largest financier of nonbanks in the nation, according to survey figures compiled by National Mortgage News. The North Carolina-based bank, however, would not verify its commitment number or talk about its business. The figure is an estimate made by NMN, based on commitments the bank inherited when it bought the troubled Colonial Bank last summer. Industry sources say Bank of America has a commitment volume of almost $15 billion but that bank, too, would not discuss its warehouse business. The $15 billion figure is based on a speech made by a B of A warehouse executive at a recent mortgage conference in Texas.

The loan buyback plague continued on unabated in the first quarter with three seller/servicers, accounting for about three-fourths of the industry's repurchases, according to an analysis done by National Mortgage News. Bank of America repurchased more loans than any other originator with $4.4 billion, followed by Chase ($2.4 billion) and Citigroup ($1.4 billion). Although the figures are large, B of A and Citigroup actually had significant declines in buybacks compared to the fourth quarter. B of A's repurchases fell by 56%, Citi's by 70%. Chase's declined by 11%. All three have special teams that work on fighting buybacks. One source close to Chase said much of the lender's current buyback requests come from "legacy" loans that were originated by Washington Mutual, which JPMorgan Chase bought in the fall of 2008. "It's a disaster," said the source, requesting his name not be used. "A lot of it is payment-option ARMs." A Chase spokesman declined to comment on specifics, but acknowledged, "We have a lot of people working on it (buybacks)." In a recent SEC filing JPM disclosed, "In 4Q09 approximately 14%, 58% and 20% of repurchase demands, respectively, came from 2006, 2007 and 2008 vintages."

Roughly 37% of single-family residences in California that are in foreclosure are rental units, according to a new report from Tenants Together, a consumer advocacy group for renters' rights. The organization says more than 200,000 renters in the state "were directly affected by home foreclosures in 2009 alone, most of whom have been displaced from their homes." Tenants Together noted that the foreclosure rate on California apartment properties spiked by 70% last year-but only on buildings with rental units of five or more.