Origination

Sovereign Bank and M&T Bank Corp.--two midsized players in mortgages--have ended their merger talks, according to combined news reports. A report by Dow Jones said the two banks were in advanced merger discussions in recent weeks. The deal would have catapulted Sovereign's owner--Spain's Banco Santander SA--into the upper ranks of U.S. banking along with such other foreign banks as HSBC and ING. Sovereign is also an active player in providing warehouse credit to nonbank mortgage firms. According to figures compiled by National Mortgage News and the Quarterly Data Report, Sovereign ranks 25th nationwide among residential funders, M&T 28th.

First-quarter commercial and multifamily mortgage originations came in higher year-to-year but lower quarter-to-quarter. Originations were up 12% compared to the same period last year but down 26% from the fourth quarter of 2009. "The results of the survey showed changes in commercial and multifamily mortgage loan origination levels varied significantly between investor groups," said Jamie Woodwell, MBA's vice president of commercial real estate research. "However, it's hard to draw conclusions based on first-quarter numbers given seasonal effects, such as the industry's usual push to finalize deals before the end of the year, resulting in lower first-quarter origination activity."

Calyx Software has expanded The Calyx Network with an interface update that provides links to new compliance, fraud prevention and verification vendors. The Calyx Network allows users of the Calyx Point LOS application to connect directly with lenders and mortgage service providers, automating data exchange. The May update contains a new connection to three new mortgage service providers including fraud detection and compliance vendor Interthinx Inc., product and pricing vendor Mortgage Pricing System and verification services T Transcript Processing. The Calyx Network interface update is automatically installed into Point versions 7.0 and higher when users open their software and connect to the Internet.

Impac Mortgage Holdings said its real estate and mortgage services unit earned $1.3 million in the first quarter from an array of vendor activities, including loss mitigation and REO services. In a new filing with the Securities and Exchange Commission, the Irvine, Calif.-based nonbank notes that it would like to begin funding loans again but remains relegated to being a loan broker only. (In the filing it provides no volume figures.) It also reveals that most of its revenue stems from services performed on its own portfolio. A former alt-A lender, Impac is trying to reinvent itself in a variety of field and REO services. Its stock recently began trading on the American Stock Exchange after being on the OTS pink sheets.

Sometime by late June PNC Financial Services will officially pull the plug on the warehouse lending business it inherited from National City, cutting 55 workers who man the division in Kentucky, and sending its nonbank borrowers into the arms of other banks. "At this point I would say the chances of PNC selling this thing or allowing for a 'lift out' is pretty nil," said one source close to the situation. "You might say this is an official wrap." To date, PNC officials have said little about the NatCity warehouse business but have stayed firm regarding a recent forecast of closing the unit by mid-2010. Paul Best, who managed the business for NatCity and stayed on at PNC when it bought the Cleveland bank in late 2008, said he could not comment.

The Senate Tuesday rejected an attempt to strike from the regulatory reform bill new authority for state attorneys general to take enforcement actions against national banks for violations of federal consumer protection laws. The amendment by Sen. Bob Corker, R-Tenn., to keep state AGs out of national banks failed on a 55-43 vote. Corker also wanted to strike a section of the bill (S. 3127) that rolls back the Office of the Comptroller of the Currency's powers to pre-empt state consumer protection laws. The Senate went on to pass an amendment by Sen. Tom Carper, D-Del., that clarifies the state AG has the authority to enforce rules promulgated by the proposed Consumer Financial Protection Bureau which will have oversight over residential lending. "It preserves the state attorneys general role in protecting their citizens from abusive practices," said Sen. Chris Dodd, D-Conn. The Carper amendment clarifies that the AGs can enforce the CFPA rules to prevent unfair, deceptive and abusive lending practices, but AGs cannot use their own interpretations of the underlying statutes. The Senate approved the Carper amendment by an 80-18 vote.

Loan applications to buy new or existing homes plummeted 27% last week, reaching a 13-year low, according to new figures released by the Mortgage Bankers Association. The trade group noted that purchase applications have declined almost 20% over the past month despite interest rates on fixed-rate loans averaging less than 5%. The trade group tracks applications using an index it created back in 1990. In a statement MBA vice president of research and economics Michael Fratanoni said the results indicate that the expiring $8,000 federal tax credit "pulled sales into April at the expense of the remainder of the spring homebuying season." Although purchase apps were pummeled for the week ending May 14, the index that tracks refinance applications increased 14.5% from the previous week. Housing and mortgage economists believe total loan production will range from a low of $1 trillion to a high of $1.4 trillion this year. MBA's forecast is at the lower end of those estimates. Over the past two quarters refis have accounted for about 60% of all originations.

Recently I wrote a post about the difficulties our industry is experiencing with borrowers who have trouble paying their taxes and insurance after closing on a reverse mortgage. It's anticipated that this challenge may increase in the coming years as many seniors have recently opted for the fixed rate reverse mortgage product, and all the available funds are taken at once. In addition, many seniors are paying off sizable existing mortgages, which increases cash flow, but they may be accustomed to having those taxes and insurance payments made through the escrow account in the mortgage. We always talk about educating our clients throughout the process of obtaining a reverse. Shouldn't we continue that education after closing and beyond?

Existing home sales rose for the second straight month in April in the greater Houston area, according to new figures compiled by the Houston Association of Realtors. Single-family home sales climbed 26.7% in April compared to the same month a year ago, with all segments reporting gains except for the under $80,000 sector, which remained flat, according to HAR. Although the biggest gains took place among houses priced above $500,000, the average sales price in the region in April stood at $206,414, a gain of 6.8% from a year ago. Some 6,200 properties changed hands during the month, for a total volume of $1.2 billion. At the same time, the number of available listings rose 8% to nearly 49,000, an inventory of roughly 6.5 months at the current sales pace. Still, that compares favorably to the national inventory of 8 months.

Cash buyers - spell that i-n-v-e-s-t-o-r-s - purchased more than four out of every five new condominium units in the Greater Downtown Miami area in the first quarter, according to the latest figures from the Bal Harbour-based CondoVultures consulting firm. Of the some 700 apartments sold during the three-month period in the 60-square-block area, financing was used to acquire less than 120. "Even though the U.S. government is encouraging lenders to once again finance condo purchases, the results have not been impressive in South Florida," says consultant Peter Zalewski. "Many lenders claim to be willing to consider writing loans for buyers of condominiums, but the end results simply do not support that." Meanwhile, The Miami Herald reports that the developer of the opulent ICON Brickell condominium complex in Greater Downtown Miami has deeded back two of the three luxury towers that make up the complex to a group of construction lenders led by HSBC. The Related Group relinquished ownership of the 57-story North and South towers in the three-building, 1.793-unit complex after selling just a fourth of the apartments in the two structures, the newspaper said.