Origination

Single-family housing starts jumped 10% in April as builders rushed to meet demand from buyers seeking to take advantage of the expiring Federal homebuyer tax credit. The U.S. Census Bureau reported that single-family housing starts rose to a seasonally adjusted annual rate of 593,000 in April, up from a 538,000 rate in March. On a sequential basis, construction activity rose 18% in the Midwest, 15% in the South, 5% in the Northeast but fell 5% in the West. Overall, single family housing starts rose 54% from April 2009. The spike in activity caused the National Association of Home Builders/Wells Fargo Housing Market Index to rise three points to a reading of 22 in May -- its highest showing since August 2007. "Builders are hopeful that the solid momentum that the tax credits initiated will continue even now that those incentives are gone," said NAHB chairman Bob Jones. The homebuyer tax credit expired April 30, but buyers have until June 30 to close and qualify for the credit. (A California tax credit for $10,000 for new home purchases is on the verge of expiration.) Builders broke ground on 68,000 multifamily units in April, down 24% from March.

Navy Federal Credit Union, the largest credit union player in mortgages, funded $847 million worth of residential loans in the first quarter, a 60% decline from the same period a year ago. Even though its loan production fell, the average size of new loans being funded by Navy FCU rose slightly to $248,606 from $233,825. In the fourth quarter the CU giant originated $1.2 billion of one- to four family mortgages. Among all lenders, Navy ranks 30th nationwide in terms of loan production, according to the Quarterly Data Report. Based in Merrifield, Va., not too far from Washington, it is also an active jumbo lender. Many of its mortgage customers are employed by the military.

In denying a mortgage application, lenders will have to show the borrower their credit score under an amendment approved by the Senate and attached to the Wall Street Reform bill. Sen. Mark Udall, D-Colo., said his amendment will "empower consumers" by giving them immediate access to their credit score for free. "If you are turned down for credit because you have applied for a loan or you have a higher loan rate, you will have access to your credit score," Sen. Udall said. The Senate approved the Udall amendment Monday evening by a voice vote. The Senate also approved an amendment preserving the Federal Trade Commission's existing consumer protection mandate. The amendment by Sen. John Rockefeller (D-W.Va.) aims at getting the FTC and the new Consumer Financial Protection Bureau created by the reform bill (S. 3217) to work together. "The amendment directs the FTC and the new bureau to enter into a memorandum of understanding and coordinate their regulatory efforts," Rockefeller said. "The bottom line is that businesses will not be subject to multiple layers of regulation and rules," he added.

CitiMortgage, a top ten player in wholesale lending, will no longer fund non-agency jumbo mortgages through loan brokers, National Mortgage News has learned. A New York area broker that has used the bank for years said he received notification on Monday and a spokeswoman for Citi confirmed that "we are not currently offering jumbos through the broker channel." The bank-owned lender, however, will continue funding jumbos through its retail channel. The spokesman said CitiMortgage offers "attractively priced" jumbo mortgages to "our highly credit-worthy customers, as we anticipate holding these loans on our balance sheet." CitiMortgage is based in O'Fallon, Mo., but its parent bank is headquartered in New York, one of the most expensive housing markets in the nation, and home to many financial service executives who live in New Jersey, New York, and Connecticut where home prices can easily exceed the GSE jumbo limit of $729,750. Many jumbo providers today require down payments of at least 20%. Liquidity in the market is beginning to loosen up somewhat thanks to a recent jumbo securitization done by Redwood Trust, a publicly traded REIT.

In the United Kingdom, purchase mortgages have continued their year-to-year rise for the ninth consecutive month, according to a London-based industry trade group. However, refinancing volume continued to fall on a year-over-year basis for the 23rd consecutive month, data from the Council of Mortgage Lenders, London, show. The number of purchase loans increased by 45% year-over-year and the value of these loans jumped by 62% in March while the value and number of refinance loans was down 29% year-to-year. The 45,000 purchase loans in March (worth £6.3 billion or $9.1 billion), were up 25% in terms of the number of loans (24% in value) from February and the 28,000 refinance loans (worth £3.5 billion or $5.0 billion) were up 23% in volume (21% in value).

Presidio Residential Capital, a private real estate construction lender, said it has closed $40.3 million in new commitments since its formation six months ago. Over the next 24 months, the company's goal is to fund in excess of $250 million in construction loans for home-building projects in the Western part of the U.S. and Texas. The first loan was $11 million to Cornerstone Communities of San Diego to provide the funding needed to build homes in its Andorra neighborhood within the master-planned community of Eastlake in Chula Vista, Calif. Other loans include $6.2 million closed in January to TRI Pointe Homes to fund the completion of 29 homes in its Traditions neighborhood in Riverside, Calif., another $8.2 million to TRI Pointe Homes for an Oceanside project of 30 homes dubbed Arrowood, and $14.9 million closed in March to McMillin Homes to fund 45 homes in its Santee, Calif., neighborhood of Morning View. Although Presidio Residential Capital targets single-family builders, condominium projects will be considered, according to Don Faye, president. Loans, with a minimum loan commitment of $10 million, are being made based on the project and builder meeting specific standards, including the project having a strong feasibility, good product and location.

Quicken Loans, Livonia, Mich., is jumping into the private label origination business, offering its services to community banks and credit unions. The company said it has launched Quicken Loans Mortgage Services for lenders that want to originate home loans, but do not feel they have sufficient resources to hire loan officers, underwriters and support staff. Currently, PHH Mortgage is the largest private label funder in the U.S.

Despite aggressive efforts to stay alive, Midwest Bank and Trust Co., was closed late Friday by Illinois regulators. The failure of the $3.2 billion-asset, Chicago-area bank came on a night when the Federal Deposit Insurance Corp. also found buyers for three other institutions, bringing the year's failure total to 72. Midwest's collapse - brought on in part by losses tied to the government-sponsored enterprises - came despite its receiving bailout funds to address its capital needs. The FDIC sold the bank's operations to $12 billion-asset FirstMerit Corp. in Akron, Ohio. The government's losses from the failure were estimated at $216 million. The three other failed banks totaled $342 million of assets. They were: $136 million-asset Satilla Community Bank in Saint Marys, Ga., $109 million-asset New Liberty Bank in Plymouth, Mich., and $97 million-asset Southwest Community Bank in Springfield, Mo. Together, the four failures were estimated to cost the FDIC about $300 million. Like other institutions, Midwest, the bank subsidiary of Midwest Banc Holdings, suffered sharp losses in its preferred stock holdings when the government's 2008 conservatorship of Fannie Mae and Freddie Mac depleted the GSEs' value. Midwest's problems were compounded by rising loan losses.

Moody's Investors Service has downgraded $2.2 billion of securities backed by 'alt-A' mortgages issued in 2005 by Residential Funding Co. LLC, a unit of what is now Ally Financial. According to wire service reports, Moody's has downgraded several hundred billion dollars of MBS since the start of April as falling home prices, high joblessness and the slow economy led credit raters to revise loss expectations. In January Moody's placed $573 billion of alt-A MBS issued from 2005 through 2007 on review for possible downgrade after it revised its loss forecasts. Alt-A loans include mortgages made to borrowers that cannot document assets and/or income.

Bank of America completed 23,500 permanent HAMP modifications in April, almost double what it processed the previous month. The nation's largest servicer of residential loans is becoming more proficient in the use of the Home Affordable Modification Program, which requires servicers to reduce a borrowers' mortgage debt to 31% of income, and put the applicant through a three-month payment trial before qualifying him for a permanent modification. "We continue to evaluate homeowners' eligibility and activate trial modifications while focusing on completing as many permanent modifications as possible," said Jack Schakett, B of A's credit and loss mitigation executive. B of A had completed 32,900 HAMP modifications as of March 30, overtaking JPMorgan Chase (31,460 completed mods) as the top HAMP servicer. "We continue to demonstrate momentum executing HAMP," B of A Home Loans president Barbara Desoer said recently. She noted that another 38,000 permanent modifications would be completed once the customers signed the contract. Since the Obama Administration launched HAMP in the spring of 2009, B of A has completed 56,400 modifications.