Origination

Radian has priced its public offering of 50 million shares of its common stock at $11 per share. The offering is expected to close on May 11. The underwriters have an option to purchase an additional 7.5 million shares. Proceeds will be used to fund working capital requirements and for general corporate purposes. On May 5, Radian closed at $11.31 per share. The next morning it opened at $10.94 and by late morning it was down further to $10.77 per share, although its low point on the day so far is $10.66.

Republican senators Bob Corker (Tenn.) and Johnny Isakson (Ga.) have teamed up to offer an amendment that calls for establishing minimum mortgage underwriting standards as well a study on risk retention. The standards would include a 5% minimum down payment and prohibit warehouse lenders and wholesalers from funding mortgages that don't meet the minimum standards. The federal banking regulators, not the new Consumer Finance Protection Agency that is contained in the financial services regulatory reform bill drafted by Sen. Christopher Dodd, D-Conn., would set the minimum standards. The Dodd bill currently requires mortgage-backed securities issuers to retain 5% of the credit risk. The Corker-Isakson amendment would strike that language and replace it with a study on risk retention by the Federal Reserve Board. Meanwhile, the Senate voted 93-5 to approve a compromise by Senators Dodd and Richard Shelby (Ala.) to create a new mechanism for managing the failure of large financial institutions without government bailouts. The bi-partisan agreement on the "too big to fail" issue shows that the Senate is now moving toward passage of the 1,400-page reform bill.

The average rate for a 30-year mortgage rate dropped to 5% and as of Thursday noon the benchmark 10-year Treasury yield had hit a low of 3.46%, a level not seen in several months. According to Freddie Mac's Primary Mortgage Market Survey for the week ended May 6 the average rate for the 30-year mortgage was down from 5.06% the week previous but up from 4.84% a year ago. The average 15-year FRM rate during the week ended May 6 was 4.36%, down from 4.39% the previous week and 4.51% a year ago. The average five-year hybrid Treasury adjustable-rate mortgage rate was 3.97%, down from 4% the week previous and 4.90% a year ago. The average one-year Treasury ARM rate was 4.07%, down from 4.25% the previous week and 4.78% a year ago. Average points were 0.7 for FRMs and hybrids and 0.6 for one-year Treasury ARMs.

Clear Capital reports a slowdown in both home price gains and real estate owned saturation rates in April suggesting price trends are only in part dependent on distressed sale volume and "re-enforcing the need to understand local markets." The company's Home Data Index Market Report shows U.S. home prices dropped 5% in April, marking an additional 1.1% decline nationally compared to March. The increase in the nation's real estate owned saturation rate slowed down in April, rising less than one percentage point to 29.6%. Analysts note that while REO saturation rates averaged over 33% during the last quarter, the country's highest performing metro areas saw "relatively flat" prices, a trend that was different from lowest performing areas where REO saturation rates were much lower and prices declined 11.1%. "This paradox" suggests that price trends are not wholly dependent on distressed sale volumes, Clear Capital said. HDI also shows "a marked slowdown in the rate of decline" compared to a 3.9% drop compared to February data and "steady" year-over-year price gains at 5.1% in all four regions. It warns however that the decline is "sufficient enough to halt" the recent growth in year-over-year gains for the center regions of the nation.

Freddie Mac lost $6.7 billion in the first quarter, and after accounting changes tied to guarantees issued on off-balance sheet instruments, saw its net worth plunge by $14.9 billion. With its net worth now clearly in the red (by $10.5 billion) the government controlled mortgage giant is asking the Treasury Department for $10.6 billion in aid. The government's policy is to keep both Freddie Mac and Fannie Mae in a positive net worth position, a move designed to assure investors that the bonds they issue are safe investments. The large drop in Freddie's net worth was caused by an accounting change that forced the company to add $1.5 trillion of assets and liabilities to its consolidated balance sheet, which in turn caused its net worth to plunge. (Fannie Mae, which soon will release its 1Q results, is facing a similar problem.) Although Freddie's loss and decline in net worth was indeed bad news, there were some positives in its report. The GSE established credit reserves of $5.4 billion in 1Q, down from $7 billion in the prior quarter. It also reported lower delinquencies on its single-family loans: 4.13% at March 31, compared to 4.2% at the end of February. Freddie's chief financial officer Ross Kari said its 1Q results "were driven significantly" by the Financial Accounting Standards Board-promulgated changes. He added that the firm is seeing some signs of "modest stabilization" in housing. If Treasury grants Freddie's request for new capital, the government's investment in the GSE will increase to $62.3 billion.

The American Bankers Association has signed up SunTrust Mortgage as a "preferred" secondary market investor for its mortgage cooperative, Community Bank Mortgage LLC. The 53-owner banks of the ABA cooperative can now sell residential mortgages, including jumbo loans, on a servicing-released basis to SunTrust. Community Bank Mortgage LLC has two other preferred investors, Wells Fargo Home Loans and Bank of America. Debbie Whiteside, president and chief operating officer of Community Bank Mortgage LLC, said SunTrust has a "viable" jumbo loan program and it will purchase fixed-rate and adjustable rate jumbo mortgages. Wells Fargo purchases only fixed-rate mortgages. "We anticipate that our new partnership with SunTrust Mortgage will have an immediate and positive impact on our owner banks," she said. ABA is a co-owner in the cooperative that was formed in 2007. Community Bank Mortgage LLC paid $2.8 million in bonuses to its owners in 2009.

ComplianceEase technology has been adapted to help originators keep compliant in the face of California's new high-cost lending law. ComplianceEase's ComplianceAnalyzer tool has been updated to enable lenders, brokers, and regulators to identify, in seconds, whether a loan falls under the new "higher-priced" category. Simultaneously, and on a single report, the system includes tests for the various federal statutes that can also place California lending licenses at risk under the new law. Under the new law, starting July in California there will be a new category of loans called "higher-priced mortgage loans." If a loan meets the attributes and thresholds that place it in the "higher-priced" category, originators face prohibitions regarding making "deceptive" or "misleading" statements about the loan to borrowers. Since it will be possible for civil penalties to be as high as $10,000 and directly assessed against individuals, lenders and brokers will need to know whether each loan they originate will be subject to the new restrictions and may make decisions about whether or not they decide to continue originating the new category of loans. California's restrictions in this area follow a growing trend among states to create a "higher-priced" category that is intended to subject a larger quantity of loans to additional restrictions. So far seven other states have created similar loan categories with increased restrictions.

The April 30 deadline for housing tax credits drove a more than 50% month-to-month increase in purchase volume at Total Mortgage Services during April, according to the company. The company said previously refinance loans had prevailed over the past three years. The company's president, John T. Walsh, said declining housing prices, record inventories and what has been a relatively low mortgage rate environment are expected to help the company continue to maintain strong volume going forward despite the tax credit's expiration.

A longtime former rating agency residential mortgage-backed securities analyst has joined Digital Risk LLC in a move the company said reflects expansion plans in line with a renewed emphasis on private-sector involvement within the secondary mortgage market. Jenine Fitter, who most recently was vice president of sales, data/analytics and risk management solutions with First American CoreLogic (BasePoint Analytics), New York, is now senior vice president, client solutions at Digital Risk. Previous to joining First American, Fitter was a director in Standard & Poor's residential mortgage group and for 10 years prior to that she was a senior director in Fitch's residential mortgage group. In her new post, her focus will be on originators that use analytics as well as bond buyers and other securitization market participants.

State Financial Network, Broomhall, Penn., a credit union-owned mortgage banking firm, has promoted Michael Magnavita, its chief financial officer, to the position of president and CEO. John Unangst, current president of the company who also heads nearby Franklin Mint Federal Credit Union, will continue to serve as chairman of the board. State Financial is a wholly owned CU Service Organizations for the $600 million credit union with a mortgage servicing portfolio of more than $500 million.