Origination

The homebuyer tax credit deadline pushed purchase mortgage applications up to their highest level since last October, as overall applications have increased from the preceding week, the Mortgage Bankers Association's Market Composite Index for the week ended April 23 found. The MCI increased 4.0% on a seasonally adjusted basis from one week earlier and on an unadjusted basis, it increased 5.1%. According to Michael Fratantoni, MBA's vice president of research and economics, "Purchase applications were up 13% over the previous week and almost 24% over the last month, driven by significant increases in both conventional and government purchase applications. We also saw the Government share of applications for purchasing a home increase to over 50% of all purchase applications last week, which is the highest in two decades." The seasonally adjusted Purchase Index increased 13.0% from one week earlier, which MBA said is the third consecutive weekly increase in purchase applications and the highest Purchase Index recorded in the survey since the week ending October 2, 2009. The Conventional Purchase Index increased 9.4% from the previous week while the Government Purchase Index increased 16.7%. The Refinance Index declined by 2.1% from the previous week. The market share of refi applications continues to decline, falling to its lowest point since the first week of July 2009; refis made up 51.9% of mortgage applications, down from 55.7% the previous week. The market share of adjustable rate mortgage applications increased to 6.3% from 6.0%. The average interest rate for the 30-year fixed rate mortgage fell six basis points from 5.08% to 5.02% for the current week with points increasing to 0.92 from 0.91 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs declined 4 bps to 4.34%. The average contract interest rate for one-year ARMs was unchanged from the previous week's 7.03%.

It's no secret that much of your reverse mortgage outreach and advertising is geared toward education on the program overall and the benefits to the borrower. As promised, I am reporting on some topics of discussion from the National Reverse Mortgage Lenders Association Road Show in Philadelphia in April.

The mortgage business is shrinking. Why that is good news for those who remain.

Invesco Mortgage Capital has completed its public offering of 900,000 shares of common stock, raising $187 million -- cash that will be used for mortgage-related investments. Using leverage, the REIT will purchase loans and residential and commercial mortgage-backed securities. The real estate investment trust also plans to use the net proceeds for general corporate purposes. Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Inc. acted as joint book-running managers for the offering. Keefe Bruyette & Woods, Inc., Stifel, Nicolaus & Company, Incorporated and JMP Securities LLC served as co-managers.

The 30-day delinquency rate on securitized multifamily mortgages fell slightly in April after a 332 basis point spike in March due to the default of the Stuyvesant Town and Peter Cooper Village project in Manhattan. In April, the delinquency rate on securitized multifamily mortgages fell 13 bps to 13.06%. It is the first decline in the multifamily rate since May 2009, according to a Trepp LLC report. The New York firm tracks the performance of commercial mortgage-backed securities. Overall, the 30-day or more past-due rate on CMBS rose 41 bps to 8.02% in April, up from 2.45% a year ago. This marks the first time ever that CMBS delinquencies hit or surpassed 8%, according to Trepp. Office delinquencies rose the most (64 bp) in April followed by retail (41 bp).

Wells Fargo & Co. funded $2.2 billion of interest-only residential loans in the fourth quarter, ranking first nationwide in this category, according to figures compiled by National Mortgage News. PHH Mortgage, Mt. Laurel, N.J., ranked second with $1.2 billion. Overall, Wells' IO production volume fell 6% compared to the same period a year ago. Interest only mortgages have been criticized in some quarters because the loans do not allow consumers to pay down any principal. However, many mortgage firms defend the loan, noting that borrowers (and investors in second homes) who are uncertain how long they might stay in a property can save money over the short-term.

Most banks did not tighten lending standards on prime or nontraditional single-family mortgages during the past three months and there appears to have been some relief on HELOC standards, according a new survey of senior loan officers conducted by the Federal Reserve. Nearly 80% of banks surveyed said their lending standards were unchanged from January. On prime mortgages, only 11% said they tightened credit with the balance saying they eased. "Large bank respondents eased standards on balance, for both prime mortgages and home equity lending lines of credit," the Fed said. However, loan officers told the central bank that demand for residential mortgage loans weakened over the past three months. As for commercial real estate lending, some banks continued to tighten underwriting, but demand for CRE is now showing signs of stabilizing, the survey found. For the first time since the financial crisis began, less than 10% of the respondent banks reported weaker demand for CRE loans, the Fed said. Over 45% of banks reported increased use of loan extensions on existing CRE loans over the past six months.

Mortgage vulture fund PennyMac Mortgage Investment Trust earned $1.3 million in the first quarter and reported that it's beginning to see more activity in the nonperforming loan market. A publicly traded REIT, the firm said it bought five mostly nonperforming loan portfolios during the quarter. The pools were valued at $115 million based on unpaid principal balances of $208 million. The firm said in early April it agreed to purchase a $141 million pool of nonperformers for $71 million. Company CEO Stan Kurland said, "Market activity for non-performing whole loans accelerated throughout the first quarter, and continues to accelerate into the second quarter of 2010." Meanwhile, the company said it is beginning to gear up its lending conduit by purchasing loans from small and mid-sized banks. The product is then delivered to Fannie Mae and Freddie Mac for securitization. A spokesman noted that, "We're looking at prime agency paper" but added that jumbo lending will be a "natural progression" for the firm.

Mortgage insurer Radian Group posted a first quarter loss of $310 million but signaled its intention to move forward with a $550 million public stock offering. At press time its shares were down 10% to $13.11 with other MI stocks trading down as well. The nation's third largest MI company (in terms of new coverage written) noted that it completed the sale of its remaining equity interest in Sherman Financial, a consumer asset and servicing firm. However, the impact of the sale, which is expected to result in a pre-tax gain of about $70 million, will be reflected in Radian's second-quarter results. The mortgage insurance business at Radian lost $237 million for the first quarter of 2010, compared with a loss of $89 million one year prior. Despite the loss, there was positive news: for the first time in nearly four years Radian had fewer delinquent loans at the end of the quarter compared with the start of the quarter. As of March 31, Radian's book-of-business had delinquencies of 143,914 loans underwritten through the primary channel in default -- or 17.64% of its portfolio. Radian expects to end 2010 with fewer delinquent loans than in 2009.

The wholesale lending division of CitiMortgage is telling its current stable of loan brokers that it will not accept new registrations from third-party salesmen unless they've already been approved to do business with FHA. "Brokers that are currently approved and recertified by FHA for 2010 will retain that approval until December 31, 2010," the lender says in a new notice. FHA, of course, is getting out of the broker approval business, ceding oversight to the wholesalers that fund them and making the actual funder responsible for all broker-sourced loans. CitiMortgage has been whittling down its use of brokers for well over a year now. In 2009 it ranked 14th nationwide in table funding, according to figures compiled by the Quarterly Data Report. Its volume in the channel fell by 69%, the largest decline among a top 20 ranked originator. (For the full story see the weekly edition of National Mortgage News.)