Origination

The average rate for a 30-year fixed rate mortgage during the week ended April 15 fell back to 5.07% from 5.21% the previous week. "After rising for four consecutive weeks, mortgage rates eased back to where they were two weeks ago and still remain historically low," said Frank Nothaft, Freddie Mac vice president and chief economist. The average weekly 30-year rate was 4.82% a year ago. The 15-year FRM in the most recent week averaged 4.40%, down from the previous week when it averaged 4.52%. A year ago at this time, the 15-year FRM averaged 4.48%. The five-year Treasury-indexed hybrid adjustable-rate mortgage in the most recent week averaged 4.08%, down from the preview week when it averaged 4.25%. A year ago, the five-year ARM averaged 4.88%. The one-year Treasury ARM in the most recent week averaged 4.13%, down from the previous week when it averaged 4.14%. At this time last year, the one-year ARM averaged 4.91%. Average points were 0.7 for 15-year FRMs, 0.6 for 30-year FRMs and five-year Treasury hybrids and 0.5 for one-year Treasury ARMs.

Rep. Paul Kanjorski, D-Pa., has introduced a bill to make the Rural Housing Service single-family program self-funding by imposing higher loan guarantees fees. The bill (H.R. 5017) would increase the upfront guarantee fee to 3.5% and allow the Agricultural Department to assess a 0.5% annual fee on the loan balance. "This change will cost taxpayers nothing and ensure families in rural areas can continue to access affordable mortgages," Rep. Kanjorski said. The second-ranking Democratic on the House Financial Services Committee noted that more and more rural families are turning to the RHS program in these difficult economic times and the RHS program is running out of loan commitment authority. RHS has $13.1 in funding authority for fiscal year 2010, which ends Sept. 30, and less than $3 billion is left. "Rather than relying on ad hoc federal funding, my bill would transform the (RHS) program and allow it to pay for itself," the Pennsylvania congressman said. House Financial Services Committee chairman Barney Frank, D-Mass., said the committee would act on the bill soon.

Lenders can use worksheets with the new good-faith estimate to provide information to mortgage applicants that is not disclosed in the GFE, according to the Department of Housing and Urban Development. "A loan officer may use a worksheet to provide the consumer with additional information about his or her loan transaction, such as the amount of cash needed at closing, seller credits and other non-loan transaction fees that would be helpful to the consumer," HUD says in an update of its "Frequently Asked Questions" on the Real Estate Settlement Procedures Act rule that went into effect Jan. 1. HUD warns, however, that the worksheet should not look like the GFE and a loan originator should "never" use a worksheet in lieu of a GFE. The new RESPA rule makes it very difficult for lenders to change their origination fee once the GFE is given to a mortgage applicant. HUD officials were suspicious of worksheets at first because the estimates of lender fees and settlement costs would not be enforceable under the RESPA rule. But now "HUD is acknowledging these documents have their place," said RESPA attorney Phillip Schulman, a partner at K&L Gates.

The Department of Housing and Urban Development has issued its long-awaited final rule that eliminates the Federal Housing Administration's approval process for mortgage brokers starting Jan. 1, 2011. The final rule increases the net worth requirement for FHA-approved lenders and requires those lenders to be fully accountable for the loans they purchase from brokers. "Mortgage brokers already approved by FHA will be authorized to continue to originate FHA-insured loans through the end of the calendar year," HUD said. Brokers appear to be divided over these changes which essentially mirror the way Fannie Mae and Freddie Mac require their lenders to underwrite and approve broker-originated loans. Some brokers are preparing to qualify as FHA-approved "small business" lenders, according to National Association of Mortgage Brokers executive vice president Roy DeLoach. The final rule creates this new category of FHA-approved lenders, which requires a minimum net worth requirement of $500,000. The final rule raises the net worth requirement from $250,000 to $1 million for other FHA-direct endorsement lenders starting a full year after the final rule goes into effect.

JPMorgan Chase plans to hire 300 local mortgage officers in the next six months in the New York Tri-state metropolitan area. The new loan officers will serve customers through bank branches in New York, New Jersey and Connecticut, bringing the total number of loan officers in the area to about 700. Chase is holding open house recruiting events on April 20th in Melville, N.Y., Purchase, N.Y., and Iselin, N.J.; on April 21st in Brooklyn and on April 29th in Manhattan.

Omega Healthcare Investors Inc., a real estate investment trust based in Hunt Valley, Md., has entered into a new $320 million revolving senior secured credit facility. The new line expires in four years, provided the company has refinanced or repaid its $310 million, 7% Senior Notes due April 2014 prior to Dec. 31, 2013. In the event the senior notes have not been refinanced or repaid by that deadline, the maturity date will become Dec. 31, 2013. The new credit facility includes an "accordion feature" that permits Omega to expand its borrowing capacity to $420 million during its first three years. It is priced at Libor plus an applicable percentage (ranging from 325 basis points to 425 basis points) based on the company's consolidated leverage. The applicable percentage above Libor is currently 350 basis points. The credit was extended by a syndication of eight financial institutions. Banc of America Securities LLC was joint lead arranger and sole book manager. Deutsche Bank Trust Co. Americas was joint lead arranger and co-syndication agent. UBS Securities LLC was co-syndication agent and Bank of America NA was the administrative Agent. General Electric Capital Corp., Credit Agricole Corporate and Investment Bank, Jefferies Group Inc., RBS Citizens NA, and Stifel Bank & Trust are the managing agents.

Prior to the mortgage insurance industry reporting its first quarter earnings, Keefe Bruyette & Woods has increased its price target on the four publicly traded companies' common stock, although it did not increase its earnings outlook. According to analyst Nathaniel Otis, "In our opinion, within the last several weeks, the Obama Administration has significantly ratcheted up efforts to prevent lenders from foreclosing on at-risk borrowers. In addition, delinquency trends thus far in 2010 indicate a better-than-expected seasonal improvement for first-quarter 2010. Although any positive impact from (the) Home Affordable Modification Program may be pushed out another quarter or two, we believe the result could be a more sustained positive stretch of quarterly reporting." The risks include changes to HAMP and to the Federal Housing Administration programs aren't successful. Otis said KBW is remaining neutral for the companies in the space, preferring to revisit its outlook after the earnings reports. KBW's price target on MGIC went from $7 to $12, for Old Republic from $11 to $14, for PMI from $3 to $6 and from Radian from $9 to $18. KBW also issued a preview on title company earnings. Otis said, "While origination expectations appear much more rational this year, reflecting the reality that the real estate market is in a more stable position, the bias is slightly negative given weather issues and compliance with new RESPA rules. This is in stark comparison to last year at this time, when low rates and increased refi volumes fostered optimism. With this in mind, we are reducing our industry estimates for (the first quarter) to factor in these trends." Fidelity National Financial's earnings per share estimate for the first quarter was cut from $0.16 to $0.11; for First American it was cut from $0.23 to $0.20; for Stewart it was cut from a loss of $0.13 to a loss of $0.45; and for Investors Title Co., it was cut from $0.34 to $0.21.

Increases in Federal Housing Administration premiums were one of the factors in another large decline in application volume even though the average 30-year fixed rate mortgage rate regained half of the increase of the previous week, according to the Mortgage Bankers Association's Market Composite Index for the week ended April 9, 2010. According to Michael Fratantoni, MBA's vice president of research and economics, "Applications for government mortgages dropped substantially last week, following the implementation of an increase in FHA mortgage insurance premiums. Applications for conventional mortgages also dropped last week, with refinance application volume continuing to drop following last week's jump in rates." The MCI, a measure of mortgage loan application volume, decreased 9.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9.5% compared with the previous week. For the fifth consecutive week there was a decline in the Refinance Index, this time down 9.0% from the previous week. Unlike last week, there was a decline in the Purchase Index of 10.5%. The decline in purchase applications was driven by government purchase applications, which decreased 19.1% from last week, compared to a decrease of 2.0% in conventional purchase applications. The government purchase index last week reached its third highest level in the history of the survey. The market share of refi applications increased slightly to 58.9% for the survey period, up from 58.7% during the previous week. The market share of adjustable rate mortgage applications is up to 6.3%, from 6.2% for the previous week. The average contract interest rate for the 30-year fixed rate mortgage which one week ago rose a whopping 27 basis points to 5.31%, came back down to 5.17% for the current week with points increasing to 0.91 from 0.64 (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 fell by 9 bps to 4.45%. The average contract interest rate for one-year ARMs fell 1 bp to 7.02%.

The Treasury Department and the Department of Housing and Urban Development will be holding public hearings this summer and fall to solicit advice from all stakeholders on the role the federal government should continue to play in the housing finance system and the future of Fannie Mae and Freddie Mac. "The public's input will be invaluable as we think through these difficult and complex issues," HUD Secretary Shaun Donovan said. In preparation of the hearings, Treasury is soliciting written comments on seven questions regarding the future structure of the housing finance system, how it fits within broader housing policy goals, and how system changes will contribute to sound underwriting standards and prevent abusive and deceptive lending practices. The Obama administration also is seeking comment on how to transition "from where we are today to a stronger housing finance system," Donovan told the House Finance Services Committee. Committee Republicans claim the questions and hearings just show the administration has no plan to deal with Fannie and Freddie and the mounting taxpayer costs of their conservatorships. Republicans lawmakers have proposed a bill that would close down the two government-sponsored enterprises. "This housing recovery remains fragile," the secretary warned. "Any hasty action to quickly change the composition of the GSEs or eliminate them, I have no doubt, would drive down this housing market and cause taxpayer losses to increase."

Senate Banking Committee chairman Christopher Dodd on Wednesday defended his massive regulatory overhaul bill, saying the GOP is involved in a "Wall Street lie" by claiming his legislation would perpetuate bank bailouts. Speaking on the floor of the Senate, chairman Dodd said his bill will end bailouts and set up a mechanism to wind down large failing institutions, while ensuring that taxpayers are not on the hook for the losses. However, Sen. Dodd said political strategists and bank lobbyists are spreading "false talking points" to kill the reform bill. "And that's why I've been so dismayed to hear members of this body repeat the utter falsehood-concocted by special interests whose jobs and pensions are plenty secure, thank you very much-that this bill will lead to more bailouts," he said. Democratic leaders are planning to bring Dodd's bill to the Senate for debate as early as next week. The chairman stressed that he has worked with Republican committee members in crafting the bill. "My friends on the other side of the aisle may not like every line in this bill. But, at the very least, let's not pretend that the bipartisan work that produced this legislation didn't happen," Sen. Dodd said.