Origination

At least two bidders still have an interest in buying National City's warehouse lending group from PNC Financial Services, but time is running out on the unit, according to sources close to the situation. A PNC spokesman confirmed that the bank plans to wind down the operation this summer and would not speculate on a possible sale. At yearend the NatCity warehouse group had just over $1 billion in commitments. A source close to the matter said that although some investors are still looking at the division, "nothing is imminent." Several of NatCity's nonbank warehouse customers said they have been looking for alternative financing since January and have found an improved market. According to figures compiled by the Quarterly Data Report, NatCity/PNC ranks third nationwide in terms of warehouse commitments. Over the past six months more regional banks have entered the space but will only finance nonbank firms that lend in their bank footprint.

JPMorgan Chase is working on in-house, targeted principal reduction programs but has strong reservations about the government's efforts to develop a large-scale, broad-based principal reduction program for first and second mortgages. "We know this will be surprising to some, but we have found that [interest] rate reductions and term extensions-not principal reductions-have the largest impact in achieving payment affordability and result in more modifications," said David Lowman, chief executive of Chase Home Lending. In testifying before the House Financial Services Committee, Lowman said Chase is using principal reductions to refinance conventional borrowers into Federal Housing Administration loans. This summer, Chase will offer delinquent borrowers an option to refinance through the FHA's Hope for Homeowners program if they need a principal reduction or a second lien extinguished. Chase also is developing a principal reduction program for certain payment-option ARM borrowers and conducting targeted tests to see if principal reduction is effective for "other high-risk borrowers," Lowman said. "Once we observe the results of these tests, we will be able to better evaluate the effectiveness of a broader principal reduction program."

As the Senate prepares to debate regulatory reform legislation, Sen. Carl Levin is using the failed Washington Mutual as evidence that the bill's most contentious provisions are necessary. The chairman of the Permanent Subcommittee on Investigations is prepping four hearings related to the financial crisis, the first of which is scheduled for April 13 and will focus on WaMu's risky lending practices. Based on an 18-month investigation, Levin said, he believes that certain provisions of the reform legislation, such as the creation of a consumer protection agency and a requirement that lenders maintain a stake in loans they sell to the secondary market, could have helped avoid, or lessen the impact of, the thrift company's failure. "A lot of proposed reforms will gain additional support, we believe, from these findings," Levin said. "It is my hope that these hearings, these findings, give a boost, a momentum to strong regulatory reform in many, many different ways." The now defunct WaMu entered the subprime space about a decade ago when it bought Long Beach Mortgage from subprime magnate Roland Arnall. The thrift eventually became one of the largest subprime lenders in the nation, funding billions of dollars in A- to D loans, and selling them into securitizations through Wall Street. The thrift failed in the fall of 2008 and was sold to JPMorgan Chase. Mr. Arnall died in early 2008 by which time he had sold most of his subprime holdings.

GMAC Financial Services has agreed to sell its European mortgage assets -- including performing and nonperforming loans -- to Fortress Investment Group, LLC, a company managed by former Fannie Mae CEO Daniel Mudd. No price was disclosed. A spokesman for GMAC said Fortress will take control of active lending units of Residential Capital Corp. in Germany, the Netherlands, and the United Kingdom. At press time no information was available on the production or servicing volume of these divisions. Fortress is also taking title to 6,000 whole loans of GMAC/ResCap but no dollar amount was provided. The sale of its European assets is the latest move by GMAC to divest its exposure in residential finance in favor of auto lending. Its U.S. mortgage operation is currently on the auction block, though it remains to be seen who might buy it. Mr. Mudd currently serves as CEO of Fortress, a publicly traded equity fund and investment manager. He was fired by the government as CEO of Fannie Mae when it took control of the GSE in the fall of 2008. In a statement, GMAC said, "The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance."

NCB FSB, the thrift unit of an organization (NCB Financial Group) dedicated to lending to cooperatives, originated over $21.7 million in new loans for 131 residential coop owners during the first quarter of 2010. "NCB FSB's ability to provide consistent and competitive financing, even in light of the current economic environment, is an important resource for consumers looking to purchase a home, pay for capital improvements or refinance existing debt," said Chris Goettke, director of residential lending. "The bank's commitment to providing these creative lending solutions was born out of its mission, to provide financial assistance to the cooperative market." By region, NCB FSB lent $11.7 million for the West Coast cooperative housing market, $5.8 million for the New York market and $2.1 million in new loan originations in the Washington Metropolitan area.

The seasonally adjusted annual rate of Canadian housing starts tracked by Canada Mortgage and Housing Corp. fell slightly in March based on revised numbers for the previous two months. At 197,300 units, seasonally adjusted March starts were down 1.5% from the previous month's revised seasonally adjusted start rate of 200,400 units. February's revised seasonally adjusted start rate was up 6% from January's revised seasonally adjusted start rate of 189,000 units. January's revised seasonally adjusted start rate put its month-over-month gain at 7.5%. "The moderation in March housing starts was due to a decrease in the volatile multiple starts segment. Helping to offset this was an increase in singles starts as well as more activity in rural areas," said Bob Dugan, chief economist at CMHC.

The Federal Home Loan Bank of New York will provide up to $250 million of disaster relief loans to member institutions that can turn around and use the money to help troubled homeowners in flood affected areas in parts of New York and New Jersey. The money is being made available through the FHLB's community lending program, and can be used as gap financing while insurance settlements are being worked out. Before a loan can be made the area must be designated as a flood-affected area by the Federal Emergency Management Agency. A few weeks ago parts of New York and New Jersey were affected by heavy flooding caused by heavy rains. Alfred A. DelliBovi, president and chief executive of the FHLB-NY, said, "The funds we are making available today will allow our members to make an immediate, positive impact on recovery efforts, while providing the flexibility our members need to suit these efforts to the individual communities they serve." The money can be used for housing, small business and economic development lending. The funds are available for relief efforts in every county in New Jersey except for Sussex, Warren, Hunterdon and Hudson. In New York, the areas covered are Nassau and Suffolk counties on Long Island, Courtland and Chenango in central New York and Allegany, Cattaraugus, Chautauqua and Erie in western New York.

Meridian Capital Group LLC, one of the nation's largest commercial real estate mortgage brokerage firms, has hired industry veteran Marty Lanigan as senior managing director of origination and strategic initiatives. Among his duties, Lanigan will be responsible for overseeing the firm's origination efforts nationally. He will report to company president and CEO Ralph Herzka. During his career Lanigan has worked at Prudential Mortgage Capital Co., and GMAC Commercial Mortgage, among other firms. In 2001, he founded Mezz Cap, which eventually grew into a mid-market commercial mezzanine lender. The New York-based Meridian was founded by Herzka in 1991. To date it has placed more than $100 billion in commercial real estate debt.

Pan American Mortgage, Chicago, has filed notification with the state that it is about to lay off a large number of loan officers employed at the firm. Princess Santos, an official at the firm confirmed to National Mortgage News that the layoffs are coming but said, "they haven't happened yet." It's unclear how many loan officers might lose their jobs but firms that terminate at least 50 workers in a single action must notify them at least 60 days in advance under federal law. Ms. Santos declined to discuss numbers, referring questions to company owner Adam Dayan. According to the Illinois Department of Corporations, PAM also does business as Senior Mortgage Network, and Charter Mortgage Network. The lender is privately held and no loan volumes were available.

The Federal Housing Administration will begin accepting electronic signatures on third party documents originated and signed outside of the lender's control, such as real estate contracts. A Mortgagee Letter detailing FHA's new streamlined process is posted on the HUD website. "This is just the beginning of FHA's commitment to use more electronic documents in our loan approval process," said FHA commissioner David Stevens. "Over time, we will be expanding the number and types of documents with electronic signatures which will be acceptable to FHA." The FHA expects lenders to employ the same level of care and due diligence with electronically signed documents as for paper documents with "wet" or ink signatures. Lenders are reminded that the electronic signature and date should be clearly visible in the document and that electronic documents will be subject to the same document retention requirements as paper documents.