Origination

A federal judge has dismissed a shareholder lawsuit against Canadian Imperial Bank of Commerce and four executives for allegedly misleading investors about the bank's exposure to securities backed by subprime mortgages. Dow Jones reported that in an order Wednesday, U.S. District Judge William H. Pauley III in Manhattan threw out the case, saying a number of major financial institutions failed to anticipate a meltdown in the mortgage market and the plaintiffs failed to demonstrate that CIBC and its executives received information that was contrary to their public statements. "Looking back, a full turn of the wheel would have been appropriate. That CIBC chose an incremental measured response, while erroneous in hindsight, is as plausible an explanation for the losses as an inference of fraud," the judge said. "CIBC, like so many other institutions, could not have been expected to anticipate the crisis with the accuracy plaintiff enjoys in hindsight." A lawyer for the lead plaintiff didn't immediately return a phone call seeking comment.

Mortgage bankers originated $26.9 billion of Federal Housing Administration-backed single-family loans in January, a 10% decline from the previous month, according to a new government report. Refinancings totaled $11.5 billion and comprised 40% of January originations. FHA originations per month have been ranging between $26 billion and $30 billion over the previous five months. Meanwhile, FHA's serious delinquency rate continues to rise. The percentage of FHA loans 90 days or more past due hit 9.4% in January, up from 9.12% the previous month. FHA servicers have foreclosed on 28,000 homes from October 2009 through January 2010, up 42% from the same period a year ago. Short sales totaled 4,000 during that four-month period, up 132% from a year ago.

A federal consumer protection bureau should be under the oversight of banking regulators and coordinate its activities with those regulators, according to Sen. Richard Shelby, R-Ala. The ranking Republican on the Senate Banking Committee wants to restructure a Democratic proposal that creates a new and independent Consumer Financial Protection Bureau. "I will do everything I can to make sure it is not running out on its own, causing a heck of a lot of trouble," Sen. Shelby told an American Bankers Association summit on Thursday. Banking committee chairman Christopher Dodd, D-Conn., wants to house a CFPB at the Federal Reserve Board but keep it independent with a director appointed by the president and confirmed by the Senate. This new consumer regulator would have enforcement and examination powers, along with the ability to act quickly to stop abusive lending practices. Only a two-thirds vote by a new nine-member Systemic Risk Council chaired by the Treasury secretary could overturn a CFPB rule. Sen. Shelby contends the CFPB is too independent. Consumer protection should not "trump safety and soundness," the Alabama senator said.

The first two months of the year have been weak in terms of loan applications and a new forecast from Fannie Mae suggests that 2010 will result in just $1.32 trillion in residential loans being funded this year. If Fannie's forecast becomes reality, that means loan volume will be down 31% this year compared to 2009. Fannie's forecast is slightly more bearish than a recent one issued by the Mortgage Bankers Association that sees production coming in at $1.33 trillion this year. Freddie Mac, by comparison, looks like a wide-eyed optimist at $1.6 trillion. Fannie's new forecast did not include any market commentary. Lenders interviewed by National Mortgage News over the past few weeks have noted a decline in loan applications in January and February, but said March is shaping up to be a decent month. "We were down by 39% in January and February," said Glenn Stearns of Stearns Lending, Irvine, Calif., "but March will be a good month for us." According to the Quarterly Data Report, Stearns Lending, a national lender, ranks 13th among all wholesale funders.

The Department of Housing and Urban Development is getting deluged with many questions from mortgage bankers regarding the new good-faith estimate form, in particular the treatment of the real estate transfer tax, according to a top official at the agency. Speaking at a regional mortgage banking trade show in Atlantic City, HUD's RESPA director Ivy Jackson gave attendees a quick list of questions the agency has received since the new GFE and HUD-1 forms went into effect Jan. 1. After disclosing the list, audience members bombarded Jackson with questions, showing-as one questioner put it-the industry's frustration with HUD over how to implement the new forms. (The questioner admitted, however, that he liked the new forms.) In her formal presentation to the trade show, Jackson said the revised forms are a new concept for the mortgage industry and professionals must learn how to do things differently. The "worksheet" issue was discussed during the audience question-and-answer portion. Jackson said the Real Estate Settlement Procedures Act does not prohibit the use of a worksheet, but she warned that it must not look like the new GFE. If it does, HUD will be paying a call on the originator. She also reiterated that the lender is responsible for the GFE in a wholesale transaction, not the mortgage broker.

Jefferies & Co. named Mark Green as a managing director and head of CMBS capital markets. Green will report jointly to William Jennings and Johan Eveland, co-heads of Jefferies' MBS/ABS group, as well as Benjamin Lorello, global head of investment banking and capital markets at Jefferies. According to a report in Asset Securitization Report, Green will become part of a team consisting of Joe Accurso and Lisa Pendergast, who co-head CMBS trading and strategy, and Dana Arrighi who heads CRE origination. Green has 11 years of CMBS capital markets experience and joins Jefferies from UBS, where for four years he was a managing director and head of CMBS capital markets. "With the ongoing rebound in capital markets activity, there is an even greater need and demand from our clients for innovative financing and ideas," Jennings and Eveland said. The company views the CMBS market as a major investment banking opportunity this year. Asset Securitization Report is an affiliate of National Mortgage News.

Jacksonville, Fla.-based LOS MortgageFlex Systems Inc. has formed a strategic alliance with secondary market analytics firm Precision Risk Management Systems Inc. Through this partnership, MortgageFlex customers will gain new financial capabilities, including point-of-sale and delivery of loans into the secondary marketing through a fully managed lender pipeline. Precision Risk also offers what the company calls a "Precision Managed Hedge Service," for lenders who would like to improve their secondary marketing execution and extend their expertise without adding staff.

Impac Mortgage Holdings, a nonbank lender that has been struggling to recover its financial footing, posted a small profit in 2009 while disclosing that it originated a "minimal" amount of product. Once an alt-A lending giant, Impac generated a $10.8 million profit for the year but paid out $7.4 million of that in the form of dividends to shareholders. No figures were released regarding its origination volume. A large portion of its cash flow comes from residual interests it holds on MBS. The company noted in its earnings report that at yearend cash within its "continuing operations decreased to $25.7 million from $46.2 million at Dec. 31, 2008. The primary sources of cash between periods were cash flow of $30.4 million from residual interests in securitizations, $42.6 million fees generated from the mortgage and real estate fee-based business activities and income tax refunds of $15.8 million, including interest." In the fourth quarter California approved its purchase of a title insurance agency. Impac is based in Irvine, Calif.

The pace of new home sales slowed in California in January, the California Building Industry Association found. Sales in new home projects of 10 units or more were 12% below January 2009, but that's an improvement over the 15% year-over-year decline recorded in December. Builders logged 1,886 sales in 2010's first month, compared to 2,137 sales in January a year ago. But the median base price of the houses sold in January was 6% higher than a year ago. Jonathan Dienhart, director of published research for HWMI, noted the figures for January showed little in the way of improvement. "The last several months have bent the trend of improvement back toward one of volatile uncertainty," said Dienhart. "As California's broader economy still struggles with a myriad of challenges, it is unlikely we will see any dramatic recovery in coming months."

Sales of single-family homes priced at $250,000 and above recorded double-digit gains in February in the Houston area, according to the Houston Association of Realtors. But overall sales slid by 5.5% compared to February 2009. It was the third consecutive month that sales declined in the big Texas market. Sales of houses priced below $80,000 fell 27.5% and sales in the $80,000 to $150,000 price range went unchanged. But in the $250,000 to $500,000 bracket, sales were up 15.8%, and sales over $500,000 climbed 14.9%. Thanks to stronger activity in the upper price ranges, the average price of all sales appreciated for the fifth straight month, reaching $203,271, an increase of 12.3% from 12 months earlier. "We are encouraged by steady activity in the higher-end single-family segment, which has strengthened Houston's already enviable real estate pricing," said HAR chair Margie Dorrance, a principal at Keller Williams Realty Metropolitan. "We expect to see consumer interest extend to the other segments as the spring buying season heats up." Overall, 3,843 properties changed hands in February, but the number of active listings rose 4.3% in February, adding 1,448 properties to the inventory.