Origination

Real estate firm Simon Property Group, Indianapolis, has made a $10 billion written offer to buy the bankrupt General Growth Properties Inc. Simon said it would provide a 100% cash recovery of par value plus accrued interest to all General Growth's unsecured creditors, including the lenders under its credit facility. The Indianapolis-based company said that, among other things, the transaction is subject to "negotiation of a definitive transaction agreement between Simon and General Growth which would provide for reasonable certainty of closing."

Altisource Portfolio Solutions, which was spun off by Ocwen Financial Corp. last year, has acquired the management arm of the Lenders One cooperative for an undisclosed sum. Scott Stern, CEO of Lenders One, said Altisource will maintain the existing executive team and employee base of the management company which is called The Mortgage Partnership of America. LO's 155 member mortgage bankers originated $75 billion in product last year, which would make it the nation's fourth largest lender if counted as one. Mr. Stern stressed that the cooperative will "continue to exist" and that Altisource is not buying Lenders One. The Mortgage Partnership handles an array of chores for the cooperative, including program development, marketing, advertising and even legislative advocacy. Mr. Stern himself owned part of TMPA but would not say how much. The publicly traded Altisource provides mortgage-related vendor services to the residential finance industry.

In his first major initiative since taking the helm at PHH Corp., Jerome Selitto laid out his strategy for transforming the nation's largest private label lender/servicer into a leaner, more profitable company — including a major cut in expenses. On a conference call Tuesday, Mr. Selitto, who became chief executive in October, said he plans to slash expenses by $100 million to $120 million annually. The effort will include combining back offices and upgrading technology. Selitto came to PHH "with a mandate from the board to turn this underperforming company into a high performer," said Steve DeLaney, a managing director and mortgage finance research analyst at JMP Securities. "He's sending the message that he's cleaning up and that he's going to do whatever it takes to make the company profitable." According to figures compiled by National Mortgage News and the Quarterly Data Report, PHH Mortgage ranks eighth among lenders nationwide, and ninth among servicers.

Existing home sales dipped 12.3% in the Houston area in January, but activity was much stronger at the top end of the market than at the bottom, according to the latest figures from the Houston Association of Realtors. Overall, 2,514 units changed hands in January, the second straight month sales have declined. But sales in the $250,000-$500,000 bracket jumped 21.6% while those priced at $500,000 and above surged by 40%. In contrast, sales of homes in the below-$80,000 segment fell 28.9% and those priced between $80,000-$150,000 slid 19.3%. As a result of the heightened activity in high-end houses, the median price in the Houston market rose 11.9% in January to $144,500, the highest median ever for a January in the region. At $144,500, the median sales price for single-family homes rose for the ninth consecutive month, up 11.9 percent from January 2009. That's also the highest median ever for a January in the region. Houston now has a 6.1-month's supply of single-family houses available for purchase, which compares favorably to the national average of 7.2-month's as posted by the National Association of Realtors. And in one more bit of good news, foreclosure sales reported in the MLS fell by 30.1% in January compared to a year ago.

California's homebuilding business ended 2009 in rather lackluster fashion, according to the latest sales data from the California Building Industry Association and Hanley Wood Market Intelligence. Sales in projects of 10 or more units in December were 15% below what they were a year earlier. Still, that's an improvement over most months in 2009, which recorded substantially larger year-to-year declines. In December, just 1,372 new houses and apartments were sold in the statewide subdivisions tracked by the Costa Mesa-based HWMI. December 2008 wasn't a particular good month either, when just 1,607 units were sold throughout the entire state. "December's figures represent a bit of a step back," said Jonathan Dienhart, director of published research at HWMI, who laid part of the blame on the extended federal tax credit removing a sense of urgency for consumers considering a home purchase. Mr. Dienhart also said the Golden State's "faces a long uphill climb" to return even to normal.

Single-family housing starts rose 1.5% in January after a 3% decline in December as construction activity continues to show signs of stability at higher levels than a year ago. The U.S. Census Bureau reported that single-family housing starts rose to a seasonally-adjusted annual rate of 484,000 in January, up from a 477,000 rate in December. The January rate rose 35% compared to a year ago. Multifamily starts jumped 18% in January to 100,000 units but compared to the same month a year ago were down nearly 18%. The National Association of Homebuilders reported that builder confidence is improving due to favorable homebuying conditions, the homebuyer tax credit, and signs the job market is getting better. "As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root," said NAHB chairman Bob Jones. Weiss Research real estate analyst Mike Larson noted that the supply of newly constructed homes is at the lowest level since the early 1970s. But don't expect a "vigorous upturn" in construction while the supply of "used" and foreclosure houses remains elevated. "Until that supply is exhausted, construction activity will remain muted," Mr. Larson said.

For the second consecutive week, the Mortgage Bankers Association's Weekly Mortgage Applications Survey found that although long-term mortgage rates on average were below the 5% mark, overall application volume declined. MBA's Market Composite Index for the week of Feb. 12, a measure of mortgage loan application volume, decreased 2.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 0.5% compared with the previous week. The Refinance Index decreased 1.2% from the previous week and the seasonally adjusted Purchase Index decreased 4.0% from one week earlier. The market share of refi applications was 69.3% of total applications, down from 69.7% the previous week. The market share of applications for adjustable rate mortgages fell one basis point from the previous week, to 4.4%. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 4.94%, with points rising to 1.09 from 1.06 (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 was 4.33% for the third consecutive week. The average contract interest rate for one-year ARMs decreased to 6.67% from 6.68%.

For the next few weeks, Broker Universe will feature some of our favorite Sue Haviland columns from the past year.As a reverse mortgage specialist, you probably have a marketing plan and strategy that you can rely on that provides predictable results. If not, we need to talk! I'm sure you use a mix of tools that position you as the local expert and that you can track the effectiveness of each.

While second liens are stumbling blocks in many modifications, when the interests of the first and second mortgages are aligned it often results in a principal reduction, according to Laura Goodman, senior managing director at Amherst Securities Group. "When a bank owns and services the first and second, 37% of those modifications have gotten some kind of principal reduction," she told an American Securitization Forum conference in Washington recently. In an interview she noted these principal reductions occurred on loans on the balance sheets of banks, not securities. Ms. Goodman noted that negative equity is a major problem and it is particularly true for borrowers with second liens. "You can't solve the negative equity problem without writing down the seconds before the firsts," she said. In the nonagency universe, 51% of option ARM borrowers have second liens and 56% of alt-A borrowers have seconds, Ms. Goodman told the ASF conference. Amherst Securities does not have data on Fannie Mae and Freddie Mac guaranteed mortgages with seconds.

Sen. Bob Corker, R-Tenn., has clarified that he is dead set against the creation of a Consumer Financial Protection Agency as a stand-alone agency and will not support financial regulatory reforms that include a CFPA. Late last week Sen. Corker volunteered to work with Senate Banking Committee chairman Christopher Dodd, D-Conn., in crafting a bipartisan reform bill. However, the Republican committee member is more interested in finding a consensus on ways to resolve failures of large financial institutions and deal with systemic risks. "Like most Republicans, I believe a stand-alone agency for consumer protection or separating those protections from safety and soundness are nonstarters. I will work to see if we can find a way to enhance consumer protection without negatively impacting the safety and soundness of our financial system, and if we cannot, this will not be a bill I can support," Sen. Corker said.