Origination

Home-Free USA, a Maryland-based, HUD-approved nonprofit counseling organization, will team with Chase Home Mortgage February 18-19 in a face-to-face modification event for borrowers struggling to make their house payment. Home-Free counselors will discuss each individual borrower's financial and employment situation, obtain a credit report for them, establish a budget that includes a potentially modified mortgage payment, and help them prepare a mortgage-modification application. The owners will then meet with Chase counselors, who will review their applications to ensure they have all the information needed for a loan modification review under the government's Home Affordable Modification Program or Chase's own loan-mod program. The applications will be sent for an accelerated review that averages just 30 to 45 days. Chase already has reached out by phone and mail to borrowers who may be eligible for either program. The sessions, scheduled for 10 hours each day, will be held at Home-Free's headquarters in Hyattsville, a D.C. suburb. "Together with Chase," said the agency's president, Marcia Griffin, "we are putting homeowners on the road to preventing foreclosure."

More than a third of the existing homes sold last year in the seven-county Chicago area were distressed properties, according to the RE/MAX Northern Illinois network. Nearly 38% of last year's sales in the Chicago suburbs were made under duress, as were 31% of the sales in the city itself. The RE/MAX report is based on transactions tracked by Midwest Real Estate Data, the region's multiple listing service, for the counties of Cook, DuPage, Kane, Kendall, Lake, McHenry and Will. "In the last two to three years, distressed properties have gone from being a small portion of the residential marketplace to a significant one," said Jim Merrion, regional director of the RE/MAX brokerages in Northern Illinois. Of the 248 suburban Chicago submarkets, distressed properties accounted for 50% or more of all 2009 sales in 66 areas, with 44 of those areas in Cook County alone. In the city, distressed sales accounted for half or more of all transactions in 37 of the city's 77 neighborhoods. In Winnetka, Kenilworth and the city's Lincoln Park, however, distressed sales accounted for less than 5% of total sales in '09. Foreclosures accounted for 70% of distressed deals, while 28% were short sales, according to RE/MAX. "We continue to see problems with securing lender approval and processing of short sales, even though these transactions typically bring more money for a property than can be obtained after foreclosure," Mr. Merrion also reported.

The mortgage insurance division of The PMI Group saw its risk-to-capital ratio fall to 22:1 at yearend, perilously close to the 25:1 ratio that could halt it from writing new business in several states. However, insurance regulators in Arizona, where PMI Mortgage Insurance Co. is domiciled, have granted the MI unit a waiver from having to meet that state's minimum policyholder position requirement. "Based on information obtained from the examination, the Department concluded that PMI currently has sufficient capital and resources to fulfill its current and projected policyholder obligations," according to a letter sent by insurance regulators. Furthermore, Fannie Mae has given conditional approval for another PMI Group subsidiary, PMI Mortgage Assurance Co. (currently called Commercial Loan Insurance Corp.) to issue new policies in states where PMI Mortgage Insurance Co. can no longer write new business. PMAC, following certain internal restructuring and capital initiatives, including a $10 million investment from PMI Mortgage Insurance Co., will hold approximately $28 million of capital. PMAC is also in negotiations with Freddie Mac about becoming an eligible insurer. Both announcements came out a day before PMI Group said it lost $228 million in the fourth quarter, compared with a loss of $179 million one year prior. Its U.S. MI business had a net loss of $242 million in the fourth quarter of 2009 vs. a net loss of $174 million in the fourth quarter of 2008. For the full year 2009, the parent company lost $659 million, an improvement on a net loss of $887 million in 2008.

Almost two months after National Mortgage News first reported that Lend America of Long Island was refinancing consumers but then not paying off their prior first liens, federal officials are investigating those allegations. Existence of the probe was first reported by Newsday. Lend America's top executive, Michael Ashley, could not be reached for comment. The Federal Housing Administration banned the Melville-based Lend America, a privately held nondepository, from its insurance program in November, citing numerous underwriting violations. FHA loans accounted for most of its production. In early December the company stopped originating new loans and laid off most of its workforce. NMN quoted consumers who had loans with the company as well as an attorney who represented vendors that did business with the nonbank.

Freddie Mac has dropped its origination forecast for 2010 by nearly 9% to $1.6 trillion as a result of lower expectations for refinancings. In January, Freddie economists estimated that one- to four-family originations would total $1.75 trillion in 2010 with 30-year fixed rate loans averaging 5.6% over the four quarters of this year. In its latest forecast, the GSE's economists expect 30 year FRMs will average 5.4%, while hovering around 5% during the first-half of this year. With the Federal Reserve slated to stop its purchase of agency mortgage-backed securities by March 31, Freddie's forecasters see little immediate impact on rates. "We expect any impact on mortgage rates to be modest and not derail the housing recovery," said Freddie's chief economist Frank Nothaft. However, a huge jump in refinancings late in the fourth quarter prompted its economists to shift production to Q4 from the early quarters of 2010. Freddie now believes refis will total $800 billion in 2010 compared to $963 billion in the earlier forecast.

Fannie Mae is still working on a warehouse lending pilot but is offering little guidance on its progress, according to industry observers. Scott Stern, who runs the Lender's One cooperative, said he has not heard anything new about the pilot of late but, noted that the 157 lenders he represents "would welcome Fannie's foray into warehouse lending." Freddie Mac, with NattyMac, St. Petersburg, Fla., as its partner, launched a small warehouse pilot late last year. At press time, Fannie Mae officials had not responded to telephone calls and emails about the pilot.

The slumping new home business is a large factor in California's monetary woes, according to a preliminary report that shows the downturn has resulted in the loss of hundreds or thousands of jobs and tens of billions of dollars in economic output to the state's economy. The study found that new housing construction contributed just $14.3 billion to California's economy in 2009 and generated 80,000 jobs. That's only a fraction of the $67.7 billion and 487,000 jobs the industry added in 2005. The report also found that every dollar spent on new housing construction in the state generates additional 80 cents in total economic activity and that each job created through residential construction supports an additional 1.2 jobs. The "Economic Benefits of Housing" report details the role the housing industry plays in the economic health of California and was conducted as the fourth update to a report first commissioned in 2003. The Center for Strategic Research analyzed construction and market data from around the state and quantified the impact of California's construction sector to the state's economy. "It has never been more evident that we must revive the housing industry in order to revive California's economy," said Liz Snow, president of the California Building Industry Association.

Creditors of Taylor Bean & Whitaker are seeking permission from a bankruptcy judge for authority to sue former company insiders, including president Lee Farkas, who founded the company and made it into a top 10 ranked lender. According to a report on Dow Jones, the committee representing Taylor Bean's unsecured creditors in the bankruptcy case wants to sue Farkas and other insiders for money the company loaned them that allegedly hasn't been paid back. The creditors committee said in court filings this week that TBW's lawyers have "conflicts or other concerns that make it unable or unwilling" to pursue the suits, but the committee said the company is backing its efforts. The committee is also planning to go after Bank of America for money the bank allegedly held back after selling securities backed by TBW mortgages. Pursuit of claims against the bank's insiders could well represent the unsecured creditors' best shot at seeing a significant recovery in the bankruptcy case. Judge Jerry Funk of the Bankruptcy Court in Jacksonville, Fla., has scheduled a Feb. 19 hearing to consider the committee's request. TBW filed for bankruptcy protection last summer after trying to buy a controlling stake in its chief warehouse provider, Colonial Bank. Colonial failed shortly thereafter.

A lone Republican on the Senate Banking Committee has stepped forward to work with committee chairman Christopher Dodd, D-Conn., on crafting a financial regulatory reform bill, but the two have decided to postpone talks on consumer protection, an issue closely being watched by mortgage bankers. Sen. Bob Corker, R-Tenn., said creation of a Consumer Financial Protection Agency is "probably the hot button issue." As a result, the two senators have agreed to set that topic aside for now. The Tennessee senator moved fairly quickly after discussions between chairman Dodd and the ranking Republican senator on the committee, Richard Shelby of Alabama, broke down. "I hope to make it clear that I am stepping forward purely as one Republican senator who believes this is a piece of legislation that needs to be passed and is willing to see if it is possible in a bipartisan way," Sen. Corker said. However, Sen. Corker has serious concerns about the creation of a CPFA, which brought Senators Dodd and Shelby to an impasse. This new independent agency would set uniform standards for mortgage lenders and credit card issuers with an eye toward preventing abusive and deceptive practices. Washington observers say that unless language creating a CFPA is in a final bill the White House will oppose it.

The average size of commercial MBS loans moved into 'special servicing' has more than doubled over the past 12 months, according to Fitch Ratings. Five of the loans newly transferred into special servicing in January had balances of more than $100 million, the rating agency said. In total, 248 loans totaling $4.27 billion moved into special servicing during the month. This is more than four times the balance transferred during the same month a year ago.