Origination

Mortgage bankers funded roughly $475 billion of one- to four-family loans in the fourth quarter, a 75% spike in originations compared to the same period a year earlier, according to preliminary survey results compiled by National Mortgage News. The period ending December 31 was a decent quarter for most lenders thanks to continued low interest rates and an extension of the federal first-time home buyer tax credit. However, fear of the tax credit ending likely pushed some consumers into buying homes earlier, causing an untold number of closings to occur in the third quarter instead of the fourth. In the third quarter of 2009 mortgage bankers originated $442 billion of loans. It should be pointed out that the fourth quarter of 2008 — the height of the credit crisis — was one of the worst production periods of the decade with just $277 billion in loans closing.

Berkadia Commercial Mortgage, Chicago, has originated $9.55 million in permanent, fixed-rate debt through its FHA program to finance the construction of Victory Centre of Galewood, a seniors' housing community in Chicago. The fully amortizing loan has a 40-year term and an interest rate of 4.47%. Additional sources of funding for the project include 9% Low Income Housing Tax Credits, a city of Chicago Department of Housing HOME loan, an AHP grant from the Federal Home Loan Bank and an Illinois affordable housing tax credit donation credit. Collectively, all sources of funding provided more than $21 million for the development of the project. Len Deering, Tom Sigrist and Paul Matusiak of Berkadia's Chicago office originated the loan. The borrower was Galewood SLF Associates LP.

Service 1st Valuation and Settlement Services Inc. has joined the Ellie Mae Network. Connectivity to the network is integrated in Ellie Mae's Encompass360 mortgage management software, which is used by mortgage bankers, mortgage brokers, community banks, credit unions and national and regional lenders across the United States. As a result of the Service 1st integration, Service 1st will be available as an independent appraiser on the Ellie Mae Network and available to all users of Encompass360.

Wells Fargo Funding has authorized the use of Docu Prep's EESS product for digital signing documents. The Entire Electronic Signature Solution is Docu Prep's newest signing technology. The company's EESS product gives customers the ability to customize their document sets, and provides them with electronic signatures and delivery, as well as integrated management with reporting capabilities. Docu Prep is the 15th approved vendor by Wells for e-signing.

The seasonally adjusted annual rate of Canadian housing starts jumped to 186,300, suggesting an upward trend. Both single-family and multifamily starts during the month saw increases similar to December's, according to Bob Dugan, chief economist at Canada Mortgage and Housing Corp. Final actual starts figures that came in for 2009 also suggested a trend toward recovery, according to the CMHC.

Lenders originated $86.1 billion in FHA-insured single-family loans in the fourth quarter, up 21% from same quarter in 2008. The Federal Housing Administration reported that 60% or $51.8 billion of the endorsements involved home purchase loans during the final quarter of calendar year 2009. Meanwhile, FHA insurance-in-force grew by 24% during in the calendar year to $752.6 billion as of Dec. 31. But the percentage of singe-family loans 90 days or more past due grew by 34%. FHA ended the year with a 9.12% default rate, up from 6.82% at yearend 2008. Housing officials are raising the FHA upfront mortgage insurance premium 50 basis points to 2.25% this April to cover rising claims and losses. Foreclosures involving FHA-insured loans totaled 20,650 in the fourth quarter, up 41% from the same quarter in 2008. The use of short sales to avoid foreclosure shot up 140% from a year ago to 2,925 in the fourth quarter of 2009.

Refinances in 2010 will be down 52% and purchase mortgage volume will be down 5% from 2009, according to the latest projections from iEmergent, a Des Moines, Iowa-based market research firm. It predicts total volume of between $1.09 trillion and $1.2 trillion for this year, as more than one-third of U.S. households are no longer in the homebuyer pool, which is now at levels lower that those experienced in the early 1990s. If the high end of its estimate is reached, iEmergent predicts a 49% refi/51% purchase market share split for this year, with purchase volume of $557 billion and refi volume of between $531 billion and $643 billion. Dennis Hedlund, president of iEmergent said current elevated loan volumes are unsustainable as consumers are savings more and are worried about their jobs. Lenders who relied heavily on refis last year will face considerable risk for their business year and next. "Competing for home buyers and loan originations in flat or declining markets is essentially a local, zero-sum game, where loan acquisition efficiency is crucial," said Mr. Hedlund. "The ability of lenders to turn quantitative market analytics and forecasts into new and more effective lending strategies that are matched to their local markets is fundamental to survival over the next two years."

Of the $87 billion in first mortgage loans Bank of America originated in the fourth quarter 2009, $23 billion were given to 151,000 low- and moderate- income customers, according to its Lending & Investing Initiative Report. For the full year of 2009, the Charlotte, N.C., based banking giant originated nearly $87 billion in mortgages to more than 561,000 low- and moderate- income borrowers. The bank also originated nearly $3 billion in home equity and reverse mortgage loans in the fourth quarter and $13 billion for the full year. On the loss mitigation side, BoA provided rate relief or agreed to modify terms for approximately 460,000 mortgage customers, compared to 230,000 in all of 2008 for itself and Countrywide (acquired during 2008) combined. The full year 2009 activities include performing 260,000 loan modifications with total unpaid principal balances of approximately $55 billion. Approximately 200,000 customers are in trial-period modifications under the government's Making Home Affordable Program at Dec. 31, 2009.

A Chicago entrepreneur is suing the Federal Deposit Insurance Corp. to win back capital he invested in a bank in the months before it failed. Pethinaidu Veluchamy, the chief executive of a direct marketing conglomerate, filed a complaint last week against the FDIC in federal court in Chicago, claiming that the regulator acted in a way that was "arbitrary, capricious [and] an abuse of discretion" in declining to approve a capital restructuring that would have benefited Mutual Bank in Harvey, Ill., before it was taken over last July. Bank experts said the allegations echo criticism by ailing banks — highlighted in a congressional hearing two weeks ago — that regulators' overly rigid rule interpretations unnecessarily led to the demise of some community banks. "There is no question that bank regulators in this market cycle have moved the goal posts for community banks in capital distress, giving banks significantly less time to work out problem loans and raise capital, while simultaneously increasing the minimum capital adequacy ratios for these same banks," said Justin A. Barr, the managing principal of Loan Workout Advisers, a consulting firm. "This [was done] at a time when community bank capital-raising has never been more difficult," Mr. Barr added. "It's all beginning to read like an Ayn Rand novel."

The Federal Trade Commission is proposing a ban on companies charging consumers upfront fees for loan modification services. In its notice of proposed rulemaking, the agency said it has already brought 28 cases against companies fraudulently offering loan modification services that charge consumers a fee and don't deliver and that state and federal law enforcement agencies have brought hundreds more. The rule would not allow a loan modification company to be compensated until it had a documented offer from a mortgage lender or servicer. It also bars providers from advising consumers to stop communicating with their lender or servicer. Furthermore, the rule would stop modification providers from misleading consumers about the likelihood of getting the results they want and how long it will take; their affiliation with public or private entities, payment and other existing mortgage obligations; and refund and cancellation policies. It also requires consumers to be told the loan modification firm is a 'for-profit' business that provides its services in exchange for a fee, what that fee is, and that there is no guarantee of success. There is a 45-day comment period for the rule, which ends on March 29, 2010. Some states, most notably California, already ban upfront fees for loan modification services.