Origination

Fidelity National Financial Inc., Jacksonville, Fla., has reported a net profit of $69 million for the fourth quarter 2009 and a net profit of $222 million for the full year. This is a turnaround from losses of $15 million and $179 million for the same periods in 2008 respectively. Direct orders opened in the fourth quarter 2009 were 550,600 (up from 428,000 one year prior) and 2.6 million for the full year 2009, up from 1.86 million for 2008. However, actual title claims paid in the fourth quarter 2009 were $149 million, vs. $50 million for the fourth quarter 2008. There were $388 million in actual title claims paid for all of 2009, compared with $278 million in 2008. Among the highlights of 2009, said FNF chairman William P. Foley II, was the return to profitability of the former LandAmerica units, Lawyers Title and Commonwealth Title, and the completion of their integration into the company during the second quarter, with a cost reduction of $265 million. Also in 2009, FNF reduced its outstanding debt by $490 million, while raising $460 million in equity.

Residential Capital Corp. — which is on the auction block — posted a $4 billion loss in the fourth quarter after reclassifying some of its troubled mortgages and being forced to repurchase loans from Fannie Mae and Freddie Mac. A year ago, the GMAC-owned ResCap lost $790 million. GMAC is trying to unload several billion dollars in troubled loans held by ResCap and said in a statement Thursday that it continues to "explore strategic opportunities" for the unit. Loan repurchases by ResCap cost the company $573 million in the fourth quarter 2009. It also marked down the value of its mortgage servicing rights by $122 million. (According to the Quarterly Data Report, ResCap ranks fifth nationwide in terms of housing receivables with $380 billion.) There was some good news, though. The mortgage lender originated $18.1 billion in the quarter, more than double its fundings in the same period a year earlier. GMAC Financial Services is majority owned by the U.S. government, which has spent more than $15 billion to keep the company in operation through the credit crisis and recession. The parent company lost $5 billion in the fourth quarter ($4 billion of that amount tied to ResCap.)

Bankrupt commercial real estate investment trust General Growth Properties Inc., Chicago, said a Brazilian shopping center venture it owns a stake in has completed an initial public offering in that country. GGP said it did not sell any of its Aliansce shares in the IPO and now has about a 31.4% interest in the company, Aliansce Shopping Centers S.A. The Brazilian company sold 50 million of the 65 million shares involved in the IPO at a price equivalent to $4.86 per share.

Witmer Partners LLC, a Horsham, Pa.-based venture capital and advisory firm that also has servicing operations, plans to buy a "significant" stake in a multifamily lender that specializes in government product. Witmer did not disclose the exact amount of the stake it wants to buy in Tavernier Capital Funding, subject to Department of Housing and Urban Development approval. Tavernier Capital Funding is a subsidiary of the Tampa, Fla.-based commercial mortgage banker Tavernier Capital Partners. Former GMACCM chairman David Creamer is a founding partner at Witmer. Tavernier Capital Funding principal Allen Moczul previously was an executive at GMACCM who oversaw state markets, first in Michigan and later in Florida. Witmer specializes in both commercial and residential mortgages and its businesses included commercial special servicer Helios AMC LLC as well as distressed residential servicer Selene Finance LP.

MetLife Bank posted strong operating earnings in the fourth quarter and full year, citing stellar results in its residential lending and servicing division. The bank, the nation's 11th largest funder of residential mortgages, had operating earnings of $65 million in the fourth quarter, a 400% increase from the same period a year earlier. For the full year, the Bridgewater, N.J.-based depository earned (on an operating basis) $298 million. In 2008 the unit had profits of $44 million. As reported by National Mortgage News recently, MetLife's mortgage division is exploring entering the warehouse and correspondent sectors.

The Mortgage Bankers Association said it will oppose a White House budgetary proposal to reduce itemized deductions, a measure that includes caps on write-offs for mortgage interest paid by high wage earners. In a new statement, the trade group said such a measure "would have a negative impact on the housing market, particularly in high cost states like California and New York." The White House is proposing a cap on mortgage interest deductions for taxpayers reporting income above $250,000 (joint) and $200,000 (single). In years past other administrations — usually Republicans — have tried to scale back the mortgage interest deduction but with little luck. "Reducing the federal deficit is vital to the long-term health of the U.S. economy and our industry," said MBA chairman Robert Story. "However, we believe it can and should be done without negatively impacting the already-fragile housing market. Limiting the mortgage interest deduction and imposing additional taxes on lenders will only make economic recovery more difficult." The trade group also opposes a proposal to tax "carried interest" at ordinary tax rates (as opposed to the capital gains rate, as it is taxed now), because it thinks the measure would discourage capital formation for lending.

The week after a decline in refinancings caused new application volume to drop, the Mortgage Bankers Association's Weekly Mortgage Applications Survey showed an improvement, but an economist for the organization said refi volume is unlikely to bounce very high. MBA's Market Composite Index for the week of Jan. 29, a measure of mortgage loan application volume, increased 21.0% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 23.5% compared with the previous week. The Refinance Index increased 26.3% from the previous week and the seasonally adjusted Purchase Index increased 10.3% from one week earlier. Michael Fratantoni, MBA's vice president of research and economics, noted that the both indices are at mid-December levels. "Rates continue to hover around 5%, quite low by historical standards, but are well above the record lows seen in 2009, and hence are not generating substantial refi volume. We expect that rates will rise over the next few months as the Federal Reserve winds down its MBS purchase program, and this will likely lead to a decline in refinance volume," he said. The market share of refi applications is 69.2%, an increase over the previous week's 67.6%. The market share of adjustable rate mortgage loan applications fell to 4.5%, down from 4.7% for the previous week. The average contract interest rate for 30-year fixed-rate mortgages fell one basis point to 5.01% from 5.02%, with points rising to 1.04 from 1 (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 fell by one basis point to 4.33%. Rates for ARM loans have been much more volatile in recent weeks. In the current survey the average contract interest rate decreased by 14 basis points to 6.70%. The three previous weeks found this rate up 41 BPs, down 11 BPs, then up 12 BPs.

The U.S. homeownership rate fell to 67.2% in the fourth quarter from 67.5% a year ago with foreclosures and a low level of home sales whittling down the percentage of homeowners to roughly a 10-year low, according to new figures from the Census Bureau. The last time the homeownership rate fell below 67.2% was in the first quarter of 2000. The high water mark for ownership came in the fourth quarter of 2004 when the rate was 69.2%. A percentage point decline in the rate represents 1.1 million owner-occupants losing their homes. The rate for blacks ended the year at 46%, down from 46.8% in the fourth quarter of 2008. Hispanics ended the year with a 48.4% homeownership rate, down from 49.6% a year ago. The Census Bureau also reported that the number of vacant homes for sale rose to 2.09 million in the fourth quarter from 1.99 million in the third quarter. Meanwhile, the number of vacant homes for rent fell to 4.47 million in the fourth quarter, from 4.59 million in the third quarter.

Fannie Mae and Freddie Mac have $2 billion at stake in the Stuyvesant Town and Peter Cooper Village debacle in Manhattan — but their former regulator believes they won't be big losers. "They have the most senior piece and they are well positioned," said former Federal Housing Finance Agency director James Lockhart, speaking at the American Securitization Forum conference in Washington. The GSEs are investors in commercial mortgage-backed securities that were issued in 2006 when Tishman Speyer Properties and BlackRock Realty acquired the 11,000-unit apartment complex for $5.4 billion. (At the time of purchase, Mr. Lockhart was the FHFA chief and the GSEs were not wards of the government.) On Jan. 25, Tishman and BlackRock defaulted on $4.4 billion in loans, including $3 billion in senior mortgages. The properties are now valued at $2 billion. "Obviously, that was a bubble transaction. It will have to be unscrambled and it is going to be very messy," said Mr. Lockhart, who is now vice-chairman of WL Ross & Co., a New York vulture fund that specializes in distressed mortgage-related investments.

Eliminating or downsizing Fannie Mae and Freddie Mac would cripple the TBA (to-be-announced) market, which provides a quick and cost-efficient mechanism for issuing mortgage-backed securities, according to an executive at JPMorgan Chase. Speaking at the American Securitization Forum meeting in Washington, JPM senior vice president Garry Cipponeri told attendees that without TBA, "We would be in big trouble." Mr. Cipponeri, during a panel discussion on the future of the GSEs, said mortgage rates would be 150 basis points higher without Fannie/Freddie and the TBA market. Also speaking on the panel was former GSE regulator James Lockhart who noted that MBS issued by Fannie and Freddie today will be backed by the government forever. "We are going to have to create a new security going forward that does reproduce the TBA," said Mr. Lockhart. "That is going to take time and it is going to take capital." Meanwhile, Wellington Denahan-Norris, a top executive for Annaly Capital Management told the ASF audience that the private label MBS market "will not come back for a long time." MetLife managing director Nancy Mueller Handal said servicing issues and the rights of first and second lien holders need to be resolved for the private label MBS market to recover. "Without a clear solution to lien holder rights, it is going to be difficult to invest," said the MetLife executive.