Origination

Purchasers who intend to be owner-occupants of Fannie Mae-owned homes will receive 3.5% in closing costs or an equivalent amount in home appliances for properties listed on HomePath.com. The offer expires on May 1, 2010. The effort aims to attract to the market more qualified buyers and reduce its real estate owned inventory, Fannie Mae executives said. Therefore it is offering an additional incentive to the homebuyer federal tax credit for first-time buyers and other affordable financing options. For example HomePath Mortgage and HomePath Renovation Mortgage listings also provide a 3% down payment alternative to qualified borrowers.

President Barack Obama, in his State of the Union speech, signaled that his administration is moving toward making it easier for homeowners to refinance into affordable mortgages. "This year, we will step up refinancing so that homeowners can move into more affordable mortgages," the President said. However, Mr. Obama was a bit light on details. Some industry officials indicated it might involve changes to the Home Affordable Modification Program. Others said it could portend changes to Fannie Mae and Freddie Mac programs that refinance borrowers with loan-to-value ratios from 81% up to 125%. Liberal housing groups were disappointed by the speech because of the lack of focus on foreclosures and housing issues. "The President highlighted the need for jobs and health care reform for middle-class families," said Mike Calhoun, president of the Center for Responsible Lenders. "But Americans need relief in the housing market and stronger measures to stop preventable foreclosures." National Low Income Housing Coalition president Sheila Crowley noted that the speech was "notably lacking" in its attention to the foreclosure crisis and affordable housing crisis. "Not only are homeowners facing the loss of their homes, but low income renters are competing for housing in an ever shrinking supply of low cost rental homes," Ms. Crowley said.

Fannie Mae bought $71.86 billion of loans from its seller/servicers during December, a 67% spike from the previous month. Compared to December 2008, purchases were up 50%. Even though Fannie had a good month in terms of new business acquisitions, its serious delinquency rate on single-family loans hit a new high: 5.29% in November, more than double the rate in the same period a year earlier. The figure includes all late payments that are 30 days or more past due. Late payments on its multifamily loans rose to 0.66% from 0.25% in November 2008. Fannie's late payments lag by one month behind disclosure of its acquisitions and other data points.

State Bank of North Carolina is acquiring cross-town mortgage lender Affiliated Mortgage LLC of Raleigh for an undisclosed sum. The agreement calls for the purchase to close on or before February 12, 2010, at which time Affiliated will become a new division of the bank called North State Bank Mortgage. Ken Sykes, Affiliated's managing partner, will serve as president. "Simply put, we are in the relationship banking business," said North State president and chief executive Larry Barbour. "Being able to provide residential mortgages for our customers is a critical part of our commitment to serving them." Affiliated opened its doors in 1994 as a mortgage broker but subsequently became a mortgage banker. "The staff at Affiliated offers excellent service, and culturally our two firms are well-aligned, which is extremely important as we work together," Barbour said. Mr. Sykes noted that both entities serve same clientele.

Genworth Financial's U.S mortgage insurance unit reported a net operating loss of $74 million for the fourth quarter, a considerable improvement from the same period a year ago. The Richmond, Va.-based company attributed two thirds of its fourth quarter losses to its GSE alt-A business, which soon will be mitigated by a reduction in its coverage on those high-risk loans. Genworth executed an agreement effective Jan. 1, 2010 that will result in the cancellation of approximately 80% of the GSE alt-A bulk risk-in-force. The agreement resulted in a total claim payment of approximately $182 million in January 2010 which was already fully reserved. This will reduce the GSE Alt-A bulk RIF from $295 million to approximately $65 million in the first quarter of 2010. Flow delinquencies totaled approximately 107,500, up from approximately 100,200 and 87,600 in the third and second quarters of 2009, respectively, reflecting seasonal increases and a decline in cured delinquencies. Loss mitigation activities, including workouts, presales and policy rescissions, resulted in $290 million of savings in the quarter, bringing total 2009 savings to $847 million. This included approximately $35 million in savings from delinquent loans that were modified through HAMP. Based upon reporting from the GSEs and certain servicers, Genworth estimates that there are approximately 22,200 delinquent loans that are currently pending within HAMP, nearly double the number at the end of the third quarter 2009. In Q4 2008 Genworth's MI business lost $114 million.

Richard Shelby, the ranking Republican on the Senate Banking Committee, believes Fannie Mae and Freddie Mac eventually should be spun off by the government and privatized. However, he warned that doing so will take a lot time and money. The "GSEs are in our lap," the Alabama lawmaker told American Banker. "You know, we own them. I would like to see them cleared up and spun off, whatever, see if anybody wants them. It's going to take a lot of money. There's a lot of guarantee out there. It's not implicit; it's explicit." When asked if he was saying he wants to privatize the GSEs, Shelby confirmed he does. "That's what I'd like to see done with them, because if you create a hybrid deal like this it's never worked." The Obama administration is expected to unveil its proposal for the GSEs in its 2011 budget, which is due Monday. Today, Fannie and Freddie in their role as secondary market investors, account for almost 70% of all residential originations.

Consumers extracted just $11 billion in equity from their homes using cash-out refinancing loans in the fourth quarter, the smallest such volume in nine years, according to new figures released by Freddie Mac. "It's not free money any more," said Amy Crew Cutts, the GSE's deputy chief economist. Ms. Cutts said declining home values and a lack of "no cost refis" for consumers have severely hammered the market. "Unless you have been in the house for a long time you may not have much to take out," she said. According to research done by Freddie, cash-out refis by consumers peaked in the second quarter of 2006 when $83.6 billion in equity was taken out of homes. Since then, the amount of money stripped out of homes using refis has fallen steadily. The GSE did find one encouraging trend: in Q4 roughly 33% of borrowers using Freddie Mac loans actually lowered the principal balance on their loans.

Flagstar Bank is seeing continued growth in its warehouse lending business with the dollar volume of commitments to nonbank mortgage lenders rising 40% at year-end compared to the same period a year earlier. According to figures reported to National Mortgage News, the Michigan-based thrift had $1.5 billion in commitments at December 31, compared to $1 billion in the same period a year earlier. However, even though its committed facilities were up handsomely, actual lines outstanding did not rise all that much year-over-year: $455 million versus $441 million. Flagstar, which earlier this week raised $300 million in fresh capital, ranks among the top five warehouse lenders in the nation.

The Federal Housing Administration is expected to ask for Congressional approval to raise the annual insurance premium on its loans to at least 75 basis points and perhaps higher, according to industry officials interviewed by National Mortgage News. The exact figure will be released Monday when the President's 2011 budget is unveiled. Currently, the annual premium is capped at 55 basis points. The additional money raised would be used to bolster its reserve fund which is barely in the black. Some sources think increasing the premium to 100 basis points is a possibility but likely will not happen. "They have half-a-million in delinquencies," said one insurance executive, requesting anonymity. "They are absolutely going to hike it; it's just a matter of how much." FHA recently raised the upfront mortgage insurance premium (MIP) to 2.25%, a 50 basis point increase that becomes effective this spring. The budget document likely will include FHA's estimates on how much the premium hike will rise and a timeline for restoring the fund's capital ratio back to 2%. (At last check it was at 0.53%.) The Department of Housing and Urban Development budget also will have projections for FHA loan losses and claims in the current (2010) fiscal year and FY 2011. HUD wants Congress to enhance FHA's authority to seek indemnification from lenders for loans that go bad. Mortgage bankers are anxious about the proposal because it will increase their liability and risks of doing business with the FHA.

Industry cooperative Lenders One, St. Louis, said Wednesday it set records for production and membership in 2009 with more than $77 billion in volume. That volume is more than twice its total production in 2008, the group said, and latest-available NMN data suggest that if counted as one entity rather than broken down by its individual members' production, Lenders One would rank fourth or fifth nationally. The cooperative added 47 new members during the year, bringing its total number of member financial institutions to 156. Members of the group include mortgage bankers, correspondent lenders, and suppliers of mortgage-related products and services.