Origination

Mortgage Guaranty Insurance Corp., Milwaukee, Wis., revealed Bank of America stopped doing business with the company prior to filing a lawsuit against it in December 2009. Both the decision to stop doing business and the lawsuit were driven by MGIC's rescission policies, the mortgage insurer said. During parent company MGIC Investment Corp.'s fourth quarter results teleconference, chairman and chief executive Curt Culver said the rescission policies are no different involving Countrywide (now a part of B of A) than the company's general rescission practices and that MGIC has not changed its practices as a result of the lawsuit. The company has mitigated its 2009 claims paid losses by $1.2 billion; for 2008 and 2009 rescissions of Countrywide-related flow loans mitigated paid losses by approximately $100 million. A substantial number of loans involved in the lawsuit are stated income loans which were insured through the flow channel. Mr. Culver also revealed MGIC was granted a change in venue for the case from a state court in San Francisco to the U.S District Court for the Northern District of California. According to MGIC, BofA and Countrywide accounted for 12% of its flow new insurance written in 2008 and 8.3% of its new insurance written during the first three quarters of 2009. A call to BofA was not returned by press time.

Some vendors are making it easier for lenders to complete the new good faith estimate disclosure by providing price guarantees, according to a Real Estate Settlement Procedures Act attorney. "We are seeing a lot of vendors guaranteeing the [settlement] charges. And I expect to see more of that," said Phillip Schulman, a partner at K&L Gates in Washington. Lenders also want third-party vendors that they recommend to homebuyers not to raise prices without providing 60-day advance notice, Mr. Schulman told clients during a webinar. Under the new RESPA rule, charges for lender-required or lender-recommended services should not exceed the initial estimate given to mortgage applicants by more than 10% at closing. If the settlement costs are higher than the good faith estimate, the lender ends up paying the difference at the closing table. In guaranteeing prices, vendors are expected to pay the overage, Mr. Schulman said.

For the next few weeks, Broker Universe will feature some of our favorite Sue Haviland columns from the past year.In a follow up to my previous piece, let’s look at what we as reverse mortgage originators can do to be proactive about how we and the reverse mortgage product are perceived in the market place. What can you do today right in your town to improve your standing in the community and your profession? It’s probably a bit out of the box but you CAN do it. And it will elevate you to a new level and bring you more credibility.

Orange County prosecutors arrested two Ladera Ranch men - and issued a warrant for a third - accusing them of defrauding more than 400 homeowners in an alleged $1.25 million loan modification scam, according to a report in The Orange County Register. Christopher Lee Diener, 42, Terrence Green Sr. 43, and Stefano Joseph Marrero, 40, are each charged with a felony count of conspiracy and 97 felony grand theft counts, according to the Orange County District Attorney's office. Messrs. Diener and Green were taken into custody and are each being held on $1.5 million bail. They will be arraigned by midweek, at the latest. The business partners are accused of getting upfront fees from homeowners, and falsely promising they can get them loans with cheaper payments in less than 90 days and offering a 100 percent money-back guarantee, prosecutors said.

Farmer Mac raised $250 million in additional capital in a private offering of shares of non-cumulative perpetual preferred stock of Farmer Mac II LLC, a Delaware limited liability company in which it owns all of the common equity. Farmer Mac II LLC is now operating the Farmer Mac II business that has operated since 1992 purchasing and holding U.S. Department of Agriculture-guaranteed loans. Farmer Mac is using the proceeds from the sale to repurchase and retire $150 million of Farmer Mac's currently outstanding Series B preferred stock and to further enhance its regulatory capital position. Farmer Mac's president and chief executive Michael Gerber said, "Today's transaction further strengthens Farmer Mac's financial position in support of our core business. It provides Farmer Mac with additional capital at a significantly lower cost."

The Department of Housing and Urban Development on Monday stopped three lenders from originating Federal Housing Administration loans and suspended another as part of a continuing effort to weed out firms that do not follow its underwriting rules. The HUD Mortgagee Review Board permanently withdrew FHA approval from Strategic Mortgage Corp., Oklahoma City, ProMortgage Inc., Claremore, Okla., and Americare Investment Group Inc., Arlington, Texas. FHA also suspended Home Mortgage Inc., of Burr Ridge, Ill., for six months. Strategic Mortgage had a 14.7% early default and claim rate and FHA said it charged borrowers impermissible or excessive fees and submitted a false certification to HUD. The MRB also levied a $71,000 civil money penalty against the Oklahoma City company. ProMortgage had a 7.3% early default and claim rate and HUD said it failed to comply with numerous FHA requirements such as reviews of early defaulted loans, verifying borrower income and reporting employee compensation on appropriate forms. The MRB levied a $124,000 CMP against the firm. HUD terminated Americare for failing to make monthly payments on a settlement involving a $124,000 civil money penalty.

Home prices fell 0.2% in November on a seasonally adjusted basis after leveling off in October, suggesting the housing market has lost momentum and values could decline over the winter months, according to the Standard & Poor's/Case-Shiller 20-city price index. "On balance, while these data do show that home prices are far more stable than they were a year ago, there is no clear sign of a sustained, broad-based recovery," said David Blitzer, chairman of S&P's index committee. Until October, the HPI registered four consecutive months of house price increases. But for 2009 through the month of November, the HPI is down 2.8%. S&P's chief economist David Wyss expects home sales will drop over the winter and house prices could fall 8% based on the 20-city HPI. Separately, the Federal Housing Finance Agency reported that its seasonally adjusted HPI -- based on Fannie Mae and Freddie Mac purchase mortgage transactions -- rose 0.7% in November from October. For the 12 months ending in November, the Federal Housing Finance Agency HPI is up 0.5%.

MGIC Investment Corp., the largest mortgage insurer in the nation, lost $280 million in the fourth quarter, its tenth straight quarterly loss. In the same period a year earlier, the Milwaukee-based firm lost slightly less, $275.6 million. At Dec. 31, the percentage of loans it guarantees that were delinquent, excluding bulk loans, was 15.46% compared with 9.51% a year ago. Curt S. Culver, chairman and chief executive, said in a statement that the weak economy, higher levels of unemployment and lower home prices have led to an increase in the delinquent inventory and elevated incurred losses. But there was some good news: MGIC has seen a sequential decline in the number of new notices received and its book of business written since implementing tighter underwriting guidelines in 2008 has improved the credit risk profile of its insurance-in-force. Total revenue fell 1% to $405.5 million in the quarter, but beat analysts' view of $393.8 million. Despite the bad news, its stock was up as much as 14% on Tuesday.

The National Association of Home Builders is trying to line up its cash-strapped members with hard-to-find sources of financing. In an effort to bring some capital back to the suffering housing business, the trade group brought together about two dozen financial firms and as many as 200 builders in a private back room of its annual convention here last week. "We are bringing the mountain to Muhammad," Michelle Hamecs, a staff member at the builder group, said of its Partnership Pavilion program. "We're doing what we can to raise awareness and try to get some money flowing again." Earl Armiger, the president of Orchard Development Corp., an apartment builder in Ellicott City, Md., said the dearth of funding for acquisition, development and construction is his industry's No. 1 problem. "Housing can't lead the country out of the recession if it doesn't have capital," he said. "The problem is so large, so global, that progress has to be taken in small steps." It's too early to assess the initiative's success, said Michael Sivage of Sivage Homes in Albuquerque, who became chairman of the trade group's housing finance committee at the convention last week. "The real proof will be if some of us actually get some capital," he said.

BB&T Bancorp plans to grow its warehouse lending business in the coming months and is receiving multiple requests for not only new lines but expansion of existing credits. Jeff Ellison, president of warehouse lending for BB&T, said in an interview with NMN that the company "is definitely looking for new business" but the one caveat is that it will only lend to nonbanks in BB&T's branch "footprint" in the South and mid-Atlantic. To date, the bank has said little about its warehouse plans but Mr. Ellison made it clear that he has been given a mandate to grow the business. "We'll be doing more in the second quarter." The warehouse chief declined to give a specific dollar amount of its commitments at yearend but said it was between $1.5 billion and $2 billion. Last summer BB&T, in a federally assisted transaction, purchased Colonial BancGroup, Montgomery, Ala., then the largest warehouse provider in the nation.