Origination

Ginnie Mae issuance of single-family and multifamily mortgage-backed securities hit a record $414 billion in 2009, up 53% from the previous calendar year. The secondary market agency ended the year on a strong note, as MBS issuance jumped to $42.5 billion in December, up from $35.5 billion in November. The Ginnie MBS issuance topped $46 billion in July, which is a single-month record for the agency. Most of Ginnie MBS is backed by Federal Housing Administration single-family loans — only $6.8 billion of the Ginnie MBS issued in 2009 involved multifamily loans guaranteed by FHA, as well as single family loans originated through the Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service programs. Outstanding Ginnie Mae MBS has a 3.25% default rate as of Nov. 30, 2009. The percentage of FHA-insured single-family loans that are 90-days or more past due hit 8.94% in November.

The pace of sales at California new-home communities continued to fall in November, but the decline was small enough for the California Building Industry Association to say that the industry is "on the threshold" of stabilization. According to the monthly CBIA/Hanley Wood Market Intelligence report, sales in projects of 10 units or more in November were 4% below November 2008. Although activity was down, the relatively small movement is an improvement over most month-to-month changes in 2009. During November, 1,860 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 1,934 in the same month the year before. Sales of single-family homes were down 18%, while condo sales were 39% higher, thanks to strong sales at projects in the Los Angeles and San Diego areas. Compared with the same period last year, the median base price of homes sold was nearly unchanged, down just 0.3%. "We have more or less reached (a) threshold," said Jonathan Dienhart, director of published research at HWMI. "While that milestone of stabilization is encouraging, it is far from what could be termed a recovery."

Titanium Holdings Inc., a Fort Mill, S.C., firm that contacts troubled homeowners on behalf of mortgage servicers to discuss loan workouts, has started a unit for when such efforts fail. The unit, Excellen REO, helps Titanium clients unload repossessed properties. Its services include premarketing, valuations, marketing and sales negotiation, closing and funding and alternative sales methods. Excellen has "a nationwide network of real estate brokers and local eviction attorneys as well as property preservation companies," Titanium said. Excellen's president, Cary Sternberg, is the former senior vice president of the real estate owned department for American Home Mortgage Servicing, Coppell, Texas, which is owned by the private-equity firm Wilbur Ross & Co. LLC. In that position Mr. Sternberg managed more than 200 employees and 33,000 assets.

The market share of refinance applications has climbed back above the 70% level as long-term interest rates had their first decline in several weeks, the Mortgage Bankers Association's Weekly Mortgage Applications Survey found. For the week ending Jan. 8, 2010, the Market Composite Index, a measure of mortgage loan application volume, increased 14.3% on a seasonally adjusted basis and 66% on an unadjusted basis from one week earlier, which was a shortened week due to the New Year's holiday. The Refinance Index increased 21.8% from last week's holiday adjusted index while the seasonally adjusted Purchase Index increased 0.8% from one week earlier. The share of refinance activity, which had fallen under 70% during the last two weeks of 2009, rose to 71.5% for the survey period. The market share of adjustable-rate mortgage loan applications remained at 4% for the second consecutive week. The average contract interest rate for 30-year fixed-rate mortgages fell to 5.13% from 5.18%, with points decreasing to 1.17 from 1.28 (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 decreased by 17 basis points to 4.45% from 4.62%, while for one-year ARMs the average contract interest rate increased by 41 basis points to 6.83%.

Large banks increasingly are opening up the warehouse spigot for independent mortgage banking firms and it looks as though government assistance may not be needed, according to the Mortgage Bankers Association. "We are encouraged by the information we are receiving from our members that lines have opened up a little bit," said MBA chairman Robert Story at a press briefing. However, the trade group would like to see more liquidity for nonbanks in need of financing. One of the nation's largest warehouse providers is National City, which is controlled by PNC Financial Services. PNC has made little effort to sell the division and plans to close it by midyear unless a committed buyer steps forward. Warehouse lending began to dry up in the fall of 2008 when Lehman Brothers filed for bankruptcy and other Wall Street firms left the sector. Over the past year MBA and other industry groups have been urging the Treasury Department to provide some type of government support for warehouse lending but little has been accomplished. MBA believes the private sector (mostly banks) is finally coming back to the sector, albeit at reduced levels. MBA noted that mid-sized banks are returning to profitability, which could spur more entrants to the sector.

The expansion-minded MetLife Home Loans is eyeing a possible entry into both correspondent residential lending and warehouse financing, a company spokesman confirmed. In an interview with National Mortgage News, the spokesman said MetLife is exploring these sectors for 2010 but could not provide any details at press time. Over the past two months rumors have circulated that MLHL, a subsidiary of MetLife Bank, N.A., was not only entering correspondent and warehouse lending but had hired a manager to spearhead the effort. The spokesman said he could not confirm the hiring of anyone at this time. In mid-2008 MetLife bought the origination and servicing divisions of First Horizon National Corp. of Memphis. The sale was accomplished through an asset purchase that included 230 retail and wholesale offices. Today, MLHL ranks 11th nationwide in both residential lending and servicing, according to the Quarterly Data Report.

The House Financial Services Committee this year will hold hearings on not only restructuring the nation's financial system, but what to do with Fannie Mae and Freddie Mac which together guarantee half of all outstanding home loans in the U.S. Committee chairman Barney Frank (D-Mass.) noted that the GSEs currently operate as public utilities and he has no desire to see them returned to their former "hybrid" status as private companies with a public mission. Talking to reporters, he said he does not know, at this time, what form the two eventually will take. (Fannie and Freddie were taken over by the federal government in September 2008 and continue to draw billions in taxpayer aid to maintain a net worth above zero.) The chairman stressed that the housing finance system, as a whole, must be analyzed, including the Federal Home Loan Bank System, the Government National Mortgage Association and the Federal Housing Administration. In terms of specific legislation, the chairman wants to address mortgage servicing and the decision-making process among investors, trustees, and servicers in regard to modifying loans. He said it seems unclear at this time which entities have the decision-making power on loan mods. "That is something we want to solve," he said.

A couple of weeks ago I asked the readers of this column to let me know what they are looking for from me in 2010. The response was swift and sure. You very much want to be connected to the reverse mortgage world and our senior clients. You want guidance and to feel your efforts are being supported. You've come to the right place.

The HUD Inspector General has subpoenaed 15 Federal Housing Administration direct-endorsement lenders as part of an investigation into why these firms have the highest default and claim rates in the nation. "We are not making any accusations at this time." said Department of Housing and Urban Development IG Kenneth Donohue. "We have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud." Despite the subpoenas, the targeted lenders will continue to originate FHA-insured mortgages. This investigation is "focusing on many of the worst performers in the FHA portfolio," said FHA commissioner David Stevens at a Washington press conference. The FHA chief said he supports the IG's effort to determine why these lenders have such a high claim rate on mortgages that are only 30 months old. "I will be interested to see what comes out of the audit work," said Mr. Stevens. The lenders issued subpoenas include: First Tennessee Bank N.A., Memphis; Alethes LLC, Lakeway, Texas; Security Atlantic Mortgage, Edison, N.J.; Pine State Mortgage of Georgia; Birmingham Bancorp Mortgage, West Bloomfield, Mich.; Alacrity Financial Services, Southlake, Texas; Assurity Financial Services, Englewood, Colo.; D and R Mortgage Corp. Farmington, Mich.; Webster Bank, Cheshire, Conn.; Mac-Clair Mortgage Corp., Flint, Mich.; Americare Investment Group, Inc., Arlington, Texas; 1st Advantage Mortgage, Lombard, Ill.; American Sterling Bank, Independence, Mo.; Sterling National Mortgage, Great Neck, N.Y.; and Dell Franklin Financial, Columbia, Md. These lenders have originated at least 1,000 FHA loans and their claim rates exceed their peers by 200%, HUD said. FHA streamlined refinancings or loans approved by automated underwriting systems are excluded from the claims rate.

Elmira Savings Bank FSB of New York says the record income it posted last year was aided, in large part, by its mortgage origination business. The thrift earned $4.5 million in 2009, compared to a profit of $3 million the year prior. Mortgage loan originations totaled $104 million last year, an increase of $40 million, or 63%, over the $64 million originated in 2008. Michael P. Hosey, president and chief executive, said "This level of mortgage originations and associated fee income, derived from secondary mortgage market sales, gives us the flexibility to accumulate a significant amount of short term funds that we will have available to invest in future periods when we expect interest rates to be higher."