Origination

OneWest Bank FSB, Pasadena, Calif. has put $10 million into the creation of a nonprofit foundation aimed at offering affordable housing and other types of support to the communities in which it operates its branch network. The bank has 72 retail branches in Southern California and total assets of $24 billion. Its assets include a loan portfolio, a securities portfolio, a servicing platform with mortgage servicing rights representing over 550,000 borrowers, and Financial Freedom, a reverse mortgage platform.

Tree.com Inc. has entered into a limited extension of its $50 million mortgage warehouse line at its LendingTree Loans operation in Irvine, Calif. One of its warehouse line providers, PNC Bank, had previously said it was exiting the warehouse business and existing lines would expire at the end of their current terms. The Tree.com facility had an original term running through Dec. 29, 2009 and is now available for funding newly originated agency and FHA loans through March 31, 2010. Matt Packey, Tree.com's CFO, stated, "This brief extension, coupled with our two other warehouse lines, enables us to maintain flexibility as we evaluate our longer-term needs and options with respect to our warehouse capacity requirements."

The volume of requests for conforming loans submitted online to Zillow's Mortgage Marketplace last week dropped 26% from the prior week. Last week 63% of requests were for purchase loans, 35% were for refinances and 2% were for home equity loans, according to Zillow. The week previous to last Zillow said 55% of requests were for purchase loans, 43% of requests were for refis and 2% were for home equity product.

House prices were unchanged in October after a 0.4% increase in September, according to the Standard & Poor's/Case-Shiller 20-city house price index. Until October, prices had been on the rise for four consecutive months. "Coming after a series of solid gains, these data are likely to spark worries that home prices about to take a second dip," said David Blitzer, chairman of S&P's index committee. Overall, the 20-city HPI is down 7.3% from a year ago and 29% from the peak in home prices in the second quarter of 2006. IHS Global Insight economist Patrick Newport expects prices to decline by another 5% to 10% due to downward pressure by sales of distressed properties. "The foreclosure outlook is not a good one," Mr. Newport said. Foreclosure and delinquency rates hit a record in the third quarter and they are "likely to rise, perhaps sharply," he said.

Fitch Ratings has affirmed 41 and downgraded 171 classes within 20 Bayview Commercial Asset Trust small balance commercial asset-backed certificate transactions in the course of its ongoing reviews. The underlying collateral pool for these transactions consists of fixed- and adjustable-rate mortgage loans secured by senior liens on commercial, multifamily and mixed-use properties and unimproved land. The average current loan size for each transaction is less than $400,000.

A new $1.2 billion statewide mortgage program has been created to help more than 11,000 homebuyers with affordable loans that will also help boost Pennsylvania's economy. The initiative is a partnership between the Pennsylvania Housing Finance Agency, the U.S. Treasury, Fannie Mae and Freddie Mac. Key elements of the program include making 11,000 long-term (30-year), fixed rate, low-interest mortgage loans; expanding the Keystone First program with an additional $10 million to help buyers who are eligible for federal homebuyer tax credits to borrow up to $6,000 interest-free for closing costs and down payments; and providing $50 million for approximately 450 new-home construction loans to encourage new building activity and create jobs. The new program targets $50 million to encourage new home construction because funds for building new homes have been scarce in these tight credit markets. It will assist in moving existing inventory for homebuilders, and create jobs for architects, builders, laborers and others in the construction industry.

PMI Mortgage Insurance Co., Walnut Creek, Calif., sold its entire investment in RAM Holdings Ltd. (RAM Holdings Ltd. is the holding company for RAM Reinsurance Co. Ltd.). Terms and conditions of the sale were not disclosed. The company had impaired its investment in RAM Holdings Ltd. in 2008 and reduced the carrying value of the investment to zero. The completion of this sale continues the company's focus on its core U.S. mortgage insurance operations and the proceeds from the sale will add to PMI Mortgage Insurance Co.'s liquidity position.

Tower Bancorp Inc., Harrisburg, Pa., has agreed to buy First Chester County Corp., West Chester, Pa., including its American Home Bank unit, in an all-stock deal valued at $65 million. As part of the agreement, Tower's subsidiary bank, Graystone Tower Bank, has agreed to increase its lending facility with First Chester to up to $26 million as well as to purchase up to $100 million of residential mortgage and commercial loans from First National Bank of Chester County. These moves are aimed at allowing the bank to satisfy the regulatory capital requirements of the Office of the Comptroller of the Currency. Upon the closing Tower "will be one of central and southeastern Pennsylvania's largest independent community banks," said Tower chairman and chief executive officer Andrew S. Samuel. Under the terms of the agreement, each First Chester shareholder will receive 0.453 shares of Tower common stock for each First Chester share. The market value as of Dec. 24 of $10.22 per First Chester share represents 90% of the company's tangible book value. The exchange ratio is subject to upward or downward adjustment if loan delinquencies at First Chester increase or decrease beyond specified amounts. Management anticipates that there will be no branch closures, but Tower expects to achieve a 15% cost savings, or approximately $12 million, through the reduction of administrative and operational redundancies. The acquisition will immediately be significantly accretive to earnings per share. It is expected to close in the second quarter of 2010 if it obtains necessary shareholder and regulatory approvals. First Chester's American Home Bank originates through retail and wholesale channels, as well as through joint venture mortgage partnerships with builders and others.

The Federal Reserve Board should permit compensation of loan officers and mortgage brokers based on a percentage of the loan amount with a minimum and maximum limit, according to the Consumer Mortgage Coalition. "It should also be permissible to use percentages that decrease as the loan amount increases," CMC says in a comment letter on a proposed Truth in Lending Act rule. Under the Fed's TILA proposal, LO and broker compensation based on increases in the interest rate or changes to other loan terms would be prohibited. The Fed invited comment on allowing compensation based on the loan amount. The industry trade group recommends that lenders should be permitted to reduce compensation for loans with high loan-to-value ratios. This approach would address the Fed's concerns about originators financing closing costs and packing other fees into the loan amount. CMC also wants the Fed to allow compensation based on the overall loan volume -- in terms of number of loans and loan amount. "We request clarification that compensation may be based upon pull-through rates, file quality, customer satisfaction and communication quality. Lenders need these common sense management tools," CMC says.

Mortgage brokers are urging the Federal Reserve Board to withdraw a proposed rule that would regulate broker compensation and delay any action until Congress finalizes pending consumer protection legislation. The National Association of Mortgage Brokers said the Fed has not met the standard for determining that the payment of yield-spread premiums to brokers is an "unfair and deceptive" practice. "Such a determination should be made, if it is to be made, by Congress, not the board," NAMB says in a comment letter on the Fed's Truth in Lending Act proposal. Under the proposed TILA rule, compensation based on increases in the interest rate or changes to other loan terms would be prohibited. The Fed suggests that loan officers and mortgage brokers could be compensated based on a set percentage of the loan amount. As an alternative, NAMB suggests a mortgage brokerage business could receive secondary market fees and compensate the brokerage's LOs based on a percentage of the loan amount. "NAMB strongly urges the board to explore this proposed alternative ... prior to finalizing any rule," the trade group says.