Origination

Essent Guaranty of Philadelphia has been greenlighted by 35 states to write mortgage insurance policies and hopes to close its first policy early next year. "Early 2010 is when they'll start writing coverage," said a company spokeswoman. She noted that back in October Essent — which was formed by former Radian executive Mark Casale — had approvals from 24 states. On Tuesday Essent announced that it has closed on its purchase of technology assets and the operating platform of Triad Guaranty, an MI that is in self-liquidation mode.

A group of former executives for Triad Guaranty is exploring the possibility of creating a new mortgage insurance company, according to MI executives and other industry officials familiar with the situation. If the company gets off the ground, it would be the second new MI company formed since the credit crisis begun in earnest in the fall of 2008. (See related story on Essent.) At press time few details were available concerning the company which has the working name of 'MAC.' Triad, which is headquartered in Winston-Salem, N.C., is self liquidating and has roughly $57 billion of policies-in-force left on its books. The company is the smallest of the nation's seven operating MIs, according to National Mortgage News and the Quarterly Data Report.

Fannie Mae is raising its minimum credit score to 620 from 580 and lowering its maximum debt-to-income ratio to 45% to reduce future defaults. These underwriting changes go into effect the weekend of Dec. 12 as part of an update to Desktop Underwriter - Fannie's automated underwriting system. "The adjustments reflect careful analysis of a borrower's ability to repay their mortgage obligation over the life of the loan," said Fannie spokesman Brian Faith. Fannie claims that borrowers with credit scores below 620 are generally nine times more likely to become seriously delinquent than other borrowers. In modifying loans, "we have seen too many borrowers where their other consumer debt has jeopardized their success at homeownership," Mr. Faith said. He noted that none of these changes apply to Fannie's Refi Plus program, which provides a streamlined refinancing option for existing Fannie borrowers that have loan-to-value ratios greater than 80% and up to 125%.

Phoenix-based CCG Catalyst now offers contract negotiation services to financial institutions for vendors such as loan origination systems, servicing and online banking providers. As banks seek ways to cut costs, many are looking to contract negotiations with their existing vendors as a way to streamline operating expenses. In the case of contracts that were signed during prosperous times in the industry, institutions are looking at renewals in regards to their decreased budgets and investigating whether they are receiving enough value from their investment. CCG Catalyst has found significant savings for institutions that enter into early renewal talks with their vendors. The service also helps to assess if an organization has gone too far with concession requests so a vendor no longer views the business as profitable.

The median price of existing houses rose for the eighth consecutive month in California in October, while the statewide inventory on unsold units fell to a four-months' supply, according to the California Association of Realtors. Sales also were up for the month, rising 1% above October a year ago to a seasonally adjusted rate of 562,400 annually, according to data collected by CAR from the state's more than 90 local Realtor associations. The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the October pace throughout the year. October's sales and price figures are "signs that California has hit and passed the bottom of this real estate cycle," said Leslie Appleton-Young, CAR's chief economist. Ms. Appleton-Young also reported that the number of distressed sales "has shown considerable improvement" since the first of the year, and that for the first time since July 2007, sales of houses priced above $1 million rose on a year-over-year basis. In another bit of good news for sellers in the Golden State, the median number of days it took to sell a single-family home fell by 11 days and a few hours in October, from 45.5 days a year ago.

The Federal Housing Administration on Monday unveiled new proposals to strengthen its depleted insurance fund, including a mandate for all FHA lenders to maintain minimum capital of $2.5 million within three years. Since 1993, FHA has required lenders that use its insurance program to have a net worth of at least $250,000. But with its new proposals, lenders will need to have $1 million of capital within 12 months of implementation of the final rule, and then $2.5 million two years later. FHA is soliciting public comment for 30 days on its proposals, telling the industry that "comments received will be considered in the development of a final rule." Fannie Mae and Freddie Mac have announced similar minimum capital standards for their seller/servicers. At the end of September FHA had roughly $3.6 billion in cash left to cover a $685 billion book of business, leaving the fund with a capital ratio of just over 0.5%. Under the new proposals, mortgage brokers would no longer need to be FHA certified, but table funders that accept their loans would be financially responsible for them.

Citing "tremendous opportunity" in Alabama and Florida markets, Superior Bank is expanding its mortgage banking operations by adding over 60 people and doubling its existing team based in Birmingham. Adding new staff is a timely step, Superior Bank president Rick Gardner said following investments in new systems, expanded product offerings and the branch network in the last several years. Currently the company operates 72 branches. While the expanded operation will serve primarily Alabama customers, the $3.2 billion thrift holding company said additional support positions will ensure a larger number of customer needs are met both in Alabama and in Florida in the coming years. Currently the company operates 72 branches in 44 locations throughout the state of Alabama and 28 locations in Florida.

The pace of new construction in California has slowed to under 3,000 units a month, according to the latest figures from the Construction Industry Research Board. Builders in the Golden State pulled just 2,017 single-family permits in October and a mere 798 multifamily units, a grand total of 2,815. That's less than 10 new dwelling units a day for the country's largest state. During the first 10 months of the year, builders started 29,901 units, a 46% decline from the same period in 2008, when 55,632 permits were issued, according to CIRB. Single-family construction dropped 33% for the 10-month period, while multifamily construction was down 64%. The research board is projecting a total of just 36,000 starts for 2009, which, if it is right, would be the lowest on record. California Building Industry Association president and CEO Liz Snow is expecting the new and extended federal tax credits to give the business a much-need shot in the arm. Now, the group is calling on state lawmakers to resurrect the state's $10,000 tax credit, which expired a few months ago.

Thrifts originated $47.1 billion in single-family loans during the third quarter, down nearly 25% from the previous quarter as refinancings dropped off. Refinancing activity accounted for 39% of thrift originations, compared to 55% in the second quarter when refis were near record levels, according to the Office of Thrift Supervision. The 780 OTS-supervised thrifts hold $348.9 billion in one-to-four family loans on their books and 5.76% are classified as "noncurrent" (90 days or more past due or considered uncollectible), up from 3.39% a year ago. The noncurrent rate on construction loans is 13.1% and 2.7% on commercial real estate loans. Thrifts posted a profit of $1.3 billion for the third quarter, up from $94 million in the previous quarter. But $1.1 billion of that profit came from a sale or non-operating gain from one institution. "Without that gain, the industry's net income would have been $200 million, essentially breaking even," OTS said.

Survey data from the Mortgage Bankers Association released Tuesday show a decline in loan applications during the week ended Nov. 20 relative to an upwardly revised number the week previous. The group's Market Composite Index during the week ended Nov. 20 slid 4.5% on a seasonally adjusted basis and 5.8% on an unadjusted basis. The MBA said the comparative data for the week ended Nov. 20 reflect an upward change in survey information from the week ended Nov. 13 that stemmed from one participant's upward revision of its submission to show higher application volume. That participant also reclassified of some of its loan applications to refinance from purchase. This left the total for the former "modestly higher" and the total for the latter "slightly lower" than originally reported for the Nov. 13 week. During the week ending Nov. 20, purchases were up 9.6% on a seasonally adjusted, week-to-week basis, up 4.9% from the previous week on an unadjusted basis and 13.7% lower than the same week a year ago. Respective MBA indices on a seasonally adjusted, four-week moving average basis register the following: a 0.5% increase in applications overall, a 6.4% drop in purchases and a 4% gain in refis. The refi share for the week ending Nov. 20 was 71.7% of total apps, down from 74.6% the previous week. The adjustable-rate mortgage share inched up to 5.3% from 5.1% during the same period. The average contract interest rate for one-year ARMs dropped to 6.66% from 6.85% with points increasing to 0.33 from 0.29 during the week ended Nov. 20. During the same period, the rate for 15-year fixed-rate mortgages stayed stable at 4.32% while points jumped to 1.05 from 1.01, and the rate for the 30-year FRMs that dominate the market fell slightly to 4.82% from 4.83% with points increasing slightly to 1.19 from 1.18.