Origination

Kawana Latrell Melvin of Atlanta pleaded guilty in Superior Court of Clayton County in Georgia to felony charges that she operated a mortgage banking business without a license. She also admitted to making a false statement with respect to her eligibility to work in the state's residential mortgage industry. The Georgia Department of Banking and Finance referred this matter to the State Attorney General's Office after learning she continued to work a as mortgage loan processor for a residential mortgage licensee in violation of a final cease and desist order. Melvin used a false document purportedly written by the Commissioner of the Department that provided that she was not prohibited from engaging in residential mortgage activities. Melvin has been placed on probation for a period of three years and must pay a fine in the amount of $2,000. While on probation, she is prohibited from obtaining employment in any real estate or mortgage business and cannot apply for or obtain professional licenses in either of these industries.

Paladin Strategic Partners has acquired a controlling interest in HomeSaver Mortgage Management LLC, an asset management company that uses private capital to acquire bank owned portfolios of troubled mortgages. "HomeSaver employs an aggressive and 'socially responsible' workout approach toward loan remediation," said Carl Webb, managing partner of Paladin. "We feel that HomeSaver has demonstrated what the nonbank private sector, unburdened by legacy assets, can do to achieve ultimate resolution of the residential mortgage nightmare." HomeSaver and its partners believe that the number of borrowers facing foreclosure will increase considerably over the next 12 months.

Commercial banks are extending the maturities of a significant portion of their commercial real estate mortgages and construction loans, according to a Federal Reserve Board survey of senior loan officers. More than 75% of the respondent banks extended more than 25% of their maturing construction and development loans. Only 16% of the banks refinanced more than a quarter of their maturing construction and development loans. Meanwhile, 70% of the banks extended more than 25% of their CRE mortgages that were on their books at the beginning of the year and scheduled to mature by September. Only 20% of respondents refinanced more than a quarter of those maturing CRE loans. The October survey revealed weaker demand for CRE loans but "stronger" demand for prime residential mortgages. However, 25% of the banks said they tightened their underwriting standards on prime single-family loans over the past three months, which is a slightly higher percentage than reported in the July loan officer survey.

The Peter Cooper Village/Stuyvesant Town $3 billion A-Note loan has been transferred to CWCapital, a specialty servicer, due to the sponsors' request for relief. Details of the request for relief by Tishman Speyer Properties, LP and Blackrock Realty have not been disclosed. New York-based Fitch Ratings expect debt service reserves to be depleted by the end of December. In addition, Fitch expected the transfer of the loan to special servicing as cash flow generated by the property remains insufficient to service the debt. Peter Cooper Village/Stuy Town comprises 56 multi-story buildings situated on 80 acres and includes a total of 11,227 apartments. The loan sponsors Tishman Speyer Properties and BlackRock Realty acquired the property with the intent of converting rent-stabilized units to market rents as tenants vacated the property. However, the conversion of units has since been determined to be illegal by the New York State Court of Appeals. In addition to the $3 billion securitized balance, there is an additional $1.5 billion of mezzanine debt held outside the trust.

The Government National Mortgage Association guaranteed a record $418 billion in mortgage-backed securities in fiscal year 2009, but it turned out to be less profitable than in previous years. Net income totaled $509.6 million in FY 2009, down from $1 billion in FY 2008 when Ginnie MBS issuance totaled only $277 billion. Low interest rates appear to be the culprit, according to an audit of Ginnie Mae's financial status and internal controls by the accounting firm Carmichael, Brasher, Tuvell & Co. The annual audit shows that Ginnie's interest income fell to $109.5 million in FY 2009 from $633.5 million in FY 2008. MBS program revenue totaled $547.8 million, up from $373 billion in the previous year. The audit also shows that defaulted Ginnie Mae issuers have left the agency with $26.2 billion in single-family loans, up from $400 million in FY 2008. Ginnie Mae also could suffer losses due to the recent bankruptcy filing of Capmark Financial, which has issued $7.5 billion in Ginnie Mae multifamily MBS. "Estimated losses on this default are not readily determinable," the auditors said. However, Ginnie Mae has $560 billion in a loan loss reserve that "management believes ... is adequate to cover any losses" related to Capmark's MBS.

Fannie Mae has given more than three-dozen credit unions until next week to accept an offer of pennies on the dollar for some $125 million of their mortgages that defunct U.S. Mortgage/CU National Mortgage fraudulently sold to Fannie. So far, only two of the credit unions have accepted the offer, detailed this afternoon in a letter to Fannie Mae's federal regulator from National Credit Union Administration chairman Deborah Matz, who expressed concern at the losses faced by affected credit unions. "I appreciate Fannie Mae is also a victim of this crime," said Mr. Matz in a letter to Edward DeMarco, acting director of the Federal Housing Finance Agency. "However, the financial impact of CU National's fraud on these member-owned cooperatives is significant. Indeed, for some of the credit unions, their losses will be so great as to force our agency to take drastic action under the prompt corrective action rules." Neither Fannie nor the FHFA returned telephone calls. Both the credit unions and Fannie were victims of a massive fraud perpetrated by Michael McGrath, the president of U.S. Mortgage and its CU National subsidiary which sold $140 million of mortgages held on behalf of credit unions to the GSE without authorization and kept the money. McGrath has pleaded guilty to the huge fraud, agreeing to forfeit almost $15 million in assets, leaving a $125 million loss for the CUs. Fannie has given the credit unions until Nov. 16 to accept the offer but so far only two have agreed. Fannie, which has rejected requests to give the mortgages back, has offered to settle with the credit unions for what would amount to less than 20% of the value of the mortgages. If those credit unions realize the 80% of losses it could push several of them into insolvency.

Short sale listings, all 10,383 of them, outnumber foreclosures two-to-one in the Las Vegas area, but take-backs are outselling short-sales by a ratio of four to one, according to local broker Robert Jenson of the Jenson Group. And together, distressed properties of both varieties accounted for 79% of the 3,235 Sin City properties which changed hands in October. That's down two percentage points from 81% last month, Mr. Jenson reports, and it's the lowest share of the market since September a year ago. Overall, the luxury broker says in his monthly report, inventory, sales and prices have remained relatively flat. The total number of properties on the local MLS is 19,891, including 626 manses and 30 condos offered at $1 million or more, and the average price paid in October was $159,959. That's $24 more than in September, but $83,000 lower than the average in September 2008.

Fannie Mae's $180 billion multifamily loan portfolio appears to be in decent shape, suffering little in the way of serious delinquencies, according to a new public filing. In a supplementary report with the Securities and Exchange Commission, Fannie says its MF holdings have a seriously delinquent rate of just 0.62%. It notes that a small percentage of the portfolio has a loan-to-value ratio north of 80%. Moreover, much of the portfolio ($123 billion) matures in 2014 and beyond. Meanwhile, Freddie Mac, in its recent earnings statement said it is facing additional risk on its MF portfolio because certain MF seller/servicers "are coming under financial pressure." The GSE cites Capmark Finance, which recently filed for bankruptcy protection, and Centerline Holding Co., which is in the process of restructuring its debt. However, Freddie, notes that its "counterparty risk" to these companies is minimal, adding "we have not incurred any losses."

NetMore of Walla Walla, Wash., is giving a $100 price break on administrative fees to any loan broker that brings a mortgage to the company — but only if that sales associate is a member of the National Association of Mortgage Brokers. NetMore said it will extend the offer to any non-NAMB broker who joins within 30 days. A privately held nonbank, NetMore said it is providing the discount as a way to support both NAMB and "the broker community." The $100 will be deducted from fees which can average about $750. The fees are deducted from the points the broker receives on loans that actually close. NAMB lost money in is last two fiscal years.

Lend America, which won its court battle against federal regulators, is moving ahead with plans to begin table funding mortgages through loan brokers. Late last week the Long Island-based nonbank began sending out email solicitations to loan brokers in Massachusetts, even though it was recently hit with a cease and desist order in nearby Connecticut. An email sent out by Brad Pollack, a wholesale account representative for Lend America, notes that the company has "officially" launched its broker outreach effort and is even waiving the registration fee that it normally charges brokers. The email — provided to National Mortgage News by a broker in the state — says the company is offering "aggressive loan programs." Mr. Pollack did not return a telephone call about the email. A spokesman for Lend America said "it's business as usual" at the company. The company called the recent Connecticut C&D "an unfortunate development," adding that it is "in talks" with the state to resolve the matter quickly.