Origination

For the third straight week, interest rates for the 30-year fixed rate loan being above 5% led to a continued decline in new applications, the Mortgage Bankers Association Weekly Mortgage Applications Survey found. The Market Composite Index, a measure of loan application volume, decreased 12.3% for the week ending Oct. 23 on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2.8% compared with the previous week. An adjustment was made to the Index for the week ending Oct. 16 to take into account Columbus Day. The Refinance Index decreased 16.2% from the previous week and the seasonally adjusted Purchase Index decreased 5.2% from one week earlier. The market share of refinance applications, according to the survey, declined to 62.3% from 65.0% for the previous week. The share of adjustable-rate mortgage applications increased to 6.9% for the week, up from 6.4% one week prior. The average contract interest rate for 30-year fixed-rate mortgages fell to 5.04% from 5.07%, with points increasing from 1.13 to 1.25 (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 increased 2 basis points from the previous week, to 4.53%, while for one-year adjustable rate loans, it declined by 7 BP to 6.79%. The MBA stopped disclosing index values with the July 31 data release.

GMAC Financial, which controls the nation's fifth largest mortgage banking franchise, is talking to the Treasury Department about the government investing up to $5 billion in additional capital into the struggling mortgage and auto lender. According to published reports, Treasury officials have confirmed the talks but GMAC, for now, is saying little about the situation. "GMAC continues to work with the Federal Reserve regarding the remaining capital requirements related to the Supervisory Capital Assessment Program," said a company spokeswoman. "We will comply with the Federal Reserve Bank's final assessment for additional capital." Earlier in the year Treasury told GMAC to raise an additional $11.5 billion in capital after undergoing a "stress test" along with other large banks. While other banks deemed undercapitalized have been able to raise money from private investors, GMAC has been forced to go back to the government via the TARP program. At mid-year Residential Capital Corp., the mortgage banking arm of GMAC, ranked fifth nationwide with $383 billion in housing receivables.

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It is becoming more difficult for some lenders to approve mortgages with balances above $625,500, according to industry groups that are urging Congress to move quickly and extend the current higher loan limit. The $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is due to expire at yearend. In a letter to House and Senate leaders, three trade groups warn that some lenders are pulling back because they don't want to get caught with loans they can't sell. "The result is that borrowers are being unnecessarily denied financing because of the uncertainty about expiring loan limits," according to a letter by the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors. "Therefore, we request Congress extend the limits as soon as possible so as not to jeopardize the fragile recovery," the Oct. 26 letter says.

More bad news for California's home builders as housing starts dipped again in September. According to the California Industry Research Board, builders in the state pulled just 2,920 permits in the entire state in September. That's down only 1% from the previous month, but it represents a 36% slide from the same month a year ago. As a result of the continued decline, the CIRB has revised its 2009 forecast down from 39,500 units to 37,700, which would be "by far" the fewest number of starts on record in the heretofore "golden" Golden State. The California Building Industry Association has called for extending the state's $10,000 home buyer tax credit, saying that traffic to new home subdivisions has fallen drastically since it expired. "The tax credit program only lasted for four months due to its growing popularity, but we saw a significant increase in traffic during that time, which led to an increase in job-generating new-home construction," said CBIA President Liz Snow. "Extending the program would help continue that positive momentum and would help reinvigorate the overall economy."

PHH Corp., has named Jerome J. Selitto, a former mortgage insurance executive at Amerin Guaranty Corp., president and chief executive, effective immediately. Mr. Selitto brings to PHH -- the nation's eighth largest lender -- nearly forty years of experience in mortgages and investment banking. His most recent position was as a senior consultant and then member of the senior management team of mortgage industry software provider Ellie Mae. George Kilroy, who in June had stepped in on an interim basis as acting president and CEO, will continue to lead the company's fleet management business. Mr. Selitto was CEO of DeepGreen Financial, an online home equity lender that he helped found. (DGF later closed the business.) From 1992 to 1999 he was the vice chairman and a founder of mortgage insurance company Amerin, which later merged with Commonwealth Mortgage Assurance Corp. and is now known as Radian Guaranty.

Senate leaders are nearing agreement on a six-month extension of the $8,000 first time homebuyer tax credit. It appears the tax credit will be expanded to more buyers and the income limits will be raised. The current tax credit is limited to first-time homebuyers and expires November 30. Details are still being worked out. But the tax credit extension is expected to be rolled into a manager's amendment and attached to a bill that extends unemployment benefits (H.R. 3548). The Senate is slated to vote on ending a filibuster Tuesday evening so that the senators can vote Wednesday on H.R. 3548 and send the extension bill back to the House of Representatives.

The embattled Lend America, Melville, N.Y., has been trying to sell a large package of Government National Mortgage Association servicing rights but has yet to close on a deal, according to investment banking sources. The company and an investment banker believed to be brokering the sale declined to comment. Sources say the portfolio of GNMA rights could be as large as $1 billion. Last week the Department of Justice and Department of Housing and Urban Development sought a court injunction to ban the firm from originating FHA loans, accusing it of fraud in regard to $14 million in originations. The court ruled against the injunction. Lend America's spokesman stressed that it is business as usual at the company. "The phones are ringing and they're still doing business," he said.

The Mortgage Bankers Association, which lost money in its last fiscal year, has decided to put its Washington headquarters up for sale, 14 months after occupying the $100 million building. The property, which has proven to be a white elephant for the financially strapped trade group almost from the instant it was purchased in May 2008, is listed with Holliday Fenoglio Fowler, a national commercial brokerage firm. No asking price was mentioned in a letter this morning to the MBA membership. According to the letter, the decision to unload the structure at 1331 L Street was deemed by the MBA board to be "in the best interest" of the association, which will continue to lease "a substantial portion" of space as its HQ through 2020. According to the letter, the decision to buy the building in the first place was made by three different member-led task forces. But the letter did not say what many observers believe: that the decision cost former President Jonathan Kempner his job after a decade as the MBA's chief operating officer. That the MBA has been unable to lease much space to other tenants in what was described as "one of the most severe recessions in a century" was sited as a major reason for the sale. "The board concluded that continued ownership...was economically imprudent and over the long term would impair MBA's ability to continue to provide our members with MBA's full range of services," the letter said.

It is becoming more difficult for some lenders to approve mortgages with balances above $625,500, according to industry groups who are urging Congress to move quickly and extend the current higher loan limit. The $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is due to expire at yearend. In a letter to House and Senate leaders, three trade groups warn that some lenders are pulling back because they don't want to get caught with loans they can't sell. "The result is that borrowers are being unnecessarily denied financing because of the uncertainty about expiring loan limits," according to a letter by the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors. "Therefore, we request Congress extend the limits as soon as possible so as not to jeopardize the fragile recovery," the Oct. 26 letter says.