Origination

Hudson City Bancorp, Paramus, N.J., a top ranked residential funder in the Northeast, originated $1.7 billion in new loans through its retail network during the third quarter, noting that it is poised to "capture additional" market share. Overall, the thrift - one of the nation's largest - grew its earnings 11% to $135 million. However, its ratio of nonperforming loans more than doubled to $518 million compared to yearend. Its allowance for loan reserves now stands at $114 million, more than double the Dec. 31 figure. Among all residential lenders, Hudson City ranks 22nd, according to the Quarterly Data Report.

With rates back above 5% for the second consecutive week, the Mortgage Bankers Association's Weekly Applications Survey registered a decrease in overall, refinance and home purchase activity. The Market Composite Index, a measure of loan application volume, decreased 13.7% for the week ending Oct. 16 on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 22.4% compared with the previous week. An adjustment was made to the Index to take into account Columbus Day. The Refinance Index decreased 16.8% from the previous week and the seasonally adjusted Purchase Index decreased 7.6% from one week earlier. The market share of refinance applications, according to the survey, declined to 65.0% from 67.4% for the previous week. The share of adjustable rate mortgage applications increased to 6.4% for the week, up from 6.2% one week prior. The average contract interest rate for 30-year fixed-rate mortgages rose to 5.07% from 5.02%, with points increasing from 1.11 to 1.13 (including the origination fee) for loans with an 80% percent loan-to-value ratio, according to the association. The average contract interest rate for 15-year FRMs increased 6 basis points from the previous week, to 4.51%, while for one-year adjustable rate loans, it increased by 15 BP to 6.71%. The MBA stopped disclosing index values with the July 31 data release. The MBA can be found online at http://www.mortgagebankers.org.

The U.S. Attorney and the Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product. A spokesman for the company - which also does business as Ideal Mortgage Bankers Ltd. - issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed." In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General's office, the government says Lend America/Ideal "falsely certified" that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley. According to figures compiled by National Mortgage News, Lend America ranks 18th nationwide in terms of GNMA MBS issuance. It services about $850 million in GNMA-backed products. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.

Wells Fargo & Co. earned $3.1 billion from its residential mortgage banking business in the third quarter and is seeing lower than expected losses on the "Pick-a-Pay" ARM portfolio it inherited when it bought Wachovia Corp. last year. While its mortgage banking earnings increased by 243% (compared to the same period last year), it originated $96 billion in new home mortgages, a 25% decline from the second quarter but more than double what it produced in 3Q08 when the credit markets froze up and mortgage lending and housing went into a freefall. (The entire bank earned $3.2 billion in 3Q09).

Well friends, it's nearly the end of October. The leaves are falling; the weather has begun to change. This signals an important time of the year for me, planning for 2010.

The U.S. Attorney and Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product. The company issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed." In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General's office, the government says Lend America/Ideal "falsely certified" that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley. According to figures compiled by National Mortgage News, Lend America ranks 18th nationwide in terms of GNMA MBS issuance. It services about $850 million in GNMA-backed products. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.

Regions Financial Corp., Montgomery, Ala., a top 20 player in mortgages, swung to a third-quarter loss amid higher loan loss provisions. Regions saw a loss of $377 million, or 32 cents a share, compared with a year-ago profit of $79 million, or 11 cents a share. Loan-loss provisions grew to $1.03 billion from $912 million in the previous quarter and $417 million a year earlier. Net charge-offs — loans the bank doesn't expect to collect — jumped to 2.86% of average net loans from 2.06% and 1.68%, respectively. "The operating environment remains challenging and credit-related costs continue to be elevated," said chief executive Dowd Ritter. "However, the economy appears to have bottomed and that bodes well for customers and for us." Regions ranks 20th among all residential originators, according to the Quarterly Data Report.

The Obama administration late Monday unveiled a long-awaited temporary bond purchase and liquidity program designed to help state and local housing finance agencies provide billions of dollars in low-cost mortgage money to consumers. Even though officials from the Treasury Department and other agencies — including the Federal Housing Finance Agency — refused to quantify the effort, it's believed to be in the range of $30 billion. The plan is aimed at boosting the struggling market for mortgage revenue bonds, which is currently operating at about 25% of capacity. Year-to-date, state and local housing finance agencies have issued just $4 billion in mortgage revenue bonds, the proceeds of which are used to provide low-cost residential loans and build or renovate rental housing. As part of the plan to increase liquidity, Treasury will purchase Fannie Mae and Freddie Mac securities, which will be backed by new MRBs. The GSEs also will provide partial credit enhancements, which will serve as a guarantee of sort on the bonds. Some HFAs have completely shut down their lending programs because of a lack of liquidity caused by the housing crisis. Officials stressed that the programs will be paid for by state and local HFAs, through fees, and not taxpayers. Asked who would be on the hook for losses, Treasury assistant secretary Michael Barr said, "The HFAs are in the first loss position," followed by the Treasury and then Fannie Mae or Freddie Mac.

Senate Banking Committee chairman Chris Dodd, D-Conn., went on the record Tuesday calling for a seven-month extension of the $8,000 first-time homebuyer tax credit, which is set to expire in five weeks. Chairing a hearing on the state of the housing market, Sen. Dodd said home prices are stabilizing but "we still need to use every tool at our disposal to try and fix this problem." The White House has yet to reveal its position on the extension. The Mortgage Bankers Association and other trade groups, predictably, support the extension. MBA chief economist Jay Brinkmann told the committee that one great unknown facing the market is what will happen to interest rates when the Federal Reserve stops purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. He noted that there is growing concern over the issue saying, "While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts."

PNC Financial Services is continuing to talk to at least one interested bidder that wants to buy the warehouse lending division of National City Corp., according to officials close to the situation. PNC, which bought NatCity late last year, declined to discuss the issue. One warehouse analyst told National Mortgage News that PNC will not extend warehouse credit to nondepository mortgage bankers beyond midyear 2010. In some cases, the cut-off will be March 31, said the analyst, requesting anonymity. After the failure of Colonial Bank this summer, the NatCity unit is believed to be one of the largest warehouse providers in the industry. PNC, though, has declined to release commitment figures.