Origination

Steve Abreu is the new president of GMAC's mortgage operations, working out of the company's Fort Washington, Pa., office. His most recent position was president and chief executive of GreenPoint Mortgage Funding of California. (GreenPoint, a subsidiary of a bank, closed two years ago.) Mr. Abreu is a 20-year veteran of the mortgage banking industry. He will report to Thomas Marano, chairman and CEO of GMAC's mortgage operations. Mr. Marano recently assumed additional responsibilities as GMAC's chief capital markets officer, coordinating the firm's capital commitments, risk analytics and broker/dealers. The hiring of Mr. Abreu will provide ongoing, strategic focus for the firm's mortgage operations, GMAC said. Mr. Abreu will be representing the company at the upcoming Mortgage Bankers Association convention in San Diego.

Mortgage companies cut their payrolls by 6,100 full-time workers in August as employment in the residential finance industry hit a new low. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell to 261,200 positions in August from 267,300 in July. Jay Brinkmann, chief economist for the Mortgage Bankers Association, said servicers are hiring workers to deal with rising delinquencies and loan modifications. However, that hiring has been offset by reductions in staff due to bank mergers, back-office consolidation and a reliance on temporary workers and contractors, Mr. Brinkman said. He noted that the bankruptcy of Taylor, Bean & Whitaker, Ocala, Fla., will not show up in the BLS mortgage jobs data until next month's report. (Some of TBW's West Coast AEs were recently hired by CMG Mortgage, San Ramon, Calif.) Meanwhile, Friday's national employment report shows a higher-than-expected 263,000 U.S. workers lost their jobs in September. The unemployment rate edged up to 9.8% from 9.7% in August. (There is a one-month lag in BLS reporting of mortgage industry employment data.)

Bank of America chief executive Kenneth Lewis — the man responsible for the bank buying both Countrywide Financial and Merrill Lynch — is stepping down at yearend. Late Wednesday BoA said its board is evaluating successors, with expectations of having the new CEO named by the time Mr. Lewis departs. Thanks to the Countrywide purchase, which closed last summer, BoA is the nation's largest servicer of home mortgages and second largest originator. His departure ends what has been a stormy 12 months for the handpicked successor to Hugh McColl Jr. In regard to the Merrill deal, Mr. Lewis tussled with regulators over the purchase (the bank almost backed out), and drew ire from shareholders and others over disclosure decisions over bonuses and losses at the investment bank late last year. (Merrill was a large player in the subprime ABS, CDO and warehouse lending market.) Mr. Lewis, 62, in his most recent pubic appearance, gave no indication that he might step down, instead using a Sept. 14 speech in Japan to sound a positive tone about the company and the global economy.

Melville, N.Y.-based Lend America on Thursday said it hopes its new wholesale lending platform will be accepting its first loan in mid-October. The company said the channel would have 25 geographically focused teams as part of its centralized operations. It also will have more than 30 Federal Housing Administration direct endorsed underwriters. "We think there's an opportunity now to revisit the wholesale market," said chief business strategist Michael Ashley in the Sept. 30 special edition of National Mortgage News.

The average rates for 15-year fixed-rate and five-year Treasury-indexed hybrid adjustable-rate mortgages have fallen to record lows and the average 30-year rate has slipped below 5%, according to the most recent Freddie Mac weekly Primary Mortgage Market Survey. The falling 10-year Treasury yield has put downward pressure on long-term rates in the past week. Federal Treasury purchases that have played a role in keeping yields low are slated to end in October and federal agency mortgage-backed securities purchases that play an even greater role in lowering primary market mortgage rates are slated to be phased out in the first quarter of next year. But the Fed has said it may keep short-term rates low for some time, which could keep ARM rates low. Freddie Mac said average rates in the most recent week were as follows: the 30-year dropped to 4.94% from 5.04% the previous week and from 6.10% a year ago, the 15-year fell to 4.36% from 4.46% the previous week and 5.78% a year ago, the five-year slid to 4.42% from 4.51% the previous week and 6% a year ago, and the one-year Treasury ARM declined to 4.49% from 4.52% the previous week and 5.12% a year ago. Average points were 0.7 for 30-year FRMs, 0.6 for 15-year FRMs and five-year hybrids, and 0.5 for one-year ARMs. The 15-year and five-year rates are the lowest they have been since Freddie began tracking them.

Private commercial mortgages held by life companies gave them a 2.25% total return for the second quarter of 2009, the best performance since the fourth quarter of 2007, according to the LifeComps Commercial Mortgage Index. This makes two consecutive quarters of positive returns for these loans. In the first quarter of this year, life insurers got a 1.63% return. In the fourth quarter of last year, these loans had a loss of 3.16%, and in the third quarter, they had a loss of 2.08%. Of the total return for the most recent period, 1.68% was from income and 0.57% was from price. LifeComps said this was the first price gain since the fourth quarter of 2007. Over a 12-month period, however, private commercial mortgages had a loss of 1.46%. The income return was 6.74% but the price loss was 8.2%. By property type, for the second quarter, mortgages secured by office buildings had a 2.67% return, apartment building mortgages had a 2.47% return, industrial property loans had a 1.81% return and retail property loans had a 1.75% return. There are 6,400 active loans in the LifeComps database with an aggregate principal balance of approximately $85 billion.

Republican congressmen are becoming more concerned about the Federal Housing Administration's financial plight and they want to increase FHA's downpayment requirement to 5%. Rep. Ed Royce, R-Calif., said FHA is operating at the same dangerous leverage ratios that led to the takeover of Fannie Mae and Freddie Mac. Rep. Scott Garrett, R-N.J., said he has drafted a bill that would increase the FHA downpayment requirement to 5% from the current 3.5% level. "There are increasing reports of the likely necessity of a taxpayer bailout for the FHA and this legislation aims to implement reforms to try to prevent such a bailout from occurring," Rep. Garrett said at a House Financial Services Committee hearing. The Garrett bill also calls for a General Accountability Office study to determine the appropriate leverage ratio for FHA. In the early 1990s, Congress mandated that FHA maintain a minimum 2% capital ratio. A recent audit shows that the federal mortgage insurance fund has fallen below the 2% minimum. But FHA officials say the insurance fund should be able to maintain a positive capital position and FHA will not need taxpayer assistance.

The seasonally adjusted delinquency rate on closed-end home-equity loans jumped 43 basis points to a record high of 4% in the second quarter, according to an American Bankers Association survey. At the same time, the survey shows that 1.92% of home-equity lines of credit are 30 days or more past due, up 3 bps from the first quarter. "Six consecutive quarters of job losses have taken their toll" on the performance of home-equity loans, ABA chief economist James Chessen said. The Federal Deposit Insurance Corp. reported that 1.73% of home-equity lines of credit are 90 days or more pass due or considered uncollectible, down 25 bps from the previous quarter. However, FDIC-insured institutions charged-off $5.1 billion in HELOCs, up from $4 billion in the first quarter.

In August the Government National Mortgage Association had one of its best months ever — while the private mortgage insurance industry continued to see its new policy business skid. According to figures compiled by the Mortgage Insurance Cos. of America, the nation's six active MIs wrote $5.76 billion in new policies, a 43% decline from the same month last year. Actually, the decline could be worse as the August 2008 data did not include Radian Guaranty, which had not yet rejoined MICA. Its book of business (primary insurance in force) fell to $900.7 billion from $906.1 billion in July. However, compared to the same month in 2008, its book of business rose 12% (this comparison is also affected by Radian rejoining MICA). Most of MI firms are capital restrained and have been tightening up their underwriting guidelines the past year. GNMAs are backed by FHA and VA insured mortgages.

The 2008 Home Mortgage Disclosure Act data show that Federal Housing Administration lending surged in the second half of 2008 and by December FHA had a 38% share of the home purchase market and 25% share of the refinancing market. "By the end of 2008, nearly one-half of home-purchase loans and one-quarter of refinanced loans were backed by either FHA or the VA," according the Federal Reserve Board analysis of the HMDA data. Fed researchers noted that Fannie Mae and Freddie Mac were losing ground to FHA and VA because the GSEs raised their underwriting fees in 2008 and the private mortgage insurance companies raised their prices and limited coverage. "Fannie Mae and Freddie increased their market share in 2007 but relinquished much of those gains during 2008," the report says. Overall, FHA, VA and Rural Housing Service combined had a 25.7% share of the mortgage market in 2008, up from 7.5% in 2007.