Origination

The Mortgage Bankers Association's Market Composite Index, a measure of loan application volume, declined 2.8% on a seasonally adjusted basis for the week ended Sept. 25, even though the average rate for the 30-year fixed rate mortgage remained under 5%. The Refinance Index showed only a slight 0.8% decline from the previous week, while the seasonally adjusted Purchase Index fell 6.2% from one week earlier. On an unadjusted basis, the index decreased 3.1% compared with the previous week and 44.3% compared with the same week one year earlier. But even as the number of refinancing applications declined, their market share increased to 65.3% of total applications, up from 63.8% the previous week. The share of adjustable-rate mortgage applications declined to 6.2% for the week, down from 6.7% one week prior. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.94% from 4.97%, with points falling to 0.94 from 1.12 (including the origination fee) for loans with an 80% loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs remained fell 7 basis points from the previous week, to 4.34% from 4.41%, while for one-year adjustable-rate loans, it decreased by 12 bps to 6.4%. The index is calculated from MBA's Weekly Mortgage Applications Survey and the organization stopped disclosing index values with the July 31 data release. The MBA can be found online at http://www.mortgagebankers.org.

If you're like many of the reverse mortgage originators I've heard from this week, you're feeling a bit beaten up. Yes, we are about to experience a reduction in the principal limits for our clients. Yes, in some areas property values are making it tough to get some of your transactions done. It seems as though we are fighting an uphill battle right now. Makes you think about throwing in the towel and moving on to something else, right?

The benchmark 10-year Treasury yield slid below 3.30% Tuesday afternoon, putting downward pressure on longer-term rates. A little less than a week ago, the 10-year yield was as high as 3.50%. Some analysts believe long-term mortgage rates could hit record lows again this year but others say the Federal Reserve's phasing out of its rate-lowering MBS purchases will gradually put upward pressure on mortgage rates.

Mortgage technology vendor Fiserv Inc., has signed a definitive agreement to sell its Loan Fulfillment Solutions business to ISGN Solutions Inc., Bensalem, Pa., for an undisclosed sum. The transaction is subject to customary closing conditions and is expected to close within 30 days. Fiserv said it does not expect the transaction to have a material impact on its financial results. LFS provides financial institutions outsourced home equity loan fulfillment services, including broker price opinions, closing and settlement services, valuation services, flood and title certification, home retention and loan modification solutions, portfolio and vendor management solutions, and related services. Despite recent mortgage technology divestitures, Fiserv contends that it is still "committed to providing best-in-class lending solutions." On the other hand, ISGN continues to acquire added mortgage technology applications and services. ISGN specializes in mortgage lending technology and solutions, including fulfillment services, title and default management.

Home prices rose 1.6% in July following a 1.4% increase in June as the Standard & Poor's/Case-Shiller 20-city house price index registered its third monthly increase — the first such increase since mid-2006. The chairman of S&P's index committee David Blitzer noted that prices increased in 18 of the 20 cities in July. Prices declined in Seattle and Las Vegas. In addition, 13 of the cities have seen price increases for least three consecutive months. "These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the federal first-time homebuyer tax credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," Mr. Blitzer said. Overall, prices are down 13.3% from a year ago and down 32.6% from the second quarter 2006 peak in home prices. Economists at Moody's Economy.com expect house prices won't bottom out until the second quarter of 2010. By then the peak-to-trough decline in the S&P/Case-Shiller HPI will be 40%.

The serious delinquency rate on Fannie Mae guaranteed single-family loans topped 4% in July, according to mortgage giant's monthly summary report. The percentage of Freddie loans 90 days or more past due and in foreclosure hit 4.17% in July, up 23 basis points from June. A year ago, the government sponsored enterprise had a 1.45% serious delinquency rate. Freddie Mac recently reported that it has a 3.13% serious delinquency rate. In its second quarter financial report, Fannie said default rates are increasing across its entire guaranty book of business and the serious delinquency rate on its $270 billion Alt-A portfolio hit 11.9% as of June 30. The Alt-A portfolio includes $195.9 billion interest-only loans and $15.4 billion of payment option ARMs. Fannie's monthly report also shows that the GSE issued $62.1 billion in mortgage-backed securities in August, down 22% from July. Fannie has a one-month lag in reporting its delinquency rate. Freddie's 3.13% delinquency rate is for August.

Wholesale Access chief David Olson, who has made his living studying the loan brokerage sector, believes there will be just 15,000 firms left by yearend, a stunning 72% decline from the sector's peak back in 2005. "I know of brokers selling car insurance and doing loss mitigation work," said Mr. Olson in an interview. "A lot of them are looking for something to do." He said upcoming regulatory changes -- including yield spread premium constraints, and loan officer registry requirements -- are making it more difficult for these third-party independent salesmen to survive. He said some of the nation's top lenders including Bank of America, Chase, and Wells Fargo, show a decreasing interest in broker-related research. Still, he believes that in time the sector could revive to some degree. "They'll come back because it eventually will become too expensive for banks to keep loan officer-related employees on their payroll," he said, adding that brokers "are a form of outsourcing. It's always cheaper to outsource." Wholesale Access is based in Columbia, Md.

CitiMortgage, in yet another reorganization move, has terminated its residential production chief, Brad Bunts, a 13-year veteran of the company. Also let go was Jeffrey Walker, head of national sales. A memo provided to National Mortgage News confirmed the dismissals which were described by CitiMortgage CEO Sanjiv Das as a way for the lender to simplify its "reporting structure." In the memo both men were described as valuable members of the CitiMortgage team. Mr. Brunts oversaw CitiMortgage's entire origination business. In their place, the bank-owned mortgage company named Ed Abufaris to lead its correspondent channel and Fred Bolstad to manage the consumer mortgage channel. Both will report directly to Mr. Das. According to the Quarterly Data Report, CitiMortgage ranked fourth nationwide in residential fundings in the second quarter with $31 billion, a 2% decline from the same period last year. It also is the nation's fourth largest servicer of home mortgages.

Jamilah Al-Bari of District Heights, Md., pleaded guilty to mail fraud arising from the fraudulent purchase of properties in Maryland and Virginia. According to Rod J. Rosenstein, U.S. attorney for the District of Maryland. Jamilah Al-Bari participated in a scheme with her brother, Osman Sharrief Al-Bari, and others to pay straw purchasers to purchase houses for them using false loan documents. While employed at M&T Bank, Jamilah Al-Bari created false documents purporting to verify assets for the straw buyers. She also sent false verification letters concerning the buyers' income and assets on M&T Bank letterhead to banks and mortgage lenders. She created a fictitious M&T Bank employee and used the fictitious name to sign some of the verification letters. Jamilah Al-Bari prepared false M&T Bank verification forms for straw buyers who purchased five properties in Baltimore and two properties in Virginia. She admitted her involvement in the scheme to M&T Bank investigators before her termination. The loss amount attributable to Jamilah Al-Bari was between $400,000 and $1 million. Most of the purchased properties have now gone into foreclosure. Sentencing is scheduled for Nov. 13. Osman Sharrief Al-Bari, a leader of the scheme, pleaded guilty in August and is scheduled for sentencing on Oct. 5. Co-defendants Timothy Reed, Terrence White, Sabrina Weinberg and Kara McIntosh have all pleaded guilty and await sentencing.

Wolters Kluwer Financial Services and LoanSifter have integrated to offer lenders the ability to customize disclosures. The new integration will enable users of LoanSifter's integrated 1003 mortgage application to generate standard and customized initial disclosure documents through Wolters Kluwer Financial Services' Disclosure Manager, and then electronically deliver them to borrowers for e-signature. The platform also gives financial institutions the option of completely and securely outsourcing the printing and mailing of paper disclosures when needed or requested by the borrower through Wolters Kluwer Financial Services' mail fulfillment center. Because Wolters Kluwer Financial Services' Disclosure Manager platform automatically generates compliance documentation for LoanSifter's lenders, they can eliminate the regulatory requirement burden associated with determining which documents are required for a specific transaction and jurisdiction.