Origination

The correspondent and warehouse lending division of Ally Bank, a unit of GMAC Financial Services, has created a correspondent community bank team that will purchase closed residential mortgage loans from banks, thrifts and credit unions. The new unit also will offer a table funding service — which means loan brokers should benefit. An executive with GMAC said the new unit will focus on community financial institutions that outsource some or all of their mortgage origination process. It will customize services to supplement the client's in-house capabilities. The Fort Washington, Pa., based company said it saw an opportunity in this line of business because market conditions have reduced funding alternatives for smaller institutions. Doug Miller is joining GMAC as the director of correspondent community banking. He held a similar position at Taylor Bean Whitaker, which filed for bankruptcy protection in August.

The serious delinquency rate on Freddie Mac guaranteed single-family loans broke the 3% mark in August, the highest reading ever posted by the mortgage giant. In its new monthly summary, the GSE said the percentage of loans 90 days or more past due and in foreclosure hit 3.13% during the month, up 18 basis points from July. In August 2008, the government sponsored enterprise had a 1.11% serious delinquency rate. The huge jump in defaults is driven mainly by Freddie's $172 billion portfolio of guaranteed alt-A loans, which had a 9.44% serious delinquency rate as of June 30. The alt-A portfolio includes $144.8 billion of interest-only loans and $11.6 billion of payment option ARMs. There was good news, though: In August Freddie issued $47.5 billion of MBS, a 7% increase from July. To date, Freddie has issued $411.2 billion of MBS, compared to $356.8 billion during the same period last year. Freddie reported that its purchases of refinanced loans in August totaled $35.6 billion, an increase of 4.3% from July.

The partial spin off of its Canadian mortgage insurance business is one of the factors that has strengthened the capital levels at Genworth Financial Inc., Richmond, Va., and thus Fitch Ratings, Chicago, is affirming the life insurance subsidiaries' "A-" insurer financial strength rating. Although Fitch is worried about investment losses at the life operations, it added projected losses from mortgage loans and alternative investments would be modest. If more capital is needed at Genworth, Fitch noted it could further monetize its remaining equity holdings in the Canadian mortgage insurer, currently valued at $1.4 billion. The report noted Genworth "remains exposed to a troubled U.S. mortgage insurance operation. Explicit in Fitch's rating (of the life insurance unit) is an assumption Genworth would not provide any future capital support to the U.S. mortgage insurance operations. Fitch continued that if this assumption were incorrect, the life units' ratings would likely be downgraded.

While the amount of multifamily debt outstanding increased between the first and second quarters of this year, the total commercial/multifamily debt decreased by 0.3%, according to data from the Mortgage Bankers Association. The $3.47 trillion in commercial/multifamily mortgage debt outstanding recorded for the second quarter by the Federal Reserve was a decrease of $9.9 billion from the first quarter 2009. Multifamily mortgage debt outstanding grew to $914 billion, an increase of $6 billion or 0.7% from first quarter. Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.55 trillion, or 45% of the total. CMBS, CDO and other ABS issuers hold $714 billion, or 21% of the total. Life insurance companies hold $313 billion, or 9% of the total, and savings institutions hold $195 billion, or 6% of the total. The GSEs, agency-backed mortgage pools and GSE-backed mortgage pools, including Fannie Mae, Freddie Mac and Ginnie Mae, hold $195 billion in multifamily loans that support the mortgage-backed securities they issued and an additional $157 billion in "whole" loans in their own portfolios. The agencies are the largest holders of multifamily loans, with a 38% share, followed by commercial banks with a 24% share, securities holders at 12%, state and local governments at 8%, thrifts at 7% and life companies at 6%.

Lenders One Mortgage, the St. Louis-based cooperative, has selected Clayton Staffing Solutions, Shelton, Conn., to provide contract Federal Housing Administration and conforming mortgage underwriters to its members who need them to deal with temporary or full-time capacity issues. Clayton could also provide personnel for closing, processing, quality control, default management and servicing functions. Lender One members have the option of having the staffers work out of their locations or at Clayton's National Operations Center in Tampa, Fla. Luke Pille, Lenders One director of National Programs, said the arrangement helps members to capitalize on current market opportunities and to have the option of taking fixed labor costs and converting them to variable costs. Clayton's database of potential staffers includes over 10,000 underwriters and processors nationwide.

American Home Bank will now purchase seasoned, high-quality, residential mortgage loans from financial institutions and other portfolio holders. The company has created a team based in Fort Lauderdale, headed up by Maylin Casanueva. Most recently she had a similar role at Redwood Financial Services; also she has been the director of transaction management and due diligence services for CoreStates Securities and Meridian Capital Markets. Other members of the team have experience in banking, mortgage banking and capital markets. James Deitch, managing director of American Home Bank, said the new business helps sellers "augment their capital base and increase liquidity, while at the same time provide them with efficient trade execution." American Home Bank is the mortgage division of First National Bank of Chester County, West Chester, Pa.

A pair of former executives of what became known as LandAmerica Tax and Flood Services have acquired the company and returned it to its former name, Lereta. LandAmerica acquired Covina, Calif.-based Lereta in October 2003, changed the company's name and operated it under the LandAmerica OneStop banner. The new owners include Jim Thornton, who will take the job of president and Doug Foley, the new chief executive; both are also former LandAmerica OneStop executives. They are partnering with an unnamed third party investment group. Kerlin Capital Group LLC represented the investment group in the transaction; Kerlin had represented Lereta in the original sale to LandAmerica. LandAmerica Financial Group has been operating under bankruptcy protection since November 2008.

House prices could drop by another nine percentage points before prices bottom in the second quarter of 2010 and it might take a full decade before prices climb back to their 2006 peak, according to Moody's Economy.com. Overall house prices will fall by 40% before bottoming next year, Moody's Economy.com economist Celia Chen said. So far, house prices have declined by 31% based on the Standard & Poor's/Case-Shiller house price index. "For many reasons, the rebound will be disproportionately small compared to the decline. It will take more than a decade to complete recovery from the 40% peak-to-trough decline in national house prices," Ms. Chen says in a recent article in Moody's Resi Landscape. In hard-hit states like Florida and California, prices "will only re-gain their pre-bust peak in the early 2030s," the article says.

Recent Federal Reserve moves could make adjustable rates more relatively attractive while potentially putting upward pressure on 30-year rates. "In its Sept. 23rd policy statement, the Federal Reserve indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period," said Frank Nothaft, chief economist at Freddie Mac. "This will likely benefit consumers who opt for ARMs, because they are typically tied to shorter-term interest rates." Also in its Sept. 23 policy statement, the Fed extended its mortgage-backed securities purchases, which have helped keep long-term rates low this year, into the first quarter of 2010. It did this without increasing the dollar amount it is authorized to purchase, which potentially cuts the pace at which they are bought by about half (although the Fed has not detailed exactly how it will handle allocating its purchases over that time period). This could put upward pressure on rates, although the Fed has indicated it is monitoring the situation and could always change its policy going forward. Mr. Nothaft could not be reached for comment at press time as to whether he thinks this will affect his earlier prediction that 30-year rates could fall to a record low this year. The Mortgage Bankers Association survey this week, which reflects roughly a week earlier period than the Freddie Mac Primary Mortgage Market Survey, suggests the 30-year rate has already fallen below the psychologically important 5.0% mark. But Freddie's survey said that during the week ended Sept. 24 it found the rate for 30-year FRMs unchanged compared to the week before at 5.04%. It remains significantly lower during the same period last year when it was 6.09%. The average one-year Treasury indexed adjustable-rate mortgage rate dropped to 4.52% from 4.58% the previous week and 5.03% a year ago. Points averaged 0.6 for 15- and 30-year product and for one-year ARMs, and were 0.5 for five-year hybrid Treasury ARMs. The five-year hybrid rate remained at 4.52% in the most recent week. This was significantly lower from a year ago when it was 6.02%. The average 15-year rate was 4.46%, down from 4.47% the previous week and from 5.57% a year ago.

Housing starts in California slipped in August, falling 5% from July and 37% for August a year ago. The slide was hastened by the end of California's generous $10,000 home buyer tax credit, according to the California Building Industry Association. "When it was in effect, the tax credit was beginning to turn things around," said CBIA President Liz Snow. "Since the program stopped in July -- only four months after it started -- activity dropped off dramatically." According to the Construction Industry Research Board, builders pulled permits for just 2,911 housing units statewide in August. CIRB now is forecasting only 39,500 housing starts in 2009, which would be by far the lowest total on record.