Origination

Freddie Mac forced its seller/servicers to buy back $951 million of bad mortgages during the second quarter, a 21% increase from the first quarter. Fannie Mae also saw its outstanding buyback requests continue to increase in the second half of 2009 - but the GSE, unlike Freddie, does not disclose the dollar amount in its securities filings. Lenders that sell loans to Freddie and Fannie are required to make "representations and warranties" that the loans comply with the GSEs' underwriting requirements. If the loans do not perform as expected and underwriting deficiencies are flagged, the lender is obligated to buy back the loans. The GSEs are concerned that their credit losses will grow if lenders cannot muster the financial wherewithal to meet their buyback obligations. Freddie recently noted that it terminated Taylor Bean & Whitaker's status as a seller/servicer on Aug. 4. "We are in the process of determining our total exposure to TBW in the event it cannot perform its contractual obligations to us. The amount of our losses in such an event could be significant," Freddie said in its second-quarter securities filing. The Federal Housing Administration recently suspended TBW as a lender.

Our story today comes under the heading of "you just never know" but it got me thinking. I've been doing that a lot lately in response to requests from coaching members who want some unique and creative ideas to spark some new business.

Weak house prices are likely to continue in the Netherlands due to a high degree of leverage in households and a continuing economic recession, according to a Moody's Investors Service report on Dutch RMBS trends. Delinquencies of more than 60 days in Dutch residential mortgage-backed securities increased slightly to 0.42% in the second quarter compared to 0.35% during the same period a year ago, Moody's said. Weighted average cumulative foreclosures during the same two comparative periods jumped to 0.42% from 0.35%. The rating agency said it did not rate any new Dutch RMBS during the second quarter.

First American CoreLogic, Santa Ana, Calif., has launched a free Apple iPhone application that enables individuals to view market data on over 140 million residential properties in the United States using their iPhone. The product, called RealQuest Home Value Pro, provides mobile access to First American's database of property data. Users of RealQuest Home Value Pro can view property values, foreclosure information and housing trends. Specifically, RealQuest Home Value Pro features include estimated home values for a given subject property and neighboring properties, nearby foreclosure data including pre-foreclosures, auctions and real estate owned (REO) properties; graphs of 12-month median home price trends, foreclosure rates and home sales trend activity; interactive maps to view estimated home values in a neighborhood; and sharing tools that enable real estate agents and homebuyers to save, organize and share properties in real time.

Allied Home Mortgage Capital Corp., Houston, has entered into a consent order with the Georgia Department of Banking and Finance over allegations it transacted business in the state with a person who was unlicensed or unregistered. Back in June, the Department sought to revoke Allied's license and served cease and desist orders on company co-owners Jim Hodge and Kathy Hodge. This consent order settles those charges. The order calls on Allied to provide "an appropriate level of supervision" to its employees, perform background checks on new employees no later than 10 days after hiring and give $1,000 to State Registry LLC, to support the Nationwide Mortgage Licensing System. State Registry LLC is a subsidiary of the Council of State Bank Supervisors, which operates NMLS along with the American Association of Residential Mortgage Regulators. A call to Allied for comment was not returned by press time.

Sales at new-home communities in California continued to level off in June, according to a joint report from the California Building Industry Association and Hanley Wood Market Intelligence. Sales in projects of 10 units or more were 26% below June 2008, the same percentage decline as in May. Sales of homes and condominiums totaled 2,607 for the month, compared to 3,528 a year ago. Jonathan Dienhart, director of published research at HWMI, said the June numbers are slightly less encouraging than prior months. "We had been seeing year-over-year decline percentages steadily shrink, yet June's figures are essentially the same as last month so that's a bit of a stall in the trend," Mr. Dienhart said. "It will definitely take a longer time to start mounting a significant recovery with home purchase tax credits due to expire and the broader economy continuing to struggle." Sales of single family homes were down by 38% in June, while sales of townhouses and "plexes" — duplexes, triplexes, etc. — were down 16%. Condo sales, on the other hand, were up 9%. Compared with the same period last year, the median base price of homes sold dropped by 5%.

A former president of the National Association of Mortgage Brokers says the collapse of Taylor, Bean & Whitaker's wholesale division may not be as disastrous as it sounds for loan brokers. "The void they left will be filled not by one but by many," said Marc Savitt, who recently stepped down as NAMB's annual president. "It will be absorbed," he said in an interview with National Mortgage News. Mr. Savitt, who manages a small brokerage shop in West Virginia, said he has not had any trouble funding loans with the wholesalers he works with. "We did use TBW," he said. "They were a good shop and offered good service." Last week the Ocala, Fla.-based TBW closed its production division after the company was suspended by the Federal Housing Administration. It remains as a servicer.

Citigroup, which has not been an active warehouse lender in recent years, said Tuesday it has earmarked $2 billion in funds for warehouse lending commitments to non-bank mortgage lenders. The money is part of $6 billion in new funding initiatives that come from government Troubled Asset Relief Program funds. Citigroup, which owns the nation's fourth largest residential lender, said it will provide mortgage bankers with "collateralized lines of credit that are backed primarily by residential mortgages which are eligible for sale" to Fannie Mae, Freddie Mac, and the Federal Housing Administration. Few other details were available at press time.

The bulk of more than 150 recent CMBS-backed synthetic CDOs ratings lowered in a recent Standard & Poor's review could face could face further downgrades. Standard & Poor's has lowered 179 ratings from 63 commercial mortgage-backed security-backed synthetic collateralized debt obligation transactions, 169 of which remain on CreditWatch Negative. S&P also lowered five ratings from five CDO retranchings referencing residential MBS transactions and placed one of these ratings on CreditWatch Negative. The rating changes follow a monthly review of the synthetic CDO sector in which 173 ratings from 116 U.S. corporate-backed transactions also were lowered. S&P left 65 of these ratings on CreditWatch Negative.

Standard & Poor's Ratings Services has lowered its ratings on 37 classes from three residential mortgage-backed securities transactions backed by U.S. prime jumbo loans, alternative-A and subprime credit mortgage collateral issued in 2004 and 2006. S&P also removed 22 of the lowered ratings from CreditWatch with negative implications. "Although cumulative losses were generally low compared with our projected lifetime losses for the transactions reviewed, we are projecting an increase in losses due to increases in delinquencies and the current negative condition of the U.S. housing market," S&P said. In addition to lowering the ratings of 37 classes, S&P affirmed its ratings on 13 classes from the same transactions.