Origination

The Obama administration's Home Affordable Refinance Program jumped into second gear in July as Fannie Mae purchased 16,000 HARP refinancings in a single month. July purchases matched the total number of HARP loans the mortgage giant acquired during the whole second quarter. Fannie noted in its second quarter securities filing that lenders have been ramping up for the HARP program that allows homeowners with loan-to-value ratios of 80% to 125% to refinance their mortgages. But the number of refinancings completed was limited due to capacity. "As a result, we expect an increase in refinancings under this program in the third quarter... as second quarter applications are closed and delivered," Fannie said. Overall, Fannie acquired or guaranteed 843,000 refinanced loans in the second quarter, up 40% from the previous quarter.

Mortgage companies trimmed their payrolls of 500 full-time employees in June and continue to hold back on hiring despite stabilizing home sales and high demand for refinancings. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell to 265,100 in June from 265,600 in May. The decline in mortgage industry jobs has leveled in the past few months, although the number of jobs is off by 16% since June 2008. Meanwhile, Friday's job report contains some encouraging signs that job losses are slowing, which could also slow foreclosures since layoffs have been driving up defaults. BLS reported that 247,000 U.S. workers lost their jobs in July, compared to 443,000 in the previous month. The nation's unemployment rate edged down slightly to 9.4%. [There is a one-month lag in BLS's reporting of mortgage industry employment data.

Colonial BancGroup Inc. said it is the target of a U.S. Department of Justice criminal investigation relating to its mortgage warehouse lending business. The Montgomery, Ala., company said it is cooperating with the investigation which concerns accounting irregularities on more than one year's audited financial statements and regulatory financial reports. The company also revealed it has provided documents to the Special Inspector General for the Troubled Asset Relief Program and the Securities and Exchange Commission. A Justice Department spokesman said the agency is not commenting on Colonial. Colonial also said its bank subsidiary received notice that the Alabama State Banking Board will meet on Aug. 12 at which time Colonial Bank will be asked to consent to the appointment of the Federal Deposit Insurance Corp. as receiver or conservator if and when the state regulator deems necessary. This news wraps a bad week for Colonial as it reported the death of its recapitalization deal with Taylor, Bean & Whitaker, a $606 million second quarter loss, and a raid by the TARP IG on its warehouse office in Orlando as well as the abrupt closing of TBW.

American Advisors Group, a reverse mortgage lender based in Irvine, Calif., said it has both a new management team and an infusion of investment capital. The capital comes from JAM Equity Partners LLC, El Segundo, Calif.; an affiliate had committed to make a $4 million investment in the firm. "The combination of a strong capital base from an industry-experienced partner — and one of the most seasoned and accomplished teams in the industry — positions us to be a substantial player in the reverse mortgage space in the coming year," said Reza Jahangiri, president of American Advisors Group. AAG is starting a direct mail campaign and television campaign with the theme of "The Best Advice for a Better Life." The campaign will have a celebrity spokesman whose name was not disclosed.

There are two more lenders that have joined the National Reverse Mortgage Lenders Association's new Wholesale Lenders Program. The companies are Live Well Financial Inc., Richmond, Va., and Generation Mortgage Co., Atlanta. Both are being treated as charter members of the group along with Bank of America Home Loans, Metlife Home Loans and Genworth Financial Home Equity Access Inc. Senior Lending Network is also listed as a participant, but the company said its Belgium-based parent is no longer making funds available for reverse mortgages. Sherry Apanay, senior vice president of wholesale lending at Generation, said "Wholesale lenders working together for the good of the reverse mortgage industry should make us all stronger."

The Mortgage Bankers Association has released a draft model whole loan purchase agreement proposal for a 30-day comment period. The 95-page, copyrighted draft whole loan sale and servicing agreement provides standard formatting and text for standard practices and is aimed at reducing the time, effort and cost of legal and due diligence reviews. It also includes standard formats for transaction-specific terms. The group said the agreement is part of an initiative to help increase liquidity and efficiency in the non-conforming residential mortgage market and that its use is voluntary. More information can be found on the MBA's website at http://www.mortgagebankers.org.

Second quarter 2009 commercial and multifamily mortgage loan originations were 50% higher than during the first quarter of 2009, but remained 54% lower than during the same period last year, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Banker Originations. "Commercial and multifamily mortgage originations continue to feel the effects of the recession and the credit crunch," said MBA's vice president of commercial real estate research Jamie Woodwell, adding that the increase in volumes between the first and second quarter of this year "follows a traditional seasonal increase in the second quarter." According to the MBA, the 54% year-over-year decrease in commercial/multifamily lending activity during the second quarter was driven by decreases in originations for all property types. When compared to the second quarter 2008, the decreases included an 81% decrease in loans for office properties, a 77% decrease for hotel properties, a 70% decrease for health care properties, a 65% decrease for industrial properties, a 51% decrease in retail property and a 21% decrease in multifamily property. Compared to the first quarter of this year, second quarter originations for health care properties saw a 173% increase. There was a 129% increase for hotel properties, a 93% increase for retail properties, a 73% increase for multifamily properties, but a 28% decrease for office properties and a 46% decrease for industrial properties.

The 30-year fixed-rate mortgage averaged 5.22% with an average of 0.6 points for the week ending Aug. 6, according to the Freddie Mac Primary Mortgage Market Survey. This was down from the previous week when it averaged 5.25%. A year ago, the 30-year FRM averaged 6.52%. The benchmark 10-year Treasury yield has been pressuring long-term rates upward recently but it appears that a plunge in that yield on July 31 offset the more recent increase on a relative basis when averaged over the course of the week. The 15-year FRM over the course of the week averaged 4.63% with an average 0.6 point, down from the previous week when it averaged 4.69%. A year ago, the 15-year FRM averaged 6.10%. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.73% with an average 0.6 point, down from the previous week when it averaged 4.75%. A year ago, the five-year ARM averaged 6.05%. One-year Treasury-indexed ARMs averaged 4.78% with an average 0.5 point, down from the previous week when it averaged 4.80%. A year ago, the one-year ARM averaged 5.22%.

Taylor, Bean & Whitaker Mortgage Corp., Ocala, Fla., has suspended origination operations effective immediately. The company was suspended or terminated as a seller/servicer on Aug. 4 by the Federal Housing Administration, Ginnie Mae and Freddie Mac. In a memo, the company said it was unsuccessful in its efforts to reverse those decisions and as a result must cease all origination activities immediately. Loans currently in its pipeline will not be funded, the memo states. The memo also states that the company is working with the agencies regarding its servicing operation and expects to continue to service mortgage loans as it restructures its business. However, the announcement from Ginnie Mae said it was taking control of a $25 billion mortgage servicing portfolio of its products.

PHH Corp. generated a $106 million profit for the second quarter, up from $16 million a year ago, mainly due to the strong performance of its mortgage production and servicing business. The Mount Laurel, N.J.-based company said it had stronger mortgage production margins, a higher volume of first mortgage originations and an increase in mortgage servicing rights mark-to-market valuation and benefited from cost efficiency efforts in both segments. PHH Corp. originated $11 billion in single-family loans during the quarter and the production unit posted earnings of $82 million. The servicing unit posted $86 million in earnings. Acting chief executive and president George Kilroy said PHH has reduced its fixed general and administrative costs by $14 million year-to-date over the prior year period. "Moving forward, we expect the near-term environment to provide attractive consumer mortgage interest rates, and we are well-positioned to leverage those dynamics. We also believe that the wider production margins we are currently experiencing are reflective of a longer term view of the returns required to manage the underlying risk of a mortgage production business, which is another encouraging trend. Our mortgage servicing portfolio may continue to see some erosion from loan defaults and prepayments due to ongoing recessionary trends. However, the servicing we are now adding is more valuable than the current portfolio given lower note rates, better credit quality and a longer expected life," he said.