Origination

Have you found that the reverse mortgage business in your area has become more competitive? Or is it maybe that the senior borrower is more hesitant about making a decision? Whatever your perception of your local market, I am hearing these concerns raised more and more in our coaching calls. What can you do to change this perception and get yourself back on track?

Federal Housing Administration endorsements are up 83% compared to a year ago, as the federal mortgage insurance program ends its third quarter of the 2009 fiscal year. As of June 30, FHA has endorsed 1.39 million single-family mortgages, according to an FHA outlook report. This represents roughly an estimated $255 billion in loans, based on an $184,000 average loan size. Congress authorized FHA to insure up to $315 billion in loans in FY 2009. So the agency could bump up against this loan limit before Sept. 30. FHA reports also show that defaults (loans 90 days or more past due) were 7.42% in May, up from 6.47% a year ago. Credit scores of new FHA borrowers also are rising. In April, the average FICO score was 661, up from 628 a year ago.

Freddie Mac has named Charles "Ed" Haldeman Jr., a former mutual fund executive, its new chief executive office, effective this August. About a month ago his name leaked out in relation to the CEO job and was considered a done deal but needed the approval of Freddie's regulator, the Federal Housing Finance Agency. FHFA signed off on the nomination this week. Mr. Haldeman, 60, recently stepped down as chairman of Putnam Investment Management after a seven-year term. He succeeds John Koskinen who had been serving as interim CEO since March. Freddie Mac, which continues to lose money, has been operating under a government conservatorship since September. It's expected to release second quarter earnings some time in August.

The Federal Reserve Board is expanding its consumer protection role by performing targeted exams of mortgage banking subsidiaries of bank holding companies, according to Fed chairman Ben Bernanke. The Fed traditionally has taken a hands-off approach to the non-bank subsidiaries of BHCs, but last year it engaged in targeted exams with state banking regulators. "In looking at our responsibility to enforce consumer protection laws, we believe a somewhat more pro-active stance is justified," Mr. Bernanke told a congressional panel Tuesday. He acknowledged that the Fed's authority over the non-bank subsidiaries of BHCs is a "bit vague" and said it would be helpful if Congress clarified the Federal Reserve Board's authority. The Fed chief also made it clear that he does not like the Obama administration's regulatory reform proposal to create a Consumer Financial Protection Agency, which would strip the Fed and the other federal banking regulators of their consumer protection role. He stressed that the Fed is committed to consumer protection and the board has done a "good job" in the past few years. "If you allow us to continue to work in this area we will be interested in doing so," he told the House Financial Services Committee.

House Financial Services Committee Chairman Barney Frank said Tuesday that he will postpone next week's planned vote on legislation to create a consumer protection agency until after the August recess.The delay was due in part to the panel's busy schedule, but committee officials also said they wanted to give consumer groups more time to respond to lobbying by the banking industry, which is opposed to the bill. Industry lobbyists said this week that their arguments to curb the powers of a new agency were gaining traction. Steve Adamske, a spokesman for Frank, said consumer groups needed time to respond to industry arguments against the new agency and efforts to limit its authority. "Consumer groups and advocates have planned a ground campaign in August and we want to give them time to preserve this agency," said Adamske. The goal is to allow lawmakers more time to "hear from their constituents," he said.

Lee Farkas, chairman and founder of Taylor, Bean & Whitaker — the lead investor in the recapitalization of Colonial BancGroup of Alabama — said he doesn't know if the deal is going to happen. In a brief interview with National Mortgage News, Mr. Farkas said he is not heard anything about the status of the investment lately. Asked whether he thought the recap of Colonial would happen, he said, "I don't know." He declined to comment further. Colonial is the nation's largest warehouse lender to non-depository mortgage banking firms. TBW is slated to invest $100 million in Colonial and has lined up additional commitments of $200 million. With that money committed, Colonial has applied for $550 million in Troubled Asset Relief Program funds to stabilize its capital position. In a new research note, Sandler O'Neill said there has been a "deafening silence" from banking regulators regarding the recap plan. (For the full story see the print edition of NMN.)

Reed Kyle Diehl, a former player with the Tennessee Titans from Coto de Caza, Calif., pleaded guilty in U.S. District Court to federal fraud charges related to a scheme in which he collected funds with false promises of high rates of returns on investments in condominium projects in Mexico. According to the U.S. attorney's office for the Central District of California, Diehl fraudulently collected deposits for lines of credit for people who desired financing for construction and development projects in Mexico. Despite paying him sometimes millions of dollars, none of the victims ever obtained a line of credit. Diehl caused losses of more than $5 million. Judge David O. Carter has scheduled sentencing for Sept. 28. Diehl was initially charged and arrested in this case in March 2008. After being freed on bond, Diehl's bond was revoked in January after he attempted to enter into a real estate transaction for a $3.5 million house using a false name and someone else's Social Security number.

The latest gross mortgage lending estimates for the United Kingdom show that, despite a seasonal boost in the latest month, several underlying weaknesses persist. Gross mortgage lending in June rose an estimated 17% month-to-month to 12.3 billion pounds ($20.3 billion) from 10.5 billion pounds ($17.3 billion) the previous month, according to the Council of Mortgage Lenders, London. However, the June figure represented a 48% decline from 23.8 billion pounds ($39.3 billion) the same month a year ago, and the total estimate for gross mortgage lending between April and June of this year matched the first quarter's £33.3 billion ($54.9 billion). These are the lowest quarterly totals seen since the first quarter of 2001. "The pick-up in June's lending largely reflects seasonal factors, and these may well support lending volumes at moderately higher levels over the rest of the summer. But the combined effects of the restricted nature of mortgage funding, reduced number of active lenders, weak labor market and limited consumer demand are likely to hold back any significant and underlying improvement," CML economist Paul Samter said.

The Federal Reserve's first subscription involving legacy commercial mortgage-backed securities attracted $668.9 million in requests for TALF financing, but analysts at Bank of America/Merrill Lynch Research expect better participation in the second subscription on August 20. "Over the next month we think more investors will gear up and ... the next subscription should see greater participation," the analysts said in their weekly Mortgage Investor report. They noted that the Fed just opened the Term Asset-Backed Securities Loan Facility to legacy CMBS and some investors held back because of the "lack of clarity about which bonds would be rejected because of credit concerns" at the New York Federal Reserve Bank. "As a result our assumption is that many that participated in the first go-around were simply "testing the waters.''

Fortress Investment Group, which controls a mid-sized subprime servicing operation, has hired former Fannie Mae chief Daniel Mudd to be its new chief executive. Mr. Mudd was forced out of the money-losing Fannie Mae in September when the company and its sister firm, Freddie Mac, were placed into separate conservatorships. Mr. Mudd became CEO of the GSE in 2004 in the wake of a $6 billion accounting scandal where the firm's former management understated its prior years earnings. Under Mr. Mudd's stewardship Fannie became a large investor in MBS backed by alternative-A credit loans. The declining value of those securities has forced the GSE to book multibillion-dollar losses. A few years back Fortress bought Centex Home Equity of Dallas, once one of the nation's largest subprime lenders. Centex changed its name to Nationstar Mortgage and eventually ceased originating new loans but remains as a servicer. Mr. Mudd will take the reins of the publicly traded Fortress on Aug. 11. He is currently a director of the company. Fortress, whose shares trade for $3, manages $26.5 billion in assets.