Origination

The Senate has confirmed David Stevens to be the new Federal Housing Administration commissioner and he is expected to begin work at the mortgage insurance agency on Monday. Mr. Stevens' nomination has been help up for several months due to alleged Real Estate Settlement Procedures Act violations by his former employer Long & Foster — a mid-Atlantic real estate brokerage firm. The RESPA complaints did not name Mr. Stevens and HUD secretary Shaun Donovan continued to support Mr. Stevens, claiming his executive experience at Freddie Mac and Wells Fargo Home Loan is needed at FHA. Meanwhile, FHA commissioner Brian Montgomery finally stepped down on July 3 after it was clear the Mr. Stevens would be confirmed. Mr. Montgomery was appointed to the FHA post by former President Bush and he was asked to stay by the Obama administrations until his successor is confirmed. "I was pleased to be able to serve the Obama Administration as a holdover, which is exactly what Secretary Donovan did back in 2001 in the early months of the Bush Administration," Mr. Montgomery said in a farewell note. "Having worked for Secretary Donovan for the past 5 ½ months, I want to tell you that he is a man of great vision and commitment to the causes that HUD champions," Mr. Montgomery said.

Two congressmen have introduced a bill to provide the Federal Housing Administration with greater resources to increase its staffing and upgrade its technology systems. The bill (H.R. 3145) also gives FHA additional tools to oversee lender performance and implement new programs to reduce foreclosures. Two members of the House Financial Services Committee — Reps. John Adler, D-N.J., and Christopher Lee, R-N.Y., — introduced the FHA bill. The National Association of Realtors endorsed the bill. "FHA continues to be a stable, affordable, safe option for American families seeking to purchase a home," NAR says in a letter to the congressmen. "Your legislation will provide FHA with the means necessary to play this important role," the Realtors said.

Chicago Title and some of its affiliates are reporting delays in what it calls "the funding of mortgage loans" by Taylor, Bean & Whitaker, Ocala, Fla. At press time TBW CEO Lee Farkas had not returned a telephone call about the matter. A memo written by title attorney S.K. Sumner of New Jersey offers no reason for the delay but notes that, "Until Taylor Bean resolves these delays, we recommend that additional interest be added to payoff calculations in order to avoid a possible shortfall in payoff amounts." TBW is the lead investor in a $300 million recapitalization plan for Colonial BancGroup, Montgomery, Ala. The recap is dependent on Colonial receiving $550 million in Troubled Asset Relief Funds from the government. Earlier this week Colonial — a warehouse lender to TBW — cut 136 jobs across five states including Alabama, Georgia, Texas, Florida and Nevada, The cuts make up about 3% of the bank's work force.

American International Group subsidiary United Guaranty Corp., Greensboro, N.C., has a new chief operating officer who — like the company's recently named chief executive — at one time worked for Safeco Corp., Seattle. Kim Garland will have responsibility for UGC's claims service and operations, business development, underwriting, marketing and risk management functions. Most recently, he was the president of the Open Seas Solutions group for Safeco. UGC president and CEO Eric Martinez, before joining the mortgage insurer's parent company AIG, New York, earlier this year, was executive vice president — claims, customer care and business operations for Safeco. Mr. Garland's previous positions also include being vice president, auto product management at Safeco, and before that he held various senior management and actuarial positions at Safeco and GEICO.

The average sale price of a home in New York City fell 22% in the second quarter, to $644,000, according to the Real Estate Board of New York. But Board President Steven Spinola says real estate brokers in the Big Apple are reporting that people are out kicking tires, if not seriously looking. "It's only a matter of time before the New York market is on the rise again," he said. "If this economic downturn is anything like others in the past, New York is one of the last to feel the effects." Manhattan showed the biggest declines in the April-June period, with average prices for cooperatives, condominiums and one-to-three unit buildings falling 19% to $1.297 million. In Queens, the average dipped 13% to $403,000, and in Brooklyn, it fell 12% to $503,000. Staten Island saw only a 10% decline to $388,000, while the Bronx fell 9% to $356,000.

The commercial real estate sector has shown signs of increased market volatility across all major sector types, according to Fitch Ratings' latest annual U.S. Property Market Metric update report. With the average cash flow volatility score rising to 3.62 in 2008 from 2.98 in 2007, volatility in commercial real estate has reached its highest levels since Fitch launched its PMM scores in 2000. The office sector was hit the hardest, with the average volatility score jumping to 3.68 last year from 2.62 in 2007. The office markets showed greater volatility in the three largest metropolitan statistical areas: New York, Chicago and Los Angeles. Multifamily properties' average volatility scores jumped to 3.15 in 2008 from 2.5 in 2007, with San Francisco, Phoenix and Miami among the more volatile markets. Retail markets also reflected more volatility with a 3.7 average PMM score last year as opposed to 3.12 in 2007. Several MSAs in Texas were affected, including Dallas-Ft. Worth and Houston.

The national Realtor.com Homeownership Survey found the same motivating factors for homebuyers that are coming back into the market that a similar survey from its California affiliate found. According to the survey, over two-thirds of potential buyers are being lured into the market by affordability; low interest rates are also being cited by respondents. Nearly 20% of the potential buyers are being motivated by foreclosed property being sold at bargain prices; over 15% believe prices are as low as they will go, while a similar number state they want to buy before interest rates rise. Just fewer than 15% of first-time buyers said the Obama administration tax credit is bringing them into the market. The survey asked participants if they or someone they knew was facing foreclosure and what steps did they take: 20% said they haven't done anything; 22% have not done something now but plan to take advantage of the Making Homes Affordable program before it expires; 37% talked to their lender about a modification; 44% asked about a refinance; and 26% have or are planning to refi in the Making Homes Affordable program. Only 28% said they believe the program is working, compared with 41% who said it isn't.

The share of new mortgage applications for government-insured products is at its highest point since 1990, the Mortgage Bankers Association said. Based on data from its Weekly Applications Survey, the share of borrowers seeking Federal Housing Administration and Veteran's Affairs program loans for June 2009 is 36%, its highest level since November 1990, and up from 26% in May and 27% in June 2009. Almost four years ago, the share of FHA/VA applications was under 6%, in August 2005, the lowest since MBA started collecting this data in January 1990. Purchase applications for the government products made up just less than 39% of total purchase application volume; the average for the year was just under 37%. The split between conventional and government product applications on the refinance side, MBA said, has been more volatile, with FHA/VA refi applications going from over 38% in October 2008 to under 20% for most of this year. "Recent increases in mortgage rates have caused conventional refinance activity to drop much more sharply than government-insured refinance activity due to a combination of credit and LTV requirements. As a result, the government-insured share of refinance applications climbed to 33.6% in June," said Orawin Velz, MBA's associate vice president of economic forecasting.

The average rate for a 30-year fixed-rate mortgage dropped during the week ending July 9 to 5.20% from 5.32% the previous week, according to the Freddie Mac Primary Mortgage Market Survey. The benchmark 10-year Treasury yield also has dropped notably in the past day or so and at noon was at levels near 3.4%, suggesting that rates may continue to decline. Bankrate's latest Rate Trend Index survey indicated the largest percentage of respondents — 44% — anticipate mortgage rates will remain relatively stable for the next 30-45 days while 37% believe they will fall. The remaining 19% of survey respondents expect rates to rise. Freddie Mac chief economist Frank Nothaft and other experts cite renewed signs of economic weakness as the catalyst for the latest weekly drop in mortgage rates. Rates remain below where they were a year ago. The average 30-year FRM rate was 6.37% at that time, according to Freddie Mac. During the latest week, the average 15-year FRM rate slid to 4.69% from 4.77% the previous week and 5.91% a year ago; the average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage was 4.82%, down from 4.88% the previous week and 5.82% a year ago; and the average one-year Treasury ARM rate was also 4.82%, down from 4.94% the previous week and 5.17% a year ago. Average points were 0.7 for FRMs and 0.6 for ARMs.

World Alliance Financial Corp. has halted the origination of all new reverse mortgages at its Long Island-based subsidiary, Senior Lending Network, after failing to find a buyer for the division. A source familiar with the matter said a Delaware bank had agreed to buy Senior Lending Network — whose pitchman is actor Robert Wagner — but the sale fell apart last week. SLN started out several years ago selling reverse mortgage leads to loan brokers but then moved into loan production. World Alliance is owned by the Belgium-based KBC Group. SLN executive vice president Jean Noble confirmed the production shutdown but stressed that it will continue to service its portfolio of reverse loans which totals about 19,000 units. Roughly 140 workers were laid off. She said the company is continuing to look at "opportunities" and is talking to investors about raising capital. She confirmed that a sale of SLN had fallen apart but declined to name the institution. SLN originated reverses under the Federal Housing Administration Home Equity Conversion Mortgage program. SLN ceased taking new applications on July 7.