Origination

The weakening economy and continued credit crunch led to increases in commercial/multifamily mortgage delinquencies during the first quarter of 2009, according to new figures released by the Mortgage Bankers Association. Between the fourth quarter of 2008 and first quarter of 2009, the 30-plus day delinquency rate on loans held in CMBS rose 68 basis points to 1.85%. The 60-plus day delinquency rate on loans held in life insurance company portfolios rose 5 basis points to 0.12%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 4 bps to 0.34%. According to the MBA, the 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 8 bps to 0.09%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 66 bps to 2.28%. "Delinquency rates on commercial and multifamily mortgages held by banks and thrifts, by Fannie Mae and in commercial mortgage-backed securities are all now at levels higher than at any time since the 2001 recession," said Jamie Woodwell, vice president of commercial real estate research at the MBA. Mr. Woodwell added that delinquency rates on commercial mortgages held by life insurance companies during 1Q09 remained below the 2001 recession levels.

A forward looking indicator of existing home sales rose 6.7% in April from the previous month, according to the National Association of Realtors. NAR's Pending Home Sales Index hit 90.3 in April, up from 84.6 in March to notch its third consecutive monthly gain. The index tracks the signing of sales contracts even though some deals do not make it to closing. NAR noted that mortgage processing times have increased due to appraisal issues, tighter underwriting, and lender approvals on short sales. The trade group is forecasting that existing home sales will jump to a 5.5 million seasonally adjusted annual rate in the fourth quarter, a 19% gain from 1Q. NAR cites the $8,000 first-time homebuyers tax credit for attracting more buyers. "There is going to be a crush of people in October and November," trying to take advantage of the tax credit before it expires November 30, said NAR spokesman Walter Maloney. NAR's economic forecast shows that home sales hit bottom in the first quarter at a 4.58 million seasonally adjusted annual rate and should end the second quarter at a 4.72 million rate.

Even though loan purchases by Fannie Mae fell by 38% in April its commitment to buy mortgages over the next few months rose by 50%, according to new figures released by the company. This somewhat good news was tempered by rising delinquencies at the government sponsored enterprise. At the end of April, 3.15% of Fannie Mae loans were considered late, compared to 2.96% in March. (A year ago its delinquency rate was just 1.15%.) The company, which is operating under a federal conservatorship, owns roughly $280 billion in alt-A loans, 9.54% of which were considered "seriously delinquent" at the end of March. In April Fannie bought $57.6 billion of mortgages. Year-to-date it has purchased $232 billion and issued $210 billion in MBS. At the end of April its total book of business was $3.137 trillion: $770 billion of on-balance sheet assets, and guarantees of $2.63 trillion.

A mix of non-depository mortgage banking companies and private individuals make up a majority of the private investment group led by Taylor, Bean & Whitaker that will inject $300 million into warehouse giant Colonial BancGroup, Montgomery, Ala., according to a new public filing. Mortgage firms cited in the Securities and Exchange Commission filing include Allied Mortgage Group, American Home Equity Corp., Atlantic Bay Mortgage, Envoy Mortgage, Myers Park Mortgage, Provident Funding Associates, WR Starkey Mortgage and others. Sources say most of these lenders are warehouse clients of the bank. Former Friedman, Billings, Ramsey executive Henry Fan is also part of the investor group, as is Florida developer Tibor Hollo.

Federal banking regulators have issued a proposed rule that sets parameters for federally supervised banks and their subsidiaries to register their loan officers through a national licensing system developed by state regulators. As required by the Secure and Fair Enforcement for Mortgage Licensing Act, mortgage originators working for federally chartered banks and thrifts are required to file background information and fingerprints with the Nationwide Mortgage Licensing System and Registry. Once registered, the loan originator will be assigned a unique identifier that they will carry like a Social Security number for the rest of their careers. The federal agencies are proposing de minimis rules that will exempt institutions that make 25 or fewer single-family mortgages at year from registering their employees. Employees that originate five or fewer loans a year or only engage in loan modifications would be exempt. State licensed originators in 26 states have completed or are in the midst of registering. Once the federal regulators finalize registration requirements, the system will be expanded for federal mortgage originators.

GMAC Financial Services — which controls the nation's fifth largest residential servicer — says it's "business as usual" at the company even though one of its owners, General Motors, filed for bankruptcy protection on Monday. A GMAC spokeswoman stressed that "we have no intention of filing for bankruptcy," adding that GM owns only 10% of the financial services company. GMAC is a bank holding company that a few months ago completed a large restructuring with its bondholders. Hedge fund giant Cerberus Capital owns 22% of GMAC with the U.S. Treasury owning a large piece as well because of a $5 billion TARP investment. Asked if GM might sell its stake in GMAC, the spokeswoman declined to comment.

Federal banking regulators have issued a proposed rule that sets the parameters for federally supervised banks and their subsidiaries to register their loan officers on a national licensing system developed by state regulators. As required by the Secure and Fair Enforcement for Mortgage Licensing Act, mortgage originators working for federally chartered banks and thrifts are required to file background information and fingerprints with the Nationwide Mortgage Licensing System and Registry. Once registered, the loan originator will be assigned a unique identifier that they will carry like a Social Security number for the rest of their careers. The federal agencies are proposing de minimis rules that will exempt institutions that make 25 or fewer single-family mortgages at year from registering their employees. Employees that originate five or fewer loans a year or do only loan modifications would be exempt also. State licensed originators in 26 states have completed or are in the midst of registering on the system. Once the federal regulators finalize their registration requirements, the registry system will be expanded for federal mortgage originators. "This proposal provides for a 180-day period within with to complete the initial registrations after the Registry is capable of accepting registrations from employees of agency-regulated institutions," the federal regulators say in the proposed rule that is being issued for a 30-day comment period.

Housing Secretary Shaun Donovan is "open to suggestions" on how his department can establish higher FHA loan limits for high-cost submarkets. Congress gave HUD discretionary authority under the American Recovery & Reinvestment Act to establish separate loan limits for submarkets in places where prices are "significantly higher" than the median for the county or MSA within which they are located. But in response to a question after his talk at the National Association of Home Builders' spring board meeting in Washington, Sec. Donovan said setting a ceiling for more than 3,300 separate jurisdictions is "already complex enough" without introducing submarkets into the equation. "It's a brain twister at this point," he said. At the same time, though, the secretary said he understood the need for more flexibility in setting the limits and welcomed input on how to implement "a very, very complex" challenge. Past NAHB President Mark Tipton, a builder in Raleigh, N.C., said there are numerous places throughout the country where buyers in high-cost communities don't have access to FHA financing because the houses they want to purchase are located within larger jurisdictions where the overall median is much lower or even depressed because of a large concentration of older or foreclosed properties. The NAHB favors the removal of the high-cost designation altogether and bumping the limit higher for the entire country. But Sec. Donovan said that "could be putting the FHA risk."

Mortgage insurance stocks rallied on Monday as newly released figures showed insurance default rates and "cures" improving. According to the Mortgage Insurance Companies of America, primary insurance cures fell to 58,587 units in April, the lowest monthly reading since January. A loan is considered "cured" when after being declared in arrears the payments become current again. The default ratio (60 days or more late) fell to 81,171 units in April, the lowest reading since October. Even though these were positive indicators for the struggling MI industry, private mortgage insurance applications fell to 60,947 in April, the weakest reading since November (39,098). Traditional MI written fell to $7.8 billion, a 20% sequential decline, and a 60% tumble from April 2008. Still, MI stocks soared Monday - along with the rest of the Dow. Winston-Salem, N.C.-based Triad Guaranty saw its stock price shoot up 36% to 83 cents per share. The PMI Group Inc., Walnut Creek, Calif., experienced a 29% leap in stock price, trading at $2.25 per share. Both Philadelphia-based Radian Group Inc. and Richmond, Va.-based Genworth Financial saw upticks of 10% in their stock prices. And MGIC Investment Corp., Milwaukee, saw its stock price go up by 7%. Old Republic, the healthiest of the nation's MIs, saw its share price increase by 2%.

Colonial BancGroup, the nation's largest warehouse lender, said its chairman and CEO Robert Lowder will retire once Taylor, Bean & Whitaker completes its investment in the bank. Mr. Lowder founded the company in 1981. TBW is a mortgage banking firm based in Ocala, Fla. It is paying two-thirds of the $300 million that will be invested in the Montgomery, Ala.-based Colonial. Until the deal is finalized Mr. Lowder will continue on as chairman, director and CEO of the bank. Under his leadership Colonial completed 68 acquisitions and became the top player in residential warehouse finance.