Origination

Sales of existing single-family homes rose 2.5% in April from the previous month but new figures show that the supply of existing condominiums and cooperatives for sale is continuing to grow again and now stands at 15.1 months, the highest reading since October. Condominium prices are down 17.3% from last year with single-family units declining 14.9% in value. According to figures released by the National Association of Realtors, first-time home buyers are driving the market, snatching up units at a steep discount from years past. The trade group says the national median home price is now $175,200 — a 12.4% decline from a year ago. (The figure includes both condos and single-family detached units.) In April existing homes sold at an annualized rate of 4.18 million in units, an increase from March but a 2.8% decline from April 2008. When condos and cooperatives are factored in all home sales averaged 4.68 million units, a 2.9% increase from March but a 3.5% drop from the same month last year. NAR chief economist Lawrence Yun says the housing market appears to be stabilizing but noted that the jumbo market has stalled.

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The Department of Housing and Urban Development soon will issue guidance enabling FHA-approved lenders to provide short-term "bridge loans" to borrowers who are eligible for a one-time $8,000 first-time homebuyer tax credit. HUD issued a mortgagee letter on May 12 outlining a program that enabled borrowers to use tax credit funds toward downpayment and closing costs. But HUD took the letter off its website a few hours later — after the Office of Management and Budget objected. Apparently HUD had not consulted with OMB officials on the issue. Meanwhile, HUD has drafted new guidance that is expected to be posted any day now, according to sources. HUD secretary Shaun Donovan told the National Association of Realtors on May 12 that FHA approved-lenders, nonprofit housing groups, as well as state and local government entities would be permitted to "monetize the tax credit through short-term bridge loans." HUD expects these bridge loans will help more borrowers to become homeowners. The department also wants to prevent lenders from abusing the program by charging FHA first-time homebuyers excessive fees and rates.

National housing prices fell 11.5% as of March compared to a year ago, a slight improvement from an 11.7% annual decline as of February, according to new data from First American CoreLogic and its LoanPerformance Home Price Index While declines are slowing in states that have had the highest declines over the past three years, they are accelerating in places that have been experiencing only moderate decreases. "The problems are no longer confined to a handful of 'Sand States,'" said Mark Fleming, chief economist for First American CoreLogic. "Homeowners in many parts of the country are coming under stress from a loss in equity, rising delinquencies and foreclosures. This is particularly pronounced in more expensive neighborhoods where the median value of all properties is over $1 million." Roughly 33 states have exhibited acceleration in the rate of price declines in the last three months, and 14 states exhibited double-digit annual declines as of March - up from seven states a year ago. Nevada (-25.9%) remained the top ranked state for annual price depreciation, followed by California (-24.9%). Price declines in both states appear to be decelerating as California's decline was the smallest since March 2008 and Nevada's was its smallest decline in six months. Rhode Island (-21.2%) jumped to third and is currently the only state among the top five that continues to experience a consistent acceleration in price declines. Florida (-21.1%) and Arizona (-20.7%) round out the top five annual price depreciation states.

Home prices fell 18.7% in March from a year ago, according to Standard & Poor's/Case-Shiller 20-city house price index, which has declined 32.2% since the second quarter of 2006. Despite the plunge, the rate of decline in prices appears to have stabilized in the first quarter at a record 19.1%. The annual decline in January was 19% and 18.6% in February. Freddie Mac economists are forecasting that house price declines will slow in the coming quarters. They expect the S&P Chase-Shiller National HPI will decline by 14% in the second quarter and by 10% in third quarter. Overall, house prices will decline by 12.8% in 2009 and by another 3% in 2010, according to Freddie.

Freddie Mac has begun marketing its first multifamily securitization package as part of an effort to increase liquidity in the apartment loan sector. The first offering of the new Series K-003 structured pass-thru certificates involves 62 highly rated multifamily mortgages totaling $1.06 billion. Deutsche Bank Securities is the lead underwriter for the securities, that will price and be settled during the second week of June. "Freddie Mac is responding to difficult conditions in the multifamily housing finance market by finding innovative ways to link affordable rental housing to the capital markets," said Mike May, senior vice president for multifamily housing. Freddie capital markets vice president David Brickman noted that Deutsche Bank is selling the A-1 through A-5 senior classes to the public with 20% subordination. The senior classes along with A-6 (a subordinated class representing 12.5% of the deal) are guaranteed by Freddie. A subordinated bond (7.5% of the deal) was sold privately. Freddie has another $1 billion of mortgages in the pipeline but the next securitization has not been scheduled. "It is going to be a growing product of ours," Mr. Brickman said, and "people can expect a steady stream of deals."

A Taylor, Bean & Whitaker-led rescue of Colonial Bancgroup -- the nation's largest warehouse lender -- was set to be finalized by Friday evening, according to TBW chairman Lee Farkas. In an interview with National Mortgage News Mr. Farkas said "it looks like it's going to go through, yes." TBW is waiting on final signed documents from some of its partners. He noted that Colonial was preparing a press release about the deal and that TBW's other investors in the $300 million capital infusion would be revealed. With the cash infusion finalized, Colonial will then be eligible for $550 million in Troubled Asset Relief Funds from the Treasury Department. At the end of March Colonial was the nation's largest warehouse provider with $4 billion in commitments, according to NMN. Mr. Farkas likely will sit on Colonial's board. He noted that the bank will most definitely continue as a warehouse provider. "It's a good business for them," he said. "They made good money on it last year." Colonial also is a warehouse lender to TBW, the nation's eighth largest residential funder, according to the Quarterly Data Report. Over the past few weeks some analysts that follow the bank raised concerns that the deal might not go through. The Alabama-based bank reported a net loss of $168 million for the quarter ended March 31. Late this past week its shares were trading at $1.36 compared to a 52-week high of $10. It has been burned by a severe downturn in the commercial construction lending, especially in the southeast.

The first quarter financial improvements at U.S. banks, in large part driven by mortgage origination activity, will be difficult to maintain as credit losses continue to rise, a report from Fitch Ratings, New York declared. The increases in what Fitch called "market-driven revenues" that come from mortgage originations and fixed income trading are not likely to persist. "It appears that the industry is poised for another strong quarter in mortgage originations, although revenues from this business are presently expected to slow, possibly materially, in the second half of 2009," Fitch said. The rating agency added banks are likely to see continued increases in loan delinquencies, non-performing assets and net charge-offs for several quarters to come because of the uncertain economy.

The Treasury Department has agreed to invest $7.5 billion in GMAC Financial Services, the parent company of the nation's sixth largest residential servicer. Announced late Thursday, the investment is coupled with Federal Deposit Insurance Corp. approval for GMAC to sell newly issued senior unsecured debt with government backing. GMAC has already received $5 billion in TARP funds. Until the new investment was extended, GMAC was on the hook to raise $11.5 billion of capital within six months. Now it needs to raise $5.6 billion, it said. GMAC is a bank holding company. It recently changed the name of its depository to Ally Bank from GM Bank. Ally makes warehouse lines of credit to non-depository mortgage firms. Over the past year GMAC has closed the retail branch arm of its Residential Capital Corp. affiliate and exited the wholesale channel. Over the past year ResCap's owned servicing portfolio has fallen by 20% to $365 billion in housing receivables, according to the Quarterly Data Report. In other TARP-related news, a new report from Morgan Stanley says many banks will repay their government bailout funds by the fourth quarter of 2009.

The Senate confirmed Michael Barr as Treasury assistant secretary for financial institutions where he will play a key role in reforming the nation's mortgage finance system. A former professor of law at Michigan University and senior fellow at the Brookings Institution, Mr. Barr served as a special assistant to former Treasury secretary Robert Rubin in the Clinton administration. He has been working in the White House since January and is now the only confirmed Treasury official working in the agency's Office of Domestic Finance. At a congressional hearing, Treasury secretary Timothy Geithner said ODF will devise a new financial regulatory structure and work on "tough problems" including the future of Fannie Mae and Freddie Mac. Mr. Geithner also noted that Treasury plans to release proposals for regulatory reform in the coming weeks. The administration is considering the creation of a consumer protection agency that might regulate all mortgage lending with enforcement powers of all residential funders regardless of charter. But the secretary stressed that he has not committed to that concept yet.