Origination

The yield on the benchmark 10-year Treasury has been creeping up again and at mid-day was at 3.4%, putting upward pressure on mortgage rates. It's the first time in several months that the yield on the 10-year has been that high. On Thursday the 10-year closed at 3.2%. "The Treasury market suffered a severe sell off," Jefferies & Co. said in a Friday morning report. The report said some of the selling was the result of concern over Standard & Poor's decision to put the United Kingdom on negative watch from a ratings perspective, which put pressure on U.K. government bonds. Comments made by influential investment fund executive Bill Gross also hurt the market. Mr. Gross predicted that the U.S. may "eventually" suffer the same fate as the U.K.

A group of private equity investors led by former North Fork Bank chief John Kanas bought ailing payment option ARM investor BankUnited of Florida in a federally assisted transaction where the government could share in losses on up to 84% of its assets. Several different private equity funds are part of the investor group including one headed by Wilbur Ross, who has already bought two large residential servicing companies, both on the cheap. One investment banking source said BU's $4.9 billion in payment option ARMs might eventually be serviced by Mr. Ross' American Home Mortgage in Irving, Texas. Another investor in the consortium is Centerbridge Capital Partners, which owns Green Tree Servicing of Minneapolis. The Kanas group bought the $12.8 billion asset BankUnited FSB of Coral Gables (along with $8.3 billion in non-brokered deposits) Thursday night for $900 million. Other investors in the Kanas group include: Carlyle Investment Management, Blackstone Capital, the LeFrak Organization, The Wellcome Trust, Greenaap Investments, and East Rock Endowment Fund. The Federal Deposit Insurance Corp. had been entertaining bids on BankUnited for several weeks. On Thursday night the Office of Thrift Supervision officially took control of the thrift and handed it over to the FDIC. Its failure will cost the government insurance fund at least $5 billion. Two other investors bidding for the thrift included J.C. Flowers & Co., and Toronto-Dominion Bank of Canada. North Fork Bank was sold to credit card giant Capital One three years ago.

The Department of Housing and Urban Development has kicked 102 lenders out of the Federal Housing Administration single-family program for various violations and the new housing secretary is promising to get tough on lenders that do not meet the highest standards of conduct. "We expect that when they deal with an FHA-approved lender, they're dealing with a lender they can trust," HUD secretary Shaun Donovan said. In one action, HUD's Mortgagee Review Board suspended Hogar Mortgage and Financial Services from making FHA loans for five years and imposed a $151,000 civil money penalty on the Montvale, N.J. lender. The company could not be reached for comment. The Mortgagee Board determined that Hogar committed serious violations of FHA underwriting requirements. Prior to its suspension in late January, the New Jersey lender had originated 680 FHA loans over the previous two years with 19 defaulting or resulting in a claim. The average FHA default and claim rate is 4.43%, according to the FHA's Neighborhood Watch early warning system. The housing bill (S. 896) that President Obama signed on Thursday imposes stricter reviews of lenders seeking to become FHA-approved lenders. It allows HUD to levy CMP against non-approved lenders participating in FHA originations. The new law requires all FHA lenders to use their official names on advertisements as a way to deter and detect deceptive advertising.

The Nasdaq has sent a letter to Stratus Properties Inc., Austin, Tex., which said the company's common stock is subject to delisting from the exchange for failure to file its financial reports in a timely manner. Stratus did not file its 2008 10-K report by an extended deadline of May 14, nor did it file its first quarter 2009 10-Q by May 11. Stratus said it would request a hearing with Nasdaq to seek an exception period in which to complete its filings and thereby regain compliance with the listing standard. This request will automatically suspend the delisting for 15 calendar days from the deadline to request a hearing, or until June 8, 2009. However, Stratus also intends to request a further stay on the delisting of its common stock. Hearings are typically held within 30 to 45 calendar days from the request. The reason for the filing delay is that following the third quarter, Stratus determined that the manner in which it had previously accounted for certain interest costs was not in accordance with SFAS 34. Stratus had historically excluded interest costs related to financing of operating properties from interest eligible for capitalization, resulting in such interest costs being charged to expense.

Priority Mortgage, Brookfield, Wis., will merge its operations into American Foundations MortgageBanc, which also is based in Brookfield. American Foundations is a subsidiary of Generations Bancorp Inc., Pewaukee, Wis. Priority has been the mortgage partner for First Weber Group, a Wisconsin real estate firm. After the deal is completed, American Foundations and First Weber will enter into a strategic alliance. Until its acquisition by Generations, American Foundations had been known as Amerihome Mortgage LLC. American Foundations generates loans through retail, wholesale and Internet channels. Besides its Wisconsin offices, it has offices in Massachusetts and Illinois.

The average rate for the 30-year fixed-rate mortgages that dominate the market for the week of March 21 slid slightly to 4.82% from 4.86% for the previous week, according to the Freddie Mac Primary Mortgage Market Survey. Other common loan types' rates also inched downward with the exception of one-year Treasury-indexed adjustable-rate mortgages, where the average rate increased to 4.82% from 4.71%. One-year and five-year hybrid Treasury ARMs had 0.6 points on average while 30- and 15-year FRMs had 0.7 points on average. "Long-term fixed-rate mortgage rates have remained below 5% for the past 10 weeks as the U.S. Treasury and Federal Reserve ... act to keep interest rates low through security purchases," said Frank Nothaft, Freddie Mac vice president and chief economist.

Fannie Mae plans to put in place a new head of its single-family mortgage business on June 1 ahead of a retirement set to take place at the end of the month. The government-sponsored enterprise said Karen Pallotta, Fannie's senior vice president, product acquisition strategy and support, is slated to take the post at that time. Thomas A. Lund, executive vice president, single-family mortgage business, plans to retire from the company on June 30.

President Barack Obama has signed two housing bills that will provide relief for troubled homeowners that need to refinance, and will crack down on mortgage fraud. The Helping Families Save Their Homes Act addresses the "administrative and technical hurdles" that make it difficult for families with underwater mortgages to use the Hope for Homeowners program and refinance into Federal Housing Administration loans, according to the President. "This bill removes those hurdles, getting folks into sustainable and affordable mortgages, and more importantly, keeping them in their homes," he said at a White House signing ceremony. The bill (S. 896) also shields mortgage servicers that modify loans from investor lawsuits. The President also praised the mortgage fraud bill (S. 386), which doubles the resources of the FBI to pursue mortgage fraud and other financial crimes. He noted the bill expands the federal bank fraud and false claims statutes to cover independent mortgage companies and mortgage brokers. "It expands the Department of Justice's authority to prosecute fraud that takes place in many of the private institutions not covered under current federal bank fraud criminal statutes - institutions where more than half of all subprime mortgages came from as recently as four years ago," Pres. Obama said.

The Treasury Department is prepared to lend roughly $7 billion to GMAC Financial Services, the parent company of the nation's sixth largest residential servicer, according to published reports. At press time both Treasury and GMAC officials were not commenting on the matter. Wire reports say such a loan would be a step toward making GMAC a quasi-federal company. GMAC has already received $5 billion in TARP funds and needs to raise an additional $11.5 billion in equity within six months. GMAC is a bank holding company. It recently changed the name of its depository to Ally Bank from GMAC 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. The government now owns 5 million shares of GMAC and recently told the lender that it must extend financing to bankrupt Chrysler Corp.

Fannie Mae plans to put in place a new head of its single-family mortgage business on June 1 ahead of a retirement set to take place at the end of the month. The government-sponsored enterprise said Karen Pallotta, Fannie's senior vice president, product acquisition strategy and support, is slated to take the post at that time. Thomas A. Lund, executive vice president, single-family mortgage business, plans to retire from the company on June 30.