Origination

Nearly six in 10 American homeowners believe their primary residence lost value during the past 12 months, according to the Zillow First Quarter Homeowner Confidence Survey. Based on its own studies, the Seattle-based firm states 80% of homes across the country lost value during the past 12 months. Additionally, 18% believe their home gained value during that time frame, and 22% believe its value remained the same. That resulted in a Zillow Home Value Misperception Index of five, which is the lowest it has been since Zillow introduced the index in the second quarter of 2008. This is down from 10 in the fourth quarter of 2008. A Misperception Index of zero would mean homeowners' perceptions' were in line with actual values. Approximately three-quarters of those surveyed felt their home would not decline in value in the coming six months, while 27% think their home's value will increase; nearly half (47% percent) believe their home's value will remain the same. Stan Humphries, Zillow's vice president of data and analytics, said, "While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well." He added one-third of survey respondents are poised to sell at the first sign of stabilization. This could bring new inventory into the market and keep home prices down.

Bond yields and Thursday's weekly rate reports paint a mixed picture for current rates as well as future rate direction. According to the Freddie Mac Primary Mortgage Market Survey for May 14, mixed employment statistics released May 8 had little effect on the average rate for fixed-rate mortgages that dominate the market, boosting it slightly to 4.86% from 4.84% the week before; but the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages and one-year Treasury ARMs dropped to 4.82% from 4.90% and 4.71% from 4.78%, respectively. Points for all these mortgage types during the week ended May 14 were 0.6. "The economy lost 539,000 jobs, less than the monthly job loss of the past five months, and the unemployment rate rose to 8.9%," said Frank Nothaft, Freddie Mac vice president and chief economist. Bankrate's national survey on May 14 indicated 30-year rates have averaged about 5.21%, down from last week's 5.27%. Credit Suisse's Mortgage Market Focus on May 14 estimated mortgage rates at 4.72%, sharply lower from 4.91% reported on May 8. The primary/secondary market spread has been about 82 basis points "but is expected to remain volatile and could move wider," Credit Suisse researchers said.

The Treasury Department is reopening its Capital Purchase Program for six months so small banks can get another shot of capital and increase their lending capacity. Current CPP recipients and other small banks with less than $500 million in assets can apply for capital assistance that will be funded through the Troubled Asset Relief Program. "In addition, we will extend the deadline for small banks to form a holding company," which is a prerequisite for applying for the capital assistance, Treasury secretary Timothy Geithner said. "Both the window to form a holding company and the window to apply or re-apply for CPP will be open for six months," he added. The Treasury secretary also told the Independent Community Bankers of America that the Obama administration is working on regulatory reform that will simplify and consolidate the oversight of financial institutions and provide better supervision in the consumer area. The new rules will be sensible, conservative and apply to all lenders so there is a level playing field. The administration also wants "greater simplicity" in core financial products. "We want a standardized, simple product that consumers can choose to opt out of to meet their individual needs," Mr. Geithner said.

The attorney for Countrywide Financial Corp. founder and former CEO Angelo Mozilo acknowledged that civil SEC charges could be brought against his client but said there is no "fair basis" for them. As reported by The Wall Street Journal late Wednesday, staff at the Securities and Exchange Commission has recommend filing civil fraud charges against Mr. Mozilo, but it is unclear what those charges might entail. The SEC has been investigating his insider stock sales which totaled more than $300 million during his last three years as head of the company. In the past Mr. Mozilo has stated that his sales were disclosed publicly and made in accordance with SEC rules. Mr. Mozilo's attorney David Siegel issued a statement that said, "We do not believe there is any fair basis for allegations to be made against Mr. Mozilo. All of Mr. Mozilo's stock sales were made in compliance with properly prepared and approved trading plans and reflected recommendations by his financial advisor over a long period of time. The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings." Mr. Mozilo retired from the company on July 1 when it was sold to Bank of America for about $4 billion. Its shares once traded as high as $45 but by the time BoA bought the company it was only selling for a few dollars a share. Mr. Mozilo co-founded the lender in the 1960s with then partner David Loeb. CFC was once the nation's largest overall residential lender/servicer and the largest funder and servicer in the subprime sector.

Staff at the Securities and Exchange Commission have recommended filing civil fraud charges against Angelo Mozilo, the co-founder of Countrywide Financial Corp., The Wall Street Journal reported Wednesday afternoon. The newspaper quoted sources "familiar with the investigation." Mr. Mozilo, who lives in Granada Hills, Calif., not too far from the old Countywide headquarters, could not be reached for comment. His telephone number is not listed. It was widely known that the agency was investigating his insider stock sales over a three-year period. He retired from the company on July 1 when it was sold to Bank of America for about $4 billion. Its shares once traded as high as $45 but by the time BoA bought the company it was only selling for a few dollars a share. Mr. Mozilo co-founded the lender in the 1960s with then-partner David Loeb. His stock sales, which were publicly disclosed, totaled more than $300 million. CFC was once the nation's largest overall residential lender/servicer and the largest funder and servicer in the subprime sector.

Roughly 1,650 former employees of Mortgage Lenders Network will divide a $2.7 million settlement from the bankrupt subprime lender under a settlement approved by a Delaware judge. The privately held Connecticut B&C lender failed to provide the required 60-day warning notice to employees that it would close, said their lawyer, Charles Ercole of Klehr, Harrison, Harvey, Branzburg & Ellers of Philadelphia. The lender had argued in bankruptcy court that the federal Worker Adjustment and Retraining Notification Act allows companies not to give the notice if business conditions change too quickly. Former workers could receive a check from the bankruptcy court by late summer.

Mortgage Warehouse Network, Houston, is rolling out turnkey operations aimed at helping depositories enter the underserved warehouse-lending arena. Company chief operating officer Jeff White said its services consist of everything but "pushing the button on the wire for the bank." MWN said it provides the back office and systems, plus experienced personnel, while the bank controls the credit parameters. The warehouse-lending sector has been in the throes of a severe credit crisis because many banks and Wall Street firms have left the business or been unwilling to lend because of high capital requirements and eroding home values. The target bank for Mortgage Warehouse Network is one with $5 million in capital and willing to leverage it on a 10-to-one basis.

ICBA Mortgage, a subsidiary of the Independent Community Bankers of America, originated $7.2 billion of residential loans during the first quarter, nearly triple its production volume of a year ago."These numbers are a dramatic indication that community bankers are regaining lost market share in the residential mortgage arena," said David Petro, president and chief executive of ICBA Mortgage. In Q1 refinancings comprised 80% of the mortgages originated by the 1,200 participating banks. The loans are funded through Fannie Mae, Freddie Mac, and Taylor, Bean & Whitaker. Of the loans funded through TBW, 40% were FHA-insured.

Commercial and multifamily mortgage loan originations continued to drop in the first quarter of 2009, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. "In the first quarter of 2009 we saw the effects of the continued recession coupled with little demand from borrowers and a constrained supply from lenders as a result of the credit crunch," said MBA's vice president of commercial real estate research Jamie Woodwell. "The net result was low levels of new originations." First quarter originations were 70% lower than during the same period last year and 26% lower than during the fourth quarter of 2008. The year-over-year decrease was seen across all investor groups and most property types. Decreases in total commercial/multifamily mortgage originations continued to be led by a drop in commercial mortgage-backed security conduit loans.

There has been a modest increase in demand for home purchase loans, but the drop-off in demand for refinances had more of an effect on the Market Composite Index, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. For the week ended May 8, the MCI — an overall measure of mortgage applications — was 895.6, a decrease of 8.6% on a seasonally adjusted basis from 979.7 one week earlier. The refinance share of mortgage activity decreased to 71.9% of total applications from 74.4% the previous week. The Refinance Index decreased 11.2% to 4588.6 from 5169.3 the previous week and the seasonally adjusted Purchase Index increased 0.5% to 265.7 from 264.3 one week earlier. On an unadjusted basis, the MCI decreased 8.1% compared with the previous week and increased 28.4% compared with the same week one year earlier. Adjustable-rate mortgages accounted for 2.3% of applications up from 2.1% for the previous week, the MBA said. There was a very slight decrease in the average contract interest rate for 30-year fixed-rate mortgages to 4.76% from 4.79%, with points (including the origination fee) increasing to 1.18 from 1.11 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.