Origination

The American Bankers Association secondary market program has helped its members sell more than $100 billion in single-family mortgages to preferred investors such as Fannie Mae and CitiMortgage. The trade group's 8-year-old 'Mortgage Solutions' program has "passed a milestone when total deliveries of mortgages surpassed the $100 billion mark," ABA said. In 2008, ABA members sold $9.7 billion in mortgages to their secondary market partners, which also include Freddie Mac, Farmer Mac, and Bank of America Home Loans. Participating banks accrued aggregate savings of $11.6 million last year, ABA said.

Thornburg Mortgage of Santa Fe, N.M., filed for bankruptcy protection late last week, listing debts of more than $1 billion. The filing had been anticipated. The company's fate is now in the hands of its bondholders who are expected to liquidate its assets which include on-balance sheet jumbo mortgages and bonds of at least $17 billion. Its lenders include Credit Suisse, JPMorgan Chase, Greenwich Capital, and Royal Bank of Scotland. Up until last year Thornburg was a publicly traded REIT. Its shares now trade on the "pink sheets" for about one penny. It stopped funding loans last year but continued to service jumbo and super jumbo assets held on its balance sheet.

The National Association of Realtors' 'Pending Home Sales Index' rose in March for the second consecutive month, and the trade group is hoping that this could be a sign that home sales are finally catching fire. However, housing analyst Jack McCabe cautioned this morning that "one month does not make a trend." Moreover, in recent interviews with National Mortgage News, two large lenders - Bank of America and Chase - said that refinancings were accounting for a huge percentage of their originations - and not purchase loans. Still, NAR's index increased to a reading of 84.6 in March, compared to 82 and 80.4 in February and January, respectively. In December the ratio was 87.1. NAR economist Lawrence Yun said it could take "a few months for the market to gain momentum," adding that the second monthly increase "could be the leading edge of first-time buyers responding to" favorable affordability conditions and a national first-time buyer tax credit of $8,000. (In California the tax credit is $10,000.)

The percentage of CMBS loans delinquent by 30 or more days in April skyrocketed to roughly five times its level a year ago, according to Trepp LLC. Thirty-plus day CMBS delinquencies have not ever seen a year-to-year spike like this in the history of the CMBS market, Trepp senior managing director Manus Clancy told MortgageWire. He added that CMBS delinquencies have been accelerating month-by-month since January. Delinquencies during the past two months have been at highs not seen since February 2004 and April's month-to-month jump in delinquencies was the largest seen since November 2001. When asked whether CMBS delinquencies may continue to ramp up, Mr. Clancy said he could not provide a forecast. However, he noted that, "It's a bad sign the fact that they're accelerating. In other parts of the economy people are looking for floors, but this seems to be accelerating." Despite the high delinquency rates, spreads on AAA CMBS eligible for the government's TALF program under new terms added Friday have been tightening, Mr. Clancy said.

Loans with five-year maturities will be available for June funding through the government's Term Asset-Backed Securities Loan Facility to finance purchases of AAA-rated commercial mortgage-backed securities. Previous to this expansion of the program, TALF had only allowed maturities of three years. The Federal Reserve had said in February it could broaden eligible collateral for TALF to encompass other types of newly issued AAA-rated asset-backed securities such as commercial mortgage-backed securities and private-label residential MBS.

Senate Democratic leaders want to pass an FDIC/housing bill on Tuesday but first they have to wade through a number of amendments including one that would require a temporary shutdown of the FHA single-family program if it is headed toward insolvency. The sponsor of the Federal Housing Administration amendment, Sen. David Vitter, R-La., says there are signs that FHA is a "ticking time bomb" and the government should be "very cautious" about expanding the FHA program. "My amendment would simply say that the first duty of the FHA is to maintain solvency," Sen. Vitter said. Industry groups, such as the mortgage cooperative Lenders One, are urging the Senate to reject the Vitter amendment. Shutting down the FHA program would be "devastating to the economy," and "shock" the housing and mortgage markets, Lenders One warns in a letter to the Senate. The FDIC/housing bill (S. 896) includes improvements to the FHA Hope for Homeowners program, legal protections for servicers and increases the Federal Deposit Insurance Corp.'s borrowing authority. The House has passed a similar bill (H.R. 1106). The House version contains a bankruptcy cramdown provision that the Senate has rejected.

The percentage of CMBS loans delinquent by 30 or more days in April skyrocketed to roughly five times its level a year ago, according to Trepp LLC.Thirty-plus day CMBS delinquencies have not ever seen a year-to-year spike like this in the history of the CMBS market, Trepp senior managing director Manus Clancy told MortgageWire. He added that CMBS delinquencies have been accelerating month-by-month since January. Delinquencies during the past two months have been at highs not seen since February 2004 and April's month-to-month jump in delinquencies was the largest seen since November 2001. When asked whether CMBS delinquencies may continue to ramp up, Mr. Clancy said he could not provide a forecast. However, he noted that, "It's a bad sign the fact that they're accelerating. In other parts of the economy people are looking for floors, but this seems to be accelerating." Despite the high delinquency rates, spreads on AAA CMBS eligible for the government's TALF program under new terms added Friday have been tightening, Mr. Clancy said.

An MBIA Inc. subsidiary and LaCrosse Financial Products LLC have filed a lawsuit against two Merrill Lynch entities for misrepresentation and breach of contract in connection with credit default swaps tied to subprime residential mortgages.A spokesman for Merrill, which is now owned by Bank of America, declined to comment on the lawsuit which was filed in New York State Supreme Court. The plaintiffs are seeking rescission and damages. MBIA alleges in the suit that Merrill's "effort to market the CDS contracts to MBIA was part of a deliberate strategy to offload billions of dollars in deteriorating U.S. subprime residential mortgages that Merrill held on its books by packaging them into collateralized debt obligations or hedging their exposure through swaps guaranteed by insurers." The plaintiffs charge that "as a direct result of Merrill Lynch's misrepresentations" and breaches of contract, MBIA now faces expected losses of almost $700 million on four CDOs.

PHH Corp. recorded a $71 million write-down on its mortgage servicing assets for the first quarter, which crimped profits.The Mt. Laurel, N.J., mortgage company reported a decline in net income at the company to $2 million ($0.04 per share) from $30 million ($0.55 per share) for the first quarter of 2008. By segment, mortgage servicing had a loss of $118 million, canceling out the $113 million profit of the mortgage production segment. PHH originated $8.9 billion in the first quarter 2009, down from $10 billion in the same period one year prior. Terry Edwards, president and chief executive, said the mortgage production segment "had its strongest quarter since the spin-off, as we experienced increased refinance volumes" adding that PHH expects this to continue through the summer months. Only 29% of PHH's first quarter 2009 volume was from home purchases. But refinancings drove PHH to the servicing asset write-down as well as forcing it to take a $92 million reduction in the value of its MSRs. The company does not hedge its MSRs.

The deteriorating performance of commercial mortgage-backed securities has resulted in a "dramatic jump" in the transfer of commercial real estate loans to special servicers during the first quarter, according to a Fitch Ratings report.The Fitch CMBS report: "What's in Special Servicing?" shows the dollar balance of specially serviced CMBS loans rose to $23.7 billion in the first quarter, up 48% from the previous quarter. Many of the "loans of concern" are jumbo vintage loans originated in 2006-2007 and Fitch said 20 of the largest specially serviced loans have balances ranging from $360 million to $73.5 million. "Later vintage CMBS transactions are backed by loans originated at the height of the market and are thus susceptible to significant income and value declines," said managing director, Mary MacNeill. Fitch said actual delinquencies remained relatively low at 1.53%. But the number of loans transferred to special servicing "due to imminent default" is growing.