Origination

Primary insurance-in-force among the nation's mortgage insurers fell to $937 billion in March, a slight decline from the pervious month, according to new figures released by the Mortgage Insurance Cos. of America.The decline, however slight, means MI firms are not writing enough new policies to replace the ones running off. In March, the nation's six active MI firms wrote $9.9 billion of primary new insurance, compared to $8.5 billion in February. A very small percentage of the policies were "bulk" in nature. The MI industry is facing a competitive threat from the boom in FHA/VA-backed loans. Meanwhile, the cure/default ratio improved for the second consecutive month, going from 75.5% in February to 83.2% in March, its best performance in a year. There were 69,931 cures and 84,042 defaults in March.

Guaranty Bank of Milwaukee on Friday confirmed that it will exit the wholesale lending channel. The bank originates loans through a subsidiary called GB Mortgage, which is based in Austin, Texas. No origination figures were available at press time but it's believed that GBM was not a very large player in wholesale. In a statement the bank said it will continue to fund loans through its retail channel "which remains unaffected by this change."

Thanks to interest rates that were at or near historical lows, residential mortgage lenders saw their loan production jump by 36% in the first quarter, according to preliminary survey figures compiled by National Mortgage News and the Quarterly Data Report.If the final results match the early results, it means the industry could wind up producing $714 billion in home mortgages in 1Q. In the year-ago quarter mortgage bankers funded $525 billion. If that run-rate holds mortgage bankers could fund close to $2.8 trillion this year. Moreover, according to interviews with some top ranked lending shops a large percentage of new loan applications are for refinancings — not new home purchases. A spokesman for Chase of Iselin, N.J., said 80% of its originations in 1Q were refinancings. Chase is a subsidiary of JPMorgan Chase.

Benefiting from historically low interest rates and a refinancing boom, Fannie Mae issued $87.8 billion in mortgage-backed securities in March, nearly doubling the previous month's volume. The last time MBS issuance was this high was in 2003. The mortgage giant's refinancing volume totaled $77 billion in March, nearly double February's total. And in April, Fannie began accepting refinancings that lenders are originating under the guidelines of President Obama's Making Home Affordable program. "We expect that the MHA program will bolster refinance volumes over time as major lenders adopt necessary system changes and consumer awareness continues to build," Fannie said. Fannie and Freddie are expected to refinance 4 million to 5 million homeowners under the President's program. Despite the surge in new business, Fannie reported that its ratio of "seriously delinquent" loans is continuing to rise. The percentage of loans 90 days or more past due rose 19 basis points during the month of February to 2.96%, compared to 1.1% a year ago. (The delinquency figures lag by a month.) Fannie will report March delinquencies in its next monthly report. Freddie has already reported its serious delinquency rate: 2.29% for March.

Accredited Home Lenders of San Diego, once a top ranked subprime lender, is expected to file for bankruptcy protection in Delaware, perhaps as soon as this afternoon, according to a source close to the matter.According to company notes provided to National Mortgage News it appears that Accredited will go into liquidation and will auction off its servicing platform. The lender, which was bought by Lonestar Funds, a hedge fund company, two years ago, at last check had about $6 billion in servicing rights on its books. The source said that Accredited Home Lenders (a holding company) and "certain affiliates and subsidiaries" will file voluntary petitions under chapter 11 of the bankruptcy code and then "commence an orderly wind-down of operations." Accredited, the source said, decided to liquidate "as a result of extremely challenging market conditions and the desire to conduct an orderly wind-down and disposition of assets." The lender is currently trying to sell its real estate owned (REO) portfolio. The source said the company is promising its borrowers that "there will be no disruption" for them in regard to the servicing of their loans. Accredited's board of directors is prepared to name Meade Monger of AlixPartners as its chief restructuring officer, the source said.

Washington Real Estate Investment Trust, Rockville, Md., has priced its 5 million share public offering of common stock at $21.40 per share. The transaction is expected to close on May 5, 2009. WRIT has granted the underwriters a 30-day option to purchase an additional 750,000 common shares. The company estimates that the net proceeds from this offering will be approximately $102.6 million and will be used to repay borrowings outstanding under WRIT's line of credit and for general corporate purposes. Wachovia Capital Markets LLC, Citi and Raymond James & Associates Inc. are joint book-running managers. J.P. Morgan Securities Inc. is a co-lead manager and Robert W. Baird & Co., Credit Suisse Securities (USA) LLC, RBC Capital Markets Corp., BNY Mellon Capital Markets LLC and Morgan Keegan & Co. Inc. are the co-managers for the offering. WRIT was trading at $20.98 per share, down $1.33, in early afternoon trading on April 30.

The Georgia Department of Banking and Finance issued Cease and Desist Orders to two mortgage companies that were unlicensed to do business in the state. The first order was issued to Kalle Kivinen, doing business as Loan Restructuring Solutions in Chandler, Ariz. The second order went to Atlanta Loan Modifications Inc. of Alpharetta, Ga. Both of these orders were issued after the Department obtained evidence that both Atlanta Loan Modifications and Mr. Kivinen through Loan Restructuring Solutions were engaged in mortgage broker/lending activities without a license. According to Rod Carnes, deputy commissioner for non-depository financial institutions, these orders "only indicate that they were not licensed in the state. This action is just for Georgia." Mr. Carnes would not comment on how investigations of these two companies came about, nor would he comment on whether the entities were engaged in fraudulent activity. Mr. Kivinen, who is still doing business through Loan Restructuring Solutions — though not in Georgia — did not return calls seeking comment.

The credit crisis has impacted commercial mortgage banking revenues at Southwest Georgia Financial Corp., Moultrie, Ga., which saw a 54.3% decline in the first quarter of 2009. The bank holding company generated $313,000 in income from mortgage banking services in the first quarter of 2009, compared to the $685,000 generated the same time a year prior. According to the company, the drop in revenue was due to the credit crisis restricting mortgage loan funding opportunities. "Our first quarter results reflect the challenging economic environment that continues to negatively impact us," said DeWitt Drew, the company's president and chief executive, adding that the company increased its loan loss provision. "However, we are encouraged by the 19% increase in total loans year-over-year."

According to a study by Freddie Mac of its own portfolio, refinancings during the first quarter are on track to reduce consumer mortgage payments by $2.5 billion in the coming year. "The payment savings from 'rate-and-term' refinancing done during the quarter is about $160 a month on a $200,000 loan and in aggregate this adds up to about $2.5 billion," said Freddie Mac chief economist and vice president Frank Nothaft. Half of all borrowers who refinanced their loans during the period lowered their interest rate by at least 20%, according to Freddie Mac. The median ratio of new-to-old mortgage rate was 0.80 in the quarter and this marked the lowest ratio since the third quarter of 2003, Freddie Mac said. The government-sponsored enterprise added that this corresponds to a new interest rate that is about 1.25 percentage points below the old rate. Refinances in which the resulting new loan amounts were at least 5% higher than paid-off first-lien mortgage balances fell to a five-year low of 42% during the period. The volume of home equity loans and lines of credit rolled into the first lien during refinance increased during the first quarter to $7 billion in second-lien debt consolidations from $4.7 billion the previous three-month period, according to Freddie deputy chief economist Amy Crews Cutts. "Because second liens generally carry higher interest rates, the consolidation of $11.7 billion into a lower-cost first lien provides about $200 million in interest savings over the next year to these households," she said.

The average rate for a 30-year fixed-rate mortgage dropped slightly to match a Freddie Mac Primary Mortgage Market Survey-record low. Freddie Mac chief economist Frank Nothaft said the industry might be near a bottom, adding, "Rates for fixed-rate mortgages hovered at record lows this week as ARM rates eased further." The average 30-year FRM rate during the week ended April 30 was 4.78%, down from 4.8% the previous week and 6.06% a year ago; the average 15-year FRM rate remained unchanged for the third week in a row at 4.48% and was down from 5.59% a year ago; the average five-year Treasury-indexed hybrid adjustable-rate mortgage rate was 4.8%, down from 4.85% the previous week and 5.73% a year ago; and the average one-year Treasury ARM rate was 4.77%, down from 4.82% the previous week and 5.29% a year ago. Mr. Nothaft cited as the "most important" evidence the housing market may be moving toward a bottom is a drop in the inventory of unsold new homes to a low not seen since 2002. Among other indicators, he also noted that the Standard & Poor's/Case-Shiller 20-city composite home price index did not show a record year-over-year decline for February, the first time there was not a larger decrease since December 2006.