Origination

MGIC Investment Corp., Milwaukee, said it is seeking new capital in order to continue to write new mortgage insurance policies. Curt S. Culver, chairman and chief executive said that while MGIC has yet to pursue raising capital from private sources, it has been in discussions with the U.S. Treasury and the Office of the Commissioner of Insurance of Wisconsin to explore options. The statement came in the company's first quarter 2009 earnings release. MGIC lost $184.6 million ($1.49 per share) during the period, compared with a loss of $34.5 million ($0.41 per share) one year ago; in the fourth quarter 2008, it lost $273.3 million ($2.21 per share). Mr. Culver added that MGIC believes it has adequate capital to pay its insured claims obligations. Losses incurred during the first quarter were $757.9 million, up from $691.6 million for the same period last year. Delinquencies went from 7.68% (5.19% flow, 23.19% bulk) in the first quarter 2008 to 13.51% (10.59% flow, 34.53% bulk) for the first quarter 2009. The amount of primary new insurance written decreased from $19.1 billion for the first quarter of 2008 to $6.4 billion for the most recent period.

To jumpstart the Hope for Homeowners program, the Treasury Department will pay servicers hefty bonuses to use the FHA refinancing program and purchase Ginnie Mae securities backed by H4H loans. "These purchases will increase secondary market liquidity for new Hope for Homeowners loans, supporting additional assistance to homeowners," Treasury says in an update to the Obama administration's loan modification program. Participating servicers are expected to evaluate homeowners that are going through a trial loan modification to see if they can qualify for a principal writedown under the Federal Housing Administration H4H program. If the investor agrees to a writedown, the servicer would receive a $2,500 up-front incentive payment for a successful H4H refinancing, instead of the $1,000 that is paid for a standard loan modification. In addition, "lenders who originate the new H4H loan are eligible for success fees of up to $1,000 per year for up to three years, so long as the refinanced loan remains current," Treasury says.

The Treasury Department has revised the President's loan modification plan to require participating servicers to consider the FHA Hope for Homeowners program as an option and write down the principal amount of the mortgage. "For borrowers where Hope for Homeowners works, it can be a better option for them," because it allows underwater borrowers to re-establish equity in their homes, HUD secretary Shaun Donovan said. If the investor is willing to do a writedown, "that will be first alternative to a modification," the Department of Housing and Urban Development secretary told reporters. The HUD secretary admitted the FHA H4H program is flawed and it has only refinanced 50 homeowners. However, the Obama administration is urging Congress to pass a housing bill (H.R. 1106) to revamp the H4H program and make it a more effective part of the administration's loan modification program. The new HUD secretary also said 11 of the largest servicers have signed up to participate in the President's loan modification program and they are beginning to modify mortgages in private-label securities. "Servicers are moving forward with modifying PLS loans." He also noted that an increasing number of investors are willing to do principal write downs under the FHA program.

Sen. Richard Shelby, R-Ala., has placed on hold on the President's nominee David Stevens to be the new Federal Housing Administration commissioner as the result of a lawsuit against his former employer Long and Foster. The Senate Banking Committee approved four other Department of Housing and Urban Development nominees on Tuesday (April 28) and cleared the way for their confirmation by the full Senate. However, committee chairman Christopher Dodd, D-Conn., did not seek a vote on Mr. Steven's nomination. "Sen. Shelby agreed with chairman Dodd that this matter needs to be thoroughly examined before moving forward with a committee vote on Mr. Stevens' nomination," said a spokesman for Sen. Shelby. The class action lawsuit is understood to involve possible RESPA violations by Long and Foster, which is the largest privately owned real estate brokerage firm. Meanwhile, the committee approved the following HUD nominees: Ronald Sims to be deputy secretary, Helen R. Kanovsky to be general counsel, Peter Kovar to be assistant secretary for congressional and intergovernmental affairs, and John D. Trasvina, to be assistant secretary for fair housing and equal opportunity.

The Senate has passed a bill that expands the bank fraud statutes to cover independent mortgage companies and mortgage brokers and increases funding for federal investigations of mortgage and financial fraud by $165 million. By a vote of 92-4, the Senate approved the Fraud Enforcement and Recovery Act that also expanded federal fraud laws to cover funds involving the $700 billion Troubled Asset Relief Program that is being used to capitalize banks and deal with problem assets. The bill (S. 386) expands the definition of "finance institutions" to ensure mortgage brokers and mortgage companies are held fully accountable under the federal fraud laws. It also makes it a crime for brokers and mortgage bankers to make materially false statements or to willfully overvalue properties to influence any action by a mortgage lending business. The Obama administration supports the bill and the House of Representatives is working on a similar bill. "The legislative enhancements would help the Department of Justice to combat mortgage fraud, securities and commodities fraud, money laundering and related offenses, and to protect taxpayer money that [has] been expended on recent economic stimulus and rescue packages," the White House told the Senate in a statement of administration policy.

Sen. Richard Shelby, R-Ala., has placed on hold on the President's nominee David Stevens to be the new Federal Housing Administration commissioner as the result of lawsuit against his former employer Long and Foster. The Senate Banking Committee approved four other Department of Housing and Urban Development nominees on Tuesday (April 28) and cleared the way for their confirmation by the full Senate. However, committee chairman Christopher Dodd, D-Conn., did not seek a vote on Mr. Steven's nomination. "Sen. Shelby agreed with chairman Dodd that this matter needs to be thoroughly examined before moving forward with a committee vote on Mr. Stevens' nomination," said a spokesman for Sen. Shelby. The class action lawsuit is understood to involve possible RESPA violations by Long and Foster, which is the largest privately owned real estate brokerage firm. Meanwhile, the committee approved the following HUD nominees: Ronald Sims to be deputy secretary, Helen R. Kanovsky to be general counsel, Peter Kovar to be assistant secretary for congressional and intergovernmental affairs, and John D. Trasvina, to be assistant secretary for fair housing and equal opportunity.

All too often when a mortgage product is seen as the "next big thing" loan officers will flock to it in droves hoping for the quick buck. They picture loans falling out of the sky and phones ringing off the hook. When they make the decision to jump into the reverse space, they realize that they truly are dealing with a segment of the population that is unique. To be successful as a reverse mortgage originator, you need to understand what is important to the senior client and how and when they decide to buy.

Data through February 2009 show continued broad-based declines in the prices of existing single family homes across the U.S. with 10 of the 20 metro areas showing record rates of annual decline, and 15 reporting declines in excess of 10% versus February 2008, according to Standard & Poor's Case-Shiller Home Price Indices. The three worst performing cities continue to be in the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31%. Dallas, Denver and Boston faired the best in terms of annual declines down 4.5%, 5.7% and 7.2%. Dallas also had the distinction of being the best performer for the month, returning -0.3%. "We witnessed some deceleration in the rate of decline in some of the markets," says David M. Blitzer, chairman of the index committee. "All 20 metro areas recorded a decline in February, but 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. We will certainly need a few more months of data before we can determine if home prices are finally turning around." Nine of the 20 metro areas showed improvement in their annual returns compared to their returns in January. In February, Cleveland was the only metro area having a record monthly decline, returning -5%. Cleveland, Charlotte, New York and Washington were the only MSAs showing larger declines in home prices in February compared to January's report.

California's home building business is picking up steam, too. Builders pulled 39% more permits in March compared to February, a jump in activity the California Building Industry Association is taking as a clear sign the combined federal-state tax credits are working to clear out unsold inventory and generate new construction. Though housing starts still are down on a year-over-year basis by 31%, CBIA President Robert Rivinius said the big month-to-month increase shows that builders are gaining confidence due to increased sales generated by the tax credits. In addition to the $8,000 tax credit offered to first-time buyers by Uncle Sam, the state is offering up to a $10,000 credit to buyers of finished but unsold new houses. The state has earmarked $100 million for its credit, and the Franchise Tax Board says one-third was applied for in the first six weeks after it was approved by lawmakers in Sacramento. "It's having the desired effect," said Mr. Rivinius. "But the allocated funds for the credit are being rapidly absorbed, which is why we believe a second round of the tax credit would be extremely helpful in keeping the momentum going."

Buyers are starting to bang heads once again in California, according to March sales figures produced by the state Realtors organization.Existing single-family home sales were up almost 64% over March a year ago, driving the median sales prices higher on a month-to-month for the first time in nearly two years, the California Association of Realtors reported. CAR's unsold inventory index also fell to five months in March, compared to 12.2 months a year earlier, and the median days on the market for houses sold in the month was down more than a week, from 56.8 to 48.3 days. Said CAR President James Liptak: "All of the regions in the state experienced increases in month-to-month raw sales." The largest gain was posted in the Riverside-San Bernardino region, which saw sales jump by almost a third. It wasn't all candy and roses, though. While the March median sales price was $253,040, a 2.2 gain from $247,590 in February, it was 39% lower than the March 2008 median of $414,520. Chief Economist Leslie cited an increase in the number of multiple offers as an indication that first-time home buyers and investors are responding to dramatically improved housing affordability in the Golden State as well as relatively low loan rates and the federal first-time buyer tax credit. The economist also noted that a number of the group's 90 local affiliates have registered monthly gains for one or more months since the beginning of this year. But she said it is still too early to call the bottom of the California's housing slide.