Origination

The ability to generate income from affiliated mortgage and title entities has been "the difference between life and death" for many real estate brokerages, members of the Real Estate Services Providers Council were told at their annual conference in Washington. "If they hadn't had mortgage, title and other affiliated businesses, they'd be gone," said Steve Murray of REAL Trends, a research organization based in Littleton, Colo. Chad Ochsner, broker-owner of RE/MAX Alliance, a Denver-based firm with 22 offices and some 800 agents, said that "having a good, solid mortgage partner" has helped his bottom line. "Real estate is now a loss-leader for our mortgage and insurance affiliates," Mr. Ochsner said. Jon Coile, president of Champion Realty, Annapolis, said the capture rate at his mortgage affiliate, HomeServices Lending, the largest of Wells Fargo's joint ventures, is way up because agents are "terrified" they will lose the deal if they take their clients to other lenders. "If you don't have mortgage and title in this market, you are dead-man walking," said Mr. Coile, whose firm entered the mortgage and title businesses in the early 1990s. Mr. Ochsner also cited an increased capture rate, noting that the down market has helped create an esprit d'corps among his agents and support staff.

When it comes to complying with the new Real Estate Settlement Procedures Act regulations, many lenders appear to be sticking their heads in the sand, according to a pair of Washington regulatory lawyers. Jeffrey Naimon of BuckleySandler said his clients seem to be adopting a wait-and-see attitude, hoping, perhaps, that the new Obama Administration will pull the regulations before their most onerous sections take effect on Jan. 1. "The rules are incredibly complicated," he said at the annual RESPRO conference, "yet our phones are not ringing off the hook." Lots of "petrified" lenders are "waiting to see what others do," agreed Jeffrey Arouh of Holland & Knight. At the same time, though, Mr. Arouh warned that lenders who are not ready to implement the regs will be "out of the game." "The rule is the rule," he said. "You're kind of stuck with it, so you have to deal with it." Mr. Naimon, meanwhile, said he's surprised lenders haven't attacked the regulations on the grounds that the Department of Housing and Urban Development has overstepped its bounds. "I question HUD's legal authority" for many of the changes in RESPA's new rules, he said. "I don't think a lot of this holds water, but no one is interested in poking the government in the face right now."

Housing industry groups are urging the Treasury Department to provide capital support for the private mortgage insurers so more financing will be available for homebuyers that can't muster a 20% downpayment. In a letter to Treasury secretary Timothy Geithner, the trade groups warn that "a vibrant housing market will not be possible unless new homeowners enter the market." They point out that a $1 billion capital infusion into the MI companies would allow lenders to finance $80 billion in purchase mortgages that could be sold to Fannie Mae and Freddie Mac. (By charter, the GSEs cannot finance mortgages with less than 20% down unless they are credit enhanced with private mortgage insurance.)"This increased level of financing is critical to meet the demands of potential homeowners, restore growth in the market and reduce the excess supply of homes," the five trade groups say. The Financial Services Roundtable, Mortgage Bankers Association, National Association of Home Builders, National Association of Hispanic Real Estate Professionals and Asian Real Estate Association of America signed the letter. GSE regulator James Lockhart also has called on Treasury to provide support for the capital-constrained private MIs.

The Department of Justice is moving closer to forming a national mortgage fraud task force to investigate and prosecute real estate and mortgage related crimes, according to government officials familiar with the matter. The effort, if it comes to fruition, would involve state and local and federal prosecutors working together "to find trends and bring cases," said one government official talking on background. Presently, DOJ has a "working group" on mortgage fraud that is an informal effort and focuses more on mortgage issues and trends, as opposed to specific cases. David Fleck, who recently stepped down as deputy District Attorney in charge of real estate fraud for Los Angeles, said he has talked to DOJ about the task force, but noted that the agency has yet to make a final decision. (Once Lanny Breuer is confirmed by the Senate to head DOJ's criminal division a final decision on the task force is anticipated.) Speaking at SourceMedia's servicing show in Dallas this week, Mr. Fleck noted that Los Angeles has 20 detectives working on real estate fraud related investigations but added that, "We're just scratching the surface."

If you have been in the reverse mortgage business for the last few years, you have certainly noticed a multitude of changes. If you are new to reverse, you have made a wise decision in choosing to serve the senior population. The reverse mortgage is projected to grow in volume for perhaps the next 20 years. As this product continues to evolve, it is imperative that you keep up to date in order to do the best job possible for our seniors.

Zacks Equity Research has named UDR Inc., a multifamily REIT, as its "Bull of the Day" for April 7. The Highlands Ranch, Colo.-based real estate investment trust owns, operates, acquires, develops and renovates middle-market apartment communities. Although it has assets across the country, UDR's exposure is mostly in the Western and Mid-Atlantic states. The Chicago research firm said "2009 will be a more difficult year for multifamily REITs. The lack of job growth will force landlords to cut rents and offer more concessions. In a recessionary environment, we would stick to well-capitalized REITs." Zack noted that UDR has plenty of liquidity to take care of 2009 debt maturities and fund its development pipeline. "The current yield is attractive, and the company does not anticipate paying any portion of the 2009 common dividend in stock, as several REITs are now doing. We like the multifamily sector going forward, as residential landlords will continue to benefit from the national housing meltdown."

A housing recovery isn't likely to begin until the middle of next year at the earliest, according to the chief economist for the trade group representing U.S. and Canadian cement makers. Edward Sullivan of the Portland Cement Association, Skokie, Ill., said for the market to begin rebounding, there must be a "meaningful recovery" in sales and a corresponding reduction in unsold inventory. "Housing construction activity cannot begin until sales recover," Mr. Sullivan said in PCA's latest Economic Research report. "Increased foreclosures, coupled with deteriorating labor markets and tight credit conditions, will delay significant sales activity until mid-2010. Improvements in housing starts are not expected to be significant until 2011." The economist said that be expects the housing recovery bill, along with bank efforts to rewrite toxic mortgages, will help slow foreclosures over the next 18 months. But he also predicted that the weak labor market and declining house prices will lead to a net increase in repossessions, which will be added to the housing inventory. Furthermore, Mr. Sullivan said, unless Uncle Sam injects more cash into the banking system, tighter credit standards will serve as another drag on housing. "Under such a scenario, the housing recovery and overall economic recovery could be delayed significantly," he said.

The owner of a company that provides mortgage financing to the health care industry is purchasing a troubled state-chartered commercial bank in Maryland. Jack Dwyer, a Baltimore businessman and owner of Capital Funding Group Inc., is acquiring AmericasBank Corp., Towson, Md., in a cash transaction and at no cost to the FDIC. Financial terms of the deal were not disclosed. After the close of the transaction, the newly formed Capital Funding Bancorp intends to inject more than $35 million in capital into the bank, which has $146 million in assets. Mr. Dwyer said AmericasBank is a good platform that Capital Funding Group can use to expand its health care related mortgage lending program. Last summer AmericasBank closed its residential mortgage banking operation but continues to make mortgage loans through its bank branches. Its stock was delisted from Nasdaq and now trades over the counter. It closed on April 6 at $0.10 per share. At the end of September, AmericasBank signed an agreement with the Federal Reserve Board giving it 60 days to submit a capital plan and a written business plan for 2009 to improve earnings and the overall condition of the bank.

The government's ongoing purchases of Fannie Mae and Freddie Mac debt and mortgage securities have "not completely" overcome investor concerns about the financial condition and future of the mortgage giants, according to a Federal Reserve governor. "Indeed, even after extraordinary actions, mostly recently by the Federal Reserve, to improve liquidity and market functioning in the agency debt markets, confidence in the GSEs is less than markets were long accustomed to before this period," said Gov. Kevin Warsh. The Fed governor blames the financial "Panic of 2008" for a loss of investor confidence and for a deeper and longer recession. "We are witnessing a fundamental reassessment of value of every asset everywhere in the world," he told a meeting of the Council of International Investors. He expects "elevated levels of volatility and unwillingness by many investors to participate in certain asset markets at virtually any price." The Fed governor also pointed out that household wealth fell by $11 trillion or 18% in 2008. And falling house prices accounted for much of that decline. "Homeownership is no longer perceived to ensure low-risk capital appreciation," he said. Mr. Warsh counseled that it will be a while before positive gross domestic product numbers are seen. "Though the pace of decline is likely to abate, I am decidedly uncomfortable forecasting a sharp and determined resumption in growth in the coming quarters."

Flagstar Bank of Troy, Mich., will reconfigure its wholesale mortgage sales operations, going from 12 sales regions down to eight. As part of the changes, Dave Bowers, executive vice president and national sales manager, will leave his post and move to Atlanta to manage Flagstar's new South region. His successor as executive vice president and national sales manager is Gregory Lutin. Mr. Lutin has been with Flagstar since 1994, serving in several management positions, most recently as senior vice president of the South division. He will relocate to Flagstar's headquarters in Troy. Other changes at Flagstar include Tim Kalaris managing the Northeast region, Linda Bissell remains as head of the Great Lakes region, Paul Wyner in charge of the North Central region, Rich Hoffman remains as regional manager of the Sunshine region, Rob Mally will oversee the Pacific Southwest region, and Mike Fowler and Kurt Mason are new managers of the Mountain and Northwest regions, respectively. The changes will be effective May 1.