Origination

Prices of vacation and investment properties plunged by over 20% in 2008 from the previous year, according to the National Association of Realtors. The median price of a vacation property fell to $150,000 or 23%, while the median price an investment property fell to $108,000 or 28%, according to the annual report on the second home market. "As in the market for primary residences, it appears that many sales of deeply distressed home are pulling down the median price of the second-home market as well," said NAR chief economist Lawrence Yun. The median price of existing home sales that NAR reports every month fell by only 9.3% in 2008 to $198,600. The NAR annual report also shows that sales of vacation homes have fallen by over 50% since 2006 and sales of investment properties has fallen by 32%.

AmeriCU Mortgage of Michigan has been approved by state regulators to provide origination and servicing services for credit unions in Wisconsin, where several CUs are still calculating their losses from the collapse of Central States Mortgage. AmeriCU Mortgage is a wholly owned subsidiary of privately held Towne Mortgage Co., Troy, Mich., and provides mortgage origination and servicing and default management services for credit unions. Central States, which provided mortgage services to more than 250 credit unions, Friday filed for receivership with the Milwaukee County Court, which is similar to a federal bankruptcy and will entail a liquidation of the mortgage company's assets overseen by a court-appointed receiver. The company, which had written more than $500 million in loans last year, shut its doors March 9 after a $33 million warehouse line of credit was called by Members United Corporate FCU, throwing about 220 people in five states out of work. Wisconsin has filed a $3 million wage lien against the mortgage banker/broker, which owes wages for March and commissions for February and March. The state is investigating whether Central States violated plant closure laws when it shut down.

Fannie Mae acquired $53.7 billion of mortgages during February, an 86% increase from January, and its best purchase month since June of last year. According to new figures released by the company, Fannie issued $45.3 billion in MBS, more than double its issuance volume of the prior month. (As reported last week, Freddie Mac purchased $40 billion of mortgages in February, an 84% gain from January.) Thanks to the Federal Reserve and Treasury driving rates lower by purchasing billions in MBS, both GSEs are seeing their seller/servicers deliver more product. Fannie ended the month with $36.4 billion in "commitments to purchase" which means in March acquisitions could be strong too. Both GSEs have been operating under a federal conservatorship since early September.

Fannie Mae has increased its required yield on Federal Housing Administration reverse mortgages, which will have the net effect of increasing the interest rate on those loans by 50 to 75 basis points, according to lenders. National Reverse Mortgage Lenders Association president Peter Bell said Fannie Mae's action was unexpected. "It's pretty draconian," he said. "We wish Fannie had given us more notice. A lender has to eat the difference for loans in the pipeline in order to honor the interest rate that it sold its borrowers. Or they have to go back to them and redo the numbers with a higher interest rate, which means the borrower will get a smaller benefit." A higher interest rate reduces the proceeds seniors receive from a reverse mortgage. The FHA's Home Equity Conversion Mortgage program dominates the reverse mortgage market. Fannie Mae is the largest investor in FHA-insured HECMs. Fannie officials could not immediately be reached for comment.

The House Financial Services Committee has postponed a markup of a mortgage reform bill that bans certain types of yield-spread premium payments and requires lenders to retain 5% of the credit risk on subprime loans that are sold to investors. The committee had scheduled a Tuesday (March 31) markup session, but canceled it without explanation. Lenders that sell subprime loans will not be allowed to "directly or indirectly transfer the credit risk it retains," according to the bill, sponsored by committee chairman Barney Frank, D-Mass., and fellow Democratic Reps. Brad Miller and Mel Watt of North Carolina. The sponsors want to crack down on compensation that might encourage mortgage lenders and brokers to steer borrowers into higher-cost loans. "Specifically, the new measure will strengthen restrictions on compensation paid to mortgage loan originators and brokers that is based on a loan's interest rate and terms, often called a yield-spread premium," according to Rep. Miller. Marc Savitt, president of the National Association of Mortgage Brokers, said that he is okay with the language in the bill, noting that "this doesn't ban yield-spread premiums outright" and instead "prevents people from making a couple of extra points" by putting consumers in higher-cost loans. Mr. Savitt added that his reading of the bill indicates that it would require mortgage banking firms to disclose their "servicing-released premiums" to the public as well. "The bill means you have to disclose everything," said Mr. Savitt. The legislation also mandates that all licensed and registered originators would be subject to a "federal duty of care" measure under the bill, obligating them to only make loans that a customer can afford. With refinancings, lenders would have to prove a "net tangible benefit.

Acknowledging that non-depository mortgage bankers are facing a warehouse funding crisis, the Federal Housing Finance Agency said it has met with industry leaders and is seeking proposals on how Fannie Mae and Freddie Mac can play a role in solving the problem.Glen Corso, who runs an advisory group called The Warehouse Lending Project, said he is working on a proposal where Fannie and Freddie would use their "guarantee authority" to help warehouse banks move the loans "off-balance" sheet which would alleviate capital charges on the credits. Mr. Corso said TWLP soon will submit its ideas to FHFA. The Mortgage Bankers Association is expected to submit a proposal too, but on Monday the trade group did not return a telephone call about the matter. In a statement FHFA said it has met "with a number of industry participants and others to try to develop solutions."

The House Financial Services Committee has postponed a markup of a mortgage reform bill that bans certain types of yield-spread premium payments and requires lenders to retain 5% of the credit risk on subprime loans that are sold to investors. The committee had scheduled a Tuesday (March 31) markup session, but canceled it without explanation. Lenders that sell subprime loans will not be allowed to "directly or indirectly transfer the credit risk it retains," according to the bill, sponsored by committee chairman Barney Frank, D-Mass., and fellow Democratic Reps. Brad Miller and Mel Watt of North Carolina. The sponsors want to crack down on compensation that might encourage mortgage lenders and brokers to steer borrowers into higher-cost loans. "Specifically, the new measure will strengthen restrictions on compensation paid to mortgage loan originators and brokers that is based on a loan's interest rate and terms, often called a yield-spread premiums," according to Rep. Miller. Marc Savitt, president of the National Association of Mortgage Brokers, said that he is OK with the language in the bill, noting that "this doesn't ban yield-spread premiums outright" and instead "prevents people from making a couple of extra points" by putting consumers in higher-cost loans. Mr. Savitt added that his reading of the bill indicates that it would require mortgage banking firms to disclose their "servicing-released premiums" to the public as well. "The bill means you have to disclose everything," said Mr. Savitt. The legislation also mandates that all licensed and registered originators would be subject to a "federal duty of care" measure under the bill, obligating them to only make loans that a customer can afford. With refinancings, lenders would have to prove a "net tangible benefit.

Craig Tengowski, a licensed appraiser from Pittsburgh, Pennsylvania, pleaded guilty to wire fraud in connection with a mortgage fraud conspiracy involving inflated appraisals.An interagency Mortgage Fraud Task Force that includes the FBI and other federal, state and local law enforcement agencies conducted the investigation that led to Tengowski's prosecution. Chief U.S. District Judge Donetta Ambrose has scheduled sentencing for Sept. 18.

1st Metropolitan Mortgage, Charlotte, N.C., "is on the cusp" of making its change to a mortgage banking operation, said its chief executive Daniel Jacobs. Late last year, the firm said it was looking for "a strategic opportunity" to move from being a mortgage broker to a mortgage banker; since then it has been spending time evaluating various options to make the migration, he said. Now it is on the verge of moving forward so that the company can adapt to the current marketplace conditions so it can grow its volume in a meaningful way as the mortgage industry rebounds from its low point, Mr. Jacobs said. However, he was unable to be specific about what options the company is looking at. In December, 1st Metropolitan closed "a significant number" of its "lowest producing" branches, but its loan volume has remained steady from those that have remained open, he said. Mr. Jacobs said he was excited about the future of 1st Metropolitan as a mortgage banker, especially with the Home Valuation Code of Conduct and other more onerous laws that affect the mortgage broker business coming into effect in the coming months.

For the second time in seven weeks, Fitch Ratings, Chicago, has downgraded the insurer financial strength rating of Attorneys' Title Insurance Fund Inc., Orlando, this time cutting the rating to 'CCC' from 'BBB'. Back on Feb. 9, Fitch downgraded the company from an 'A-' rating. Fitch's latest action follows Attorneys' Title seeing an 82% or $122 million decline in statutory surplus to $27 million at year-end 2008. An underwriting loss of $89 million, $16 million in realized investment losses and $30 million in unrealized losses due to an above average allocation to common stocks in the investment portfolio all contributed to the decrease in surplus. Future rating actions by Fitch depend on Attorneys' Title's ability to access additional capital. A potential problem, said Fitch, is that Attorneys' Title is owned by a business trust that in turn is owned by attorneys who serve as agents for the company. Consequently, this ownership structure adds a layer of complexity in any attempt to access new capital. Fitch added that the company's capital adequacy was a key component of its financial strength ratings in light of its more limited geographic scope. The company underwrites title insurance in Florida, Georgia, North Carolina, South Carolina and Illinois.