Origination

The Mortgage Bankers Association has asked federal banking regulators to cut the capital requirement on warehouse lines of credit by as much as 80% to alleviate a funding crisis facing non-depositories. Currently, depending on what stage of funding a loan is in, the risk weighting on a warehouse loan can be as high as 100%. This means $8 in capital must be held for every $100 in warehouse credit outstanding. For Fannie Mae, Freddie Mae, Federal Housing Administration and Veterans Affairs loans the trade group wants the capital charge to be 20%. Non-bank mortgage lenders are seeing their lines disappear or reduced with several regional banks exiting the warehouse sector as a way to preserve capital. MBA's letter was sent to the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.

Mission Capital Advisors, LLC in New York is now accepting bids for a commercial real estate mortgage loan and real estate owned portfolio with an outstanding balance of $48 million. The sale offers prospective bidders an opportunity to acquire nonperforming and REO assets secured by a variety of collateral types, including office, industrial warehouse, retail, condominium, town homes, marinas, single family residential, and commercial development land. On behalf of a Southeastern super regional bank, Mission Capital is soliciting final bids from investors for the purchase of individual loans/REO, any combination of loans/REO, or the entire portfolio. Overall, there are 17 loans or REO assets available, including five loans in Florida, four loans in South Carolina and six loans and two REO assets in Georgia. The portfolio is divided into several single asset pools, allowing investors to target specific assets by performance, collateral type or geography based on their individual acquisition criteria, said Will Sledge, director at Mission Capital Advisors.

The new home market may be picking up a little steam in California. Though only 2,298 permits were pulled by builders in February — a 66% decline from the same month a year ago — that's still a 15% improvement over January, according to the California Industry Research Board. Better yet, rumblings from the field indicate that traffic has picked up in recent weeks, thanks largely to a combined federal-state tax credit package that could result in a savings of up to $18,000 for buyers who purchase by Dec. 1. "After hearing preliminary reports of increased sales traffic from local builders, we believe the tax credits are doing their job in attracting buyers and we remain hopeful that this will have a positive impact on homebuilding," said Robert Rivinius, president of the California Building Industry Association. For now, though, only 1,261 single-family houses were started in the entire state in February, and work began on just 1,037 multifamily units. The two-month total for 2009 so far: 4,298 starts, a decline of 63% compared to 11,531 for the first two months of 2008. CBIA is now forecasting 50,000 starts statewide for this year, which would be the lowest total on record.

Amerisave Mortgage Corp. of Atlanta is offering consumers a 4% 30-year fixed-rate loan — but with strings attached. At press time, the mortgage lender was advertising a 4% 30-year FRM on its website (APR: 4.357%) but when a consumer called for more information she was told that to get that rate she would need a FICO score of at least 720 and a downpayment of 15%. Points were not discussed but on its website Amerisave is telling borrowers that the lower rates carry higher fees and points. On one low-rate, 30-year loan the fees/points totaled almost $11,000.

The Mortgage Bankers Association has drafted and sent to Washington officials a regulatory reform proposal suggesting how a new federal mortgage regulatory agency the group has been calling for might set lending and servicing rules for the entire mortgage industry, regardless of charter or license. "Under our proposal, we are calling for one federal regulator to implement standards and oversee all mortgage bankers and brokers," MBA president and chief executive John Courson said. State and federal regulators would sit on the board of directors of the newly created Federal Mortgage Regulatory Agency, which will establish uniform lending standards and update them as needed without going to Congress for approval. "The new regulator also will work with federal and state regulators to enforce lending standards for their regulated entities," MBA says in a letter to House and Senate banking committee leaders.

The Office of Management and Budget is considering changes to the estimates the Federal Housing Administration is using for house values over the next several years, which could lead to a possible increase in mortgage insurance premiums FHA charges on single-family loans. Sources also note that losses on FHA loans with seller-funded downpayment assistance continue to rise. A re-estimate by OMB could show "massive losses," which might require a congressional appropriation or higher premiums, said a former Department of Housing and Urban Development official. William Apgar, senior advisor to the HUD secretary for mortgage finance, said HUD is working with OMB, but he could not comment further because the budget projections have not been finalized yet. Mr. Apgar noted that FHA is vulnerable to rising unemployment, declines in house prices and a weak economy. The FHA program has weathered many housing downturns, Mr. Apgar said. "FHA has historically played the role as the stabilizer in tough markets." OMB is expected to send the President's fiscal year 2010 budget to Congress in late April to early May.

Spurred by lower long-term mortgage interest rates as a result of the Federal Reserve Board's actions, the Market Composite Index, an overall measure of mortgage applications, increased 32.2% on a seasonally adjusted basis to 1159.4 from 876.9 for the week ended March 20, according to the Mortgage Bankers Association. "Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve's announcement on the Treasury bond and mortgage-backed securities purchase programs. The drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity," said Orawin Velz, associate vice president of economic forecasting. For the current week, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.63% from 4.89%, making it three consecutive weeks with rates under 5%; points (including the origination fee) decreased to 1.13 from 1.23 for loans with 80% loan-to-value ratios, the association said. On an unadjusted basis, the Index increased 31.4% compared with the previous week and 18% compared with the same week one year earlier. The Purchase Index increased 4.2% to 267.8 from 257.1 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 41.5% to 6363.2 from 4497.6 the week prior. Refinancings increased to 78.5% of total applications from 72.9% the previous week, while adjustable-rate mortgages accounted for 1.4% of applications, down from 2.0% the week prior, the MBA said. The MBA can be found online at http://www.mortgagebankers.org.

New homes sales jumped 4.7% in February from January and it could be a sign that the housing market is finally bottoming out. "We have been looking for a bottom to form sometime in the first half of the year and it looks like things have firmed up a little bit," said Scott Anderson, senior economist at Wells Fargo & Co. The U.S. Census Bureau reported that sales of new single-family homes rose from a seasonally adjusted annual rate of 322,000 in January to 337,000 in February. The bureau revised the January sales number upward from 309,000. The new home sales report combined with the 4.4% jump in sales of previously owned homes is "very encouraging at this point," Mr. Anderson said. But he wants to see a couple more months of good reports before calling a bottom. "Now that the Federal Reserve is trying to push down mortgages, we are seeing a refi boom and it seems like it is helping to give some confidence to buyers to go ahead with a purchase."

Freddie Mac purchased $40 billion of mortgages in February, an 84% increase from the previous month as declining interest rates led to increased business for the government-controlled giant. However, compared to the same month a year ago, purchases fell 16%. According to new figures released by the company, Freddie now holds $123 billion of whole loans (not securitized) in its portfolio, a 43% increase over 12 months. The GSE ended the month with a retained portfolio of $822 billion, a 16% increase compared to February 2008. But there was some negative news in the new numbers: its mortgage "purchase and sale agreements" fell to $4 billion in February, from $17 billion the prior month. Fannie Mae has not yet released its February numbers.

How many times have you heard someone say, "that's so simple, why didn't I think of it?" Too often we want to look for complicated procedures and plans that go on forever when adding new products to our menu. To be truly successful in the reverse mortgage business, sometimes all you need to do is look around at what's right in front of you.