Origination

Goldman Sachs & Co. is scaling back the lending operations of Senderra Funding, Fort Mills, S.C., in particular its wholesale division, sources told National Mortgage News. A spokesman for Goldman Sachs in New York declined to comment. Goldman acquired Senderra a few years ago when it was known primarily as a subprime wholesaler. Today, Senderra is originating FHA-backed loans, Fannie Mae products and some jumbos. (For the full story see the Monday edition of National Mortgage News.)

A lawsuit filed by the National Association of Home Builders to block implementation of a RESPA rule has been put on hold while the Department of Housing and Urban Development reconsiders its position on prohibiting builders from tying price discounts to the use of their affiliated mortgage companies."All aspects of the litigation are put on hold until HUD completes its renewed public comment process," a NAHB spokeswoman said. A U.S district court judge was scheduled to hear arguments April 3 in NAHB's suit to overturn the new "required use" provision in the Real Estate Settlement Procedures Act rule that the Bush administration issued shortly after the November elections. On March 6, HUD said it will delay the implementation date until July 16, while it solicits public comment on whether to "withdraw" the required use rule. "Proposing to withdraw this rule is the right thing to do so that home builders can offer consumers the best possible deal on the purchase of a new home. We are hopeful that HUD will do what is right for consumers and take final action to strike the rule later this year," NAHB chairman John Robson said.

The nation's remaining private mortgage insurance companies will need at least $4 billion of new capital to maintain a 15-to-1 risk capital level, according to a new white paper from Keefe, Bruyette & Woods. This total — which could grow to $6.6 billion if cumulative losses are 10% worse than analysts' projections — does not take into account needing additional capital for increasing the amount of business being written. "In the event the government decided to inject capital into the MI industry, the level would likely need to be above what we have in our matrix, because the government's goal would not just be industry stabilization from a loss perspective, but industry utilization as a method for helping more borrowers either refinance or purchase new homes," the report says. KBW analysts Nathaniel Otis and William Clark added that if the GSEs continue to operate in the future as they do now, mortgage insurers would not become obsolete. But they note: "there is also the possibility that the future structure of the GSEs will be completely different than exists today, which could threaten the need for a private mortgage insurance industry," KBW says.

The PMI Group, the nation's second largest mortgage insurer, said it will shutter its contract underwriting unit in mid-April, the first MI to pull the plug on this once lucrative side business.PMI said the move is part of its strategic plan to focus on its core mortgage insurance business. "Contract underwriting services are labor-intensive and require a commitment of resources and capital that we believe is better used elsewhere to serve our customers," said David Katkov, executive vice president and chief business officer of PMI. In years past lenders that did not have in-house underwriters (or if their in-house underwriters were busy) turned to the MIs to pick up the slack. Calls to the other mortgage insurers to see if they are considering a similar move were not returned at press time.

Freddie Mac servicers will only have to pay a 25 basis point "delivery" fee when refinancing loans under the new "Home Affordable Refinance" program mandated by the Treasury Department."We have waived all the delivery fees with the one minor exception — the across-the-board market conditions fee," said Freddie spokesman Brad German. Freddie charges the 25 bp market conditions fee on all loans it purchases from lenders. Fannie Mae has similar 25 bp fee. Fannie has not waived its delivery fees for Home Affordable refinancings. However, the GSE will allow borrowers to roll the closing costs into the new loan. They can also shop around for the best refinancing deal offered by Fannie seller/servicers. Freddie allows borrowers to roll $2,500 of closing costs into new loan, but only if they refinance through their current servicer.

The New York Federal Reserve Bank ramped up its purchase of GSE mortgage-backed securities the past two weeks due to an increase in refinancings and agency issuance of MBS.MBS issuance by Fannie Mae, Freddie Mac and Ginnie Mae increased to $97 billion in February, compared to $61 billion in January. A new Credit Suisse report says issuance could reach $130 billion in March. "The Fed's purchases of agency MBS have been very effective in lowering rates, improving liquidity in the market and spurring refis," said CS mortgage strategist Mahesh Swaminathan. From February 26 through March 11, the New York Fed purchased $57.2 billion in agency MBS compared to $44.9 billion for previous two-week period. Meanwhile, Treasury said it purchased $12.7 billion in Fannie and Freddie MBS in February, down from $22.6 billion in January.

Bank of America's top mortgage executive, Barbara Desoer, says the depository will remain in warehouse finance, even though many of its competitors are leaving the niche.In an interview with National Mortgage News, Ms. Desoer said BoA likes the warehouse lending business, has no plans to exit, but also is in no hurry to grow its current business either. "We're getting lots of inquiries about warehouse," she said, "but we're not going to bolster it. We'll do it for the right kind of clients." Scott Stern, president of the Lenders One mortgage banking alliance said BoA's Countrywide unit has expanded credit to some of its existing customers. "One member told us Countrywide saved their life," he said.

The National Association of Mortgage Brokers has responded angrily to comments made by JPMorgan chairman and chief executive Jamie Dimon at the U.S. Chamber of Commerce Capital Markets Summit. Mr. Dimon said not shutting Chase's wholesale channel sooner was the worst mistake of his career. NAMB president Marc Savitt responded in a statement "It is disappointing to once again refute senseless attacks on the mortgage brokerage industry based on misinformation. Mr. Dimon's comments clearly reflect his poor understanding of the mortgage industry and the role of the mortgage broker. NAMB urges Mr. Dimon to recognize that mortgage brokers do not create loan products, do not determine the automated underwriting systems used to qualify borrowers, do not underwrite the loans, and do not approve borrowers for those loans — Wall Street investment banks 'who are now out of business' did that." Mr. Dimon said the broker-originated product had two-to-three times the loss rates of the retail originations. The difference, he implied, is that the retail product was written by sales people who were sitting with the client.

Kara McIntosh of Bethesda, Maryland, pleaded guilty to mail fraud related to the fraudulent purchase of properties in Maryland and Washington, D.C. using false mortgage documents. According to the plea agreement, McIntosh, Timothy Reed and others recruited straw buyers to purchase houses. McIntosh knew the straw purchasers were not planning to live in the properties and did not qualify for the mortgages. Some of the straw buyers purchased multiple properties at the same time. To enable straw buyers to purchase the properties, McIntosh was paid to prepare fraudulent mortgage applications, which misrepresented the straw buyers' income and assets. McIntosh also received part of the fraudulently obtained mortgage funds. For example, at one closing, McIntosh falsely claimed $109,600 for "renovations" that her company purportedly performed. No such renovations ever occurred. Beginning in 2006, this scheme involved fraudulent loans worth more than $19 million. More than 10 individuals and banks were harmed. The loss amount foreseeable to McIntosh is between $2.5 million and $7 million. Many of the purchased properties have been foreclosed upon. U.S. District Judge J. Frederick Motz has not yet scheduled her sentencing. Her co-conspirator, Reed, pleaded guilty on Feb. 10 to the same offense. No date has been scheduled for his sentencing. To date, four defendants have pleaded guilty to their participation in this scheme.

Former loan officer Stefan M. Guerra of Lee's Summit, Missouri, and two others pleaded guilty in separate appearances before U.S. Chief District Judge Fernando J. Gaitan to charges related to part of a mortgage fraud scheme. From June 2005 to May 2007, buyers purchased the homes at inflated prices, obtaining mortgages by providing false information to lenders, then kept the extra proceeds. Guerra purchased one property and acted as broker on 11 others. The mortgages on the 12 properties totaled more than $5 million. Two Olathe, Kansas, men who also plead guilty in charges connected to the scheme — Leon T. Jones and Daryle A. Edwards — each purchased a Lee's Summit, Missouri, property as part of the conspiracy and made material misrepresentations upon which the lender relied in making the mortgages. In addition, from the purchase of one property — unbeknownst to the lender — Jones received $50,000. Edwards used a false Social Security number, address and employment and falsely claimed that he would occupy one property. Edwards also made false representations regarding the use of loan proceeds and received a $76,600 check payable to a construction company he owned, which was not disclosed to the mortgage lender or to the title company. Sentencing has not yet been scheduled.