Origination

The members of the Mortgage Insurance Cos. of America started off 2009 the way 2008 ended, at the low end of the spectrum in terms of new business written and in the cure/default ratio. For January 2009, there was $7.1 billion of primary new insurance written, all through the traditional channel. This is compared with $7.2 billion in December 2008 (all but $28 million through the traditional channel) and $22.2 billion in January 2008 ($496 million through the bulk channel). However the numbers for January 2008 include Triad Guaranty, whose data stopped being included in the report in July 2008 and do not include Radian Guaranty, which rejoined the group and started reporting again in December 2008. The number of applications received increased from 61,597 in December to 76,130 in January, while certificates issued increased in the same time frame from 46,605 to 59,569. The amount of primary insurance in force decreased from $952.2 billion in December to $949.3 billion in January. There was a slight improvement in the cure/default ratio, to 48.0%, with 51,093 cures and 106,484 defaults. December's cure/default ratio was 47.3%. New pool risk written in January was $6.8 million, down from $8.1 million in December.

The Market Composite Index, an overall measure of mortgage applications, decreased 12.6% on a seasonally adjusted basis to 649.7 from 743.5 for the week ended Feb. 27, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. On an unadjusted basis, the index decreased 2.0% compared with the previous week and 6.7% compared with the same week one year earlier. The Purchase Index decreased 5.6% to 236.4 from 250.5 one week earlier on a seasonally adjusted basis, while the Refinance Index decreased 15.3% to 3063.4 from 3618.0 the week prior. Refinancings decreased to 66.9% of applications from 69.7% the previous week, while adjustable-rate mortgages accounted for 2.3% of applications, up from 1.9% for the previous week, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.14% from 5.07%, with points (including the origination fee) decreasing to 1.05 from 1.25 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Suncoast Schools Credit Union of Tampa — one of the largest CU players in home mortgages — is talking to a crosstown CU about a possible merger, according to The Credit Union Journal. The other institution, GTE Federal Credit Union, ranks 95th in CU mortgage holdings, whereas Suncoast ranks seventh, according to The Mortgage Industry Directory. If the two combine forces it would be the biggest merger ever of two credit unions. Both institutions, however, have been saddled with large losses because of the mortgage meltdown. Suncoast is Florida's largest credit union. A merger would create a giant with almost $8 billion in assets serving roughly 675,000 members. Last year Suncoast lost $76.7 million and GTE lost $27.5 million, according to figures compiled by the National Credit Union Administration.

For the second consecutive month there has been a large decline in the Eleventh Federal Home Loan District Cost of Funds Index, driving it to its lowest point since April 2005.As calculated by the Federal Home Loan Bank of San Francisco, the index for January was 2.455%, down from 2.757% in December 2008. The 30 basis point decline follows a drop of nearly 40 basis points between November and December. For January 2008, the index was 3.970%. The index was calculated using total average funds of $82.0 billion and total interest expense of $167.7 million. The total interest expense is derived from interest expense reported on deposit accounts, Federal Home Loan Bank advances, and other borrowings, adjusted for the number of days in the month, according to FHLB-SF. The all-time low for the index was reached in May 2004, when it was 1.708%.

Union Bank of California, which originated $4.5 billion in mortgages last year, says it's sticking with loan brokers. The San Diego-based depository told The Orange County Register that brokered residential loans perform as well as retail ones. Craig Cole, a senior vice president for Union, said the key to third-party lending is carefully picking the brokers it does business with. Union Bank has 80 approved brokers in its wholesale network and monitors them and their loans over time. "Most lenders mismanage the broker channel by not being disciplined about who they work with and offering products indiscriminately through that channel," said Mr. Cole. Union Bank avoided subprime lending. The SVP recently told National Mortgage News that, "Not to blow our horn but we refrained from all the lending excesses of the past," adding that 2008 "was the best year we have ever had."

United Guaranty Inc., the mortgage insurance division of the troubled American International Group, lost $1.25 billion in 2008 on its U.S. first lien business, compared to a $239 million loss the year before. In the fourth quarter UGI's domestic first lien business lost $408 million while its second lien division posted an operating profit of $23 million. In 4Q 2007 its first lien business lost $208 million. In the quarter the MI took in $156 million in first lien premiums, a 4% decline from the year ago. According to the Quarterly Data Report, UGI is the nation's fifth largest MI (out of seven) in terms of policies-in-force.

Financial institutions last year filed 62,084 mortgage-related "suspicious activity reports" with government regulators -- a 44% increase from the prior year, according to new figures released by the Financial Crimes Enforcement Network. FinCEN director James H. Fries said one trend the agency found "is the increase in mortgage fraud detection in connection with mortgage purchasers sending home loans back to originators for repurchase." FinCEN also is seeing an increase in foreclosure-related fraud. The SARs figures cover reports filed for the 12-month period ending June 30, 2008.

A civil lawsuit filed against CU National Mortgage last week - hours before the company filed for bankruptcy - charges that the owner and CEO of CUNM masqueraded as an executive vice president of another credit union and approved "allonges," assigning millions of dollars of that credit union's mortgages to Fannie Mae as part of a wide-ranging fraud scheme that may involve hundreds of millions of dollars of credit union loans. CUNM was a private-label lender/servicer for more than a dozen credit unions. During a hearing last week in U.S. bankruptcy court (where CUNM and its parent U.S. Mortgage of Pinebrook, N.J. filed for protection), lawyers for the other CU, Picatinny FCU of Dover, N.J., said CUNM may have sold as much as $14 million of its loans to Fannie Mae without authorization and without sending the receipts to the credit union. "[USM CEO Michael] McGrath endorsed Picatinny's name to a note which assigned the mortgages to Fannie Mae," said James Forte, Picatinny's lawyer in the case. "These loans were sold without our authorization." Picatinny and dozens of other CUs are currently working with officials of USM/CUNM for the return of tens of millions of mortgages sold to Fannie Mae without their authorization, according to a report in Credit Union Journal. Lawyers for Mr. McGrath did not return telephone calls about the matter. The FBI is now investigating the collapse of USM and CUNM.

The ceiling on FHA-insured loans has been raised to $729,750 in 76 high-cost counties, including 51 in just four states - 15 in Virginia, 14 in California, 12 in New Jersey and 10 in New York. In 666 other counties, meanwhile, the FHA maximum has been set somewhere between the $271,000 floor and the high-cost ceiling. The new limits, which were authorized under the American Recovery and Reinvestment Act signed into law by President Obama on Feb. 17, will remain in effect until Dec. 31, 2009. A complete list of the affected counties is attached to HUD mortgagee letter 09-07.

Freddie Mac's Conventional Mortgage Home Price Index's purchase-only series, which excludes refinancing data, registered the largest annual decrease in its 39-year history during 2008. Home sales prices dropped 9.5% on average during the year and their decline accelerated notably in the fourth quarter when the index registered a 17.9% annualized decrease compared to an 8% annualized fall during the third quarter. The fourth quarter index results for 2008 mark "the first time that year-over-year declines in home values were recorded in each of the nine regions of the country," according to Freddie Mac vice president and chief economist Frank Nothaft. The index also showed for the second consecutive quarter "every region of the nation experienced flat or declining home values," he said. He noted, however, that the range of declines was wide, with the West South Central area experiencing declines of one-tenth of 1% over the year while the Pacific region had a decline of 23%.