Origination

Freddie Mac saw a spike in delinquencies in the month of January along with lackluster issuance of mortgage-backed securities and portfolio activity. The mortgage giant said its serious delinquency rate shot up 26 basis points since December to 1.98%. In January 2008, the percentage of loans 90 days for more past due was 0.71%. Meanwhile, the secondary market agency issued $16.3 billion in MBS, up slightly from $15.8 billion in December. Ginnie Mae issued $26.5 billion in single-family MBS in January. Freddie also said the size of its mortgage portfolio declined slightly to $798.9 billion. The Treasury Department recently doubled its financial backing of Freddie to $200 billion to increase market confidence in the government-sponsored enterprise, which is expected to report a large loss for the fourth quarter. Treasury also increased the GSE's portfolio limit by $50 billion to $900 billion.

Single-family existing home sales fell 4.7% in January from the previous month, but Realtors are optimistic the economic stimulus package passed by Congress will boost home sales this year. National Association of Realtors found that sales of previously owned homes fell from a seasonally adjusted annual rate of 4.25 million in December to 4.05 million in January. NAR economists estimate the stimulus package, which includes an $8,000 first-time homebuyer tax credit and higher loan limits, along with lower mortgage rates, will result in 900,000 additional sales this year. Meanwhile, the median single-family sales price was $169,900 in January, down 13.8% from a year ago. A preliminary analysis by NAR suggests that house prices in traditional sales are holding up better the distressed sales involving foreclosures and short sales. However, Wellesley College professor Karl Case estimates 1 million homes were sold in auctions last year, which is one reason Standard & Poor's Case-Shiller Housing Price Index has registered steeper price declines than other indexes. In addition, the auctions were heavily concentrated in the hardest-hit states - Arizona, Florida, California and Nevada. Auctions comprised 54% of sales in those four states, Mr. Case said.

Gov. Arnold Schwarzenegger has reportedly signed into law a 90-day moratorium on California home foreclosures — but the measure carries certain exemptions for servicers. According to a report in The Orange County Register, state regulators can grant loan servicers and lenders exemptions, if they have a mortgage modification program in place that meets certain criteria. The measure covers owner-occupied homes and first mortgages originated between 2003 and 2007. The loan mod exemptions cover programs that defer a portion of the principal, lower interest rates for at least five years, or extend loan terms. Sen. Ellen Corbett, D-San Leandro, introduced the moratorium language as an add-on to the California budget package.

Buyers of new homes in California will be eligible for as much as a $10,000 credit on their state tax returns under a bill that is expected to be signed by Gov. Arnold Schwarzenegger. "The measure, which has cleared both the state's General Assembly and Senate, establishes a tax credit of 5% of the purchase price, up to a maximum of $10,000, for anyone who buys a new house between March 1, 2009 and Feb. 28, 2010, or whenever funding is exhausted, whichever comes first. A total of $100 million - the equivalent of 10,000 purchases at the maximum credit - has been allocated for the credit. A first-time buyer in the Golden State who closes before Dec. 1 of this year also will qualify for the $8,000 federal tax credit enacted earlier this month by Congress as part of the most recent economic stimulus package, for a combined benefit of up to $18,000. California's homebuilders say the state credit, which will be paid out in equal increments of up to $3,333 over three years, will result in a net gain for the state coffers "because building a new home generates some $16,000 in state tax revenue." They also expect it to push reticent prospects off the fence and back into the market, and in the process, jumpstart a homebuilding industry that recently has built the fewest housing units since records started being kept in the early 1950s. Taxpayers must repay the credit if they do not live in the home as their principal residence for at least two years.

Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs. Four high ranking Republicans on the House Judiciary and Financial Services Committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage-backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

In their fight to stop bankruptcy cramdowns, financial services groups can no longer count on the support of the Realtors and homebuilders as the House prepares to vote on a housing bill that would allow bankruptcy judges to reduce or cram down the principal amount of residential mortgages. The National Association of Realtors is supporting passage of the bill (H.R. 1106) because it enhances the FHA Hope for Homeowners program that allows certain troubled borrowers to refinance and provides legal protections for servicers that engaged in loan modifications. The National Association of Home Builders recently changed its position on bankruptcy cramdowns. And the trade group is willing to accept a temporary change in the bankruptcy code to facilitate loan modifications. Meanwhile, the House is slated to vote Thursday (Feb. 26) on the housing bill and financial services lobbyists are working to narrow the negative effects of the bankruptcy provisions.

JPMorgan Chase has decided to close its warehouse lending division and is giving its non-bank customers just a few months to secure new lines. Meanwhile, mortgage advisors close to the warehouse issue say at least one more warehouse provider, a large regional bank, is seriously considering exiting the warehouse arena. Late on Feb. 24 a spokesman for JPM confirmed to National Mortgage News that the bank's warehouse business - bought from Washington Mutual last Spring - would be shuttered. Eight non-banks currently have lines of credit with JPM. (WaMu was sold to JPM in the fall with government assistance.) One advisor who has been tracking the warehouse issue, said he is not sure how large a player JPM is in terms of commitments but added, "This cannot help the industry." Earlier this year JPM began winding down its wholesale/broker division. Non-depository residential lenders that depend on warehouse credit are facing a funding crisis because so many banks and Wall Street firms have closed their warehouse divisions or scaled back credit. According to National Mortgage News there are about 10 banks or thrifts that are still active in warehouse lending compared to roughly 30 two years ago.

JPMorgan Chase has decided to close its warehouse lending division and is giving its eight current customers a few months to secure new lines. Late on Tuesday a spokesman for JPM confirmed to National Mortgage News that the business — bought from Washington Mutual last spring — would be shuttered. (WaMu was sold to JPM in the fall with government assistance.) One advisor who's been tracking the warehouse issue, said he is not sure how large a player JPM is in terms of commitments but added, "This cannot help the industry." Earlier this year JPM began winding down its wholesale/broker division. Non-depository residential lenders that depend on warehouse credit are facing a funding crisis because so many banks and Wall Street firms have closed their warehouse divisions or scaled back credit. According to National Mortgage News there are about 10 banks or thrifts that are still active in warehouse lending compared to roughly 30 two years ago.

Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs. Four high-ranking Republicans on the House Judiciary and Financial Services committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

JER Investors Trust Inc., a real estate investment trust headquartered in McLean, Va., has received written notice from the New York Stock Exchange that it is not in compliance with continued listing standards. However, the firm added it already has taken action that should put it back in good standing. Under NYSE rules, JRT common stock is required to maintain a minimum average closing price of $1.00 per share over a consecutive 30 trading day period. Once it receives the notice, JRT has 10 business days to notify the NYSE on how it plans to cure the problem; otherwise the common stock would be subject to suspension or delisting. On Feb. 23, 2009, JRT notified the NYSE that it intended to cure the price deficiency by effecting a 1-for-10 reverse stock split, which was announced in a press release dated Feb. 13, 2009 and became effective on Feb. 20, 2009. The per share price of JRT common stock at market close on Feb. 23, 2009 was $2.68. The determination as to JRT's restored compliance with the continued listing standards will be made by the NYSE.