Origination

After earning a profit in the third quarter, Radian Guaranty Inc., Philadelphia, lost $250.4 million in the fourth quarter, an improvement over last year's 4Q loss of $721 million. For all of 2008 the insurer lost $410.6 million ($5.12 per share), versus a loss of $1.3 billion ($16.22 per share) in 2007. In the fourth quarter Radian's mortgage insurance business posted a net loss of $77.0 million, compared to a loss of $336.6 million in the same period one year prior. For the year, the mortgage insurance business lost $784.7 million compared to $695.4 million in 2007. In the fourth quarter Radian wrote $5 billion of primary new insurance, most of it through its flow channel. In the same quarter of 2007, it wrote $13.6 billion of new insurance, $10.4 billion of which was flow. For all of 2008 it wrote $32.5 billion in new MI, compared to $57.1 billion the year before.

The loan-to-value limit on mortgages that Fannie Mae and Freddie Mac can refinance under the President's foreclosure rescue plan could go higher than 105%, according to an industry veteran who has been advising the Obama Administration on the issue. Stressing that he was speaking for himself and not the White House, William Longbrake, a member of the board at First Financial Northwest, Renton, Wash., said it's "entirely possible" the ceiling could rise above 105% once the government-sponsored enterprises determine the procedures they will follow regarding refinancing underwater loans. Last week, James Lockhart, director of the Federal Housing Finance Agency, said the line was drawn at 105 so the new loans could still be securitized. According to the government, about 75% of the mortgages with LTVs above 80% of current value that the GSEs own or guarantee fit under that cap. Mr. Lockhart said his team did not want to push the lid any higher because of capacity issues. But mortgage professionals said the artificially low LTV limit won't help borrowers in California, Nevada and other markets where values have sagged the most. Mr. Longbrake, who has worked at the FDIC and most recently at WaMu, made his remarks at the National Association of Mortgage Brokers Legislative and Regulatory Conference in Washington.

Home prices fell 18.2% in the fourth quarter, retreating to their 2003 levels, according to the newly released Standard & Poor's/Case-Shiller housing price index. "This is the steepest rate of decline we have seen," S&P managing director David Blitzer told reporters. The December HPI report shows that average house prices are down 26.7% since the peak in the second quarter of 2006. Wellesley College professor Karl Case noted that Case-Shiller data includes auction sales, which is one reason the index shows steeper price declines than other indexes. "There are very few, if any, pockets of turnaround that one can see in the data," said Mr. Blitzer. However, Boston, Denver, Los Angeles, San Diego and Washington D.C. showed a relative improvement in lesser rates of decline.

Bank of America has decided to combine the wholesale and correspondent lending divisions of Countrywide Home Loans into one unit, placing executive Doug Jones in charge of both. Mr. Jones also will oversee warehouse lending for the bank, said a company spokesman. Todd Dal Porto, executive vice president in charge of wholesale, was named retail sales executive in charge of the Western U.S. In late April the Countrywide Home Loans brand will disappear entirely, replaced with Bank of America Home Loans, which will incorporate all residential lending for BoA and the old Countrywide franchise. BoA bought Countrywide Financial Corp., the parent of CHL, in July of last year. Prior to the purchase, BoA had ceased funding loans through wholesale and correspondent means, but so far has vowed to remain in these third-party lending channels, which Countrywide routinely dominated along with Wells Fargo & Co.

Table funding using mortgage brokers accounted for just 16.6% of all new residential loans originated in the fourth quarter, the lowest on record since National Mortgage News began tracking originations 15 years ago. As recently as mid-2007 wholesale -- where broker-sourced loans are table funded -- accounted for 28% of production. The 30 or so table funders reporting to NMN and the Quarterly Data Report originated roughly $50 billion in mortgages through loan brokers. All lenders -- using retail, wholesale and correspondent means -- funded $300 billion in product during 4Q, according to preliminary figures. Retail and correspondent lending accounted for the balance of production. Several of the nation's largest lenders have exited the wholesale channel in the past year and mortgage insurance companies have tightened their guidelines on broker-sourced loans.

FHA lenders would be reimbursed for losses on any cramdowns under a housing bill pending in Congress. The bankruptcy bill recently approved by the House Judiciary Committee raised concerns that lenders of FHA and Department of Veterans Affairs guaranteed mortgages could suffer losses if a mortgage is crammed down. The housing bill (H.R.1106) that the House of Representatives is slated to vote on this Thursday allows FHA and VA lenders to cover lender losses (principal and interest) due to a bankruptcy cramdown. Despite these changes, the mortgage industry continues to oppose passage of the bankruptcy section of the housing bill. H.R. 1106 also provides legal protections for servicers that engage in loan modifications.

Expecting another big year for the FHA single-family insurance program, House appropriators are increasing the agency's commitment level to $315 billion, a 70% improvement from last year. Lenders originated $171.8 billion in Federal Housing Administration loans in FY 2008, which ended September 30. In the first quarter of FY 2009, FHA single-family endorsements totaled $71.9 billion, compared to $21.4 billion for the same period a year earlier. The House of Representatives is slated to vote on an omnibus appropriations bill this Wednesday (Feb. 25) that increases commitment levels for the Government National Mortgage Association and FHA. Meanwhile, appropriators have allotted the HUD Inspector General an extra $13 million to keep a closer watch on FHA, focusing on new programs, including the 'Hope for Homeowners Now' initiative which helps consumers refinance their underwater mortgages. On Thursday, the House is expected to vote on a bill (H.R. 1106) to make the H4H program more attractive to borrowers and servicers. H.R. 1106 also includes provisions to allow bankruptcy cramdowns, shield servicers engaged in loan modifications from investor lawsuits, and bolster the federal deposit insurance programs for banks and credit unions.

Bank of America has decided to combine the wholesale and correspondent lending divisions of Countrywide Home Loans into one unit, placing executive Doug Jones in charge of both. Mr. Jones also will oversee warehouse lending for the bank, said a company spokesman. Todd Dal Porto, executive vice president in charge of wholesale, was named retail sales executive in charge of the Western U.S. In late April the Countrywide Home Loans brand will disappear entirely, replaced with Bank of America Home Loans, which will incorporate all residential lending for BoA and the old Countrywide franchise. BoA bought Countrywide Financial Corp., the parent of CHL, in July of last year. Prior to the purchase, BoA had ceased funding loans through wholesale and correspondent means, but so far has vowed to remain in these third-party lending channels, which Countrywide routinely dominated along with Wells Fargo & Co.

NetMore America Inc., Walla Walla, Wash., is the latest mortgage lender to be affected by the lack of funds available to originate loans, although the company is still bullish on its growth prospects for 2009. Mark Freedle, president and chief executive of NetMore commented in a statement, "NetMore is giving priority to purchase transactions which will still be handled within five days and is curtailing its focus refinances for a time. Last week we realigned our staffing in line with the ongoing credit crisis and lack of access to growth capital. We reduced our overall number of employees by about 20 or less than 10% of our total of over 200 employees. We regret taking this action because it impacts dedicated and talented people whose work we value. However, it was a necessary step given the current environment impacting the mortgage industry. Such as, one, the reduced number of warehouse lenders offering credit lines even to responsible and growing lenders such as NetMore; and two, the difficulty of accessing growth capital due to the disruption in the capital markets. We will still be funding between $85-100 million a month of high quality FHA and agency loans, which at this rate would double our 2008 closings, and we will increase this level once the credit and capital markets return to normal."

U.S. Mortgage Corp. of Pinebrook, N.J., whose credit union lending affiliate went bust last week, has closed its doors according to industry sources and a posting on its website. Company officials could not be reached for comment. One loan officer familiar with the company said it may have had a servicing portfolio as large as $1 billion but that figure could not be confirmed. A posting on the lender's website says it has ceased operations "due to unforeseen circumstances." USMC was the parent of CU National Mortgage, a private label funder that served the nation's smaller credit unions. CUNM was founded 13 years ago.