Origination

Employment in the mortgage industry fell 18% in 2008 as nearly 60,000 full-time workers lost their jobs, according to new government figures released Friday. In December alone 4,800 full-timers were let go even though interest rates fell and refi applications began to pile up at month's end. Mortgage companies are using increased productivity to substitute for hiring people, according to Orawin Velz, director for economic forecasting at the Mortgage Bankers Association. "Some lenders are managing their pipelines by quoting higher rates," she said. "Unless they see a sustained increase in volume they don't want to hire right now," she said. The mortgage banking and brokerage segments now employ about 280,000 workers compared to more than 500,000 two years ago, meaning the industry is off 44% from its peak. Meanwhile, the U.S. Bureau of Labor Statistics made a huge annual adjustment -- of 52,800 jobs -- in its mortgage employment figures for 2008. BLS originally reported that employment in the mortgage banker/broker sector was 337,600 in November. But it then revised downward that number to 284,800 in Friday's jobs report. The revision shows that BLS under-estimated the amount of job losses early in the recession for all workers, not just those employed in housing finance.

NVR Inc., a homebuilder headquartered in Reston, Va., has been given a No. 5 (Strong Sell) rating from Zacks.com. In a statement issued on Feb. 5, 2008, Chicago-based Zacks said NVR's fourth quarter 2008 loss was a result of being "battered by the prolonged downturn in the housing sector." NVR had been profitable in the fourth quarter 2007. Furthermore earnings have been shrinking steadily for the past 2 years. Analysts now expect NVR to earn $18.98 in fiscal 2009, down from $20.30 per share."

Citizens South Bank, Gastonia, N.C., will use all of its $20.5 million in federal Troubled Assets Relief Program money to create a 30-year residential loan program with a starting interest rate of 3.5% in an effort to stimulate the local housing market. The loan program has a maximum rate of 5.5% and waives closing costs. The program will bring together builders and developers, who are Citizens South customers and have extra housing stock or residential lots ready for sale, with consumers who are looking for the best possible mortgage rate. Participating builders and developers will agree to pay the closing costs on the mortgages as a form of assistance to qualified homebuyers. "Recent consumer surveys show that lower interest rates provide people with the assistance they need to purchase a home," Kim S. Price, president and chief executive of Citizens South Bank, said. "We believe this program is the best use of our CPP funds because it promotes home ownership and generates work for builders, developers, construction workers and real estate agents." The start rate of 3.5% is set for the first 24 months; then the loan adjusts to the 5.5% rate. Applicants will be qualified at the 5.5% rate. Citizens South will hold the loans in portfolio.

The Senate has approved a $15,000 homebuyer tax credit that the homebuilders and Realtors have been pushing for to stimulate sales and soak up the excess inventory of unsold houses. The Senate approved and added the tax credit amendment by Sen. Johnny Isakson, R-Ga., to the economic stimulus bill by a voice vote. The Isakson amendment expands an existing $7,500 homebuyer tax credit to $15,000, or 10% of the purchase price, whichever is less. And it makes the tax credit available to all homebuyers. The House has passed a $7,500 tax credit that is limited to first-time homebuyers. In the 1970's, the government successfully employed homebuyer tax credits to get the economy out of a serious housing down turn, according to Sen. Isakson. "We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment," he said. Sen. Patty Murray, D-Wash., is expected to offer an amendment that raises the maximum loan limit on Fannie Mae, Freddie Mac and FHA loans back to $729,750 for the rest of this calendar year. The House-passed economic stimulus bill has a similar loan limit provision.

First Interstate Mortgage of New Jersey is pulling the plug on its wholesale division, at least for now, according to an e-mail memo sent out to some of its approved brokers. The memo notes that "effective immediately" the Shrewsbury-based non-depository will no longer accept applications from brokers, but will honor mortgages that have been submitted and/or locked. Company officials did not return telephone calls and e-mails seeking comment. One mortgage banker familiar with the company speculated that the lack of warehouse credit available to non-bank funders may have something to do with FIM's decision, adding that the company might re-enter the space eventually. Towards the end of the memo company vice president Ed Pascocello notes, "Market conditions specific to third-party originators has necessitated this decision."

The average rate for a 30-year fixed-rate mortgage rose to 5.25% from 5.10% during the week ending Feb. 5, according to Freddie Mac. "Interest rates for fixed-rate mortgages rose this week amid economic reports that were somewhat better than consensus forecasts had anticipated," said Frank Nothaft, Freddie Mac vice president and chief economist. The average 30-year FRM rate was down from 5.67% a year ago. The 15-year FRM rate averaged 4.92% in the latest week, up from the previous week's 4.80% but down from 5.15% last year. The average rate for the five-year Treasury-indexed hybrid adjustable-rate mortgage fell slightly to 5.26% from 5.27% but was up from 5.21% a year ago. One-year Treasury-indexed ARM rates averaged 4.92% in the latest week, up from the previous week's 4.90% but down from 5.03% last year. Average points were as follows: 0.8 for 30- and 15-year year FRMs, 0.6 for five-year Treasury-indexed hybrids and 0.5 for one-year Treasury-indexed ARMs.

Wells Fargo has gotten some backlash from industry supporters after canceling a scaled-backed mortgage employee recognition event "in light of the current environment" and in response to what the company called a "misleading" Associated Press report. According to Wells, the report suggested the expenditure was inappropriate given that the company, like many of its peers, has been under financial duress and accepted public money. The company said the meeting was one of the few pre-planned events for 2009 it had not cancelled only because there was no "meaningful" savings to be derived from it. Wells also noted that the government has encouraged that the public funds it received be used for lending and the originators that had been invited to the event, in combination with their colleagues, had produced $230 billion in mortgages during 2008. "Last quarter alone, we made $22 billion in loan commitments and $50 billion in mortgage originations. That's more than $70 billion or almost three times the amount of the U.S. Treasury's investment in Wells Fargo," the company said. Industry supporters, such as author Scott McKain, criticized such cancellations as set backs to go-forward company efforts to compete in the market and improve its finances. Many commentators, however, lambasted the lender for what they felt was a totally inappropriate junket after receiving $25 billion in taxpayer funds.

Often held out as the poster boy for all that is wrong with the housing sector, Las Vegas is attracting more than its share of bargain hunters. According to Robert Jenson, an agent with RE/MAX Central who specializes in Sin City's high-end properties, of the nearly existing home 2,000 sales logged in Vegas in January, 88% were distressed sales, either foreclosures (1,588) or short sales (180). "Lower interest rates and a drop in the average sales price to under $184,000 is attracting more bargain hunting," Mr. Jenson said. While the inventory of homes on the market peaked in the Las Vegas area in July, there are still roughly 21,000 units on the market. Of those, nearly 1,000 are priced at $1 million or more. January's sales pace was the second lowest over the past 12 months, according to the local real estate agent, who distributes a monthly report to his clients. At $184,000 the average price in January was down 7.25% from December, "the biggest drop in more than a year," Mr. Jenson said.

California's home builders last year produced just 65,380 units in a state where population estimates alone dictate a need for nearly three times that many new houses annually. And 2009 could be even tougher yet on the state's moribund housing industry. The California Building Industry Association is predicting that only 63,400 units will be started in 2009. That's a 3% decline from 2008's all-time low. The previous low point in the Golden State's housing production also was during a recession. But in 1993, builders in the state still managed to start 84,656 units. In the early 1980s recession, production bottomed out at 85,656 units in '82. The 2009 forecast, prepared by the Construction Industry Research Board, predicts California builders will produce 30,000 single-family units in 2009, down 9% from the 33,048 constructed in 2008, and 33,400 multifamily units, up a modest 3% from the 32,332 permits issued in 2008. "These numbers do not bode well for our industry, or the economy, and we could be in for a very rough year," said CBIA President Robert Rivinius.

Fidelity National Financial Inc.'s acquisition of LandAmerica's title underwriting subsidiaries resulted in a loss that pushed FNF into the red for the fourth quarter but still left the company with improved year-to-year results for the period. FNF lost $1.7 million ($0.01 per share) for the fourth quarter 2008, an improvement over its loss of $44.9 million ($0.21 per share) for the same period in 2007. The fourth quarter 2008 results include the nine days during the period it owned the former title underwriting subsidiaries of LandAmerica Financial Group. Those units - Commonwealth Land Title, Lawyers Title and United Capital Title - were responsible for a net loss of $2.8 million. Otherwise, FNF would have earned $1.2 million ($0.01 per share) for the first quarter. For the full year, FNF lost $165.8 million ($0.79 per share) compared with profits of $129.8 million ($0.59 per share) for 2007. FNF chairman William P. Foley II said through the end of January, the company has "eliminated approximately 1,500 of the 5,500 employees we inherited" from the former LandAmerica firms and closed 125 offices. This, he said, has given FNF run-rate savings of $180 million. More good news, Mr. Foley said, was that FNF's per day open order counts doubled between November and December. In January, they improved even further to 14,200 new open orders per day.