Origination

HFF Inc., a commercial mortgage banker based in Pittsburgh, has reduced its workforce by approximately 12%, equating to 57 positions nationwide. Nearly all of HFF's 18 offices were affected by the reductions during the fourth quarter. Its employee count now stands at 433, including 163 producers. As of the third quarter of 2008, total employees came to 490, including 174 producers. "we are aggressively seeking ways to take advantage of opportunities as well as ensuring we are operating as efficiently as possible which includes tightly managing operating costs and eliminating positions in offices or in lines of business where the business no longer supports these positions," states John H. Pelusi Jr., HFF's chief executive.

Credit Suisse thinks mortgage bankers will originate about $1.75 trillion in new home mortgages this year with refinancings accounting for 58% of the total. CS analyst Moshe Orenbuch notes that his forecast "is subject to variations that may be caused by public policy measures." CS thinks that a loosening of loan-to-value requirements could cause "a significant amount" of refi activity. In 2008 mortgage bankers funded about $1.6 trillion in one- to four-family originations, according to figures compiled by National Mortgage News and the Quarterly Data Report.

Edward Gotschall, co-founder of New Century Financial Corp. - once one of the largest subprime lenders in the nation - died late last week of natural causes, according to a report in The Orange County Register. He was 53. New Century's collapse is now the subject of a criminal investigation by the Department of Justice. Mr. Gotschall and three others founded New Century in 1995. He managed the books of the publicly traded company and worked with Wall Street investment banking firms. The company failed in early 2007. At one time, Merrill Lynch had considered buying it but passed on the deal. At its peak it was funding $60 billion in mortgages, according to the Quarterly Data Report.

The average rate for a 30-year fixed-rate mortgage as tracked by Freddie Mac fell for the 10th consecutive week in a row to another survey-record low of 5.01%, down from 5.09% the week before. "Since the end of October 2008, these rates have declined by almost 1.5 percentage points, or a payment savings of about $184 a month for a $200,000 loan -- an additional $11 dollars from last week," said Freddie Mac chief economist Frank Nothaft in the weekly report. The average 30-year rate was up from 5.87% a year ago. The average 15-year FRM rate was 4.62%, down from 4.83% the previous week and from 5.43% a year ago. It has not been lower since June 13, 2003 when it was 4.6%. The average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was 5.49%, down from 5.57% the previous week and 5.63% a year ago. The average rate for one-year Treasury-indexed ARMs was 4.95%, up from 4.85% the previous week but down from 5.37% a year ago. Average points were 0.6 for 30-year FRMs, 0.7 for 15-year FRMs and five-year hybrids and 0.5 for one-year Treasury-indexed ARMs.

The Mortgage Bankers Association and the Financial Services Roundtable strongly oppose the bankruptcy "cramdown" deal Citigroup stuck Thursday with key Democratic senators. "We remain opposed to bankruptcy cramdown legislation because of the destabilizing effect it will have on an already turbulent mortgage market," said MBA chairman David Kittle. During negotiations, Sen. Dick Durbin, D-Ill., agreed to limit his bill so that bankruptcy judges could only reduce or cram down the amount of existing mortgages -- not new loans originated after enactment of the bill. "The compromise changes are a first step to improve the bill, but the Durbin bill is still far too broad and presents a serious risk to the mortgage markets," said Roundtable senior vice president Scott Talbott. MBA wants the bankruptcy provisions limited to subprime loans (2005- 2007 vintages) along with a specific exemption for Federal Housing Administration and Department of Veterans Affairs guaranteed loans.

The number of Home Equity Conversion Mortgages originated in calendar year 2008 increased by 6.4% over the previous year, according to new figures released by the Department of Housing and Urban Development. There were 115,176 of the Federal Housing Administration-insured reverse mortgage loan product originated last year, compared with 108,293 in 2007. Dollar volume figures were not available. According to an analysis from Reverse Market Insight, a consulting firm based in Aliso Viejo, Calif., Miami was the No. 1 market for reverse mortgage originations, with 9,561 HECMs originated in 2008, followed by Los Angeles at 4,126; Tampa, Fla., at 3,956; Santa Ana, Calif., at 3,695 and Baltimore at 3,595. Reverse Market Insight also determined that 2,949 lenders produced at least one HECM last year, a 76.5% increase over the previous year. NRMLA president Peter Bell said changes to the program recently put in place, such as a higher loan limit, the ability to use the loan for purchases and co-op eligibility, will lead to further growth of the product.

In early April a U.S district court judge will hear arguments in the National Association of Home Builders' case against the government, challenging newly issued Real Estate Settlement Procedures Act regulations that could hurt builders.NAHB originally filed for a preliminary injunction to block implementation of the "required use" section of the RESPA rule that bans builders from offering discounts and upgrades to buyers that are contingent on their use of an affiliated mortgage company. The trade group dropped that request after the Department of Housing and Urban Development agreed to delay the effective date. HUD extended the implementation date from Jan. 16 to April 16. NAHB claims the RESPA rule will force them to divest their affiliated mortgage and title companies, which could "greatly obstruct" the industry's effort to stimulate demand and sell off the excess supply of newly constructed homes. "In promulgating the final rule, HUD has flouted consumer satisfaction surveys and dampened the housing sector's efforts toward economic recovery," NAHB said in a filing with the U.S district court in Alexandria, Va.

The House Financial Services Committee released draft legislation on Friday that will revamp the TARP program, requiring that a minimum of $50 billion of the remaining $350 billion be used for foreclosure mitigation to help consumers. Among other things, the committee wants the government to pay down second liens that are impeding loan modifications. It also wants to continue the practice of offering cash incentives to residential servicers that engage in loan modifications. The effort is focused solely on owner-occupied homes. In October President Bush signed a $700 billion bailout bill for the mortgage and credit markets. Half the money has already been spent. Only Congress can release the balance of the money to the Treasury, which is managing the Troubled Asset Relief Program. The committee will hold a hearing on TARP next Tuesday, January 13. "We want to make it clear what our conditions will be," said House Financial Services Committee chairman Barney Frank, D., Mass. Rep. Frank also wants the FHA and the Office of Management and Budget to tell the committee what additional resources (staffing and technology) the mortgage insurance agency needs to keep up with the demand for FHA loans and to prevent fraud and abuses in the lending program.

The economic stimulus package, which is slated for a full House vote next month, will hike the Fannie Mae/Freddie Mac loan limit back up to $729,500, said Rep. Barney Frank, chairman of the House Financial Services Committee. The Democrat from Massachusetts said the loan limit increase has received the blessing of the incoming Obama Administration. The loan limit (for high-cost housing areas only) had been temporarily increased to $729,500 early last year but expired at Dec. 31. The new loan cap is $625,000, which will remain in place until the stimulus legislation passes. Many top ranked lenders continue offering jumbo mortgages but at interest rates 200 basis points higher than on "conforming" loans.

Because of a lack of warehouse financing available to non-bank primary funders, upwards of $370 billion in new residential originations could be at risk, according to an estimate made by The Warehouse Lending Project, a coalition of 50 lenders. The estimate, the group said, is based on "current projections of mortgage demand in 2009." Meanwhile, one warehouse source said the freeze in warehouse credit might be easing somewhat. The source, requesting his name not be used, said, "Some banks are beginning to take more applications and extend credit." He cited Comerica and National City as two examples. This past fall the Mortgage Bankers Association formed a task force on warehouse financing, but the MBA group is not affiliated with The Warehouse Lending Project. The WLP is headed by a former Fannie Mae official and two other industry veterans. (For the full story see the Monday edition of National Mortgage News.)