Origination

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 ½ percentage points, or 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 Bank of England's Monetary Policy Committee has cut the Bank Rate paid on commercial bank reserves by 50 basis points to 1.5%, citing among other things a deterioration in the outlook for residential investment and tighter credit. "The outlook for business and residential investment has deteriorated. And the availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non-financial sector," the BoE said.

One supporter of seller-funded downpayment assistance programs believes the recent decline in pending home sales to an all-time low is further evidence of housing market woes that reflect a need for federal officials to reauthorize the use of such programs in conjunction with government loans. Ann Ashburn, president of AmeriDream Inc, Gaithersburg, Md., went so far as to say, "our housing market and our economy depend" on Congress restoring seller-funded DPA programs. "The next generation of qualified homeowners has little incentive to enter the market, particularly after DPA programs expired last fall. DPA is a common sense approach to getting responsible, creditworthy homebuyers off the sidelines and into homes without costing the taxpayer a dime. DPA is also recognized as a logical means to directly help Main Street Americans while stimulating the broader economy. President-elect Obama was right when he said we need to move beyond the stale arguments that say low-income Americans shouldn't even try to own a home," Ms. Ashburn said.

The Financial Accounting Standards Board has approved by a 3-2 vote changes to its other-than-temporary impairment guidance that should reduce the amount of charges banks and other holders of mortgage-backed securities have to report in the fourth quarter. The new guidance (first proposed on Dec. 19) allows management to make a "reasonable judgment" of future cash flows of debt securities in determining impairment. Previous guidance required consideration of what "market participants" would use in determining the current fair value of MBS. At Wednesday's meeting, the board amended the proposed guidance to stress that MBS holders are required to assess collections of future cash flows even when the securities are performing and borrowers making timely payments. In making that assessment, MBS investors must consider all available information reflecting past events and current conditions in developing estimates of future cash flows. "I don't think it represents amnesty on OTTI in the fourth quarter. It still requires an assessment of the collectibility of the cash flows," said FASB member Leslie Seidman. Board members also stressed that the new guidance is not retroactive to the third quarter or previous periods.

The Mortgage Bankers Association released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the third quarter of 2008, which reveals that commercial/multifamily real estate began to be affected by the slowing economy during the third quarter. Property fundamentals showed a slowdown in leasing activity. Property sales and mortgage originations showed the impact of economic uncertainty, shifting investor expectations and the continued capital markets malaise, while mortgage investment levels were depressed by the capital constraints of traditional investors and headline risks associated with holding mortgage-related assets. Despite relatively modest new construction activity, the slowdown in job growth, retail sales and other aspects of the economy has led to lower demand for commercial space and to declines in net absorption of space. As a result, supply is outpacing demand. Nationally, asking rents fell in the third quarter for office and retail space. Rents were flat for industrial space and up slightly for apartments and vacancy rates increased for each of the major property types. Commercial property sales have also stalled. On a dollar basis, commercial property sales through the first three quarters of 2008 were 67% lower than for the same period in 2007. While part of the large percentage fall off can be attributed to the extraordinary volumes seen in the first half of 2007, sales volume in the third quarter was the lowest since 2003's third quarter.

A coalition of mortgage lenders led by a former Fannie Mae official and two other industry veterans, may lobby elected officials and regulators to allow Fannie Mae, Freddie Mac and the Federal Home Loan Bank system to provide warehouse financing to non-banks, MortgageWire has learned. Glen S. Corso, a former executive at PMI Group of Walnut Creek, Calif., said having the GSEs provide warehouse financing is just one of many ideas the group is kicking around. Currently, the warehouse lending arena is dominated by commercial banks, but there are major capacity issues regarding warehouse financing because of all the lenders that have left the sector. Mr. Corso is heading a group called the 'Warehouse Lending Project' along with Bob Englestad, a former Fannie Mae official, and Pete Mills, who was once the top Washington lobbyist for Countrywide Home Loans. Mr. Corso said 50 non-bank mortgage lenders are part of the coalition. (For the full story see the Monday edition of National Mortgage News.)

The Financial Accounting Standards Board has approved by a 3-2 vote changes to its other-than-temporary impairment guidance that should reduce the amount of charges banks and other holders of mortgage-backed securities have to report in the fourth quarter. The new guidance (first proposed on Dec. 19) allows management to make a "reasonable judgment" of future cash flows of debt securities in determining impairment. Previous guidance required consideration of what "market participants" would use in determining the current fair value of MBS. At Wednesday's meeting, the board amended the proposed guidance to stress that MBS holders are required to assess collections of future cash flows even when the securities are performing and borrowers making timely payments. In making that assessment, MBS investors must consider all available information reflecting past events and current conditions in developing estimates of future cash flows. "I don't think it represents amnesty on OTTI in the fourth quarter. It still requires an assessment of the collectibility of the cash flows," said FASB member Leslie Seidman. Board members also stressed that the new guidance is not retroactive to the third quarter or previous periods.

Timothy Pearson of Beavercreek, Ohio, was sentenced to 20 months in federal prison, followed by three years of supervised release and ordered to pay $171,211 in restitution to the Internal Revenue Service for his role in a mortgage fraud scheme. Pearson had previously been employed as a loan officer. Pearson pleaded guilty on March 12, 2007 to one count of conspiracy to commit money laundering and to two counts of income tax evasion. According to court documents, Pearson was involved in a mortgage fraud conspiracy between March 2001 and December 2005 where he directly and indirectly participated in at least 365 fraudulent real estate closings in the greater Dayton, Ohio area. Pearson prepared and submitted fraudulent mortgage loan applications on behalf of prospective purchasers of residential properties, a majority of which were located in the Dayton area. In addition, Pearson fraudulently provided downpayments for the purchasers at the real estate closings.

Chicago-based commercial real estate firm Sheldon Good & Co. Auctions International LLC marked the passing of its chairman and CEO, Steven L. Good - a globally-known author and philanthropist - on Tuesday by closing all its offices as it made plans to reopen Wednesday under its president's day-to-day management. Multiple news reports indicate Mr. Good's death was an apparent suicide. He had been quoted as saying, like many industry executives, that the commercial real estate market has been challenging. A spokeswoman who has worked with the family since 1976, Susan Berman Hammer, told MortgageWire that the death was a surprise to all that knew him and he had been optimistic and energized by his many business and philanthropic activities as well as his writing, and had been looking forward to chairing the National Association of Realtors' commercial alliance this year. Several family members survive Mr. Good, including his father, Sheldon Good, whom his company was named after and who also is a well-known international real estate executive. Company president Alan R. Kravets said in a statement posted on the company's website that it plans to "continue the tradition of excellence established by our founder, Sheldon Good, and expanded upon by our late chief executive" going forward. "We have a number of exciting projects currently in development. Steve enjoyed this fact," he said.

Federal regulators have decided to give banks and thrifts Community Reinvestment Act credit for helping to prevent foreclosures. "Examiners may consider favorably" the establishment of loan programs to modify and restructure mortgages for homeowners facing foreclosure, according to a newly revised "Interagency Questions and Answers Regarding Community Reinvestment." Banks can also receive community development services points by providing foreclosure prevention programs to low- and moderate-income homeowners. "The new and revised Questions and Answers encourage financial institutions to participate in foreclosure programs that have the objective of providing affordable, sustainable, long-term restructurings and modifications for homeowners who are facing foreclosure on their primary residences," according to a joint statement by the regulators.