Origination

The delinquency rate on home equity lines of credit reached its highest level ever in the American Bankers Association's third quarter 2008 consumer credit delinquency bulletin. The HELOC overdue rate rose seven basis points from the second quarter to 1.15% in the third, according to the ABA. The percentage of closed-end home equity loans that were past due rose to 2.63% from 2.56% in the previous quarter. And consumer delinquency rates likely have not peaked, according to ABA chief economist James Chessen. Noting that a composite ratio of overdue rates on eight types of consumer loans rose by 22 basis points to 2.90% in the third quarter, he said the data point to continuing financial stress for consumers. With job losses continuing to mount, he predicts that delinquencies on all types of consumer loans will continue rising in the coming quarters.

The Market Composite Index, an overall measure of mortgage applications, decreased 8.2% on a seasonally adjusted basis from 1245.7 down to 1143.8 during the week ended Jan. 2, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The index was adjusted by MBA to account for the short week because of New Year's Day. On an unadjusted basis, there would have been an 8.9% decrease compared with the previous week but the index would have increased by 28.3% compared with the same week one year earlier. The Purchase Index increased 7.3% to 344.2 from 320.9 one week earlier on a seasonally adjusted basis, while the Refinance Index decreased 12.3% to 5904.5 from 6733.8. Refinancings fell to 79.8% of applications from 82.9% the previous week, while adjustable-rate mortgages accounted for 0.9% of applications, up from 0.8% for the previous week, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.07% from 5.03%, with points (including the origination fee) decreasing to 1.16 from 1.24 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

The National Association of Home Builders is willing to discuss a temporary change in the bankruptcy code to facilitate loan modifications as they lobby Congress for passage of key provisions to boost home sales. "It is a 180 degree turn for us. But desperate times call for desperate measures," NAHB chief executive Jerry Howard said. The builders are concerned foreclosures are making it difficult to sell off excess inventory and vacant homes are pushing appraisals on new homes down to liquidation prices. NAHB also supports a loan modification program developed by the Federal Deposit Insurance Corp. and it is urging Congress to provide $25 billion for the loan guarantees. The builder's main legislative agenda calls for passage of an interest rate buy-down program and an expanded homebuyer tax credit as part of the massive economic stimulus bill that Congress is expected to pass in mid-February. Builders and executives from related industries met in Washington Wednesday to lobby for the buy-down and tax credit provisions. NAHB estimates enactment could increase new home sales by 200,000 and existing home sales by 1 million this year.

Wells Fargo Home Mortgage, Des Moines, Iowa, has decided to "temporarily suspend" the purchase of nonconforming mortgage loans through its wholesale channel. The move was effective on Jan. 5. A statement from a company spokesman said "Wells Fargo has long been the nation's No. 1 retail mortgage lender and a leading third-party lender. Due to low market demand and higher risks, we have decided to temporarily suspend nonconforming product offerings through our wholesale channel."

Agree Realty Corp., Farmington Hills, Mich., has exercised its option to extend the maturity date of its $55 million line of credit from November 2009 to November 2011. All other terms of the agreement remain unchanged. This includes that the company can continue to choose to pay interest on the facility at a rate of 100 basis points over Libor or at the prime rate. Excluding this facility, the company has no debt expirations before 2015.

Avista Solutions has integrated the Avista Agile loan origination system with DocMagic, a loan document solution provider. The integration to DocMagic streamlines the loan document production process for Avista Solutions customers, giving Avista customers access to DocMagic's e-disclosure and e-sign features. DocMagic's interface with Avista's Agile LOS is a direct interface. DocMagic's e-disclosure feature allows lenders to deliver and get receipt confirmations of disclosure documents via e-mail. DocMagic monitors the entire e-disclosure process, notifying lenders when borrowers view their documents and mailing printed copies of the documents to borrowers if they fail to view them electronically within 48 hours.

Roughly 50 different investors received confidential bid packages on IndyMac Bank FSB, the insolvent thrift that is also the nation's ninth largest residential servicer. A spokesman for the Federal Deposit Insurance Corp. also clarified that the investor group awarded IndyMac this past Friday is putting roughly $2.9 billion into the deal: $1.6 billion that represents the difference between the thrift's liabilities and the value of its assets (after the assets have been marked-to-market) and another $1.3 billion in cash that will be used to capitalize the re-constituted lender/servicer. "It's failed bank math," he said. The spokesman said at least 80 different investors were invited to bid but declined to say how many were involved in the final bid process. Of the 80, 50 received bid packages. Late last week the FDIC agreed to sell the Pasadena, Calif.-based IndyMac to IMB Management Holdings, a consortium of hedge funds led by Dune Capital, J.C. Flowers, Paulson & Co., and others. IndyMac has $13.9 billion in assets and $12.3 billion in liabilities, said the spokesman.

The National Association of Realtors' Pending Home Sales Index fell 4% between October and November and is now at the lowest point since the trade group started tracking this data in 2001. Job losses and low consumer confidence were the driving factors, the group said. The new index is 82.3, compared with 85.7 in October and 86.9 for November 2007. And according to NAR chief economist Lawrence Yun, "December's housing market activity could be comparably lower due to ongoing problems in the economy, so a real-estate focused stimulus plan is urgently needed. With a properly real-estate focused stimulus measure, home sales could rise more than expected, by more than 10% to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country." NAR calls for expanding a $7,500 tax credit to all homebuyers and permanently raising the conforming loan limits. "The unique housing affordability conditions in today's market underscore the opportunities in giving consumers the necessary incentives to stimulate our economy through a housing recovery," Mr. Yun said.

The Department of Housing and Urban Development has agreed to delay for 90 days the implementation of a RESPA rule that would ban builders from offering discounts to home buyers that use their affiliated mortgage companies. The National Association of Home Builders is trying to overturn the "required use" section of the new Real Estate Settlement Procedures Act rule that was slated to go into effect Jan. 16. The builders have filed a complaint in a U.S. district count in Alexandria, Va., seeking an injunction to block implementation. A HUD spokesman said the department agreed to postpone the effective date so its attorneys "can argue the case on the merits of the issue." NAHB officials could not be reached for comment.

An accused participant in a mortgage fraud scheme has pled guilty to conspiring to commit mail fraud and wire fraud. Seth Srader entered his plea on Dec. 11, 2008, before U.S. District Judge Keith Ellison. Srader was charged in a mortgage fraud scheme involving the recruitment of individuals to purchase residential properties at or near 100% financing using their good credit. The borrowers were paid from the loan proceeds for their participation in the acquisition of the property. Loan officers at mortgage brokerage offices were utilized to furnish false and fraudulent information to the lenders. Loan proceeds would be disbursed to one or more of the conspirators through checks or wire transfers from the title company to a bank account established in an assumed name. Srader participated in the scheme as a borrower, purchasing two residential properties in the Houston area, borrowing a total of $869,310. Each loan was obtained using false and fraudulent information. The residential loans Srader obtained during the scheme eventually fell into default. Srader has been permitted to remain free on bond pending sentencing, which has been set for March 3, 2009.