Origination

Single-family existing home sales fell 8% in November from October as deteriorating economic conditions produced a drop in homebuying for the second month in a row, as well as a further slide in house prices. National Association of Realtors said sales of previously owned homes fell from a seasonally adjusted annual rate of 4.37 million in October to 4.02 million in November. "The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level," NAR chief economist Lawrence Yun said. Sales are down 8.8% from a year ago. But prices of single-family homes have declined by 12.8% from November 2007. Unless Congress takes steps to stimulate home sales and stabilize prices, "falling home prices will lead to faster contraction in consumer spending and further deterioration in bank balances sheets," Mr. Yun said.

The Office of Thrift Supervision has suspended a regulator whose career dates back to the S&L crisis for allegedly allowing IndyMac to backdate a capital infusion a few months before the alt-A lender/servicer was seized by the government. The OTS removed Darrel Dochow as director of its western region, which supervised IndyMac of Pasadena, Calif., Washington Mutual, Downey Savings, and several other large, now defunct thrifts that were key players in the subprime and alt-A markets. The matter is now under investigation by the Inspector General's Office of the U.S. Treasury. According to a letter written to Sen. Charles Grassley, R-Iowa, "The impact of West Region Director Dochow's approval to record the capital infusion in the quarter ending March 31, 2008, was that IndyMac was able to maintain its 'well-capitalized' status and avoid the requirement in law to obtain a waiver from FDIC to accept brokered deposits." IndyMac, which was taken over this past summer, was a big user of "hot money" to maintain its base of liabilities. Earlier in his career Mr. Dochow was a top regulator in Washington. In the late 1980s Mr. Dochow wanted the Federal Home Loan Bank Board (the forerunner of the OTS) to negotiate with rogue S&L operator Charles Keating Jr., who was threatening to sue the government. Eventually, Lincoln was seized by the FHLBB in one of the costliest thrift collapses in history, not counting failures that occurred this year.

New homes sold at an annualized pace of 407,000 units in November, the weakest showing in almost 18 years and further evidence that the housing market is still in distress. According to figures compiled by the Commerce Department and the Department of Housing and Urban Development, new home sales fell 2.9% compared to October, and 11.4% from the same month last year. "The November figure of 407,000 is the lowest since January 1991 and within a whisker of the lowest since 1982," said Greenwich Capital analyst Steve Stanley. "Builders are having increasing difficulty competing on price against the wave of foreclosed homes hitting the market, and the drastic tightening in credit is hitting developers on both sides (households are having more trouble qualifying for mortgages and the builders are having their own funding issues)." The median sales price rose to $220,400 from $214,600 in October.

Real estate website Zillow.com has launched Zillow Advice, an online resource for consumers to find answers to specific local real estate questions. Located in the "Advice" tab on Zillow.com, Zillow Advice encourages consumers to "Ask a Question," tag it by topic or locality, and receive advice from Zillow's online community of local real estate experts. Zillow Advice adds to existing community features such as Zillow Discussions and Home Q&A, which allow for broader discussion topics or home-specific questions and answers. Currently, more than 40,000 contributions are made to Zillow.com by its community of users each day, according to Zillow.

Fraud prevention firm National Loan Auditors, Walnut Creek, Calif., is now offering an online resource portal aimed at providing clients with up-to-date information on statutes and case law pertaining to lending and foreclosure. The portal includes status updates on all federal, state and municipal legislation, the company said. "NLA Law Portal adds value to our forensic loan audit by providing support for its findings and information on how to effectively use the audit report in legal proceedings," said August Blass, CEO of National Loan Auditors. "Users are given summaries and guidelines that distill lending and foreclosure law into a short manageable synopsis, saving hours in research." Once access has been granted, clients have the ability to search various summary topics such as alternatives to workout agreements, Truth in Lending Act summary, and Home Ownership and Equity Protection Act action steps. State legislation topics also are available. By selecting a state, users will receive current case law and statues in that state. Litigation tools also will be displayed when applicable.

Harland Financial Solutions' Interlinq E3, the company's Web-based loan production platform management system, is providing complete integration with Compliance EAGLE, an automated compliance review service developed by QuestSoft. Compliance EAGLE offers Interlinq E3 users a compliance process within the LOS. Compliance EAGLE uses proprietary rule sets to identify regulatory exceptions. "Harland Financial Solutions has been a valued integration partner of QuestSoft's for more than ten years," said Leonard Ryan, president of QuestSoft in a prepared statement. This integration is said to provide customers with a best practices approach to dealing with regulatory compliance.

Home price declines are showing signs of easing but it's too early to declare a bottom, according to preliminary figures compiled by First American CoreLogic. The company released an early preview of its November findings, showing that prices declined at a rate of 9.6% in November, compared to 10.4% and 11.2% in October and September, respectively. "The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines," said Mark Fleming, chief economist for First American CoreLogic. But the economist cites continued job layoffs and a huge inventory of unsold homes as major negatives weighing on the housing market. Roughly $2 trillion in home equity has been wiped out over the past year. California cities continue to lead the pack in terms of price declines, according to the company. Salinas has suffered the most among California cities with values falling by almost 30%.

A new report shows that banks and thrifts are more successful at modifying mortgages they own than the loans they service for other investors and Fannie Mae and Freddie Mac. Only 51% of bank-owned modified loans had missed a payment after six months, compared to 61% for private investors, according to a third quarter mortgage metrics report issued by the Office of the Comptroller of the Currency and Office of Thrift Supervision. The joint report noted that 58% of Freddie modified loans were 30-day past due after six months and 57% of Fannie loans were delinquent. "The lower re-default rate for loans held by servicers may suggest that there is greater flexibility to modify loans in more sustainable ways when loans are held on the servicer's books than when loans have been sold to third parties," the report says. OCC and OTS collected the data from nine national banks and five thrifts with the largest servicing portfolios.

Hope Now servicers are planning to step up their loss mitigation efforts in 2009 and modify two million loans -- double the number of modifications this year, according to the private sector alliance. The alliance said servicers completed 107,800 repayment plans and 99,800 loan modifications in November to help homeowners avoid foreclosure. Hope Now projects the tally for modifications for all of 2008 will be 950,000. "We expect to double that to two million for 2009," said Steve Bartlett, president and chief executive of the Financial Services Roundtable. Mortgage Bankers Association chief operating officer John Courson stressed Hope Now will be more aggressive and employ new strategies to help troubled homeowners. "Stay tuned," he told reporters. The two trade group executives said they would welcome federal funding for foreclosure prevention efforts. And they support a FDIC plan would provide federal loan guarantees for modified loans.

Mortgage lenders funded just $20.58 billion in second liens during the third quarter, an 82% decline from the same period last year, according to exclusive survey figures compiled by National Mortgage News. A year ago the industry funded $116 billion in seconds. The figures include both open-end HELOCs and closed-end seconds. In the second quarter, home equity originations totaled $42 billion. Over the past 18 months second-lien funders of all stripes have severely curtailed the size of loans they are willing to fund and exited certain markets where home prices have fallen the most. Also, many lenders no longer use seconds in 80-10-10 and 80/20 structures. The top five funders experienced declines ranging from 61% to 81% in 3Q. Bank of America ranked first among second liens lenders in the third quarter, originating $5.8 billion compared to $21.1 billion in the same period last year, a 72% decline, according to figures compiled by NMN and the Alternative Products Quarterly Data Report. Chase ranked second with $2.6 billion (down 77%), followed by Wells Fargo & Co. ($2.5 billion/down 61%).