Origination

Thanks to falling interest rates the man who heads the National Association of Mortgage Brokers, is seeing loan applications spike at his brokerage firm. Marc Savitt, president of The Mortgage Center of Martinsburg, W. Va., said "our business has tripled since last month." He declined to give specific figures but said applications are running 60/40 in favor of home purchases. "We are absolutely seeing more activity," he said in an interview. Most of the refi applications the Mortgage Center is receiving involve customers wishing to get out of an adjustable rate loan into a FRM. "We're also seeing customers trying to reduce their terms -- changing from a 30-year loan into a 20," said Mr. Savitt. NAMB, meanwhile, has just filed suit against the government regarding coming changes to RESPA. (See lead news item today.)

AllRegs, Eagan, Minn., has become the exclusive training provider for the National Association of Mortgage Brokers and will begin offering mortgage origination and compliance instruction to members and other originators starting early next year. AllRegs said it would offer several forms of training, including audio programs, self-study online courses, instructor-led webinars and classroom programs. Courses are slated to focus on topics that include fair lending, state compliance, Federal Housing Administration, Truth in Lending Act, Real Estate Settlement Procedures Act, the Housing and Economic Recovery Act and ethics.

The Mortgage Bankers Association wants Congress to raise the $417,000 conforming loan limit on Fannie Mae and Freddie Mac loans to $625,500 when it passes an economic stimulus bill early next year. Raising the conforming loan limit to $625,500 would achieve better execution for higher balanced loans in the TBA (to-be-announced) securities market, according to MBA associate vice president Josh Denney. "It would provide more affordable financing for borrowers," he said. The maximum loan limit for Fannie, Freddie and Federal Housing Administration loans is slated to adjust from $729,750 down to $625,500 on January 1. (The $729,750 is for "high cost" areas only.) Democrats in Congress and the incoming administration of president-elect Barack Obama are expected to seek an extension of the maximum $729,750 loan limit or make it permanent. "MBA is pushing for a permanent loan limit structure that is similar to what we have now," Mr. Denney said.

GMAC Bank, the depository arm of GMAC Financial Services, has warehouse commitments of $2.5 billion, a 58% decline from a year ago. A company official, requesting anonymity, confirmed the figures to MortgageWire but noted that the unit has increased credit to what he calls "our existing core customer base" by $400 million this year. GMAC Bank, he said, has scaled back its business and eliminated subprime credits. "We are lending to customers that are selling loans to our conduit," he said. He noted that GM Bank is keeping "a low profile" these days. Its parent is trying to become a bank holding company and is waiting for enough investors in its corporate notes to accept an exchange offer that will allow it to raise $30 billion in regulatory capital. A few years back GMAC was the largest warehouse lender in the nation.

The White House is pulling the plug on the Federal Housing Administration's "FHA Secure" refinancing program at yearend, according to industry sources. FHA Secure has helped at least 460,000 subprime borrowers refinance into Federal Housing Administration-backed loans. The Bush Administration launched the program in August 2007 as part of President Bush's first response to the subprime crisis which later morphed into a global financial meltdown. FHA Secure was meant to be a temporary program that expired at the end of 2008. However, lender and consumer groups have urged the Department of the Housing and Urban Development and the White House to extend it through 2009. "The expanded loan options offered by FHA Secure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers," according to a November letter signed by several trade groups. Under the program, FHA loosened its underwriting standards to allow borrowers with adjustable-rate mortgages to refinance into fixed-rate FHA mortgages. The program was expected to help refinance borrowers who were behind on their payments, but only 4,000 delinquent borrowers were refinanced.

The National Association of Mortgage Brokers on Friday sued the Department of Housing and Urban Development, seeking an injunction to coming changes under the Real Estate Settlement Procedures Act. In an interview with MortgageWire NAMB president Marc Savitt said, "We're asking for an injunction so the rule will not be finalized." NAMB has a number of complaints with the changes proposed by HUD. The new rules -- which go into effect a year from now -- require yield spread premiums to first be disclosed as a borrower paid item and then a broker credit back to the borrower. NAMB believes this will only confuse mortgage applicants and does not create a level playing field because mortgage bankers are not required to disclose servicing and secondary marketing fees paid to them. The trade group also does not like the new three-page good faith estimate (GFE) disclosure form because it is not itemized (as it is now) and quotes the borrower only one figure. Mr. Savitt said his brokerage has been asking customers whether they prefer an itemized explanation of their closing costs, "and all of them told us yes -- that they want to know how we arrived at that number." In a statement, HUD said, "In this housing market, the nation is crying out for reasonable regulation to help families shop for and save money on the largest purchase of their lives. This rule is that reasonable regulation and it helps consumers to avoid getting into trouble in the first place. It's mystifying why anyone would stand in the way of the kind of transparency this rule brings to the marketplace."

SL Green Realty Corp., New York, is being added by Standard & Poor's Corp. to the S&P MidCap 400 index after the close of trading on Dec. 22, 2008. It is replacing Foundry Networks Inc., which is being acquired by Brocade Communications Systems Inc. SL Green will be added to the S&P MidCap 400 GICS (Global Industry Classification Standard) Office REITs Sub-Industry index.

Mortgage interest rates of 4.5% will not be enough to lure homebuyers, according to the National Association of Home Builders, which is pushing for a government program to buy down rates to 2.9% and really stimulate sales. "Some of our homebuilding companies have gone out with 4.5% interest rates recently," NAHB chief executive Jerry Howard. "Although there has been an uptick in business, it is not enough to be called an economic stimulus." Congress is expected to pass an economic stimulus package early next year and home builders and a coalition of housing-related industries want the buy-down to be part of the package. With a 2.9% mortgage rate and an expanded homebuyer tax credit, it could help to eliminate the inventory of unsold homes in six to 12 months, Mr. Howard told reporters. NAHB also supports efforts to prevent foreclosures, including the Federal Deposit Insurance Corp. loan modification program. "Foreclosures need to be addressed," Mr. Howard said.

The level of commercial/multifamily mortgage debt outstanding decreased slightly by 0.1% in the third quarter, to $3.44 trillion, according to the Mortgage Bankers Association's analysis of the Federal Reserve Board Flow of Funds data. The $3.44 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $3.3 billion from the second quarter 2008. Multifamily mortgage debt outstanding grew to $890 billion, an increase of $15.2 billion or 1.7% from second quarter. "Uncertainty surrounding the weakening economy, coupled with the continuing pressures of the credit crunch, led to a slight pullback among investors in commercial/multifamily mortgages in the third quarter," said Jamie Woodwell, MBA's vice president of commercial real estate research. "The government-sponsored enterprises and other finance companies have taken advantage of the limited competition to increase their holdings, but the numbers show banks and thrifts beginning to pull back on their holdings and the CMBS market continuing to pay-down its holdings with few, if any, acquisitions."

Fannie Mae is tightening its lending standards on condominiums and it is introducing a new project eligibility review service (PERS) for new and newly converted condos that will be mandatory in Florida starting Jan. 15 and optional elsewhere. The delinquency and default rates on condo loans in Florida are "at an all time high," Fannie says in a notice to lenders. And the secondary market agency is reducing the maximum loan-to-value ratios for established condos in Florida when lenders don't use PERS or don't conduct full lender reviews. Use of PERS will cost lenders $30 per unit. Effective immediately, Fannie has eased its owner-occupied requirements for condominiums with bank-owned foreclosed units. Real estate owned units that are for sale (not rented) will be counted in the owner-occupancy ratio. The National Association of Realtors asked for this change. Meanwhile, lenders are bracing for loan buy-backs demands from Fannie and Freddie Mac and the lenders expect to face a lot of buy-backs involving condo loans, a source said.