Origination

A market research firm is projecting that mortgage origination volume will be between $1.28 trillion and $1.35 trillion next year. iEmergent, based in Des Moines, Ia., predicts that the industry will make 4.29 million home purchase loans next year for an aggregate amount of $708 billion. The firm predicts that refinancing volume will range from $575 billion to $640 billion. The firm's forecast for mortgage volume suggests that total volume will fall 5% in 2009 from the firm's estimated 2008 year-end total. iEmergent's economists predict that home purchase lending will reach a bottom in late 2009.

HSBC Mortgage Corp., Depew, N.Y. in an internal memo Tuesday said it is officially ceasing originations through its wholesale and third party correspondent channels, and 325 of the corporation's 1,500 employees will lose their current jobs as a result, according to a spokeswoman. Mortgages in these categories registered as of Nov. 18 will be processed and floating wholesale and correspondent loans registered on that date must be locked by Dec. 2, according to the memo. Mortgages from these channels will have until Jan. 20, 2009 to fund and the corporation will not fund any wholesale or correspondent loans after Jan. 21, 2009. One hundred account executives nationwide and 225 mortgage lending specialists and support personnel in Depew will face cuts, the spokeswoman said. However, the majority of the 1,100 positions in Depew remain intact and an undetermined number of internal placements may be made. Affected employees have received 60 days notice and are to be individually informed about severance and benefits. The move comes a little more than a year after the corporation's European-owned corporate parent shut down the Decision One subprime wholesale unit operated by its HSBC Finance arm and said it would be working to refocus its mortgage business on the direct-to-consumer retail origination channel.

August Blass, a former wholesale mortgage executive, has started a company that will provide quality control, risk assessment, and fraud prevention services to banks and lenders. The Walnut Creek, Calif., company, National Loan Auditors Inc., said Monday that it will "assist loan modification professionals, review loan documents for errors or misrepresentations and help in reducing the high foreclosure rates that have overcome the real estate market." Mr. Blass is a former Western regional correspondent manager for Wholesale Lending Online in Millbrae, Calif. In the 1990s he wrote "Internet Strategies for the Mortgage Banking Industry," published by Faulkner & Gray, which is now part of NMN's publisher SourceMedia Inc. "There is a need in the current market to provide an in-depth look at loan portfolios and financial documents to find potential errors and expose hidden liabilities," Mr. Blass said in a press release Monday. National Loan Auditors "will help financial institutions save millions in foreclosure dollars by providing them with an accurate report of which loans present the most risk."

The National Reverse Mortgage Lenders Association has launched an electronic resource guide that it said provides extended technical knowledge about reverse mortgages. The group introduced its NRMLAPedia at its 2008 Annual Meeting & Expo in Los Angeles. The guide has 100 user-requested topics, among them appraisals, disclosures, marketing and sales, processing, underwriting and servicing. The group expects the list to grow in response to further lender and borrower user requests. The association said it plans to initially sell NRMLAPedia to member on disks for a nominal fee and later make it available on the NRMLAOnline.org website. Various contributors will update information as needed.

The National Association of Mortgage Brokers has vowed to pull out all the stops in an effort to kill the final rule implementing changes in the Real Estate Settlement and Procedures Act. "We are not going to stand for this," President Marc Savitt said at the NAMB West regional conference in Las Vegas. The West Virginia broker wouldn't reveal the group's exact strategy but said "nothing is off the table," including legal action against the Department of Housing and Urban Development. "We have several ideas up our sleeves but we'll wait for the new administration to take over before we do anything," Mr. Savitt said. NAMB has numerous issues with the new RESPA regulations, but its main complaint is the method HUD has chosen to disclose yield spread premiums - first as a borrower paid item and then as a broker credit back to the borrower. "We thought that dog was dead but it came back to life," Mr. Savitt said, referring to the fact that the disclosure plan first surfaced in 2002. The final RESPA rule takes effect Jan. 1, 2010.

Home sales should bottom out by mid-2009, but house prices will continue to decline, according to a survey of 50 members of the National Association of Business Economists. The panel of 50 economic forecasters expects the Federal Housing Finance Agency house price index will decline by 6% this year and 3.5% on 2009. "When asked to identify the bottom in home sales, the panel is evenly split between the current quarter and next two quarters. Thus, the general expectation is that home sales should trough by mid-2009, as should housing starts," the November NABE Outlook report says. NABE president Chris Varvares said the business economists "became decidedly more negative on the economic outlook" since the October survey. And nearly all (96%) of the economists "believe that a recession has begun."

The Federal Housing Administration has set aside $12.2 billion in reserves to cover expected losses on its single-family program after closing the books on a record fiscal year in which lenders originated $171.8 billion in FHA-insured loans. The FHA insured portfolio jumped to $479.6 billion in the fiscal year ended Sept. 30, 2008, up from $351.8 billion in FY 2007. And its reserves jumped to $19.7 billion, up from $7.5 billion in FY 2007. The annual FHA management report attributes the sharp rise in "loan guarantee liability" to high default rates on loans with downpayment assistance and house price declines. The nationwide decline in house prices "results in increased claims and lower proceeds from the sale of foreclosed properties," the report says. The FHA report also shows that the capital ratio for the single-family insurance fund fell to 3% in FY 2008, down from 6.4% in the previous fiscal year. By statute, FHA must maintain a 2% capital ratio.

Mission Capital Advisors, New York, is accepting bids on behalf of an unnamed seller for all or part of a more than $260 million distressed commercial mortgage portfolio. The properties collateralizing the nonperforming and subperforming loans are in Florida, Georgia, Nevada, Arizona and California. Among the collateral property types are multifamily, condo-conversion, retail, office, single-family residential, residential development land, marinas, a restaurant and an auto dealership. Mission Capital can be found online at http://www.missioncap.com.

There will not be a recovery in the home market until all the "five timers" are out of their homes, said Bob Simpson, the president of IMARC, a Newport Beach, Calif.-based mortgage fraud investigations firm. The fact that those who owe five times more than what they make are still in their homes means the bottom has not been reached, he said, speaking at NAMB/West in Las Vegas after having made similar comments at the SourceMedia Mortgage Fraud Conference. The "five timers" need to turn in their house keys and move into something they can afford. "You're not qualified" is a phrase mortgage originators have to start using again, Mr. Simpson said. At NAMB/West, he made an analogy to the markers casinos give to high rollers. In the lending industry, those markers have now gone bad. The origination process was not about cost but about monthly debt service; originators sold payments. Compounding the problem, Mr. Simpson said, is lenders no longer required borrowers "have skin in the game" in the form of a downpayment. He added that he was not a fan of downpayment assistance programs. There need to be barriers to homeownership and the borrower's ability to save is important, Mr. Simpson said.

The Home Valuation Code of Conduct is "potentially the most dangerous regulation" with the effect of cutting the mortgage broker out of the origination process, declared Dave Biggers, the chief executive of appraisal technology firm a la mode, Oklahoma City. While the intent of the HVCC, which is actually a legal settlement, is good, he told attendees at NAMB/West in Las Vegas, it singles out mortgage brokers as the source of pressure on appraisers to deliver a certain value. It "drives a wedge between you and the lending process," he reiterated. Under the settlement, a firewall has to be created between the lender and appraiser. In many cases, that has taken the form of the lender hiring an appraisal management company. Mr. Biggers called the situation "absurd" because the lawsuit that resulted in the HVCC was filed against an appraisal management company. Whether or not the HVCC takes effect, many lenders will likely adopt its terms, he said. A number of Federal agencies, including the Federal Reserve Board, have just introduced their own regulation that could trump the HVCC, Mr. Biggers said. Unlike the HVCC, the regulation will not cut the mortgage broker out of the appraisal ordering process. The broker also will be able to have contact with the appraiser but will not be allowed to discuss a target value.