Origination

The Fannie Mae/Freddie Mac conforming loan limit will remain at $417,000 in 2009, unchanged from 2008, according to the Federal Housing Finance Agency. The FHFA monthly purchase-only index declined by 5.9% over the 12 months ending in August. The two GSEs can purchase conventional mortgages with a loan amount of up to $417,000 anywhere in the country. In higher cost markets, the loan limit is based on a percentage of the area median price calculated by the Department of Housing and Urban Development. Starting January that limit will be set at 115% of the local median price and capped at $625,500. Currently, the Fannie/Freddie loan limit in high cost areas is based on 125% of the local median price with a cap of $729,750. The cap expires at yearend but some industry trade groups are urging Congress to extend it.

The usually positive National Association of Realtors struck a decidedly downbeat chord at its annual convention in Orlando, predicting that housing prices would fall this year by the largest percentage since the Great Depression. Lawrence Yun, NAR's chief economist, said the average sales price of existing homes would slide 9.8% in 2008, "by far" the sharpest decline since the group began keeping records in 1968 and "probably" since the Depression. The record for the largest decline was set last year, when the average slipped a mere 1.4%. For 2009, NAR is expecting prices to go back up by 1.1%. But Mr. Yun told reporters that the slight increase is akin to "essentially no change." By 2010, though, the group is expecting price appreciation to return to the historical norm of 4-5% as the inventory of unsold houses returns to normal. "We have hit bottom, we believe, in terms of sales activity," he said. "But not prices. The only way to stabilize prices is to get inventory down, and we're not there yet."

Lend America, Melville, New York, on Monday plans to begin offering direct to qualifying consumers with subperforming mortgages in 44 states the lower-payment government-backed 'Home for Homeowners' refinance loans it previously made available only through alliances with institutional investors. The Federal Housing Administration lender and Ginnie Mae issuer will market the 'H4H' product to consumers through a series of 30-minute television infomercials that run under the name "The Mortgage Network." The company is continuing to offer the loans through its institutional investor program as well. Michael Ashley, chief business strategist of Lend America, said its mortgage specialists, who have received certified training in the relatively new government program, can educate borrowers, assess their affordability and refinance their loans in as little as 10 days, usually by phone.

Title insurance giant Fidelity National Financial has agreed to purchase one of its top competitors, LandAmerica Financial Group, for $126 million in stock. The sale announcement comes a day after LandAmerica said it would delay its third quarter earnings release. The purchase is subject not only to shareholder approvals but needs to be sanctioned by the antitrust division of the Justice Department. The two companies say they will save at least $400 million in expenses by reducing their combined debt loads by $250 million and cutting another $150 million in costs. Fidelity, a large player in servicing technology, is based in Jacksonville, Fla. LandAmerica is headquartered in Richmond, Va. Shareholders of LandAmerica, the nation's third largest title insurer, will receive 0.993 shares of Fidelity common stock for each share held.

Some loan brokers are now engaging in loan modifications to make ends meet, according to researcher David Olson of Wholesale Access. In an interview Mr. Olson said brokers are "linking up with title firms" to help consumers restructure their troubled loans. "Some brokers can make $2,000 on a loan," he said. Marc Savitt, the current president of the National Association of Mortgage Brokers, said he has heard anecdotal stories about brokers doing loan modifications and working with attorneys but could not offer any specific examples. "A lot of people are hurting and trying to make ends meet," said Mr. Savitt. The Columbia, Md.-based Wholesale Access is on the verge of launching a new study of the brokerage industry but Mr. Olson is none too optimistic about the immediate future of third-party loan salesmen. "Will it come back?" he asked. "One of the biggest problems is the lack of product variety."

Mortgage companies hired 2,900 full-time workers in September -- even though all U.S. business trimmed their employment roles by a surprising 284,000 workers, according to new government figures. The mortgage number, unfortunately, lags the national unemployment rate by a month. On Friday the U.S. Bureau of Labor Statistics said the unemployment rate spiked to a 14-year high of 6.5% in October as another 240,000 jobs were cut -- far worse than many economists expected. Unemployment is a key determiner of loan delinquencies. According to the government, 352,200 workers made their living off of mortgages (lending, servicing, brokerage) in September, compared to 349,300 in August. Employment in the mortgage industry has been relatively stable since January with most of the new jobs being added in servicing and loan modifications. Wachovia Corp. chief economist John Silva expects to see negative job and weak personal income reports until the spring of 2009, which will make it difficult for consumers struggling to make their mortgage payments. "Delinquencies and foreclosures will be rising for the next three to five months," Mr. Silva told MortgageWire. The housing market will go through a "tough winter," the economist said, but conditions should improve by spring with the help of government spending to revive the economy. "Most of the U.S. economy should have a decent housing recovery in 2009," he said.

The Bank of England's monetary policy committee said a sharp drop in residential investment, among several global and domestic market and economic pressures, led it to cut the bank rate by 1.5%. The rate cut "provides more room for lower borrowing costs," said Michael Coogan, director-general of the Council of Mortgage Lenders, London.

Freddie Mac released the results of its Primary Mortgage Market Survey in which the GSE concluded that a stalling jobs market and a pullback in consumer spending has caused rates to fall. The 30-year fixed-rate mortgage averaged 6.20% with an average 0.7 point for the week ending November 6, 2008, down from last week when it averaged 6.46%. Last year at this time, the 30-year FRM averaged 6.24%. Similarly, the 15-year FRM this week averaged 5.88% with an average 0.7 point, down from last week when it averaged 6.19%. A year ago at this time, the 15-year FRM averaged 5.90%. Lastly, five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.19% this week, with an average 0.6 point, down from last week when it averaged 6.36% and one-year Treasury-indexed ARMs averaged 5.25% this week with an average 0.4 point, down from last week when it averaged 5.38%.

The financial services division of Centex Corp., Dallas, lost $44 million for the quarter ending September 30, partly because of costs related to the shutdown of its traditional retail mortgage banking operation. Centex is the parent of CTX Mortgage, a top 30 ranked residential lender. During the quarter CTX completed a wind down of its business of originating loans on non-Centex properties. The shutdown alone cost it $26 million. The mortgage banker continues to fund loans on homes built by Centex. During the quarter the entire company lost $172 million compared to a $644 million loss in the same period last year.

Even though many major wholesale lenders have exited the channel or severely cut back their operations, there appears to be some life left in the correspondent market, according to an upcoming study. "Correspondent lending is not dead," said Jeff Lebowitz, the publisher of the annual MORTECH study. In an interview with MortgageWire Mr. Lebowitz said, "There are a number of small lenders that are acting as originators," and who turn around and sell their production servicing-released to larger funders. These lenders are mostly depositories, he added. The new MORTECH study will be out in December. Among its findings: two-thirds of mortgage bankers believe that despite the government takeover of Fannie Mae and Freddie Mac transacting business with the two GSEs will not be less costly. (See Monday's National Mortgage News for the full details.)