Origination

LandAmerica Financial Group Inc., Richmond, Va., has delayed the release of its third quarter 2008 results. The company was supposed to release them on Nov. 5, but in the early evening hours of that day the company issued a statement saying, "The release has been delayed to allow LandAmerica additional time to complete the preparation and review of its financial statements for the third quarter." As a result, the company cancelled its investor call scheduled for Nov. 6. LandAmerica said it plans to file its Form 10-Q with the Securities and Exchange Commission by its due date of Nov. 10 and would release third quarter results concurrently with that filing. The news displeased investors, who drove LandAmerica's stock well below its old 52-week low in morning trading on Nov. 6. The stock, which hit its most recent peak of $24.25 on Sept. 30, fell to $4.72 at 11:20 a.m., down $2.52.

There will be a trio from the Florida Association of Mortgage Brokers sitting in that state's legislature when the new term begins in 2009. Nancy Detert, who previously served in the House and ran a strong second in a Republican primary for a seat in Congress two years ago, has been elected to the state Senate by a margin of 58% to 42%, according to results provided by the state of Florida. Also, FAMB president D. Ritch Workman was elected to a seat in the state House in the 30th District by a margin of 54% to 46%, while Debbie Mayfield won the contest in the 80th District at 65% to 35%. Both are Republicans. Originally, five members of the group said they were seeking political office at FAMB's annual convention in Orlando in August. One, Rafael Perez, was defeated in a Republican primary for the 111th District seat in the state House of Representatives. A second, Terry Lynn Sanchez, another Republican, withdrew from the race for the 51st District seat in the House.

The Market Composite Index, an overall measure of mortgage applications, decreased 20.3% on a seasonally adjusted basis from 476.7 to 379.9 during the week ended Oct. 31, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The Purchase Index decreased from 303.1 to 260.9 on a seasonally adjusted basis, while the Refinance Index decreased from 1489.4 to 1075.4. Refinancings represented 42.9% of total applications, down from 46.9% the previous week, while adjustable-rate mortgages accounted for 2.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased 21 basis points from 6.26% to 6.47%, and points (including the origination fee) increased from 1.10 to 1.19 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

A Mortgage Bankers Association survey shows that 20.1% of single-family originations in the second quarter were guaranteed by the Federal Housing Administration, Department of Veterans Affairs and Rural Housing Service, up from 11.5% in the first quarter. "This survey confirms the increased popularity of FHA," said MBA senior economist Orawin Velz. She estimates FHA's market share hit 25% in the third quarter and it will go even higher in the fourth quarter. The MBA Mortgage Origination Survey also shows the conventional prime loans that Fannie Mae and Freddie Mac purchase are declining in terms of market share. Prime loans comprised 75.9% originations in the second quarter, down from 82.7% in the second quarter. In the second quarter, only 2.9% of originations were subprime loans and 1.1% were Alt-A loans.

Bucking the trend of losses being reported by its peers in the mortgage insurance industry, Radian Group Inc., Philadelphia, generated net income for the third quarter of $36.7 million ($0.46 per share). One year prior it lost $703.9 million ($8.82 per share). "Radian's third quarter results were impacted by a continuation of elevated mortgage insurance losses, which were offset by a reduction in our first-lien premium deficiency reserve," said S. A. Ibrahim, CEO of Radian. The company's profits came from the financial guaranty business. Its mortgage insurance business had a net loss for the quarter of $46.9 million, vs. net income of $74.4 million for the financial guaranty sector. Radian lowered its guidance on total claims paid for 2008 to $950 million. However, first-lien primary mortgage insurance defaults increased to 9.71% for the third quarter of 2008 vs. 5.87% in the third quarter of 2007. Total new mortgage insurance written was $7.5 billion, compared with $13.5 billion for the same period in 2007.

Reunion Mortgage, Milpitas, Calif., has pulled out of Florida, abruptly closing its wholesale office there. A company official confirmed the shutdown to MortgageWire. "Yes, we're closed, as of today," he said. He declined to say why. Reunion opened its wholesale office in Tampa two years ago. A company official at the lender's California headquarters did not return a telephone call about the matter. Reunion, according to its website, has 100 employees. The company is almost 10 years old and focuses mostly on wholesale lending.

Despite weaker loan demand, about 80% of the largest banks and 55% of smaller banks tightened their lending standards on prime single-family loans during the third quarter, according to a Federal Reserve Board survey of senior loan officers. More than 70% of 52 respondent banks said they tightened the underwriting standards on prime loans even though 25 of the respondents reported "moderately weaker" demand for loans and five banks reported "substantially weaker" demand, according to the October survey. In the July survey, 75% of the banks said they had tightened their prime lending standards during the previous three months. The 52 banks in the latest survey held 78% of all residential mortgage loans in the commercial banking system. Almost all (90%) of the 29 banks that originate nontraditional mortgages said they tightened their lending standards. And all four respondent banks that originate subprime loans tightened too. Meanwhile, 85% of the participating banks that originate commercial real estate loans have tightened their lending standards during the third quarter.

Housing markets in Northern California remain four to eight quarters away from a "bottom," according to an analysis by FBR Capital Markets. FBR analysts traveled to the region to meet with Realtors, mortgage brokers and property managers as well as regional officials from the Office of Thrift Supervision. "While the most stressed markets may be near a bottom, losses to the financial system will be substantial, and markets that have held up well thus far are starting to experience greater weakness," FBR's Paul Miller said in a report. Peak industry losses related to Northern California housing are not likely to occur until late 2009 or early 2010, FBR estimated. Weakness that began in "overbuilt, distant suburbs" is moving closer to higher priced neighborhoods closer to northern California's big cities, FBR said.

For the first time since last September, there has been an increase in the Eleventh Federal Home Loan District Cost of Funds Index. The index for September is 2.769%, an increase of over seven basis points from August 2008's 2.693%. The total average funds used in the calculation was $105.4 billion and the total interest expense was $243.2 million; for August, the average total funds used in making the weighted average calculation was $375.6 billion and the total interest expense was $842.7 million. COFI is known as a lagging indicator, reflecting movement in other interest rates on a three-to-six month delay. The Freddie Mac Primary Mortgage Market Survey data for the one-year adjustable rate mortgage saw the average monthly commitment rate rise starting in February (with the exception of a dip in June) before peaking in August and declining in September.

Because of losses and loss adjustment expenses in its U.S. and European operations, a decrease in premiums earned and net realized investment losses, the PMI Group Inc., Walnut Creek, Calif., posted a net loss of $229.4 million or $2.81 per share for the third quarter of 2008. Of that loss, $80.1 million or $0.98 per share came from discontinued operations, namely PMI Australia, PMI Asia and PMI Guaranty. In the third quarter 2007, PMI lost $86.8 million or $1.04 per share. Consolidated losses and LAE for the third quarter were $382.7 million, compared with $351.0 million one year prior. Net premiums written fell to $176.5 million from $218.8 million for the third quarter of 2007. Its U.S mortgage insurance operations lost $137.1 million for the quarter, compared with a loss of $65.2 million the year prior. Persistency increased from 73.3% in the third quarter of 2007 to 81.0% for the most recent period. PMI reported an after tax equity in losses of $0.1 million from its CMG joint venture vs. after tax equity in earnings of $2.7 million for the third quarter 2007.