Origination

Financial institutions that file "suspicious activity reports" are getting better at detecting mortgage fraud before the loan is funded, according to a Financial Crimes Enforcement Network report. "Suspected fraud was detected prior to loan disbursements in 31% of the mortgage loan fraud SARs filed" in 2006, the FinCEN report says, compared with 21% in previous years. Reporting companies filed 37,313 SARs citing mortgage fraud in 2006 -- a 44% increase from the previous year's level -- and a sample analyzed by FinCEN showed that loans originated by mortgage brokers were reported in over half of those SARs. The SAR update report "demonstrates that in this period of mortgage crisis we also have witnessed a substantial increase in fraudulent activity that targets lenders and borrowers," said Richard Reise, an American Bankers Association executive.

Employment in the mortgage industry appears to be stabilizing, with a loss of only 700 jobs in February, as refinancing activity and loan workouts keep the current work force busy. The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage banker/broker sector fell from 364,800 in January to 364,100 in February. The industry has lost 28% of its work force since February 2006, and it is back to the level last seen in July 2002, according to the Mortgage Bankers Association's senior director of economic forecasting, Orawin Velz. "Job losses seem to be stabilizing," Ms. Velz said. "That is good news for us." However, the forecaster sees industry employment continuing to decline at a moderate rate for the rest of the year as the economy pulls out of a mild recession. "Originations will be quite strong in the first half" due to refinancings, she predicted. But refis will slow considerably in the second half as the economic stimulus package takes effect and the Federal Reserve stops easing, the MBA economist said. The BLS can be found online at http://stats.bls.gov.

More than 30 additional classes of subprime mortgage pass-through certificates were downgraded by Fitch Ratings on April 2 as a result of changes to its subprime loss forecasting assumptions. Fitch also placed three classes of subprime pass-throughs on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of over $570 million. The securities affected by the latest downgrades were 33 classes from four issues of IndyMac mortgage pass-throughs. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." Fitch can be found online at http://www.fitchratings.com.

The average portfolio size of the apartment industry's largest owners is declining, while concentrations among apartment management firms are growing, according to a survey by the National Multi Housing Council. Apartment Investment and Management Co., Denver, was the nation's largest apartment owner for the third year in a row in 2007, although it shed more than 14,000 units to fall below 200,000 for the first time since 1988, the annual NMHC rankings found. Equity Residential, the No. 4 owner, sold 11,500 units. Meanwhile, most of the top managers boosted their portfolio holdings, with Riverstone Residential Group, Dallas, adding 64,000 units for a 70% increase. "The apartment industry has historically been dominated by smaller local and regional firms, particularly in the area of property management," said NMHC president Doug Bibby. "But that is clearly changing, as we see the emergence of several powerful national property managers. These firms are using economies of scale to overcome thin margins and to refute the conventional wisdom about property management being a low-growth area." The trade group can be found online at http://www.nmhc.org.

Kimpton Group Holding LLC, a San Francisco-based boutique hotel company, has announced the closing of its third institutional real estate fund, KHP Fund II LP. Kimpton, the parent company of Kimpton Hotels & Restaurants, said it had raised $246 million, 50% more than the amount raised three years ago in the first KHP fund, Kimpton Hospitality Partners LP. The company said KHP Fund II will build new boutique hotels in targeted areas, buy nonhotel buildings that can be converted to Kimpton hotels, and buy existing hotels that either "fit the Kimpton model" or are underutilized and can be repositioned as a Kimpton hotel. The company can be found online at http://www.kimptonhotels.com.

Zillow.com, Seattle, has announced the launch of Zillow Mortgage Marketplace, which it describes as a transparent lending marketplace offering borrowers "an anonymous and hassle-free way" to request custom loan quotes from registered lenders. Zillow said the marketplace includes "the industry's first-ever public feedback system" whereby borrowers rate the lenders they contact. Potential borrowers can request customized quotes by filling out a detailed loan request form that is submitted to lenders who have registered on Zillow and been confirmed as mortgage professionals. "Loan shoppers tell us they want real quotes -- not just teaser rates -- when doing their research online, and they want to control who and when they contact by shopping anonymously until they are ready to talk," said Rich Barton, chief executive officer and co-founder of Zillow.com. Consumers can access the Zillow Mortgage Marketplace by clicking on the Mortgages tab on Zillow's website at http://www.zillow.com.

MetLife Inc., New York, has announced that it will acquire EverBank Reverse Mortgage LLC, Bloomfield, N.J., from EverBank Financial Corp., Jacksonville, Fla. The terms of the planned transaction were not disclosed. MetLife said EverBank Reverse Mortgage would likely become a division or operating subsidiary of MetLife Bank, which added reverse mortgages to its product line in 2007. The bank can be found on the Web at http://www.metlifebank.com.

Frost Mortgage Banking Group has entered into an arrangement to operate as a division of Primary Residential Mortgage Inc., Salt Lake City, allowing Frost to focus on borrower relationships while PRMI provides a platform of financial and operational support. Under the agreement, Frost Mortgage will have access to PRMI's support services (including accounting, compliance/licensing, information technology, marketing, and quality control) and retail operation services (including secondary marketing and underwriting/risk management), the companies said. Frost Mortgage operates offices in New Mexico, Arizona, and Utah. "By allowing [PRMI] to handle our back office needs, we can continue doing what we do best -- originating mortgages," said Greg Frost, who manages Frost Mortgage and has been named vice president of national training at PRMI. Mr. Frost started in the mortgage industry in 1985, and founded Frost Mortgage Banking Group in 1991.

CNBS Financial Group Inc., Tampa, Fla., has announced the acquisition of the name HomeBanc for use on its banks and loan production offices. The bank holding company purchased the name for an undisclosed amount from the previous Atlanta-based HomeBanc Corp., which closed its mortgage loan business last August. CNBS Financial said it raised $49 million last year to build a de novo bank, Community National Bank of the South, which will now be known as HomeBanc. "Although the previous company wasn't a bank, but rather a leading residential lender, we knew it was highly regarded and had a positive name," said Jerry Campbell, chairman, president, and chief executive officer of CNBS. As part of the company's plan for marketing the HomeBanc name, golfer Brittany Lincicome will wear the HomeBanc logo on her golf shirts and sweaters while competing on the LPGA tour, CNBS said. The company can be found online at http://www.homebanc.com.

The Federal Housing Administration is requiring a second appraisal on jumbo mortgages above $417,000 in declining markets and limiting the maximum LTV on cash-out refinancings to 85%. The direct endorsement lender must select the appraiser for the second appraisal if the property is located in a market where house prices are declining, according to an FHA mortgagee letter. The letter also imposes a maximum loan-to-value ratio on cash-out refinancings. If the "loan balance exclusive of FHA's upfront mortgage insurance premium will exceed $417,000, the LTV may not exceed 85% of the appraiser's estimated value," the FHA says. The economic stimulus bill signed by President Bush in mid-February temporarily raises the FHA loan limit to 125% of median home prices in high-cost areas, with a cap of $729,725.