Originations

Liberty Mortgage Corp., a division of Branch, Banking & Trust, is exiting the wholesale channel, a move that will lead to the bank ramping up both its correspondent and warehouse lending divisions, National Mortgage News has learned. Late Wednesday, a spokeswoman for BB&T called the change a realignment of the bank's "resources" noting that it will bolster the warehouse unit it inherited when the bank bought Colonial Bank last summer. "We believe that now is the time to focus on growing that business," she said. At press time, no further details were available. BB&T already ranks ninth among correspondent funders, according to figures compiled by the Quarterly Data Report. NMN broke the news about Liberty exiting wholesale earlier in the day. Even though Liberty is exiting the channel, it will honor loan commitments as long as the mortgage closes before Aug. 1. "There will be no extensions beyond July 31," the memo says. Liberty and BB&T are based in North Carolina.

The average rate for a 30-year fixed-rate mortgage increased slightly while the 15-year rate inched down to another survey-record low in Freddie Mac's Primary Mortgage Market Survey for the week ending June 3. "The economy grew at a slower rate than originally reported in the first three months of the year," according to the Bureau of Economic Analysis, "which suggests inflation will remain tame near-term," said Freddie Mac chief economist and vice president Frank Nothaft, noting that this development kept rates at or near the historic lows they have been flirting with of late. The average 30-year FRM rate was 4.79%, up slightly from the previous week's 4.78% but down from 5.29% a year ago. Also in the latest week average fees for a 30-year mortgage, which have not risen above 0.7% in some time, edged up a bit to 0.8%. Average fees for other loan types tracked by Freddie Mac's survey-15-year FRMs, five-year Treasury indexed hybrid adjustable-rate mortgages and one-year Treasury ARMs-were 0.7 during the week ended June 3. The average 15-year rate during that week was 4.20%, down from 4.21% a week earlier but down from 4.79% a year ago. This is the second consecutive week this rate has been at a record low. Freddie has been tracking the 15-year rate since August 1991. The average five-year hybrid Treasury ARM rate in the most recent week was 3.94%, down from 3.97% the previous week and 4.85% a year ago. The average one-year Treasury ARM rate was 3.95%, the same as it was the previous week, remaining at a low not seen since the week ending May 27, 2004 when the average rate for this loan type was 3.87%. A year ago the average one-year Treasury ARM rate was 4.81%.

Nation Condo Advisors LLC, which helps approved condominiums for government and agency financing, has launched a new inspection subsidiary. National Condo Inspections aims to help provide all needed studies and inspections for projects being financed, including environmental site assessments, property construction assessments, noise studies, and flood zone support such as FEMA letter of map amendment services. Chad Heiser, previously chief operating officer at Coastal Ecology Group, has been named COO of the new National Condo Advisors unit.

The 30-day or more past due rate on securitized multifamily mortgages rose 28 basis points in May to 13.34%-dashing hopes that delinquencies in that sector of the commercial real estate market had stabilized. Last month, Trepp LLC reported the multifamily 30-day plus delinquency rate fell 13 bps to 13.06%—the first decline since May 2009. However, one month does not make a trend. Commercial mortgage-backed securities delinquencies overall set yet another new record high as they jumped 40 basis points to 8.42% in May, according to Trepp. Trepp said the monthly increase in delinquencies has been between 37 and 49 basis points for seven out of the past eight months when the anomaly associated with New York's Stuyvesant Town in March is removed. The one exception outside of this was February, when delinquencies jumped just 22 bps. Serious delinquencies of 60-plus days—a category that also includes loans in foreclosure, real estate owned, and nonperforming balloons—increased 41 bps to 7.55% in the past month.

CitiFinancial, the Baltimore-based consumer finance subsidiary of Citi Holdings, New York, has provided some details on how it is separating its business into two segments. One unit will include full service branches, focusing on originating and servicing personal, refinance and home equity loans. The other, CitiFinancial Servicing, will provide specialized service to customers who might benefit from expanded support, including a loan modification or restructuring. Once the reorganization is completed, new names will be picked for the divisions, likely by yearend. Over the past decade, Citi has been a major player in residential-based consumer finance, acquiring such brands as Commercial Credit, Associates Financial, and parts of the old Argent and Ameriquest brands.

Fannie Mae and Freddie Mac may have a statutory duty to serve low-income and rural homebuyers, but their regulator does not want the two involved in financing mobile homes. The Federal Housing Finance Agency says most manufactured housing loans are essentially personal property notes and the GSEs have no experience in financing "chattel" loans. "Thus, FHFA proposes that chattel loans on manufactured homes not be considered toward the duty to serve the manufactured housing market as these loans are inconsistent with the enterprise conservatorship and would require substantial new efforts by the enterprises to ensure safe and sound operations and sustainable homeownership for families," FHFA says. However, the regulator is issuing a proposed rule that encourages Fannie and Freddie to finance manufactured housing loans secured by land. The GSEs can best serve low-income families by purchasing loans on "manufactured housing titled as real property," the regulator said. The proposed affordable housing rule is being issued for a 45-day comment period.

Nearly three out of every four mortgage applications submitted during the week ended May 28 was for a refinancing, found the Mortgage Bankers Association's Market Composite Index. The MCI increased 0.9% on a seasonally adjusted basis from one week earlier, while on an unadjusted basis, the Index increased 0.3%. The dichotomy in the direction of the components of the MCI continued for the fourth consecutive week as the Refinance Index increased 2.4% from the previous week (remaining at its highest level since October 2009) as the seasonally adjusted Purchase Index decreased 4.1% from one week earlier, falling to its lowest point since April 1997. "Purchase applications are now almost 40% below their level four weeks ago, while the refinance share, at 74%, is at its highest level since December," said Michael Fratantoni, MBA's vice president of research and economics. "In addition, the ARM share dropped last week to its lowest level since March of this year, as borrowers took the opportunity to lock in at historically low fixed mortgage rates." The market share of adjustable-rate mortgage applications fell from 6.0% to 5.2%. The average contract interest rate for the 30-year fixed-rate mortgage increased by three basis points to 4.83% from 4.80% for the current week with points decreasing from 1.08 to 1.05 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs fell by 1 bp during the week to 4.24%. The average contract interest rate for one-year ARMs was up by 13 bps over the previous week, to 6.96% for this week.

There are plenty of things you can do which will allow your business to stay running in the near term.

The Federal Housing Finance Agency has released proposed requirements for Fannie Mae and Freddie Mac to provide liquidity to underserved housing markets. Under the proposal, each GSE would have to present a plan to serve such markets. FHFA will then rate their performance against the plans. The proposed rule, announced Tuesday morning, was required by a 2008 housing law. There will be a 45-day period for FHFA to collect public comments before finalizing the rule. Both have been wards of the government since the fall of 2008.

A Maine investment group has agreed to inject $60 million into Savings Bank of Maine, Gardiner, as part of the thrift's recapitalization plan. In March the $929 million-asset savings bank received a prompt-corrective-action directive from the Federal Deposit Insurance Corp., ordering it to become adequately capitalized by June 30, sell itself or merge with another institution. The $60 million investment from SMB Financial will boost the thrift's capital ratios above the required levels, the company said. Under the recapitalization plan, SMB also will absorb the thrift's two holding companies, restructure its debt and acquire all of its common stock. SMB Financial, also based in Gardiner and led by a group of local investors, is replacing several Savings Bank of Maine executives.

By mid-week issuers and rating agencies must comply with a Securities and Exchange Commission rule designed to encourage more unsolicited opinions on asset-backed securities. The regulator wants to remove the conflicts of interest in the ratings process that led to inflated ratings in the past and contributed to the financial crisis. Among the new requirements, when a firm is hired to rate an asset-backed security, it must notify rivals that did not get the job. The arranger of a security must give all raters - even those it has not tapped - detailed information on the underlying loans, something that previously only the agencies that got the assignment could see. And the agencies will have to rate at least 10% of all deals they inspect, whether or not they are paid to rate them. Government-sanctioned kibitzing could complicate the gradual recovery in the asset-backed market that began last year. "Issuers are not really crazy about getting unsolicited ratings that are going to be lower ones than they obtain," said Steve Kudenholdt, partner and co-chair of the capital markets practice at Sonnenschein Nath & Rosenthal LLP. For one thing, the new requirements may prolong the time it takes to bring deals to market. "It's definitely going to slow things up," said Michael Buttner, Wells Fargo & Co.'s head of residential mortgage-backed securities. "Until you've got all the rules laid out and have worked it through a few times, it's new and it's not going to be as smooth."

Mortgage Services III LLC, Bloomington, Ill., is expanding into the Greater Milwaukee area through its acquisition of Complete Mortgage Inc., of Sussex, Wis. The newly acquired team will be located in an office in Waukesha, Wis. Mark Young, president and chief executive of MSI, said that Complete Mortgage has been a valued wholesale lending partner of his company for years. MSI has offices in Oakbrook Terrace, Ill., Urbandale, Iowa, Warrenville, Ill., and St. Charles, Ill., plus two downtown Chicago locations. It is a subsidiary of First State Bank, Mendota, Ill.

The Government National Mortgage Association says a recent change it made to its Ginnie II MBS program will help mortgage bankers with their warehouse lines of credit. "Lenders will be able to better utilize warehouse lending lines and reduce interest costs associated with carrying loans until they can be securitized and settled," said Ginnie Mae president Theodore Tozer. Beginning this fall, issuance for Ginnie II multiple issuer pools can occur daily, rather than once a month. Also, mortgage bankers can submit just one loan for securitization, eliminating the current three-loan minimum. Another wrinkle to the program will allow seller/servicers to submit "orphan loans" which are individual mortgagees that normally may not fit into a certain pool because the note rate differs significantly (at least 50 basis points) from other loans in the pool. In general, banks have been more willing to extend warehouse credit to nonbanks over the past six months, but only on Fannie Mae, Freddie Mac, and FHA/VA products.

It's no secret that the GSEs have been demanding billions of dollars in loan buybacks over the past year, but now Freddie Mac is warning that some of its seller/servicers may not meet their repurchase obligations. "Some of our seller/servicers failed to perform their repurchase obligations due to lack of financial capacity, while many of our larger seller/servicers have not fully performed their repurchase obligations," the GSE says in a public filing. As of March 31, Freddie had $4.8 billion in outstanding buyback requests pending. Roughly 34% of those requests were outstanding more than 90 days. The secondary market agency warned that its credit losses may increase if customers do not fulfill their buyback obligations. Freddie executives also are concerned that collection efforts could "negatively impact" their relationships with seller/servicers who have the financial capacity to perform buybacks but chafe at such requests for one reason or another. In the first quarter, seller/servicers reimbursed Freddie $1.3 billion for breaches of representations and warranties, compared to $789 million in the same period in 2009. Fannie Mae reported $1.8 billion of buybacks in the first quarter, compared to $1.1 billion a year ago. Fannie expects its buyback requests will remain high for the rest of this year.

Passage of a jobs bill in the next few weeks could provide the first $1 billion of seed money for the National Housing Trust Fund. Supporters estimate the trust fund could spark the construction of 10,000 affordable rental units while creating 15,000 new construction jobs. After a multi-year lobbying campaign led by the National Low-Income Housing Coalition, Congress passed legislation in 2008 to create the NHTF that would be funded by Fannie Mae and Freddie Mac. But low-income housing advocates lost that funding source when the GSEs were placed in conservatorships. Housing supporters are hopeful the Senate will pass the jobs bill (H.R. 4213) with the one-time funding for the start up of the trust fund. The House passed the bill May 28 by a 215-204 vote. "We are hopeful and it couldn't come a better time. States are eager to build affordable housing," said NLIHC vice president Linda Couch. The Senate is expected to begin consideration of the jobs bill when it returns from the Memorial Day recess.

Fannie Mae, Freddie Mac and GNMA had a combined "purchase" market share of 98% in the first quarter, according to new figures compiled by National Mortgage News. The share number represents a slight decline from the near monopoly (99%) they had on the business last year. NMN derived its market share numbers by taking the loan purchases of the GSEs (and the bond issue of GNMA, which reflects FHA/VA production) and dividing it by industry-wide originations in a given time frame. It's no secret to seller/servicers that these three entities dominate the secondary market, setting loan standards for 60 million borrowers. The numbers also indicate that very few lenders actually keep whole loans on their balance sheets except for jumbo mortgages, and, perhaps, conventional ARMs. Ten years ago Fannie and Freddie had a combined purchase market share of about 50% with GNMA at a meager 5%. (For the full story see this week's paper edition of NMN.)

Fidelity National Information Services' board this week authorized a $2.5 billion stock repurchase program, offering to buy back its common for between $29 and $31 each. The stock has risen more than 40% this year. The firm, a top vendor to the mortgage industry, now has a market capitalization of roughly $9.8 billion. The news about the stock split comes a week after a leveraged buyout of the company fell apart. Last month, FIS reported that its 1Q profit nearly tripled, thanks to a big jump in processing and service revenue.

Regency Centers Corp., a Jacksonville, Fla.-based real estate investment trust said its operating partnership, Regency Centers LP, has completed the sale of $150 million of 6.0% 10-year senior unsecured notes. The notes are due June 15, 2020 and were priced at 99.299%. Interest on the notes will be payable semiannually on June 15th and December 15th of each year, beginning on Dec. 15, 2010. The net proceeds will be used to repay near-term maturing indebtedness and for general corporate purposes of the shopping center REIT. J.P. Morgan Securities Inc. and Wells Fargo Securities, LLC acted as joint book-running lead managers for the transaction. The co-managers were Banc of America Securities LLC, Capital One Southcoast Inc., Comerica Securities Inc., Daiwa Securities America Inc., Mitsubishi UFJ Securities (USA) Inc., Mizuho Securities USA Inc., Morgan Keegan & Company Inc., PNC Capital Markets LLC, RBC Capital Markets Corporation, SunTrust Robinson Humphrey Inc. and US Bancorp Investments Inc.

The Mortgage Bankers Association has hired Bill Killmer as senior vice president of legislative and political affairs, effective July 5. His appointment as chief lobbyist on Capitol Hill comes as the residential finance industry is at a crossroads, poised for the largest changes, perhaps, in its history. Killmer will be directly responsible for the development and implementation of legislative and political strategy for the trade group which has lost several hundred members during the mortgage crisis. He joins MBA from the National Association of Home Builders, where for the past 20 years he worked in a variety of senior positions including chief lobbyist.

Homebuyers in Australia soon can choose what's being called a "never-ending" mortgage in an attempt to overcome that nation's affordability crisis. According to a report in The Sunday Telegraph, ING Direct, the nation's fifth largest residential funder, will originate loans that have no fixed term and no requirement to repay any principal at all. At current rates, the interest-only loans would cut repayments on a $300,000 mortgage by $5,000 a year, the newspaper reported. Repayments would be kept to a minimum, allowing borrowers to benefit from capital growth in their property. "People are needlessly being denied the chance to buy a property while prices spiral rapidly out of their reach" said ING Direct CEO Don Koch. He added that "There is an urgent need to provide more affordable options and borrowers should be able to choose whether they want to repay the capital, or not." During the U.S. housing boom (which is now being called a bubble) American homebuyers used interest only loans in a similar fashion, but investors speculating on home values also used the product. In America IOs are still being originated but at much reduced volume levels, according to figures compiled by the Quarterly Data Report, a National Mortgage News publication.