Originations

Federal regulators expect banks and thrifts to move certain mortgage securitizations onto their balance sheets due to new accounting rules and are seeking comment on the impact it will have on capital ratios. The new Financial Accounting Standard Board rules go into effect in January. Request for comment was published in Tuesday's Federal Register and is a short 30 days. Institutions have until October 15 to respond and convince regulators that they need capital relief. The request for comments asks whether a phase-in of risk-based capital requirements over four quarters is needed. Federal Reserve Board chief accountant Arthur Lindo told certified public accountants at their annual banking conference that certain private-label mortgage backed securities are "likely to come on board." And securitizations where the servicing bank has residual interests are likely to be consolidated under Financial Accounting Standards 166 and 167.

LoanSifter, a Web-based loan product eligibility and pricing tool, has expanded its offering given the shift from broker to banker, to include LoanSifter Banker Edition to help automate backend processes. LoanSifter Banker Edition is a single product eligibility and pricing solution for bankers, credit unions and community banks. The product includes an automated rate sheet generator, a wholesale/third-party originator Web portal, an online 1003 mortgage application, and an upcoming bulk-pricing tool. These features expand on the original LoanSifter solution, consisting of a secondary pricing engine, scenario rate alerts and monitoring, custom e-mail rate campaigns, open house flyers, website quoting, and lead auto-quoting.

MGIC Investment Corp., in a new regulatory filing, said that it is delaying by 10 years an interest payment on its 9% convertible junior subordinated debentures. Originally, the interest payment was due Oct. 1 of this year but now will not be paid until Oct. 1, 2019. The bonds do not come due until 2063. In trading Monday, MGIC's shares were down 6% to $9.17. Other publicly traded MIs were either flat, or down slightly. In terms of book-of-business, the MI is the nation's largest with policies-in-force of $223 billion, according to the Quarterly Data Report.

The first "material" year-over-year increase in July's purchase lending seen in two years has increased hopes for a recovery in the United Kingdom's market, but experts remain reluctant to forecast a turnaround. Purchase mortgages in July represented 56,000 loans totaling £7.5 billion ($12.4 billion), up from 47,000 loans totaling £7.1 billion ($11.8 billion) during the same period last year, according the Council of Mortgage Lenders, London. CML economist Paul Samter said that while evidence is strong that purchase lending in increasing, constraints on the industry's ability to fund increased lending, reduced consumer interest in refinancing and persisting weaknesses in the economy make it likely that on the whole lending could remain relative subdued for some time. During July, total gross U.K. lending was £14.5 billion ($24.0 billion), 42% lower than during the same month last year.

Standard & Poor's Corp. is significantly increasing credit enhancement levels for U.S. residential mortgage-backed securities receiving its top AAA rating. In an effort to update its criteria so an RMBS pool can withstand an extreme economic downturn without defaulting going forward, S&P is establishing a 7.5% credit enhancement level for the archetypical, AAA-rated prime credit quality RMBS pool. S&P also said that, although it is difficult to say what "typical" alternative-A and subprime credit loans might look like in the future, it expects that "an archetypical pool that has similar characteristics to alt-A and subprime would have AAA credit enhancement levels of 18% and 30%, respectively."

If the Federal Reserve Board suddenly stops purchasing agency mortgage-backed securities on Jan. 1, mortgage rates could jump by 30 basis points to 50 bps, according to Fannie Mae chief economist Doug Duncan. Conventional mortgages with principal balance up to $417,000 would likely rise by 30 bp and rates on higher balance loans of $650,000 to $729,750 could go up by 50 bps, he told MortgageWire. The Fed's $1.25 trillion MBS purchase program is slated to expire Dec. 31. But Mr. Duncan expects the Fed will extend and slowly wind down its purchases of Fannie, Freddie Mac and Ginnie Mae MBS. "Thus, incremental winding down of the Fed's program may not be too disruptive of rates and spreads," Mr. Duncan said in his August economic forecast. The Fed is expected to decide how it will wind down the MBS purchase program at the Sept. 22-23 Federal Open Market Committee meeting.

The Department of Housing and Urban Development said the Federal Housing Administration is delaying the Oct. 1 effective date of its new condominium policies for one month while it finalizes several modifications. A mortgagee letter issued in June allows FHA direct endorsement lenders for the first time to approve condominium projects so that unit sales can be financed with FHA-insured loans. The industry has welcomed this new streamlined approach to building approvals. However, FHA continues to limit the number of condo units that can be financed in one complex to 30%. And 50% of the units must be occupied before FHA financing can be used. The National Association of Realtors has been pressing HUD to relax those restrictions. "We'll be issuing new guidance soon, with several modifications to the policy described in Mortgagee Letter 09-19," a HUD spokesman said, with a November 2 effective date.

Federal regulators have closed Illinois-based Corus Bank, the lender on several high-profile Tampa Bay area projects. The Federal Deposit Insurance Corp., which was appointed receiver after Corus was seized late Friday, entered a purchase and assumption agreement with MB Financial Bank of Chicago. MB will pay a 0.2% premium to assume all the deposits, the FDIC said in a release. MB also agreed to purchase about $3 billion of assets, mainly cash and marketable securities, the release said. The FDIC said it plans to sell substantially all of the remaining assets of Corus Bank in the next 30 days in a private placement. The failure of Corus will cost the FDIC's deposit insurance fund $1.7 billion, the release said.

U.S. District Judge Catherine C. Blake sentenced Deborah Williams, a title company owner from Pasadena, Md., to 84 months in prison for mail fraud and diverting settlement funds for her benefit. Williams was ordered to forfeit $3.4 million. Williams was the sole officer and director of Day Title, a title company with offices in Severna Park, Md., that conducted real estate closings and issued title insurance policies. According to Rod Rosenstein, U.S. attorney for the District of Maryland, Williams concealed her illegal transactions by falsely representing on settlement documents that her company had paid off lien holders and then sent the falsified settlement documents to the lender by commercial carrier. She initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

Mountain Funding LLC has appointed Arthur Nevid to be its chief investment officer and to spearhead the national real estate investment company's plans to acquire $1 billion of distressed real estate debt portfolios over the next two to three years. He also will serve as managing director of the Charlotte, N.C., company's special servicing affiliate, which currently manages $1 billion in mortgage debt on 90 commercial properties. Since 1997, Mr. Nevid has served as Mountain's managing director of lending and investment. Prior to joining Mountain Funding, Mr. Nevid was the U.S. executive managing director of a French-owned development company based in New York City, and a real estate investment banker and asset manager at Merrill Lynch Hubbard.

FNC Inc., a real estate collateral technology provider based in Oxford, Miss., has hired Glen Evans as president. Most recently, he was a senior vice president at FTN Financial, a subsidiary of First Tennessee Bank. Mr. Evans, who has been in the business for 25 years, will report directly to FNC CEO and co-founder, Bill Rayburn. "FNC has grown beyond its start-up phase," Mr. Rayburn said. "Glen's background and industry knowledge will help us expand our mortgage clients and our business." FNC's new president previously ran FTN Financial's correspondent services division. The company said Mr. Evans' primary goal will be to help the firm meet its revenue goals.

A continuing rise in negative home equity and unemployment has led to rating actions on 581 prime residential mortgage-backed securities transactions issued between 2005 and 2008, according to Fitch Ratings, New York. "While actual loan losses to date remain low on average for the transactions reviewed (36 basis points), average delinquency has almost doubled since the start of the year to 11% and continues to grow due to high average roll-rates from performing to delinquency," Fitch said in a report. About 45% of the borrowers in the private-label MBS reviewed by Fitch owed more on their mortgages than their homes were worth, according to Grant Bailey, a senior director at the rating company.

The Government Accountability Office, in a new report, has entered into the debate over the future of Fannie Mae and Freddie Mac, blistering some of the most widely discussed options for revamping the two. Though the watchdog agency did not take a formal position on what policymakers should do with the GSEs, it essentially declared two ideas unworkable — fully privatizing Fannie and Freddie or turning them into public utilities. Those options could spur inefficiencies, raise mortgage rates and take banks out of the business of offering traditional mortgages, the GAO concluded. The report offered detailed pros and cons of other options including nationalizing Fannie and Freddie, simply restoring the firms to their previous status, breaking them up into multiple entities or turning them into cooperatives. In the year since the federal government seized the GSEs, options for how to deal with them have multiplied, even though the Obama administration has said it will not deal with the issue until 2010. While many Republicans and other conservatives have pushed for years to privatize the GSEs or eliminate them, the GAO found only one benefit to such an approach: enhanced market discipline. But the agency warned that it was not clear if privatized GSEs could support the mortgage market during a crisis.

Introduced earlier this year as part of the president's economic stimulus bill, the $8,000 first-time homebuyer tax credit, to date, has prompted 314,000 additional consumers to get off the fence and purchase a home, according to new figures released by the White House. The National Association of Realtors estimates that the tax credit will boost home sales by an additional 350,000 by the time it expires on December 1. Overall, 1.8 million first-time homebuyers may take advantage of the tax credit, according to NAR economists. Meanwhile, homebuilders, Realtors and other housing groups are trying to get the word out that buyers must go to closing by November 30 to take advantage of the tax credit. In mid-October, housing groups will mount a public campaign to extend and increase the tax credit and possibly expand it to all homebuyers. But for now, the lobbying is low key so potential first-timers won't get the idea they can sit back and wait for an extension. In July, 30% of existing home sales were by first-time buyers.

Caliber Funding, which is controlled by private equity firm Lone Star Funds, has agreed to acquire what it calls "certain technology and operational assets" from StoneWater Mortgage for an undisclosed sum, according to a source close to the deal. Both non-depository lenders are based in Arizona. Caliber expects to retain most of StoneWater's employees. No further information was available on the deal, including figures on the firms' origination and servicing volumes. A spokesman for Caliber confirmed the transaction. The Dallas-based Lone Star has been bottom fishing in the mortgage market the past year. A year ago the private equity firm made headlines when it paid 22 cents on the dollar ($6.7 billion) for $30.6 billion in mortgage CDOs held by then struggling Merrill Lynch & Co. (This was prior to Merrill's sale to Bank of America.) The PE firm also bought CIT's home lending business.

Investor Wilbur Ross, one of the most active bidders on distressed mortgage assets, is gearing up to make a run at mortgage insurance giant United Guaranty Inc., a unit of American International Group, according to MI and investment banking sources. One investment banker described Mr. Ross — a principal in WL Ross & Co., New York — as the leading bidder on UGI, the nation's fifth largest MI in terms of policies-in-force. (Figures courtesy of the Quarterly Data Report.) However, it's unclear if Mr. Ross is bidding on all or part of the company and whether he has partners on the deal. Spokespersons for both AIG and UGI had no comment. Mr. Ross had not returned a telephone call as National Mortgage News went to press. Over the past 18 months he has acquired two large non-prime residential servicing portfolios. Ross was part of an investor group that bought failed Florida bank BankUnited FSB, a large player in the payment option ARM market. He also recently hired James Lockhart, former director of the Federal Housing Finance Agency, who is familiar with the MI industry and its role in guaranteeing loans sold to Fannie Mae and Freddie Mac. "Ross' interest in the MI business is very important," said one MI executive. "It shows the importance of this business. He can be an important part of the MI business moving forward."

DebtX is selling $788 million in loan participations held by failed Silverton Bank of Georgia for the Federal Deposit Insurance Corp. The 344 participations are from commercial real estate and commercial and industrial loans and are being offered on an individual basis. It includes both performing and non-performing assets from 27 states, with the largest concentrations in Georgia, Alabama, Florida, Ohio and Washington. The largest loan is a $20.7 million participation in a loan secured by residential lots in Las Vegas. More than 140 of the participations are less than $1 million. Kingsley Grassland, chief executive of DebtX said the sale is getting investor interest, especially from community banks, the traditional buyer of loan participations.

Mario Bernadel, a real estate investor from Phoenix, has been convicted of running a mortgage fraud scheme involving at least 32 residential properties in the greater Phoenix area. According to John J. Tuchi, interim U.S. attorney for the District of Arizona, participants in the scheme recruited unqualified straw borrowers, submitted fraudulent loan applications on their behalf, obtained mortgage loans in excess of the selling price and then took the excess amount of the loans out through escrow. Bernadel recruited and trained mortgage brokers, straw buyers and an escrow officer in the scheme and, following the funding of the loans, received cash back. The homes purchased through the scheme have been foreclosed or sold at a loss. Seven other co-conspirators were also charged and have pleaded guilty and await sentencing. The scheme resulted in $20 million in loans obtained by fraud and a loss of more than $2 million. Bernadel's conviction is part of "Operation Cash Back," in which 40 defendants were indicted and arrested. Bernadel is the 20th defendant to date who has been convicted. U.S. District Judge Stephen M. McNamee set sentencing for Nov. 30.

Generation Mortgage Co., Atlanta has named Scott Peters president and chief executive, replacing Joe Morris. Mr. Morris, who served as president and CEO since the company's inception in 2006, will take on the role of executive director, industry relations, where he will represent Generation Mortgage as an industry advocate to play a stronger role with organizations such as the National Reverse Mortgage Lenders Association, lend support to wholesale relationships and will also be active legislatively. Mr. Peters joins Generation Mortgage from Nortel Networks Corp., where he led the Global Business Services division. He also held senior leadership positions within General Electric Capital Corp., MassMutual, BellSouth Corp., The Profit Recovery Group International and CompuCredit Corp.

The Federal Reserve, in its new Beige Book report, says home sales are increasing somewhat in the Boston, Chicago, Richmond and San Francisco districts but the housing sector in general is not out of the woods yet. The St. Louis area has seen no noticeable improvement in housing conditions and most Fed districts reported that sales were "below the levels of a year earlier." The central bank noted that housing demand "remained stronger at the low-end of the housing market." As for home construction, the news is bleak with only Chicago and Dallas reporting small increases in housing activity. In the commercial real estate market, construction remained at low levels overall, "although Chicago and Dallas reported a small increase in activity" the Fed said. Overall, the central bank said economic activity is stabilizing or improving in the vast majority of the country and that the worst recession since the 1930s may be over.