Originations

While not as huge an increase as in the week prior, refinancings drove another overall rise mortgage applications, according to the Mortgage Bankers Association. The MBA's Market Composite Index increased 3.9% on a seasonally adjusted basis to 1194.4 from 1159.4 for the week ended March 27, according to the group's Weekly Mortgage Applications Survey. During the week, the average contract interest rate for 30-year fixed-rate mortgages fell to a record low for the survey to 4.61% from 4.63%, making it four consecutive weeks with rates under 5%; points (including the origination fee) decreased to 1.03 from 1.13 for loans with 80% loan-to-value ratios, the association said. On an unadjusted basis, the index increased 2.9% compared with the previous week and 68.8% compared with the same week one year earlier. The Purchase Index had a modest increase of 0.1% to 268.0 from 267.8 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 3.7% to 6600.1 from 6363.2 the week prior. Refinancings increased to 79.1% of total applications from 78.5% the previous week, while adjustable-rate mortgages accounted for 1.5% of applications, up from 1.4% the week prior, the MBA said. The MBA can be found online at http://www.mortgagebankers.org.

Thornburg Mortgage Inc., Santa Fe, N.M., has made plans to discontinue operations after winding down through a bankruptcy filing and a series of asset sales and liquidations, ending a struggle to survive the non-agency liquidity crisis that started in 2007. Remaining assets are slated to be sold or liquidated with the assistance of Houlihan Lokey Howard & Zukin Capital Inc. The company already has agreed to transfer its mortgage servicing rights, which were granted to certain Wall Street firm counterparties as security for TM's obligations under their respective financing agreements. The counterparties are JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Ltd., Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland plc and UBS AG. The counterparties have agreed to grant the company additional forbearance from demanding payment on deficiency claims under their various financing agreements through April 30, or earlier if certain events occur. But in exchange for the continued forbearance TM has agreed that the remaining counterparties who have not previously taken possession of their collateral under their respective financing agreements may do so at their discretion. The company said it will not be able to make certain senior subordinated notes payments but has a 30-day grace period before it defaults on these. It does not expect to file its 10-K annual report with the Securities and Exchange Commission. Thornburg Investment Management, which is co-located with TM and has the same chairman as TM, is a separate legal entity and said it would not be affected by TM's situation.

Colonial BancGroup, the nation's largest warehouse provider, has received a $300 million capital commitment from mortgage banker Taylor, Bean & Whitaker and other investors, an infusion that will aid in the bank's near-term survival. Described as the lead investor in the deal, TBW is also a warehouse lending customer of Colonial's. The deal was announced late Tuesday afternoon and no other details were released concerning the other investors. Based in Ocala, Fla., TBW is a privately held S&L holding company. According to the Quarterly Data Report, TBW is the nation's eighth largest lender overall and second largest wholesaler. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. According to a statement released by the bank, TBW's investment is contingent upon the Treasury agreeing to infuse the $550 million into Colonial. Once the deal is completed the investor group led by TBW will control 75% of the Alabama bank. On Tuesday, National Mortgage News reported that Colonial had been approaching "mortgage banking companies" about being part of the investor group.

Colonial BancGroup, the nation's largest warehouse provider, has received a $300 million capital commitment from mortgage banker Taylor, Bean & Whitaker and other investors, an infusion that will aid in the bank's near-term survival.Described as the lead investor in the deal, TBW is also a warehouse lending customer of Colonial's. The deal was announced late Tuesday afternoon and no other details were released concerning the other investors. Based in Ocala, Fla., TBW is a privately held S&L holding company. According to the Quarterly Data Report, TBW is the nation's eighth largest lender overall and second largest wholesaler. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. According to a statement released by the bank, TBW's investment is contingent upon the Treasury agreeing to infuse the $550 million into Colonial. Once the deal is completed the investor group led by TBW will control 75% of the Alabama bank. Yesterday National Mortgage News reported that Colonial had been approaching "mortgage banking companies" about being part of the investor group.

Interstate Hotels & Resorts, Arlington, Va., has received a waiver from the lenders of its senior credit facility through June 30.The waiver covers a violation of the facility's terms that require Interstate's common stock maintain its listing on the New York Stock Exchange. The NYSE suspended trading of Interstate's stock on March 12 after the company failed to meet the minimum $15 million market capitalization requirement. The real estate investment trust currently trades on the over-the-counter market as it waits for the NYSE to rule on its appeal. As part of the waiver agreement, the interest rate on the credit facility was increased 75 basis points to LIBOR plus 350 basis points. In addition, the company paid a 50 basis point fee to consenting lenders, and the facility size was permanently reduced to $173.3 million from $198.0 million. The new facility size provides for $10 million of borrowing capacity, of which $6 million is available through June 30. The company does not expect to draw on the facility during the waiver period.

Prior to the recent sale of the government-owned IndyMac FSB to an investor group, Fannie Mae settled a $1 billion-plus buyback dispute with the thrift but all the parties involved are keeping the settlement secret.Representatives from IndyMac's new owners (Dune Capital), the Federal Deposit Insurance Corp., and Fannie all confirmed that the dispute was settled but have declined to say on what terms. A source familiar with the matter said the amount of loans Fannie wanted IndyMac to repurchase totaled about $1 billion. Loan buyback requests typically come about when a buyer of mortgages discovers that the portfolio acquired has early payment defaults or higher-than-anticipated delinquencies.

Colonial BancGroup, the nation's largest warehouse provider, is talking to an investor group that includes some of its mortgage customers about supplying much-needed capital to the bank, a source familiar with the matter told National Mortgage News. The Alabama-based bank needs to raise $300 million in private equity before it can become eligible for $550 million in Federal TARP funds. The source, requesting anonymity, said Colonial is approaching "mortgage banking companies" about being part of the investor group. The Wall Street Journal reported that non-bank lender Taylor Bean & Whitaker, Ocala, Fla., is part of that group and that TBW has a thrift affiliate that would be part of the deal. The newspaper says that the plan would be to convert Colonial from a commercial bank into a thrift. At press time officials from both Colonial and TBW declined to comment or had not returned telephone calls about the matter.

Pennant Capital Management, the largest shareholder in PHH Corp., Mt. Laurel, N.J., is seeking to install former Freddie Mac CEO Greg Parseghian and another candidate on the lender's board.In a new public filing Pennant, a hedge fund, says it wants Mr. Parseghian and Allan Z. Loren elected as directors at the PHH annual meeting in June. A proxy filing is forthcoming. Mr. Loren is the former chairman of Dun & Bradsheet, a business information publisher. Mr. Parseghian left Freddie Mac under a cloud in the summer of 2003 in the midst of a $5 billion accounting scandal. An independent report said Mr. Parseghian, while serving as a Freddie Mac executive, approved accounting treatments for different transactions that had the effect of the GSE under-reporting earnings. It is unclear from the SEC filing what ties Messrs. Parseghian and Loren have to Pennant. A spokesman from Pennant did not return a telephone call. At press time PHH — the nation's 10th largest residential servicer — had no comment on the matter. Pennant owns 9.97% of PHH's common.

The common stock of Walter Investment Management Co., the surviving entity of a merger between Hanover Capital Mortgage Holdings Inc., Edison, N.J., and the mortgage financing business of Walter Industries, Tampa, Fla., will be listed on the NYSE Amex exchange. This transaction is expected to close on April 17 and the new stock, using the symbol WAC, will begin trading on April 20. Starting on March 27, the surviving company stock began trading on NYSE Amex on a "when issued" basis using the symbol WAC-WI. It closed on at $8.50 per share on that day; on the same day Hanover closed at $0.19 per share. Hanover is holding a special meeting on April 15 for its shareholders to approve the transaction. Walter shareholders do not have to approve the deal. Terms of the deal have every 50 shares of Hanover becoming a single share of Walter Investment Management.

JER Investors Trust Inc., a commercial real estate investment trust, said the New York Stock Exchange will permanently delist its common stock on Tuesday. The delisting will occur prior to the opening of trading that day, the REIT said. Its stock will continue to trade in the over-the-counter market. The delisting resulted from the REIT's failure to maintain a 30-day trailing average global equity market capitalization of at least $15 million as required by the NYSE. The REIT had $743.5 million in CRE mortgage-backed securities as of Sept 30, 2008. JER Investors Trust also said it has cancelled a previously planned public offering of $150 million in a new class A common stock due to market conditions. In addition, the REIT said it is discontinuing its regular quarterly dividend and will replace it with an annual dividend. JER is associated the J.E. Roberts Cos., McLean, Va.

The Rouse Co. LP failed to secure minimum acceptance levels for a consent solicitation from holders of unsecured notes issued under the 2006 senior credit agreement. However, Rouse's parent General Growth Properties Inc., Chicago, said it was continuing discussions with the ad hoc committee of the note holders and its syndicate of lenders. The solicitation would have given Rouse a forbearance of a payment default; the notes would have been due in April and May and acceptance of the solicitation would have delayed payment of the principal until the end of the year. The consent solicitation expired at 5:00 p.m., New York City time, on March 27, 2009. "Although we did not achieve the minimum acceptance levels for each series of notes, we did receive a significant number of consents from the holders of all five series," said Adam Metz, chief executive of GCP. A recent note by Fitch Ratings on this solicitation said that without the exchange, Rouse is likely to file for bankruptcy.

Prices of vacation and investment properties plunged by over 20% in 2008 from the previous year, according to the National Association of Realtors. The median price of a vacation property fell to $150,000 or 23%, while the median price an investment property fell to $108,000 or 28%, according to the annual report on the second home market. "As in the market for primary residences, it appears that many sales of deeply distressed home are pulling down the median price of the second-home market as well," said NAR chief economist Lawrence Yun. The median price of existing home sales that NAR reports every month fell by only 9.3% in 2008 to $198,600. The NAR annual report also shows that sales of vacation homes have fallen by over 50% since 2006 and sales of investment properties has fallen by 32%.

AmeriCU Mortgage of Michigan has been approved by state regulators to provide origination and servicing services for credit unions in Wisconsin, where several CUs are still calculating their losses from the collapse of Central States Mortgage. AmeriCU Mortgage is a wholly owned subsidiary of privately held Towne Mortgage Co., Troy, Mich., and provides mortgage origination and servicing and default management services for credit unions. Central States, which provided mortgage services to more than 250 credit unions, Friday filed for receivership with the Milwaukee County Court, which is similar to a federal bankruptcy and will entail a liquidation of the mortgage company's assets overseen by a court-appointed receiver. The company, which had written more than $500 million in loans last year, shut its doors March 9 after a $33 million warehouse line of credit was called by Members United Corporate FCU, throwing about 220 people in five states out of work. Wisconsin has filed a $3 million wage lien against the mortgage banker/broker, which owes wages for March and commissions for February and March. The state is investigating whether Central States violated plant closure laws when it shut down.

Fannie Mae acquired $53.7 billion of mortgages during February, an 86% increase from January, and its best purchase month since June of last year. According to new figures released by the company, Fannie issued $45.3 billion in MBS, more than double its issuance volume of the prior month. (As reported last week, Freddie Mac purchased $40 billion of mortgages in February, an 84% gain from January.) Thanks to the Federal Reserve and Treasury driving rates lower by purchasing billions in MBS, both GSEs are seeing their seller/servicers deliver more product. Fannie ended the month with $36.4 billion in "commitments to purchase" which means in March acquisitions could be strong too. Both GSEs have been operating under a federal conservatorship since early September.

Fannie Mae has increased its required yield on Federal Housing Administration reverse mortgages, which will have the net effect of increasing the interest rate on those loans by 50 to 75 basis points, according to lenders. National Reverse Mortgage Lenders Association president Peter Bell said Fannie Mae's action was unexpected. "It's pretty draconian," he said. "We wish Fannie had given us more notice. A lender has to eat the difference for loans in the pipeline in order to honor the interest rate that it sold its borrowers. Or they have to go back to them and redo the numbers with a higher interest rate, which means the borrower will get a smaller benefit." A higher interest rate reduces the proceeds seniors receive from a reverse mortgage. The FHA's Home Equity Conversion Mortgage program dominates the reverse mortgage market. Fannie Mae is the largest investor in FHA-insured HECMs. Fannie officials could not immediately be reached for comment.

The House Financial Services Committee has postponed a markup of a mortgage reform bill that bans certain types of yield-spread premium payments and requires lenders to retain 5% of the credit risk on subprime loans that are sold to investors. The committee had scheduled a Tuesday (March 31) markup session, but canceled it without explanation. Lenders that sell subprime loans will not be allowed to "directly or indirectly transfer the credit risk it retains," according to the bill, sponsored by committee chairman Barney Frank, D-Mass., and fellow Democratic Reps. Brad Miller and Mel Watt of North Carolina. The sponsors want to crack down on compensation that might encourage mortgage lenders and brokers to steer borrowers into higher-cost loans. "Specifically, the new measure will strengthen restrictions on compensation paid to mortgage loan originators and brokers that is based on a loan's interest rate and terms, often called a yield-spread premium," according to Rep. Miller. Marc Savitt, president of the National Association of Mortgage Brokers, said that he is okay with the language in the bill, noting that "this doesn't ban yield-spread premiums outright" and instead "prevents people from making a couple of extra points" by putting consumers in higher-cost loans. Mr. Savitt added that his reading of the bill indicates that it would require mortgage banking firms to disclose their "servicing-released premiums" to the public as well. "The bill means you have to disclose everything," said Mr. Savitt. The legislation also mandates that all licensed and registered originators would be subject to a "federal duty of care" measure under the bill, obligating them to only make loans that a customer can afford. With refinancings, lenders would have to prove a "net tangible benefit.

Acknowledging that non-depository mortgage bankers are facing a warehouse funding crisis, the Federal Housing Finance Agency said it has met with industry leaders and is seeking proposals on how Fannie Mae and Freddie Mac can play a role in solving the problem.Glen Corso, who runs an advisory group called The Warehouse Lending Project, said he is working on a proposal where Fannie and Freddie would use their "guarantee authority" to help warehouse banks move the loans "off-balance" sheet which would alleviate capital charges on the credits. Mr. Corso said TWLP soon will submit its ideas to FHFA. The Mortgage Bankers Association is expected to submit a proposal too, but on Monday the trade group did not return a telephone call about the matter. In a statement FHFA said it has met "with a number of industry participants and others to try to develop solutions."

The House Financial Services Committee has postponed a markup of a mortgage reform bill that bans certain types of yield-spread premium payments and requires lenders to retain 5% of the credit risk on subprime loans that are sold to investors. The committee had scheduled a Tuesday (March 31) markup session, but canceled it without explanation. Lenders that sell subprime loans will not be allowed to "directly or indirectly transfer the credit risk it retains," according to the bill, sponsored by committee chairman Barney Frank, D-Mass., and fellow Democratic Reps. Brad Miller and Mel Watt of North Carolina. The sponsors want to crack down on compensation that might encourage mortgage lenders and brokers to steer borrowers into higher-cost loans. "Specifically, the new measure will strengthen restrictions on compensation paid to mortgage loan originators and brokers that is based on a loan's interest rate and terms, often called a yield-spread premiums," according to Rep. Miller. Marc Savitt, president of the National Association of Mortgage Brokers, said that he is OK with the language in the bill, noting that "this doesn't ban yield-spread premiums outright" and instead "prevents people from making a couple of extra points" by putting consumers in higher-cost loans. Mr. Savitt added that his reading of the bill indicates that it would require mortgage banking firms to disclose their "servicing-released premiums" to the public as well. "The bill means you have to disclose everything," said Mr. Savitt. The legislation also mandates that all licensed and registered originators would be subject to a "federal duty of care" measure under the bill, obligating them to only make loans that a customer can afford. With refinancings, lenders would have to prove a "net tangible benefit.

Craig Tengowski, a licensed appraiser from Pittsburgh, Pennsylvania, pleaded guilty to wire fraud in connection with a mortgage fraud conspiracy involving inflated appraisals.An interagency Mortgage Fraud Task Force that includes the FBI and other federal, state and local law enforcement agencies conducted the investigation that led to Tengowski's prosecution. Chief U.S. District Judge Donetta Ambrose has scheduled sentencing for Sept. 18.

1st Metropolitan Mortgage, Charlotte, N.C., "is on the cusp" of making its change to a mortgage banking operation, said its chief executive Daniel Jacobs. Late last year, the firm said it was looking for "a strategic opportunity" to move from being a mortgage broker to a mortgage banker; since then it has been spending time evaluating various options to make the migration, he said. Now it is on the verge of moving forward so that the company can adapt to the current marketplace conditions so it can grow its volume in a meaningful way as the mortgage industry rebounds from its low point, Mr. Jacobs said. However, he was unable to be specific about what options the company is looking at. In December, 1st Metropolitan closed "a significant number" of its "lowest producing" branches, but its loan volume has remained steady from those that have remained open, he said. Mr. Jacobs said he was excited about the future of 1st Metropolitan as a mortgage banker, especially with the Home Valuation Code of Conduct and other more onerous laws that affect the mortgage broker business coming into effect in the coming months.