Originations

Tim Wilson is the new president of affiliated businesses for The Long & Foster Cos., Chantilly, Va. In this position, he oversees Long & Foster Real Estate Inc., Prosperity Mortgage Co., Long & Foster Insurance Agency Inc., and Long & Foster Settlement Services. Mr. Wilson replaces Dave Stevens, who was recently promoted to president at The Long & Foster Cos. Most recently, Mr. Wilson was executive vice president and director of wholesale lending at Wachovia Bank, Charlotte, N.C. and before that, group senior vice president and national loan manager for World Savings & Loan, Oakland, Calif.

Freddie Mac's multifamily whole loan and bond guarantee business set a record of $24 billion in mortgage settlements in 2008, according to the government-sponsored enterprise. This represented an increase of more than 10% over 2007, Freddie Mac said. The GSE also noted that during 2008 its purchases in the moribund commercial mortgage-backed securities dropped dramatically to just $1.4 billion from $22 billion in 2007.

There are $171 billion of commercial and multifamily mortgage loans held by non-bank lenders and investors that are set to mature this year, a survey from the Mortgage Bankers Association said. The Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes found that short-term floating-rate mortgages in commercial mortgage-backed securities and mortgages held by credit companies, warehouse facilities and other investors are more likely to mature in 2009 and 2010 than are fixed-rate CMBS mortgages, mortgages held by life insurance companies or multifamily mortgages held or guaranteed by Fannie Mae, Freddie Mac or FHA. MBA found that $120 billion of non-bank commercial/multifamily mortgages are scheduled to mature in 2010. "Substantial concerns have been raised about the volume of mortgages maturing in the face of the current credit crunch," said Jamie Woodwell, MBA's vice president of commercial real estate research. "This study shows that while the dollar volume of maturing non-bank mortgages represents only one-tenth of the total outstanding balance, it is not evenly spread across investor and lender groups. Across all these investor groups, commercial/multifamily lenders and servicers have a wide variety of tools to help them deal with maturing mortgages, which should mitigate - but not eliminate - the impact of maturities in 2009." Of the total non-bank holdings of commercial/multifamily mortgages coming due in 2009, 52.8% is in CMBS, collateralized debt obligations or other forms of asset-backed securities, and an additional 33.6% is held by credit companies, warehouse facilities or other investors. Life insurance companies hold only 9.8% of the non-bank mortgages maturing in 2009, and 3.8% are held or guaranteed by Fannie Mae, Freddie Mac or FHA.

Fannie Mae is loosening a restriction to encourage lending to real estate investors, a group that has been widely blamed for contributing to the housing meltdown but is also seen by many as critical to a recovery. The government-sponsored enterprise told lenders last week that starting next month it will buy or guarantee home loans made to borrowers that have mortgaged as many as nine other properties. Currently, Fannie will not touch a loan if the borrower has financed more than three other homes. The change is meant "to bring added liquidity to the investor segment of the market and help hasten the recovery," Fannie said. However, the GSE, which said it wants to make more loans available to "high-credit quality, bona fide ... experienced investors," is tightening other requirements for this type of borrower. Starting in June, an investor will have to hold six months of payments in reserve, rather than two months, to get a single-family loan approved by Fannie's automated system.

Treasury Secretary Timothy Geithner Tuesday morning promised that a "comprehensive" government program to revive the housing market and help consumers avoid foreclosure is in the works but offered no details on what the effort might entail. The new Treasury secretary said specifics of the plan will be released in the next few weeks. At press time, Treasury officials were offering no guidance on the issue. "Millions of Americans have lost their homes, and millions more live with the risk that they will be unable to meet their payments or refinance their mortgages," said Mr. Geithner. Meanwhile, the new Term Asset-Backed Securities Loan Facility, or TALF, does not include single-family mortgages. (See related story.)

The government sponsored enterprises' regulator wants the Obama administration to use some of the second installment of the Troubled Asset Relief Program funds to shore up the capital bases of the private mortgage insurance companies so that Fannie Mae and Freddie Mac can finance more homebuyers. "I am hopeful that TARP II will address the private mortgage insurers' capital issues," Federal Housing Finance Agency director James Lockhart told an American Securitization Forum meeting in Las Vegas. The government-sponsored enterprises depend on PMI to serve borrowers with down payments of less than 20%. But the PMI companies have increased premiums, tightened underwriting and become less competitive as a result of default and foreclosure losses. Due to "stresses on mortgage insurance company capital," Mr. Lockhart said, the GSE market share has fallen while the market share of government-insured Federal Housing Administration/Veterans Affairs loans has increased dramatically. "The private mortgage insurers' market share versus FHA/VA fell from nearly 80% in the first quarter of 2007 to about 30% in the third quarter of 2008," the GSE regulator said.

REOMAC, a trade association serving the mortgage default industry, has created a commercial real estate committee. Until now, the group had been primarily focused on residential real estate owned. The new committee is led by co-chairs John Murray and Peter Monroe. "In light of the imminent tsunami of commercial mortgage defaults and foreclosures, it is crucial that our organization find new and innovative ways to help the private REO industry respond," said Shelley Kaye, president of REOMAC. Mr. Monroe is currently the president and chief executive of a venture capital firm. He served as the president of the Resolution Trust Corp. Oversight Board during the late 1980s and early 1990s. "There are more than a half a trillion dollars of commercial mortgages requiring refinancing over the next three years," Mr. Monroe said. "Given the state of the economy, the debt markets and the great number of commercial mortgages in complex conduit structures, a commercial meltdown of historic proportions is inevitable." Mr. Murray is a managing member of an investment firm.

The benchmark 10-year Treasury yield had risen above 3% as of midday on Monday, Feb. 9. The 10-year yield has not been above 3% since November of last year. Federal officials have been considering buying Treasuries, a move that could potentially counteract the increase in the yield.

The Mortgage Bankers Association is asking the Treasury Department to take quick action on a plan to offer federal guarantees on warehouse lines of credit, warning that many non-banks are facing a severe liquidity crisis as refinancing applications swell. In a letter to Treasury secretary Timothy Geithner, MBA president John Courson requested a meeting with the government to discuss the issue. Among other ideas, the trade group wants regulators to relax the risk-based capital charge on warehouse lines. MBA's plea comes as rumors mount that some non-banks are struggling to maintain warehouse lines and complaints from loan brokers about delivery fees and turnaround times. The government has yet to adopt a policy or plan on warehouse lending but lobbyists say both the Treasury and Federal Reserve are rapidly being educated on the issue. Glenn Corso, who runs a group called The Warehouse Lending Project, said he has a meeting with Federal Reserve officials next week to discuss the matter. Mr. Corso said the Federal Housing Finance Agency is aware of the warehouse crisis "and they understand it." One idea being promoted by the industry is to have Fannie Mae and Freddie Mac buy participation interests in warehouse lines, thus adding liquidity to the market. (For more on the story see the Monday, February 9 issue of National Mortgage News.)

The Mortgage Bankers Association is asking the Treasury Department to take quick action on a plan to offer federal guarantees on warehouse lines of credit, warning that many non-banks are facing a severe liquidity crisis as refinancing applications swell. In a letter to Treasury secretary Timothy Geithner, MBA president John Courson requested a meeting with the government to discuss the issue. Among other ideas, the trade group wants regulators to relax the risk-based capital charge on warehouse lines. MBA's plea comes as rumors mount that some non-banks are struggling to maintain warehouse lines and complaints from loan brokers about delivery fees and turnaround times. The government has yet to adopt a policy or plan on warehouse lending but lobbyists say both the Treasury and Federal Reserve are rapidly being educated on the issue. Glenn Corso, who runs a group called The Warehouse Lending Project, said he has a meeting with Federal Reserve officials next week to discuss the matter. Mr. Corso said the Federal Housing Finance Agency is aware of the warehouse crisis "and they understand it." One idea being promoted by the industry is to have Fannie Mae and Freddie Mac buy participation interests in warehouse lines, thus adding liquidity to the market. (For more on the story see the Monday, February 9 issue of National Mortgage News.)

Fannie Mae said Thursday that it would no longer require an appraisal or property inspection of some borrowers trying to refinance a Fannie-owned mortgage. Some analysts said the change would have a marginal impact. Starting April 4, Fannie said, its Desktop Underwriter system will validate property values for refis of Fannie loans by means of automated models instead of requiring an appraisal or property inspection. Brian Faith, a Fannie spokesman, said the change and several others would let "potentially millions of current mortgage holders" take advantage of historically low interest rates and "break the logjam in mortgage refinancing." A report by UBS analyst Jena Curro notes that the impact on prepayment speeds will be limited but says, "there are still some possible effects (pressure from lenders and third parties, origination) that should not be overlooked."

Citizens South Bank, Gastonia, N.C., will use all of its $20.5 million in federal Troubled Assets Relief Program money to create a 30-year residential loan program with a starting interest rate of 3.5% in an effort to stimulate the local housing market. The loan program has a maximum rate of 5.5% and waives closing costs. The program will bring together builders and developers, who are Citizens South customers and have extra housing stock or residential lots ready for sale, with consumers who are looking for the best possible mortgage rate. Participating builders and developers will agree to pay the closing costs on the mortgages as a form of assistance to qualified homebuyers. "Recent consumer surveys show that lower interest rates provide people with the assistance they need to purchase a home," Kim S. Price, president and chief executive of Citizens South Bank, said. "We believe this program is the best use of our CPP funds because it promotes home ownership and generates work for builders, developers, construction workers and real estate agents." The start rate of 3.5% is set for the first 24 months; then the loan adjusts to the 5.5% rate. Applicants will be qualified at the 5.5% rate. Citizens South will hold the loans in portfolio.

Bank of America CEO Ken Lewis said Friday the bank -- one of the largest players in residential finance -- will not need or ask for any more TARP funds from the government. In an interview on CNBC Mr. Lewis said the bank does not need more TARP money -- and therefore would not ask for additional assistance. To date the Charlotte-based bank has accepted $45 billion in funds provided under the Troubled Asset Relief Program or TARP. Over the past year the bank acquired the nation's largest subprime lender/servicer, Countrywide Home Loans, as well as Merrill Lynch which owns two large subprime servicing platforms: Home Loan Services, and Wilshire Credit Corp. Merrill was also a top underwriter and investor in subprime ABS and CDOs.

Union Bank of California originated $4.5 billion in mortgages in 2008, a 70% increase from the prior year. "Not to blow our horn but we refrained from all the lending excesses of the past," said Craig Cole, senior vice president of residential lending at the San Diego based bank. Mr. Cole said that Union's mortgage group has hired about 20 people over the past year. "Mostly in the underwriting area to accommodate the volume and growth," he said.

Senate Republicans are trying to revive and refine an interest rate buy-down proposal that would create a 4% mortgage even though the Senate shot down the language on a 35-62 procedural vote. The original buy-down amendment offered by Sen. John Ensign, R-Nev., provided low-rate mortgages to 40 million borrowers at an estimated cost of $300 billion. A majority of senators refused to waive budget procedures to add such an expensive program to the economic stimulus bill. In opposing the Ensign amendment, Sen. Charles Schumer, D-N.Y., said it would not help borrowers with underwater mortgages, adding that a refi surge would not reduce the glut of unsold homes on the market. "It is a totally flawed proposal," he said. One source said Sen. Ensign might pare down the buy-down program and possibly limit it to homebuyers. Sen. Patty Murray, D-Wash., is expected to offer an amendment on Friday that raises the maximum loan limit on Fannie Mae, Freddie Mac and Federal Housing Administration loans back to $729,750 for the rest of this calendar year. A similar loan limit provision is contained in the House-passed Economic Stimulus bill.

The Mortgage Bankers Association -- whose members have been decimated by the credit crisis and rising residential delinquencies -- is making contingency plans to cut staff and re-engineer its organization for leaner times. A spokeswoman for the trade group, which currently employs about 134 full-timers, stressed that no decision on layoffs is imminent. "We are going through a general re-engineering exercise," she told MortgageWire. "We want to make sure MBA is the right size and strong going forward." Former MBA employees said the trade group continues to struggle from poor leasing on its new 10-story headquarters in downtown Washington. The 160,000 square-foot building, which was completed last year, is about half leased. "The building is an albatross around their neck," said one former MBA executive.

Employment in the mortgage industry fell 18% in 2008 as nearly 60,000 full-time workers lost their jobs, according to new government figures released Friday. In December alone 4,800 full-timers were let go even though interest rates fell and refi applications began to pile up at month's end. Mortgage companies are using increased productivity to substitute for hiring people, according to Orawin Velz, director for economic forecasting at the Mortgage Bankers Association. "Some lenders are managing their pipelines by quoting higher rates," she said. "Unless they see a sustained increase in volume they don't want to hire right now," she said. The mortgage banking and brokerage segments now employ about 280,000 workers compared to more than 500,000 two years ago, meaning the industry is off 44% from its peak. Meanwhile, the U.S. Bureau of Labor Statistics made a huge annual adjustment -- of 52,800 jobs -- in its mortgage employment figures for 2008. BLS originally reported that employment in the mortgage banker/broker sector was 337,600 in November. But it then revised downward that number to 284,800 in Friday's jobs report. The revision shows that BLS under-estimated the amount of job losses early in the recession for all workers, not just those employed in housing finance.

NVR Inc., a homebuilder headquartered in Reston, Va., has been given a No. 5 (Strong Sell) rating from Zacks.com. In a statement issued on Feb. 5, 2008, Chicago-based Zacks said NVR's fourth quarter 2008 loss was a result of being "battered by the prolonged downturn in the housing sector." NVR had been profitable in the fourth quarter 2007. Furthermore earnings have been shrinking steadily for the past 2 years. Analysts now expect NVR to earn $18.98 in fiscal 2009, down from $20.30 per share."

Citizens South Bank, Gastonia, N.C., will use all of its $20.5 million in federal Troubled Assets Relief Program money to create a 30-year residential loan program with a starting interest rate of 3.5% in an effort to stimulate the local housing market. The loan program has a maximum rate of 5.5% and waives closing costs. The program will bring together builders and developers, who are Citizens South customers and have extra housing stock or residential lots ready for sale, with consumers who are looking for the best possible mortgage rate. Participating builders and developers will agree to pay the closing costs on the mortgages as a form of assistance to qualified homebuyers. "Recent consumer surveys show that lower interest rates provide people with the assistance they need to purchase a home," Kim S. Price, president and chief executive of Citizens South Bank, said. "We believe this program is the best use of our CPP funds because it promotes home ownership and generates work for builders, developers, construction workers and real estate agents." The start rate of 3.5% is set for the first 24 months; then the loan adjusts to the 5.5% rate. Applicants will be qualified at the 5.5% rate. Citizens South will hold the loans in portfolio.

The Senate has approved a $15,000 homebuyer tax credit that the homebuilders and Realtors have been pushing for to stimulate sales and soak up the excess inventory of unsold houses. The Senate approved and added the tax credit amendment by Sen. Johnny Isakson, R-Ga., to the economic stimulus bill by a voice vote. The Isakson amendment expands an existing $7,500 homebuyer tax credit to $15,000, or 10% of the purchase price, whichever is less. And it makes the tax credit available to all homebuyers. The House has passed a $7,500 tax credit that is limited to first-time homebuyers. In the 1970's, the government successfully employed homebuyer tax credits to get the economy out of a serious housing down turn, according to Sen. Isakson. "We have a pervasive housing problem, and we have a historical precedent that works. I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment," he said. Sen. Patty Murray, D-Wash., is expected to offer an amendment that raises the maximum loan limit on Fannie Mae, Freddie Mac and FHA loans back to $729,750 for the rest of this calendar year. The House-passed economic stimulus bill has a similar loan limit provision.