Originations

Lend America, a non-depository FHA lender based in Melville, N.Y., expects its origination volume to increase by almost 80% this year to $2.5 billion. The privately held company - which also will announce a new product launch this week - forecasts its servicing portfolio will grow to $1.5 billion by year-end, compared to just $223 million at the end of December 2008. Lend America is headquartered in an office building which once housed executives for American Home Mortgage, a non-depository alt-A and conventional lender/servicer that went bankrupt in the summer of 2007. A spokesman for the company provided the estimates to MortgageWire. Lend America uses warehouse lines to finance its production.

FirstFed Financial Corp., Los Angeles, which recently shut its mortgage wholesale production operations, lost $244.8 million ($17.91 per share) in the fourth quarter of 2008 because of a $220 million provision for loan losses. The company is now operating under an Office of Thrift Supervision cease and desist order. Its level of delinquent mortgage loans was affected by adjustable-rate mortgages which had reached their maximum allowable negative amortization and required an increased payment. In 2008, there were 1,741 loans with a total balance of $802.3 million that were scheduled to recast; in 2009, there are an additional 913 loans, with a total balance of $396 million set to recast. FirstFed chief executive Babette Heimbuch said "we are focused on modifying our adjustable-rate loans where possible so that borrower payments are affordable and stable." The company has $403.8 million in non-accrual single-family mortgage loans as of the end of last year, down from $445.2 million at the end of the third quarter.

The benchmark 10-year Treasury yield, while remaining historically low, has climbed back to levels seen before its steepest plunge in December. The yield was near 2.8% as of noon on Monday, up from lows below 2.2% late last year. The yield generally has been rising recently but that could change as a federal purchase program for Treasury bonds is being considered.

Genworth Financial Home Equity Access Inc., Richmond, Va., a reverse mortgage lender once known as Liberty Reverse Mortgage Inc., is expanding its wholesale lending operations. It cited the increased number of companies (more than 1,300) that started a reverse mortgage lending program in 2008; most of those broker loans through a larger lender like Genworth. Genworth also said recent changes at other wholesale reverse mortgage lenders have shown a need for additional capacity. The company has created an inside sales division to build relationship with new reverse mortgage lenders. It will be headed up by Bob Marseilles, national wholesale manager; most recently he was with Financial Freedom. Genworth has also hired four regional account managers to work with mortgage brokers on the east coast. They are: Barbara Chearney, who covers Maryland, Virginia and the District of Columbia; Gina Monopoli, New Jersey and Southern Pennsylvania; Kirk O'Connor, New England; and Tim Frederick, Alabama, Eastern Florida and Georgia.

It's official: Total housing production in California in 2008 slammed to the lowest level on record, according to the California Building Industry Association. Just 65,380 building permits were issued statewide last year for new homes, condominiums, townhouses and apartments, the trade group said. That's down 42 percent from 2007 and 69 percent -- 147,580 units - compared to 2004, the peak of the current cycle. Continuing the industry's siren call for help in bringing buyers back into the market, CBIA President Robert Rivinius said a temporary tax credit enacted in the 1970s during a similar downturn did the trick back then and could do so again. Just a few months after the credit was put in place, sales had increased by 100 percent, Mr. Rivinius said. And within two years, construction in the Golden State was back to normal levels. He also said the state's lagging economy is not likely to recover until homebuilding does. "Because homebuilding has declined so dramatically, California has lost nearly 300,000 jobs and $46 billion in economic impact in just the last three years, enough to plug the budget deficit and lift our economy out of the doldrums," he said. "New-housing construction creates jobs, generates revenue for state and local coffers and puts California back on the path to economic recovery."

Citing its strong loan production, Fidelity D & D Bancorp Inc., Dunmore, Pa., declined to participate in the U.S. Treasury Department's Troubled Asset Relief Program Capital Purchase Program, even though the government had approved its entry. It said it had ample liquidity to fund loans for the foreseeable future. Steven C. Ackmann, president and chief executive, said, "We are well-capitalized, solid, and continue to invest in our community. Because we are so well capitalized, we felt our customers and shareholders would be better served by not participating in the Treasury program." The lender continues to fund consumer, mortgage and commercial loans. In the fourth quarter Fidelity D&D originated $12 million in residential mortgages, and $40 million in commercial.

The Federal Reserve purchased nearly $70 billion of GSE mortgage-backed securities during the first month of its special initiative to lower loan rates and help stabilize the residential finance market. The New York Federal Reserve Bank started purchasing Fannie Mae, Freddie Mac and Ginnie Mae MBS on January 2, buying $10.2 billion in agency MBS the first week. By the mid-January, the 30-year mortgages had dropped below 5%, creating a surge in refinancing applications. But a sell off in the Treasury securities market has pushed mortgage rates up to 5.25% again. The Fed succeeded in narrowing the spread between the 10-year Treasury rate and mortgage rates, according to Mahesh Swaminathan, a Credit Suisse mortgage strategist. "The Fed's buying of mortgages is definitely a positive on the whole, but it doesn't guarantee lower mortgage rates if Treasury rates continue to sell off," he said. The New York Bank reported on Thursday that it purchased $16.8 billion in agency MBS from January 22 through January 28.

Flagstar Bancorp of Michigan, one of the few remaining wholesale residential lenders left, reported a net loss of $200 million in the fourth quarter, after taking $292 million in charges during the period. In the fourth quarter, Flagstar originated $5.4 billion of residential mortgage loans, compared to $6.5 billion one year prior. For the full year, it funded $28 billion in home mortgages, a 9% gain from 2007. At year-end it serviced $55.9 billion, with a weighted average servicing fee of 33.3 basis points. In the fourth quarter of 2007 it lost $30.1 million. Among the items associated with the 4Q 2008 charges: an increase in the loan loss provision to ($176.3 million); a $270 million writedown on the value of its mortgage servicing rights (although this was mostly offset by hedging gains); a $16.4 million valuation adjustment; a $9.8 million reserve established to cover anticipated losses in its captive mortgage reinsurance arrangement; and an 'other than temporary' impairment of $43.6 million related to investment securities available for sale. Flagstar's full year loss was $257.3 million or $3.57 per share.

The top executive at James B. Nutter and Co., Kansas City, Mo., is citing a lack of warehouse capacity for both the company's decision to end wholesale production of traditional forward mortgages, and a new moratorium it placed on accepting reverse loan applications from brokers. James B. Nutter Jr., president of the family-run mortgage firm, said the warehouse funding problem exists throughout industry. The company, a non-depository, will continue to close and fund forward and reverse loans in its existing pipeline. The lender estimates it closed 1,100 reverse mortgage loans in January. Mr. Nutter said he hopes to resume wholesale reverse production in March. He added that the company would consider re-entering the wholesale forward mortgage production channel if it gains access to additional warehouse capacity. Nutter & Company's retail business remains strong, he said.

Lehman Brothers Holdings -- which filed for bankruptcy protection back in the fall -- has been shopping around its alt-A servicing division in recent months but with no takers. At one point the unit, Aurora Loan Services of Colorado, had $120 billion in servicing rights on its books. It's unclear how much of that portfolio is servicing versus subservicing contracts. ALS was both a funder and servicer of alt-A loans but also had ventured into subprime in recent years. One investment banker, requesting anonymity, said ALS is housed under Lehman Brothers Bank FSB of Delaware, which was not a party to the bankruptcy. A few years back Lehman hired away CEO Tom Wind from Chase Home Finance to manage its mortgage operations. A spokeswoman for Lehman in New York had not returned a telephone call at press time.

In the fourth quarter 2008, Bank of America, Charlotte, N.C., lent $45 billion through its mortgage unit, of which $11.3 billion went to low- and moderate- income borrowers. This was one of the findings of its first Lending & Investing Initiative, which the bank said covers its business activity in 10 sectors key to reviving the U.S. economy. BofA said in 2008 as part of its loss mitigation efforts, it modified approximately 230,000 mortgage loans representing over $44 billion in financing. Commercial real estate lending in the fourth quarter totaled nearly $7 billion. Through the end of October 2008, the bank delivered nearly $2 billion in "green" commercial real estate debt and equity transactions. For the full year, BofA invested $1 billion in affordable housing by using Low Income Housing Tax Credits. BofA and the recently acquired Merrill Lynch together made $450 million of loans and investments to Community Development Financial Institutions. In the fourth quarter of 2008, BofA had net purchases of $20 billion in mortgage-backed securities.

Freddie Mac's average rate for a 30-year fixed rate mortgage fell slightly but remained above 5% during the week ended Jan. 29. The average 30-year FRM rate was 5.10%, down from 5.12% the week previous and from 5.68% the previous year. The average 15-year FRM rate remained where it was the previous week at 4.80% but was down from 5.17% from a year ago. The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage was 5.27%, up from the previous week's 5.24% but down from 5.32% last year. The average rate for a one-year Treasury-indexed ARM was 4.90%, down from 4.92% the previous week and 5.05% the previous year. Average points were 0.7 for 30- and 15-year FRMs, and 0.6 for five-year hybrids and one-year Treasury-indexed ARMs.

The House has passed the $820 billion economic stimulus bill that restores the $729,750 loan limit in high cost areas for the rest of this year. Congress originally raised the maximum loan limit on Fannie Mae, Freddie Mac and Federal Housing Administration loans to $729,750 in February 2008 as part of the first stimulus bill. But that provision expired Dec. 31 and the loan limit adjusted downward to $625,500 where it is today. The Senate is expected to vote on a stimulus bill next week. But so far the Senate package does not include a loan limit increase. Housing industry lobbyists are working to attach the House loan limit provision to the Senate bill. The House bill also includes a provision that increases the loan limit on FHA-insured reverse mortgages from $417,000 nationwide to $625,500 for the rest of calendar year.

New homes sales fell nearly 15% in December from November to a level not seen since 1981 as builders wait to see what Congress is going to do to help the housing market. They are also saying low appraisals are causing many cancellations. The U.S. Census Bureau reported that sales of new single-family homes fell from a seasonally adjusted annual rate of 388,000 in November to 331,000 in December. Construction activity has fallen by 45% since December 2007. Builders are facing the worst market conditions in 40 years. Construction financing is tight, appraisers are valuing newly constructed homes at foreclosure prices and sales contract cancellations are running at a 30% rate. "Appraisals are killing sales," said Bernard Markstein, director of economic forecasting at the National Association of Home Builders. "Some appraisals are coming in at below building costs," he said. The NAHB is urging Congress to extend a $7,500 first-time homebuyer tax credit to all buyers as a way to stimulate sales and increase the tax credit to 10% of the sales price. But it appears Congress is not moving in that direction.

Cavalier Homes Inc., Addison, Ala., a builder of manufactured homes, is selling its financial services subsidiary, CIS Financial Services Inc., to Triad Financial Services Inc., Jacksonville, Fla. Triad will pay $750,000 in cash for the unit, plus the principal balance of certain outstanding installment contracts; these will be paid to Cavalier as collected by Triad within 180 days of the deal closing. CIS purchases retail installment contracts from the dealers that sell Cavalier's manufactured homes. It also periodically resells the majority of these contracts. For the third quarter of 2008, Cavalier lost $168,000, with the financial services segment reporting an operating loss of $22,000. For 2007, Triad had a loan volume in excess of $270 million. This deal is expected to close on or before March 1, 2009. Cavalier has also hired Avondale Partners as its financial advisor as it evaluates strategic alternatives.

The Market Composite Index, an overall measure of mortgage applications, decreased 38.8% on a seasonally adjusted basis (to 732.1 from 1195.3) during the week ended Jan. 23, as there was a substantial decline in refinance applications, according to the Mortgage Bankers Association. This week's results included an adjustment to account for the shortened week due to the Martin Luther King Jr. holiday. On an unadjusted basis, there would have been a 46.5% decrease compared with the previous week and a 40.4% decrease when compared with the same week one year earlier. The Purchase Index decreased 2.9% to 294.3 from 303.1 one week earlier on a seasonally adjusted basis, while the Refinance Index decreased 48% to 3373.9 from 6491.8. Refinancings decreased to 72.8% of applications from 83.3% the previous week, while adjustable-rate mortgages accounted for 2.4% of applications, up from 1.5% for the previous week, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.22% from 5.24%, with points (including the origination fee) decreasing to 1.05 from 1.16 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

The Federal Housing Finance Agency, which has just instituted a final rule on the dollar size of Fannie Mae's and Freddie Mac's respective on-balance sheet holdings, also is seeking comment from the industry regarding what criteria should govern their holdings in the future once they return to health. By law, Fannie's and Freddie's portfolios cannot grow any larger than $850 billion each, a cap that pertains to the last day of this year. After that, each must shrink its portfolio with the eventual goal of holding just $250 billion in mortgage-related assets. FHFA has published a list of 20 issues including "benefits and risks associated with mortgage portfolios" that it wants comments on. Respondents have 120 days to send in their answers. Fannie and Freddie were taken over by the government in early September and continue to bleed red ink.

Wells Fargo posted solid mortgage origination numbers and said home loan volume continues to trend upward, despite its quarterly loss of $2.6 billion amid a $5.6 billion increase to its credit reserve. Wells took in $116 billion of mortgage applications in the fourth quarter of 2008, up 158% from the year earlier period. And application volume in December marked the fourth highest monthly application volume in the company's history. Moreover, chief financial officer Howard Atkins said daily mortgage application volume during the first two weeks of January was running 20% higher than in December. The company had $71 billion of home loan applications in its pipeline at year-end. Wells estimates that it now accounts for 12% of the mortgage origination market, up from 10% a year earlier. Wells originated $50 billion of home loans during the fourth quarter and $230 billion for the full year. Wells' fourth quarter results did not include results from Wachovia, which Wells officially acquired on Dec. 31. Wachovia lost $11.2 billion in the fourth quarter. Wells' mortgage servicing portfolio swelled to $2.1 trillion at year-end with the addition of Wachovia's $379 billion servicing portfolio.

The Federal Housing Finance Agency, which has just instituted a final rule on the dollar size of Fannie Mae and Freddie Mac's on-balance sheet holdings, also is seeking comment from the industry regarding what criteria should govern their holdings in the future once they return to health. By law, Fannie and Freddie's portfolios cannot grow any larger than $850 billion, a cap that pertains to the last day of this year. After that, each must shrink its portfolio with the eventual goal of holding just $250 billion in mortgage-related assets. FHFA has published a list of 20 issues including "benefits and risks associated with mortgage portfolios" that it wants comments on. Respondents have 120 days to send in their answers. Fannie and Freddie were taken over by the government in early September and continue to bleed red ink.

LendingTree and GetSmart.com, a pair of affiliated lead generation services based in Charlotte, N.C., are now allowing consumers to search for reverse mortgage products on their sites. A company executive said the change is in response to consumer demand for these products on the site. Participating lenders who already offer reverse mortgages now get pre-screened candidates for these loans, reducing the legwork they have to do to create the lead, said Keith Moore, senior vice president at LendingTree.