Originations

New homes sold at an annualized pace of 407,000 units in November, the weakest showing in almost 18 years and further evidence that the housing market is still in distress. According to figures compiled by the Commerce Department and the Department of Housing and Urban Development, new home sales fell 2.9% compared to October, and 11.4% from the same month last year. "The November figure of 407,000 is the lowest since January 1991 and within a whisker of the lowest since 1982," said Greenwich Capital analyst Steve Stanley. "Builders are having increasing difficulty competing on price against the wave of foreclosed homes hitting the market, and the drastic tightening in credit is hitting developers on both sides (households are having more trouble qualifying for mortgages and the builders are having their own funding issues)." The median sales price rose to $220,400 from $214,600 in October.

Real estate website Zillow.com has launched Zillow Advice, an online resource for consumers to find answers to specific local real estate questions. Located in the "Advice" tab on Zillow.com, Zillow Advice encourages consumers to "Ask a Question," tag it by topic or locality, and receive advice from Zillow's online community of local real estate experts. Zillow Advice adds to existing community features such as Zillow Discussions and Home Q&A, which allow for broader discussion topics or home-specific questions and answers. Currently, more than 40,000 contributions are made to Zillow.com by its community of users each day, according to Zillow.

Fraud prevention firm National Loan Auditors, Walnut Creek, Calif., is now offering an online resource portal aimed at providing clients with up-to-date information on statutes and case law pertaining to lending and foreclosure. The portal includes status updates on all federal, state and municipal legislation, the company said. "NLA Law Portal adds value to our forensic loan audit by providing support for its findings and information on how to effectively use the audit report in legal proceedings," said August Blass, CEO of National Loan Auditors. "Users are given summaries and guidelines that distill lending and foreclosure law into a short manageable synopsis, saving hours in research." Once access has been granted, clients have the ability to search various summary topics such as alternatives to workout agreements, Truth in Lending Act summary, and Home Ownership and Equity Protection Act action steps. State legislation topics also are available. By selecting a state, users will receive current case law and statues in that state. Litigation tools also will be displayed when applicable.

Harland Financial Solutions' Interlinq E3, the company's Web-based loan production platform management system, is providing complete integration with Compliance EAGLE, an automated compliance review service developed by QuestSoft. Compliance EAGLE offers Interlinq E3 users a compliance process within the LOS. Compliance EAGLE uses proprietary rule sets to identify regulatory exceptions. "Harland Financial Solutions has been a valued integration partner of QuestSoft's for more than ten years," said Leonard Ryan, president of QuestSoft in a prepared statement. This integration is said to provide customers with a best practices approach to dealing with regulatory compliance.

Home price declines are showing signs of easing but it's too early to declare a bottom, according to preliminary figures compiled by First American CoreLogic. The company released an early preview of its November findings, showing that prices declined at a rate of 9.6% in November, compared to 10.4% and 11.2% in October and September, respectively. "The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines," said Mark Fleming, chief economist for First American CoreLogic. But the economist cites continued job layoffs and a huge inventory of unsold homes as major negatives weighing on the housing market. Roughly $2 trillion in home equity has been wiped out over the past year. California cities continue to lead the pack in terms of price declines, according to the company. Salinas has suffered the most among California cities with values falling by almost 30%.

A new report shows that banks and thrifts are more successful at modifying mortgages they own than the loans they service for other investors and Fannie Mae and Freddie Mac. Only 51% of bank-owned modified loans had missed a payment after six months, compared to 61% for private investors, according to a third quarter mortgage metrics report issued by the Office of the Comptroller of the Currency and Office of Thrift Supervision. The joint report noted that 58% of Freddie modified loans were 30-day past due after six months and 57% of Fannie loans were delinquent. "The lower re-default rate for loans held by servicers may suggest that there is greater flexibility to modify loans in more sustainable ways when loans are held on the servicer's books than when loans have been sold to third parties," the report says. OCC and OTS collected the data from nine national banks and five thrifts with the largest servicing portfolios.

Hope Now servicers are planning to step up their loss mitigation efforts in 2009 and modify two million loans -- double the number of modifications this year, according to the private sector alliance. The alliance said servicers completed 107,800 repayment plans and 99,800 loan modifications in November to help homeowners avoid foreclosure. Hope Now projects the tally for modifications for all of 2008 will be 950,000. "We expect to double that to two million for 2009," said Steve Bartlett, president and chief executive of the Financial Services Roundtable. Mortgage Bankers Association chief operating officer John Courson stressed Hope Now will be more aggressive and employ new strategies to help troubled homeowners. "Stay tuned," he told reporters. The two trade group executives said they would welcome federal funding for foreclosure prevention efforts. And they support a FDIC plan would provide federal loan guarantees for modified loans.

Mortgage lenders funded just $20.58 billion in second liens during the third quarter, an 82% decline from the same period last year, according to exclusive survey figures compiled by National Mortgage News. A year ago the industry funded $116 billion in seconds. The figures include both open-end HELOCs and closed-end seconds. In the second quarter, home equity originations totaled $42 billion. Over the past 18 months second-lien funders of all stripes have severely curtailed the size of loans they are willing to fund and exited certain markets where home prices have fallen the most. Also, many lenders no longer use seconds in 80-10-10 and 80/20 structures. The top five funders experienced declines ranging from 61% to 81% in 3Q. Bank of America ranked first among second liens lenders in the third quarter, originating $5.8 billion compared to $21.1 billion in the same period last year, a 72% decline, according to figures compiled by NMN and the Alternative Products Quarterly Data Report. Chase ranked second with $2.6 billion (down 77%), followed by Wells Fargo & Co. ($2.5 billion/down 61%).

Thanks to falling interest rates the man who heads the National Association of Mortgage Brokers, is seeing loan applications spike at his brokerage firm. Marc Savitt, president of The Mortgage Center of Martinsburg, W. Va., said "our business has tripled since last month." He declined to give specific figures but said applications are running 60/40 in favor of home purchases. "We are absolutely seeing more activity," he said in an interview. Most of the refi applications the Mortgage Center is receiving involve customers wishing to get out of an adjustable rate loan into a FRM. "We're also seeing customers trying to reduce their terms -- changing from a 30-year loan into a 20," said Mr. Savitt. NAMB, meanwhile, has just filed suit against the government regarding coming changes to RESPA. (See lead news item today.)

AllRegs, Eagan, Minn., has become the exclusive training provider for the National Association of Mortgage Brokers and will begin offering mortgage origination and compliance instruction to members and other originators starting early next year. AllRegs said it would offer several forms of training, including audio programs, self-study online courses, instructor-led webinars and classroom programs. Courses are slated to focus on topics that include fair lending, state compliance, Federal Housing Administration, Truth in Lending Act, Real Estate Settlement Procedures Act, the Housing and Economic Recovery Act and ethics.

The Mortgage Bankers Association wants Congress to raise the $417,000 conforming loan limit on Fannie Mae and Freddie Mac loans to $625,500 when it passes an economic stimulus bill early next year. Raising the conforming loan limit to $625,500 would achieve better execution for higher balanced loans in the TBA (to-be-announced) securities market, according to MBA associate vice president Josh Denney. "It would provide more affordable financing for borrowers," he said. The maximum loan limit for Fannie, Freddie and Federal Housing Administration loans is slated to adjust from $729,750 down to $625,500 on January 1. (The $729,750 is for "high cost" areas only.) Democrats in Congress and the incoming administration of president-elect Barack Obama are expected to seek an extension of the maximum $729,750 loan limit or make it permanent. "MBA is pushing for a permanent loan limit structure that is similar to what we have now," Mr. Denney said.

GMAC Bank, the depository arm of GMAC Financial Services, has warehouse commitments of $2.5 billion, a 58% decline from a year ago. A company official, requesting anonymity, confirmed the figures to MortgageWire but noted that the unit has increased credit to what he calls "our existing core customer base" by $400 million this year. GMAC Bank, he said, has scaled back its business and eliminated subprime credits. "We are lending to customers that are selling loans to our conduit," he said. He noted that GM Bank is keeping "a low profile" these days. Its parent is trying to become a bank holding company and is waiting for enough investors in its corporate notes to accept an exchange offer that will allow it to raise $30 billion in regulatory capital. A few years back GMAC was the largest warehouse lender in the nation.

The White House is pulling the plug on the Federal Housing Administration's "FHA Secure" refinancing program at yearend, according to industry sources. FHA Secure has helped at least 460,000 subprime borrowers refinance into Federal Housing Administration-backed loans. The Bush Administration launched the program in August 2007 as part of President Bush's first response to the subprime crisis which later morphed into a global financial meltdown. FHA Secure was meant to be a temporary program that expired at the end of 2008. However, lender and consumer groups have urged the Department of the Housing and Urban Development and the White House to extend it through 2009. "The expanded loan options offered by FHA Secure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers," according to a November letter signed by several trade groups. Under the program, FHA loosened its underwriting standards to allow borrowers with adjustable-rate mortgages to refinance into fixed-rate FHA mortgages. The program was expected to help refinance borrowers who were behind on their payments, but only 4,000 delinquent borrowers were refinanced.

The National Association of Mortgage Brokers on Friday sued the Department of Housing and Urban Development, seeking an injunction to coming changes under the Real Estate Settlement Procedures Act. In an interview with MortgageWire NAMB president Marc Savitt said, "We're asking for an injunction so the rule will not be finalized." NAMB has a number of complaints with the changes proposed by HUD. The new rules -- which go into effect a year from now -- require yield spread premiums to first be disclosed as a borrower paid item and then a broker credit back to the borrower. NAMB believes this will only confuse mortgage applicants and does not create a level playing field because mortgage bankers are not required to disclose servicing and secondary marketing fees paid to them. The trade group also does not like the new three-page good faith estimate (GFE) disclosure form because it is not itemized (as it is now) and quotes the borrower only one figure. Mr. Savitt said his brokerage has been asking customers whether they prefer an itemized explanation of their closing costs, "and all of them told us yes -- that they want to know how we arrived at that number." In a statement, HUD said, "In this housing market, the nation is crying out for reasonable regulation to help families shop for and save money on the largest purchase of their lives. This rule is that reasonable regulation and it helps consumers to avoid getting into trouble in the first place. It's mystifying why anyone would stand in the way of the kind of transparency this rule brings to the marketplace."

SL Green Realty Corp., New York, is being added by Standard & Poor's Corp. to the S&P MidCap 400 index after the close of trading on Dec. 22, 2008. It is replacing Foundry Networks Inc., which is being acquired by Brocade Communications Systems Inc. SL Green will be added to the S&P MidCap 400 GICS (Global Industry Classification Standard) Office REITs Sub-Industry index.

Mortgage interest rates of 4.5% will not be enough to lure homebuyers, according to the National Association of Home Builders, which is pushing for a government program to buy down rates to 2.9% and really stimulate sales. "Some of our homebuilding companies have gone out with 4.5% interest rates recently," NAHB chief executive Jerry Howard. "Although there has been an uptick in business, it is not enough to be called an economic stimulus." Congress is expected to pass an economic stimulus package early next year and home builders and a coalition of housing-related industries want the buy-down to be part of the package. With a 2.9% mortgage rate and an expanded homebuyer tax credit, it could help to eliminate the inventory of unsold homes in six to 12 months, Mr. Howard told reporters. NAHB also supports efforts to prevent foreclosures, including the Federal Deposit Insurance Corp. loan modification program. "Foreclosures need to be addressed," Mr. Howard said.

The level of commercial/multifamily mortgage debt outstanding decreased slightly by 0.1% in the third quarter, to $3.44 trillion, according to the Mortgage Bankers Association's analysis of the Federal Reserve Board Flow of Funds data. The $3.44 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $3.3 billion from the second quarter 2008. Multifamily mortgage debt outstanding grew to $890 billion, an increase of $15.2 billion or 1.7% from second quarter. "Uncertainty surrounding the weakening economy, coupled with the continuing pressures of the credit crunch, led to a slight pullback among investors in commercial/multifamily mortgages in the third quarter," said Jamie Woodwell, MBA's vice president of commercial real estate research. "The government-sponsored enterprises and other finance companies have taken advantage of the limited competition to increase their holdings, but the numbers show banks and thrifts beginning to pull back on their holdings and the CMBS market continuing to pay-down its holdings with few, if any, acquisitions."

Fannie Mae is tightening its lending standards on condominiums and it is introducing a new project eligibility review service (PERS) for new and newly converted condos that will be mandatory in Florida starting Jan. 15 and optional elsewhere. The delinquency and default rates on condo loans in Florida are "at an all time high," Fannie says in a notice to lenders. And the secondary market agency is reducing the maximum loan-to-value ratios for established condos in Florida when lenders don't use PERS or don't conduct full lender reviews. Use of PERS will cost lenders $30 per unit. Effective immediately, Fannie has eased its owner-occupied requirements for condominiums with bank-owned foreclosed units. Real estate owned units that are for sale (not rented) will be counted in the owner-occupancy ratio. The National Association of Realtors asked for this change. Meanwhile, lenders are bracing for loan buy-backs demands from Fannie and Freddie Mac and the lenders expect to face a lot of buy-backs involving condo loans, a source said.

Declines in the weekly 30-year fixed mortgage rate and a key benchmark bond yield to lows never before seen in their recorded histories may put the deeply-cut origination business back in hiring mode by early next year - if it is sustained and all the stars are aligned. "That is a big 'if,'" said Art Frank, director and head of mortgage-backed securities research at Deutsche Bank Securities. A lot of other factors would have to fall into place, but it is possible, said Dennis Hedlund, founder and president of regional industry data forecast firm iEmergent. One originator, Lendability, already has had to speed up its timetable for existing hiring due to the lower rates, according to chief executive officer Paulo LaGreca. The average rate on a 30-year fixed-rate mortgage during the week ended Dec. 18 fell to 5.19% from 5.47% and, according to Freddie Mac, this was the lowest it has ever been since it started its rate survey in 1971. A Freddie spokeswoman said the lowest it had gotten previously was 5.21% in June 2003. Also the 10-year Treasury yield, a mortgage benchmark, has dropped sharply to near 2.1% and hit a low not ever before seen in the recorded trading history of that bond, which goes back to the 1950s. "We're at the lowest levels we've ever seen," said David Ader, head of government bond strategy at RBS Greenwich Capital. The last time the 10-year yield even approached this level was in 1954, when it hit a low of 2.29%, he said.

Gateway Funding Diversified Mortgage Services, Horsham, Pa., has agreed to pay $200,000 to the Federal Trade Commission to settle charges that it engaged in discriminatory lending practices, even though it refutes the allegations. The FTC had originally levied a $2.9 million judgment against the non-bank lender, which was once headed by a top officer of the Mortgage Bankers Association. Gateway had been battling the FTC for three-and-a-half years. The agency alleged that in 2004 and 2005 the lender violated the Equal Credit Opportunity Act. During these two years, Diversified was managed by Regina Lowrie, who served as annual chairman of the Mortgage Bankers Association for 2005/2006. The FTC alleged that Gateway allowed its loan officers to charge overages that resulted in African-Americans and Hispanic applicants paying higher fees and interest rates than whites. But Gateway president and chief executive Bruno Pasceri says the company uses the term overage in an unusual way and it does not mean loan officers can charge overages. "We tried to explain," he said. "But they could not get their heads around that we don't operate like other people." FTC began its investigation in 2005 when Ms. Lowrie was president and CEO of Gateway and MBA chairman. She could not be reached for comment. She left Gateway about two years ago. "We do not discriminate," Mr. Pasceri said. "The only we reason we agreed to settle is because the legal fees are destroying us. Our legal bills were $100,000 a month," he added.