Archive for May, 2009
Web-based origination solutions provider OpenClose Mortgage Software reached out to Northeastern credit unions by partnering with Members Insurance Agency's settlement solutions platform.
The marriage of platforms allows Members Insurance's clients, credit unions based in the Northeast, access to an integrated loan system with services ranging from marketing to post-closing. Credit unions advantage from the partnership, which allows them a choice of services to complete the loan on a case-by-case basis, including credit reporting, appraisal services, title insurance and document preparations.
"We were looking for a turn-key product to get our mortgage program off the ground," said Alan Schumann, vice president of lending for Middletown, Conn.-based Seasons Federal Credit Union, in a media statement today. "Using OpenClose's Web-based [loan origination software]…we were able to get up and running with minimal set-up time and on-going maintenance."
Write to Diana Golobay.
Treasury Department secretary Tim Geithner and US Department of Housing and Urban Development (HUD) secretary Shaun Donovan together announced new initiatives within the administration's Making Home Affordable (MHA) program. The additional programs aim to increase participation in MHA and offer alternatives where borrowers and servicers cannot achieve modification.
The secretaries announced financial incentives for servicers and borrowers who decide to pursue short sales and deeds-in-lieu of foreclousre as an alternative to costly foreclosure in situations where MHA-qualifying borrowers cannot complete the refinance process. The secretaries also announced new financial incentives for modifications by lenders who fear "severe" home price declines may continue in a particular case.
"Together the incentive payments on all modified homes will help cover the incremental collateral loss on those modifications that do not succeed," HUD officials said in a media statement moments ago.
HUD also said today it requested a $100m investment in its counseling program on housing for fiscal year '10, a $35m increase from the previous-year budget, to support its network of counselors that assist borrowers seeking to refinance through MHA.
Write to Diana Golobay.
Q109 racked up $2.6bn in US commercial mortgaged-back security (CMBS) loan defaults, compared to $3.2bn for all of 2008, signaling an expedited pace in commercial mortgage defaults is upon the industry, according to Fitch Ratings data released Thursday.
"If the rate of defaults continue at this accelerated pace combined with limited issuance in 2009, the cumulative default rate will exceed 5% by year end," says Fitch managing director Mary MacNeill.
Multifamily properties and retail spaces are expected to lead defaults in 2009, both of which experienced high default rates in 2008. Multifamily spaces accounted for $1.06bn in new defaults and posted a 5.21% default rate in 2008, while retail defaults hit $1.03bn with a default rate of 2.52%.
As of year-end 2008, the cumulative default rate increased to 3.29% from 2.71% in 2007. Fitch says it expects the rate of defaults in 2009 to increase consistent with the levels of defaults in recent months, as the slow economy and lack of financing further stress loan performance.
So even though residential markets may see signs of recovery, the worst may lie ahead for the commercial sector.
The 2006 vintage had the highest dollar balance and number of commercial defaults in 2008 with $742.9 billion and 78 loans. But Fitch says loan defaults among 2007 CMBS transactions will lead all other vintages by year end as larger loans within these deals have begun to default in late 2008 and early 2009.
In a separate report Thursday, the Mortgage Bankers Association said commercial and multi-family mortgage origination volume in Q109 slipped 26% from the previous quarter and sits 70% below the reading a year ago. A drop in CMBS conduit loans led the overall decline in origination, the MBA said, plunging 96% year-over-year.
The government agreed to lend a helping hand to the commercial real estate market, effective in June. After aiding residential markets, the Federal Reserve decided in early May CMBS will also be eligible collateral for TALF participation.
The decision to incorporate CMBS into the TALF program, aims to stimulate lending in the commercial real estate sector by allowing private investors to purchase securities with a matching government investment.
Write to Kelly Curran.
Florida's largest mortgage lender, with more than $13.1bn in assets, is unable to raise the minimum capital requirements set aside by the Office of Thrift Supervision.
As a result, the Federal Deposit Insurance Corp. (FDIC) may take BankUnited (BKUNA: 0.00 N/A) operations into receivership, though rumors swirl of a possible takeover.
Last week, the bank reported $1.3bn in cash and cash equivalents, but this amount falls short of the OTS standard. BankUnited needed to raise at least $706m in order to meet the minimum requirement.
The bank cites a lack of borrowing capacity with the same lenders to which the firm holds a current outstanding balance. For instance, its revolving credit with the Federal Home Loan Bank of Atlanta (FHLB) is no longer available, though BankUnited must still pay outstanding loans on maturity.
BankUnited needs to pay back the FHLB more than $1bn by September 30, 2009. In its past-due filed 10-Q, BankUnited reported to the Securities and exchange Commission that its liquidity facilities are adequate enough to prop up the bank at least until the end of September.
It's growth in the retail trade, current loan portfolio performance and cash reserves remain its primary sources of funding, the filing states.
BankUnited is running late with most of its filings, and as a result it may become delisted from NASDAQ for failing to complete a 10-K report, an index standard.
BankUnited blames the tardiness on "the continuing adverse market conditions, the complexity of accounting and disclosure issues, which increased the need for additional review and analysis of our business including, without limitation, regulatory issues, liquidity and capital and the material weaknesses in internal control over financial reporting."
Write to Jacob Gaffney.
Fixed mortgage rates remained virtually unchanged in the week ending May 14, but hybrid adjustable-rates inched lower, according to Freddie Mac's (FRE: 0.00 N/A) Primary Mortgage Market Survey released today.
Thirty-year fixed-rate mortgages averaged 4.86% with an average 0.6 point, up slightly from last week's 4.84% average. The 15-year Fixed-rate mortgage rose from an average 4.51% to 4.52% this week.
“Interest rates for fixed-rate mortgages were little changed this week following the release of April’s employment figures,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The economy lost 539,000 jobs, less than the monthly job loss of the past five months, and the unemployment rate rose to 8.9%. ARM rates, however, fell slightly over the period."
Five-year Treasury-indexed ARMs averaged 4.82% this week, down from last week's 4.90% average and well below 5.57%, the average recorded last year at this time. One-year Treasury-indexed ARMs dropped as well, from 4.78% to 4.71%.
A separate rates survey conducted by Bankrate.com revealed findings similar to those of Freddie Mac. The benchmark 30-year, fixed-rate mortgage fell 6 basis points to 5.21%, according to Bankrate, while the Five-year ARM fell a much more significant 26 basis points to 4.81%.
Nothaft says relatively low house prices and interest rates continue to help first-time home buyers. "Housing affordability for the median first-time buyer reached an all-time record high in the first quarter since the NAR index began in 1981," he says. "Consequently, first-time home buyers accounted for half of existing home sales in the first three months of this year."
And now, after an announcement Tuesday by the US Department of Housing and Urban Development, buyers will be allowed to use their first-time home buyer tax credits as down payments on FHA-insured loans.
Write to Kelly Curran.
Monoline bond insurer MBIA faces a lawsuit by 18 financial firms over its decision to split its mortgage exposures off of its municipal-bond insurance portfolio.
The allegations claim MBIA's split and the resulting transfer of $5bn out of its main insurance business to a muni-bond insurance company constituted an unlawful effort to escape contractual obligations to cover mortgage security-related losses, according to a report filed at the Wall Street Journal.
Many of the 18 institutions at the suing end of the case — which included JP Morgan Chase (JPM: 37.21 -0.75%), Bank of America (BAC: 7.29 -0.14%), Morgan Stanley (MS: 18.56 +2.26%), Barclays and UBS AG, among others — purchased credit derivatives that supposedly protected them against losses on subprime mortgage- and commercial real estate-backed securities.
"Our lawsuit simply seeks to ensure that policy holders receive what they have paid premiums for: contractually guaranteed insurance protection," said Vince Diblasi, a lawyer representing the suing party, to WSJ.
But MBIA is pursuing a case of its own to recoup losses it says were unfair. MBIA Insurance brought a case against Merrill Lynch over certain “misrepresented” credit default swap (CDS) contracts and related insurance policies.
MBIA asked the New York Supreme Court to rescind — or unmake — the contracts and damages resulting from Merrill’s “misrepresentations” and contract breaches. According to the suit, Merrill marketed the CDS contracts to MBIA as part of a strategy to offload billions of dollars in deteriorating subprime residential mortgages. MBIA alleges that Merrill either packaged these bad mortgages into collateralized debt obligations or hedged their own exposure to them through insurer-guaranteed swaps.
Write to Diana Golobay at diana.golobay@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
The Securities and Exchange Commission (SEC) may soon bring civil fraud charges against Angelo Mozilo, co-founder of Countrywide Financial, which folded into the Bank of America (BAC: 7.29 -0.14%) name as part of the recent mortgage operations rebranding initiatives there.
The SEC weeks ago sent a memo to Mozilo warning him of the likely charges, unnamed sources told the Wall Street Journal. The charges may include allegations of insider trading and failure to provide shareholders with material information, the WSJ's sources said.
The charges point toward the $130m in Countrywide stock Mozilo sold in the first half of '07, compared with the $60m sold in the year-earlier period, according to securities filings, although Mozilo's lawyer told WSJ any inferences drawn about his adverse knowledge of the company for insider trading are unfounded.
BofA purchased the giant mortgage lender and servicer last July.
Write to Diana Golobay at diana.golobay@housingwire.com.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.
A new portable pricing tool allows originators to qualify borrowers and check current pricing anytime and anywhere — so long as they have a smart phone.
"A loan officer could be out at lunch, standing in line at the grocery store, or watching their kid's soccer game" and still conduct business, says Gigi Campbell, national sales director at PriceMyLoan.
Mobile Quick Pricer, an extension of the PriceMyLoan's standard automated underwriting and loan pricing engine, operates on internet-enabled smart phones to accommodate loan officers on-the-go. Originators enter loan scenarios and obtain loan qualification and pricing information straight from their Blackberry or iPhone, for example.
"Providing originators with a portable product and pricing tool makes perfect sense given the current mortgage environment," the company says. "Low mortgage rates have sparked a refinance boom and consumer interest in mortgages is incredibly high."
Although, in recent weeks, consumer interest has proved unpredictable. Mortgage applications slid 18.1% the last full week in April, inched up 2% the following week, just to fall almost 9% in the week ending May 13, according to the Mortgage Bankers Association.
Write to Kelly Curran.
At least one legal firm continues to grow as demand for real estate-related legal expertise increases.
Akerman Senterfitt adds to its US real estate practice two attorneys and a consultant with experience in mortgage finance, public-private investment and economic development.
"Akerman has seen a continuing demand for real estate lawyers with experience in key areas, such as distressed property investing, loan workouts, alternative forms of financing, and affordable housing," said Richard Bezold, chair of Akerman's real estate practice, in a media statement today.
Joining the firm's Jacksonville office as a shareholder, Robert Leapley brings significant distressed property experience, assisting lenders and borrowers with restructurings and commercial real estate loan workouts.
Robert Drillings, an affordable housing expert and the former general counsel to the New York State Housing Finance Agency, joins Akerman's New York office with a primary focus on the development and financing of governmentally assisted low-, mixed-, and moderate-income multifamily residential housing.
Also joining the firm's New York office is consultant Beth Zafonte, who specializes in economic incentives and alternative financing arrangements.
Write to Diana Golobay.
A 60% majority of US homeowners said in Q109 they believed their homes lost value during the past 12 months, while 80% of homes actually lost value during that time, according to a quarterly survey released today by Zillow.com.
The discrepancy between survey respondent sentiment and the actual yearly value loss narrowed in Q109 from previous surveys. Of homeowners surveyed in Q408, 57% believed their home lost value while 76% of homes actually declined in value. Of respondents in Q308, 49% believed their home had lost value, while 74% of homes had actually lost value.
The difference between homeowner belief and reality, calculated as the misperception index, narrowed to five from 10 in the fourth quarter. An index of zero indicates homeowner perception in line with actual home value. The quarter's index marked the lowest level of misperception reported by the online marketplace, suggesting homeowners are more accepting than ever of the deteriorating home values nationwide.
"While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well," says Stan Humphries, head of data and analytics at Zillow, in a media statement today.
The problem historically with homeowner misperception, the belief home prices have nowhere to go but up, led to situations where borrowers wishing to refinance out of an adjustable-rate mortgage before the teaser rate shot up found themselves slipping underwater, owing more on their mortgages than their homes were worth on the current market, and unable to qualify for a refinance.
These same situations prevented borrowers from selling their homes at a high enough price to repay their mortgages and still receive equity back. The end result was a volume of homeowners unable to either sell or comfortably make payments and unwilling to simply foreclose. These homes, not technically on the market, make up a part of the housing inventory that is, by nature, difficult to track. The task is not lost on Zillow.
"Also interesting is the information we have for the first time this quarter on the levels of 'shadow inventory' — homes that people would like to sell but that aren't currently on the market, and thus aren't captured in the official number of homes on the market," Zillow's Humphries adds. "With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices."
Write to Diana Golobay.
