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Monday Morning Cup of Coffee

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A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues: The elevated conforming loan limits for mortgages insured or guaranteed by the government expire in nearly one month and legislation to extend them is unlikely to make it far in the House of Representatives. The Department of Housing and Urban Development alerted lenders to the new limits Friday, which will drop to $625,500 in the most expensive neighborhoods Oct. 1. The new prices will vary by county. A source in the House pointed to a paper Republicans released in March 2010, detailing their plans for winding down Fannie Mae and Freddie Mac. One of the principles includes allowing the elevated conforming loan limits to expire come October. While committee leadership has not said they would ignore efforts to extend the limits, the source signaled a continued stance behind the principles in the paper. HUD said the new rules would apply to loans applications received on or after Oct. 1, but some lenders already began applying the limits in August due to the process time it takes to approve borrowers for a new loan. The Arizona Department of Insurance placed two mortgage insurance subsidiaries of The PMI Group (PMI) under its supervision and prohibited the company from writing new commitments effective Friday. PMI faces a possible delisting from the New York Stock Exchange because its stock price closed at less than $1 for 30 consecutive days. Under the order from the state of Arizona, PMI can issue new mortgage insurance through pending commitments until Sept. 16 but must cease making interest payments on $285 million in surplus notes the company issued. PMI is also prohibited from entering into any new contracts, mergers, and acquisitions or from withdrawing any bank accounts. The state said the company must submit a plan within 60 days for rebuilding its financial condition. The company said if the state chooses to appoint a receiver and begin liquidating the company, roughly $735 million of outstanding debt would become due. PMI said it would not have enough capital to meet those obligations. The company engaged Willis Capital Markets & Advisory and Evercore Partners as advisers to help find options. "There can be no assurance that any of these potential alternatives will be successful," PMI said. Standard & Poor's analysts do not expect national home sales to recover in the near future after dropping for the third time in four months. Existing home sales fell 3.5% in July, the National Association of Realtors said last week, but S&P said even record-low mortgage rates can't improve the still-struggling housing market. "Home prices and sales have been weak even though the average 30-year fixed mortgage rate has been near or below 5% since 2009, and the housing market has been a drag on the economy," S&P analyst Erkan Erturk said late Friday. Some local markets are faring better, however. The Triangle Multiple Listing Service covering 16 counties in North Carolina said June pending home sales in Raleigh, Durham and Chapel Hill area increased 16% from one year ago. Sales in the first six months of 2011 on the MLS averaged the same amount seen in 2001. Prices increased 3.3% from the previous month but remained 3% down from one year ago. The MLS said it currently has an 11.4 month supply of inventory, up more than 11% from last year. Three banks closed over the weekend to go with the one shuttered Thursday, bringing the total number of failures to 68 for 2011. The Federal Deposit Insurance Fund estimates the closings last week to cost the DIF $374.8 million. The Office of the Comptroller of the Currency closed Lydian Private Bank based in Palm Beach, Fla. Sabadell United Bank will assume all $1.24 billion in deposits and purchase essentially all $1.7 billion in assets. The closing is expected to cost the DIF $293.2 million. The OCC also closed First Southern National Bank of Statesboro, Ga. Heritage Bank will assume all $159.7 million in deposits and purchase essentially all $164.4 million in assets. The closing will cost the DIF $39.6 million. The Illinois Department of Financial and Professional Regulation closed First Choice Bank of Geneva, Ill. Inland Bank & Trust will assume all $137.2 million in deposits and purchase essentially all $141 million in assets. The closing is estimated to cost $31 million. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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