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Last Updated Friday, March 12, 2004 07:06 AM CST

Subprime Delinquency Falls as FHA Rate Climbs

According to the National Delinquency Survey released Thursday by the Mortgage Bankers Association of America, the seasonally adjusted delinquency rate for one-to-four-unit residential properties dropped 16 basis points from the third quarter to 4.49%. The highest seasonally adjusted delinquency rate was seen in FHA loans, which rose 10 BPS to 12.23%. It is the first time the FHA rate is above the subprime delinquency rate, which fell from 12.69% to 11.59%.

Record Low 1-Year ARM as Fixed Rates Fall

Freddie Mac reported the average for the 1-year Treasury ARM fell 6 BPS from last week to 3.41% -- the lowest level since it began tracking these figures 20 years ago. The 30-year fixed-rate mortgage average came in at 5.41% this week -- a whopping 18 BPS lower than last week, according to Freddie. Forty-six percent of the mortgage panel surveyed this week by Bankrate.com voted rates would remain unchanged.

Mortgage Firm Squanders $1 Mil of Investors' Money on Gambling

The SEC has filed a federal lawsuit against the Rose Fund and its principals, accusing the firm of running a fraudulent Ponzi scheme that squandered at least $1 million of about $3.3 million raised from investors. The firm spent "hundreds of thousands of dollars at a horse racing track located a few minutes from the company's office," the SEC said in a written statement. Earlier this month, the company's president was held in contempt of court after he was accused of gambling another $33,183.

Nevada Nails Four More Mortgage Companies

In a crackdown on unlicensed lending activity, four mortgage lenders were recently disciplined by the state of Nevada for allegedly conducting unauthorized practices within the territory. The state said the violations ranged from employing an unregistered mortgage agent to sending direct mail to Nevada residents without holding a license. "All lenders must comply with Nevada statutes or face disciplinary actions," said the Nevada Mortgage Lending Division commissioner.

Countrywide Closings Climb

Countrywide Financial Corporation reported $23.3 billion in loan fundings during February, up 13% from the prior month. The company reported a servicing portfolio of $669 billion at February's end, while delinquency ended at 3.71% -- unchanged from January.

Saxon, Aames Going REIT Route

Saxon Capital and Aames Financial Corp. are pursuing conversions to real estate investment trusts, or REITs, to raise millions in cash through stock offerings. The new companies will not only continue their traditional roles as mortgage lenders, but will also use money raised by the sale of stock to finance real estate deals. Saxon's CEO told analysts during a recent conference call the company hopes to raise $500 million through the public offering.

'Mortgage' Still Among Top 10 Spam Subjects

Mortgage-related subject lines were among the most often used in spam e-mails during 2003, according to America Online. The Internet service provider said that among the top 10 most widely recognized subject lines in unsolicited e-mails was "Lowest mortgage rates." Other popular real estate finance headers were "lower your mortgage rates," "refinance" and "refi."

Principal Mortgage May Be On the Block

Word among equity analysts and industry watchers is that Principal Financial Group is already shopping its Principal Residential Mortgage unit. A Principal spokeswoman said in a brief interview that she could not comment on the rumors of a sale or on the company's plan for the mortgage unit. But in a Feb. 25th research report prepared by Credit Suisse First Boston Equity Research, a top Principal Financial Group executive raises the possibility of a sale.

New Century Production Holds Up

New Century Financial Corp. reported February loan production of $2.5 billion, the same as January. However, volume is up 79% compared to $1.4 billion a year ago. The Irvine, Calif.-based lender said its secondary marketing subsidiary, NC Capital Corp., has entered six deals for the sale of $6 billion in mortgage loans through June.

Packer Turned Loan Officer Still Plays Minor League Football

Once a Green Bay Packer, Mark McCutcheon is currently a loan officer for Household Financial Corp. Still, six months out of the year he is a strong safety for the Central Penn Piranha. McCutcheon began his loan officer career at a friend's brokerage business, where he went almost six months without closings "because I basically didn't know what I was doing." Once he picked up on the terminology, "and the ins and outs of the industry, then I started making some money. I liked what I saw so I just stayed with it."

More Mortgage Industry Job Losses

The Bureau of Labor Statistics reported that the non-seasonally adjusted number of people employed in mortgage-related jobs totaled 432,500, down from the previous month's revised total of 439,800. Since last August, the agency said credit intermediation, which includes mortgage banking, has lost 22,000 jobs.

Refi's Rise & So May Rates

The Refinance Index increased 5.1% from the previous week to 3532.2 -- the highest level its been at since the week ending Aug. 8, 2003 -- the Mortgage Bankers Association of America reported. The 30-year fixed-rate mortgage averaged 5.59% this week, up only 1 basis point from last week, according to Freddie Mac's Primary Mortgage Market Survey. "The current federal funds rate is accommodative...at some point, it will have to rise back to a more neutral state, because it is inconsistent with general long-term stability," Federal Reserve Chairman Alan Greenspan recently said.

Appraisal, Debt Ratio Still At Issue in Kerry Campaign

Questions are being asked by reporters, opponents and political watchdogs about Presidential contender John Kerry's recent mortgage loan. Did Kerry get a favorable investment and sweetheart deal? And how, on a Congressman's salary of $158,000, will he be able to make the $15,000 monthly interest payments his campaign has confirmed? "One issue is the house worth enough to take about a $6 million mortgage based on only half the value of the house," a political watchdog group said. A Kerry campaign spokesman has been quoted as saying that the bank valued the home at about twice what public records show.

Greenspan Clarifies Fixed Rate Stance

Federal Reserve Chairman Alan Greenspan recently said "many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade." This week he backtracked a bit saying, "I did not mean to disparage the 30-year self-amortizing mortgage." In his previous speech, he said, he had been focusing on a "narrow segment" of the market that might prefer an alternative to the 30-year fixed-rate, either variable rate or perhaps a variable maturity mortgage.

GMAC Relents on Widow's Foreclosure

After being allegedly duped by a home improvement contractor, a Pennsylvania widow saw her mortgage passed from servicer to servicer -- only to wind up on the verge of foreclosure. However, Friday she received a letter from GMAC Mortgage Corp. confirming that her mortgage debt had been forgiven. It all began when the contractor stopped by the widow's aging home shortly after she and her husband had purchased the place, she said. While she got a home improvement loan, her roof was not repaired as promised. During the process of reconciling the repairs, the loan became delinquent and was passed from servicer to servicer. However, heeding the widow's claims of fraud, GMAC, the final servicer, ultimately sent the letter indicating the debt had been forgiven.

Management, Procedural Changes Drive Improvement in Fairbanks' Servicer Rating

The servicer ratings of Fairbanks Capital Corp., which last year agreed to a $40 million settlement with the federal government over consumer complaints, has been removed from rating watch negative by Fitch Ratings. Fitch said Fairbanks has replaced senior managers, reviewed and changed procedures and "aggressively initiated many process improvements in an effort to correct the problems that had been identified.

DiTech or E-LOAN?

Internet ads are the dominant media in used in the "First Learn or Awareness" phase of the mortgage purchase process, according to a study by DoubleClick. Online resources are having a dramatic impact on later phases of the purchase process. The survey also found that news and financial sites have the greatest impact on mortgage applicants, closely followed by company Web sites.

Broker Going to Jail for Role in Marijuana Case

A former Oregon mortgage broker received a 15-month prison sentence for being an accessory after the fact to laundering. The broker, who reportedly built his company into a regional leader during the mid-1990's, took title on a property back from a real estate broker knowing it had been searched and that a "marijuana grow" was found within it, said the mortgage broker's attorney. By recording ownership under his name, he was "telling the world that he owns the property," said the prosecuting attorney, and "he takes the property back knowing that to do so will further conceal the identity of the wrongdoer -- that's what he plead guilty to."

FTC Says Broker YSP Disclosures Bad

The FTC released a study that suggests the additional yield spread premium disclosures required of brokers in mortgage transactions only hurt, not help, loan applicants. "Disclosures confuse consumers, are likely to lead a significant number of consumers to choose more expensive loans by mistake, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans, which could lead to reduced market competition and increase the cost of all mortgages," said the FTC. Consumers mistakenly paying more for their mortgages could overspend by $400-$800 million per year, according to the study.

COFI Drops to Lowest Level Ever

The 11th District average cost of funds index declined to 1.811% in January, according to the Federal Home Loan Bank of San Francisco. Published reports say the average is at its lowest level since the government sponsored housing enterprise began reporting the index nearly 23 years ago.

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