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Mortgage Industry News Headlines
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Last Updated Friday, October 10, 2008 04:51 PM CST
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Lawsuit Dropped Against Illinois Sheriff
On Wednesday, the sheriff of Cook County, Illinois, issued a statement indicating he is suspending all foreclosure evictions. The following day, Accredited Home Lenders filed a petition againstthe county seeking to have a former borrower evicted from her foreclosed home. One day later, Accredited decided to withdraw its petition.
Inside Mortgage Fraud
Assistant U.S. Attorney Shamoil Shipchandler spoke to the Dallas Mortgage Bankers Association last month about the prosecution of fraud. He described fraud for property, where criminals commit mortgage fraud so they can live in a property. Shipchandler also discussed fraud for profit, where the bad guy pulls out significant money from mortgage fraud transactions without actually being part of the transaction. Shipchandler explained that before he can prosecute a case, another U.S. Department of Justice associate has to analyze the financial records to determine what might have happened. Then, secret service agents handle the leg work to determine where the fraud occurred and who the victims were, while FBI agents investigate straw borrowers and investors. Even the Internal Revenue Service gets involved.
New No. 1?
Wells Fargo & Co. reported yesterday that Citigroup Inc. has dropped its bid for Wachovia Corp. The move leaves Wells on track to complete a stock-swap acquisition by the end of this year. Combined, W&W originated nearly $80 billion during the second quarter, well above the $58 billion in residential third-quarter production reported by Bank of America Corp. -- including volume from recently acquired Countrywide Financial Corp. The merged entity could wind up as the No. 1 U.S. mortgage lender.
Move by Sheriff Threatens Chicago Lending
Cook County's sheriff has issued a statement indicating he is suspending all foreclosure evictions. The county is home to the City of Chicago. A local banking trade group executive reportedly said that if lenders can't be assured that they have the ability to take over collateral upon default, "we simply won't make the loan."
Foreclosures Edge Lower
During September, around 190,000 pre-foreclosures were filed across the country, according to data published by ForeclosureS.com. Filings were down slightly from August, the report indicated. But pre-foreclosures were nearly double from September 2007.
MTA at 30-Month Low
The monthly Treasury average was 2.48 percent during September, according to Federal Reserve data. The index was lower than in August and in September 2007. In fact, MTA has not been this low since March 2005.
Mixed Mortgage Market
The average 30-year fixed rate mortgage declined 0.16 percent from the prior week to 5.94 percent in Freddie Mac's Primary Mortgage Market Survey for the week ending Oct. 9. But the 1-year Treasury-indexed adjustable-rate mortgage increased 3 basis points. At the same time, the 1-year Treasury yield itself was 1.28 percent on Wednesday -- tumbling 44 BPS from one week earlier, the U.S. Treasury Department reported.
TARP Gives Hope to Mortgage Sector
Under H.R.1424, the Emergency Economic Stabilization Act of 2008, the Troubled Asset Relief Program enables the Treasury to purchase $700 billion in illiquid mortgage assets. Throwing nearly three-quarters of a trillion dollars at this problem is very likely to yield some pretty positive results. In addition to freeing up capital for the current holders of the investments, it will also establish prices where no bidding had been occurring. Furthermore, with so much money flowing through the secondary mortgage market, new players will enter to capitalize on increasing values -- with some staying in the game permanently.
Default Servicing News
Wingspan Portfolio Advisors LLC announced it has launched to help servicers convert non-performing loans into re-performing mortgages utilizing an aggressive incentive compensation plan for its specialists. Attorneys general from eight states sent letters yesterday to 16 subprime mortgage servicers calling on them to adopt the streamline modification program outlined in an $8.4 billion settlement announced by Bank of America Corp. Mortgagees must take three actions to avoid treble damage assessments for failing to engage in loss mitigation, the U.S. Department of Housing and Urban Development said in a mortgagee letter.
Judgment in Favor of Lenders on Escrow Interest
A class-action lawsuit filed against Prudential Federal Savings and Loan Association in 1975 in state district court sought earnings on escrow accounts be paid to borrowers. Prudential was subsequently acquired by Washington Mutual Bank. After the case was appealed and remanded back to the state district court, the Utah Supreme Court ruled in favor of WaMu. Federal preemption was cited in the decision.
Red Flag Alert
The Fair and Accurate Credit Transactions Act's new Red Flag Rules becomes effective on Nov. 1. SecureWorks has launched a consulting service for financial organizations seeking help with the new rules. FraudGUARD supports the mandatory requirements of the Red Flag Rules, Interthinx said. Help complying with the rules is among the features available in ComplianceOne 2.0 from Wolters Kluwer Financial Services.
Credit Trends Morph
Up until 2005, consumers who had mortgages generally did a better job of paying consumer loans and credit cards than renters. But delinquency patterns began to shift for borrowers who closed on a mortgage after December 2004, Experian said in a study. Experian said bankcard delinquency has risen 286 percent for prime borrowers with ARMs closed after March 2005.
U.S. Subprime Losses Projected at $1.4 Trillion
A report published by the International Monetary Fund said financial institutions have been shedding bad assets, reducing borrowing and seeking new capital. Through September, losses on U.S.-based loans and securities of $0.6 trillion had already been realized, the report said. The IMF now projects losses could ultimately reach $1.4 trillion -- climbing from an estimate of $0.9 trillion in April.
CitiMortgage Reduces Broker Business
CitiMortgage is cutting off some of its mortgage brokers, a spokesman told MortgageDaily.com in an interview. "In the current challenging environment, we are redefining the wholesale business model to work with a smaller, targeted group of brokers," the spokesman said in a written statement. Sister company CitiFinancial severed relationships with more than 1000 mortgage brokers in 2001 following the acquisition of Associates First Capital Corp.
Broker Share, Loan Profits Decline
Mortgage broker share accounted for 25 percent of 2007 residential originations, according to a cost study released by the Mortgage Bankers Association. Broker share fell from 38 percent in 2006. Meanwile, mortgage banking firms saw production profits of a negative $560 on a per-loan basis last year. In 2006, mortgage bankers lost just $50 per loan.
Lack of FHA Kills Ohio Firm
Coldstream Financial Services Inc. told MortgageDaily.com in a 2006 interview that it expected to originate $0.5 billion that year. Now, the company has lost two licenses and is apparently out of business. Coldstream, which had focused on subprime refinance, was not approved to originate FHA loans. One source told MortgageDaily.com that the company had placed most of its customers in loans with First Franklin Financial Corp. -- including those who qualified for conforming programs.
BoA Originations Dive
Third-quarter production was $58 billion at Bank of America Corp., earnings data indicated. Fundings, including prior activity from Countrywide Financial Corp., sank from $93 billion in the second quarter. During the third-quarter 2007, combined volume was $142.6 billion.
Bad Loans, Bad Investments
Five defendants have been charged by the Securities and Exchange Commission. Each was a mortgage broker and a registered representative with World Group Securities Inc. The SEC claims they refinanced the properties of cash-poor borrowers using unaffordable subprime mortgages then deceitfully sold unsuitable securities.
Servicing Employees Eliminated
Popular Mortgage is laying off employees in New Jersey, according to a Worker Adjustment and Retraining Notification Notice. The move will impact 167 employees at an office in Cherry Hill -- where it operates Popular Mortgage Servicing Inc. The layoffs are expected to take effect on Nov. 7.
Bailout Satire
A skit on the latest Saturday Night Live provided a humorous but comprehensive overview of the mortgage crisis. It started with joint speeches by a clueless President Bush, a condescending House Speaker Nancy Pelosi and a grossly lisping House Financial Services Committee Chairman Rep. Barney Frank. The Pelosi character introduced subprime victims, including two men who qualified for loans with no credit, no job, criminal records, drug problems and gambling problems. One said he was a double victim because now he was being charged with arson on his foreclosed home.
Mother of All Settlements
Bank of America Corp. announced that it has reached agreements with several states to resolve outstanding claims against Countrywide Financial Corp. The announcement indicated BoA will provide up to $8.4 billion in interest rate and principal reductions to systematically modify loans for nearly 400,000 troubled borrowers. "The Countrywide settlement will likely become the largest predatory lending settlement in history," a statement from California's attorney aeneral said.
Over 9,000 Mortgage Layoffs in Q3
From July 1, 2008, to Sept. 30, 2008, MortgageDaily.com tracked 10,131 U.S. mortgage layoffs and 996 mortgage hirings. The net job losses of 9,135 tumbled from losses of 49,451 during the third-quarter 2007. Still, job losses nearly doubled from the second quarter's net job losses of 4,578.
University of Mortgage Leads
Data Warehouse and MarketerNet Holdings LLC have merged to create Tranzact Information Services LLC, a statement from the companies' parent said. LeadMailbox has added a feature that enables originators to direct prospective borrowers to realtors, a press release said. Mortech was recognized as innovator of the year at the 2008 LendingTree Partner Summit, a recent press release said.
Consumer Bankruptcies Down
Bankruptcy was filed by more than 88,000 consumers during September, the American Bankruptcy Institute reported. Filings fell from more than 95,000 in August, the group said. But filings were nearly 30 percent higher than a year earlier.
Bailout Bill Now Law
H.R.1424, the Emergency Economic Stabilization Act of 2008, was signed today by the president Friday. The bill was passed earlier in the date by the U.S. House of Representatives. Today's passage and signing followed a 74 to 25 approval vote in the Senate on Monday.
Fannie Cancels Adverse Delivery Fee Increase
Fannie Mae said it is canceling a planned increase in its adverse market delivery charge. The increase was to be effective for whole loans purchased on or after Oct. 1. The secondary lender had announced in August that it would raise the adverse delivery fee to 0.50 percent. But the latest bulletin indicated the fee would remain at 0.25 percent.
Mortgage Jobs Off, Brokers Up
The number of people working in the mortgage industry was 349,100 during August, according to data released by the Bureau of Labor Statistics. Employment fell from July and the prior August. However, the number of mortgage and nonmortgage loan brokers accounted rose.
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Copyright © 2007 MortgageDaily.com
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CitiMortgage Reduces Broker Business
CitiMortgage is slashing the number of mortgage brokers it does business with -- leading to hundreds of layoffs. Business from a smaller and more productive group of brokers will ultimately be channeled through offices in Missouri and Texas.
The O'Fallon, Mo.-based lender is cutting off some of its mortgage brokers, spokesman Mark Rodgers told MortgageDaily.com in an interview.
He could not reveal which brokers are being cut or how exactly the company is determining this, but he did note that the brokers they are keeping tend to be those with the higher quality loans and higher volume.
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Broker Share, Loan Profits Decline
A new trade group report indicated broker share fell last year as retail and correspondent share rose. Mortgage bankers saw losses climb more than $500 for each loan they originated, though servicing profits per loan nearly doubled.
Average income for mortgage banking firms was $0.9 million during 2007, tumbling from $6.4 million the prior year, according to the 2008 MBA Cost Study released today by the Mortgage Bankers Association.
In 2003 -- at the height of the biggest refinance wave in U.S. history -- net income averaged $57.9 million.
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Bad Loans, Bad Investments
Five Southern California mortgage brokers have been charged by the Securities and Exchange Commission with allegedly placing borrowers in unaffordable subprime loans to finance unsuitable securities -- earning commissions every step of the way.
The defendants, Kederio Ainsworth, Jesus Gutierrez, Guillermo Haro, Gabriel Paredes and Angel Romo, worked for World Group Securities Inc. in the Los Angeles area, an SEC statement Friday said.
Each was a registered representative and a mortgage broker.
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Mortgage Jobs Off, Brokers Up
An increase in the number of brokers wasn't enough to push overall mortgage employment higher in a monthly government report.
The number of people working in the mortgage industry was 349,100 during August, according to data released today by the Bureau of Labor Statistics.
Mortgage employment fell from a revised 355,100 in July and 408,000 in August 2007.
MortgageDaily.com subscribers read full story
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Broker's Business is Booming
A St. Louis mortgage broker, who is on track to increase his originations this year by nearly 40 percent, attributes his success to strategic networking.
Gary Bussard closed $23 million during the first six months of 2008, he told MortgageDaily.com in a statement today.
The first-half activity has him on track to surpass his full-year 2007 production of $33 million by 39 percent.
MortgageDaily.com subscribers read full story
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