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MortgageChronicle.com Archives
week ended Jan. 1, 2010
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Modification Litigation Explodes
Ohio's attorney general filed a lawsuit against Barclays Capital Real Estate dba HomEq Servicing, according to court documents. The servicer is accused of issuing unfair loan modification agreements and providing inadequate, incompetent customer service to delinquent borrowers. In Pennsylvania, a lawsuit was filed against Foreclosure Awareness Inc. and its owner by the state's attorney general, according to an announcement. The company allegedly used deceptive and misleading advertisements and failed to provide promised services. A lawsuit was filed in on Nov. 24 against Loan Mod One LLC by Illinois's attorney general, a news release indicated. The firm allegedly targeted at-risk borrowers for up-front fees on modification services that were never performed.
Credit Union Regulator Seizing Lawsuit
The National Credit Union Administration said that it has made a court filing oust plaintiffs in a lawsuit against Western Corporate Federal Credit Union. The San Dimas, Calif., institution was placed in conservatorship by the NCUA during March. The current plaintiffs are seven credit unions who are members of the WesCorp.
Mortgage Insurance Performance Improves
The dollar volume of mortgage insurance written during November was up 2 percent from October, the Mortgage Insurance Companies of America reported. Primary insurance defaults eased 1 percent, according to MICA. It was the second consecutive month that defaults were down.
Cap Lifted on FHA Origination Fees
FHA origination fees are no longer limited to 1 percent, according to a mortgagee letter from the U.S. Department of Housing and Urban Development. But originators will still be monitored to ensure borrowers are not overcharged and fees remain "fair and reasonable." HUD said it intends to issue additional guidance about the limits.
1-Year Finishes 2009 Lower, 30-Year Higher
In Freddie Mac's Primary Mortgage Market Survey for the week ended Dec. 31, the average 30-year was 9 basis points worse than a week earlier. The 30-year was 4 BPS higher than at the beginning of the year. But the one-year adjustable-rate mortgage was 47 BPS better than it started the year.
GMAC Gets $4 Billion More from Government
GMAC Financial Services announced that it received a $3.79 billion capital infusion from the U.S. Department of the Treasury. The transaction was structured with $2.54 billion in trust preferred securities and $1.25 of mandatorily convertible preferred securities. A $15 billion government package was announced by GMAC in May, while the company obtained $5.0 billion in capital investments under Troubled Asset Relief Program a year ago.
2 Wells Fargo Units Face Lawsuits
The mayor's office in Shelby County, Tenn., announced that a lawsuit was filed against Wells Fargo. The company is accused of causing increased foreclosures through predatory lending to minorities. An activated U.S. Marine has filed a lawsuit against Wells Fargo Home Mortgage, FOX news reported. Wells allegedly violated the Soldiers and Sailors Civil Relief Act.
Mortgage Graveyard Litigation
Deutsche Bank AG filed a lawsuit against Bank of America, N.A., according to a copy of the complaint. BoA allegedly failed to secure and safeguard more than $1 billion in cash and mortgages originated by failed Taylor, Bean & Whitaker Mortgage Corp. Morgan Stanley was sued over allegations it promoted a collateralized-debt obligation while betting against the underlying loans that were originated by failed New Century Financial Corp. and Option One Mortgage Mortgage Corp. A former IndyMac Bancorp Inc. trustee has sued IndyMac's former chief executive officer directors for allegedly squandering the failed firm's assets and ignoring warning signals.
Criminal Mortgage Actions
A lawsuit was filed by Colorado's attorney general against Alternative Lending of Colorado, according to a recent announcement from the state. The state claims the company's top originator commited mortgage fraud and deceived prospective borrowers. A former employee of Mortgage Network Solutions in Pennsylvania was arrested over allegations she diverted $29,000 in appraisal payments from the company to three accounts she controlled at different banks.
Consumer Group Takes on Broker YSPs
The National Association of Mortgage Brokers said it issued a letter to the Federal Reserve Board asking for a delay in the implementation of a final rule that would prohibit broker compensation on closed-end mortgages based on the loan's terms or conditions. But the Center for Responsible Lending says the Fed should strengthen -- not delay -- its proposal. "These kickbacks are easy to hide from consumers, and they encourage brokers to aggressively market the worst kinds of loans -- even when their customers qualify for better," the center said.
New Rules for Credit Union Membership
The National Credit Union Administration is proposing to provide more clear guidance about who credit unions can target for membership when they are seeking a new charter or expanding. The objective is to make it easy for applicants to determine whether they have a viable charter before dedicating resources to the application process. In addition, the NCUA will expend fewer resources reviewing and declining applications.
Deterioration Deepens at Fannie
November new business acquisitions fell by more than a quarter from the prior month at Fannie Mae, according to monthly operation data. The company's book of business declined by $186 billion from October. Record residential delinquency increased another 26 basis points between September and October.
Investor Lawsuits Include Criminal Actions
The law firm of Tramont Guerra & Núñez, P.A., announced that a class action was filed on behalf of investors that traded common shares of Advanta Corp. Settlements have been proposed in a class action by shareholders of American Home Mortgage Investment Corp. Regions Financial Corp. faces a lawsuit recently filed by investors, the Shareholders Foundation Inc. announced. Federal and state prosecutors filed a 249-count securities fraud complaint against seven defendants tied to Pacific Wealth Management and Stonewood Investments, an announcement indicated.
MBS Litigation Ledger
Two class actions have been filed by purchasers of pass-through certificates issued by Structured Asset Mortgage Investments II Inc. and Bear Stearns Asset-Backed Securities I LLC, according to a news release. The Securities and Exchange Commission filed a criminal action against Brookstreet Securities Corp. and its chief executive officer. The SEC claims that between 2004 and 2007, the defendants systematically sold high-risk mortgage-backed securities to investors with conservative investment goals.
MGIC Accused of Denying Valid M.I. Claims
Two class actions have been filed by purchasers of pass-through certificates issued by Structured Asset Mortgage Investments II Inc. and Bear Stearns Asset-Backed Securities I LLC, according to a news release. The Securities and Exchange Commission filed a criminal action against Brookstreet Securities Corp. and its chief executive officer. The SEC claims that between 2004 and 2007, the defendants systematically sold high-risk mortgage-backed securities to investors with conservative investment goals.
GSE Losses Could Cost Gov Over $400 Billion
The U.S. Department of the Treasury announced that the program established under the Housing and Economic Recovery Act to purchase GSE-guaranteed mortgage-backed securities will end on Dec. 31. The Treasury also said it would amend the preferred stock purchase agreements that were established to ensure both firms maintain a positive net worth are being increased from $200 billion for each firm to whatever is "necessary to accommodate any cumulative reduction in net worth over the next three years."
Citi Done With TARP
Citigroup Inc. announced that is has repaid government investments under the Troubled Asset Relief Program. The amount of the repayment was $20 billion. In addition to the repayment, the company also said it terminated a loss-sharing agreement with the government.
Mortgage Market Deteriorates
The average 30-year fixed-rate mortgage rose 11 basis points in Freddie Mac's survey of 125 thrifts, credit unions, commercial banks and mortgage lenders for the week ended Dec. 24. The yield on the 10-year Treasury bond worsened by 32 BPS, according to U.S. Department of the Treasury data. Overall loan applications fell 11 percent from the prior week on a seasonally adjusted basis in the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ended Dec. 18.
BoA Servicing Unit Deteriorating, Downgraded
Wilshire Credit Corp.'s servicer quality ratings for first lien subprime mortgages was downgraded by Moody's Investors Service, a news release said. Wilshire is a subsidiary of Bank of America Corp. Moody's cited a deterioration in call center metrics, management turnover and staffing concerns in its decision to cut the servicer's rating.
MGIC Accused of Denying Valid M.I. Claims
A complaint was filed in a California superior court by two Bank of America Corp. units, according to a public filing. Mortgage Guaranty Insurance Corp. is named as defendant in the case. MGIC is allegedly denying valid mortgage insurance claims submitted by the BoA businesses.
Wells Done With TARP
Wells Fargo & Co. announced that it redeemed $25 billion of series D preferred stock issued under the Troubled Asset Relief Program. Wells first announced its intention to exit TARP last week. Funding for the transaction came from excess capital and a public offering.
Firm to Add 1000 NC Jobs
Zenta Mortgage Services plans to create more than a thousand new North Carolina jobs, the state's governor announced. The positions will be located in Charlotte. Zenta reportedly plans to hire the new employees over the next five years.
More Record Delinquency at Freddie Mac
Residential delinquency of at least 90 days climbed 18 basis points in November, Freddie Mac reported. It was another all-time high for late payments. Compared to a year earlier, the delinquency rate was 220 BPS higher.
New Risk-Based Pricing Requirements
Final rules announced today by the Federal Reserve Board and the Federal Trade Commission generally require mortgage lenders to provide a consumer notice when the borrower is given a loan on less favorable terms than provided to other borrowers. The rules take effect next year. The rules impact the practice of risk-based pricing, where lenders base the pricing on the creditworthiness of the borrower.
HELOC Activity Sinks, Delinquency Climbs
Monthly home-equity line-of-credit originations have fallen by more than a third during the past year, according to Equifax. The findings were based on the credit files of nearly 200 million U.S. consumers. HELOC delinquency rose 4 basis points between October and November.
FHA Volume, Delinquency Worse
The number of mortgages endorsed by the Federal Housing Administration declined 11 percent between October and November, according to data released by the U.S. Department of Housing and Urban Development. Activity has fallen each month since July. Delinquency of at least 90 days, meanwhile, rose 20 basis points during the same period.
New Player Emerges
New York Community Bank announced it would maintain the mortgage operations of AmTrust Bank. New York Community acquired assets of AmTrust when it failed earlier this month. Based on quarterly data analyzed by MortgageDaily.com, AmTrust ranked among the 15 biggest residential lenders in the country during the first nine months of 2009.
US Bank Adding KY Jobs
U.S. Bank, N.A., plans to add 50 new jobs at a mortgage operations center in Bowling Green, Ky., according to a statement. A spokeswoman told MortgageDaily.com that most of the new positions will be added as the center is renovated and space becomes available. Bowling Green was selected as a growth spot for U.S. Bank because of the high quality pool of employee prospects.
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Consumer Group Takes on Broker YSPs
A consumer group is at odds with mortgage brokers over the use of yield spread premiums.
On Christmas Eve, the National Association of Mortgage Brokers said it issued a letter to the Federal Reserve Board asking for a delay in the implementation of a final rule that would prohibit broker compensation on closed-end mortgages based on the loan's terms or conditions.
The McLean, Va.-based trade group claims the rule doesn't fairly regulate all compensation for all types of mortgage originators.
MortgageDaily.com subscribers read full story
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Huge Broker Acquiring Wholesaler
A California mortgage broker with nearly $3 billion in annual originations announced a deal to acquire a wholesale lender.
The broker, First Priority Financial Corp., said in a news release yesterday that it reached an agreement to acquire privately held Austin Perry Financial Corp.
Terms of the transaction, which is expected to close by Dec. 31, weren't disclosed.
MortgageDaily.com subscribers read full story
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MD Firm Loses FHA Approval
The Federal Housing Administration announced the suspension of a Maryland mortgage broker over allegations of overcharging borrowers and failing to disclose yield spread premiums.
The agency said Equitable Trust Mortgage Corp. can no longer originate and underwrite FHA-insured mortgages.
The suspension will last a minimum of six months.
MortgageDaily.com subscribers read full story
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Firms Make Broker Compliance With HVCC Easier
As mortgage brokers continue to battle the Home Valuation Code of Conduct, one firm is addressing a concern by brokers about not being able to transfer appraisals. Another firm is providing a solution to communication between originators and appraisers.
The National Association of Mortgage Brokers issued a Nov. 6 statement highlighting a one-quarter increase in third-quarter property valuation fraud reported last month by Interthinx.
The brokers, who want the HVCC repealed, called the code "a failure."
MortgageDaily.com subscribers read full story
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Lower Fees for NAMB Members
A wholesale lender based in Washington is offering discounts to members of the National Association of Mortgage Brokers.
NAMB members will receive a $100 discount on NetMore America Inc.'s administration fees, an announcement today said.
Brokers must show that they are an active NAMB member or show that they join before Dec. 10.
MortgageDaily.com subscribers read full story
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