News

Bolstered by a slight increase in both purchase and refinance activity, total mortgage loan application volume edged up 1.3 percent for the week ending July 30, 2010, the Mortgage Bankers Association (MBA) reported Wednesday. According to MBA's Weekly Mortgage Applications Survey, the purchase index jumped 1.5 percent from the week prior, and the refinance index inched up 1.3 percent.

WR Starkey Mortgage has agreed to pay $4.7 million to North Carolina homeowners exploited by a scheme related to the sale and financing of overpriced manufactured and modular homes sold by Phoenix Housing Group, Inc. In conjunction with the attorney general, the North Carolina Office of the Commissioner of Banks announced that the company will pay $26,000 to each of the 171 victimized homeowners.

State housing finance agencies in North Carolina, Ohio, Oregon, Rhode Island, and South Carolina have been given the green light to use $600 million in federal funding to implement their own foreclosure prevention programs. These five states were designated as some of the nation's hardest-hit housing markets because of high unemployment -- local rates above 12 percent -- and concentrated areas of severe economic distress. The Treasury says another round of state grants is in the works, with $2 billion more allocated for local housing programs.

Stabilization for commercial real estate has become increasingly dependent on the re-pricing and deleveraging of property positions, according to an industry report released by two research firms this week. They say the commercial real estate recovery is now less contingent on access to capital, given that liquidity has returned to many markets. In fact, it is in some cases scarily reminiscent of the pre-credit crisis environment, with equity sitting on the sidelines in abundance. And lenders, they say, have the ability to re-price assets at a level that will clear the market.

The Federal Housing Administration (FHA) has just $3.5 billion in its capital reserve account. The decline, though, is the result of a shuffling of funds. FHA moved $9.8 billion from its capital reserves to its financing account, the fund used to cover insurance claim payouts and losses. The transfer bumped this loss reserve account up to $29.6 billion and suggests that the FHA may be preparing for another wave of defaults and mortgage insurance claims, although so far this year, claims are coming in well below projections made at the end of 2009.

Bank of America has agreed to another hefty lawsuit settlement to smooth over charges brought against Countrywide. A U.S. district judge in Los Angeles has approved BofA's payout of $600 million to Countrywide investors who claim the lender wasn't forthcoming with disclosures about its business of making low-quality, high-risk loans. Countrywide's third-party auditor, KPMG, also agreed to pay $24 million. It's the largest shareholder settlement awarded out of the subprime mortgage meltdown.

Despite a continued crackdown, mortgage fraud is still a major cause of concern within the industry. In fact, according to the 2009 mortgage loan fraud study just released by the Financial Crimes Enforcement Network (FinCEN), the number of mortgage fraud suspicious activity reports (SARs) filed last year edged up 4 percent compared to the previous 12 months. Mortgage SARs were most prevalent in the Los Angeles and Miami metro areas, both of which reported more than 10,000 filings in 2009.

First American Financial Corporation reported Tuesday that its net income during the second quarter was $33.8 million, or 32 cents per share. The Q2 profit posted by the title insurance and settlement company follows its spin-off from CoreLogic just two months ago and represents an 18 percent increase compared to a year earlier. First American says its average revenue per order increased 20 percent, thanks to a shift in the order mix to higher premium resale transactions.

After tumbling 30 percent in May in the wake of the expiration of the homebuyer tax credit, pending home sales continued to edge down in June, hitting the lowest level recorded in more than a year, the National Association of Realtors (NAR) reported Tuesday. NAR's pending sales index is a forward-looking indicator based on contracts signed during the month. It declined 2.6 percent from May to June, and is 18.6 percent below year-ago levels. The trade group says the weak numbers imply closing activity will languish at least through August.

Mortgage borrowers with balances over $1 million are faring just as poorly, but not worse, than borrowers with lower balances, according to Moody's Investors Service. Based on the agency's data of securitized private-label mortgages, as of June 2010, mortgages originated from 2005 to 2008 are 60 or more days delinquent at the same rate, 28 percent, for both the average borrower and borrowers with million-dollar-plus mortgages. Moody's says the data also contradicts conventional wisdom that strategic defaults are more prevalent among rich borrowers.