Kevin's Blog

Mortgage Employment Declines For 13th Straight Month

2008-05-05T23:35:06Z

Graph: In Thousands, Mortgage Employment since Jan. 2002

Although the rate of job losses in the mortgage industry has leveled since it began dropping precipitously last fall, industry employment has declined for more than 13 consecutive months.

The Bureau of Labor Statistics (BLS) reported 360,100 full-time mortgage positions in the month of March, down from 364,700 in February and 465,800 one year ago.

Employment reporting at the Bureau generally lags one month for the mortgage industry.

The mortgage industry has lost 144,600 jobs since employment peaked at 504,700 in October 2006.

The BLS breaks down mortgage employment into two categories.

Under "real estate credit," the BLS reported 249,100 million jobs, compared to 251,400 a month earlier.

For the "mortgage and nonmortgage loan brokers" sector, there were reportedly 111,000 positions, compared to 112,700 one month ago.

The national unemployment rate remained at 5.0% for April.

Representing the fourth consecutive monthly loss, the number of non-farm payroll jobs declined another 20,000 for the month as the number of unemployed people stood at 7.6 million.

Freddie Mac announces $20 Billion Subprime Commitment

2007-04-20T08:58:02Z

Freddie Mac announced today that it will purchase $20 billion in fixed-rate and hybrid ARM products that will provide lenders with more choices to offer subprime borrowers. The products, currently under development by the company and slated to be introduced by mid-summer, will limit payment shock by offering reduced adjustable rate margins; longer fixed-rate terms; and longer reset periods.

The commitment follows Freddie Mac's recent announcement that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure. Among other things, the company will require that subprime adjustable-rate mortgages (ARMs) - and mortgage-related securities backed by these subprime loans - qualify borrowers at the fully-indexed and fully-amortizing rate. The company also will limit the use of low-documentation products in combination with these loans; require that loans be underwritten to include taxes and insurance; and strongly recommend that the subprime industry collect escrows for taxes and insurance, as is the norm in the prime sector.

As a secondary mortgage market investor, Freddie Mac works closely with its customers in the primary market to combat predatory lending and promote foreclosure prevention. The new $20 billion purchase commitment for model products using stronger underwriting standards builds on Freddie Mac's long-term leadership in this arena. The company's previously implemented anti-predatory lending practices include:

refusing to do business with institutions that engage in predatory lending practices;
not investing in mortgages that require mandatory arbitration;
refusing to invest in high-rate or high-fee mortgages as defined by the Home Ownership and Equity Protection Act of 1994 (HOEPA), as well as mortgages with single-premium credit insurance or subprime mortgages with prepayment penalty terms of more than three years; and,
requiring that lenders provide complete credit information about borrowers to all the credit bureaus and reporting agencies.

Freddie Mac also promotes consumer education through programs such as CreditSmart®, its award-winning financial education curriculum, Don't Borrow Trouble, an anti-predatory lending campaign, as well as its many foreclosure prevention initiatives. These programs help borrowers understand the mortgage origination process, their housing finance options, and how to avoid abusive lending practices.

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for more than 50 million families.

Source: Freddie Mac

Avg. 30 Yr Fixed Rate Mortgage down from last week

2007-04-20T08:35:12Z

Graph: Average 30-year Fixed-Rate Mortgage since Jan. 2005

Week Ending April 19, 2007

Average 30-year fixed-rate mortgage

04/19: 6.17%
04/12: 6.22%
04/05: 6.17%
03/29: 6.16%
03/22: 6.16%
03/15: 6.14%
03/08: 6.14%
03/01: 6.18%

One Year Ago: 6.53%

Average 15-year fixed-rate mortgage

04/19: 5.89%
04/12: 5.90%
04/05: 5.87%
03/29: 5.86%
03/22: 5.90%
03/15: 5.88%
03/08: 5.86%
03/01: 5.92%

One Year Ago: 6.17%

Average 5-year Treasury-indexed hybrid ARM

04/19: 5.92%
04/12: 5.93%
04/05: 5.92%
03/29: 5.88%
03/22: 5.91%
03/15: 5.90%
03/08: 5.90%
03/01: 5.93%

One Year Ago: 6.16%

Average One-year Treasury-indexed ARM

04/19: 5.45%
04/12: 5.47%
04/05: 5.44%
03/29: 5.43%
03/22: 5.40%
03/15: 5.47%
03/08: 5.42%
03/08: 5.47%
03/01: 5.49%

One Year Ago: 5.63%

Source: Freddie Mac

Top Ten Foreclosure States

2007-04-20T08:21:39Z

The number of foreclosure filings was up 7% in March as Nevada reported the highest state foreclosure rate for the third month in a row with a 29% monthly increase from February, according to RealtyTrac.

A total of 149,150 foreclosure filings were reported during the month, up 7% from February's revised total and up 47% from March 2006.

The national foreclosure rate stood at one foreclosure filing for every 775 U.S. households in February, according to RealtyTrac the foreclosure tracking company.

RealtyTrac considers default notices, auction sale notices and bank repossessions as foreclosure filings.

A 29% increase in monthly foreclosure activity kept Nevada in place as the nation's highest state foreclosure rate with for the third month in a row with foreclosure rate of one foreclosure filing for every 183 households

In March, Nevada reported 4,738 foreclosure filings, up 16% from February 2006.

Colorado followed with one foreclosure filing for every 292 households in February, a 18% month-to-month increase with 6,267 total foreclosure filings.

California foreclosures jumped 36% with 31,434 foreclosure filings - the most of any state - reporting one foreclosure filing for every 389 households.

The Top Ten Foreclosure States:

1. Nevada
2. Colorado
3. California
4. Georgia
5. Arizona
6. Michigan
7. Florida
8. Ohio
9. Indiana
10. Illinois

Thousands Lose Their Jobs With Subprime Setbacks

2007-03-12T20:16:52Z

Graph: In Thousands, Mortgage Employment since Jan. 2002

Mortgage employment statistics began to reflect the growing number of closings and scale-backs in the subprime industry.

The Bureau of Labor Statistics (BLS) reported 489,200 full-time mortgage positions in the month of January.

Employment reporting at the Bureau generally lags one month for the mortgage industry.

Employment levels were reported at 495,100 in December.

In January 2006, there were 498,100 mortgage jobs reported.
The mortgage industry has lost 15,500 jobs since October began the steady decline.

The BLS breaks down mortgage employment into two categories.

Under "real estate credit," the BLS reported 349,100 jobs, compared to 352,000 in December 2005.

For the "mortgage and nonmortgage loan brokers" sector, there were reportedly 140,100 positions, down from 146,100 one year earlier.

The national unemployment rate for February dropped to 4.5%, while the U.S. economy gained 97,000 non-farm payroll jobs.

Fremont Sends Employees Packing With Subprime Exit

2007-03-08T13:17:45Z

Fremont General Corp. has put a number of their employees on paid leave "pending further information" after the company was issued a cease-and-desist which prompted an exit from the subprime business.

The cease-and-desist issued by the Federal Deposit Insurance Corp. (FDIC) demanded the end to 14 violations including ``unsatisfactory lending practices'' and ``operating with a large volume of poor-quality loans.''

Santa Monica, California-based Fremont recently announced that it would delay reporting earnings for the fourth quarter, as well as annual results, a move that sent company shares to their lowest level since 2003.

Following the announcement, Fitch Ratings put Fremont on "Rating Watch Negative."

Earlier this year, the subprime wholesaler announced that it had once more tightened its underwriting guidelines and had discontinued its "piggyback" second mortgages.

For the first nine months of 2006 the company's net income was $113.1 million, plummeting 59% from $273.4 million for the same period in 2005.

"The regulators did not seek any changes in the company's retail deposit-gathering business,'' the company said in a statement.

Fremont also intends to continue to offer commercial real estate loans.

"Thanks in part to its very substantial equity and $8 billion retail deposit franchise, Fremont Investment & Loan has significant balance sheet strength and funding capacity that we believe will enable us to exit the subprime lending business in an orderly and disciplined way," said Fremont President and CEO Louis J. Rampino in the statement.

The financial services holding company has taken on Credit Suisse Securities LLC to help find a potential buyer.

Mortgage Applications Climb With Surge in Refinancing

2007-03-08T13:11:46Z

Graph: MBA Applications Index over 52 Weeks

For Week Ending: March 2, 2007

Seasonally Adjusted
Total Mortgage Activity: Up 7.3%
MBA Market Index Now: 671.6
Index One Week Earlier: 626.1

Unadjusted Basis
Total Mortgage Activity: Up 19.9%
One Year Ago: Up 15.6%

Seasonally Adjusted
Refinance Activity: Up 15.0%
Index Now: 2234.2
One Week Earlier: 1943.5

Purchase Activity: Up 1.0%
Index Now: 405.3
One Week Earlier: 401.3

Percentage of Total Activity

Refinance Share: 46.1%
One Week Earlier: 43.2%

Adjustable-Rate Mortgage (ARM) Share: 21.4%
One Week Earlier: 21.1%

Source: Mortgage Bankers Association

Mortgage Applications Decline

2007-01-25T17:17:15Z

Mortgage Applications Decline for the Week
Graph: MBA Applications Index over 52 Weeks

Mortgage demand was on the decline for the week as applications both refinances and purchases dropped noticeably.

For Week Ending: January 19, 2007

Seasonally Adjusted
Total Mortgage Activity: Down 8.4%
MBA Market Index Now: 611.3
Index One Week Earlier: 667.2

Unadjusted Basis
Total Mortgage Activity: Down 5.7%
One Year Ago: Up 3.8%

Seasonally Adjusted
Refinance Activity: Down 9.6%
Index Now: 1848.8
One Week Earlier: 2045.8

Purchase Activity: Down 8.4%
Index Now: 402.7
One Week Earlier: 439.7

Percentage of Total Activity

Refinance Share: 47.8%
One Week Earlier: 49.9%

Adjustable-Rate Mortgage (ARM) Share: 20.3%
One Week Earlier: 21.2%

Source: Mortgage Bankers Association

Mortgage Demand Up 16.6% As Holidays Draw to a Close

2007-01-11T13:33:06Z

The new year started with a large upsurge in mortgage demand as the holiday season drew to a close.

For Week Ending: January 5, 2007

Seasonally Adjusted
Total Mortgage Activity: Up 16.6%
MBA Market Index Now: 671.1
Index One Week Earlier: 575.6

Unadjusted Basis
Total Mortgage Activity: Up 33.2%
One Year Ago: Up 12.0%

Seasonally Adjusted
Refinance Activity: Up 17.3%
Index Now: 1923.8
One Week Earlier: 1640.4

Purchase Activity: Up 16.2%
Index Now: 472.8
One Week Earlier: 406.9

Percentage of Total Activity

Refinance Share: 48.4%
One Week Earlier: 48.1%

Adjustable-Rate Mortgage (ARM) Share: 20.1%
One Week Earlier: 20.4%

Source: Mortgage Bankers Association

FHA Loan Limits Remain, But Program Future in Question

2007-01-11T13:30:04Z

The Federal Housing Administration loan ceiling has gone into effect for 2007, but the director of the Single Family Ownership Center with the Department of Housing and Urban Development (HUD) is openly questioning the future viability of the program.

HUD opted to leave the maximum single-family loan amount for a FHA-backed loan to remain at 2006 levels, following the decision to leave conforming loan limit at $417,000 after a decline in home prices between October 2005 and October 2006.

For high cost areas, the FHA loan ceiling will stay at $362,790 and remains at $200,160 for low cost areas.

The maximum amount on two-unit properties stayed at $464,449, three-unit properties remained at $561,411, and four-unit properties were left at $697,696.

Meanwhile, Ben Johnson recently suggested to members of the Colorado Association of Mortgage Brokers that the future of the FHA program is uncertain.

"Quite frankly, we're at a crossroads to keep FHA a viable player," the director of the Single Family Ownership Center, indicating that FHA loans currently account for less than 5% of residential mortgages each year.

Legislation to streamline the procedures for obtaining FHA loans passed in the House of Representatives last year, but failed to get off the ground in the Senate.

Johnson said that another push for something along the lines of the FHA Modernization Act of 2006 will likely occur sometime this year.

While FHA loans had been extremely popular in the past, many lenders have turned elsewhere to avoid the lengthy documentation requirements and costly audits that can be as much as $45,000 a year - a price many smaller originators cannot afford.

Also, while many brokers work out of their home or other unconventional environments, federal regulations still require an FHA lender to operate from a formal workplace.

Other disadvantages FHA loans face against the competition: a 3% down payment requirement, a ban on 40-year mortgages, and a limited number of reverse mortgages available.

In 2006, the FHA loosened regulation to increase electronic processing, provide faster turnaround of appraisals, and update guidelines for refinancing.

The agency also eliminated closing cost restrictions and reduced the documentation required.

In the meantime, the decision to leave loan limits as they were was welcome news for the mortgage industry.

Mortgage Rates Remain Flat for the Week

2007-01-05T15:32:18Z

The average 30-year fixed-rate mortgage remained flat for the week, and not far from where rates were one year earlier.

Week Ending January 4, 2007

Average 30-year fixed-rate mortgage

01/04: 6.18%
12/28: 6.18%
12/21: 6.13%
12/14: 6.12%
12/07: 6.11%
11/30: 6.14%
11/22: 6.18%
11/16: 6.24%

One Year Ago: 6.21%

Average 15-year fixed-rate mortgage

01/04: 5.94%
12/28: 5.93%
12/21: 5.89%
12/14: 5.86%
12/07: 5.84%
11/30: 5.87%
11/22: 5.91%
11/16: 5.94%

One Year Ago: 5.76%

Average 5-year Treasury-indexed hybrid ARM

01/04: 6.02%
12/28: 5.98%
12/21: 5.96%
12/14: 5.92%
12/07: 5.92%
11/30: 5.95%
11/22: 5.99%
11/16: 6.04%

One Year Ago: 5.78%

Average One-year Treasury-indexed ARM

01/04: 5.42%
12/28: 5.47%
12/21: 5.44%
12/14: 5.45%
12/07: 5.43%
11/30: 5.46%
11/22: 5.49%
11/16: 5.53%

One Year Ago: 5.16%

"Interest rates were flat this past week, reflecting the mixed messages from recent economic indicators," said Frank Nothaft, Freddie Mac vice president and chief economist.

"The recently released manufacturing report showed improvement, and while construction spending for November was down, it was still better than expected. On the other hand, a private sector employment report suggested that the labor market was weaker than anticipated. As a result, 30-year fixed-rate mortgage rates started off the year at about the same level as this time last year. "

Nothaft added, "Currently the market is waiting for a clearer signal on the direction in which the economy is heading, and that may come on Friday when the December employment report is released."

Source: Freddie Mac

Ownit Mortgage Files For Chapter 11 Bankruptcy

2007-01-03T10:43:29Z

Subprime lender Ownit Mortgage Solutions Inc. filed for bankruptcy last week, reportedly as a response to lawsuits filed by two creditors.

Last Thursday, Ownit Mortgage filed for Chapter 11 in the U.S. Bankruptcy Court of San Fernando Valley, California just weeks after announcing it would stop making new loans.

According to court papers, Ownit Mortgage listed assets between $1 million to $100 million.

The company was more than $100 million in debt, an estimated $93 million of which was owed to Merrill Lynch LP Holdings Inc.

Merrill Lynch also owns a 20% share in Ownit Mortgage.

Among the other unsecured creditors, Ownit Mortgage owes $19 million to Terwin Advisors LLC and $12.7 million to Credit Suisse First Boston.

Although the Chapter 11 petition did not include an explanation for the bankruptcy decision, the Los Angeles Times reported that the petition was a response to lawsuits filed by two creditors.

During the housing boom, Ownit Mortgage grew rapidly to become one of the top wholesale subprime mortgage lenders by new loan volume in the first half of 2006.

Licensed or approved to fund mortgages in 41 states, the company employed about 325 people, according to the website.

THE SAGA CONTINUES... ANOTHER MAJOR LENDER IN FINANCIAL TROUBLE!!!

2007-01-03T10:38:22Z

Subprime lender Mortgage Lenders Network USA (MLN) has announced that it will no longer fund loans or accept applications for new loans as the company explores "strategic alternatives" for its wholesale business lines.

Middletown, Connecticut-based MLN also has a servicing portfolio over $17 billion and over 100,000 accounts, but there was no indication of any changes with the company's servicing arm.

The company has five non-prime wholesale lending offices and two retail offices, as well as centers for loan servicing and processing.

The majority of the offices are located in Connecticut.

According to MLN, the company's goal in 2006 was to produce more than $12.1 billion in loans, 80% of which would be non-prime and 20% conforming product.

On Dec. 8, MLN had posted on its website that the company would continue to operate normally.

Brace yourself as we will continue to see more consolidation in the mortgage arena. This is a much needed correction and now is the time to separate the men from the boys. See my next post as well...

Interest-Only Underwriting Tightened at Fannie Mae

2007-01-02T15:21:51Z

Fannie Mae has indicated that as of January 30 borrowers must qualify at "a fully-indexed rate that assumes a fully-amortizing repayment schedule" in order to be considered for a loan to be purchased by the company, just one of several underwriting changes at the government-sponsored enterprise (GSE).

The company also announced it will no longer treat "InterestFirst" as an interest-only loan product, categorizing it as a "feature" to used with other loan products.

Fannie Mae will broaden the products, occupancy and property types eligible for an interest-only feature, as well as allow lenders to underwrite most products with an interest-only feature outside of Desktop Underwriter.

Because of potential payment shock for borrowers, the company will limit interest-only features to fixed-rate mortgages with terms of at least 30 years and adjustable-rate mortgages with fixed-rate periods of three years or more.

Included among the eligible fixed-rate structures for purchase by the GSE will be 30- and 35-year loans with a 5-year interest-only period, along with 40-year fixed-rate mortgages with 5-, 10-, and 15-year interest only periods.

Fannie Mae will also permit temporary buydowns for fixed-rate mortgages with an interest-only feature on primary residences or second homes if the rate reduction does not go over three percentage points and the rate increase will not exceed one percentage point per year.

The only exception to the buydown option will be "MyCommunity Mortgages," according to Fannie Mae.

New Home Sales Climb in November Along With Prices

2006-12-28T07:40:28Z

New home sales climbed in November as the inventory of unsold homes dropped for the fourth month in a row, causing optimistic economists to suggest that the slumping market may have bottomed out.

In November, sales of new single-family homes increased by 3.4% last month to a seasonally adjusted annual rate of 1.047 million units, according to the Commerce Department.

The increase in sales marked the third increase in the last four months.

"It looks like sales activity has truly bottomed out," said David Seiders, chief economist for the National Association of Home Builders.

Seiders expects new home sales of new homes to drop approximately 18% from the record levels of 2005 and remain stable through 2007.

The median price for a new home rose to $251,700 in November, a 3.2% increase from one year ago.

Unlike an average, the median price is the point where half the homes sold for more and half for less.

This is generally considered a more reliable indication of the market.

Last month, the number of unsold homes dropped 1.4% to 545,000, the fourth consecutive decline after a record high of 573,000 units in July.

Frustrated builders have spent those months cutting prices and offering a number of incentives - ranging from free trips to helping to cover closing costs - in an attempt to sell finished homes and cut down on high cancellation rates.

At the November sales pace, it would take 6.3 months to deplete the current supply of homes, down from 6.7 months in October and 7.2 months in July.

Only the South failed to see large increases in home sales, instead dropping 9.3% in November.

Meanwhile, sales rebounded 22.5% in the Northeast after a 35.5% nose-dive in October.
Sales increased 22.4% in the Midwest and 19% in the West.

Source: www.commerce.gov

Mortgage Rates Tip Upwards For The Week

2006-12-15T12:02:17Z

The average 30-year fixed-rate mortgage edged up slightly this week as the economy presented mixed messages, keeping rates relatively stable.

Week Ending December 14, 2006

Average 30-year fixed-rate mortgage

12/14: 6.12%
12/07: 6.11%
11/30: 6.14%
11/22: 6.18%
11/16: 6.24%
11/09: 6.33%
11/02: 6.31%
10/26: 6.40%

One Year Ago: 6.30%

Average 15-year fixed-rate mortgage

12/14: 5.86%
12/07: 5.84%
11/30: 5.87%
11/22: 5.91%
11/16: 5.94%
11/09: 6.04%
11/02: 6.02%
10/26: 6.10%

One Year Ago: 5.85%

Average 5-year Treasury-indexed hybrid ARM

12/14: 5.92%
12/07: 5.92%
11/30: 5.95%
11/22: 5.99%
11/16: 6.04%
11/09: 6.08%
11/02: 6.05%
10/26: 6.14%

One Year Ago: 5.77%

Average One-year Treasury-indexed ARM

12/14: 5.45%
12/07: 5.43%
11/30: 5.46%
11/22: 5.49%
11/16: 5.53%
11/09: 5.55%
11/02: 5.53%
10/26: 5.60 %

One Year Ago: 5.15%

"Mixed economic reports have kept mortgage rates from making any drastic changes this week," said Frank Nothaft, Freddie Mac vice president and chief economist.

"On the upside, there was stronger job growth and greater than expected retail sales in November. Offsetting that news was weaker wage growth in that same time frame and lower indications of consumer sentiment in December.

"Long-term mortgage rates, while expected to rise over the new year, will very likely not get up to even 7%, which will help to moderate the current weakness in the housing market."

Source: Freddie Mac

MBA: 3Q Delinquencies Jump, Especially Subprime ARMs

2006-12-14T08:25:59Z

Delinquencies jumped from 4.39% in the second quarter to 4.67% in the third, led by a significant upswing in delinquencies for subprime adjustable-rate loans, according to a new report by the Mortgage Bankers Association (MBA).

In its quarterly National Delinquency Survey, the MBA reported lay payments on prime mortgages rose from 2.29% to 2.44% while foreclosures on such loans climbed from 0.18% to 0.19% in the third quarter.

For subprime loans, however, delinquencies jumped from 11.70% to 12.56% and foreclosures were up from 1.79% to 1.82% during the same period.

Still, the share of late payments and foreclosures remains historically low as the housing market attempts to make a soft landing from years of a booming housing industry, according to the MBA.

"Only 7% of all loans out there are subprime adjustable loans. We're talking about a 12% delinquency rate on 7% of all home mortgages and the foreclosure rate is much lower than that," said MBA Chief Economist Doug Duncan.

"So in terms of a macro-economic event, if that's what everyone's concerned about, we don't see that happening."

The MBA expects somewhere between $1.1 trillion and $1.5 trillion of mortgages to reset rates in 2007.

As much as $700 billion of those loans will be refinanced, while up to $800 billion will adjust to higher rates, said the MBA.

"Chances are that we're seeing the leading edge of that reset wave coming through," Duncan said.

Borrowers of subprime loans are expected to feel the brunt of that wave, as many of them used extremely low teaser rates to purchase homes otherwise out of reach.

Subprime borrowers "are more likely susceptible to the cumulative increases in rates we've experienced, and the slowing of home price appreciation that has resulted," Duncan said.

Number of PMI Borrowers declined 5.5% in October

2006-12-13T15:37:05Z

The number of borrowers using private mortgage insurance fell 5.5% in October, according to a recent announcement by the Mortgage Insurance Companies of America (MICA).

MICA reported that 123, 626 borrowers used private mortgage insurance (PMI) to buy or refinance a home in October, down from 130, 830 in September.

In October, the number of PMI applications received by MICA members fell 4. 8% to was 129, 612, down from the 136, 185 received in September.

In terms of dollar volume, the primary insurance written on newly originated 1-to-4 family conventional mortgage loans totaled $18.8 billion in October, a drop of 13.2% from the previous month's $21.6 billion.

Traditional primary insurance totaled $13.5 billion and bulk primary insurance totaled $5.2 billion in October.

For October, PMI in-force totaled $650.2 billion.
MICA members reported 33,163 cures and 46, 217 defaults during the month.

CONGRESS MAKES MORTGAGE INSURANCE TAX DEDUCTIBLE

2006-12-13T15:31:09Z

Congress has passed legislation to allow premiums on private and government mortgage insurance to become tax-deductible for qualified borrowers in 2007.

For the first time, borrowers who make less than $100,000 a year will be able to write off the full amount of their premiums.

Homeowners making more than $110,000 will not be eligible.

Private mortgage insurance is often a requisite for borrowers who don't put down at least a 20% down payment or take out a second "piggyback" loan.

Over the last five years, about 20% of new loans have been taken out with mortgage insurance, and more than half of those carrying private insurance, according to Mortgage Insurance Companies of America (MICA).

The tax breaks will take effect for new loans in 2007.

The write offs are expected to result in average tax savings of between $300 and $350.

An increase in the use of home-equity loans by borrowers to cover down payments in recent years has hurt private mortgage insurers.

Private mortgage insurance is most often used on low-down-payment loans bought by Fannie Mae and Freddie Mac.

Federal Reserve Keeps Rates at 5.25% Once Again!!!

2006-12-13T10:13:22Z

In a widely expected move, the Federal Reserve left interest rates unchanged at 5.25% for the fourth straight time since June, after raising rates seventeen consecutive times in a two-year battle with inflation.

At its final meeting of 2006, the Federal Open Market Committee (FOMC) voted 10-1 in favor of maintaining current levels for the federal funds target rate, with Jeffrey Lacker, president of the Fed's Richmond regional bank, favoring another quarter-point rate increase for a fourth straight meeting.

The decision will ultimately leave banks' prime lending rate unchanged at 8.25%.

Economists believe there is a strong chance the central bank could maintain current levels through the first half of 2007, watching closely to see if the earlier campaign of rate hikes properly slow
economic growth enough to keep inflation in check.

"The Fed judges that some inflation risks remain," the Federal Reserve said in a statement accompanying the decision.

The phrase has been regularly used by the Fed to signal the possibility further rate hikes unless inflation slows more.

The central bank said that the economy has slowed in recent months to reflect a "substantial cooling of the housing market."

Mortgage Rates Decline to Second-Lowest Level of 2006

2006-12-12T05:48:13Z

The average 30-year fixed-rate mortgage fell to the second-lowest level of the year, as Freddie Mac's economist suggested the housing market is two-thirds of the way through the current correction.

Week Ending November 30, 2006

Average 30-year fixed-rate mortgage

12/07: 6.11%
11/30: 6.14%
11/22: 6.18%
11/16: 6.24%
11/09: 6.33%
11/02: 6.31%
10/26: 6.40%
10/19: 6.36%

One Year Ago: 6.32%

Average 15-year fixed-rate mortgage

12/07: 5.84%
11/30: 5.87%
11/22: 5.91%
11/16: 5.94%
11/09: 6.04%
11/02: 6.02%
10/26: 6.10%
10/19: 6.06%

One Year Ago: 5.87%

Average 5-year Treasury-indexed hybrid ARM

12/07: 5.92%
11/30: 5.95%
11/22: 5.99%
11/16: 6.04%
11/09: 6.08%
11/02: 6.05%
10/26: 6.14%
10/19: 6.11%

One Year Ago: 5.78%

Average One-year Treasury-indexed ARM

12/07: 5.43%
11/30: 5.46%
11/22: 5.49%
11/16: 5.53%
11/09: 5.55%
11/02: 5.53%
10/26: 5.60 %
10/19: 5.57%

One Year Ago: 5.16%

"Continued signs of slowing in the housing market and weakness in the manufacturing sector helped keep mortgage rates down this week," said Frank Nothaft, Freddie Mac vice president and chief economist.

"As a matter of fact, the 30-year FRM is very nearly the lowest it has been this year. The only other time the 30-year FRM has been lower was in January when it fell to 6.10 percent," he added.

"Looking forward in the housing market, we think that housing is about 2/3 of the way through the correction, and should stabilize by mid-year 2007."

Source: Freddie Mac

I'm late on this one... Major California Subprime Wholesaler Collapses

2006-12-11T02:11:17Z

Bill Dallas founded First Franklin back in 1981, later stepping down as CEO after the subprime wholesaler, which he sold to Bank of America, was bought by National City. He then went on to become CEO of Ownit Mortgage Solutions, a company that has now folded as the subprime market has increasingly tightened.

In 2003, Ownit was formed by Merrill Lynch, Interthinx, Mindbox, C-BASS, Litton Loan Services establishing a strategic alliance with Dallas to buy a wholesale mortgage company called Oakmont Mortgage.

The Agoura Hills, California-based company had done well during the boom years, building its book of new loans from $1.1 billion in 2003 to $8.3 billion in 2005.

Employees of the company had no indication that the company was doing poorly before they were notified that the company was being shut down, leaving hundreds suddenly out of work.

Earlier this week, an e-mail was sent out, "For the past three years, we have pursued a mission to influence the mortgage industry toward increased affordability options for a changing market of home buyers.

"Change takes time, and we are saddened that the current unfavorable conditions of the mortgage industry did not afford us sufficient time to see our mission through."

The collapse of the company comes at a time when subprime lenders are faced with higher funding costs, lower mortgage demand and rising delinquencies.

"Effective Dec. 5, Ownit closed its doors, and we are no longer able to fund or process your loans," a recorded telephone message from the company stated. "We apologize for any inconvenience."

Merrill Lynch is believed to own about a 20% share of Ownit.

Dallas, co-author of "Strategic Financing: A Survival Guide for Loan Originators," remains at Dallas Capital Management, a private-equity, advisory firm that he founded in 1999 to diversify his financial interests.

BIG NEWS!!! - Another Wholesale Lender Shuts down Suddenly

2006-12-11T01:59:46Z

Sebring Capital Partners LP has closed up shop, the second subprime wholesale lender to end operations in recent days, prompting Wall Street to cast a suspicious eye towards subprime mortgage bonds.

The Carrollton, Texas-based residential mortgage lender ended operations almost simultaneously with Agoura Hills, California-based Ownit Mortgage Solutions.

"Sebring Capital will cease operations and no longer accept new submissions," read the company's website.

"We apologize for any inconvenience this may cause you or your borrowers. It has truly been a pleasure doing business with you."

Licensed or approved to fund mortgages in 41 states, the company employed about 325 people, according to the website.

Sebring plans to honor the loans already approved, providing that conditions are met and they can be closed by Dec. 15.

Employees will receive pay for work done through November 30, and the company expects to work with several consumer financial services players to help employees find new positions.

The collapse of Sebring and Ownit brought concern on Wall Street.

The index of credit-default swaps based on bonds rated BBB- and consisting of sub-prime mortgages made in 2006 fell 2.6% to 95.36 on Friday.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on the odds the debt will be repaid.

Last month, defaults on adjustable-rate subprime mortgages made and packaged into bonds in 2006 jumped 25% to the highest level for new loans in five years, Friedman Billings Ramsey Group Inc. said in Nov. 17 report.

The annual cost to protect against default for $10 million of 2006 BBB- mortgage bonds rose to $389,000 from $310,000, according to calculations by Deutsche Bank AG.

Refinance applications rise 13.7%

2006-12-07T18:09:53Z

Refinance applications jumped 13.7% this week, representing more than 50% of total activity, according to the MBA.

For Week Ending: December 1, 2006

Seasonally Adjusted
Total Mortgage Activity: Up 8.1%
MBA Market Index Now: 647.6
Index One Week Earlier: 599.0

Unadjusted Basis
Total Mortgage Activity: Up 52.0%
One Year Ago: Up 1.9%

Seasonally Adjusted
Refinance Activity: Up 13.7%
Index Now: 1989.7
One Week Earlier: 1749.6

Purchase Activity: Up 4.9%
Index Now: 426.6
One Week Earlier: 406.7

Four-Week Moving Average
Market Index: Up 1.1%
Purchase Index: Up 1.5%
Refinance Index: Up 1.2%

Refinance Share of Total Activity: 50.1%
Share One Week Earlier: 46.9%

Adjustable-Rate Mortgage (ARM) Share: 23.9%
Share One Week Earlier: 24.5%