Home Loan Wholesale

First American CREDCO has replaced eCREDCO.com, the company’s dedicated e-commerce site, with an all new integrated online ordering and marketing website. The new site features expanded functionality that allows mortgage lenders and loan officers to order and track products more efficiently and the company to develop and deliver new products faster. The newly upgraded platform-http://www.CREDCO.com features a totally improved customer purchasing experience, supported by Direct-Connect customer support, simplified account administration and real-time product tracking. The new CREDCO.com features include streamlined ordering, direct-connect with customer support, access to multiple accounts with one sign-in, electronic document uploading, access to detailed pricing and transactions, search functions, free credit report reprints, real-time product tracking, simplified account administration and a credit card payment option.

In a recent Bryan Dornan published article, the state of mortgage industry was defined with great rhetoric.  Dornan continued, “FHA home loans were reborn in 2007 as HUD introduced revised guidelines with new cash out requirements that allowed borrowers to get cash out for refinance loans up to 95%.”  In an effort to curb foreclosures, HUD introduced the FHA Secure refinance that enabled borrowers who were paralyzed with a high rate adjustable mortgage to lock into a fixed rate loan that they could afford.  The homeowners that had enough equity began utilizing FHA home loans for debt consolidation and home improvement funding.  In 2008, Congress finally passed an economic bill that mandated FHA mortgage loan amounts to increase nationally.  

The main stream media has grabbed hold of the foreclosure crisis and the mortgage meltdown.  Unfortunately many media sources have only been reporting the shams of the loan modification brokers and not informing the public of the mortgage relief companies that have made a difference.  

Read the complete published article Loan modifications, FHA Refinancing and No Hope for Homeowners.

US authorities launched fresh efforts Tuesday to unfreeze credit and limit the economic downturn with programs to buy up to 800 billion dollars in mortgage loans and asset-backed securities.  The initiatives call for up to 600 billion dollars in Federal Reserve purchases of home loan securities, and a separate 200 billion dollars for asset-backed securities to assist consumers with more credit lines.  The Federal Reserve and Bush administration continue efforts to stimulate the economy with cash injections intended to jump-start American credit markets that have nearly been frozen shut since October.   The government has not made their intentions to increase liquidity while decreasing the home loans costs for borrowers looking to refinance or purchase a home.  Last month, HUD introduced FHA home loans for distressed homeowners who were 90 days or more delinquent on their mortgage, but after thousands of borrowers completing the applications for this Hope for Homeowners program, only a few actually were approved by FHA mortgage lenders. 

With the housing sales plummeting and the foreclosure crisis worsening, the government wants mortgage lenders to provide loan modification to prevent foreclosures.  According to mortgage marketing executive, Bryan Dornan, “Clearly, the sub-prime mortgage meltdown ignited sparks through the financial markets and has spread like wild fires burning our economy and many American’s home equity in the process.”  Dornan continued, “The lure of low mortgage rates has faded because the traditional refinance has completely disappeared because lenders continue to tighten credit guidelines beyond Main St. America.”

Economist Marie-Pierre Ripert noted in a recent article, “Both these measures are clearly a significant step in the action implemented by the Fed in trying to avoid a deeper recession and to prevent the economy to fall in a deflationary spiral.”  The US central bank said it planned to buy up to 100 billion dollars of bad mortgages and debt obligations of housing-related government-sponsored entities like Freddie Mac and Fannie Mae in the next week and purchase 500 billion more in a home loan modifications scheduled to roll out by the end of this year.  The 500 billion dollars in mortgage securities is said to be bought by asset managers selected in a competitive mortgage servicing process “with a goal of beginning these purchases before year-end,” the Federal Reserve said.  These purchases “are expected to take place over several quarters.”  Many real estate analysts believe that we have not seen the bottom of the housing market and this foreclosure crisis and lending drama may just be the beginning of a much more severe decline with no real solutions achieving any measurable success rectifying the lack of credit. 

The government’s program to refinance delinquent mortgages into affordable government-insured loans has been enhanced. Among the improvements are increased loan-to-values, extended loan terms and immediate compensation for second mortgage companies.  More than ever before FHA home loans have been the backbone supporting mortgage brokers and lenders with subprime and foreclosure prevention products. 

The maximum LTV on the HOPE for Homeowners program has been raised to 96.5%, the U.S. Department of Housing and Urban Development announced today. The LTV was previously limited to 90, an October mortgagee letter from HUD said.  Many FHA mortgage lenders had indicated that the Hope for Homeowners Programs simply did not connect with the average homeowner that need mortgage refinancing.

In La Jolla California home sales rose unseasonably last month from September as buyers shook off gloomy financial news and took advantage of often-steep discounts. The median sale price fell to $300,000 – a 67-month low – as foreclosures once again accounted for half of all resales, a real estate information service reported.  Last month’s record annual sales increase reflects two things: Very weak sales a year ago on the heels of the August credit crunch and earlier subprime meltdown, and this year’s big sales gains in inland markets where prices have fallen 30% or more. Depreciation in such areas has triggered record foreclosures, which tend to sell at a discount, attracting bargain hunters.

51% of existing homes that closed escrow in October were foreclosed on at some point in the prior 12 months. That’s up from a revised 50.0% in September and 16.0% in October 2007.  At the county level, these “foreclosure homes sold” ranged from 39.2% of October existing home sales in Orange County to 67.7% in Riverside County. In Los Angeles County homes sold from foreclosure were 40.3% of sales; in San Diego 48.6%; San Bernardino 65.2% and in Ventura County 47.0 %.

High foreclosure levels may explain the Southern California’s $300,000 median sale price in October, the lowest since it was $298,000 in April 2003. Last month’s median was 2.8% lower than $308,500 in September and 32.6% lower than $445,000 in October 2007. The October median stood 40.6% below the peak $505,000 median reached in spring and summer of last year.  Several factors explain the plunge in the median price, the point where half of the house sold for less and half for more: Regionally home price depreciation; much slower high-end sales; and the rising market share of foreclosure home sold, which tend to be located in mid-to lower-cost areas.

Many of the region’s relatively affordable neighborhoods saw October sales more than double from a year ago. Use of FHA-insured loans allowing a down payment of as little as 3% represented nearly one-third of all Southern California’s home loans last month, up from 2% a year earlier.

Meanwhile, use of larger mortgages known as “jumbo mortgage loans,” common in higher-cost coastal neighborhoods, is still far below normal. Before the credit crunch hit in August 2007, 40% of Southland sales were financed with jumbos, then defined as over $417,000. Last month just 13.1% of home purchase loans were over $417,000.

The typical monthly mortgage payment that Southern California home-buyers committed themselves to paying was $1,413 last month, down from $1,458 the previous month, and down from $2,115 a year ago. After inflation adjustments, current payments are 33.9 % below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 45.8% below the current cycle’s peak in June 2006.  Indicators of market distress continue to move in different directions. Foreclosure activity is at or near record levels, financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages.

DataQuick also reported Down payment sizes and flipping rates are stable, non-owner occupied buying activity appears flat but might be emerging.  MBA reported this week that home loan activity has decreased, but the home loan modification inquiries continue to soar as the foreclosure crisis worsens.

Bank of America Corp.’s recent decision to provide $8.4 billion in home loan modifications to settle charges brought by state attorneys general against Countrywide Financial Corp. was hailed as a milestone when the deal was announced this fall. But apparently nobody talked to one group that will shoulder much of the settlement’s costs: investors who hold securities backed by Countrywide home loans.  Now, some of those investors are crying foul, adding to the confusion over what is becoming a central issue in efforts to resolve the wave of foreclosures that is at the root of the global financial crisis.

J.P. Morgan Chase & Co. and Citigroup Inc. recently announced foreclosure-prevention programs that aim to lower mortgage rates, extend repayment schedules and, in the case of Citigroup, reduce loan amounts, to help borrowers keep their homes. But the programs have focused primarily on home loans wholly owned by those companies because they feel they have more authority to provide loan work-outs.  Over $2 trillion in mortgage loans were packaged into mortgage-backed securities and sold to investors by Wall Street, according to Inside Mortgage Finance. But opinions vary regarding the degree to which these mortgages can be modified.  Bank of America settled charges this fall with attorneys general from 15 states. The settlement stemmed from charges that Countrywide engaged in predatory lending practices involving borrowers who took out subprime mortgages and option-ARM mortgage loans that featured a negative amortization. Under the settlement, Bank of America, which acquired Countrywide in July, agreed to modify the mortgages of as many as 400,000 borrowers by providing mortgage refinancing, lowering interest rates and reducing principal amounts. Bank of America neither admitted nor denied wrongdoing.

Background: This fall, Bank of America agreed to an $8.4 billion program to modify mortgages, to settle charges by state attorneys general against Countrywide, which it now owns.  The Concern: Many of the loans covered by the settlement were packaged into mortgage-backed securities. Some investors who own those securities say Bank of America is shifting much of the cost of the settlement to investors.  The Response: Bank of America says its contracts with investors provided it with “delegated authority” to modify many of the loans. It also is talking with investors about their concerns.

Bigger Picture: The dispute comes as mortgage companies are under pressure to do more to keep borrowers in their homes. It isn’t clear just how much authority the companies have to modify loans that were packaged into securities.  Bank of America said it owns about 12% of the roughly 400,000 loans at issue in the settlement and can modify another 75% based on the “delegated authority” provided in its contracts with investors. “We believe the program benefits both customers and investors,” a Bank of America spokesman said. Bank of America didn’t seek investor approval before agreeing to the settlement “because the design of the program was based in large part on the delegated authority” in the contracts, he added.

But some investors believe they should have been contacted first. “Our view is that Countrywide Financial Corp. made this determination without consulting with a representative group of investors,” said Ralph Daloisio, managing director at Natixis SA, which owns securities backed by Countrywide loans. He agreed, though, that if done right, loan modifications can benefit investors.  Other investors said Bank of America is moving much of the cost of the settlement to investors when it should be paying those costs itself. These investors said that they don’t oppose modifying mortgages when it will increase investor returns while keeping borrowers in their homes. But they said that many of these home loans violated representations and warranties made when the mortgages were packaged into securities. As a result, they said, Bank of America should repurchase the loans before modifying them.

“This is literally an attempt to settle a dispute with state attorneys general on predatory lending claims with someone else’s money,” said one money manager. “In 10-plus years in the market, I’ve never seen anything as outrageous as this.”  The Bank of America spokesman said that “no court has made … findings” that the Countrywide loans were “either predatory or unlawfully originated.” He said Bank of America has been “responding to investor questions regarding this program. We believe that these have been positive interactions.” Bank of America believes “the program benefits both customers and investors,” he said.  Under terms of contracts with investors, mortgage companies generally have the authority to rework loans when it is likely to benefit investors. But just how much authority the mortgage companies have is open to debate.  Mortgage loan modifications also can benefit some bondholders at the expense of others. Reducing a borrower’s loan balance, for instance, may hurt holders of the riskiest piece of a mortgage securitization more than investors who bought securities that had higher credit ratings.

Citigroup Inc. announced Tuesday that it will preemptively contact 500,000 mortgage holders to restructure their mortgage terms on as much as $20 billion in home loans for borrowers who are current on their home loan payments but in danger of falling behind. Under its new program, the Citi Homeowner Assistance Program, Citi is focusing on borrowers who live in areas that are likely to face “extreme economic distress.”

“Under our new program we will preemptively reach out to help homeowners before they become delinquent, which is critical to avoiding the loss of a home and protecting their credit score and future borrowing potential,” said Sanjiv Das, chief executive officer of CitiMortgage.

Citi extended its moratorium on foreclosures, saying it won’t begin or complete a foreclosure sale on a home on which it owns the home mortgage if the borrower wants to stay in the home, which is his or her principal residence. And, Citi said it is also working with investors to expand the Citi Homeowner Assistance program to include mortgages Citi services but does not own.

It added that it recently streamlined its loan modification program to rework delinquent loans. This revamped program uses a simplified formula to figure out an affordable payment as a percentage of the borrower’s gross income. It then reduces the monthly payment to that amount by either reducing interest rates on the loan, extending the loan’s term or forgiveness of principal.  You do not have to work with foreclosure lawyers if you would rather deal with a foreclosure prevention company or the lender directly.

“We believe at-risk borrowers should not have to wait until they are facing potential foreclosure before they become eligible for a loan modification or a foreclosure pause,” said Eric Eve, senior vice president at Citi.  Since 2007, they have helped nearly 370,000 families, representing more than $35 billion in underlying loans, avoid foreclosure. Even if you’ve been turned down previously, call CitiMortgage. You may qualify under its newly announced program.

On Friday, JPMorgan Chase became the latest big bank to pledge to cut monthly payments, by lowering interest rates and temporarily reducing loan balances for as many as 400,000 homeowners. Early in October, Bank of America, which acquired the large mortgage lender Countrywide, announced a similar effort aimed at 400,000 borrowers as part of a settlement with state officials. Wachovia initiated a home loan refinancing program before agreeing to its pending takeover by Wells Fargo & Co. The loan modification effort targets the option-ARM portfolio.

“The banks are doing the cost-benefit analysis,” said Gerard S. Cassidy, a banking analyst with RBC Capital Markets. “The banks don’t want these customers going into foreclosure because it is a costly and punitive way of trying to collect your money.”

Roughly 1.5 million homes were in foreclosure at the end of June, and economists expect several million more borrowers may default in the coming year as housing prices erode and job losses rise. Nearly 1 in 10 mortgages is either delinquent or in foreclosure.

By renegotiating mortgage rates loans with borrowers, Chase is hoping to reduce the losses that it incurs in the foreclosure process and when it sells repossessed homes. Chase said it has already modified 250,000 loans since the start of 2007.

“What we are doing is a process that just makes a lot of sense,” said Charlie Scharf, chief executive of retail financial services at Chase. “If the government can come in and help us find ways to modify more people that would be wonderful.”  Like other banks, Chase is largely aiming at loans that the bank owns and not the mortgages that it services on behalf of bond investors who own mortgage-backed securities. Banks have less leeway in changing the terms of loans packaged into securities, because contracts that govern them can be very restrictive.

Chase is following the example set by Sheila C. Bair, the Chairman of the Federal Deposit Insurance Corporation (FDIC). They are lowering interest rates on existing mortgages and temporarily reducing the principal owned on loans. The goal is to lower a borrower’s mortgage payments to 31 to 41% of disposable income—income after monthly debts are paid.

“A clear consensus is emerging that broad-based and systematic loan modifications are the best way to maximize the value of mortgages while preserving homeownership — which will ultimately help stabilize home prices and the broader economy,” Ms. Bair said in a statement that applauded the announcement by Chase.

“A clear consensus is emerging that broad-based and systematic home loan modifications are the best way to maximize the value of mortgages while preserving homeownership — which will ultimately help stabilize home prices and the broader economy,” Ms. Bair said in a statement that applauded the announcement by Chase.

The mortgages affected by J.P. Morgan’s program represent 4.7% of the home loans it owns or that are serviced by one of the bank’s units, EMC Mortgage Corp. While the program to give these mortgages easier terms is likely to cost J.P. Morgan billions of dollars in interest payments and loan fees, it is also likely to save the bank from the costly and lengthy process of foreclosing homes and selling them.

Up to this point, the Bush Administration has taken a top-down approach to trying to stimulate the economy. But, it hasn’t been successful because the problem that still remains untouched is the mortgage meltdown that started this financial crisis. Because of the big bank losses as a result of their investments investment of trillions of dollars in securities backed by risky mortgages, a wider credit crunch spawned, crippling the financial industry even further. Until now, mortgage holders have been reluctant to renegotiate loans or have been doing so one-by-one, a time-consuming process.

The announcement by J.P. Morgan steps up pressure on other mortgage companies to respond with relief programs for stressed borrowers, said Stuart Feldstein, president and co-founder of SMR Research Corp., a Hackettstown N.J., firm that specializes in consumer lending.  Sources: New York Times and Wall Street Journal