Mortgage Information For The Homeowner and Professional

The tightening mortgage environment has forced Liberty Mortgage out of business. The Tampa based lender has been in trouble for the last couple of years and the recent downturn put the final nail in the coffin.

After a 5 year period of low interest rates and prosperous times, the mortgage industry is looking at tough period. Companies that have been marginal successes will most likely wash out during the coming months as they will be unable to withstand the slower times.

Liberty is among a handful of mortgage companies that have gone out of business as the housing market cools and the mortgage industry gets tighter.
MortgageDaily.com, an online news source for the mortgage industry, reported the closing in April and May of three large firms: San Francisco-based Capital Alliance Funding Corp.; QuoteMeARate.com., based in Houston; and Merit Financial Inc. in Kirkland, Wash. Dozens of other mortgage companies are “teetering on which way to go,” said Sam Garcia, editor of MortgageDaily.com.
Ameriquest, one of the nation’s largest subprime mortgage lenders, is restructuring and eliminating retail branch offices. Wachovia Corp.’s (NYSE: WB) planned $25.5 billion purchase of Golden West Financial Corp. (NYSE: GDW), the parent company of World Savings Bank, a major residential mortgage lender, is a sign of consolidation in the industry, Garcia said. via  MSNBC.com.

IndyMac is opening a regional office in Tampa as the  company is taking a brave plan of expansion in the face of a slowing mortgage market. They are  adding 140 jobs in the Tampa area.  

The 12,187 square foot facility is located in the Centerpointe office building at 5100 W. Lemon St. When fully staffed, the new center will create more than 140 jobs in the Tampa area, 100 in operations and 40 in sales, the company said. It will employ individuals involved in underwriting and funding, various support positions, and sales.

“At a time when other mortgage companies are downsizing and closing operations centers, Indymac is continuing to expand into additional regional markets,” said Frank Sillman, chief executive officer of Indymac’s Mortgage Bank, in a release.
With the Tampa office, Indymac will operate a total of 15 regional mortgage centers and employ 3,300 mortgage professionals and more than 7,200 individuals. via Tampa Bay Business Journal:.

With the rise in consolidation of the mortgage industry after a 5 year run of record profits, Merrill Lynch is looking to make a purchase in the industry. The company does not have any exposure in the mortgage world, but is looking to buy into the dip as independent mortgage companies retrench.

New York-based Merrill’s top managers spent the past six months determining how to spend “excess capital,” Chief Administrative Officer Ahmass Fakahany said in an interview last week. The firm, which has the world’s biggest network of brokers, decided against expanding by buying a consumer bank, he said.
“What’s new is an increased emphasis on building our institutional business,” said Fakahany, 47. “When I say mortgage origination will take capital, that’s because it requires an acquisition.”
The biggest U.S. mortgage lenders not owned by major banks include Countrywide Financial Corp., Ameriquest Mortgage Co. and IndyMac Bancorp Inc. Fakahany declined to name potential targets.

Bloomberg.com: U.S..

H&R Block is expecting slower earnings for 2006 as it’s mortgage division has slowed down significantly. The company said its tax business was doing much better than expected, but that a slow down in its mortgage writing has hurt the companies earning.

The company said it now expected its earnings per share to come in slightly below the $1.65 low end of a previous forecast. Analysts on average were expecting earnings of $1.70 a share, according to Reuters Estimates.
The move comes as mortgage lending across the industry slows down and as H&R Block fights charges from New York Attorney General Eliot Spitzer that it fraudulently marketed retirement savings plans that caused losses for hundreds of thousands of mostly low-income clients.
Chief Executive Mark Ernst said in a statement the company cut its forecast for fiscal 2006, which ends in April, citing in part weaker results from the company’s mortgage services, which is one of its four main business units.via  Yahoo! News.

The rising interest rates are causing an increase in mortgage refinancing as households are changing their mortgages from Adjustable Rate Mortgages (ARMs) to Fixed Rate Mortgages. Countrywide Financial Corp and Quicken Loans are both expecting an increase in volume as homeowners get out of ARMs to more stable fixed interest mortgages.

About $200 billion of adjustable-rate mortgages will be reset this year, according to Calabasas, California-based Countrywide. Fifty-five percent of the home loans the lender made in the first quarter were used to replace floating-rate mortgages with ones that pay a fixed rate, compared with 47 percent a year ago. Next year, $1 trillion of floating-rate loans are due to reset.

The difference between the monthly payment on an adjustable- rate home loan and a 30-year mortgage narrowed as the Federal Reserve raised interest rates 15 times since June 2004. The monthly payment on a floating-rate mortgage was about 30 percent less than for a loan charging a fixed rate two years ago. Today, the gap is about 10 percent.

“The consumer preference these days is for the longer-dated mortgage” loans that reduce interest-rate risk, said Larry Goldstone, chief operating officer of Santa Fe, New Mexico-based Thornburg Mortgage Inc., which made $5 billion of adjustable-rate loans last year. via Bloomberg

Golden West Financial will sell out to Wachovia as the US Mortgage industry is poised to see a consolidation as the volume of mortgages slows down after 5 boom years. Golden West Financial is solely focused on mortgages and as such did well during the past few years, but as  Herbert Sandler, co-chairman of Golden West states, We’ve always been aware that being a monoline company had extra positives and extra negatives,” he said Monday. “There were inherent weaknesses in our strategy.”

As the market is turning down, these single play mortgage companies are going to look to be consolidated into the larger banking institutions. Smart business if you ask me.

Mortgage banks have spent the last five years in boom mode, benefiting from historically low interest rates that drove more people to take out first mortgages, refinance existing loans and take out home equity lines. But rising interest rates have threatened to end the party.

The Mortgage Bankers Association estimates that this year, even with interest rates stabilizing, the volume of new mortgage loans will drop 14% from the $2.7 trillion logged last year.

Herbert Sandler, the colorful and blunt co-chairman of Golden West, said his decision to seek a merger partner was in no way meant to signal his view that the mortgage business is going down the drain. Rather than concerns about loan volumes coming off the boom times, Sandler pitched his desire to diversify. via Forbes

Freddie Mac, the 2nd largest mortgage lending company, has just announced they will be offering new mortgage products through the world wide web this summer. The programs include Home Possible, a program that is designed for borrowers who need assistance, and over 20 other mortgage programs.

The company’s Loan Prospector automated underwriting service and its online selling system will include a new array of 40-year mortgages, 20 more adjustable-rate mortgage (ARM) products and federally insured rural housing mortgage products, the company said.

It is also expanding its flagship suite of affordable mortgage products, known as Home Possible, by adding a special 40-year fixed-rate option and providing lenders with more competitive selling options.

The enhancements, to be rolled out this summer, were announced at the Mortgage Bankers Association’s National Secondary Conference and Expo in Chicago.

Bank of America analysts raised their ratings for Fannie Mae and Freddie Mac as the largest mortgage finance companies settled their investor class action lawsuit. The mortgage lenders have been under a cloud since irregularities showed up on the balance sheets of the two concerns.

The bank changed its rating of Freddie Mac to “buy” from “neutral” and its recommendation on Fannie Mae to “neutral” from “sell.” In both cases it raised its estimate of how high the companies’ share prices can go, the bank said in separate reports today.

Freddie Mac’s so-called target price was raised to $70 from $68.75 in part because of better long-term profitability, Bank of America said. The bank raised Fannie Mae’s to $50 per share from $48, it said. via Bloomberg

New York Mortgage reported 1st quarter earnings and showed a loss of 14 cents a share. They attributed this to a difficult lending environment but they see a 30 percent increase in lending in the second quarter so far. This could be a very good indicator of the market as a whole as the marketplace stopped with the fear of a bubble but now pressures from housing demands may be re-invigorating the housing and mortgage market.

“While we were disappointed with our first quarter financial results, they were not unexpected given the challenges that persist in the mortgage industry at present. Fortunately though, as a result of the repositioning of our REIT portfolio during the first three months of 2006, we have been able to improve our REIT earnings potential and stabilize our quarterly dividend at $0.14 for 2006. Though our loan origination volume in our mortgage banking subsidiary fell approximately 9.9% in the first quarter of 2006 as compared to the first quarter of 2005, the decrease we experienced compares favorably to the overall industry decline of 20.3% predicted by the Mortgage Bankers Association for the comparable period. Additionally, during the last 60 days we have experienced an approximate 30% increase in loan origination volumes over our January and February volumes and expect that this favorable trend will enable us to show significant improvements in our TRS earnings in future quarters with a targeted breakeven in the TRS by the third quarter of this year,” Steven B. Schnall, Chairman, President and Co-Chief Executive Officer, commented.

MSN Money - PR Newswire Business News: New York Mortgage Trust Reports First Quarter 2006 Results.

Cash out refinancing has risen in the  first quarter of 2006 as refinancing for improved interest rates slowed to a crawl. People are  now looking on extracting some of the appreciation out of their  homes instead of trying to get a lower rate. Freddie Mac has come out with the new report on the trend.

In the first quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances, according to Freddie Mac’s quarterly refinance review. This percentage is up from the fourth quarter of 2005, when the share of refinanced loans that took cash out was a revised 81 percent, and is the highest since the third quarter of 1990.
“The share of all mortgages that were for refinance fell slightly in the first quarter of 2006 to 44 percent from 45 percent in the fourth quarter of 2005. Over that same period interest rates on all mortgages increased between 0.02 and 0.25 percent,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Almost no one is refinancing to reduce their interest rate in today’s environment. In fact, the first quarter of 2006 is the first time in 20 quarters in which the new mortgage rate was higher than the old one for more than half of refinancing borrowers. One reason why homeowners may be willing to increase the mortgage rate on their first-lien mortgage is because interest rates on most home equity lines of credit have been pushed up again as the Fed increased short-term interest rates in January and March, which in turn pushed up the prime rate. Home-equity loans are typically linked to the prime rate, which currently is at 7.75 percent, and many home equity loans have rates that are one percent or more above the prime rate. In contrast, the average rate on 30-year fixed-rate mortgages is presently near 6.5 percent. via Freddie Mac News Archive