The Year Of Technology

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Special events that occurred in 1999 with the mortgage industry. The following are easily found via the web.

This will be a work in progress in no particular order and feel free to chime in and email a tip.

  • GLASS-STEAGLLL ACT, Established in 1933 and repealed in 1999.
  • In February 1999, Lehman Brothers was the first company to include MERS registered loans in a MBS.
  • MOM Makes It Work (April 26, 1999) The following revised MOM language must be used on the revised security instrument. After July 2000, only the revised security instrument may be used. Please see Fannie/Freddie Bulletins for further details.
  • The MBAA XML Work Group was created in May 1999 as an outgrowth of the MBA Technology Committee’s Emerging Technologies Work Group.
  • October 16, 1999, the Mortgage Bankers Association of America (MBA) announced it would take an active role in the maintenance and administration of mortgage industry data standards through its new Internet data standards organization Mortgage Industry Data Standards Maintenance Organization (MISMO).
  • [December 22, 1999] “New Data Dictionary to simplify Mortgage e-COMMERCE process.” – “Two key players in the electronic mortgage arena announced today they will work together to develop a universal data dictionary for the mortgage industry’s use in e-commerce. This announcement marks a milestone in streamlining the way the mortgage industry conducts its e-commerce activities, assuring that all players will speak a common language in handling data exchange requirements. The entities working together on the project include: (1) The Mortgage Industry Standards Maintenance Organization (MISMO), the Mortgage Bankers Association of America’s (MBA) Internet data standards organization; and (2) XML-Mortgage Partners (XML-MP), a coalition of mortgage industry lenders, software developers and e-commerce providers.
  • 1999–FNF, through Micro General, sponsored and financed a new interest transaction intermediary company called Escrow.com.
  • FNF announces its plan to acquire Chicago Title Corp. and its title insurance subsidiaries – Chicago Title, Ticor Title and Security Union Title, thus creating the world’s largest title insurance organization.
  • 1999, LPS boarded its first home-equity lines of credit onto Mortgage Servicing Package (MSP) with full escrow functionality available for those loans. In addition to supporting escrow accounts, MSP has functionality to establish escrow cushions, automate escrow refunds, spread shortages, and ensure annual compliance and disclosures. This functionality is available for traditional mortgages, as well as home-equity products and other second liens.
  • In the first half of 1999, mortgage loans held by Fannie and Freddie have grown $102 billion. In total, there were almost $400 billion of mortgage-backed securities and almost $140 billion of asset-backed securities (largely credit card, auto and home equity loans) issued during the first half.
  • In 1999, Countrywide reached an exclusive agreement to sell Fannie Mae billions of dollars in mortgages at a discounted rate. By 1999, the figures were $30.8 billion to $11.2 billion in Fannie’s favor.
  • 1999, Countrywide established Global. Home Loans (GHL), a subsidiary created to provide mortgage processing and servicing to third-party customers.
  • Subprime loan originations increased from $35 billion in 1994 to $160 billion in 1999. The subprime market share increased from less than 5 percent of all mortgage originations in 1994 to almost 13 percent in 1999. Securitization of subprime mortgages has developed in the past few years and has contributed significantly to rapid growth of the market. Issuance of securities backed by subprime mortgages increased from $11 billion in 1994 to $83 billion in 1998. In 1998, 55 percent of subprime mortgages were securitized, falling back to 37 percent in 1999.
  • In the fall of 1999, several federal agencies, including the Board, the Treasury Department’s Office of the Comptroller of the Currency and Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Federal Housing Finance Board, the Federal Trade Commission, the Department of Justice and HUD, established the Interagency Task Force on Predatory Lending. The purpose of that task force was to promote vigorous and coordinated enforcement of federal fair lending and consumer protection laws.
  • By 1999, outstanding subprime mortgages amounted to $370 billion, which was approximately 8 percent of the $4.8 trillion in single family residential mortgage debt.
  • 1999, the average FICO score of the top prime issuers of 30-year mortgage pools (privately issued non-GSE mortgage-backed securities) was 721 compared to a 605 average FICO score for subprime issuers of fixed-rate pools.
  • Under another classification, a 580 FICO score has been used to describe the minimum credit score acceptable for “A-minus” credit. Still, the lower grade subprime borrowers are characterized by a history of more delinquencies on their credit obligations. Under one classification, “B” and “C” borrowers can have a minimum FICO score of 540 and may have four late mortgage payments in the past twelve months. See Jess Lederman, Tom Millon, Stacy Ferguson, and Cedric Lewis, “A-minus Breaks Away from Subprime Loan Pack,” in Secondary Market Executive.
  • RESPA Statement of Policy 1999-1 sets forth HUD’s position on the legality of lender payments to mortgage brokers in connection with federally related mortgage loans under RESPA. HUD stated that such payments are not illegal per se.
  • About 10 percent of subprime loans originated in 1999 had a balloon term, about the same percentage as in 1993, and down from 16 percent in 1996 (Figure 6.3). Only 1 percent of the subprime mortgages originated in the third quarter of 1999 that met the current HOEPA interest rate threshold carried a balloon term.
  • Subprime loans may be purchased in the secondary market either whole (in the whole loan market) or through a mortgage-backed security, which gives the buyer an interest in a pool of loans. About 35 percent of subprime lending by dollar volume in 1999 was securitized. The volume of subprime loans purchased outright in the whole loan market is not known, though it likely represents a substantial remainder of the non-securitized portion of the market.
  • The Uniform Electronic Transaction Act (“UETA”) was adopted by the National Conference of Commissioners on Uniform State Laws.
  • The legal basis for eMortgages was established with the Electronic Signatures in Global and National
    Commerce Act (ESIGN) law enacted by Congress on June 30, 2000, as well as the Uniform Electronic
    Transactions Act of 1999 (UETA).
  • Over 80 percent of the Real Estate Investment Trusts (REITs) operating in the United States in 1999 were traded on the national stock exchanges, including the New York Stock Exchange, the American Stock Exchange, and the NASDAQ National Market System. Dozens of REITs, however, are not traded on a stock exchange (“NCCUSL”) in 1999.