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Wisconsin’s largest bank, Marshall & Ilsley Corp., better known as M & I, expects to write off $195 million in bad debt in its fourth quarter, compared to only $15 million last year, largely resulting from the downturn in the housing and real estate market. The delinquent loans are concentrated in Arizona and Florida residential construction and land development, the bank said.

The debt is one of “several unusual events which will impact M&I’s financial results for the quarter and year ending December 31, 2007,” said the bank’s Dec. 17 statement.

M&I will offset the expected mortgage losses with a one-time $526 million gain and $1.7 billion capital infusion from the spinoff of its former financial technology arm, Mentavante Technologies.

Because the credit market is “currently unfavorable,” M&I also has retired $1 billion of Puttable Reset Securities, to reduce future borrowing costs cash advance loan. M&I incurred a one-time after-tax charge of $48 million for retiring the debt, but expects to recover it through lower financing costs over the next three years.

Milwaukee-based M & I also expects to pay $5 million as its share in the proposed settlement of an anti-trust lawsuit brought by American Express against Visa. M & I was not named individually in the lawsuit but has exposure as a Visa member bank.

“Despite these challenging market conditions, we are fortunate to have one of the strongest capital positions in the industry,” M & I president and CEO Mark Furlong said in a statement. “We believe we are well positioned to weather the downturn in the real estate market.”
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Mortgage applications for the week ending Nov. 30 were up 22.5 percent from a week earlier, the Mortgage Bankers Association said today, as interest rates on 30-year fixed-rate mortgages fell below 6 percent and loan refinancings rose dramatically.

The average contract interest rate for 30-year fixed-rate mortgages fell to 5.82 percent, down from 6.09 percent the week before. That’s the rate for a loan with an 80 percent loan-to-value (LTV) ratio and an average of 1.07 points, including origination fees.

The average contract interest rate for 15-year fixed-rate mortgages fell to 5.38 percent, down from 5.69 percent the week before, with points decreasing to 1.12 from 1.13 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year adjustable-rate mortgages (ARMs) rose to 6.28 percent, up slightly from 6.24 percent the week before, with points increasing to 0.99 from 0.96 (including the origination fee) for 80 percent LTV loans.

Falling interest rates were accompanied by a surge in applications, particularly refinances, the MBA reported in its Weekly Mortgage Applications Survey.

The market composite index, a measure of all mortgage loan application volume, was 791.8, an increase of 22.5 percent on a seasonally adjusted basis no teletrack payday loans. On an unadjusted basis, the index was up 24.2 percent compared to the same week a year ago.

The seasonally adjusted refinance index, which measures applications for refinance loans, increased 31.9 percent from a week earlier, to 2761.3, outstripping a 15.2 percent increase in the purchase index, which rose to 464.3.

The refinance share of mortgage activity increased to 56.0 percent of total applications from 51.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 11.6 from 14.6 percent of total applications from the previous week.

The seasonally adjusted conventional index increased 21.9 percent from the previous week to 1138.4, and the seasonally adjusted government index increased 27.8 percent to 214.0.

The MBA also issued revised numbers for the week ending Nov. 23, saying an error by one reporting company inflated the purchase index reported Nov. 28 while underreporting loan refinancings.

The refinance index was 2093.0 rather than the 1862.9 originally reported and the seasonally adjusted purchase index was 403.2 rather than the 450.1 originally reported. The seasonally adjusted market composite index for the week ending Nov. 23 was 646.3 rather than the 652.5 originally reported.

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