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CLARIFICATION: LO Compensation and Reg Reform

July 15, 2010
Mortgage attorneys, consultants, and trade group officials are at odds over the implementation date of restrictions on loan officer/broker compensation—and prepayment penalties—promulgated in the pending Dodd-Frank regulatory reform bill.

As reported on the National Mortgage News website Wednesday, K&L Gates attorneys contend these provisions could go into effect shortly after the president signs the bill. In an alert to its mortgage clients, K&L Gates attorneys note that lawmakers did not instruct the Federal Reserve Board, or the new Consumer Financial Protection Bureau, to issue regulations on originator compensation, which means the changes could go into effect immediately. Industry officials indicate the K&L Gates interpretation is one possible reading of the statute. However, trade group executives and others now believe a more reasonable reading of the legislative language gives the Federal Reserve Board or the new CFPB the time and option to issue regulations. If the regulators don't issue regulations, the LO/broker compensation restrictions in the bill would not go into effect until 18 months after the new CFPB is up and running, said Brian Chappelle, a mortgage banking consultant who has followed the bill closely. "Either way, implementation is unlikely until 2011 at the earliest," said Chappelle. At press time K&L Gates attorneys could not be reached for comment.

ABA Strikes Mortgage Correspondent Deal with Wells

July 14, 2010
The American Bankers Association has opened the door for more of its members to sell residential mortgages to Wells Fargo Funding under a special pricing arrangement.

"Under the terms of the agreement, Wells Fargo Funding will offer eligible ABA member banks a full-range of products at advantaged pricing levels," according to ABA Business Solutions, a division of the trade group. Wells Fargo Home Loans has been a "preferred" secondary market investor for ABA's mortgage cooperative, Community Bank Mortgage LLC since 2007, but only 55 ABA member banks are co-owners of the cooperative. Nearly 1,000 banks have signed up for the free services offered. (ABA Business Solutions and 700 banks are active members.) "Now all eligible ABA member banks can take advantage of the strong Wells Fargo offerings," said ABA Business Solutions president William Kroll. Business Solutions also has alliances with Fannie Mae, Freddie Mac, Farmer Mac, Bank of America, Mortgagebot, Genworth Financial and MetLife.

ABA Chief Yingling Retiring

July 7, 2010
American Bankers Association president and chief executive Edward Yingling is retiring at the end of this year, according to the trade group.

A former bank attorney and lobbyist, Yingling joined ABA 25 years ago to work in legislative affairs and become its chief executive in 2005. The thrift trade group America's Community Bankers merged with ABA in 2007. Following the financial crisis in 2008, Yingling became the point man for the industry as other bank executives shied away from testifying before Congress and appearing on network news programs. The ABA CEO also became very critical of mark-to-market accounting policies that caused severe writedowns of bank assets, including MBS. Yingling, 61, plans to stay active in the industry and may return to practicing law.

PennyMac Selling NPLs on its Website

July 6, 2010
PennyMac Mortgage Investment Trust, a publicly traded vulture fund, is now offering nonperforming notes to investors through its website but is using three outside firms to facilitate sales.

A spokesman for the Calabasas-based company cautioned that the company is only offering hard-to-resolve mortgages to outside parties. "These typically are loans that we tried to resolve but the borrower was unresponsive," he said, noting that the offerings comprise less than 1% of the portfolio. The company has posted links to three online auction sites to move the notes. The auctioneers include Loanmarket.net, Bigbidder.com, and CarltonGroup.com. Jeff Freud, a principal in Loanmarket.net, told National Mortgage News that "we're closing [PennyMac] sales in volume" but said he could not be more specific at this time, but noted that any investor in NPLs must be certified through the HAMP program.

NAMB: Reform Bill Impinges on Consumer Choice

June 28, 2010
The financial services reform bill does little to help consumers shop for a loan, according to the National Association of Mortgage Brokers.

NAMB chief executive Roy DeLoach said the government is trying to impose its choices on consumers. An amendment by Sen. Jeff Merkley, D-Ore., restricts the way brokers can be paid by lenders and consumers. It is "too big brotherish," he said. NAMB feels regulators should be given the flexibility to make changes to the compensation provisions. The trade group also is worried about a safe harbor provision that limits points and fees to 3% of the loan amount. Congress directed regulators to make adjustments, giving lenders an incentive to make loans under $100,000, a move that helps low- and moderate- income homebuyers. "This will help to counter any unintended consequences for consumers," DeLoach said in an interview conducted during NAMB's annual meeting in Phoenix.

PennyMac Signs up Impac as a Correspondent Lender?

June 25, 2010
PennyMac Mortgage Investment Trust, a mortgage vulture fund that also is working on a new conduit, has signed up Impac Mortgage Holdings as a correspondent lender, according to industry officials.

At press time both companies had not responded to telephone calls about the matter. The publicly traded PennyMac, a REIT based in Calabasas, is reportedly gathering product for a future securitization but has not released details about its plans. Impac, a former alt-A lender, has managed to survive the financial crisis and is acting as both a servicer and broker of loans, in addition to other side businesses. The company is based in Irvine.

Final Reg Reform Draft Hammered Out

June 25, 2010
After a marathon final day of debate, the regulatory reform process ended in the early hours of Friday in the same dramatic manner it had been conducted for more than a year: with a near breakdown followed eventually by a miraculous save.

After several hours of late-night wrangling, conferees resolved the two most problematic questions: how to finalize a ban on proprietary trading and limit banks' investment in hedge funds and private equity firms, and whether to force banks to spin-off their derivatives trading desks. The resolution of those and other pending issues meant the regulatory reform bill is now complete and will return to the full House and Senate for votes next week, where it is expected to pass. Although there is certain to be more rhetoric and debate next week over the merits of the bill, the end of the conference committee means the final legislation can no longer be altered, short of unforeseen circumstances. "Nobody thought we could get this done," said Senate Banking Committee Chairman Chris Dodd, speaking immediately after the conference concluded. "It took a crisis to bring us to the point where we could actually get this done." Although at some points the bill looked like it could still fall apart, lawmakers reached final agreement roughly 20 hours after debate first began early Thursday. Sen. Blanche Lincoln, the chairman of the Senate Agriculture Committee, refused to budge on a provision that would force banks to spin off their swaps desks, while moderate House Democrats threatened to vote against the bill if the derivatives measure was not removed. The final version of the Volcker Rule also remained in limbo, with Senate Democrats and Republicans sparring over how much to allow banks to invest in private-equity firms and hedge funds. Ultimately, the Lincoln amendment was essentially split into two, so that banks would have to conduct some derivatives activities in an affiliate while it could conduct others in the bank itself. The derivatives provision was the last to be dealt with and for a time looked like it would not be resolved. Banks have vigorously opposed the Lincoln amendment, arguing it would cost them billions of dollars to spin off their derivatives units. Regulators, too, had argued against the provision, saying it would drive derivatives trades overseas or underground, where they would not be regulated. For weeks, banking lobbyists and moderate Democrats had been assured the provision would be watered down or eliminated as the final legislation was settled. But Lincoln had continued to hold the line as her political power was bolstered by her primary victory on June 8. The issue finally came to a head Thursday after the New Democrats, a coalition of moderate members, threatened to oppose the final bill if the provision was not removed. That resulted in a wave of negotiations between Lincoln and House Democrats over the final provision. Around midnight, House Agriculture Committee Chairman Collin Peterson, D-Minn., suggested the basic solution where some swaps should be forced into an affiliate while others would be allowed within the bank. The Treasury Department was instrumental in helping to craft the new language. "What can be retained by banks will be interest rate swaps, foreign exchanges, credit derivatives relative to investment grade entities that are cleared, gold and silver and hedging for the bank's own risk," Peterson said. "What would be required to go under the affiliate would be cleared and non cleared commodities, energies and metals... and all equities and any non cleared credit default swaps." Peterson said the split was based on what activities banks could already engage in. "Currently banks are not allowed to invest in commodities, energy; they are not allowed to invest in equities or trade in equities or agriculture," he said. "These are things that are currently not allowed in banking, so why we would allow them to do the derivatives that are related to those things that are currently not allowed in banks? So we took those provisions and put them in the affiliate. These are generally the most risky parts of these derivatives." He was backed by House Financial Services Committee Chairman Barney Frank, who said the amendment was "the best compromise we can get."

Ex-NAMB Chief: Brokers Lose on HVCC and YSPs

June 24, 2010
House and Senate conferees working on the regulatory reform bill dealt a double-blow to loan brokers Thursday morning by extending HVCC appraisal ordering bans and capping yield-spread premium payments at 3%, according to one trade group official.

Marc Savitt, who has been lobbying on behalf of the brokerage industry, said conferees decided against a sunset provision that would have allowed approved brokers and loan officers to order appraisals. (Under the Home Valuation Code of Conduct regulation originators cannot directly order appraisals and must use appraisal management companies.) Savitt, past president of the National Association of Mortgage Brokers who leads a new industry trade group, said the appraisal ordering ban was set to expire but Sen. Chris Dodd, D-Conn., supported language maintaining it. Savitt, who runs a small brokerage operation in West Virginia, noted that the House and Senate agreed to a compromise, essentially capping yield-spread premiums at 3%, though the final language allows for certain fees and charges to be excluded from the cap. He said that, overall, the loan brokerage industry was "shafted" and is being unfairly blamed for the financial crisis. "We've been convicted and sentenced without having a trial," he said.

Questions Remain on 'Fair Value' Accounting

June 22, 2010
If a new survey is any indication, a push by the Financial Accounting Standards Board to have all financial instruments marked to market would be at odds with the preferences of most investors.

After conducting hour-long, face-to-face interviews with 62 users of financial statements, PricewaterhouseCoopers determined that a majority of respondents want to retain a more nuanced system, where the appropriateness of using fair value would be dictated by the characteristics of either the financial instrument itself or the company recording it. Lest the banking lobby declare victory, very few investors are happy with the status quo. Only 13% of the survey respondents said financial statements and disclosures are "sufficiently useful" in their current form. Investors want to know more about how financial instruments are valued, and how sensitive the values are to changes in key assumptions. They want more details about portfolio composition and risk. But they don't want to be inundated with dense, technical data that gets in the way of making sense of the disclosures. Investors said it is important to see fair-value data on loans held for sale, equities owned for the long haul, traded securities and on derivatives. But they assigned less importance to fair value when it comes to deposits and loans held to maturity.

May Home Sales Disappoint but Some Positives in the Numbers

June 22, 2010
Sales of existing single-family homes fell 1.6% in May with the expiration of federal tax credits and problems with mortgagors obtaining flood insurance policies.

The National Association of Realtors reported that sales of previously owned single-family homes fell to a seasonally adjusted annual rate of 4.98 million units from a 5.06 million rate in April. The homebuyer tax credit expired April 30, but buyers still have until June 30 to close and qualify for the benefit. Legislation is pending in Congress to extend the closing date into the fall. (NAR and other trade groups want a closing deadline of Sept. 30.) NAR chief economist Lawrence Yun noted that many sales are being delayed because of an interruption in the National Flood Insurance Program. "Approximately 180,000 home buyers who have signed a contract in good faith to receive the tax credit may not be able to finalize it by the end of June due to delays in the mortgage process, particularly for short sales," Yun said. NAR economists expect to see one more month of elevated home sales before they start to trail off. The trade group reported that the national median existing-home price for all housing types was $179,600 in May, up 2.7% from a year ago. During the month distressed home sales slipped to 31% of all purchases, compared to 33% in April and 33% in May 2009.

CoreLogic Addresses Fannie's Loan Quality Initiative

June 21, 2010
CoreLogic Credco has launched Instant Merge LQ and ENCORE LQ to help lenders be compliant with Fannie Mae Loan Quality Initiative requirements.

Instant Merge LQ and ENCORE LQ were created to help lenders satisfy requirements under the new Fannie Mae LQI, an initiative designed to help lenders avoid loan buybacks. LQI, which went into effect June 1, 2010, requires lenders to proactively verify identity and disclose the status of all borrower debts immediately prior to pre-funding of the loan, including open and closed tradelines, public records filings or any new inquiries on the credit file. Credco's Instant Merge LQ is a solution for lenders to satisfy prefunding credit refreshes, while ENCORE LQ enables lenders to check credit, identity verification, property data, occupancy status and exclusionary list screening. Both generate a reporting solution for underwriter review.

A Marketing Advantage: Pass the LO Test and Brag About it

June 18, 2010
Some nonbank mortgage lenders that pass the state LO tests required under the SAFE Act plan to market their expertise and use it as a competitive advantage against commercial banks.

"It's definitely a plus in our favor," said Marc Savitt, a former past president of the National Association of Mortgage Brokers. "We can wave that piece of paper around and say, 'Hey, we're certified.'" Bodhi Kraus, for one, said his company, Priority Lending Mortgage Corp. in Santa Rosa, Calif., plans to highlight the fact that its loan officers are licensed on its business cards and mailings, and may even tout the licensing in its radio advertisements. "We advertise and make the phones ring," said Kraus, Priority's vice president. "We just don't have the employees to take" the calls. Under the Secure and Fair Enforcement Licensing Act, part of the Housing and Economic Recovery Act of 2008, loan officers working for state-supervised mortgage firms must now meet minimum standards for licensing and registration, including several hours of education and passing a test. Nonbanks say the requirements can be costly and time consuming, which puts them at a disadvantage to depositories, which are exempt from the SAFE Act. But Glen Corso, managing director of the Community Mortgage Banking Project, a trade group for independent lenders, said a number of companies he works with plan to use the licensing as a competitive tool, as a way to tell consumers that their loan officers are well qualified.

FHFA Moving GSE Stocks to the 'OTC' Market

June 16, 2010
The regulator of Fannie Mae and Freddie Mac is directing the troubled GSEs to move the trading of their stocks to the Over-the-Counter Bulletin Board market while declining to answer questions about a reverse stock split.

"We're not getting into that," said a Federal Housing Finance Agency spokeswoman when asked why the regulator didn't direct the two mortgage giants to declare a reverse stock split. Sources say the GSEs were informed of the move last week and were caught off guard. In trading Wednesday, their stocks plunged in value by 40%. The OTC Bulletin Board is operated independently of the 'Pink Sheets' market which is for private firms. OTCBB requires regular SEC filings while the Pink Sheets does not, said a Freddie Mac spokesman. Last Friday Fannie was in violation of a New York Stock Exchange requirement mandating a publicly traded firm to maintain a minimum average closing price of $1 for 30 days. Agency chief Edward DeMarco cautioned that FHFA's "determination to direct each company to delist does not constitute any reflection on either enterprise's current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator." Since being taken over by the government in September 2008, Fannie and Freddie continue to lose money. To date, the two have required $140 billion of assistance from the Treasury to maintain their net worth positions above zero. Over the past 52-weeks Fannie's share price has ranged from a low of 51 cents to a high of $2.13. Freddie's 52-week low is 53 cents, its high $2.50.

Analyst Calls PennyMac a 'Market Outperform'

June 15, 2010
JMP Securities has initiated coverage of PennyMac Mortgage Investment Trust, calling the residential-related vulture fund a "market outperform."

Six firms are now following Calabasas, Calif.-based PennyMac, which is managed by former Countrywide Financial Corp. president Stanford Kurland. (Kurland departed Countrywide two years before the lender's problems began in earnest.) A publicly traded REIT, PennyMac has been actively bidding on nonperforming loan portfolios and is working on a lending conduit. Its affiliates include a servicing operation as well.

Risk Retention Debate: Progress on Some Issues, but Not All

June 14, 2010
Securitization market participants appear to be unified on eight issues related to risk retention proposals and split on two, according to a draft report by a group that represents both the "buy" and "sell" side of trades.

The group is split on a portion of the legislative proposal which makes it possible in the commercial mortgage market to have a third-party purchaser retain the first-loss position if that purchaser specifically negotiates for such a position and performs due diligence on the pool. According to the American Securitization Forum's June 11 draft report on its membership's response to financial regulatory reform proposals by the House and Senate, certain of the group's members "believe this alternative form of retention should be available for other asset classes." However, it said, other members "believe retention of risk by a third-party purchaser is not retention at all, because it allows the issuer to sell the risk which does not align incentives or result in prudent securitization practices." The group also remains split on whether "qualified" securitized mortgages underwritten to "prime" credit standards should get an exemption. Some members believe allowing a "qualified" mortgage exemption would ensure "incentives are aligned between originators and investors." Others said they are concerned that "while a 'qualified mortgage' would require some minimum in quality, it would not require an issuer to have ongoing 'skin in the game' with respect to the securitization." While the membership is split on the aforementioned two issues, it is unified in pushing for proposals that allow for "adequate representations and warranties and enforcement mechanisms" to be used as an alternative for risk retention.

Builder/Housing Recovery Still Years Away

June 11, 2010
Builders gathering at the nation's largest regional housing trade show this week were told they'd have to hang on for a few more years before the market picks up any kind of steam.

Eventually, builders will produce 1.4 million units a year, but that's "three or four years down the road," said Elliott Pollack, a Phoenix investor and consultant. Speaking at the Pacific Coast Builders Conference in San Francisco he noted, "There's going to be a recovery, but it's going to be a weak recovery." David Crowe, chief economist at the National Association of Home Builders, said patience will be "a builder's best virtue" going forward. But he also said the states which will recover first are relatively small ones. "North Dakota can double its production and we're not going to feel it at the national level," he said. Kicking off PCBC's new Capital Markets Forum, Pollack told builders not to get caught up in numbers. "Things are going to get progressively better, capital will show up and there will be less competition," he said, noting that the number of builders operating in the Phoenix area has dropped from 864 at the height of the market to 133 today. "If I'm you, I'm doing cartwheels because I'm still here," he told the crowd. Pollack, who heads Elliott D. Pollack & Co., also predicted that house prices will jump once the oversupply of building lots is worked off. But he warned that credit for both builders and their buyers will be tougher to come by. "If you want to know what credit is going to look like, go back to the '70s and '80s," he said.

Builders Think Worst Is Over...

June 10, 2010
The aisles are a little wider at the Moscone Center in San Francisco at the Pacific Coast Builders Conference, the nation's largest regional trade show, and the crowds are somewhat thinner.

But the builders and exhibitors who are here are generally optimistic that the worst is over. According to a survey of registered attendees by Immersa Marketing on behalf of PCBC, nearly a third said their businesses have stopped constricting and 40% said their businesses have actually begun to recover. "We hope the turnaround two out of five builders are experiencing will soon be experienced by many more," said Linda Baysari, senior vice president of PCBC. The West has been particularly hard hit by the housing and banking crises, with only 4% of the respondents saying they have been unaffected by the recession. And as a result, the professionals here say they are adapting. Nearly two-thirds of the attendees said they are becoming more competitive, and 60% said they are exploring new housing products, including smaller houses, better use of design and greater densities. Some 55% said they were becoming more innovative. Furthermore, most said they are committed to a business they enjoy. "Homebuilders tend to be resourceful by nature," Baysari said.

Pennsylvania Lender Launches Correspondent Channel

June 9, 2010
Gateway Funding Diversified Mortgage Services has launched a correspondent lending division, offering to buy residential loans — including renovation products — from depositories and nonbanks in the Mid-Atlantic region.

At press time officials of the Horsham, Pa.-based company had not returned telephone calls about the new effort, but according to statements made by company CEO Bruno Pasceri, FHA's 203(k) program will be one product it offers. Gateway is a nonbank that in past years has ranked 140th or so among residential funders, according to figures compiled by National Mortgage News. Pasceri said, "Demand for renovation products is likely to continue increasing over the next several years." Two years ago Gateway made headlines in the industry when it agreed to pay $200,000 to the Federal Trade Commission, settling charges that it engaged in discriminatory lending practices. While setting with the government, it denied the allegations. The FTC's original judgment against Gateway was for $2.9 million.

Regulators to Ask for Restrictions on Compensation, Risk

June 9, 2010
The Federal Reserve Board and other regulators will urge major banks to restructure their compensation packages to "discourage excessive risk taking," according to central banker Ben Bernanke.

"We anticipate interagency guidance on this matter within the next few weeks," the Fed chief told a congressional panel Wednesday. He indicated that the guidance will include a "set of criteria and set of expectations" to ensure executives and traders are not compensated to take excessive risk without being penalized when those risks translate into losses for the banks. "We will be pushing the banks to move as quickly as possible" to implement new compensation policies, he said. The Fed has conducted a survey of bank compensation practices, discovering that many banks continue to use the same pay practices that were in place before the 2008 financial crisis. "We found many banks have not modified their practices," Bernanke testified in response to a question from Rep. Lloyd Doggett, D-Texas.

Americans Reduce Their Housing Debt

June 8, 2010
The amount of outstanding housing debt in the U.S. fell to $9.8 trillion at March 31, compared to $10.1 trillion at yearend, the first such sequential decline since National Mortgage News began tracking such figures 12 years ago.

Overall, the lower balance owed shouldn't come as a total surprise. Millions of homes have entered foreclosure the past two years, wiping that debt off the balance sheet of residential servicers. When mortgage bankers finally take title and place the house back on the market, the "new" sales price will be lower - in come cases much lower - than the old price. What this effectively does is reduce not only the outstanding mortgage bill for the nation, but it lowers the base of receivables that mortgage bankers can earn servicing fees on. "The numbers are definitely declining," said Jay Brinkmann, chief economist for the Mortgage Bankers Association. The trade group tracks mortgage debt differently than this newspaper, but its findings are similar: consumers have reduced their residential debt load. (For the full story see this week's paper edition of National Mortgage News.)

B of A Pays FTC $108 MM for the Sins of Countrywide

June 7, 2010
Bank of America has agreed to pay the Federal Trade Commission $108 million to cover foreclosure-related servicing abuses by Countrywide Home Loans, the mega lender/servicer that it purchased almost two years ago.

Overall, the settlement will benefit more than 200,000 consumers who were charged excessive fees while facing foreclosure or trying to save their homes from bankruptcy. Countrywide profited from failed loans and "illegally extracted the last dollar out the pockets of the most desperate consumers," FTC chairman Jon Leibowitz said in announcing one of the largest settlements in FTC history. "To have a major servicer like Countrywide piling on illegal and excessive fees is indefensible," he added. B of A bought Countrywide Financial Corp., the parent of CHL, in August 2008 and "took responsibility for fixing the problems," Leibowitz said. "Bank of America did step up to the plate." The FTC worked with bankruptcy trustees to investigate allegations that CHL made inaccurate claims to the courts on the amounts mortgagors owed on their loans. "Countrywide's outdated computer systems made the records incredibly difficult to sort out. But we believe thousands of borrowers in bankruptcy ended up overpaying," the FTC chairman said. He also noted that Countrywide used affiliates to provide default services such as property inspections and lawn mowing, charging excessive fees in the process. "Countrywide's mortgage contracts prohibited these inflated charges but that didn't stop Countrywide from passing on those markups in violation of the FTC Act," Leibowitz said.

MBA Moves to New Digs a Few Blocks Away

June 4, 2010
The Mortgage Bankers Association, which took a bath on the sale of its custom designed and environmentally friendly Washington headquarters, has finally moved into new space a few blocks away.

At press time the trade group was in the process of completing the move to 1717 Rhode Island Avenue from L Street, allowing employees to work from remote locations on Friday. The new headquarters will officially open on Monday. Earlier this year CoStar Group, a provider of commercial real estate data, bought MBA's 10-story headquarters for $41.3 million. The negotiated sale price was well below the $79 million the trade group paid to construct the building from scratch. The lender on the deal was PNC Bank.

Trade Group Finds REITS Perform Better than Dow, S&P

June 4, 2010
According to data from the National Association of Real Estate Investment Trusts, REITS are outperforming the broader equities market.

The trade group said the FTSE NAREIT Equity REIT Index delivered an 11.13% total return for the year through May, while the FTSE NAREIT All REITs Index was up 10.58%. Meanwhile, the S&P 500's total return for the year through May was negative 1.50, the Dow Jones Industrial Index had a negative 2.79% return and the NASDAQ Composite's return for the period was a negative 0.53%. The apartment sector at 23.91%, the lodging/resorts sector at 19.05%, and the self-storage sector at 15% led the REIT industry's gains in the first five months of 2010.

Barclays Agrees to Sell HomEq to Ocwen Unit

June 1, 2010
Barclays Bank PLC has agreed to sell HomEq, a specialty servicer, to a division of Ocwen Financial for roughly $1.3 billion. Under terms of the agreement, Ocwen Loan Servicing LLC would pay for the U.S. mortgage servicing business in cash at the completion of the deal, with the amount subject to an "adjustment mechanism."

The mechanism is based on the unpaid principal balance of HomEq's servicing portfolio and the value of certain other assets at the completion of the transaction, according to Barclays. HomEq's servicing portfolio had a UPB of $28 billion at the end of March. The division is based in North Highlands, Calif., and was once owned by Wachovia Corp., which sold it to Barclays four years ago for $470 million, a year before the subprime meltdown began. It also has connections to the Money Store, a well-known subprime lender. The British-based Barclays said it expects the transaction to close in the third quarter, subject to customary conditions that include competition clearance and regulatory approval. The publicly traded Ocwen Financial is based in West Palm Beach, Fla.

Barclays Agrees to Sell HomEq to Ocwen Unit

May 28, 2010
Barclays Bank PLC has agreed to sell HomEq, a specialty servicer, to a division of Ocwen Financial for roughly $1.3 billion.

Under terms of the agreement, Ocwen Loan Servicing LLC would pay for the U.S. mortgage servicing business in cash at the completion of the deal, with the amount subject to an "adjustment mechanism." The mechanism is based on the unpaid principal balance of HomEq's servicing portfolio and the value of certain other assets at the completion of the transaction, according to Barclays. HomEq's servicing portfolio had a UPB of $28 billion at the end of March. The division is based in North Highlands, Calif., and was once owned by Wachovia Corp., which sold it to Barclays four years ago for $470 million, a year before the subprime meltdown began. The British-based Barclays said it expects the transaction to close in the third quarter, subject to customary conditions that include competition clearance and regulatory approval. The publicly traded Ocwen Financial is based in West Palm Beach, Fla.

MBA Names New Chief Lobbyist

May 28, 2010
The Mortgage Bankers Association has hired Bill Killmer as senior vice president of legislative and political affairs, effective July 5.

His appointment as chief lobbyist on Capitol Hill comes as the residential finance industry is at a crossroads, poised for the largest changes, perhaps, in its history. Killmer will be directly responsible for the development and implementation of legislative and political strategy for the trade group which has lost several hundred members during the mortgage crisis. He joins MBA from the National Association of Home Builders, where for the past 20 years he worked in a variety of senior positions including chief lobbyist.

REIT Takes Stock Off of NYSE

May 27, 2010
Prime Group Realty Trust, Chicago, has had its Series B Preferred Shares delisted and ceased trading on the New York Stock Exchange, with the last day of trading being May 26, 2010.

This listing was part of its obligations under its July 2005 acquisition by The Lightstone Group and the delisting at that time of its common shares. Prime Group agreed to voluntarily file reports under the Exchange Act for five years after the closing of the acquisition. After the voluntarily delisting of the Series B Preferred Shares from the NYSE, the company expects that they will trade on the Pink Sheets with Pink OTC Markets Inc.

PennyMac Offering $98MM Pool of Loans

May 27, 2010
PennyMac Mortgage Investment Trust is offering a $98 million pool of loans to investors, according to market sources.

One bidder who has seen the offering documents said the Calabasas-based vulture fund is marketing the loans as "mostly performing," adding that investors are allowed to buy different portions of the pool. No other details were available at press time. A PennyMac spokesman said the company generally does not discuss its auctions until after a sale actually takes place. He noted that the publicly traded vulture fund and servicer will consider securitizing some of its assets "as a way of exploring leverage" but could not say anything concrete about the matter. PennyMac also is rolling out a conduit to securitize agency quality loans and eventually jumbo mortgages.

FASB Proposes Mark-to-Market for Portfolio Loans

May 27, 2010
The Financial Accounting Standards Board wants banks and thrifts to apply fair value accounting to the multifamily and single-family loans they hold on their books.

The FASB proposal would require depositories to mark-to-market the value of their loans on a quarterly basis to provide more timely information on anticipated credit losses. The American Bankers Association claims mark-to-market accounting should not be used for assets that are not traded. "If a company's business is not based on mark-to-market, then using it as a basis of accounting can be misleading to users of financial statements," ABA president and chief executive Edward Yingling said. The ABA president also noted it will reduce the availability of long-term loans and increase "pro-cyclicality" in the financial system. The comment period on the FASB exposure draft ends Sept. 30, 2010. Under the proposal, non-public lenders with less than $1 billion in assets would have four years to implement the new accounting rule.

Warehouse Acceptance of E-Mortgages Inevitable

May 26, 2010
The acceptance of e-mortgages by warehouse lenders is inevitable, but banks will have to get more comfortable with the product before it becomes a reality.

According to panelists speaking at the Mortgage Bankers Association's trade show in New York—including Ken Logan, a managing director at Wells Fargo, and Elaine Batlis, senior vice president of Silvergate Bank—warehouse providers must be assured of their "senior" position in an e-mortgage. Such assurances must be perfected in the electronic documents so that banks know they will be repaid. A second issue, they both said, is the "rule of three." Logan explained that there need to be three primary investors (not including any scratch-and-dent investors) willing to buy any mortgage loan that is originated in order to assure the warehouse provider will be repaid. Currently, there are not three loan purchasers willing to buy these loans, he said. He added that consumers also have to get comfortable with the premise. Batlis said acceptance by warehouse providers of e-documents will take place when primary and scratch-and-dent investors come together on the issue.

DocMagic Expands Initial Charges in Ellie Mae Lawsuit

May 26, 2010
DocMagic Inc. has filed an amended complaint against Ellie Mae that expands the initial charges the former company levied against the latter.

The amended complaint was filed in United States District Court (San Francisco) and is Case No. 3:09-CV-4017-MHP. Back in August 2009, DocMagic filed two lawsuits against Ellie Mae: one in Federal Court for antitrust violations, intentional interference with contractual relationships, interference with prospective economic advantage and unfair competition; and one in San Francisco Superior Court seeking a permanent injunction against Ellie Mae arising out of Ellie Mae's alleged misuse of DocMagic's proprietary information in connection with the Ellie Mae Docs system. At the urging of the federal court judge, the parties have since agreed to consolidate the state case claims into federal court and to dismiss the state case without prejudice. The amended complaint sets forth 14 federal and state claims, expanding on the allegations and claims initially made against Ellie Mae. The amendments include expansion of antitrust allegations and claims, including explanation of market definitions, monopoly leveraging, attempted monopolization, refusal to deal, and denial of access to essential facility (all federal violations of Section 2 of the Sherman Act). Charges of unfair competition and false advertising; copyright infringement; and trade secret misappropriation were also included in the amended complaint. DocMagic is also seeking a declaratory judgment that DocMagic did not infringe upon Ellie Mae's copyrights and that Ellie Mae has no claim to the ownership of its client's loan data. When asked to respond to the amended complaint advancing the lawsuit Ellie Mae said that it had no comment.

Vendor Offers Quality Control Product

May 25, 2010
Valligent, a provider of appraisal review services, has introduced V-Cert, a new product which moves the quality control function to the front of the origination process.

Jeremy McCarty, chief executive and chief valuation strategist of the Roseville, Calif.-based company, said one of the reasons he is attending the Mortgage Bankers Association trade show in New York is to meet with Wall Street investors and rating agencies to get them familiar with this concept. Issues over collateral are a major source for the lack of confidence in the market from an investor standpoint, he said. Doing the review before the loan closes will let secondary market purchasers know that if they buy a loan that eventually goes bad, at least the valuation was done properly. The V-Cert review includes an USPAP-compliant desk review, a fraud and foreclosure risk analysis and a value determination.

Florida Bottom Feeder Stumbles in Condo Deal

May 25, 2010
Not all bottom feeders are successful, at least not in the downtrodden Miami market.

Case in point: A bulk buyer who was unable to resell 42 of the 56 units purchased at deep discount in the Altos de Miami condominium in Miami's Little Havana neighborhood is taking the unusual step of selling 37 of the apartments at auction. The asking price is $58 a square foot, or $11 a foot less than what the investor paid 15 months ago, according to Condo Ventures, a Bal Harbour-based consultant firm. "This is a first for the South Florida bulk market since this latest condo crash," said consultant Peter Zalewski. At the same time, however, the bulk buyer of the failed 60-unit Vista Del Rio just west of downtown has sold the eight-story property to a Panamanian group at a 27% premium. The trade represents the 18th sale of a property from one investor to another at a higher price. Despite the floundering Little Havana investment, Zalewski sees the Vista Del Rio transaction as a sign the market for new condominiums is beginning to stabilize, at least in Miami-Dade County.

GNMA Chief Wants Agency to Be a 'Solution' for Lenders

May 25, 2010
Marking his 90th day on the job as president of the Government National Mortgage Association, Theodore Tozer said his goal is to "do a better job managing the Ginnie Mae brand on Wall Street."

Speaking at the MBA trade show, Tozer said, "We're here to make things happen, not just as a participant, but as a major plus" to the market. Fresh from a long career at the now-defunct National City Mortgage, the Ginnie Mae president told NMN he is trying to tweak the agency's long-running programs so they can become "major solutions" for lenders. A case in point are the pending program changes that will allow lenders to securitize a single loan as part of Ginnie Mae's multi-issuer pools and permit the agency to issue Ginnie Mae II pools on a daily rather than a monthly basis. The changes have been on Tozer's wish list since his days at NatCity, and are intended to give lenders of all sizes a substantial boost in liquidity. "Both changes make a lot of sense," Tozer said. "It's the still the same program. We just took a program that lenders didn't think much about and made it better." The Ginnie Mae president said he's heard a lot of "really positive" feedback from lenders who plan to use the changes to clean up their pipelines and turn over their loans more quickly. "People who understand the issue are already positive about it, and once the changes are up and running, people will be even more so," he said. The changes will take effect with Ginnie Mae's July's issuances.

Employment Recovery a Key Issue for Lenders

May 25, 2010
If this is supposed to be an employment-led recovery, then it's going to be a long, slow slog from the bottom, according to the Mortgage Bankers Association's chief economist.

Though the recession was "clearly over" last summer, Jay Brinkmanm said at the MBA's trade show, the employment picture is anything but rosy. The unemployment rate nationally has been pegged at a little under 10% by Uncle Sam, but Brinkmann said the true rate, or what he calls the "total" unemployment rate, is up around the 17% level nationally, and even higher in a dozen states. The "total" unemployment rate includes not just those actively looking for work but also people who are in and out of the workforce--discouraged people who are no longer looking, those who were forced to take part-time positions while seeking full-time jobs, and others who are only marginally attached to the work force. Not surprisingly, Michigan has the nation's highest total unemployment rate at 22.9%. But in something of surprise, California, the nation's largest housing market, is next at 22.9%. Nevada has a 21.6% total out-of-work rate, Florida is at 20.4% and North Carolina is at 18.2%. All are considered key housing markets. Real unemployment is "holding back the real estate market's recovery," Brinkmann said in presenting his outlook for 2010 and beyond. The MBA economist also noted that the number of unemployed workers who haven't had a paycheck for more than six months--"Almost a permanent kind of unemployed"--is rapidly approaching 50%. And in that regard, he added, "We are approaching absolutely uncharted territory."

Distressed Loan Auctions Finally Boom

May 25, 2010
The sale of distressed assets has become one of the largest segments of the mortgage business, panelists at the Mortgage Bankers Association's National Secondary Market Conference in New York agreed.

John Daurio, chairman of Kondaur Capital, Orange, Calif., told a standing room only session that since March 31, roughly $10 billion worth of nonperforming mortgages has been put up for sale, "more than we've seen cumulatively over the last couple of years." Only 30% of that total has actually changed hands because many sellers are simply "feeling" the market, he added. "But even at that, far more has traded than in previous years." And a lot more sales can be expected in the future, according to James Lockhart, the former director of the Federal Housing Finance Agency, who is now vice chairman at WL Ross & Co., New York, a firm which has built a $1.5 billion mortgage recovery fund to buy bad loans on a bulk basis. "We still have a year or so to go to work our way through" the huge number of distressed assets, Lockhart ventured. He said the "best thing that can happen going forward" is to move bad loans into the hands of investors who are willing to work them out one way or another. "We need to clear the market," he said. "Too many mortgages are still sitting on balance sheets in need of being resolved." Daurio said that while Kondaur's goal is to keep people in their homes, only 10% are able to remain. The majority end up taking "a significant amount of cash" in return for handing over the deeds to their homes, while 20% wind up in foreclosure because they have either skipped and can't be found or the junior lien holder is being unreasonable.

Yield on 10-Year Treasury Approaches 52-Week Low

May 25, 2010
The yield on the benchmark 10-year Treasury dove Tuesday morning, coming within a hair of its 52-week low of 3.1%.

By early afternoon the yield had climbed to 3.14%. (The high for year is 4.01 %.) The declining yield did not escape the attention of executives attending the Mortgage Bankers Association's trade show in New York, including chief economist Jay Brinkmann. "This has been a somewhat tough year to forecast," said Brinkmann, referencing previous expectations for relatively higher rates this year. Securitized mortgage yields did not fall as fast as Treasury yields during the flight to quality Tuesday morning but the drop was still fairly significant, Michael Fratantoni, vice president of research and economics at the MBA, told National Mortgage News.

New York Congresswoman Warns About 'Skin in the Game'

May 24, 2010
Rep. Carolyn Maloney, who represents part of New York City, voiced her support for mortgage bankers having "skin the game" but not a "one size fits all approach."

Speaking at the MBA trade show in New York, Maloney noted that some commercial property values have decreased by at least 40% from their peak, voicing her concern about a lack of liquidity in the commercial mortgage market and underwater mortgages. The Democrat from the East Side of Manhattan said she sees a glimmer of hope in the market due to improving GDP numbers. More than 600 attendees are at the MBA show, up 200% from last year. The trade group recently reported improving commercial loan volumes. "With 8.4 million jobs lost during the Great Recession, it will take time while our economy recovers and the CMBS market returns," Maloney told lenders.

MBA: Refi 'Boomlet' on the Way?

May 24, 2010
The Mortgage Bankers Association's chief economist is hopeful that last week's run-up in the Libor index could be the spark needed to light a fire under the refinancing sector.

For the most part, borrowers with Libor-based adjustable-rate mortgages have been reluctant to trade in their loans for safer fixed-rate products because the interest rate on their ARMs is less than that currently available for fixed loans, even at the fully indexed rate. But now that the Libor benchmark is moving up, they could change their minds, Jay Brinkmann told National Mortgage News at the MBA's National Secondary Market Conference in New York. It's too early to tell whether the hoped-for increase in refis will be a "boomlet" or a "wavelet," Brinkmann said. But he reported that several MBA members told him their phones were "ringing off the hooks" Thursday and Friday of last week from callers who were worried that their next rate adjustments could drive their payments higher than if they were to refinance. The economist said he is watching the situation carefully. Meanwhile, on Monday the yield on the 10-year Treasury bond held steady at about 3.2%.

California Realtors Want to Ban Deficiency Judgments

May 20, 2010
The California Association of Realtors is trying to drum up support for a bill in the state legislature that would ban deficiency judgments on refinancings.

Most states place some limit on lenders' ability to go after borrowers if the sale of a home does not satisfy the entire mortgage balance. In California, for example, the lender cannot pursue a deficiency judgment if the loan was taken out to buy the home. But the Golden State does not currently extend that protection to refis. And most defaulted borrowers "have no idea they are personally liable" for the full value of the mortgage even after the bank has repossessed their property, Steve Goddard, the real estate agent group's president, said in a press release issued Tuesday. Of course, the trade group may have ulterior motives for backing the bill sponsored by Sen. Ellen Corbett, a Democrat from San Leandro. After all, the prospect of a deficiency judgment hanging over their heads might deter homeowners from giving up their homes through a short sale or strategic default. And right now, distressed sales make up a sizable chunk of the market. Foreclosure sales alone accounted for 36.4% of California home resales in April (though this figure was down from an all-time high of 56.7% in February 2009), according to MDA DataQuick. The trade group did not return a call seeking comment by press time. Deficiency judgments in residential foreclosures are rare. Most foreclosures in California occur under a deed of trust (not a judicial foreclosure), in which there is no liability for a deficiency, lawyers said. But if that were to change and lenders became more aggressive about collecting leftover debts, deficiency judgments could pose a threat to agents' commissions as well as borrowers' peace of mind.

Industry Makes Plea on Overtime to Labor Department

May 20, 2010
Nine mortgage industry groups along with the U.S. Chamber of Commerce are urging the Department of Labor to reconsider and withdraw its recent ruling that requires residential lenders to pay overtime to certain loan officers.

"The interpretation constitutes a sharp break from existing law that will result in both very considerable costs to, and adverse effects on, employers and employees alike," the industry groups say in a letter to DOL's director of Wage and Hour Division. On March 24, DOL issued an interpretation that requires lenders to pay overtime to retail loan officers that work in an office. There are currently 110,000 retail mortgage loan officers and they are "well compensated by commissions and frequently work irregular hours," the May 19 letter states. The trade groups contend DOL made the new interpretation without notice and it represents a "sharp break" with the department's 2004 interpretation. "The interpretation should be withdrawn and the department should embark on a new rulemaking with notice and comment if it wishes to change policy or implement new requirements in this area," the joint letter says.

Purchase Applications Hit 13-Year Low

May 19, 2010
Loan applications to buy new or existing homes plummeted 27% last week, reaching a 13-year low, according to new figures released by the Mortgage Bankers Association.

The trade group noted that purchase applications have declined almost 20% over the past month despite interest rates on fixed-rate loans averaging less than 5%. The trade group tracks applications using an index it created back in 1990. In a statement MBA vice president of research and economics Michael Fratanoni said the results indicate that the expiring $8,000 federal tax credit "pulled sales into April at the expense of the remainder of the spring homebuying season." Although purchase apps were pummeled for the week ending May 14, the index that tracks refinance applications increased 14.5% from the previous week. Housing and mortgage economists believe total loan production will range from a low of $1 trillion to a high of $1.4 trillion this year. MBA's forecast is at the lower end of those estimates. Over the past two quarters refis have accounted for about 60% of all originations.

Residential Delinquencies Jump, $1 Trillion in Loans Past Due

May 19, 2010
Residential delinquencies climbed to yet another new high at March 31 with 10.06% of all mortgagors behind on their payments, according to new figures released by the Mortgage Bankers Association.

According to calculations made by National Mortgage News using MBA's findings, that means $1 trillion in both first and second liens are now in arrears. Compared to the same period a year ago, late payments rose 10%. Late payments worsened in all delinquency categories, but there was a slight respite in the "seriously delinquent" bucket which includes loans that are 90 days or more late or in foreclosure. The trade group found that 9.54% of all mortgages were seriously delinquent at March 31, a slight improvement from the 9.67% number recorded at yearend. At March 31, 2009, 7.24% of all loans were seriously delinquent.

FNIS Says Buyout Talks Have Ended

May 18, 2010
Fidelity National Information Services, which manages the largest residential servicing bureau in the nation, confirmed that buyout talks with Blackstone Group and two of its partners have ended.

A leveraged buyout for the payment processing company could have reached $15 billion. The consortium bidding for FNIS pulled out because of a disagreement over price, according to combined press reports. FNIS' servicing platform has a market share approaching 70%, according to past research conducted by National Mortgage News and MortgageStats.com. The publicly traded FNIS, which was spun off by Fidelity National Financial, the title insurance giant, saw its share price fall 5% Tuesday to $27.50.

Rep. Udall Offers 'Free' Credit Score Amendment

May 18, 2010
In denying a mortgage application, lenders will have to show the borrower their credit score under an amendment approved by the Senate and attached to the Wall Street Reform bill.

Sen. Mark Udall, D-Colo., said his amendment will "empower consumers" by giving them immediate access to their credit score for free. "If you are turned down for credit because you have applied for a loan or you have a higher loan rate, you will have access to your credit score," Sen. Udall said. The Senate approved the Udall amendment Monday evening by a voice vote. The Senate also approved an amendment preserving the Federal Trade Commission's existing consumer protection mandate. The amendment by Sen. John Rockefeller (D-W.Va.) aims at getting the FTC and the new Consumer Financial Protection Bureau created by the reform bill (S. 3217) to work together. "The amendment directs the FTC and the new bureau to enter into a memorandum of understanding and coordinate their regulatory efforts," Rockefeller said. "The bottom line is that businesses will not be subject to multiple layers of regulation and rules," he added.

CitiMortgage Exits Jumbo Wholesale

May 18, 2010
CitiMortgage, a top ten player in wholesale lending, will no longer fund non-agency jumbo mortgages through loan brokers, National Mortgage News has learned.

A New York area broker that has used the bank for years said he received notification on Monday and a spokeswoman for Citi confirmed that "we are not currently offering jumbos through the broker channel." The bank-owned lender, however, will continue funding jumbos through its retail channel. The spokesman said CitiMortgage offers "attractively priced" jumbo mortgages to "our highly credit-worthy customers, as we anticipate holding these loans on our balance sheet." CitiMortgage is based in O'Fallon, Mo., but its parent bank is headquartered in New York, one of the most expensive housing markets in the nation, and home to many financial service executives who live in New Jersey, New York, and Connecticut where home prices can easily exceed the GSE jumbo limit of $729,750. Many jumbo providers today require down payments of at least 20%. Liquidity in the market is beginning to loosen up somewhat thanks to a recent jumbo securitization done by Redwood Trust, a publicly traded REIT.

U.K. Purchase Volumes Rises, but Refis Fall

May 17, 2010
In the United Kingdom, purchase mortgages have continued their year-to-year rise for the ninth consecutive month, according to a London-based industry trade group.

However, refinancing volume continued to fall on a year-over-year basis for the 23rd consecutive month, data from the Council of Mortgage Lenders, London, show. The number of purchase loans increased by 45% year-over-year and the value of these loans jumped by 62% in March while the value and number of refinance loans was down 29% year-to-year. The 45,000 purchase loans in March (worth £6.3 billion or $9.1 billion), were up 25% in terms of the number of loans (24% in value) from February and the 28,000 refinance loans (worth £3.5 billion or $5.0 billion) were up 23% in volume (21% in value).

FHA Chief: Fix Would Add $330MM a Month to Fund

May 11, 2010
Returning to his Realtor roots, Federal Housing Administration commissioner David Stevens called on the nation's largest trade group of real estate professionals to storm Capitol Hill in support of legislation to reform the government's housing insurance agency.

"The FHA is at risk," Stevens told NAR's midyear legislative meeting in Washington. The FHA chief, who came to the agency from Long & Foster Realtors, one of the largest independent real estate companies in the nation, said the government cannot continue to prop up the housing market "unless we do something to shore up" FHA's capital reserves. Currently, H.R. 5072, which would allow the FHA to more closely mirror how private sector mortgage insurers price their products and hold lenders accountable for the loans they originate, has been cleared by the House Financial Services Committee but has not yet been scheduled for floor action. Commissioner Stevens called it a "critical bill" because otherwise FHA cannot continue to be the cornerstone to the housing market it has been for the past 30 years. If the legislative changes Stevens wants are enacted, the estimated value to the FHA insurance fund would be some $330 million a month. He said the fixes would help the agency replenish its capital reserves even faster than if this authority was provided through the annual Congressional approval process.

Redwood Readying Second Jumbo MBS Deal

May 11, 2010
Redwood Trust Inc., which recently came to market with a jumbo MBS deal, is already working on a follow-up bond offering, according to industry officials familiar with the matter.

The publicly traded REIT had no comment on its plans. One investor noted that "they already have the loans in place." And a source close to the firm noted that the Mill Valley, Calif., company "is interested in creating more credit pieces or subs to own or invest in." Last month Redwood securitized $238 million of jumbo prime residential mortgage loans through its Sequoia securitization program. It was the first non-government sponsored residential jumbo bond issued in almost two years. Many of the loans collateralizing the security came from CitiMortgage. (Citi's parent firm was one of the bond's underwriters.) Meanwhile, Redwood on Monday launched a flow purchase program where it will acquire prime residential mortgage loans from "banking companies and other selected originators." It noted that the effort "is currently operating with a small number of mortgage loan originators that have national platforms."

First Am Clears Hurdle For Division

May 10, 2010
First American Corp., Santa Ana, Calif., has received consents from more than half of the holders of its 7.55% senior debentures due 2028 to amend the indenture, clearing another hurdle for the division of its information solutions and financial services businesses into separately traded public companies.

The company needed the approval to make the change, as well as the previously received approval of holders of two other debt issues to make a similar change, so the split would not conflict with the terms of those indentures. The separation remains scheduled to take place on June 1. First American extended its tender offers to purchase the 7.55% senior debentures, its 5.70% senior notes due 2014, its 8.50% capital securities due 2012 and the 7.55% trust certificates issued by the Preferred Plus Trust Series Far-1 due 2028 to May 12 at 5 p.m., Eastern Time. Over 99% of the 5.70% senior notes have been tendered for purchase so far, along with 65% of the capital securities, 40% of the 7.55% senior debentures and 48% of the Preferred Plus certificates.

Analytics Firm Hire RMBS Trader

May 6, 2010
BlackBox Logic, a mortgage analytics firm that provides loan-level collateral data for non-agency residential mortgage-backed securities, has hired former trader Cory Lambert as a senior analyst.

Lambert joins BlackBox from Braddock Financial where he worked on the non-agency RMBS desk. "Cory's trading desk experience will be invaluable as we deliver customized loan-level data solutions for a wide variety of mortgage market participants," said BlackBox CEO Larry Barnett in a statement. In his new role, Lambert will build collateral analytics using BBx Data, a data service offered by BlackBox. The analytics firm was founded in 2007. CEO Barnett is a former managing director at Appix, where he was responsible for fixed income trading. He also spent 12 years at Fannie Mae, where he was vice president for secondary mortgage trading operations.

Banks, OCC Face Uphill Fight Over Preemption

May 4, 2010
Large banks have repeatedly prevailed in battles to preserve federal preemption in Congress and the courts, but that victory string is likely to be broken by the regulatory reform bill being debated in the Senate this week.

With so many other provisions requiring the large banks' attention, such as a crackdown on derivatives and a ban on proprietary trading, most of them will lack the time or attention to fight curbs on federal preemption. Without their help, the Office of the Comptroller of the Currency, which has been quietly pushing for changes in the bill, is not expected to prevail. "The large banks are playing more defense than they thought they would," said Raj Date, the chairman and executive director of the Cambridge Winter Center for Financial Institutions Policy. "That means the OCC won't have as much help from its national-bank allies." Though the Senate bill would not eliminate preemption, it would force the OCC to jump through several legal hoops before declaring that national banks need not comply with a state law. These include proving that an existing federal regulation sufficiently addresses the issue a state was trying to rectify. Under other circumstances, this would probably be a top priority of the industry's trade groups and the largest banks. But they are focused on other parts of the bill they view as more important, including the so-called Volcker Rule, which would ban proprietary trading, and provisions to regulate derivatives.

PennyMac Posts 1Q Profit, Provides Guidance on Conduit

May 4, 2010
Mortgage vulture fund PennyMac Mortgage Investment Trust earned $1.3 million in the first quarter and reported that it's beginning to see more activity in the nonperforming loan market.

A publicly traded REIT, the firm said it bought five mostly nonperforming loan portfolios during the quarter. The pools were valued at $115 million based on unpaid principal balances of $208 million. The firm said in early April it agreed to purchase a $141 million pool of nonperformers for $71 million. Company CEO Stan Kurland said, "Market activity for non-performing whole loans accelerated throughout the first quarter, and continues to accelerate into the second quarter of 2010." Meanwhile, the company said it is beginning to gear up its lending conduit by purchasing loans from small and mid-sized banks. The product is then delivered to Fannie Mae and Freddie Mac for securitization. A spokesman noted that, "We're looking at prime agency paper" but added that jumbo lending will be a "natural progression" for the firm.

Obama Bank Tax Has Implications for Mortgages

May 4, 2010
The Obama administration's bank tax proposal could curtail borrowings from the Federal Home Loan Bank system by large depositories and reduce mortgage liquidity for member institutions, according to the American Bankers Association.

The administration's proposal would impose a tax on financial institutions with more than $50 billion in assets --but only for firms that were eligible for emergency assistance programs such as the Troubled Asset Relief Program. ABA chief economist James Chessen told the Senate Finance Committee the 15 basis point tax on non-deposit liabilities (including FHLBank advances) would increase the costs of large banks borrowing from the system, and reduce demand for FHLB advances. This has "important implications for the financial stability" of the 12 regional banks and "could lead to a downward spiral" with fewer advances being made, he warned. The trade group is concerned that members will reduce their holdings of the FHLB stock required to borrow, thus shrinking the system and its ability to provide liquidity to all members. Treasury secretary Timothy Geithner said the bank tax could raise $117 billion over 10 years to cover the government's cost of the financial crisis. He stressed the tax will not affect 99% of depository institutions.

Capstead Warns About Rising Prepayments, Re: GSE Buyouts

April 30, 2010
Capstead Mortgage Corp., a REIT that invests in GSE-backed MBS, is warning that higher prepayments will hit the market in the second and third quarters because of efforts by Fannie Mae to "buy out" delinquent loans from MBS pools.

Capstead also believes that government-sponsored loan modifications will play a role in faster prepayment speeds on the securities it buys, possibly putting its earnings under some pressure. Capstead earned $40 million in the first quarter, a slight decline from the same period a year ago. Fannie began its buyouts of delinquent loans from MBS pools in March and will continue the effort in the coming months. By purchasing nonperforming loans out of pools, the GSE avoids forwarding those payments to the ultimate bondholder--a move that can save Fannie money but reduces the bond's yield to the investor. Capstead is publicly traded and monitors prepayments closely.

First American Spin-Off to Take CoreLogic Name

April 29, 2010
When the Information Solutions Group of First American Corp. becomes a separately traded public company, it will take the name CoreLogic and trade on the New York Stock Exchange under the symbol CLGX.

The spin-off is targeted for June 1. The title company will be part of First American Financial Group, which will retain the FAF ticker symbol. The new CoreLogic will encompass more than 20 different business lines, making it larger and more diverse than the entity currently known as First American CoreLogic. Meanwhile, two sets of First American bondholders have approved debt tender offers and consent solicitations. The approvals by those who hold the 5.7% senior notes due 2014 and the 8.5% capital securities due 2012 expressly affirm the spin-off transaction. A third solicitation for the holders of the 7.55% senior debentures due 2028 remains in progress, with 43% tendered so far.

MBA Expecting a Flood of Home Price Listings

April 28, 2010
With home prices stabilizing, the market may soon be flooded with new listings from sellers that have been waiting for such an improvement, according to the Mortgage Bankers Association.

"There will be a flood of listings," predicted MBA vice president of research Michael Frantantoni. "We will have a rather volatile, sort of topsy-turvy market for the next couple of years." Speaking at an MBA trade show, Frantantoni noted that both owner (2.6%) and rental vacancy rates (10.6%) are increasing. He said this trend suggests "we are losing households." MBA anticipates that home prices will be flat for the rest of the year. The trade group anticipates that the Federal Reserve will not start hiking short-term rates until December of this year, at the earliest. But Frantantoni fears that even with the economy improving, consumers may not spend much. "Their outlook on spending, saving and risk taking may have changed," he told the audience. As for the job market, MBA sees unemployment falling steadily to 7.5% by 2012, but a large portion of that improvement may come in the hiring of temporary workers, he said. "Roughly one-quarter to one-third of this audience is hiring temps," Frantantoni said. "We're not anywhere close to a peak. Businesses are seeing an increase in demand for their services and they need to staff up as a result, or plug the hole while they wait to see if this demand will persist."

FBI Swamped by Mortgage Fraud Cases

April 27, 2010
The Federal Bureau of Investigation is currently juggling 3,000 open mortgage fraud cases, but is facing challenges managing its resources.

Speakers at an industry trade show on mortgage fraud told attendees that rather than spend more money to prosecute fraud, government agencies must utilize their available resources to be as smart and as effective as possible. Ninety-three U.S. attorneys across the nation are working to determine enforcement efforts to fit the needs of individual cases in local communities, said John D. Arterberry, executive deputy and fraud chief of the Justice Department's criminal division. "Each U.S. attorney has the opportunity to tailor his or her enforcement," he said. "The needs in the Northern District of Illinois are going to be different than Fargo, N.D., compared to what is happening in Phoenix or Washington, D.C.," said Arterberry. Speaking at the same show, which was put together by the Mortgage Bankers Association, FHA officials said they are spending an increasing amount of their time focusing on risk while carefully reviewing early payment defaults for signs of fraud. Vicki Bott, deputy assistant secretary for single-family housing at FHA, said the agency is stepping up enforcement through its Mortgagee Review Board. "We are not afraid to take action on lenders who are doing fraudulent activity," she said. "We are looking at how principles of lenders jump around. We are really beefing up our process around loan-level review. We are bringing delinquencies into our cycle of reviewing."

Signs of Improvement in SRP Pricing

April 26, 2010
With the credit crisis-including a dearth of warehouse financing-beginning to ease, there are new signs that the buyers of freshly originated mortgages are becoming less stingy on what they pay for loans sold "servicing released."

According to Glen Corso, managing director of the Community Mortgage Banking Project, a month ago servicing-released premium prices hit an all-time low. But lately, prices have improved. His nonbank members are reporting an improvement due to rising rates. "One member told me that the improvement came at a time when the increase in mortgage rates from below 5% to above 5% took place," said Mr. Corso, who heads up the fledgling trade group. (For more details see the Monday print edition of National Mortgage News.)

Servicer of Private Notes Launches NPL Trading Site

April 23, 2010
FCI Lender Services of California, the largest servicer of privately held real estate notes, has launched a new online trading platform designed to match sellers of distressed mortgages with buyers.

Company EVP Gordon Albrecht said the site -- dubbed FCI Exchange LLC -- is now operational. "Right now we have 2,500 loans, with about $470 million in principal up there," he said. FCI joins such existing online platforms as BigBidder.com and LoanExchange.com as sites where buyers can hunt for product. "Ours is a trading platform, not an auction site," Albrecht cautioned. "We're the first trading platform run by an actual servicer of loans." Websites that cater to loan trading -- be it nonperforming notes or not -- tend to be marketing tools as opposed to a place where trades actually take place. "The problem with most of these websites is that after you make a bid you need a lot of handholding and that occurs offline, not online," said one investor who has used both LoanExchange and BigBidder. FCI said it will not charge firms to list their loans and will only get paid if an NPL trades, a strategy used by the other two.

Industry Still Pressing for Risk Retention Changes

April 23, 2010
The Senate is moving closer to voting on a financial services regulatory reform bill and industry groups are pressing hard on the risk retention issue to get a qualified mortgage exemption.

The current version of the bill requires securitizers to retain up to 5% of the credit risk with some of that risk shared with lenders. Industry groups are urging Senate Banking Committee leaders to give regulators more flexibility in determining risk retention requirements on different mortgage types. But they also want certain loans to be totally exempt from risk retention. "To ensure a liquid and efficient market for core mortgages, we think it is imperative that a mandatory 'zero' risk category be created for 'qualified mortgages' -- those that meet minimum standards for safely underwritten residential mortgages," says a letter penned by five trade groups: The Financial Services Roundtable, Mortgage Bankers Association, National Association of Home Builders, Community Mortgage Lenders of America and Community Mortgage Banking Project. In a separate letter, the MBA warned that the future of small independent mortgage bankers would be threatened if they are forced to retain a percentage of the loan amount on their books. Without a qualified mortgage exemption, these small local lenders might have to shut their doors and between 45,000 to 50,000 jobs could be at risk, MBA senior vice president Steve O'Connor told National Mortgage News. Final changes to the bill are expected to be worked out this weekend as the Senate prepares for a test vote on Monday evening.

New York Bank Jumps into Warehouse Arena

April 22, 2010
Sterling Bancorp of New York is dipping its toe in the warehouse lending business, concentrating-not surprisingly- on Fannie Mae, Freddie Mac, and FHA-backed loans.

The publicly traded commercial bank said it will focus on making lines of credit to only "established mortgage banking firms." Warehouse industry veteran Gary Timmerman has been hired to head the effort for Sterling. "Warehouse lending has historically been a successful product for a number of banks," said Sterling Bancorp CEO Louis Cappelli. "As the housing market has now begun to show signs of stabilizing, we see an opportunity to apply Sterling's capital, experience and market knowledge to fill this financing need and generate solid returns on our investment in the warehouse business." Over the past two quarters a handful of medium sized banks has entered the warehouse market, but at least one large player-PNC's National City warehouse group-is preparing to leave the business by this summer.

PennyMac Names B of A Official to Servicing Post

April 21, 2010
The Private National Mortgage Acceptance Co. has named former Bank of America executive Steve Bailey as its chief servicing officer, effective immediately.

In his new role, Bailey will oversee all mortgage servicing activities at PennyMac Loan Services, the servicing arm of PNMAC and its publicly traded vulture fund parent, Penny Mac Mortgage Investment Trust, Calabasas, Calif. At B of A he oversaw about $2 trillion in receivables. At Penny Mac he will oversee about $2 billion, a figure the company hopes to grow. However, the company hopes to enter the origination market shortly through a new conduit operation. To date, the firm has said little publicly about its conduit plans.

KBW Previews MI, Title Earnings

April 14, 2010
Prior to the mortgage insurance industry reporting its first quarter earnings, Keefe Bruyette & Woods has increased its price target on the four publicly traded companies' common stock, although it did not increase its earnings outlook.

According to analyst Nathaniel Otis, "In our opinion, within the last several weeks, the Obama Administration has significantly ratcheted up efforts to prevent lenders from foreclosing on at-risk borrowers. In addition, delinquency trends thus far in 2010 indicate a better-than-expected seasonal improvement for first-quarter 2010. Although any positive impact from (the) Home Affordable Modification Program may be pushed out another quarter or two, we believe the result could be a more sustained positive stretch of quarterly reporting." The risks include changes to HAMP and to the Federal Housing Administration programs aren't successful. Otis said KBW is remaining neutral for the companies in the space, preferring to revisit its outlook after the earnings reports. KBW's price target on MGIC went from $7 to $12, for Old Republic from $11 to $14, for PMI from $3 to $6 and from Radian from $9 to $18. KBW also issued a preview on title company earnings. Otis said, "While origination expectations appear much more rational this year, reflecting the reality that the real estate market is in a more stable position, the bias is slightly negative given weather issues and compliance with new RESPA rules. This is in stark comparison to last year at this time, when low rates and increased refi volumes fostered optimism. With this in mind, we are reducing our industry estimates for (the first quarter) to factor in these trends." Fidelity National Financial's earnings per share estimate for the first quarter was cut from $0.16 to $0.11; for First American it was cut from $0.23 to $0.20; for Stewart it was cut from a loss of $0.13 to a loss of $0.45; and for Investors Title Co., it was cut from $0.34 to $0.21.

Mudd's Firm Buys ResCap's European Ops

April 13, 2010
GMAC Financial Services has agreed to sell its European mortgage assets-including performing and nonperforming loans-to Fortress Investment Group, LLC, a company managed by former Fannie Mae CEO Daniel Mudd.

No price was disclosed. A spokesman for GMAC said Fortress will take control of active lending units of Residential Capital Corp. in Germany, the Netherlands and the United Kingdom. At press time no information was available on the production or servicing volume of these divisions. Fortress is also taking title to 6,000 whole loans of GMAC/ResCap but no dollar amount was provided. The sale of its European assets is the latest move by GMAC to divest its exposure in residential finance in favor of auto lending. Its U.S. mortgage operation is currently on the auction block, though it remains to be seen who might buy it. Mudd currently serves as CEO of Fortress, a publicly traded equity fund and investment manager. He was fired by the government as CEO of Fannie Mae when it took control of the GSE in the fall of 2008. In a statement, GMAC said, "The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance."

First American Gets Financing for Spin Off

April 13, 2010
First American Corp., Santa Ana, Calif., has received an $850 million credit facility that will finance the operations of its Information Solutions Group once the unit is split off into a separate publicly traded company.

In addition, First American Financial Corp., the company that will be the parent of its title insurance business, has an agreement in place to receive a $400 million line of credit concurrent with the split which will occur June 1. The ISG credit facility consists of a $500 million secured revolving credit line due in 2012, and a $350 million term loan due in 2016. It is secured by substantially all of the group's assets. The First American credit facility is partially secured and due in 2013. First American also commenced a cash tender offer for all $350 million of its outstanding public debt securities. It is soliciting consents from debt holders to amend the indenture agreement to expressly affirm that the split does not conflict with the terms of the indentures. First American will pay an early consent fee of 100 basis points over par for holders of the 5.7% senior notes due 2014 and the 8.5% capital securities due 2012 if they are tendered by 5 p.m. Eastern time on April 23, 2010.

More Details Emerge on Redwood's Jumbo MBS Plans

April 13, 2010
Not only has Redwood Trust purchased jumbo loans for a planned nonagency MBS, but is actively shopping the mortgages to rating agencies, according to officials familiar with the company's plans.

The publicly traded REIT has been working on reviving its "Sequoia" jumbo MBS program for several months. "A year ago there were no buyers for an AAA-rated jumbo MBS," said one mortgage official familiar with Redwood's efforts, "but the situation has reversed." Sources say Mill Valley, Calif.-based Redwood has purchased at least $100 million of jumbo loans with hopes of securitizing them. The REIT declined to comment but in a recent company report said it is working "closely with credit rating agencies to model a safer and more straightforward securitization structure that will promote investor and public confidence in a time of higher scrutiny and uncertainty." Except for "re-securitizations" there have been no new jumbo MBS issued in about two years.

GMAC/ResCap Agrees to Sell European Mortgage Assets to Fortress

April 12, 2010
GMAC Financial Services has agreed to sell its European mortgage assets -- including performing and nonperforming loans -- to Fortress Investment Group, LLC, a company managed by former Fannie Mae CEO Daniel Mudd.

No price was disclosed. A spokesman for GMAC said Fortress will take control of active lending units of Residential Capital Corp. in Germany, the Netherlands, and the United Kingdom. At press time no information was available on the production or servicing volume of these divisions. Fortress is also taking title to 6,000 whole loans of GMAC/ResCap but no dollar amount was provided. The sale of its European assets is the latest move by GMAC to divest its exposure in residential finance in favor of auto lending. Its U.S. mortgage operation is currently on the auction block, though it remains to be seen who might buy it. Mr. Mudd currently serves as CEO of Fortress, a publicly traded equity fund and investment manager. He was fired by the government as CEO of Fannie Mae when it took control of the GSE in the fall of 2008. In a statement, GMAC said, "The agreements to sell the European mortgage assets and businesses are key steps toward our objective of reducing the ongoing exposure for GMAC from the legacy mortgage operation. This is a significant achievement and will contribute in putting GMAC on a path toward improved performance."

Servicers Need to Take Loss Mitigation to the Next Level

April 9, 2010
In dealing with billions of dollars worth of troubled homes, residential servicers need to hire trained engineers, statisticians, and even scientists to enhance the way they approach loss mitigation.

Speaking at SourceMedia's 4th Annual Mortgage Servicing Conference, Ocwen Financial Corp. president Ron Faris told attendees, "The problem is that many of us are still using basically the same type of loss mitigation technology we did 20 years ago. We haven't had our industrial revolution yet. We're still craftsmen who hire others to carry out our trade." He noted that Ocwen, one of the nation's top ranked subservicers, has reached out and hired professionals in behavioral science and psychology. The company also has a consumer psychology department headed by a Ph.D. in psychology, he told the audience. "Their focus is on taking what they have learned to help us determine how to approach our customer," he said. "Now it's time to take it to another level." In order for the borrower to get the best payment plan or modification, it does not mean the servicer has to give them a modification at 31% DTI or a modification at the maximum amount the servicer thinks they can afford, for example. Servicers need to have models that optimize the resolution for each individual borrower, he said. "If you give them a lower payment than what they can afford today, you will reduce the redefault probability across a lot of loans, and the net present value to the investor is significantly better than pushing the limit right upfront."

Trading Platform for MH ABS Created

April 8, 2010
A marketplace for illiquid asset-backed securities will include manufactured housing ABS, the company that operates the exchange said.

SecondMarket, which already has platforms to trade residential and commercial mortgage-backed securities, has created the ABS platform based on the "significant interest" from its buyer and seller bases. "Over the past several months, we have seen significant buy- and sell-side interest from our market participants in a variety of securities across multiple sectors," said Elton Wells, head of structured products at SecondMarket. "The increased demand and completion of numerous ABS deals prompted us to officially launch this new market."

AG Shuts Two Firms Engaged in Foreclosure Rescue Scams

March 23, 2010
The California Attorney General over the weekend closed two companies engaged in what it calls "fraudulent foreclosure-assistance" scams that gave consumers "false hope after paying upfront fees for nonexistent loan-modification services."

In closing U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc., AG Edmund Brown secured $1 million in court ordered restitution against the firms and officers George Escalante and Cesar Lopez. The state had filed suit against the firms in a joint action brought with the Federal Trade Commission. The AG's office said an investigation found that "the defendants used aggressive telemarketing tactics to convince distressed homeowners to pay $1,800 to $2,800 in upfront fees for loan-modification services that included reductions in principal and lower interest rates." The AG claims that in sales calls, H.E. Servicing claimed it had successfully negotiated 10,000 loan modifications. However, a full review of internal records found the company opened only 2,960 loan-modification files and completed only 311. The state says California homeowners accounted for 15% to 20% of the company's opened loan-modification files. The two men could not be reached for comment at press time.

HUD Deluged with Questions on GFE and Transfer Tax

March 18, 2010
The Department of Housing and Urban Development is getting deluged with many questions from mortgage bankers regarding the new good-faith estimate form, in particular the treatment of the real estate transfer tax, according to a top official at the agency.

Speaking at a regional mortgage banking trade show in Atlantic City, HUD's RESPA director Ivy Jackson gave attendees a quick list of questions the agency has received since the new GFE and HUD-1 forms went into effect Jan. 1. After disclosing the list, audience members bombarded Jackson with questions, showing-as one questioner put it-the industry's frustration with HUD over how to implement the new forms. (The questioner admitted, however, that he liked the new forms.) In her formal presentation to the trade show, Jackson said the revised forms are a new concept for the mortgage industry and professionals must learn how to do things differently. The "worksheet" issue was discussed during the audience question-and-answer portion. Jackson said the Real Estate Settlement Procedures Act does not prohibit the use of a worksheet, but she warned that it must not look like the new GFE. If it does, HUD will be paying a call on the originator. She also reiterated that the lender is responsible for the GFE in a wholesale transaction, not the mortgage broker.

Former MBA Chair Kittle Joins IMARC in D.C.

March 16, 2010
David Kittle, the immediate past chair of the Mortgage Bankers Association, has joined IMARC, a mortgage auditing firm based in Santa Ana, Calif.

A senior director at IMARC, Mr. Kittle will manage the firm's Washington office and will be responsible for government and industry relations as well as the development of client services. Before climbing to the top of the MBA leadership ladder, Mr. Kittle was president and chief executive officer of Principle Wholesale Lending in Louisville. After leaving his MBA post, he joined another former MBA chair, Regina Lowrie, at Vision Mortgage Capital, where he was executive vice president. He continues to serve on the MBA board. IMARC's clients are publicly traded mortgage investors and insurers.

First American Names CEO of Solutions Group

March 16, 2010
First American Corp., Santa Ana, Calif., in preparation for the split of its title and information services businesses into separate publicly traded companies, has named Anand K. Nallathambi as chief executive and Buddy Piszel as chief financial officer of its information solutions group.

Mr. Nallathambi, who was appointed president and chief operating officer of the ISG in December, will continue to serve in those capacities. Mr. Piszel will continue to serve as the parent company's chief financial officer. The company's Financial Services Group will commence a search for Mr. Piszel's replacement as its chief financial officer. The target date for the split is June 1. Mr. Nallathambi previously served as chief executive and president of First Advantage Corp., which, until November 2009, was a majority-owned public subsidiary of the company and a business segment within the Information Solutions Group. Mr. Piszel joined the company as chief financial officer in January 2009. Prior to that, he was executive vice president and chief financial officer for Freddie Mac. In a separate announcement, First American said it would purchase the remaining 18% of First American CoreLogic that it does not already own. Parker S. Kennedy, chairman and chief executive of First American, said the purchase of the outstanding shares will simplify the structure as the information solutions group, which First American CoreLogic is a part of, moves toward being spun off. "This acquisition will result in an extra measure of flexibility and operational efficiency that will be beneficial as we develop our next-generation analytic capabilities for the financial services and capital markets industries," he added.

PennyMac Interested in Servicing and Condo Development Loans

March 16, 2010
PennyMac Mortgage Investment Trust, a publicly traded vulture fund, says in a new public filing that it is exploring the idea of purchasing distressed condominium construction loans and growing its residential servicing business.

In a filing with the Securities and Exchange Commission, the Calabasas, Calif.-based company says it would like to buy condo construction loans at a discount and then finance the completion of projects. "This solution creates the opportunity to effectively repackage distressed developer loans into high-quality residential loans." As for the MSR market, PennyMac thinks it can buy servicing rights from "liquidating and other institutions." PennyMac is currently subservicing more than $2 billion in troubled loans for outside parties.

Industry Worries About 5% MBS Risk Retention in Dodd Bill

March 16, 2010
The mortgage industry is becoming increasingly worried that if risk retention language for MBS in a new bill from Sen. Chris Dodd is not clarified, nonbanks could disappear, the nation's megabanks will get even larger, and consumers will have fewer retail choices.

In particular, mortgage bankers fear that a 5% risk retention requirement will apply to all loans, particularly "A" paper credits guaranteed by Fannie Mae and Freddie Mac, which currently account for 70% of all fundings. The capital requirement could force small- to medium-sized lenders to either exit mortgage lending/servicing entirely or become correspondents for Wells Fargo, Bank of America and JPMorgan Chase, the three largest players in residential finance. "This will cause a huge rollup of mortgage bankers," one former MBS trader said. "At a time when the government wants to prevent 'too-big-to-fail' they will be creating more of it. The big banks will be in charge." The Community Mortgage Banking Project, a trade group headed by former mortgage insurance executive Glen Corso, says the new Dodd bill "needs a clear exemption for well underwritten, lower-risk traditional loans." The senator's financial regulatory overhaul bill requires securitizers to retain at least 5% of the credit risk when loans are packaged into bonds. The legislation that Sen. Dodd will mark up next week allows federal banking regulators and the Securities and Exchange Commission to reduce the risk retention on loans that exhibit high-quality underwriting. However, the direction given the regulators seems to be very vague when clarity is needed, one source said. Industry groups are urging the lawmakers to create an exemption for 30-year fixed-rate mortgages and other "qualified" loans. But the Dodd bill does not provide such a blanket exemption. The regulators also have the discretion to require originators to retain a portion of the credit risk.

Houses Valued Higher than $750,000 Gain Sales Momentum

March 15, 2010
Sales of homes priced above $750,000 are starting to pick up after being frozen at a very low level last year.

For most of last year, first time homebuyers were driving sales and they were focused "almost exclusively" on foreclosed properties and other bargains priced under $250,000, according to Walter Moloney, economics spokesman for the National Association of Realtors. "Beginning in October for the first time we started seeing increases in other sales categories," Mr. Maloney said. Sales of homes priced from $750,000 to $1 million jumped 40% in January from a year ago, yet accounted for only 1.3% of total sales. Over 70% of sales in January involved properties priced under $250,000. Sales in all price classes rose in January. "The trade-up market is now beginning to benefit," Mr. Moloney said. Despite this movement in the top tier, foreclosure and short sales are expected to remain at a very high level. Last year, distressed sales comprised 36% of existing home sales. "Maybe it will come down to 33% this year," said NAR chief economist Lawrence Yun. In a normal market, distressed sales make up 15% of sales. "By historical standards, we have never seen anything like this before," Mr. Yun said.

B of A Executive Takes Mortgage Jobs with Wells

March 12, 2010
Kevin Jackson, previously a director in convexity products at Bank of America Merrill Lynch, will be joining Wells Fargo Securities as part of the firm's efforts to bolster its residential financing, origination, and trading activities.

In his new position, Mr. Jackson - who joined Merrill in August 2007 - will be a director, specified pool trader and desk strategist. The new hire, who will be officially joining Wells Fargo in two months, will be reporting to Joe Gaziano, who is managing director and head of pass-through trading at the Wells.

LPS Asks for $3 Million to Add 350 Jobs

March 12, 2010
Mortgage vendor Lender Processing Services Inc. is requesting nearly $3 million in city and state incentives to add 350 full-time jobs in Jacksonville, Fla., according to a report in the Jacksonville Business Journal.

The city is being considered along with three other areas in the nation for the jobs. The newspaper reported that the publicly traded LPS is requesting the incentives from the Jacksonville Economic Development Commission. If the JEDC recommends it, it will then go to the City Council for approval. The 350 jobs would have an average wage of $44,807 plus $11,202 in benefits, totaling an annual payroll of $15.7 million, according to LPS. "The proposed project will increase the visibility of Jacksonville as a financial services center, further strengthening a targeted industry and continue the redevelopment of downtown Jacksonville," the company said in its application to the JEDC. LPS would hire 175 people by the end of 2010 with the rest coming sometime next year.

Industry Wants Exemption from SAFE Act

March 8, 2010
Mortgage servicing employees who help troubled borrowers with loan modifications should be exempt from the licensing and registration requirements of the SAFE Act, according to a comment letter by three industry groups.

The trade groups note that the Department of Housing and Urban Development is considering bringing certain servicing personnel under the Safe and Fair Enforcement for Mortgage Licensing Act (SAFE), which is intended to ensure uniform licensing and registration of loan officers and mortgage brokers. The American Financial Services Association, American Bankers Association, and Mortgage Bankers Association argue that there is no basis to impose SAFE requirements on mortgage servicing employees. Such an "undue expansion" of SAFE, the trade groups warn, could hamper the process of serving troubled borrowers.

PennyMac CIO Departs, New One Named

March 3, 2010
PennyMac Mortgage Investment Trust, Calabasas, Calif. said its chief investment officer, Michael Muir, has resigned effective March 2.

No reason was given for his departure. The publicly traded mortgage vulture fund named Vandad Fartaj as its new CIO, effective March 3. A spokeswoman for PennyMac said Mr. Fartaj has been with the company since its inception two years ago. As CIO Mr. Fartaj will be responsible for all capital markets activities, including asset valuation, trading, hedging and research. Mr. Fartaj also was named chief capital markets officer for two PennyMac affiliates. Prior to joining PennyMac, he held a number of positions at Countrywide Securities Corp., a broker-dealer, including vice president of whole loan trading. Later this year PennyMac hopes to launch its lending conduit.

GMAC/ResCap Trims Correspondent '3-D' Program

March 1, 2010
GMAC Financial Services has tightened standards on a servicing-related program geared toward small- to medium-sized correspondent lenders, according to trade group officials and executives familiar with the effort.

Moreover, a top executive who managed the program left the company in recent weeks, National Mortgage News has learned. The effort, known as '3-D,' is a way for GMAC's mortgage division, Residential Capital Corp., to gather servicing rights and grow its portfolio. With 3-D, according to executives familiar with it, the loans are sold to Fannie Mae with ResCap obtaining the underlying servicing rights. "There's certain tax advantages to it," said one servicing broker close to the situation. A trade group official said ResCap eliminated "the bottom tier" firms participating in 3-D "and only wants to deal with high net worth companies." A ResCap spokeswoman stressed that GMAC "has not discontinued" what she called its "rapid delivery program to Fannie Mae, though we may elect to change certain features of the program." She declined to comment further.

Fight Over Fed's Power Kicking Into High Gear

February 26, 2010
The fight to keep the Federal Reserve Board's role in banking supervision has finally been joined.

Late this past week Fed chairman Ben Bernanke made his strongest public pitch to date to keep the central bank's powers intact, while industry lobbyists privately told Treasury secretary Timothy Geithner that they will work with the administration to press Congress on the issue. Although there remains strong support in the Senate to strip the central bank of much of its power, the issue is key as the final reform bill takes shape. "The ICBA will fight tooth and nail to preserve the Fed's role in bank regulation," said Camden Fine, president of the Independent Community Bankers of America, who along with other trade group representatives met with Mr. Geithner on Wednesday. "In our view, it is absurd to blind the Federal Reserve to 8,000 community banks on Main Street America. That's very poor public policy." All eight of the industry groups attending the meeting, including the American Bankers Association and the Financial Services Roundtable told Geithner much the same thing.

Servicing Attorneys Need to Improve Practices

February 26, 2010
For mortgage firms that institute foreclosure actions, the key to a successful outcome is in the lawyer selected, according to speakers at the MBA's national servicing conference in San Diego.

Executives participating on the judicial activism panel at the trade show said it is important to choose a lawyer who knows how to cut their losses while providing advise on whether the servicer is facing a bad case, especially with so many "foreclosure factory cases" swamping the industry. Speakers worried about uncommunicative attorneys on both sides of the equation especially in regard to requests for information. Judge Ronald Pearson, who works bankruptcy cases in the Southern District of West Virginia, advised servicers to look for attorneys who are available and proactive about workouts. "I see situations most often where the borrower appears in court and the attorney for the lender is not there," he said. "The borrower says he has been calling the lender and getting no response. They bring in returned checks," said Judge Pearson. "If you hire a lawyer to commence legal action, he better have the time to call the borrower who is there." Older borrowers around the country are making appearances in court, he said, sharing stories of how their homes were almost paid for when someone made a telephone call and asked the borrowers to refinance. The refi turned out to be a teaser interest rate with payments that doubled after a three-year period. "If a borrower can prove that and show how they can't make the payment, you are in trouble," said Judge Pearson. "I have yet to see the servicer bring a loan originator to court to counter the elderly debtor's testimony." On the other hand, Cynthia Nierer, a partner with Rosicki, Rosicki & Associates, said there are plenty of borrowers who get "busted" for making claims that they tried to contact their servicer. Many times, they did not make the calls they claimed, she said, and in some cases the judges recognize that argument.

NAR: Declining Home Inventory a Good Sign

February 26, 2010
Even though existing-home sales fell 7.2% in January to a seasonally adjusted annual rate of 5.05 million units, the inventory of available homes is continuing to shrink, a sign that housing values might be stabilizing, according to the National Association of Realtors.

In January inventory fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace. In December the number was better (a 7.2-month supply) but NAR says "raw unsold inventory" is 9.6% below a year ago, and is at the lowest level since March 2006. "Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory," said NAR. The January existing home sale figure compares to a downwardly revised pace of 5.44 million in December. The results, the weakest since June, were worse than many housing economists had forecast. Mr. Yun admitted that the sales numbers are "not good." The trade group hopes that sales will spike this spring as consumers move to take advantage of the $8,000 first-time homebuyer tax credit which is set to expire in late April. The median sales price was $164,700, unchanged from a year earlier and down 3.4% from December.

Industry Seeks Extension of Federal Refinance Program

February 24, 2010
Mortgage industry groups are urging the Treasury Department to act quickly and extend the Home Affordable Refinance Program so that borrowers with high LTV or underwater mortgages still have an avenue to refinance and lower their payments.

HARP is due to expire June 10. But the trade groups are concerned there could be disruptions if the program is not extended soon. "By April 1, lenders will no longer be able to extend even 60-day rate locks," according to a joint letter by five trade groups. Launched last April, HARP has facilitated the refinancing of nearly 190,000 Fannie Mae and Freddie Mac mortgages with loan-to-value ratios of 81% up to 125%. "HARP makes it easier for families to stay in their homes," the Feb. 18 letter says. "HARP also appropriately rewards borrowers who have worked hard to stay current on the mortgage loans" and "prevents unnecessary foreclosures." The American Bankers Association, American Financial Services Association, Consumer Mortgage Coalition, Housing Policy Council and Mortgage Bankers Association signed the letter.

GSE Buyout Plans Disrupts Some TBA Trades

February 19, 2010
The delivery of certain coupons within the "TBA" mortgage-backed securities market were disrupted (or failed) in the wake of massive loan buyout plans unveiled by Fannie Mae and Freddie Mac last week.

These settlements are expected to be resolved soon, according to Credit Suisse researchers. The "fails," which represent situations in which a promised amount of securities cannot be delivered by the settlement date, have been seen in to-be-announced 5% and 5.5% MBS coupons. These higher premium coupons are prioritized in the buyout plans. Credit Suisse researchers said in a report accompanying an investor call that they expect fails should move toward resolution as investors deliver more of the needed pools going forward. They see the buyouts of delinquent loans as ultimately a positive for the agency MBS market as they remove prepayment uncertainty, among other things. That uncertainty is removed almost entirely in Freddie Mac securities due to its "one [month] and done" buyout plan. Fannie's multimonth buyout plan presents opportunities for short-term trades in those securities, said Mahesh Swaminathan, director and head of residential mortgage-backed securities for CS.

MBA: A Sequential Decline for Residential Delinquencies, But ...

February 19, 2010
The delinquency rate on all residential loans fell slightly in the fourth quarter to 9.47% while "seriously delinquent" mortgages (90 days or more past due) continued to rise, according to new figures released by the Mortgage Bankers Association.

The trade group tried to put a positive spin on the overall delinquency rate, its chief economist Jay Brinkmann declaring, "We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007." Late payments by consumers fell 17 basis points in the fourth quarter (compared to the third), but were up 159 bps compared to the same period a year earlier. However, these figures are seasonally adjusted — and do not include foreclosures. (The seriously delinquent rate does include foreclosures.) The nonseasonally adjusted numbers show a bleaker picture: 10.44% of all home loans were late by 30 days or more compared to 9.94% in 3Q. Also, the numbers for Florida continue to be abysmal with 26% of all mortgages there late by one month or more.

PennyMac Called a "Hold" by Stifel

February 18, 2010
Stifel Nicolaus has initiated coverage of PennyMac Mortgage Investment Trust, calling the publicly traded vulture fund a "hold."

There are now four investment firms following the company which went public last summer but has yet to turn a profit. PennyMac is trying to branch out from buying troubled mortgage assets into servicing and even lending through a conduit. Based in Calabasas, Calif., the company was formed two years ago by former Countrywide Financial Corp. president Stanford Kurland. It has been actively bidding on both nonperforming loan packages and servicing. It came in second in the bidding for an $11 billion package of jumbo servicing rights auctioned off by the bankruptcy trustee for Thornburg Mortgage of Santa Fe.

Former Ocwen Unit Buys Management Arm of Cooperative

February 17, 2010
Altisource Portfolio Solutions, which was spun off by Ocwen Financial Corp. last year, has acquired the management arm of the Lenders One cooperative for an undisclosed sum.

Scott Stern, CEO of Lenders One, said Altisource will maintain the existing executive team and employee base of the management company which is called The Mortgage Partnership of America. LO's 155 member mortgage bankers originated $75 billion in product last year, which would make it the nation's fourth largest lender if counted as one. Mr. Stern stressed that the cooperative will "continue to exist" and that Altisource is not buying Lenders One. The Mortgage Partnership handles an array of chores for the cooperative, including program development, marketing, advertising and even legislative advocacy. Mr. Stern himself owned part of TMPA but would not say how much. The publicly traded Altisource provides mortgage-related vendor services to the residential finance industry.

Parent of Top Wholesaler Comes Up Short on Capital Raise

February 10, 2010
Flagstar Bancorp Inc., which controls one of the nation's largest wholesale lenders, came up nearly $200 million shy of its capital-raising goal in a rights offering that expired earlier in the week.

The company is also in the process of trying to sell a $10 billion package of mostly Fannie Mae servicing rights. In an interview with American Banker, Flagstar CEO Joseph Campanelli acknowledged that the rights offering did not bring in as much capital as Flagstar desired. But he said the total was still in line with the capital level targeted in its business plan. The $300.6 million raised, he said, "brings us north of 8% capital, which we believe is a good, solid number." As part of a plan to diversify its portfolio this year, Mr. Campanelli noted recently that Flagstar would seek to broaden its revenue stream with ventures outside its national mortgage banking model. According to figures compiled by National Mortgage News and its Quarterly Data Report affiliate, Flagstar ranks eighth among residential wholesale funders with a quarterly run-rate just shy of $3 billion. Flagstar is also an active warehouse lender. In the fourth quarter it lost $72 million, an improvement over its third quarter loss of $298 million. Its shares continue to trade for less than $1 on the New York Stock Exchange.

SPS Wins Thornburg Servicing, P-Mac Comes in Second

February 9, 2010
Select Portfolio Services, Salt Lake City, has agreed to pay roughly 77 basis points for an $11 billion package of jumbo servicing rights belonging to the bankrupt Thornburg Mortgage.

According to a new Securities and Exchange Commission filing by Thornburg, PennyMac — the vulture fund managed by former Countrywide president Stanford Kurland — came in second and was declared the "back-up" bidder. SPS, a subsidiary of Credit Suisse, ranks first among all subprime subservicers in the nation, according to figures compiled by the Quarterly Data Report. In agreeing to buy the Thornburg receivables for roughly $85 million, SPS said it would continue to use Cenlar as the subservicer of the loans. At press time, both SPS and PennyMac had not returned telephone calls about the auction. Interactive Mortgage Advisors was the investment banker on the deal. Thornburg filed for Chapter 11 bankruptcy protection in early 2009. A publicly traded REIT, it was once one of the largest lender/servicers in the jumbo and "super" jumbo market.

FTC Proposes Ban on Upfront Fees for Loan Mods

February 5, 2010
The Federal Trade Commission is proposing a ban on companies charging consumers upfront fees for loan modification services.

In its notice of proposed rulemaking, the agency said it has already brought 28 cases against companies fraudulently offering loan modification services that charge consumers a fee and don't deliver and that state and federal law enforcement agencies have brought hundreds more. The rule would not allow a loan modification company to be compensated until it had a documented offer from a mortgage lender or servicer. It also bars providers from advising consumers to stop communicating with their lender or servicer. Furthermore, the rule would stop modification providers from misleading consumers about the likelihood of getting the results they want and how long it will take; their affiliation with public or private entities, payment and other existing mortgage obligations; and refund and cancellation policies. It also requires consumers to be told the loan modification firm is a 'for-profit' business that provides its services in exchange for a fee, what that fee is, and that there is no guarantee of success. There is a 45-day comment period for the rule, which ends on March 29, 2010. Some states, most notably California, already ban upfront fees for loan modification services.

Mortgage Investing REIT Annaly Has Blowout Quarter

February 4, 2010
Thanks to a steep yield curve, Annaly Capital Management, New York, a mortgage investment REIT, earned $729 million in the fourth quarter, a 155% improvement in profits from the prior period.

In the same quarter a year earlier Annaly lost $506 million. The publicly traded company, which holds $64.8 billion in MBS, told stock analysts that it believes the yield curve will remain steep. According to a research note from Sandler O'Neill, management at Annaly is not "convinced that a sharp decline in MBS prices is on the horizon, although they would welcome a pullback in prices since it would enable Annaly to purchase new MBS at wider spreads."

Job Losses Affect DJIA, Mortgage Stocks

February 4, 2010
Following an unexpected increase in weekly claims for state unemployment benefits, the Dow Jones Industrial Average dropped by almost 2%, losing 201.18 points by noon on Jan. 4, while many mortgage-related stocks fared even worse.

Mortgage insurers saw the biggest stock price decreases with Radian taking the lead trading down 7.41%, closely followed by PMI whose stock price fell by 5.17%. Among the mega banks whose share prices fell by at least 3% or more was Bank of America (down 3.54%), JPMorgan Chase (down 3.77%) and Citigroup (down 3.26%). During the morning, BofA announced it had settled with the Securities and Exchange Commission and the North Carolina Attorney General over the acquisition of Merrill Lynch, but New York Attorney General Andrew Cuomo filed his own lawsuit in the matter. Fannie Mae traded at $0.98, down 2.90%, while Freddie Mac traded at $1.17, down 1.68%. There was one temporary exception as PennyMac was trading up on the previous day's close shortly before noon, to only go back down again by 0.12% as the day progressed. Apparently, while some may have hoped for a jobless recovery, the weaker than expected labor market and other economic data continue to weigh on investors.

MBA Opposes White House Effort on Deductions

February 3, 2010
The Mortgage Bankers Association said it will oppose a White House budgetary proposal to reduce itemized deductions, a measure that includes caps on write-offs for mortgage interest paid by high wage earners.

In a new statement, the trade group said such a measure "would have a negative impact on the housing market, particularly in high cost states like California and New York." The White House is proposing a cap on mortgage interest deductions for taxpayers reporting income above $250,000 (joint) and $200,000 (single). In years past other administrations — usually Republicans — have tried to scale back the mortgage interest deduction but with little luck. "Reducing the federal deficit is vital to the long-term health of the U.S. economy and our industry," said MBA chairman Robert Story. "However, we believe it can and should be done without negatively impacting the already-fragile housing market. Limiting the mortgage interest deduction and imposing additional taxes on lenders will only make economic recovery more difficult." The trade group also opposes a proposal to tax "carried interest" at ordinary tax rates (as opposed to the capital gains rate, as it is taxed now), because it thinks the measure would discourage capital formation for lending.

Legislation Needed to Start U.S. Covered Bond Market

February 1, 2010
Covered mortgage bonds — which have yet to appear in the U.S. — trade at better prices when there is a solid legal foundation for the securities, according to a German trade group executive.

"It is essential that the underlying legal framework be of high quality," said Jens Tolckmitt, executive director, association of German Pfandbrief Banks. He noted German banks were able to issue 10 billion to 14 billion euros in private covered bonds per month during the height of the financial crisis — September 2008 through January 2009. Mr. Tolckmitt made his comments during a panel discussion on creating a covered bond market in the U.S. Congress is toying with the idea of passing covered bond legislation but no firm timetable is in place. Morrison & Foerster senior counsel Jerry Marlatt noted that legislation sponsored by Rep. Scott Garrett, R-N.J., would assure investors that the FDIC would not liquidate covered bond assets in the event of the issuing bank's failure. Without this legislation, investors would demand higher premiums and higher over-collateralization. "Legislation would take a lot of the expense out of issuing U.S. covered bonds," Mr. Marlatt said. Canadian banks began issuing covered bonds in 2007 without legislation, but did not face FDIC-like issues, according to David Power of the Royal Bank of Canada. Nevertheless, Canadian banks are seeking covered bond legislation, Mr. Power said.

NAHB Lining up Funding for Builders

January 26, 2010
The National Association of Home Builders is trying to line up its cash-strapped members with hard-to-find sources of financing.

In an effort to bring some capital back to the suffering housing business, the trade group brought together about two dozen financial firms and as many as 200 builders in a private back room of its annual convention here last week. "We are bringing the mountain to Muhammad," Michelle Hamecs, a staff member at the builder group, said of its Partnership Pavilion program. "We're doing what we can to raise awareness and try to get some money flowing again." Earl Armiger, the president of Orchard Development Corp., an apartment builder in Ellicott City, Md., said the dearth of funding for acquisition, development and construction is his industry's No. 1 problem. "Housing can't lead the country out of the recession if it doesn't have capital," he said. "The problem is so large, so global, that progress has to be taken in small steps." It's too early to assess the initiative's success, said Michael Sivage of Sivage Homes in Albuquerque, who became chairman of the trade group's housing finance committee at the convention last week. "The real proof will be if some of us actually get some capital," he said.

MBS Database Firm Run by Former Fannie Execs

January 22, 2010
BlackBox Logic LLC, founded in 2007, said that after years of designing and testing work, it is now offering to the broader market a comprehensive database of loan-level collateral underlying nonagency residential MBS.

The company, which is majority owned by a private equity affiliate of the Denver-based Braddock Financial Corp., said it has available a trademarked loan-level data aggregation service called BBxData that covers jumbo-A, subprime and alternative-A credit mortgage markets. This includes more than 7,200 RMBS, 21 million loans and almost 600 million remittance records dating back to 1999. The company is aiming to provide monthly full-set data faster than other providers and to also differentiate itself by allowing users to purchase only the data they need rather than the full 21-million loan dataset. The company's top brass includes three former Fannie Mae executives. Chief executive Larry Barnett was once Fannie's vice president for secondary mortgage trading operations, chief technology officer William Pugh was at one time responsible for all technology development and loan processing systems at Fannie, and lead data modeler Marty Schwartz once managed mortgage loan processing systems for Fannie, including its liquidation and recourse system.

Some Mortgage Stocks Recover in Thursday PM Trading

January 21, 2010
While the overall stock market did not recover on Thursday from its morning free fall, some mortgage-related stocks did show some improvement in the afternoon.

At noon the Dow Jones Industrial Average dropped by 207.37 points following a surprising jump in first-time claims for unemployment benefits that indicate the economic recovery may be at a standstill. By the closing bell, it was down by 213.27 points. Fannie Mae and Freddie Mac closed at $1.07 and $1.31, respectively. So it was down 0.93% for Fannie and zero change for Freddie, but still an improvement over where they were trading in the morning. Meanwhile Bank of America's improved performance one day prior was short lived. At the close, BoA's stock traded at about $15.47, at 6.19% less; at noontime, it was down about 5%. Mortgage insurers, which by noon were down across the board, featured more mixed performances at the end of the day with PMI Mortgage Inc. (PMI) down by 2.88%, Penny Mac (PMT) moving up by 0.06%; and the Radian Group (RDN) down by 5.72%. Ocean Financial (OCFC) closed 1.20% down, but Astoria Federal (AF) was up by 0.53% at the end of the day.

Unemployment Figures Drive Down Stocks

January 21, 2010
Mortgage stocks continued to trade downwards at noon Thursday as the Dow Jones Industrial index dropped to -207.37 following a surprising jump in first-time claims for unemployment benefits that indicate the economic recovery may be at a standstill.

Both Fannie Mae and Freddie Mac stocks were changing hands at $1.05 and $1.29, respectively, or 2.78% and 1.53% less than yesterday, respectively. Meanwhile, Bank of America's improved performance one day prior appeared short lived. Minutes after noon, BoA's stock traded at about $15.70, or almost 5% less. Similarly, mortgage insurers were down by the following percentages: 1.23% for PMI Mortgage Inc. (PMI), 0.47% for Penny Mac (PMT), and 4.81% for the Radian Group (RDN). Astoria Federal (AF) and Ocean Financial (OCFC) also were down by 1.29% and 0.83% respectively. Dime Community (DOCM) was one of the better performing stocks that actually saw gains of 1.69% near noon on Thursday.

Savitt Resigns from NAMB Board

January 20, 2010
Mark Savitt, the immediate past president of the National Association of Mortgage Brokers — and who recently launched a new trade group — has resigned from NAMB's board of directors, effective immediately.

Mr. Savitt said his resignation from NAMB was his own decision but declined to comment further except to say this week he is meeting with government representatives on two key issues facing the industry: the Home Valuation Code of Conduct, and yield spread premiums. Mr. Savitt's new trade group is called the National Association of Independent Housing Professionals. He is president and CEO of the group, which officially launched two weeks ago. At NAMB, George Hanzimanolis, who was the organization's president in 2007- 2008, has been appointed to fill out Mr. Savitt's term and will serve as chairman of NAMB's nominating committee. No reason was given in a statement issued by NAMB.

PennyMac Buying Two 'Troubled' Portfolios Totaling $140 MM

January 15, 2010
PennyMac Mortgage Investment Trust, Calabasas, said it has bought a $40 million portfolio of problem loans and is negotiating to buy a second one which has an unpaid principal balance of $100 million.

No purchase price was disclosed. Since the end of September, the company has reviewed $6 billion in whole loan portfolios and is seeing an increase in offerings in the secondary market. PennyMac, a publicly traded REIT, has a handful of affiliates which are engaged in servicing, investment, and advisory work. Penny Mac, which went public this past summer, will release its fourth quarter earnings Feb. 1.

California Shuts Down Loan Mod Businesses in SoCal

January 14, 2010
The state has closed the loan modification businesses of two Southern California men for allegedly lying to consumers about being supervised by attorneys, according to a report in The Orange County Register.

The two operated firms under the trade names Guardian Credit Services, Green Credit Solutions, Green Credit Services, Erickson Law Group, Green Credit Law and PacWest Funding. The state bar, which acted with the Orange County Superior Court in the case, has worked with other state and local officials to crack down on companies promising homeowner aid but not delivering it, the newspaper said. The bar alleges Curtis Melone of Huntington Beach and Christopher Fox of Redondo Beach promised to help homeowners facing foreclosure keep their homes but did nothing. An attorney for the men was not immediately available for comment.

ASF, SIFMA Split; New Exec Director Hired at ASF

January 14, 2010
The American Securitization Forum has ended its administrative relationship with the Securities Industry and Financial Markets Association and said its acting executive director will now permanently assume that post.

"The ASF has been self-funded and self-governed since its inception in 2002 but has utilized certain operational resources of SIFMA," the former trade group said. "That relationship has ended and the ASF will now independently serve the securitization markets to restore credit flow to Main Street." The group has been particularly focused on setting industry guidelines aimed at restoring new issuance in the residential mortgage-backed securities market. The ASF's board unanimously chose Tom Deutsch to permanently serve as the group's executive director. Previous to serving as acting executive director, Mr. Deutsch had been deputy executive director. Executive director George Miller resigned in December, saying he planned to remain professionally connected to the business but in a different capacity.

Partnership Seen as Bringing New Type of Security Closer to Launch

January 13, 2010
The new type of asset-backed security DelphX Capital Markets has created is currently on track to launch later this year with the assistance of its new partner, the Mortgage Industry Advisory Corp.

"We're on target to roll out the first part of the second quarter of this year," DelphX chief executive officer Larry Fondren told National Mortgage News. MIAC is integrating its analytics with the market platform through which DelphX's recently renamed Syndicated Investor Guaranteed and Managed Asset securities are traded. The technology is designed to allow subscribers to access online asset-level information regarding a SIGMA portfolio and monitor its monthly performance thereafter. It also was designed to collectively assess the current value of each of these types of portfolios and related SIGMA securities as it anonymously trades all SIGMA issues. SIGMAs are based on American depository receipts, but they are officially considered ABS because, in contrast to the equity shares issued by foreign companies that ADRs issue the rights to, the ownership rights to the loan portfolios in SIGMAs officially are "terminal in nature" and don't persist the way rights to the stock in a company could. They are considered syndicated because they not sliced or diced but rather are participations or shares in the whole portfolio and they are guaranteed and managed by an investor "who holds skin in the game throughout," Mr. Fondren said.

Banks Now Seen as More Willing on Warehouse Lending

January 13, 2010
Large banks increasingly are opening up the warehouse spigot for independent mortgage banking firms and it looks as though government assistance may not be needed, according to the Mortgage Bankers Association.

"We are encouraged by the information we are receiving from our members that lines have opened up a little bit," said MBA chairman Robert Story at a press briefing. However, the trade group would like to see more liquidity for nonbanks in need of financing. One of the nation's largest warehouse providers is National City, which is controlled by PNC Financial Services. PNC has made little effort to sell the division and plans to close it by midyear unless a committed buyer steps forward. Warehouse lending began to dry up in the fall of 2008 when Lehman Brothers filed for bankruptcy and other Wall Street firms left the sector. Over the past year MBA and other industry groups have been urging the Treasury Department to provide some type of government support for warehouse lending but little has been accomplished. MBA believes the private sector (mostly banks) is finally coming back to the sector, albeit at reduced levels. MBA noted that mid-sized banks are returning to profitability, which could spur more entrants to the sector.

Jaymes Financial Selling $61MM in Delinquent Loans

January 12, 2010
Jaymes Financial of Virginia is offering a $61 million portfolio of delinquent residential loans -- an auction that is actually a "re-trade" of an earlier sale.

Jaymes Financial principal Andy Jaymes declined to identify the seller but noted that the $61 million is part of a $365 million sale of nonperforming loans sold by DebtX of Boston on behalf of the Federal Deposit Insurance Corp. A majority of the package being offered by Jaymes Financial includes Florida condominium loans.

New MBA Forecast: Originations Will Fall, Refis 'Choked Off'

January 12, 2010
The Mortgage Bankers Association believes residential originations will fall to just $1.28 trillion in 2010 -- a 33% decline from last year and the industry's worst year since 2000.

In early December, the trade group had forecast loan production of $1.5 trillion but lowered its estimate Tuesday morning. (According to National Mortgage News, the industry funded $1.9 trillion in 2009.) The MBA now believes 30-year FRMs will average 5.8% this year and recent increases in rates have already "choked off" refinancings. Refis will fall to $166 billion in the first quarter compared to $363 billion in 4Q. However, home sales will see a steady improvement. "We do expect purchase originations in 2010 to be about 5% higher than in 2009," MBA chief economist Jay Brinkmann told reporters. A few months back veteran mortgage analyst David Olson of Access Research said some large lenders were bracing for just $1 trillion in production for 2010. Despite the poor outlook on originations, many mortgage lenders are continuing to earn strong profits (thanks to the wide yield curve). The profit picture also improved, in part, because of a lack of competition. In 2000 mortgage bankers funded just over $1 trillion in new loans.

California Fund Buying $1B in Commercial Loans from FDIC

January 8, 2010
Investment funds controlled by Colony Capital, LLC of Los Angeles have agreed to purchase $1.02 billion in troubled commercial loans from the Federal Deposit Insurance Corp., paying just $90.5 million while receiving government funding of $233 million.

The sale, a "structured transaction," will give Colony a 40% managing member equity stake in a newly formed limited liability company created to hold the acquired loans. The FDIC will retain the remaining 60%. In total, Colony will gain access to 1,200 commercial real estate loans. Deutsche Bank served as advisor to the FDIC on the sale. Even though Colony is private, it controls Colony Financial, Inc., a publicly traded company. Colony Capital is in the business of acquiring, originating and managing commercial mortgages. As reported by National Mortgage News, the FDIC is contemplating issuing a large security in the first or second quarter backed by delinquent and subperforming residential mortgage assets. Some of these assets could include subprime and/or alt-A MBS, said a source familiar with the plan.

PennyMac May Have Buyer for Two Pools

January 8, 2010
PennyMac may have found a buyer for two different pools of loans it put out for bid in December, according to investment banking sources who work in the nonperforming loan market.

The publicly traded REIT declined to comment but acknowledged that it has been trying to sell two loan pools -- a $20 million nonperforming loan package, and a $17 million performing pool. A source said Kondaur Capital of California may have been a bidder on the nonperforming package. Kondaur did not return telephone calls on the matter.

FBR Raises PHH EPS Estimates on MSR Valuation

January 7, 2010
An expected fourth quarter 2009 write-up of $80 million in the mortgage servicing rights asset of PHH Corp., Mt. Laurel, N.J., is leading FBR Capital Markets analysts to increase their earnings per share projections at the company.

The report, authored by Paul J. Miller Jr., William Wallace and Jessica Halenda, said PHH should have EPS of $0.86 for the fourth quarter, compared with their original estimate of $0.79. The anticipated write-up in MSR valuation is because of rising interest rates in recent weeks. FBR Capital Markets noted that PHH is the rare mortgage banking company that does not hedge its mortgage servicing rights portfolio, which can lead to volatility in earnings. In the third quarter, PHH wrote down the MSR asset by $89 million. "We would note that there are a lot of moving parts to MSR valuation, and, in our view, we believe that the stock will be positively impacted if PHH posts a fourth quarter headline number in the $0.60 to $0.90 range. We reiterate our Outperform rating on PHH shares, which continue to trade at an attractive discount to tangible book value," the analysts said.

Ross Out of United Guaranty Deal?

January 7, 2010
WL Ross & Co. has reportedly ended negotiations with American International Group, New York, to buy its mortgage insurance division, United Guaranty, Greensboro, N.C., according to MI industry sources.

Wilbur Ross, chairman and chief executive of the company, was out of the country and could not be reached for comment. But he issued a statement to National Mortgage News which said, "We never confirmed we were in the deal." However, this past fall reports began to surface that WLR&C was indeed negotiating with AIG and even had an exclusive with the company for several months. Sources familiar with the original parameters of the talks say WLR&C wanted to purchase all of UG's licenses, operating systems, and its entire 2009 book of business, leaving the "legacy" coverage with AIG. No price was ever mentioned. According to the Quarterly Data Report, UG ranks fifth nationwide in terms of policies-in-force with $127 billion. AIG has received pledges of up to $180 billion in taxpayer aid since its near collapse 16 months ago. The U.S. Treasury owns about 80% of the company, which is still publicly traded after undergoing a reverse stock split last year.

Despite Bad November, NAR Expects Sales Will Rise

January 5, 2010
The National Association of Realtors expects existing home sales will rise 9.9% in 2010 to 5.71 million units, after falling 12.8% last year.

The trade group's updated forecast also calls for a surge in sales this spring as the newly extended and expanded homebuyer tax credit expires on April 30. Homebuyers that sign a sales contract before the end of April will have 60 days to close. NAR economists see sales surging to a seasonally adjusted rate of 6.03 million units in the second quarter before falling back to a 5.45 million rate in 3Q. Despite this optimistic outlook, a leading indicator of future home sales plunged 16% in November after rising nine consecutive months with the help of the first-time homebuyer tax credit. (Due to expire Nov. 30, the tax credit, this fall, was extended by Congress and the White House.) The uncertainty surrounding the tax credit legislation has been cited as a reason for first-time buyers staying on the sidelines. NAR reported that its 'Pending Home Sales' index fell to 96 in November from 114.3 in October. The PHS index is based on newly executed sales contracts with the closing expected to be completed in the next month or two.

MBA: Lenders Need Time to Meet New FHA Net Worth Requirement

January 4, 2010
The Federal Housing Administration should give lenders five years, instead to three years, to meet a higher $2.5 million net worth requirement, according to the Mortgage Bankers Association.

The current net worth requirement for FHA-approved lenders is $250,000. "MBA supports limiting the approval process to qualified mortgagees and increasing the net worth requirement," MBA president and chief executive John Courson says in a comment letter to the Department of Housing and Urban Development. "However, we strongly believe market conditions merit an increased phased-in period," MBA says, "with lenders meeting a minimum net worth of $1 million by the end of year one." HUD wants to raise the minimum to ensure the financial strength of lenders that endorse FHA-insured mortgages. "Based on MBA analysis, it will take companies with a current net worth of approximately $1 million five years to retain enough earnings to reach the $2.5 million threshold," the trade group says.

U.K. Buyer Tax Break Benefits Greater Percentage than Expected

December 31, 2009
A temporary tax break for those buying properties sold in a certain price range in the United Kingdom has benefited a greater percentage of borrowers than expected but its effects vary by region, according to the Council of Mortgage Lenders, London.

The trade group said, "In September last year, when the government first raised the nil rate threshold for stamp duty, ... the CML estimated that this would mean the proportion of homebuyers who would not have to pay would rise from a quarter to a half. In fact, at its peak in the first quarter of this year, the concession benefited even more than this, with 57% of all those buying with a mortgage not having to pay [the tax]." However, that percentage decreased over the course of the year. "Modest house price increases and a shift in the mix of houses bought (toward higher value properties) brought this down to 51% in the third quarter." The CML also noted, "The flat nature of the concession - the same in all regions of the country - means that there is a wide geographic variation in the effect. Those areas with generally lower home prices see the greatest benefit."

CMC: Fed Needs to Refine Compensation Rule

December 28, 2009
The Federal Reserve Board should permit compensation of loan officers and mortgage brokers based on a percentage of the loan amount with a minimum and maximum limit, according to the Consumer Mortgage Coalition.

"It should also be permissible to use percentages that decrease as the loan amount increases," CMC says in a comment letter on a proposed Truth in Lending Act rule. Under the Fed's TILA proposal, LO and broker compensation based on increases in the interest rate or changes to other loan terms would be prohibited. The Fed invited comment on allowing compensation based on the loan amount. The industry trade group recommends that lenders should be permitted to reduce compensation for loans with high loan-to-value ratios. This approach would address the Fed's concerns about originators financing closing costs and packing other fees into the loan amount. CMC also wants the Fed to allow compensation based on the overall loan volume -- in terms of number of loans and loan amount. "We request clarification that compensation may be based upon pull-through rates, file quality, customer satisfaction and communication quality. Lenders need these common sense management tools," CMC says.

Brokers Propose Alternative to YSP Ban

December 28, 2009
Mortgage brokers are urging the Federal Reserve Board to withdraw a proposed rule that would regulate broker compensation and delay any action until Congress finalizes pending consumer protection legislation.

The National Association of Mortgage Brokers said the Fed has not met the standard for determining that the payment of yield-spread premiums to brokers is an "unfair and deceptive" practice. "Such a determination should be made, if it is to be made, by Congress, not the board," NAMB says in a comment letter on the Fed's Truth in Lending Act proposal. Under the proposed TILA rule, compensation based on increases in the interest rate or changes to other loan terms would be prohibited. The Fed suggests that loan officers and mortgage brokers could be compensated based on a set percentage of the loan amount. As an alternative, NAMB suggests a mortgage brokerage business could receive secondary market fees and compensate the brokerage's LOs based on a percentage of the loan amount. "NAMB strongly urges the board to explore this proposed alternative ... prior to finalizing any rule," the trade group says.

Fed Issues Final Risk-Based Pricing Rule

December 23, 2009
The Federal Reserve Board and the Federal Trade Commission have issued a final rule that requires lenders to disclose their use of risk-based pricing along with a notice that tells consumers they will not get the best deal because of their credit score.

Starting in January 2011, lenders must provide mortgage applicants with a risk-based pricing notice if they will receive less favorable terms than 40% of the lender's other customers. The final rule has two tests, including a 40%/60% test, for determining when consumers should get a RBP notice. The Fair Credit Reporting Act rule, mandated by Congress in 2003, provides some exceptions to the RBP notice requirement, including one for single-family lenders that provide applicants with their credit score. Along with the credit score, the lender must provide a notice that "describes the creditor's use of credit scores to set the terms of credit," the final rule says.

Existing Home Sales Rise 7.4% from October — but 44.1% Year over Year

December 22, 2009
Thanks to record low mortgage rates and a feared expiration of the first-time home buyer tax credit, existing home sales spiked 44.1% in November (compared to the same month last year) to a seasonally adjusted annual rate of 6.54 million units, according to figures released by the National Association of Realtors.

Roughly 33% of sales were considered "distressed." The comparison to the same month last year may seem impressive but it was a time when the credit markets were frozen, and the economy was suffering from a meltdown in stock prices and massive corporate layoffs. It was also less than two months after the federal takeover of Fannie Mae and Freddie Mac. When compared to October, the existing home sales figures still look strong: 7.4%. However, interest rates are beginning to rise and along with them mortgage rates. The NAR figures include sales of single family units, townhomes, condos and co-ops. The trade group said total housing inventory at the end of November declined 1.3% to 3.52 million existing homes available for sale, which represents a 6.5-month supply based on the current sales pace. In October, supply stood at seven months. The national median existing-home price for all housing types was $172,600 in November, a 4.3% decline from November 2008. The home buyer tax credit — originally set to expire November 30 — was extended until the spring.

Flagstar Sees Warehouse Commitments Rise 31%

December 18, 2009
Flagstar Bank saw its warehouse lending commitments to nonbanks rise 31% in the third quarter to $1.48 billion, according to figures compiled by NMN.

The thrift, one of the largest remaining S&Ls in the nation, is part of a shrinking base of depositories willing to extend credit to mortgage banking firms. However, its stock continues to trade for less than $1 a share. Despite raising nearly $620 million in capital this year, the $14.8-billion-asset company earlier in the week said it would be turning to shareholders for as much as $500 million through a rights offering. The fresh capital is likely needed to satisfy regulators, who have limited the Troy, Mich., company's ability to grow and imposed other restrictions on it. Among wholesale lenders, it ranks eighth, according to the Quarterly Data Report.

Former NAMB President Starts New Trade Group

December 18, 2009
Marc Savitt, the recent past president of the National Association of Mortgage Brokers, has launched a new trade group and hopes to have 100,000 new members signed up within a year.

"I'm only charging $50 a year membership dues," he said in an interview with National Mortgage News. Mr. Savitt, who owns and operates his own loan brokerage in West Virginia, stressed that he will not be competing against NAMB (he continues to head its HVCC task force) but will gear the efforts of the upstart National Association of Independent Housing Professionals strictly toward government affairs and lobbying outreach. He plans to officially launch the NAIHP next week and already has "a few hundred" committed members. "This organization will be run like a business," he said. Mr. Savitt has been a vocal critic of the Home Valuation Code of Conduct and is pushing for immediate changes to how lenders and brokers order and manage appraisals.

Vulture Fund PennyMac Is Now Selling Loans

December 15, 2009
PennyMac Mortgage Investment Trust, generally considered a buyer of problem residential loans, is auctioning off two different loan packages totaling $47 million.

A company spokeswoman confirmed that the publicly traded REIT is offering an $18 million pool of nonperforming loans and a $29 million pool of performing mortgages. No other details were provided. The company is in the process of getting licensed as an originator and servicer in several states. In other nonperforming loan news, investment bankers say a large Wall Street firm is offering a small package of NPLs believed to be in the $20 million range. Gordon Albrecht, EVP for FCI Lender Services, Anaheim Hills, Calif., said he believes the NPL auction market is beginning to heat up but cautioned that "it's all small scale deals." Few large sales of NPLs — anything over $100 million in face value — have occurred over the past two quarters. (For full details see the Dec. 14 paper edition of National Mortgage News.)

U.K. Purchase Mortgages Seen Rising as Refinancing Plateaus

December 14, 2009
Home purchase mortgages in the United Kingdom continue to trend upward to their highest level in nearly two years while refinancing levels hold steady, the most recent data from the nation's industry trade group found.

Monthly U.K. purchase loans were at 55,000 at last count in October, according to the Council of Mortgage Lenders, London. This is the highest level seen since December 2007. The number of monthly refinance loans this year has been at some of the lowest levels since the CML began tracking them in 2002. These were at 33,000 per month for the past two months. The only time since 2002 that monthly refinancing has been slower was in August of this year when the rate was 30,000. "We are still in a two-speed mortgage market. It appears that low interest rates for those with substantial deposits, coupled with this year's sustained increases in house prices, are encouraging more people to buy or move home," said CML director-general Michael Coogan. "But the same low interest rates that are driving ... purchase activity provide little incentive for borrowers to refinance their loans." Mr. Coogan said this, combined with tight lending guidelines, continues to constrain refinancing. Also declining in the United Kingdom have been fixed-rate mortgages. These peaked at 80% of the market in July but as of October had fallen to 66% of the market. Recently in the United Kingdom adjustable rates have been competitively low and there have been expectations that rates will remain at or near their current lows for the foreseeable future.

MBS Investor Withdraws Plans for IPO

December 14, 2009
Mortgage-backed securities investor Ellington Financial has pulled its planned initial public offering due to a lack of investor interest, according to combined news reports.

Ellington Financial LLC, a company managed and advised by former Kidder Peabody head MBS trader and market veteran Michael Vranos' Ellington Management Group Inc., had previously filed a preliminary prospectus for an initial public offering. In other mortgage-related capital markets news, the shares of PennyMac Mortgage Investment Trust continue to be thinly traded. A vulture fund founded by former Countrywide president Stan Kurland to invest in delinquent and underperforming mortgages, the company went public this summer. As of late Monday morning just 10,000 shares had changed hands. Since the IPO, its shares have traded between $16.70 and $20. Mortgage investors have said recently that the market still appears to be largely cautious when it comes to distressed mortgage product from recent years. "No one wants to be first to catch a falling knife," DebtMarket president Michael Sheridan told National Mortgage News. His fledgling company is starting to trade nonmortgage assets and he believes this will eventually be followed by in mortgage asset trade, but it remains uncertain as to when.

NAMB Issues 'Call to Action' on the Fed's YSP Rule

December 10, 2009
The National Association of Mortgage Brokers is encouraging its members to comment to the Federal Reserve before its Dec. 24 deadline on a rule that will ban yield spread premium payments.

A letter sent to loan brokers asks them to "express your concern" on a YSP ban by telling the Fed "how this proposal will negatively impact your business and customers." The trade group says the Fed has acknowledged that in some cases YSPs can actually help borrowers "but believes that this benefit may be outweighed by costs incurred by consumers who obtain a higher interest rate or negative loan terms" including prepayment penalties. According to new figures compiled by National Mortgage News and the Quarterly Data Report, loan brokers in the third quarter, accounted for just 14.6% of originations - half of what they did two years ago.

Irvine Investment Banker Charged with CMO Fraud

December 9, 2009
The Securities and Exchange Commission on Tuesday slapped the now-defunct Brookstreet Securities Corp., Irvine, Calif., with civil fraud charges, accusing it of causing "substantial investor losses" on the sale of $300 million worth of collateralized mortgage obligations.

The SEC also charged company CEO Stanley C. Brooks with fraud for selling risky mortgage-backed securities to more than 1,000 customers that had "conservative investment goals." The SEC said the fraud cost Brookstreet investors their savings, homes and retirement money. The government says the company collapsed in 2007 because of these bad investments and continued to sell risky CMOs to retail investors even after Mr. Brooks received numerous indications and personal warnings that these were "dangerous" investments. One trader even called Brookstreet's program a "scam." At press time Mr. Brooks could not be reached for comment.

SEC Accuses Former Subprime Officials of Fraud

December 8, 2009
The Securities and Exchange Commission has charged three former executives of now-defunct subprime mortgage giant New Century Financial with fraud for misleading investors as their business was "collapsing" in 2006.

At the time, Irvine, Calif.-based New Century was a top-ranked subprime lender, and management was considering selling the company to Merrill Lynch. SEC director of enforcement Robert Khuzami said investors in the once publicly traded company "took a double-hit: The company's mortgage assets and business performance became increasingly impaired, and management manipulated its numbers and concealed its deteriorating performance." At one time, New Century's shares traded for $50. Former top managers accused of fraud include Brad Morrice (vice chairman/president), Patti Dodge (EVP) and David Kenneally (SVP). New Century filed for bankruptcy protection in April 2007. The complaint, filed in federal court in the Central District of California, seeks civil penalties and from Morrice and Dodge reimbursement of bonuses and other incentive or equity-based compensation. The agency is seeking a severe personal penalty against the three: a bar against ever again serving as officers or directors of a publicly traded company. Josh Epstein, a spokesman for Proskauer, the law firm representing Mr. Morrice, told The Orange County Register that the SEC's charges against the former executive are "flatly false." He said, "Brad did all he could to save the company and to accurately report the company's numerous challenges to its shareholders. While his efforts failed, there was no fraud." Mr. Morrice remained a large shareholder until the end, losing millions of dollars when New Century filed for bankruptcy in April 2007, Mr. Epstein said. John Vandevelde, an attorney for Mr. Kenneally, said the former executive was never a top executive there but a new accountant who lost "every penny he ever invested" in the company he believed in. "Kenneally never signed any financial statements and relied on the outside auditors for accounting treatment now under question by the SEC," his lawyer said. Ms. Dodge could not be reached for comment.

Another Mortgage Vulture Fund Goes Public

December 4, 2009
Nuveen Investments, which provides investment services to institutional and high net worth investors, recently completed the initial public offering of a new "opportunity" fund that will buy distressed MBS.

The fund, which trades under the stock symbol "JLS," is called Nuveen Mortgage Opportunity Term Fund and its stated goal is to "generate attractive total returns through opportunistic investments in mortgage-backed securities." The IPO raised $400 million. It hopes to participate in the government's Public-Private Investment Program established by the Department of the Treasury. The fund began trading on the New York Stock Exchange earlier in the week.

Two More Depart from MBA

December 4, 2009
The Mortgage Bankers Association is continuing to lose experienced staffers, confirming the departures of senior vice president in charge of commercial/multifamily, Jan Sternin, and one other.

Leaving the trade group next week is Chris Oswald, who serves as director of state government affairs. Ms. Sternin will depart by late January. A spokeswoman for the trade group confirmed the departures but said MBA will hire replacements. The trade group, which hopes to turn a profit in the current fiscal year, is in the process of reorganizing parts of its government affairs division. It is in the process of selling its new Washington headquarters building but expects to take a loss on the sale.

PennyMac Chief Kurland Buying Shares

November 24, 2009
PennyMac Mortgage Investment Trust chief Stan Kurland is putting his money where his mouth is regarding the future of his publicly traded vulture fund, recently purchasing $429,000 worth of stock in the firm, according to trading records.

Documents filed with the Securities and Exchange Commission show that Mr. Kurland bought $259,451 of PennyMac stock (15,000 shares) on November 11 and then the next day acquired 10,000 shares, paying $169,888. The CEO and chairman of the Calabasas-based company bought shares at prices ranging from $16.91 to $17.31. Since going public this summer, PennyMac's share price has ranged from $16.70 to $20. Stock analysts consider it a bullish sign when company insiders buy shares on the open market, which is what Mr. Kurland has done. For the period ending September 30, PennyMac, a REIT, lost $730,000.

MBA Reshuffling Government Affairs Duties

November 23, 2009
The Mortgage Bankers Association is in the midst of reshaping its government affairs duties, and plans to hire a new senior vice president to oversee what it calls "advocacy."

The new title has yet to be cast in stone, but MBA has hired the search firm of Lochlin Partners, Washington, to assist it in finding someone with legislative and policy experience. Steve O'Connor, who currently serves as senior vice president of government affairs, will take over as SVP of public policy and industry relations. A spokesman for the trade group said Mr. O'Connor and the new hire will have duties that overlap to a certain degree. Over the next two years Congress likely will decide the fate of Fannie Mae and Freddie Mac, a decision that will have a major impact on residential lenders. During his career, Mr. O'Connor has worked in government affairs for the National Association of Realtors and Freddie Mac.

Multifamily Origination Market Drops 40%

November 23, 2009
The origination of commercial mortgages backed by apartment buildings fell 40% in 2008 to $88 billion with a small cadre of lenders dominating the market, according to an analysis released by the Mortgage Bankers Association.

The trade group said 2,877 different lenders funded multifamily loans during the year with PNC Real Estate, Wachovia (now part of Wells Fargo), Wells Fargo, Capmark Financial and Deutsche Bank Commercial Real Estate having the largest market shares. (Capmark recently filed for bankruptcy protection.) MBA found that 26% of lenders that funded MF loans made just one mortgage on these properties in 2008. And two-third of originators made five or less. Over the past year multifamily loan defaults have been on the rise even though housing analysts believe there will be more renters because of a weak job market.

Triad MI Receives Delisting Notice

November 18, 2009
Triad Guaranty Inc., a mortgage insurer that is in self-liquidation mode, has received a delisting notice from the NASDAQ.

The exchange told the nation's smallest MI that it is no longer in compliance with a rule requiring it to maintain a minimum market capitalization (based on common stock value) of $15 million. NASDAQ is giving the Winston-Salem company 90 calendar days, or until Feb. 9, 2010, to regain compliance. Triad, whose shares trade for about 50 cents, lost $102 million in the third quarter. In October Triad agreed to sell its MI platform, including its technology, to Essent Guaranty, a new MI company that hopes to begin writing policies next year. Triad has outstanding coverage on about $57 billion worth of home mortgages, according to the Quarterly Data Report.

Fed Clarifies HOEPA Short-Term Loan Standards

November 16, 2009
The Federal Reserve Board has clarified its new HOEPA lending standard so that lenders can refinance short-term balloon mortgages on farmhouses and other rural residences.

Rural lenders make nonconforming 3-year and 5-year balloon mortgages that they hold in portfolio. They raised concerns that the Home Ownership and Equity Protection Act regulations that went into effect Oct. 1 could prohibit such products. The HOEPA rule requires lenders to evaluate the borrower's ability to repay a loan. On higher-cost balloon mortgages with a term of less than seven years, it appeared the borrower must be able to pay off the mortgage in full at the end of the term. FRB director of consumer affairs Sandra Braunstein said there is "no" such pay off requirement since it would effectively ban short-term balloon loans. "If the Board had intended to ban such products it would have done so explicitly," she says in a letter to banking trade groups and bank examiners. In making the loan, the lender should "verify that the consumer would likely be able to satisfy the balloon payment obligation by refinancing the loan or through income or assets other than the collateral," Mr. Braunstein says. American Bankers Association regulatory counsel Rod Alba said, "most of our members" are satisfied with this clarification. But some are concerned that they may still be open to possible private litigation or borrowers exercising a right of rescission, he said.

Ex-Bear Managers Not Guilty in Subprime Hedge Fund Case

November 11, 2009
Two former managers in charge of Bear Stearns hedge funds that invested in subprime bonds and derivatives were found not guilty of fraud charges Tuesday afternoon in New York.

A jury in Federal District Court in Brooklyn acquitted former Bear executives Ralph Cioffi and Matthew Tannin, believing the two men did not lie to investors by presenting an upbeat picture without disclosing that the two funds they managed were plummeting in value. In particular, Mr. Cioffi was found not guilty of insider trading charges on accusations that he moved $2 million he had invested in one of the failing subprime hedge funds to another less risky fund while telling investors he was adding to his position. The government accused them of defrauding at least 300 investors out of $1.6 billion. The two had been charged with three counts of securities fraud and two counts of wire fraud. They still face civil damages in regard to the hedge funds. Massachusetts sued Bear Stearns Asset Management, accusing Mr. Cioffi of making hundreds of trades on behalf of the hedge fund with the approval of the fund's independent directors. In late 2007 Bear disclosed in an SEC filing that the funds were the subject of a criminal investigation. Bear, which collapsed in early 2008, was a major player in the subprime mortgage market. Previous to its collapse, Bear operated a trading desk and a warehouse unit, and also owned a mortgage banking firm called Encore Credit. (Photos: Bloomberg News)

PennyMac Vulture Fund Posts Loss, Considering a Conduit

November 6, 2009
PennyMac Mortgage Investment Trust, a mortgage vulture fund created by a former Countrywide executive to profit from the mortgage crisis, posted a $730,000 loss for the period ending Sept. 30.

Meanwhile, the company confirmed recent market rumors that it is working on a conduit to provide small mortgage lenders "an outlet for their newly originated mortgage loans." PennyMac founder and CEO Stanford Kurland said in a statement that the company has reviewed $6.9 billion in potential acquisitions of nonperforming mortgage assets but refuses to overpay for product. "While some market participants have been willing to accept lower yields and bid more aggressively, we still believe that it is in the best interest of our shareholders over the long term to remain patient in order to maximize the returns from our long-term investment opportunities," Mr. Kurland said in a statement. A publicly traded REIT, PennyMac manages and services about $324 million in assets. Since going public in August, its stock has been thinly traded. On Friday its shares were trading just above their 52-week low of $17.72. Its high is $20.

Equifax Acquires Fraud Detection Company

November 3, 2009
Equifax Inc. has acquired Rapid Reporting Verification Co., a privately held fraud detection firm, for $72.5 million in cash.

The publicly traded Equifax said having Rapid Reporting in its stable will enhance its ability to provide lenders with "improved products, quality and services to help them better control fraud." RRVC is a specialist in IRS tax transcript information and social security number authentication services. Based in Fort Worth, Texas, Rapid Reporting products include IncomeChek, which provides IRS verification of income tax information, and DirectChek, which provides Social Security Administration verification of social security numbers and also meets USA Patriot Act compliance requirements.

PennyMac's Stock Hits New Low, Earnings Due Thursday

November 3, 2009
PennyMac Mortgage Investment Trust, a mortgage vulture fund that went public this summer, saw its share price hit a new low in trading during Tuesday's session.

On Thursday the Calabasas-based company — headed by former Countrywide Financial Corp. president Stanford Kurland — is scheduled to release its first earnings report as a public company. The report will cover its results from August 4, when it completed its initial public offering, to September 30. In trading Tuesday its share price fell to $18.14 compared to a high (since its IPO) of $20. PennyMac was started by Mr. Kurland two years ago to profit from an anticipated boom in sales of distressed mortgage assets. However, banks, thrifts and Wall Street firms have been reluctant to sell their distressed mortgage assets because there has been too wide of a disparity between the asking and bid price on troubled loans and securities. Since going public, PennyMac's shares have been thinly traded.

LendingTree Parent Continues to Lose Money

November 2, 2009
Tree Inc., which operates the LendingTree.com website, saw its third quarter revenues fall 17% sequentially but was able to add a $75 million warehouse line of credit.

The publicly traded mortgage bank/lead generator lost $7.4 million in the third quarter, compared to a slight profit in 2Q. In the year ago quarter it lost $22.6 million. According to its earnings statement, the company was hurt by what it called "unanticipated items" including $4.2 million in loan loss settlement requests and additional legal costs associated with a lawsuit. Even though the company lost money in the period, revenue at its lending operation — its largest segment by that measure — increased 21% from a year earlier, but fell 34% from the previous quarter to $24.1 million. The company said the decrease was primarily driven by higher interest rates, which led to a 31% drop in loan production, to $620.2 million. Its new warehouse lender is JPMorgan Chase & Co.

MBA: Origination Profits Rose 28% in 2Q

November 2, 2009
Independent mortgage banking firms saw their origination profits increase 28% to $1,358 per loan in the second quarter thanks to rising loan volumes, in particular a swell in refinancings.

According to a new study by the Mortgage Bankers Association, 96% of the 292 lenders surveyed posted a pre-tax profit in 2Q compared to 85% in 1Q and just 53% in 4Q. The profit study focused on what the trade group calls "independent" mortgage bankers, a universe that includes both non-depositories and subsidiaries of banks. None of the nation's "mega" banks — Bank of America, Wells Fargo & Co., JPMorgan Chase, and Citigroup — are included in the MBA's survey, said a spokeswoman. According to figures compiled by National Mortgage News and the Quarterly Data Report, all lenders funded $583 billion in residential loans in 2Q compared to $480 billion in 1Q — a 21% increase in volume. Commenting on the results, Marina Walsh, MBA's associate vice president of industry analysis, said, "The big increase in production volume allowed lenders to spread their fixed costs over a larger number of loans, thus increasing net profits. At the same time, purchases picked up as homebuyers with good credit took advantage of low interest rates."

Appropriators Agree to Extend Current Loan Limits

October 29, 2009
The Obama Administration said it supports an extension of the current loan limits for Fannie Mae, Freddie Mac and Federal Housing Administration mortgages following an agreement by House and Senate appropriators to extend those limits for another year as part of the continuing funding resolution Congress is expected to pass this week.

"The CR [continuing resolution] maintains the limits for FHA, GSE ... single-family mortgages at $729,750 through the end of calendar year 2010," according to a statement issued by the chairmen of the appropriations committees. The maximum $729,750 loan limit is due to expire Dec. 31 and it would drop down to $625,500 if not extended. "This could result in major disruptions in the mortgage origination market for larger loan sizes as early as November," the appropriations chairmen said. Earlier in the week, industry trade groups warned Congress that quick action is needed because it is becoming more difficult for lenders to approve mortgages with balances above $625,500 due to uncertainty about an extension.

Industry Group Want Extension on GSE Loan Limits

October 27, 2009
It is becoming more difficult for some lenders to approve mortgages with balances above $625,500, according to industry groups that are urging Congress to move quickly and extend the current higher loan limit.

The $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is due to expire at yearend. In a letter to House and Senate leaders, three trade groups warn that some lenders are pulling back because they don't want to get caught with loans they can't sell. "The result is that borrowers are being unnecessarily denied financing because of the uncertainty about expiring loan limits," according to a letter by the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors. "Therefore, we request Congress extend the limits as soon as possible so as not to jeopardize the fragile recovery," the Oct. 26 letter says.

MBA Puts Headquarters Up for Sale

October 27, 2009
The Mortgage Bankers Association, which lost money in its last fiscal year, has decided to put its Washington headquarters up for sale, 14 months after occupying the $100 million building.

The property, which has proven to be a white elephant for the financially strapped trade group almost from the instant it was purchased in May 2008, is listed with Holliday Fenoglio Fowler, a national commercial brokerage firm. No asking price was mentioned in a letter this morning to the MBA membership. According to the letter, the decision to unload the structure at 1331 L Street was deemed by the MBA board to be "in the best interest" of the association, which will continue to lease "a substantial portion" of space as its HQ through 2020. According to the letter, the decision to buy the building in the first place was made by three different member-led task forces. But the letter did not say what many observers believe: that the decision cost former President Jonathan Kempner his job after a decade as the MBA's chief operating officer. That the MBA has been unable to lease much space to other tenants in what was described as "one of the most severe recessions in a century" was sited as a major reason for the sale. "The board concluded that continued ownership...was economically imprudent and over the long term would impair MBA's ability to continue to provide our members with MBA's full range of services," the letter said.

Group Form to Combat Loan Mod Fraud

October 26, 2009
Local, state and national government agencies, nonprofits and other financial institutions gathered in Los Angeles to enter into an alliance that aims to help homeowners protect themselves from loan modification fraud.

The "Loan Modification Scam Alert" campaign is the first of a number of other events that will be announced in major cities around the country. Partners include some of the country's largest organizations. NeighborWorks will coordinate the efforts with partner organizations such as the Department of Housing and Urban Development, the Federal Trade Commission, the U.S. Department of Treasury, Fannie Mae, Freddie Mac, and the Lawyers' Committee for Civil Rights Under Law. "As the foreclosure rate grows more and more homeowners are being deceived by scam artists who prey on their fears," said the COO of NeighborWorks, Eileen Fitzgerald. "Knowledge is the best defense, which is why the campaign equips homeowners with the tools they need to minimize their risk."

Trade Groups Urge Loan Limit Extension

October 26, 2009
It is becoming more difficult for some lenders to approve mortgages with balances above $625,500, according to industry groups who are urging Congress to move quickly and extend the current higher loan limit.

The $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is due to expire at yearend. In a letter to House and Senate leaders, three trade groups warn that some lenders are pulling back because they don't want to get caught with loans they can't sell. "The result is that borrowers are being unnecessarily denied financing because of the uncertainty about expiring loan limits," according to a letter by the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors. "Therefore, we request Congress extend the limits as soon as possible so as not to jeopardize the fragile recovery," the Oct. 26 letter says.

Existing Home Sales up 9.4% in September

October 23, 2009
Single-family existing home sales jumped 9.4% in September to the highest level in two years as more first-time homebuyers took advantage of the $8,000 tax credit before it is set to expire soon, according to the National Association of Realtors.

"Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home," said NAR chief economist Lawrence Yun. The Realtors reported that sales of previously owned single-family homes jumped to a seasonally adjusted annual rate of 4.89 million in September from 4.47 million in August. The September report shows that the supply of unsold homes fell to a 7.6-month supply at the current sales pace, down from a 9.4-month supply a year ago. In addition, the decline in the sale price is slowing. The median sales price of previously used homes was $174,900 in September, which is 8.1% below the price a year ago. Six months ago in March, the median sales price was down 11.5% from a year ago. "The looming expiration of the tax credit, combined with stabilization in the broader economy and cheap home prices, drove sales to the highest level we've seen in a couple of years, " said Weiss Research analyst Mike Larson. If Congress allows the tax credit to expire on November 30, he warned there will be a "noticeable" slowdown in sales for a couple of months. "I don't think it derails the overall recovery. That's being driven by fundamental forces, such as the dramatic improvement in housing affordability," Mr. Larson said.

Senate Banking Committee Chair Wants FTHB Credit Extended

October 20, 2009
Senate Banking Committee chairman Chris Dodd, D-Conn., went on the record Tuesday calling for a seven-month extension of the $8,000 first-time homebuyer tax credit, which is set to expire in five weeks.

Chairing a hearing on the state of the housing market, Sen. Dodd said home prices are stabilizing but "we still need to use every tool at our disposal to try and fix this problem." The White House has yet to reveal its position on the extension. The Mortgage Bankers Association and other trade groups, predictably, support the extension. MBA chief economist Jay Brinkmann told the committee that one great unknown facing the market is what will happen to interest rates when the Federal Reserve stops purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. He noted that there is growing concern over the issue saying, "While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts."

KBR Says Common Stock of GSEs Worthless

October 19, 2009
The stock of Fannie Mae and Freddie Mac is worthless and any hope of recapitalizing the two lies with their seller/servicers, according to a new research report from Keefe, Bruyette & Woods.

"In our view, in order for Fannie Mae and Freddie Mac to survive going forward, they need to be recapitalized through investments by the banks that benefit from their guarantee," KBR writes. The firm says that seller/servicers should be required to retain 5% of the loan balance on mortgages sold to the GSEs, adding that the "new agencies" would be capitalized at a "solid 5% level of the new expanded balance sheets" under Financial Accounting Standards Board rules 166 and 167. It says that even under a "bad bank" approach to restructuring them the government would be owed $100 billion. The Federal Housing Finance Agency placed the two into a conservatorship 13 months ago. To date, the Treasury has invested $98 billion in capital into them. Both continue to trade on the New York Stock Exchange -- Fannie for $1.25, Freddie at $1.40.

Trade Groups Step Up Pleas on Tax Credit

October 19, 2009
The Mortgage Bankers Association and other trade groups are stepping up their pleas to the White House, imploring the administration to extend the $8,000 first time homebuyer tax credit by at least 12 more months while allowing consumers to use the money for closing costs.

In a new letter to officials at the White House, Treasury and the Department of Housing and Urban Development, MBA and two other industry groups contend the tax credit has dramatically reduced the inventory of new homes for sale to seven months from 12.4 months back in January. MBA, the National Association of Home Builders, and the National Association of Realtors, also want the credit expanded to all types of homebuyers. They contend that buyers of new homes spend an additional $12,000 on goods and services while buyers of existing homes spend almost $9,000. The White House has recognized the value of the tax credit but has not commented either way on extending it.

Well Fargo Is RESPA Compliant, Ready for Jan. 1

October 16, 2009
Wells Fargo Home Mortgage says it is ready to implement the new RESPA disclosure rule and urged the Department of Housing and Urban Development to stay with the Jan. 1 effective date.

"We have already programmed the mandated RESPA changes into over 40 computer systems and have no choice but to proceed with implementation of the new forms on the Jan. 1 effective date," WFHM co-president Michael Heid says in a letter to HUD. As previously reported, HUD has decided to stay with original effective date despite pressure from Congress and major trade groups to postpone the change. "We fully appreciate that there are challenges involved in transitioning to the new RESPA rule, but I want to personally assure all mortgage professionals that we will continue to make every effort to assist them throughout this process," said HUD assistant secretary David Stevens. "Even after Jan. 1, HUD will continue to help lenders, brokers and other settlement service providers in complying with the rule," he added.

California Extending Homebuyer Tax Credit?

October 16, 2009
The California Senate has cleared a measure that would reinstate the popular $10,000 tax credit for new homebuyers.

The measure, which would re-authorize the use of $30 million in credits not awarded during the first program, is expected to be taken up by the General Assembly next week. The state set aside $100 million for the original program, and more than 10,600 buyers were approved for the original credit before the Franchise Tax Board stopped taking applications July 2. But the FTB has since determined that the average credit would be $7,000, not the full $10,000, freeing up $30 million to cover the tax credit extension. Under the bill, only buyers who close after the extension is approved will be eligible. Those who closed after July 2 but before the bill's effective date would not be eligible. On the federal level, lobbyists from the Mortgage Bankers Association and other trade groups are trying to persuade the White House and Congress to extend the $8,000 first-time homebuyer tax credit at least for a few more months.

FASB Change Will Require More Capital for Certain Assets

October 14, 2009
New Financial Accounting Standard Board rules that go into effect Jan. 1 could force bank issuers and servicers to consolidate "hundreds of billions of dollars" of private-label residential and commercial mortgage securities on their balance sheets, according to industry trade groups.

The Mortgage Bankers Association and Commercial Mortgage Securities Association warn that such a consolidation of securitized assets would "artificially increase" bank risk-based capital and loan loss reserve requirements at the worst time - forcing some to raise additional capital. Anything regulators can do to delay implementation "will serve to postpone the pro-cyclical, anti-consumer, anti-affordable housing impacts" of the FAS rules 166 and 167, MBA and CMSA say in a joint comment letter to the federal banking agencies. The groups say FASB is reacting to credit card issuers that provided credit support for their securities to shield investors from losses and prevent rating agency downgrades. They argue, "There is no business case for sponsors to provide credit support" for static pools of securitized mortgages. "MBA and CMSA recommend that the agencies take the time to study the risks inherent in each of the major securitization structures so that the regulatory capital treatment is more precisely aligned with the risk of the reporting bank." Capital One Financial Corp., McLean, Va., is urging the regulators to delay the capital impact of consolidation for six months. The American Bankers Association wants a one-year delay. The banking agencies have suggested a phase-in over four quarters would reduce the costs and burdens.

New MI Firm Inks Deal for Triad Assets

October 8, 2009
Essent Guaranty, a new mortgage insurance company, has agreed to buy the operating platform and technology systems of Triad Guaranty, the nation's smallest MI, which is in the process of self liquidating.

Based in Radnor, Pa., Essent will pay $30 million in cash and assume what it calls "certain software contractual obligations" that the publicly traded Triad is on the hook for. Essent said it would establish its operational and software center in Winston-Salem where Triad is headquartered. Essent CEO Mark Casale said the purchase of the assets from Triad "is the next major step in the formation" of the young company's MI business. Essent has yet to write any coverage but has received $500 million in financial backing from a group of investors that includes Goldman Sachs & Co. In after hours trading Wednesday, after the deal was announced, Triad's share price shot up 11% to $1.37.

Former Cityscape Chief Now with Luxury Mortgage

October 7, 2009
Robert Grosser, former chief executive of Cityscape Financial, an early high flyer of the subprime business of 1990s, has been named president of Luxury Mortgage, Stamford, Conn.

Luxury is buying Homestar Direct, a mortgage firm that Mr. Grosser formed in 1999 after the publicly traded Cityscape filed for bankruptcy protection. Homestar's origination platform focused on consumer direct marketing utilizing diverse channels to reach target borrowers. Homestar is becoming part of Luxury in an asset acquisition transaction. Mr. Grosser will work with Luxury's CEO David Adamo on the overall day-to-day management of the firm with a focus on the following areas: new business opportunities, regulatory/compliance, accounting, human resources, vendor management, facilities management, capital planning, capital raising, strategic planning and risk management. Cityscape was based in Elmsford, N.Y.

FHA Hires Wells Wholesale Executive to Run Single-Family Program

October 6, 2009
Vicki Bott has left Wells Fargo Home Loans to run the Federal Housing Administration's single-family program, according to industry sources.

The new deputy assistant secretary began working at the Department of Housing and Urban Development on Monday after moving from Austin, Texas. Ms. Bott was a senior vice president for national sales at Wells Fargo Wholesale Lending. She will report to FHA commissioner David Stevens. Wells is one of the nation's largest FHA funders. In other personnel news, the Mortgage Bankers Association has hired Tom Koonce to manage the trade group's day-to-day lobbying efforts on Capitol Hill. A former lobbyist for the Independent Insurance Agents and Brokers of America, Mr. Koonce previously served as legislative director for Rep. Brad Miller, D-N.C., who has sponsored several anti-predatory lending bills.

Trade Groups Want GSE Loan Limit Extension

October 5, 2009
Housing trade groups are urging Senate appropriators to go along with a House-passed provision that extends the GSE $729,750 loan limit, which is due to expire Dec. 31, for another nine months.

"We believe continuing the current higher temporary loan limit is necessary to complete the recovery of the nation's housing market," the nine trade groups say in a joint letter. The House has passed a Department of Housing and Urban Development appropriations bill that extends the $729,750 maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans for the rest of the 2010 fiscal year, which ends Sept. 30, 2010. The Senate did not include an extension because raising Fannie and Freddie's loan limit raises budget costs. The Senate is expected to accept the loan limit extension when House and Senate appropriators meet in conference to agree on a final HUD FY 2010 budget bill. Congress raised the loan limit to $729,750 in Feb. 2008 as part of the Bush administration's stimulus bill. It was extended again in Feb. 2009 with the passage of President Obama's stimulus bill. "Although the economy is showing signs of recovery, current conditions require those limits to stay at the higher level," the trade groups say.

SAFE Act Seen Putting Nonbanks at Disadvantage

October 5, 2009
The SAFE Act is putting nondepository mortgage lenders at a disadvantage to banks when it comes to hiring new loan officers, according to Scott Stern, chief executive of mortgage cooperative Lenders One.

The Secure and Fair Enforcement for Mortgage Licensing Act passed by Congress in July 2008 requires LOs joining an independent mortgage company to go through prelicensing and continuing education requirements mandated by the states. "It is a huge barrier to hiring new loan officers," Mr. Stern said, because LOs hired by banks don't face prelicensing and continuing education requirements and don't pay licensing fees. Like stockbrokers, he said there should be one nationally recognized prelicensing course and one nationally recognized continuing education course for all loan officers. "We believe all lenders that meet with consumers should be licensed," the Lenders One CEO said. Mr. Stern is forming an advocacy group called the Community Mortgage Lenders of America that has membership commitments from 140 mortgage banking companies and community banks. He has lined up BuckleySandler LLP to serve as regulatory counsel for the new trade group and the Glaser Group to be its Washington lobbying arm.

MBA to Revise Origination Forecast at Convention

October 2, 2009
The Mortgage Bankers Association will update its origination forecast for 2010 at next week's annual convention but isn't giving any hints on whether the forecast will change much.

MBA chief economist Jay Brinkmann told National Mortgage News that he is weighing such key factors as the possibility that the government might extend the first-time homebuyer tax credit and what effect the Federal Reserve's plan to reduce its mortgage purchases will have on the market. In its latest forecast MBA estimates $1.62 trillion in new single-family originations for next year, which is what the industry funded in 2008, the year the subprime sector collapsed and credit markets ground to a halt. The forecast is set for next Wednesday at the trade group's annual convention in San Diego. According to figures compiled by NMN and its Quarterly Data Report product, mortgage bankers funded $1.06 trillion during the first half of this year and could wind up funding $2 trillion by the time 2009 ends. MBA's forecast for this year is $1.89 trillion.

Nonperforming Second Lien Portfolio About to Trade?

September 30, 2009
A nonperforming second-lien portfolio with a face value of $365 million is about to change hands, according to an investment banker close to the transaction.

Final contracts could be signed by the end of next week. The product includes distressed closed-end second liens and open-end HELOCs that have been frozen. At press time no further details were available. Nonperforming second-lien portfolios tend to trade for just pennies on the dollar.

ICBA and Frank Close on CFPA Compromise

September 28, 2009
Efforts by Financial Services Committee chairman Barney Frank, D-Mass., to get community bankers behind his Consumer Financial Protection Agency bill might require giving banking regulators more say over consumer regulations.

Chairman Frank recently proposed several changes to the CFPA bill that the Independent Community Bankers Association considers very positive. "It is moving in the right direction," said ICBA's top lobbyist Steve Verdier. But he noted that the trade group still has concerns about rulemaking. In staking out the trade group's position, ICBA has issued a statement that calls for joint rulemaking between the banking regulators and the CFPA when it comes to consumer regulations. "While the bill provides a role for the banking agencies through an advisory oversight board, the board lacks substantive authority over consumer regulations," ICBA says.

New Secondary Market Outlet for Seasoned Loans

September 24, 2009
American Home Bank will now purchase seasoned, high-quality, residential mortgage loans from financial institutions and other portfolio holders.

The company has created a team based in Fort Lauderdale, headed up by Maylin Casanueva. Most recently she had a similar role at Redwood Financial Services; also she has been the director of transaction management and due diligence services for CoreStates Securities and Meridian Capital Markets. Other members of the team have experience in banking, mortgage banking and capital markets. James Deitch, managing director of American Home Bank, said the new business helps sellers "augment their capital base and increase liquidity, while at the same time provide them with efficient trade execution." American Home Bank is the mortgage division of First National Bank of Chester County, West Chester, Pa.

Existing Homes Sales Decline After Months of Gains

September 24, 2009
After five straight months of increases, existing home sales took a breather in August — along with rising values.

According to figures compiled by the National Association of Realtors, existing homes sales of one-to four-family units fell 2.8% in August (compared to the previous month) to a seasonally adjusted rate of 4.48 million units. Compared to the same month last year sales were down 2.5%. After several months of increases, the median sale price of a home fell to $177,500, NAR reported. But the trade group had some good news: the monthly supply of homes for sale continued to decline. In August there was an 8.2 months supply of homes for sale compared to 10.6 months back in November of last year, the nadir of the housing crisis. NAR and other trade groups are lobbying hard to have Congress extend the $8,000 first-time homebuyer tax credit which is set to expire on Nov. 30.

Existing Homes Sales Decline After Months of Gains

September 24, 2009
After five straight months of increases, existing home sales took a breather in August — along with rising values.

According to figures compiled by the National Association of Realtors, existing homes sales of one- to four-family units fell 2.8% in August (compared to the previous month) to a seasonally adjusted rate of 4.48 million units. Compared to the same month last year sales were down 2.5%. After several months of increases, the median sale price of a home fell to $177,500, NAR reported. But the trade group had some good news: the monthly supply of homes for sale continued to decline. In August there was a 8.2 months supply of homes for sale compared to 10.6 months back in November of last year, the nadir of the housing crisis. NAR and other trade groups are lobbying hard to have Congress extend the $8,000 first-time homebuyer tax credit which expires November 30.

Small Mortgage Bankers May Be Hurt by FHA Net Worth Change

September 23, 2009
The net worth requirement changes proposed to the Federal Housing Administration program could end up hurting small mortgage bankers, said National Association of Mortgage Brokers president Jim Pair.

The higher requirement could force small mortgage banking firms to leave the FHA program, which in turn will limit consumer choice, said the trade group chief. As a result, only large lenders — more than anybody else — will benefit from this change, he said. As for removing the need for mortgage brokers to receive FHA approval, Mr. Pair said, "This is good and this is bad in some cases. The devil is in the details." He said NAMB is concerned about FHA adopting a similar policy regarding the ordering of appraisals as mandated by the Home Valuation Code of Conduct. NAMB is trying to set up a meeting with FHA to see if the agency will revise its stance. Mr. Pair spoke at the annual convention of the New York Association of Mortgage Brokers in Melville, N.Y.

NAMB Says Complaints Rising on HVCC

September 18, 2009
The National Association of Mortgage Brokers said it has received thousands of complaints from its members as well as appraisers, Realtors, and consumers concerning Home Valuation Code of Conduct rules promulgated by the GSEs.

Loan brokers, in particular, don't like the rule because it takes them directly out the appraisal process, ceding that function to appraisal management firms. "One of the major problems caused by the HVCC is inaccurate appraisals, which are lowering house prices," the trade group said. It said some of the complaints received over the HVCC consistently describe out-of-area appraisers unfamiliar with the neighborhood being contracted to appraise homes."

FTC Sues Two Loan Modification Firms

September 18, 2009
The Federal Trade Commission has filed complaints against two loan modification companies for allegedly making false claims that they could obtain a mortgage modification in virtually all cases.

One complaint, filed in the U.S. District Court for the District of Columbia, charges Nations Housing Modification Center and its principals, Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg, with violating the FTC Act and the FTC's Telemarketing Sales Rule by allegedly misrepresenting themselves as a government agency and falsely claiming to obtain mortgage mods for consumers. The FTC alleges that very few homeowners got mods and the defendants accepted advance fees for their services. The other complaint, filed in the U.S. District Court for the Central District of California's Southern Division, charges Infinity Group Services and its president, Kahram Zamani, with violating the FTC Act by falsely representing that they would obtain a loan modification in all instances and would allegedly obtain loan refinancing for an up-front fee. The FTC alleges that the company often failed to obtain loan mods and either failed to answer or return consumers' telephone calls or update them about their status. The defendants were unavailable for comment.

Redwood Trust Warns on RMBS Market

September 18, 2009
A few months ago it was a buyer's market for senior tranches of residential mortgage-backed securities, but no more, according to a recent report by Redwood Trust, Mill Valley, Calif.

A publicly traded REIT that invests in and services MBS, Redwood said that in the second quarter prices for senior RMBS rose 10% to 15%. "This trend continued early into the third quarter, as prices have moved significantly and steadily higher," it writes. Redwood, which bought RMBS during the market's "nadir," said the negative investment psychology for this asset class has turned positive "and in some cases, is showing signs of animal spirits." The REIT hinted that it may be a selected seller of its positions, noting that "prices could stay at elevated levels for some time."

Thornburg Auction Almost Set, $12B in Receivables Coming

September 18, 2009
Thornburg Mortgage, which is operating under bankruptcy protection, soon will auction off $12 billion in jumbo servicing rights — $2 billion more than previous estimates, according to investment banking officials.

Sources indicate that an auction of receivables is indeed coming but that the company's managers have to proceed with the bankruptcy court's approval. Thornburg's legal counsel in Baltimore did not return a telephone call about the matter. Even though the once publicly traded company is based in Santa Fe it filed for Chapter 11 in Maryland. Its legal counsel is Venable LLC in Baltimore. A REIT, Thornburg filed in May, listing assets of $24.4 billion and debts of $24.7 billion.

Two Funds Buy Stakes in PennyMac

September 17, 2009
Two different funds have bought stakes in PennyMac, Calabasas, Calif., the publicly traded real estate investment trust that invests in and services distressed mortgage assets.

According to recent filings with the Securities and Exchange Commission, Legg Mason Capital Management now owns 7.14% of the company and Highbridge International LLC of the Cayman Islands, 4.74%. Since going public this summer, PennyMac's shares have been thinly traded on the New York Stock Exchange. The company was founded more than two years ago by former Countrywide Financial Corp. president Stanford Kurland. Mr. Kurland owns 207,290 shares in the company.

Feds and States Discuss Ongoing Anti-Fraud Efforts

September 17, 2009
A group of state and federal officials met in Washington to discuss trends and improve coordination in the efforts to combat mortgage fraud.

Treasury Secretary Timothy Geithner hosted Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, Federal Trade Commission Chairman Jon Leibowitz, Financial Crimes Enforcement Network Director Jim Freis and attorneys general from 12 states. They also spoke about proactive strategies to combat fraud against consumers in the housing markets as well as best practices to bolster coordination across state and federal agencies. This meeting follows up on an announcement by the Obama Administration in April of a multi-agency crackdown on foreclosure rescue scams and loan modification fraud designed to protect homeowners from predatory financial practices. "A clear lesson of this financial crisis is that American consumers need better protection against fraud," said Mr. Geithner, adding that government agencies "will not wait for problems to peak before we respond." Treasury, FinCEN and DOJ, HUD and FTC are working on taking proactive measures to curb abuse by coordinating information and resources across agencies to maximize targeting and efficiency in fraud investigations. Secretary Donovan announced that HUD has requested $37 million in its 2010 budget to combat fraud. FTC Chairman Leibowitz announced two new law enforcement actions in a continuing crackdown on mortgage foreclosure rescue and loan modification scams, bringing to 22 the number of these cases the Commission has filed since the housing crisis began. The FTC also announced developments in similar pending mortgage-related actions, several of which have involved coordinated casework from FinCEN.

Federal Reserve Makes Mortgage Units Subject to Reviews

September 16, 2009
The mortgage and finance company subsidiaries of bank holding companies will now be subject to consumer compliance reviews by the Federal Reserve Board.

"The policy, which takes effect immediately, also provides for investigation of consumer complaints against nonbank entities," the Fed said. The Fed is the primary supervisor of bank holding companies but it has traditionally taken a hands-off approach to nonbank subsidiaries. There have been exceptions, however. Fleet Finance, the Atlanta subsidiary of a BHC, was charged and settled state allegations of predatory lending in 1992. Under chairman Ben Bernanke, the Fed initiated coordinated exams of nonbank subs with the Federal Trade Commission and state regulators in 2007. The new policy "builds on the pilot program and responds to a need for more effective supervision and consumer protection," the Fed said.

New Mortgage Advocacy Group Seeks to Grow

September 16, 2009
Former top executives at Fannie Mae, PMI, and Countrywide have launched and are seeking to expand a new advocacy group that will lobby on behalf of what it calls "independent, community and regionally-based" mortgage banking firms.

The Community Mortgage Banking Project already has 26 members and is talking to eight more, said group founder, Glen Corso, a former senior vice president for The PMI Group, a mortgage insurance firm. His partners in the project include Robert Engelstad, a former senior vice president at Fannie, and Pete Mills, who was Countrywide Financial Corp.'s top lobbyist in Washington. In an interview with National Mortgage News Mr. Corso said his group would not compete with the Mortgage Bankers Association per se but would be involved in lobbying, and legislative and regulatory analysis on behalf of its members. Mr. Corso noted that the CMBP is a "not-for-profit company" but for tax purposes will not be filing as a nonprofit (which enjoy certain federal tax breaks). The MBA, by contrast, is a (Form 990) nonprofit organization with annual results that are publicly available. He said the CMBP would stay away from holding trade shows and getting involved in educational programs — two major sources of revenue for MBA. Mr. Corso is a founding member of The Warehouse Lending Project. That group has been lobbying regulators for government help with efforts aimed at increasing warehouse-lending capacity for nonbanks.

PNC Close to Picking Winner on National City Second Liens

September 15, 2009
PNC Financial Services is close to picking a winning bidder on a $600 million portfolio of mostly non-performing second mortgages that belonged to National City Mortgage.

Several hedge funds have been mentioned as possible bidders, said one investment banker close to the deal. PNC bought National City and its mortgage business late last year. NCM was a large player in the second lien market, including 80-10-10 structures. A PNC spokesman did not return a telephone call about the matter. Meanwhile, traders say that Bank of America recently came to market with a $100 million package (perhaps larger) of mostly non-performing first liens, some of which came from Countrywide Home Loans. BoA has a policy of not commenting on its NPL auctions.

$10B Thornburg Servicing Package Could Hit the Market

September 15, 2009
A large package of jumbo servicing rights belonging to the now defunct Thornburg Mortgage, Santa Fe, is expected to hit the market during the next few weeks, according to investment banking sources.

The size of the offering could be upwards of $10 billion of jumbo receivables. An official working on the bankruptcy said he could not comment at this time and referred inquiries to Thornburg's bankruptcy counsel in Maryland. (They had not responded at press time.) Once a publicly traded REIT, Thornburg filed for chapter 11 bankruptcy protection in May. Its bondholders (debtors) are now in charge of its operations. Thornburg's name has been changed to TMST Inc.

Largest Mortgage Insurer MGIC Delays Debt Payment

September 14, 2009
MGIC Investment Corp., in a new regulatory filing, said that it is delaying by 10 years an interest payment on its 9% convertible junior subordinated debentures.

Originally, the interest payment was due Oct. 1 of this year but now will not be paid until Oct. 1, 2019. The bonds do not come due until 2063. In trading Monday, MGIC's shares were down 6% to $9.17. Other publicly traded MIs were either flat, or down slightly. In terms of book-of-business, the MI is the nation's largest with policies-in-force of $223 billion, according to the Quarterly Data Report.

Deutsche Bank Initiates Coverage of PennyMac

September 9, 2009
Deutsche Bank has initiated coverage of mortgage vulture fund and specialty servicer PennyMac, calling the company a "buy."

DB's investment banking arm was one of three stock underwriters that served as joint book running managers when the Pasadena-based PennyMac went public in July. The other two were Merrill Lynch and Credit Suisse, the latter of which initiated coverage of the company, labeling it an "outperform." Since its IPO, PennyMac's shares have traded in a tight range between $18.70 and $19.87. A REIT, the company's formal name is PennyMac Mortgage Investment Trust. Its CEO is former Countrywide Financial Corp. president Stanford Kurland.

The First American Corp. Hits 120 Year Mark as Split Nears

September 2, 2009
The First American Corp. reaffirmed plans for a split into two companies it noted will come relatively soon as it celebrated its 120-year anniversary.

The plan to separate the Santa Ana, Calif.-based company's information solutions and financial services businesses into two new, separate publicly traded companies could come as soon as the first half of 2010. Originally an Orange County, Calif. title abstract company, The First American Corp. said it has grown to the point where 90% of all real estate transactions in the United States involve at least one of its products or services. It is one of the nation's largest title insurance companies, has trust company, tax services, home warranty and flood certification businesses and is a national data and analytics provider to the mortgage industry and the investment community. The company first went public, trading on the over-the-counter market, in 1964 and began offering its stock on the New York Stock Exchange in 1993.

MBA Releases Plan to Replace Fannie Mae and Freddie Mac

September 2, 2009
The Mortgage Bankers Association on Wednesday morning released a working paper on rebuilding the secondary market — a plan that does not include the continued existence of Fannie Mae and Freddie Mac in their present form but instead relies on the creation of a small number of mini-GSEs that could be in co-operative form.

Under the plan, the creation of mortgage-backed securities would rely on risk-based premiums paid into a federal insurance fund with loan level guarantees provided by what the trade group calls a "small number of privately-owned government-chartered and regulated mortgage credit-guarantor entities" or MCGEs. MBA wants ownership of at least one of the MCGEs to be in a co-op form with mortgage lenders as shareholders. "A co-op could be attractive to mortgage bankers," said MBA chief executive John Courson. (Ownership of Freddie Mac stock was limited to savings and loan associations under a co-op structure until 1989, when the company first sold shares on the New York Stock Exchange.) Even though Fannie and Freddie would no longer exist under this blueprint for the secondary market their "technology, human capital, standard documents and relationships" could serve as the foundation for the new MCGEs, MBA says. The plan — which played a role in driving down the GSEs' share price on Wednesday morning — was drafted by a special task force of MBA members including top executives in the industry who work for lenders, servicers, mortgage insurance firms, title companies and other players in the business. Fannie and Freddie declined to comment on the proposal. Some members of the task force work for companies that were once part of FM Watch, a lobbying group whose mission was to curtail the powers of Fannie and Freddie.

July a Weak Month for the Nation's Mortgage Insurers

August 31, 2009
The nation's beleaguered mortgage insurance companies wrote $7.54 billion of new traditional MI policies in July, its third worst volume month of the year.

Compared to the same month a year ago, new business fell by 39%, according to figures compiled by the Mortgage Insurance Companies of America, a trade group. July was the industry's weakest month in terms of new applications received: 44,532 -- almost half the number received in July 2008. Meanwhile, MICA reported that primary insurance defaults rose to 94,571 units in July, the second highest reading of the year for the industry. January was the worst month of the year for defaults at 106,482. The data was culled from six of the nation's seven MI companies. Triad, which is self-liquidating, is not represented in the numbers.

SAFE Act Coming to California Soon

August 27, 2009
In a few weeks California will move to implement the federal Secure and Fair Enforcement for Mortgage Licensing Act which means individuals will have to obtain their own licenses if they want to operate as loan brokers.

According to the California Mortgage Bankers Association, individual loan officers can no longer latch onto a company license and must obtain their own. A spokesman for the trade group noted the "act should pass here in the next few weeks, which will be a much bigger change than in some other states that already individually license LOs." California also is working on major legislation to reorganize and consolidate all the financial/real estate agencies and departments, and create a new consumer-focused department but no further action is expected until next year.

Surprise: New-Home Sales Jump by Almost 10%

August 26, 2009
New-home sales unexpectedly spiked 9.6% in July following a 9.1% rise in June, another sign that the housing market could indeed be on the mend.

According to figures compiled by the U.S. Census Bureau, sales of new single-family homes rose to a seasonally adjusted annual rate of 433,000 in July, compared to a 395,000 rate in June. The June rate was revised upward by 11,000 sales. Weiss Research analyst Mike Larson said sales were "hotter" than expected. "This is clear evidence the dramatic cut in housing starts, plus increasing consumer confidence and the targeted tax credit for first-time buyers is restoring stability to the new home market," he said. The federal government's $8,000 federal tax credit expires later this year. The National Association of Home Builders and other trade groups are lobbying to have it extended.

MBA Takes Loss, Plans to Break Even in FY 2010

August 20, 2009
The Mortgage Bankers Association took an $8.6 million loss for the fiscal year ending September 30, 2008 as the mortgage crisis took its toll on MBA members and the trade group's revenues fell by 31% to $39.4 million.

In fiscal year 2007, MBA generated a $6.7 million surplus with total revenues of $57.1 million, including $13.9 million in member dues and assessments. In its latest annual filing with the Internal Revenue Service, MBA reported that dues and assessments fell by 20% to $11.1 million. MBA expects to take another loss in FY 2009 and show a positive result in FY 2010, according to MBA spokeswoman Cheryl Crispen. MBA's board of directors has just approved its FY 2010 budget and it shows a "balanced, slightly positive" budget, she said. MBA moved into its newly constructed headquarters in June 2008 that is listed as a $98.6 million asset on the IRS report. MBA planned to lease out 60% of the building but reported no rental income. MBA has leased some of the space and there is "substantial interest" in the remaining office and retail space, Ms. Crispen said.

Changes Made to KBW Mortgage Finance Index

August 17, 2009
Keefe, Bruyette & Woods, New York, has made some changes to the KBW Mortgage Finance Index.

Effective Aug. 19, it is deleting homebuilder and mortgage company Centex Corp., Dallas, because it is being acquired by another publicly traded homebuilder, Pulte Homes. Bloomfield Hills, Mich.-based Pulte will see an increase in its shares in the composition of the index as a result of the deal. MGIC Investment Corp., Milwaukee, Wis., will be added to the index as a replacement for Centex. The last change, and the only one not related to the Pulte-Centex deal, is that Ocwen Financial Corp., West Palm Beach, Fla., is having an increase in its shares included in the index as a result of its equity offering.

Stocks See Monday Slump

August 17, 2009
Mortgage stocks experienced a slump Monday afternoon as the Dow dropped 170 points by around 1 PM.

Despite being very active last week, the stock prices for government sponsored enterprises Fannie Mae and Freddie Mac dropped by 8.5% and 7.1% a little after noon, respectively. Winston-Salem, N.C.-based Triad Guaranty saw its stock price drop by 7.2% Monday afternoon, while Genworth Financial, Richmond, Va., dropped 6.8%. MGIC Investment Corp., Milwaukee, traded at $6.99 per share, down 5%. Both Philadelphia-based Radian Group and Walnut Creek, Calif.-based PMI Group experienced a 4.8% slump in stock price. Old Republic International Corp., Chicago, saw its stock drop 2.7%.

RBS Names Lancaster MBS Chief

August 14, 2009
Royal Bank of Scotland has named Brian P. Lancaster head of mortgage-backed securities, commercial MBS and asset-backed securities strategies at its Stamford, Conn.-based RBS Global Banking unit.

Mr. Lancaster is a well-known strategist whose previous positions have included a mortgage research post at Bear Stearns. He is one of several senior executives recently added to RBS global sales, trading and strategy teams. RBS has hired several former Bear mortgage traders.

NAMB Executives to Meet with FHA Commissioner

August 12, 2009
Top executives from the National Association of Mortgage Brokers are set to meet with the new Federal Housing Administration commissioner on Aug. 19 over a plethora of issues.

These include "Kiddie Condos" where a parent's credit is used (according to one trade group memo) for loan qualification purposes. A copy of the meeting's agenda was provided to National Mortgage News by an industry source. NAMB also hopes to discuss with FHA commissioner David Stevens the new RESPA rule and how it will affect the agency's use of origination and discount points. Also possibly on the agenda: implementation of risk based pricing rules, and the possible involvement of the Government National Mortgage Association in warehouse lending. A spokesman for NAMB confirmed that the meeting is set but said the agenda has not been finalized.

Ocwen to Service Nonperformers for Freddie Mac

August 12, 2009
Ocwen Loan Servicing LLC has inked a deal to be the interim servicer for Freddie Mac on 24,000 nonperforming single-family loans with a principal balance of $4.4 billion.

The deal, effective Aug. 10, was revealed in a recent Securities and Commission filing by Ocwen's parent, the publicly traded Ocwen Financial Corp. of West Palm Beach, Fla. No further details were available at press time. Ocwen is the nation's ninth largest subprime/scratch and dent servicer, according to the Quarterly Data Report. Meanwhile, Ocwen executives are on a road show, promoting an additional common stock offering which could raise up to $250 million. J.P. Morgan Securities, Barclays Capital, and Wells Fargo Securities are the joint book running managers on the deal.

MBA Meets with FDIC Over Colonial and Warehouse Issues

August 11, 2009
Roughly 70 non-bank mortgage lenders could be at risk of losing their warehouse lines of credit if Colonial Bancgroup goes under, according to warehouse lending officials.

The dire prediction prompted staffers from the Mortgage Bankers Association to meet with officials at the Federal Deposit Insurance Corp. last week, according to one warehouse consultant familiar with the meeting. "There will be major ramifications if Colonial goes down," said one lobbyist following the issue. "You might say this issue has hit the screen at the FDIC, Treasury and HUD." At press time, a spokesman from the FDIC had not returned a telephone call about the matter. Colonial's warehouse chief also did not return a telephone call and email. At the end of March, Colonial — whose shares trade for about 50 cents — was the nation's largest warehouse lender with $4.1 billion in commitments, according to National Mortgage News' Quarterly Data Report. In a related development Citigroup said it would commit $2 billion of TARP funds to new warehouse lending initiatives. (See story below.)

UBS Pares Down Monoline Exposures

August 5, 2009
UBS during the second quarter still was working on reducing monoline insurance risks that can be traced partially back to U.S. residential real estate finance exposures, but it said in an earnings report that as of July it had agreed to commute certain trades with insurers, mitigating those bond insurance risks.

Monoline risk exposures, about one-third of which were linked to credit protection on subprime and other U.S. residential mortgage-backed security collateralized debt obligations, were among "identified risk concentrations" listed in the company's first-quarter financials. But UBS said that during the period and in July it "agreed to commute certain trades with three monoline insurers which significantly decreased remaining exposures." During the second quarter, UBS took a loss of 1.4 billion Swiss francs ($1.3 billion). This was greater than the net loss of 395 million Swiss francs ($372 million) seen during the same period last year but an improvement over the loss of 1.97 billion Swiss francs ($1.86 billion) seen in the first quarter. The company said its second quarter loss "was driven by lower losses on risk positions now exited or in the process of being exited by the investment bank" and "significantly affected" by charges for own credit on financial liabilities designated at fair value, restructuring and goodwill impairment charges in relation to the sale of a unit.

Beige Book: Residential Real Estate Improving?

July 30, 2009
Lending is steady or slower and residential real estate generally remains weak with signs of improvement, according to the Federal Reserve's Beige Book.

Residential real estate lending is decreasing in New York, Richmond, and St. Louis, according to the Fed. Dallas' outstanding mortgage volumes are steady but low, while Kansas City's rise in mortgages is slowing. Refinancing activity is dropping dramatically in Richmond, decreasing in New York and Cleveland, and maintaining its pace in Dallas. Credit quality is varying by district with commercial real estate concerns leading to tighter credit in some areas as generally credit standards continue to tighten or remain stable. The only district where residential real estate sales are failing to improve is St. Louis, where they instead are seeing a steep drop. The Fed said the low end of the market, particularly entry-level sales, continues to do relatively well, with some districts attributing this to the first-time homebuyer tax credit. The Boston and New York districts said condominium sales are still far below 2008 levels. Home prices continue to decline in most cases although some districts see possible signs of stabilization. Three districts said foreclosure sales are putting downward pressure on prices. Residential construction appears to remain slow, with three districts noting that financing is difficult, according to the report. Respondents said commercial real estate sales volume is low, or even "non-existent" in some districts, citing a combination of tight credit and weak demand. Tight credit also was cited as a factor in limited or declining commercial construction in most districts, exceptions being health and institutional construction in the St. Louis district, public sector construction in the Chicago district and World Trade Center reconstruction in Manhattan.

PennyMac Raises $320 Million in Initial Public Offering

July 30, 2009
PennyMac Mortgage Investment Trust, Calabasas Hills, Calif., said its initial public offering of 16 million common shares has been priced at $20 per share, raising $320 million.

The amount raised was somewhat below expectations, according to combined news reports. PennyMac Mortgage Investment Trust intends to use the net proceeds from the offerings to purchase residential mortgages and mortgage-related assets, a substantial amount of which may be distressed. Merrill Lynch & Co., Credit Suisse Securities (USA) LLC and Deutsche Bank Securities are the joint book-running managers for the offering. JMP Securities and Stifel Nicolaus are acting as co-managers. PennyMac Mortgage Investment Trust trades on New York Stock Exchange under the ticker symbol "PMT."

Mortgage Insurers Paying Advance Claims for Modifications

July 27, 2009
Private mortgage insurers have developed a "second look" program that will pay advance claims to facilitate modifications of insured non-GSE loans.

The program is designed to rescue distressed mortgages that have flunked a net present value test and could be on the road to foreclosure. "As constructed, many NPV models disadvantage loans with mortgage insurance, making it mathematically appear that foreclosure is the best path," according to the Mortgage Insurance Cos. of America. "Under the Second Look program, loans that fail the NPV test are reviewed by the mortgage insurer to determine if it can provide an advance claim payment and permit the loan to be modified," MICA executive vice president Suzanne Hutchinson said. This MI program does not apply to mortgages owned or guaranteed by the government-sponsored enterprises. The trade group did not offer any estimates of how many homeowners the Second Look program could help. MICA recently reported that mortgage insurers, working with servicers, were able to save almost 100,000 people in 2008 from losing their homes.

Southwest Securities Expands, Adds Mortgage Traders

July 21, 2009
Southwest Securities Inc., Dallas, has expanded its taxable fixed-income trading desks with two mortgage-related appointments.

Steve Palmer has been named senior vice president, mortgage trading in Southwest's New York office. In addition, Southwest has named Derek Rose as senior vice president, asset-backed and commercial mortgage-backed securities in its Chicago office. Most recently, Mr. Palmer was an executive director with JPMorgan, where he traded non-agency fixed rate securities and unsecuritized residential loans. Mr. Rose most recently was an ABS/CMBS trader and director of securitization syndicate in RBC Capital Markets' New York office.

Former Fannie Chief to Head Fortress Investment Group

July 20, 2009
Fortress Investment Group, which controls a mid-sized subprime servicing operation, has hired former Fannie Mae chief Daniel Mudd to be its new chief executive.

Mr. Mudd was forced out of the money-losing Fannie Mae in September when the company and its sister firm, Freddie Mac, were placed into separate conservatorships. Mr. Mudd became CEO of the GSE in 2004 in the wake of a $6 billion accounting scandal where the firm's former management understated its prior years earnings. Under Mr. Mudd's stewardship Fannie became a large investor in MBS backed by alternative-A credit loans. The declining value of those securities has forced the GSE to book multibillion-dollar losses. A few years back Fortress bought Centex Home Equity of Dallas, once one of the nation's largest subprime lenders. Centex changed its name to Nationstar Mortgage and eventually ceased originating new loans but remains as a servicer. Mr. Mudd will take the reins of the publicly traded Fortress on Aug. 11. He is currently a director of the company. Fortress, whose shares trade for $3, manages $26.5 billion in assets.

MBA Lobbyist Leaving to Take Job on Capitol Hill

July 17, 2009
Catherine Cruz Wojtasik, a Democratic lobbyist for the Mortgage Bankers Association, is leaving the trade group to take a job on Capitol Hill.

A MBA spokeswoman confirmed her departure noting that it will hire a replacement for Ms. Wojtasik. It's believed that she has accepted a position with the Senate Banking Committee but at press time it could not be confirmed. Meanwhile Cheryl Malloy, who handles multifamily issues for MBA, is retiring soon but will stay on as consultant through September.

FTC and 23 States Launch Massive Crackdown on Loan Mod Scams

July 16, 2009
As part of a massive federal-state crackdown on loan modification scams, the Federal Trade Commission — with the help of 23 other federal and state agencies — filed a total of 189 lawsuits and cease-and-desist orders across the country against companies and individuals offering allegedly fraudulent loan mod services.

The nationwide sweep of fraudulent loan mod consultants, announced at a press conference held in Los Angeles led by FTC chairman Jon Leibowitz and California attorney general Jerry Brown, is part of "Operation Loan Lies." At the press conference, AG Brown said his office has filed legal action against 21 individuals and 14 companies who allegedly ripped off thousands of homeowners desperately seeking mortgage relief. One company, Irvine, Calif.-based U.S. Homeowners Assistance, is accused of claiming to be a government agency. It allegedly bilked dozens of homeowners out of thousands of dollars. AG Brown is also suing Home Relief Services LLC, its executives, the Diener Law Firm and its principal attorney for allegedly charging homeowners more than $4,000 in upfront fees and failing to provide any loan mod services. Representatives from U.S. Homeowners Assistance, Home Relief Services and Diener Law Firm could not be reached for comment.

Real Estate Auction Company REDC Launching NPL Site

July 15, 2009
REDC of Irvine, which has been doing a swift business in selling distressed homes, plans to enter the whole loan auction market, focusing on non- and sub-performing mortgages, and other note types.

The company also may enter the origination space. A spokesman for REDC - known formally as Real Estate Disposition LLC - confirmed the auction company's loan sale plans. REDC bills itself as the world's largest real estate auction company. A handful of firms have sprung up in the past two years to sell performing and troubled whole loans using the Internet. Other loan auction companies include LoanMarket.net and BigBidder.com. REDC was launched early last decade. At one time it was owned, in part, by Impac Holdings of California, once a top ranked alt-A lender and servicer. Impac is still publicly traded but is listed on the OTC "pink sheets" market. It no longer lends but continues to service a portfolio of mortgage assets.

Key Democrats Wary of Federal Trade Commission Authority Shift

July 8, 2009
Key Democrats on the House Energy and Commerce Committee are skeptical of the Obama administration's proposal to create a new Consumer Financial Protection Agency that would take over most of the Federal Trade Commission's authority to prevent abusive mortgage lending practices.

"I have significant concerns about these plans," Rep. John Dingell, D-Mich., said at a hearing. "FTC has done superb work in protecting consumers and this country will not benefit from a diminished mandate to that agency." Committee chairman Henry Waxman, D-Calif., said a new approach to consumer protection is "clearly warranted." But the chairman said the FTC's ability to perform its consumer protection function should be strengthened, "not weakened." Republican members strongly oppose claims the CFPA would "strip" the FTC of its authority over consumer financial products and create a "new tax" on all consumer credit providers. It appears that House Financial Services Committee chairman Barney Frank, D- Mass., will have to address Rep. Waxman's concerns in drafting a CFPA bill. Some industry groups also oppose the creation of a new consumer protection agency. The American Financial Services Association is recommending that Congress leave enforcement authority with the federal banking agencies and give FTC back-up enforcement authority. "The FTC should be granted authority to step in if the prudential regulator fails, or is unable, to address consumer protections in a timely manner," AFSA president and chief executive Chris Stinebert testified.

Texas Company Branching Out into Asian Market

July 7, 2009
Amherst Holdings LLC, an Austin, Texas-based company that assists institutional investors in the U.S. residential mortgage market, is expanding overseas to Asia.

Paul Kan, previously a senior vice president and senior trader of mortgage-backed securities and securitized products for Asia at Lehman Brothers, has been named managing director of the new Hong Kong-based venture. The company said its initial focus will be on facilitating securities transactions in the United States between Asian accounts and Amherst's broker-dealer affiliate, Amherst Securities Group LP.

HUD Gets Letter From Appraisers on AMCs

July 2, 2009
The Department of Housing and Urban Development is revising its appraisal policies on Federal Housing Administration-insured loans with respect to appraisal management companies, according to an agency spokesman.

Appraisal groups have been complaining that HUD's restrictions on appraisal fees and the lenders' increasing reliance on AMCs is driving many experienced appraisers away from taking assignments that involve Federal Housing Administration-insured loans. "The loss of these seasoned professionals is adding unnecessary and substantial risk to the FHA program," according to four appraisal trade groups which sent a letter to HUD secretary Shaun Donovan. "We already have a mortgagee letter in the clearance process addressing this issue," the HUD spokesman said. FHA borrowers are expected to pay no more than the "customary fee" for an appraisal, according to a 1997 HUD mortgagee letter on appraisal management companies. To cover their management fees, AMC hires appraisers that will accept a reduced fee, according to the appraisal coalition. As a result, "the consumer is receiving a much lower level of service - often from appraisers who do not know the local market - in many cases," the coalition says in its letter to HUD. The Appraisal Institute, American Society of Appraisers, American Society of Farm and Rural Appraisers and National Association of Independent Fee Appraisers signed the letter.

Trade Groups Urge HUD to Pull RESPA Rule

July 2, 2009
Industry groups are backing an Obama administration plan to simplify mortgage disclosures and make them more consumer friendly but first the trades want the Department of Housing and Urban Development to kill a Real Estate Settlement Procedures Act rule that is due to go into effect Jan. 1, 2010.

The administration has endorsed the concept of merging the RESPA disclosures and the Federal Reserve Board's Truth in Lending Act disclosures into a single document as part of its legislative proposal to reform the regulatory system. "We believe development of a simple, single RESPA/TILA disclosure is achievable, and that such an effort can be undertaken and completed far sooner than broader legislative efforts to reform regulation of the financial industry," the industry groups say in a July 1 letter to top administration officials. To move this process along, the RESPA rule should be withdrawn and HUD and the Fed should commence a joint rulemaking effort, according to the letter, which was signed by 10 associations. Signers include: American Bankers Association, American Escrow Association, American Financial Services Association, Consumer Bankers Association, Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Mortgage Brokers and Real Estate Settlement Providers Council.

Realtors Foresee Rebound in Second Quarter

July 1, 2009
Existing home sales bottomed out in the first quarter and sales should be up 3% when the final numbers come in for the second quarter, according to National Association of Realtors.

NAR economists are forecasting that sales will total 4.72 million in the second quarter and rise another 5% in the third quarter. Housing affordability is at historic highs and the first-time home buyer tax credit is fueling demand. "Strong activity by entry level buyers is helping absorb inventory and [allowing] some existing owners to make a trade," said NAR chief economist Lawrence Yun. NAR pending sales rose ever so slightly in May to 90.7, up from 90.6 in April. The index tracks signings of sales contracts and it is a forward-looking indicator of existing home sales. But the Realtors are concerned that appraisal issues are hindering some sales. "Closed existing home sales have improved but are coming in lower than expected because some contracts are delayed or falling through," Mr. Yun said. NAR wants regulators to suspend the implementation of a new GSE appraisal code that went into effect May 1 that it blames for appraisal issues. Other market participants and observers say the problem may be driven less by the code's implementation and more by lower recent market prices and foreclosure sales.

Credit Union Administration Eyes Own Consumer Protection Office

July 1, 2009
In an effort to pre-empt plans to bring credit unions under a new Consumer Financial Protection Agency, National Credit Union Administration chairman Michael Fryzel has proposed the creation of the agency's own consumer protection office.

NCUA currently has authority over products and services offered by credit unions but rarely, if ever, determines whether they comply with consumer laws and regulations, leaving that to other agencies such as the Federal Reserve, Federal Trade Commission of the Securities and Exchange Commission. The new NCUA office would monitor compliance with mortgage laws and disclosures, credit card rules and regulations, and investment products sold by credit unions.

NAMB Elects New President

June 30, 2009
The National Association of Mortgage Brokers has elected Jim Pair to be its president for 2009-2010.

The announcement came at the trade group's midyear meeting in San Antonio. Mr. Pair, who is from Corpus Christi, Texas, succeeds Marc Savitt, who remains as an officer of the group as immediate past president. The new president-elect is William Howe, Scottsdale, Ariz., who moves up from vice president. The brokerage industry is facing an uphill battle for survival thanks to the credit crisis and the blame placed on third-party originators for poor credit quality. Wholesale production now accounts for about 15% of all fundings compared to 28% three years ago, according to National Mortgage News and the Quarterly Data Report.

Genworth Prices IPO for Canadian MI Unit

June 30, 2009
Genworth Financial Inc., Richmond, Va., has priced the initial public offering of its Canadian mortgage insurance subsidiary, revealing that it hopes to raise up to $730 million (U.S.)

The IPO has been priced at $19 per share, Canadian, which translates into $16.45. U.S. Genworth hopes to complete the IPO by July 7. The stock will trade on the Toronto Stock Exchange under the symbol MIC. "This IPO reinforces our already sound financial foundation and provides additional capital flexibility to Genworth," said Michael D. Fraizer, chairman and chief executive of Genworth Financial. "At the same time, we will continue to benefit from the earnings associated with our majority position in Genworth MI Canada as it plays an important role in providing solutions to the housing finance market in Canada." The Canadian business had first quarter 2009 net operating income of $66 million, compared with $75 million for the same period one year prior. The unit had $2.4 billion of flow insurance sales and $0.4 billion of bulk sales for the first quarter 2009.

Investment Banker Known for Merger/Acquisition Work Dies

June 24, 2009
Brenda White, an investment banker who brokered some of the largest mortgage-related M&A deals of the past 15 years, died Sunday after a two-year battle with a rare form of cancer.

Born in Monmouth County, N.J., in 1954, she is survived by her husband Tim and a daughter, Adrienne. Ms. White began her career at Dun & Bradstreet, and eventually worked at MBS pioneer Salomon Brothers. In 1994 she was named managing director, head of investment banking to the mortgage industry. According to a statement released by her family, her promotion at Salomon was "perhaps her proudest professional achievement." During her career she also held M&A advisory positions and worked at UBS and Deloitte & Touche before starting her own M&A boutique. Over the years she authored several M&A related articles in industry trade publications including NMN sister publications Mortgage Servicing News and American Banker.

Builders Seek to Stop Distressed Sale Valuations of New Homes

June 24, 2009
The National Association of Home Builders wants federal regulators to enforce appraisal standards that would stop appraisers from valuing newly constructed homes at distressed sale prices.

Some appraisers are engaged in "inappropriate practices" that will forestall a recovery in the housing sector, according to Jerry Howard, NAHB executive vice president and chief executive. He said valuing new homes at prices below replacement value doesn't make sense. "It is one of the components of why sales are not rebounding," Mr. Howard said in an interview. NAHB is working with banking trade groups on getting the Department of Housing and Urban Development and the Federal Housing Finance Agency to address appraisal issues. "We are hoping to get them to join with us and send a letter to HUD and FHFA," he said.

MBA Slashes 2009 Origination Forecast

June 23, 2009
The Mortgage Bankers Association has slashed its forecast of mortgage production by more than $700 billion, wiping out most of a projected increase made to that forecast in late March.

The trade group is now estimating 2009 single-family originations of $2.03 trillion — $737 billion of it "purchase-money" with the balance being refinancings. All but $84 billion of the cut is due to a lower number of rate/term refinancings and very low volumes in the Fannie Mae and Freddie Mac Home Affordable Refinance Program. The March forecast of $2.78 trillion was driven by expected refis as a result of the Treasury's actions to push bond rates lower. MBA chief economist Jay Brinkmann said the group's warning that the March projection could have been too optimistic came true, as investors have shied away from Treasuries. "Given the high issuance volume of Treasuries in June, the Fed is likely approaching its self-imposed ceiling of $300 billion and may be reluctant to increase its current commitment to purchase long-term Treasuries," he said. MBA is forecasting increasing rates through the end of this year and through 2010.

Non-Banks/Banks May Face Fees to Fund Agency's Creation

June 17, 2009
Non-bank mortgage lenders and depositories would be assessed millions of dollars in fees to fund the creation and maintenance of the Consumer Financial Protection Agency, a new government body that would have massive enforcement powers over all players in residential finance, according to a White House draft proposal.

Funding of the new agency also would come from transaction fees, the White House says. The Obama Administration notes that mortgage lenders not owned by banks fall into a regulatory "no man's land" where no government body "exercises leadership and state [attorneys general] are left to fill in the gap." The administration feels the Federal Trade Commission lacks the jurisdiction over the banking sector and has limited tools to "promote compliance of nonbank institutions." The White House believes the core of the CFPA can be "assembled reasonably quickly from discrete operations of other agencies." (For the full plan see Editor's Choice below or visit: http://www.nationalmortgagenews.com/documents/reg_reform_paper.pdf.

Fremont Settles with Massachusetts Over B&C

June 15, 2009
Bankrupt subprime lender Fremont General Corp. of California agreed to pay $10 million to settle a lawsuit alleging that it engaged in unfair loan practices in Massachusetts.

Fremont, once one of the largest B&C wholesalers in the U.S., also agreed not to foreclose on what the Massachusetts attorney general called "unfair loans." In total about 2,200 foreclosures may be prevented, for now. The payment includes $8 million in consumer relief, $1 million in civil penalties, and $1 million in attorneys' fees. In 2007 the state accused Fremont of engaging in predatory and unfair lending practices by funding mortgages to consumers who could not afford them. Fremont denied wrongdoing. Even though Fremont's depository is no longer in business, the holding company continues to trade on the "pink sheets."

Credit Unions Cut Off from Recovery in U.S. Mortgage Case

June 15, 2009
Hours after last week's guilty plea in the $140 million fraud offense at U.S. Mortgage Corp., insurers for the bankrupt mortgage firm moved to cancel the company's surety bond, which would foreclose one potential source of recompense for some 30 credit unions victimized in the biggest fraud ever to hit the industry.

In a motion filed with the U.S. Bankruptcy Court, Zurich American Insurance Co. and its Fidelity & Deposit Co. unit asked the court to allow it to cancel the bond it held for U.S. Mortgage and its CU National Mortgage subsidiary because the companies have ceased originating loans. "As such, U.S. Mortgage no longer requires the surety bonds to support or guarantee its business operations," the company said in a filing with the bankruptcy court on Friday. In addition, U.S. Mortgage stopped paying premiums on the bond after it filed for bankruptcy, voiding the policy, the insurer asserted. The filing came the day after Michael McGrath, the 46-year-old owner of U.S. Mortgage, pleaded guilty in federal court to siphoning $140 million from CU customers by selling their loans to Fannie Mae and pocketing the funds. McGrath has agreed to forfeit $13 million, leaving more than $125 million of CU funds unaccounted for. Authorities told The Credit Union Journal last week they believe McGrath gambled away those funds in the stock market over the past year, leaving virtually nothing for credit unions to recover. One stock he invested in was Fannie Mae, which now trades for less than 70 cents a share.

MBA Losing Yet Another Lobbyist

June 12, 2009
The Mortgage Bankers Association is losing yet another lobbyist, the second such departure in the past week.

The trade group confirmed to NMN that Meghan Sullivan, who specializes in state mortgage-related legislation, will be leaving at the end of June. She holds the title of director of state legislative affairs. Her departure leaves MBA with just one manager to oversee state bills: Chris Oswald. The trade group said it has lobbyist/consultants "on the ground" to represent it in state capitals. "These are not staff people but consultants," she said. Earlier this week it was revealed that Francis Creighton, MBA's liaison on Capital Hill, was leaving to take a job with a Congressman. MBA will hire a replacement for Ms. Sullivan.

MBA's Chief Lobbyist Departing

June 9, 2009
Francis Creighton, a top lobbyist for the Mortgage Bankers Association, is departing the trade group to take a job on Capital Hill, National Mortgage News has learned.

A source familiar with the matter said Mr. Creighton, a vice president who is MBA's top liaison with elected officials, has accepted a chief of staff position with Rep. Chris Murphy, D-Conn. He informed the trade group of his plans last Friday. He will officially depart MBA within a few weeks. Mr. Creighton was promoted to VP in late 2006. He previously served as director of government affairs for MBA. During his career he also worked as a legislative director to Rep. Steve Israel of New York.

Realtors: 'Pending Home' Sale Index Rises

June 2, 2009
A forward looking indicator of existing home sales rose 6.7% in April from the previous month, according to the National Association of Realtors.

NAR's Pending Home Sales Index hit 90.3 in April, up from 84.6 in March to notch its third consecutive monthly gain. The index tracks the signing of sales contracts even though some deals do not make it to closing. NAR noted that mortgage processing times have increased due to appraisal issues, tighter underwriting, and lender approvals on short sales. The trade group is forecasting that existing home sales will jump to a 5.5 million seasonally adjusted annual rate in the fourth quarter, a 19% gain from 1Q. NAR cites the $8,000 first-time homebuyers tax credit for attracting more buyers. "There is going to be a crush of people in October and November," trying to take advantage of the tax credit before it expires November 30, said NAR spokesman Walter Maloney. NAR's economic forecast shows that home sales hit bottom in the first quarter at a 4.58 million seasonally adjusted annual rate and should end the second quarter at a 4.72 million rate.

FTC Wants Guidance on Dealing with Loan Mod and REO Scams

June 1, 2009
The Federal Trade Commission is seeking public comments on how it should address foreclosure and loan modification scams and whether it needs to engage in further rule making with regard to unfair and deceptive mortgage lending and servicing practices.

FTC has taken legal actions to stop several foreclosure rescue scams where consumers have paid fees up-front for bonus services. The consumer protection agency is considering drafting regulations that would ban advance fees for loan modification and foreclosure rescue services. The comment period ends July 15. In a separate "Mortgage Act and Practices Rulemaking," the FTC is soliciting comments on whether it needs to issue regulations to stop deceptive practices dealing with mortgage advertising and marketing, loan underwriting and terms, appraisals and servicing. "The FTC is particularly interested in receiving comments about mortgage servicing," the agency said. The advance notice of proposal rulemaking specially asks if FTC should prohibit or restrict servicers from charging fees that are not authorized under the mortgage contract or servicing agreement, such as late fees. Or charging "estimated" attorney fees or other fees for services not rendered. The comment period ends July 30.

HUD Findings Could Move FHA Nomination

June 1, 2009
The Department of Housing and Urban Development has investigated alleged RESPA violations that have held up Senate confirmation of David Stevens to be the new housing commissioner, concluding that the nominee did nothing wrong, according to sources.

HUD has provided these findings to the Senate Banking Committee, sources said. In speaking to the National Association of Home Builders on Friday, HUD secretary Shaun Donovan again affirmed his support for Mr. Stevens, saying the former Freddie Mac and Wells Fargo Home Loan executive will be a great Federal Housing Administration commissioner. Five housing groups also are calling for quick Senate action on Mr. Stevens. "We are aware of no barriers that should prevent Mr. Stevens from serving and urge the Senate to act promptly to confirm Mr. Stevens," the trade groups say in a letter to the Senate Banking Committee. Committee leaders have postponed a vote on Mr. Stevens while they look into allegations of possible Real Estate Settlement Procedures Act violations by his most recent employer Long & Foster, a mid-Atlantic real estate brokerage firm. The American Financial Services Association, Mortgage Bankers Association, National Association of Home Builders, National Association of Realtors and Lenders One/National Alliance of Independent Mortgage Bankers signed the letter supporting the nominee.

Existing Home Sales Up But Condo 'Supply' Rising

May 27, 2009
Sales of existing single-family homes rose 2.5% in April from the previous month but new figures show that the supply of existing condominiums and cooperatives for sale is continuing to grow again and now stands at 15.1 months, the highest reading since October.

Condominium prices are down 17.3% from last year with single-family units declining 14.9% in value. According to figures released by the National Association of Realtors, first-time home buyers are driving the market, snatching up units at a steep discount from years past. The trade group says the national median home price is now $175,200 — a 12.4% decline from a year ago. (The figure includes both condos and single-family detached units.) In April existing homes sold at an annualized rate of 4.18 million in units, an increase from March but a 2.8% decline from April 2008. When condos and cooperatives are factored in all home sales averaged 4.68 million units, a 2.9% increase from March but a 3.5% drop from the same month last year. NAR chief economist Lawrence Yun says the housing market appears to be stabilizing but noted that the jumbo market has stalled.

Taylor Bean Supplying 2/3rds of Investment Money for Colonial

May 26, 2009
Mortgage banker Taylor, Bean & Whitaker is supplying two-thirds of the $300 million investment in its warehouse provider, Colonial Bancgroup, according to newly filed documents.

As reported on the National Mortgage News website Friday, the due diligence deadlines for the deal have been met. Securities and Exchange Commission documents show that TBW will invest $199.5 million in the publicly traded Colonial and receive 399,000 "preference" shares that carry voting rights. (Previously, the agreement called for partial voting rights.) Other unidentified purchasers will invest $100.5 million. The SEC filing shows that some of the original investors have dropped out of the deal. A new report by Sandler O'Neill notes that the investment is still subject to Treasury approval "which is not a certainty in our view." With the $300 million cash infusion contractually finalized, Colonial will then be eligible for $523 million in Troubled Asset Relief Funds. TBW chairman Lee Farkas said on Friday that he likely will sit on Colonial's board. He noted that the bank will most definitely continue as a warehouse provider. "It's a good business for them," he said. "They made good money on it last year."

Fed on Pace to Purchase $500 to $600B of MBS in Quarter

May 21, 2009
The Federal Reserve is currently on track to purchase $600 billion in government-sponsored enterprise mortgage-backed securities by the end of this quarter, according to the minutes of its Monetary Policy Committee meeting on April 29.

But the committee has directed its traders to purchase "at least $500 billion" by June 30. Credit Suisse mortgage strategist Mahesh Swaminathan does not see this as a directive for the New York Federal Reserve Bank to reduce its purchases of Fannie Mae, Freddie Mac and Ginnie Mae MBS. "It does not put a limit on their purchases. Besides they have a $1.25 trillion total commitment. So they have ample room to keep buying," he said. "If they did slow down purchases, it would encourage private investor participation," the mortgage strategist added. The Fed has committed to purchase up to $1.25 trillion in agency mortgage-backed securities by the end of this year. As of May 13, Fed purchases of agency MBS totaled $457.3 billion, according to the Mortgage Bankers Association.

Former Troubled Loan Investor Now Just Subservicing

May 20, 2009
Franklin Credit Holdings, which made a name for itself as an investor in troubled mortgages, has restructured and is operating mostly as a subservicer.

But the firm's servicing rights are now housed on the balance sheet of Huntington Bancshares, Columbus, Ohio, which still has financial ties to Franklin. In the first quarter, the bank restructured its relationship with Franklin, buying certain assets from the nonbank. (Huntington is a large receipient of government money through the Troubled Asset Relief Program.) "We used to put troubled loans on our balance sheet but now we're just a provider of services," said Franklin CEO Gordon Jardin. Mr. Jardin noted that Franklin has a "financial commitment" to Huntington, which used to bank Franklin. Currently, the Jersey City-based Franklin has $2 billion of subservicing contracts, most of which are tied to Huntington. "We're the subservicer for them," said Mr. Jardin. "We're going to try and grow our subservicing business," he added, saying the firm will focus on "scratch and dent" loans, subprime, and alt-A. FCH's shares are still publicly traded but in the OTC "pink sheets" market.

Triad MI Reports Another Loss

May 19, 2009
Triad Guaranty, whose MI unit is in a "run-off" mode, lost $55.2 million in the first quarter, compared to a $150 million loss in the same period last year.

Company president and CEO Ken Jones said, "risk in default continued to increase as the combination of the recession and declines in home prices impacted our insured portfolio. While there were indications during the quarter that risk in default growth could be slowing on a monthly basis, we expect the challenging environment will continue for the foreseeable future." The publicly traded Triad has insurance-in-force of $60.5 billion, an 11% decline from March 31, 2008. Its shares trade for 89 cents compared to a 52-week high of $4.42 and a low of 12 cents. It is the nation's smallest MI.

FBR Units in a 'Divorce'

May 19, 2009
Two main business units that used to make up Friedman Billings Ramsey Group Inc., Arlington, Va., are going for the full divorce.

Arlington Asset Investment Corp. (the name FBR is using and expects to adopt legally after its annual meeting in June) will sell 16.7 million shares of common stock it holds in FBR Capital Markets Corp. back to that company for $72.5 million. FBR Capital became a separately traded public entity in 2007. The deal reduces Arlington's holdings in FBR Capital from 56% to 39% when it closes on June 2. Furthermore, the two sides will cooperate to facilitate the sale of Arlington's remaining holdings in FBR Capital. They also are terminating intra-company service and governance agreements. Rock Tonkel Jr., president and chief operating officer of Arlington, said the deal gives his company substantial additional liquidity and the ability to utilize its net operating loss carry-forwards and capital loss carry-forwards on a timely basis. The FBR Group was a major player in the subprime REIT IPO business, taking several firms public during the industry's boom.

Wisconsin Lender's President Resigns

May 18, 2009
Associated Banc-Corp., Green Bay, Wisc., one of the largest in-state mortgage lenders, said its president and chief operating officer, Lisa Binder, resigned, effective Friday, May 15.

No reason was given for Ms. Binder's departure. She had been with the lender for more than two years. Sandler O'Neill, which covers the publicly traded depository, said it was surprised by Ms. Binder's departure but noted, "based on our conversation with management, we believe that the decision to leave was hers and was not based on any specific incident or event." Based on rankings in the Mortgage Industry Directory, Associated is a top 20 ranked residential lender in the Milwaukee metropolitan area.

Bids Due Tuesday on POA Servicer BKUNA of Florida

May 15, 2009
The Federal Deposit Insurance Corp. has extended to Tuesday the bid deadline for all offers on BankUnited Financial Corp., Coral Gables, Fla., a thrift that has roughly $5 billion in payment option ARMs on its books, according to an investment banking source familiar with the transaction.

Final bids were originally set for Thursday, May 14 but the deadline was extended. At least three different consortiums are vying for the publicly traded BankUnited (stock symbol: BKUNA) whose shares trade for 80 cents. (Recently, Green Tree Servicing, St. Paul, Minn., bought some of BKUNA's conventional residential servicing rights.) One of the consortiums includes well regarded bottom fisher Wilbur Ross whose American Home Mortgage unit is already a large servicer of POAs. According to documents filed with the Securities and Exchange Commission, Ross' American Holdings recently bought 500,000 shares of BKUNA for 31 cents and then want out and bought 43,818 shares for 30 cents. (American Holdings is headquartered in Tortola.) The "Ross Group" includes the Blackstone Group, Centerbridge Capital, and the Carlyle Group. J.C. Flowers and Toronto Dominion Bank are bidding separately, said one source. The FDIC declined to comment as did BKUNA officials.

Mozilo's Attorney Responds to SEC Allegations

May 14, 2009
The attorney for Countrywide Financial Corp. founder and former CEO Angelo Mozilo acknowledged that civil SEC charges could be brought against his client but said there is no "fair basis" for them.

As reported by The Wall Street Journal late Wednesday, staff at the Securities and Exchange Commission has recommend filing civil fraud charges against Mr. Mozilo, but it is unclear what those charges might entail. The SEC has been investigating his insider stock sales which totaled more than $300 million during his last three years as head of the company. In the past Mr. Mozilo has stated that his sales were disclosed publicly and made in accordance with SEC rules. Mr. Mozilo's attorney David Siegel issued a statement that said, "We do not believe there is any fair basis for allegations to be made against Mr. Mozilo. All of Mr. Mozilo's stock sales were made in compliance with properly prepared and approved trading plans and reflected recommendations by his financial advisor over a long period of time. The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings." Mr. Mozilo retired from the company on July 1 when it was sold to Bank of America for about $4 billion. Its shares once traded as high as $45 but by the time BoA bought the company it was only selling for a few dollars a share. Mr. Mozilo co-founded the lender in the 1960s with then partner David Loeb. CFC was once the nation's largest overall residential lender/servicer and the largest funder and servicer in the subprime sector.

Report: SEC May Sue CFC Co-founder Mozilo

May 13, 2009
Staff at the Securities and Exchange Commission have recommended filing civil fraud charges against Angelo Mozilo, the co-founder of Countrywide Financial Corp., The Wall Street Journal reported Wednesday afternoon.

The newspaper quoted sources "familiar with the investigation." Mr. Mozilo, who lives in Granada Hills, Calif., not too far from the old Countywide headquarters, could not be reached for comment. His telephone number is not listed. It was widely known that the agency was investigating his insider stock sales over a three-year period. He retired from the company on July 1 when it was sold to Bank of America for about $4 billion. Its shares once traded as high as $45 but by the time BoA bought the company it was only selling for a few dollars a share. Mr. Mozilo co-founded the lender in the 1960s with then-partner David Loeb. His stock sales, which were publicly disclosed, totaled more than $300 million. CFC was once the nation's largest overall residential lender/servicer and the largest funder and servicer in the subprime sector.

Banks and Street Firms Largest Unsecured Creditors of Thornburg

May 12, 2009
The ten largest unsecured creditors of the recently bankrupted Thornburg Mortgage include banks and Wall Street firms that were owed at least $4.6 billion, according to court records.

The nature of the debts include senior subordinated notes, master repurchase agreements, and junior notes. The top three unsecured creditors are owed (combined) $3.2 billion and include Wilmington Trust ($1.3 billion), Royal Bank of Scotland ($1 billion), and Credit Suisse ($911 million). A jumbo lender based in Santa Fe, Thornburg filed for Chapter 11 protection in Maryland, listing debts of more than $1 billion. It was a publicly traded REIT. At last check this once high flying "super jumbo" lender had a servicing portfolio of about $16 billion — all of it jumbos or super jumbos.

James B. Nutter & Co. Agrees to Consent Decree with FTC

May 7, 2009
The mortgage banking company James B. Nutter & Co. has agreed to a consent decree with the Federal Trade Commission to maintain adequate data security procedures to protect its customers' financial information.

FTC did not fine the Kansas City, Mo. company because an e-mail incident that sparked FTC's attention five years ago did not involve the release of sensitive personal information. "Nothing was compromised," said president and chief executive James Nutter Jr. He noted that the software problem was fixed and no other problems have occurred. Working "very diligently with the agency, "we were able to resolve some issues relating to data security that were raised by [an FTC] audit," Mr. Nutter said. As part of the agreement, JBN agreed to hire an independent auditor to assess its data security procedures every two years for 10 years.

DTCC Recommends Daily Trade Netting for TBA MBS

May 7, 2009
The Depository Trust & Clearing Corp. is recommending daily trade netting for to be announced mortgage-backed securities transactions.

The DTCC said the move would cut what have been high costs in processing the trades and increase risk protection for the market. "The idea is to streamline the somewhat complex current `balance order' netting process," said Murray Pozmanter, DTCC's managing director, clearance and settlement/fixed income. "The industry's process today requires trading firms to allocate pools of mortgages against the TBA obligations we establish, and then to settle all those pools with multiple counterparties at different prices." He said the DTCC is recommending this be changed to a process where trades would be netted daily and the DTCC's Fixed Income Clearing Corp. subsidiary would "step in as the allocation and settlement counterparty." Currently, MBS trades are netted only once a month, beginning 72 hours prior to the monthly settlement date established for each kind of TMBA security. Because this forces trading firms to meet a netting cut-off on the "72 hour day," the number of trades incorporated in the current netting process can be limited, according to a DTCC report.

MI Stocks Surge

May 4, 2009
As Triad Guaranty's stock price dropped by 10% to 72 cents per share after Friday's meteoric rise, other mortgage insurance companies saw their stock prices record substantial gains at the close of trading on Monday.

Walnut Creek, Calif.-based PMI Group Inc.'s stock went up a whopping 42% to $1.08 per share. MGIC Investment Corp., Milwaukee, ended the day with a stock price of $3.88, up 25% from the day's opening trade. Richmond, Va.-based Genworth Financial's share price went up 14.75% to $2.80 per share. Radian's stock went up 10% to $2.20. The Dow closed at 8426.74 on Monday, up more than 214 points from the day's opening.

ABA Mortgage Program Passes $100 Billion Mark

May 4, 2009
The American Bankers Association secondary market program has helped its members sell more than $100 billion in single-family mortgages to preferred investors such as Fannie Mae and CitiMortgage.

The trade group's 8-year-old 'Mortgage Solutions' program has "passed a milestone when total deliveries of mortgages surpassed the $100 billion mark," ABA said. In 2008, ABA members sold $9.7 billion in mortgages to their secondary market partners, which also include Freddie Mac, Farmer Mac, and Bank of America Home Loans. Participating banks accrued aggregate savings of $11.6 million last year, ABA said.

'Super Jumbo' Investor Thornburg Goes BK

May 4, 2009
Thornburg Mortgage of Santa Fe, N.M., filed for bankruptcy protection late last week, listing debts of more than $1 billion.

The filing had been anticipated. The company's fate is now in the hands of its bondholders who are expected to liquidate its assets which include on-balance sheet jumbo mortgages and bonds of at least $17 billion. Its lenders include Credit Suisse, JPMorgan Chase, Greenwich Capital, and Royal Bank of Scotland. Up until last year Thornburg was a publicly traded REIT. Its shares now trade on the "pink sheets" for about one penny. It stopped funding loans last year but continued to service jumbo and super jumbo assets held on its balance sheet.

NAR Hoping Increase in 'Pending' Index a Positive Sign

May 4, 2009
The National Association of Realtors' 'Pending Home Sales Index' rose in March for the second consecutive month, and the trade group is hoping that this could be a sign that home sales are finally catching fire.

However, housing analyst Jack McCabe cautioned this morning that "one month does not make a trend." Moreover, in recent interviews with National Mortgage News, two large lenders - Bank of America and Chase - said that refinancings were accounting for a huge percentage of their originations - and not purchase loans. Still, NAR's index increased to a reading of 84.6 in March, compared to 82 and 80.4 in February and January, respectively. In December the ratio was 87.1. NAR economist Lawrence Yun said it could take "a few months for the market to gain momentum," adding that the second monthly increase "could be the leading edge of first-time buyers responding to" favorable affordability conditions and a national first-time buyer tax credit of $8,000. (In California the tax credit is $10,000.)

Mortgage ETF Created

May 1, 2009
Keefe, Bruyette & Woods and State Street Global Advisors have launched what they said is the first exchange traded fund to offer 100% exposure to the U.S. mortgage finance industry.

The two companies said the new ETF allows investors to gain exposure or hedge positions related to interest rates, housing inventory and pricing cycles through a group of 24 mortgage finance-related stocks. Companies represented by the stocks through KBW's Mortgage Finance Index include pure mortgage players, mortgage processors, title insurers, homebuilders, and banks and thrifts with loan books dominated by mortgages. The fund is called SPDR KBW Mortgage Finance ETF and it began trading April 30 on the New York Stock Exchange under the ticker symbol KME.

Ex-AmHome Chief Strauss Settles with SEC

April 29, 2009
Former American Home Mortgage founder and CEO Michael Strauss — who is now running a loan modification startup — has agreed to pay the Securities and Exchange Commission $2.45 million to settle a slew of allegations including one where he had others turn company losses into "fictional" profits.

Mr. Strauss, who could not be reached for comment, also agreed not to serve as an officer or director of a publicly traded company for five years. The SEC also brought charges against two other former AmHome executives, Stephen Hozie (CFO), and Robert Bernstein. Both could not be reached for comment and have yet to settle. Two former officers of AmHome (once a publicly traded REIT) told National Mortgage News that they have been contacted by the FBI concerning AmHome's operations. Mr. Strauss' new loan modification company is called InstaModify and according to its website has offices in East Meadow, N.Y., and Irvine, Calif. This publication left a message for Mr. Strauss at the East Meadow office and had received no response at press time. A prime and alt-A lender/servicer, AmHome filed for bankruptcy in the summer of 2007, costing investors hundreds of millions of dollars.

Kanjorski Wants Oversight of Appraisal Management Cos.

April 27, 2009
Appraisal management companies have cornered nearly two-thirds of the single-family appraisal market and Rep. Paul Kanjorski, D-Pa., is concerned there is very little oversight of these entities.

"We must establish oversight of appraisal management companies. They now touch 64% of written appraisals but are subject to little supervision," Rep. Kanjorski said. The high ranking member of the House Financial Services Committee said he is preparing a "comprehensive" appraisal reform amendment that he plans to offer when the committee meets to mark up a mortgage reform bill. The Appraisal Institute and other appraiser trade groups have warned the committee that the use of AMCs increases costs for consumers. The management firms rely on less experienced and less competent appraisers and keep "half the appraisal fee in most cases," Appraisal Institute president Jim Amorin testified. "One remedy is to direct that appraisal fees be clearly disclosed to borrowers and differentiated from the management or service fees on all relevant mortgage loan documents," Mr. Amorin said.

Kanjorski Wants Oversight of Appraisal Management Cos.

April 24, 2009
Appraisal management companies have cornered nearly two-thirds of the single-family appraisal market and Rep. Paul Kanjorski, D-Pa., is concerned there is very little oversight of these entities.

"We must establish oversight of appraisal management companies. They now touch 64% of written appraisals but are subject to little supervision," Rep. Kanjorski said. The high ranking member of the House Financial Services Committee said he is preparing a "comprehensive" appraisal reform amendment that he plans to offer when the committee meets to mark up a mortgage reform bill. The Appraisal Institute and other appraiser trade groups have warned the committee that the use of AMCs increases costs for consumers. The management firms rely on less experienced and less competent appraisers and keep "half the appraisal fee in most cases," Appraisal Institute president Jim Amorin testified. "One remedy is to direct that appraisal fees be clearly disclosed to borrowers and differentiated from the management or service fees on all relevant mortgage loan documents," Mr. Amorin said.

Freddie CFO Dead in Apparent Suicide

April 22, 2009
David Kellermann, the acting chief financial officer of Freddie Mac -- and an employee of the firm for 16 years -- was found dead at his Northern Virginia home early Wednesday morning in what authorities said was an apparent suicide, according to combined press reports.

The 41-year-old Kellermann had been Freddie Mac's chief financial officer since September, when the government placed the mortgage investing giant and its sister company, Fannie Mae, into a federal conservatorship. A spokesman for Freddie Mac had no comment and referred all press inquiries to the Fairfax County police. As acting chief financial officer, Kellermann was responsible for the GSE's financial controls, financial reporting, tax, capital oversight and related matters. He began his career at the company as a financial analyst/auditor. He also worked in Freddie's securities sales and trading unit. Freddie's CEO (also appointed in September), David Moffett, resigned last month. The company's stock trades for 86 cents a share.

Stocks, Dow Rises End of Trading Day

April 9, 2009
Mortgage stocks went up across the board at the end of trading on Thursday as the Dow closed up 246 points. In particular, Bank of America Corporation's stock went up 35.27%.

Additionally, Wells Fargo saw its stock price go up 31.7% at the end of the day Thursday. Earlier today, the banking giant announced that it expects a $3 billion profit from the first quarter. SunTrust Banks also saw a huge surge at 30.56%. US Bancorp ended trading on Thursday at $17.64 a share, up 22.84% from the last trade. Government sponsored enterprises Fannie Mae and Freddie Mac also ended the trading day Thursday on up notes, up 8.82% and 10%, respectively.

Builders See More Buyer Interest

April 8, 2009
Builders are seeing increased foot traffic at model homes and say potential buyers are drawn by low mortgage rates, affordable prices as well as a first-time homebuyer tax credit, according to the National Association of Home Builders.

"With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing," said NAHB chairman Joe Robson. The trade group noted that 1.5 million visitors have logged on to its website to learn more about the $8,000 first-time homebuyer tax credit that Congress approved in February. A survey by Move Inc. found that "nearly 20% of those that plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November," NAHB said. Move Inc., based in Westlake Village, Calif., provides home listing services for builders and Realtors. Buyer interest typically increases in the spring.

Pulte/Centex Merger to Create 23rd Largest Lender

April 8, 2009
Once homebuilders Pulte Homes and Centex Corp. complete their just announced merger, their combined mortgage units will rank 23rd nationwide in residential originations, according to figures compiled by National Mortgage News.

However, when it comes to residential servicing rights, neither of the their mortgage divisions service much in the way of loans. Two years ago — before the A- to D credit market crashed — Centex sold its subprime division, Centex Home Equity, to a hedge fund. In the fourth quarter Pulte Mortgage, Englewood, Colo., ranked 29th among all funders ($848 million) with Centex's CTX Mortgage ranking 34th with originations of $601 million. It's expected that, in time, the two publicly traded HBs will merge their mortgage divisions, though at press time this could not be confirmed.

Industry Urges More Capital Support for Private MIs

April 8, 2009
Housing industry groups are urging the Treasury Department to provide capital support for the private mortgage insurers so more financing will be available for homebuyers that can't muster a 20% downpayment.

In a letter to Treasury secretary Timothy Geithner, the trade groups warn that "a vibrant housing market will not be possible unless new homeowners enter the market." They point out that a $1 billion capital infusion into the MI companies would allow lenders to finance $80 billion in purchase mortgages that could be sold to Fannie Mae and Freddie Mac. (By charter, the GSEs cannot finance mortgages with less than 20% down unless they are credit enhanced with private mortgage insurance.)"This increased level of financing is critical to meet the demands of potential homeowners, restore growth in the market and reduce the excess supply of homes," the five trade groups say. The Financial Services Roundtable, Mortgage Bankers Association, National Association of Home Builders, National Association of Hispanic Real Estate Professionals and Asian Real Estate Association of America signed the letter. GSE regulator James Lockhart also has called on Treasury to provide support for the capital-constrained private MIs.

Treasury Extends PPIP Application Deadline

April 7, 2009
Fund managers seeking to run and raise capital for the Public-Private Investment Program will have an extra two weeks to file their applications with the Treasury Department.

Treasury said it is extending the deadline from April 10 to April 24 to increase small business participation in the Legacy Securities program. Prospective fund managers are being encouraged to partner with small businesses, including firms owned by veterans, minorities and women. "There are several ways smaller firms can partner with fund managers including as an asset manager, an equity partner or a fundraising partner," Treasury said. Others can provide services, such as trade execution or valuation. Originally, Treasury wanted to select only five managers in the first round. But that may be changing also. "More than five pre-qualified fund managers may be selected depending on the number of applications deemed to be qualified," Treasury said. Successful applicants will be notified by May 15. The Public-Private Investment Program is designed to purchase bad residential and commercial mortgage-backed securities from banks and other financial institutions. The goal is to create a market for these securities and clean up bank balance sheets. Fund managers are expected to have a demonstrated capacity to raise $500 million of private capital and manage $10 billion of eligible MBS.

Cement Makers Not Looking for Quick Recovery

April 7, 2009
A housing recovery isn't likely to begin until the middle of next year at the earliest, according to the chief economist for the trade group representing U.S. and Canadian cement makers.

Edward Sullivan of the Portland Cement Association, Skokie, Ill., said for the market to begin rebounding, there must be a "meaningful recovery" in sales and a corresponding reduction in unsold inventory. "Housing construction activity cannot begin until sales recover," Mr. Sullivan said in PCA's latest Economic Research report. "Increased foreclosures, coupled with deteriorating labor markets and tight credit conditions, will delay significant sales activity until mid-2010. Improvements in housing starts are not expected to be significant until 2011." The economist said that be expects the housing recovery bill, along with bank efforts to rewrite toxic mortgages, will help slow foreclosures over the next 18 months. But he also predicted that the weak labor market and declining house prices will lead to a net increase in repossessions, which will be added to the housing inventory. Furthermore, Mr. Sullivan said, unless Uncle Sam injects more cash into the banking system, tighter credit standards will serve as another drag on housing. "Under such a scenario, the housing recovery and overall economic recovery could be delayed significantly," he said.

Troubled Maryland Bank Finds Buyer

April 7, 2009
The owner of a company that provides mortgage financing to the health care industry is purchasing a troubled state-chartered commercial bank in Maryland.

Jack Dwyer, a Baltimore businessman and owner of Capital Funding Group Inc., is acquiring AmericasBank Corp., Towson, Md., in a cash transaction and at no cost to the FDIC. Financial terms of the deal were not disclosed. After the close of the transaction, the newly formed Capital Funding Bancorp intends to inject more than $35 million in capital into the bank, which has $146 million in assets. Mr. Dwyer said AmericasBank is a good platform that Capital Funding Group can use to expand its health care related mortgage lending program. Last summer AmericasBank closed its residential mortgage banking operation but continues to make mortgage loans through its bank branches. Its stock was delisted from Nasdaq and now trades over the counter. It closed on April 6 at $0.10 per share. At the end of September, AmericasBank signed an agreement with the Federal Reserve Board giving it 60 days to submit a capital plan and a written business plan for 2009 to improve earnings and the overall condition of the bank.

Treasury Extends PPIP Application Deadline

April 6, 2009
Fund managers seeking to run and raise capital for the Public-Private Investment Program will have an extra two weeks to file their applications with the Treasury Department.

Treasury said it is extending the deadline from April 10 to April 24 to increase small business participation in the Legacy Securities program. Prospective fund managers are being encouraged to partner with small businesses, including firms owned by veterans, minorities and women. "There are several ways smaller firms can partner with fund managers including as an asset manager, an equity partner or a fundraising partners," Treasury said. Others can provide services, such as trade execution or valuation. Originally, Treasury wanted to select only five managers in the first round. But that may be changing also. "More than five pre-qualified fund managers may be selected depending on the number of applications deemed to be qualified," Treasury said. Successful applicants will be notified by May 15. The Public-Private Investment Program is designed to purchase bad residential and commercial mortgage-backed securities from banks and other financial institutions. The goal is to create a market for these securities and clean up bank balance sheets. Fund managers are expected to have a demonstrated capacity to raise $500 million of private capital and a minimum of $10 billion of eligible MBS under management.

Southeast Broker Show Started

April 6, 2009
A new Southeast Mortgage Conference will take place on Oct. 7 to 9 in Destin, Fla.

According to the sponsors of the show, the new multistate 2009 conference will aid mortgage professionals in adapting to ever-changing legislative and regulatory rules that shape the industry's future and the way it does business. The event is set to include education and networking opportunities as well. The show is co-hosted by six state mortgage broker trade groups from Alabama, Arkansas, Florida, Georgia, Mississippi and Tennessee. For more details, visit http://www.semc2009.com.

Feds and States Team Up for Crackdown on Rescue Scams

April 6, 2009
Federal and state authorities announced a new joint effort to stop scam artists who target troubled owners struggling to hold onto their homes.

"If you prey on vulnerable homeowners," U.S. attorney general Eric Holder said at a press conference, "we will find you and we will punish you." As part of the initiative, the Treasury Department's Financial Crimes Enforcement Network has issued an advisory to help financial institutions spot questionable loan modification schemes and report that information to the authorities. FinCEN, working with other law enforcement agencies and regulators, will identify possible suspects for civil and criminal investigations. "We will shut down fraudulent companies more quickly than before," said Treasury secretary Timothy Geithner, vowing to target "companies that otherwise would have gone unnoticed under the radar." Calling perpetrators of fraudulent rescue schemes "bottom feeders," Federal Trade Commission chairman Jon Leibowitz said five new cases have been brought against companies who "kick people when they are down, sabotaging" their efforts to save their homes. Four of the cases name outfits which use "copy-cat names and logos" to try to trick homeowners into thinking they are working with legitimate government agencies, while the fifth calls itself the "Federal Loan Modification Center" even though it has no federal connection. The FTC also has sent warning letters to 71 additional possible scam artists who promise to stop foreclosures, save people's houses and claim a 97% success rate of doing so. Such companies "will promise" to do these things "but they don't," said Illinois attorney general Lisa Madigan. "All they do is take your money."

Triad Received 'CO' From Illinois Director of Insurance

April 3, 2009
Triad Guarantee recently received a corrective order from the Illinois director of insurance, which would impact its insurance subsidiaries, Triad Guaranty Insurance Corporation and Triad Guaranty Assurance Corporation.

Under the order, effective June 1, all valid claims under Triad's mortgage guaranty insurance policies will be paid 60% in cash and 40% by the creation of a deferred payment obligation. "Continuing volatility in the housing and mortgage markets, a high incidence of fraud and noncompliance with underwriting programs in the loan origination process make it very difficult to forecast Triad's future financial position and claims," said Triad CEO Ken Jones. The company said "there is more uncertainty today than when we entered run-off in July 2008." The MI, the nation's smallest, is in the process of self-liquidation. Its shares trade for just 29 cents each.

U.S. Officials Seek Efficient Mod Borrower-Servicer Matches

April 2, 2009
Obama administration officials believe they have designed a loan modification program that will fit a wide range of struggling homeowners and they want to ensure that these borrowers are guided quickly to the right servicer.

"This mod program is the right option for most folks," said William Apgar, senior advisor to the HUD secretary for mortgage finance. And special emphasis is being placed on the "triage function to make sure that folks that just need information about whether they are eligible can be sent directly to the appropriate servicer," Mr. Apgar told a Washington meeting of the National Alliance of Community Development Associations. The Department of Housing and Urban Development official also noted that servicers are responding to the "generous" loan modification incentives and building up their processing capacity. "We are already seeing announcements of servicers hiring new staff and opening up new call centers," Mr. Apgar said. At the same time, the administration is concerned foreclosure rescue scam artists are ramping up, too. "There are so many scams out there that people won't be able to tell the true mods from the false ones." He said HUD is working with state attorneys general, the Federal Trade Commission and others to keep a lid on these scams.

NAMB Drops Suit on HVCC

April 2, 2009
The National Association of Mortgage Brokers has withdrawn its lawsuit against the Federal Housing Finance Agency, one day after it sent a letter to Congress asking it for help to stop implementation of the Home Valuation Code of Conduct.

The trade group called the withdrawal a "strategic maneuver;" it said it wants to assess the FHFA's claim that no court may review its decisions while Fannie Mae and Freddie Mac are in conservatorship. "This issue goes beyond the bounds of this particular case," said NAMB president Marc Savitt. "All companies, investors, and trade groups should understand there may not be a court, any court, able to hear their case while FHFA is utilizing their conservatorship powers." NAMB said its options include filing suit again with revised and expanded arguments directed at FHFA's new claim.

KPMG Slapped with $1B Negligence Suit Over New Century

April 2, 2009
The trustee for bankrupt subprime giant New Century Financial Corp. is suing the lender's auditor, KPMG, for $1 billion in damages, charging that it abetted the firm in misstating its true financial condition.

Among other things, the trustee accuses the auditor with negligence noting that KPMG "did not act as a watchdog." The bankruptcy trustee is represented by the California law firm of Thomas, Alexander & Forrester, which filed claims in New York and California. New Century, whose shares once traded as high as $55, collapsed in the spring of 2007, wiping out shareholders. At its peak, the nation's second largest subprime lender had a market capitalization of almost $3 billion. KPMG issued a statement denying that it was responsible for New Century's collapse, saying it acted "in accordance with professional standards." The accounting firm said it would vigorously fight the lawsuits. A report issued last summer said creditors of NCFC are owed as much as $1.6 billion. KPMG's predecessor firms were sued for negligence by federal regulators during the S&L crisis. Some of those claims were settled out of court.

Hotel REIT Gets Waiver From Lenders

March 31, 2009
Interstate Hotels & Resorts, Arlington, Va., has received a waiver from the lenders of its senior credit facility through June 30.

The waiver covers a violation of the facility's terms that require Interstate's common stock maintain its listing on the New York Stock Exchange. The NYSE suspended trading of Interstate's stock on March 12 after the company failed to meet the minimum $15 million market capitalization requirement. The real estate investment trust currently trades on the over-the-counter market as it waits for the NYSE to rule on its appeal. As part of the waiver agreement, the interest rate on the credit facility was increased 75 basis points to LIBOR plus 350 basis points. In addition, the company paid a 50 basis point fee to consenting lenders, and the facility size was permanently reduced to $173.3 million from $198.0 million. The new facility size provides for $10 million of borrowing capacity, of which $6 million is available through June 30. The company does not expect to draw on the facility during the waiver period.

CRE REIT Says Stock Will Be Delisted on NYSE

March 30, 2009
JER Investors Trust Inc., a commercial real estate investment trust, said the New York Stock Exchange will permanently delist its common stock on Tuesday.

The delisting will occur prior to the opening of trading that day, the REIT said. Its stock will continue to trade in the over-the-counter market. The delisting resulted from the REIT's failure to maintain a 30-day trailing average global equity market capitalization of at least $15 million as required by the NYSE. The REIT had $743.5 million in CRE mortgage-backed securities as of Sept 30, 2008. JER Investors Trust also said it has cancelled a previously planned public offering of $150 million in a new class A common stock due to market conditions. In addition, the REIT said it is discontinuing its regular quarterly dividend and will replace it with an annual dividend. JER is associated the J.E. Roberts Cos., McLean, Va.

Acknowledging Warehouse Crisis, FHFA Asks for Proposals

March 30, 2009
Acknowledging that non-depository mortgage bankers are facing a warehouse funding crisis, the Federal Housing Finance Agency said it has met with industry leaders and is seeking proposals on how Fannie Mae and Freddie Mac can play a role in solving the problem.

Glen Corso, who runs an advisory group called The Warehouse Lending Project, said he is working on a proposal where Fannie and Freddie would use their "guarantee authority" to help warehouse banks move the loans "off-balance" sheet which would alleviate capital charges on the credits. Mr. Corso said TWLP soon will submit its ideas to FHFA. The Mortgage Bankers Association is expected to submit a proposal too, but on Monday the trade group did not return a telephone call about the matter. In a statement FHFA said it has met "with a number of industry participants and others to try to develop solutions."

MBA Formally Asks for Capital Cut on Warehouse Lines

March 26, 2009
The Mortgage Bankers Association has asked federal banking regulators to cut the capital requirement on warehouse lines of credit by as much as 80% to alleviate a funding crisis facing non-depositories.

Currently, depending on what stage of funding a loan is in, the risk weighting on a warehouse loan can be as high as 100%. This means $8 in capital must be held for every $100 in warehouse credit outstanding. For Fannie Mae, Freddie Mae, Federal Housing Administration and Veterans Affairs loans the trade group wants the capital charge to be 20%. Non-bank mortgage lenders are seeing their lines disappear or reduced with several regional banks exiting the warehouse sector as a way to preserve capital. MBA's letter was sent to the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision.

MBA Cuts 20 Staffers

March 24, 2009
The Mortgage Bankers Association on Monday laid off about 16% of its workforce — about 20 full-timers — including four of its vice presidents.

A spokeswoman for the trade group said the layoffs "were across the board" affecting all of its departments, including communications, government, marketing and research. Since last year MBA has lost about 30% of its staff. After the cutbacks the organization will employ about 110. Recently, mortgage technology vendors said MBA would eliminate its annual technology trade show to save money, but the spokeswoman shot down such talk in part. Sources say it is unlikely the MBA will hold a standalone technology show and may fold it into other shows or hold smaller regional conferences. MBA's membership ranks have been hurt by the worst housing downturn since the Great Depression, resulting in hundreds of non-banks and depositories closing their doors over the past 18 months.

Guaranty's Warehouse Chief Leaving

March 24, 2009
Jim Clapp, senior vice president in charge of warehouse lending at Guaranty Financial Group, is leaving the bank, industry sources told National Mortgage News.

Mr. Clapp declined to comment on the matter. He is expected to take a job with a mortgage banking company based in Texas. The Austin-based GFG is winding down its warehouse lending business but will continue to fund lines that are not set for expiration until 2010. GFG, whose shares trade for less than $1, is trying to shrink its balance sheet in an effort to preserve capital. In a recent filing with the Securities and Exchange Commission, the depository said it would not file its annual report and 10-K on time. The thrift has been hit by large markdowns on its MBS and commercial real estate portfolios.

MBA Cuts 20 Staffers

March 23, 2009
The Mortgage Bankers Association on Monday laid off about 16% of its workforce - about 20 full-timers - including four of its vice presidents.

A spokeswoman for the trade group said the layoffs "were across the board" affecting all of its departments, including communications, government, marketing and research. Since last year MBA has lost about 30% of its staff. After the cutbacks the organization will employ about 110. Recently, mortgage technology vendors said MBA would eliminate its annual technology trade show to save money, but the spokeswoman shot down such talk in part. It is unlikely the MBA will hold a standalone technology show, but rather fold technology into its other shows or do smaller regional technology shows. Its membership ranks have been hurt by the worst housing downturn since the Great Depression, resulting in hundreds of non-banks and depositories closing their doors over the past 18 months. The trade group has been criticized by members and past employees for two large, somewhat recent blunders: building a new $100 million headquarters in Washington and then struggling to lease out its empty floors. It also merged with a subprime lending trade group, most of whose lending members have failed. Discussing the office building, one former MBA executive said, "They basically traded paying the rent for bodies." The executive, requesting anonymity, said the staff cuts "will impact a lot of long-term projects they have."

Fitch Cuts Ratings on Two Largest MI Firms

March 20, 2009
Fitch Ratings has cut the insurer financial strength ratings at MGIC Investment Corp. and The PMI Group to 'BBB' and 'BB,' respectively.

For Milwaukee-based MGIC, the cut "reflects the loss expectations and capital constraints facing MGIC as an independent mortgage insurance company," Fitch said. "In addition to limited capital markets access, MGIC has few remaining assets that could be monetized to increase its capital resources (as the company did in 2008 with the sale of its interest in Sherman Financial LLC) and will largely have to rely on current capital resources to satisfy ongoing MI claims." Fitch said PMI requested that the rating agency withdraw its ratings and will no longer provide it with non-public data. "PMI has extremely limited access to the capital markets and, as a result, will largely have to rely on current capital resources to satisfy ongoing MI claims," Fitch said. Both MIs have posted large losses in the past year and their shares trade for $1 or less.

NAHB: Howard 'Continues' as President/CEO

March 18, 2009
A day after press reports suggested that Jerry Howard might be dethroned as president and CEO of the National Association of Home Builders, the trade group issued a press release saying that he is still in charge.

One builder, requesting anonymity, told National Mortgage News that Mr. Howard and certain homebuilding firms that were upset with the trade group's apparent stance on tax breaks that might only benefit small builders "have kissed and made up." In its statement NAHB noted that its High Production Home Builders Council met Monday for a "candid" discussion of issues facing builders, adding that "now more than ever, it is important for all homebuilders to be united." The Wall Street Journal reported in its Monday edition that Mr. Howard might be forced out of NAHB by a faction of large publicly traded building companies.

Chair: MBA to Become a 'Lean Mortgage Machine'

March 18, 2009
The chairman of the Mortgage Bankers Association, David Kittle, said there are changes coming to the organization that will make it a "lean mortgage machine going forward."

He told attendees at the Regional Conference of Mortgage Bankers Associations in Atlantic City those changes will make MBA run like an entrepreneurial business. Details will come by the end of this month. Mr. Kittle made the theme of his speech, "If not now, when?" Speaking to the power of what one person can do, he noted the number of people in the room equals the gap in the disputed U.S. Senate race in Minnesota. As for issues with warehouse liquidity, MBA is meeting with the U.S. Treasury Department looking for the establishment of loan participation programs by Fannie Mae, Freddie Mac and/or the Federal Home Loan Banks. Such a program will reduce capital requirements for lenders and free up funds to be used to originate loans, he said. He addressed the cramdown issue, calling for members to fight for changes to the law. If the industry does not do something about it, "they will do something to us," Mr. Kittle said. He also said he is working with other housing trade groups to go to get a $15,000 tax credit for home purchases, and he called on the administration to drop plans to limit the mortgage interest deduction, declaring, "President Obama, don't kill it, expand it."

NAHB: Howard 'Continues' as President/CEO

March 17, 2009
A day after press reports suggested that Jerry Howard might be dethroned as president and CEO of the National Association of Home Builders, the trade group issued a press release saying that he is still in charge.

One builder, requesting anonymity, told National Mortgage News that Mr. Howard and certain home building firms that were upset with the trade group's apparent stance on tax breaks that might only benefit small builders "have kissed and made up." In its statement NAHB noted that its "High Production Home Builders Council" met Monday for a "candid" discussion of issues facing builders, adding that "now more than ever, it is important for all homebuilders to be united." The Wall Street Journal reported in its Monday edition that Mr. Howard might be forced out of NAHB by a faction of large publicly traded building companies.

Thornburg May File for Bankruptcy Protection

March 17, 2009
Thornburg Mortgage, once a top ranked originator of "super jumbo" loans, said Tuesday it may file for Chapter 11 bankruptcy protection and has hired the law firm of Kirkland and Ellis to advise it on restructuring options.

A REIT that is publicly traded on the "pink sheets," Thornburg said its lenders — which include such names as Citigroup, Credit Suisse, JPMorgan Chase, and Greenwich Capital — have agreed to give it certain forbearances on its loans "through March 31." The company was de-listed by New York Stock Exchange late last year. Its shares trade for just 2 cents compared to an all time high of $140. It has an on-balance sheet portfolio of roughly $20 billion that it services on a monthly basis and needs to finance.

E-Vault/ID Verify Link Seeks to Offer Security, Compliance

March 11, 2009
SigniaDocs, Houston, has integrated its electronic vault technology with Equifax's identity verification engine to address their respective users' interest in using secure automation to counter increasing ID fraud through means in line with new federal rules.

The engine, which is called Equifax Secure's eIDverifier, verifies online mortgage applications and the company promises borrower identification that is compliant with the Federal Trade Commission's Fair and Accurate Credit Transactions Act red flag rules. The rules, which first went into effect in November 2008 and are set for full enforcement as of May 1, require companies to look out for and address potential indicators that may be signs of ID fraud. A February report by Javelin Strategy & Research, San Francisco, indicated that the number of identity fraud victims increased 22% to 9.9 million adults in the United States in 2008.

Finacorp Names Three VPs to Mortgage Team

March 6, 2009
Finacorp Securities, Irvine, Calif., has expanded its Minneapolis office and named three vice presidents to its mortgage team in an effort to bolster fixed income securities coverage for its institutional clients: Mike Weir, Tom Sullivan and Mike Lingvall.

Mr. Weir and Mr. Sullivan, now both VPs in sales and trading at Finacorp, had played roles in founding North American Capital Markets. All three men at one point worked in the fixed income area at Dain Rauscher. Among their most recent positions: Mr. Weir worked in Oak Ridge Financial's investment banking department, Mr. Sullivan worked with Cronin & Co. as a VP and MBS trader, and Mr. Lingvall led fixed-income private placement trading at Morgan Joseph Inc. with a focus on distressed and crossover credits.

Broadpoint Adds Five

February 27, 2009
Broadpoint Capital, Inc., a New York broker-dealer subsidiary of Broadpoint Securities Group, Inc. said Chris Lau, Ryan King, Brian Horan, Joseph Lyons, and Mike Regan have joined Broadpoint DESCAP, its mortgage-/asset-backed security and rates division.

Mr. Lau, a former managing director on RBS Greenwich Capital's commercial MBS desk, joins Broadpoint as a managing director of the CMBS group. Mr. King, previously associate director of ABS trading at Barclays, is joining Broadpoint's ABS trading group. Mr. Horan, previously a trader of adjustable-rate mortgage products at GMAC-RFC, joins Broadpoint as a director of MBS trading and marks Broadpoint's further expansion into a greater presence in the agency ARM market. Mr. Lyons, previously an executive director of the fixed income structured credit sales group at Morgan Stanley, joins the sales group of the division. Mr. Regan, former director at Bank of America, joins the sales group of the division. Mr. Regan started his career as a mortgage originator at Citimortgage and he managed a team of four covering hedge funds, money managers and insurance companies while at Bank of America.

Fannie Posts Massive Loss for 4Q and Year

February 27, 2009
Operating as a ward of the federal government, Fannie Mae posted a massive $25.2 billion loss in the fourth quarter, blaming its abysmal performance on asset- and derivative-related writedowns.

For the year the GSE lost an eye popping $58.7 billion. The Congressionally chartered mortgage investing giant declared that it had a negative net worth of $15.2 billion at year-end - a gap that must be filled with taxpayer money. FHFA director James Lockhart already has requested that the Treasury Department cover the financial hole by increasing its preferred stock ownership stake in the company. In 2007, Fannie lost just $2.1 billion. It was taken over by the Federal Housing Finance Agency in early September of 2008. Its common stock continues to trade on the NYSE but at just 40 cents a share. Its main competitor, Freddie Mac, also is a ward of the government.

Fannie Posts Massive Loss for 4Q and Year

February 26, 2009
WASHINGTON -- Operating as a ward of the federal government, Fannie Mae posted a massive $25.2 billion loss in the fourth quarter, blaming its abysmal performance on asset- and derivative-related writedowns. For the year the GSE lost an eye popping $58.7 billion.

The Congressionally chartered mortgage investing giant declared that it had a negative net worth of $15.2 billion at year-end -- a gap that must be filled with tax payer money. FHFA director James Lockhart has already requested that the Treasury Department cover the financial hole by increasing its preferred stock ownership stake in the company. In 2007 Fannie lost just $2.1 billion. It was taken over by the Federal Housing Finance Agency in early September. Its common stock continues to trade on the NYSE but at just 40 cents a share. Freddie Mac, also a ward of the government, is expected to issue its 4Q earnings shortly. Similar results are expected. Both GSEs were large investors in subprime and alt-A mortgage-backed bonds.

Some GOP Members Open to Cramdowns

February 25, 2009
Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs.

Four high ranking Republicans on the House Judiciary and Financial Services Committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage-backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

Builder, Realtors Sidelined on Cramdown Issue

February 25, 2009
In their fight to stop bankruptcy cramdowns, financial services groups can no longer count on the support of the Realtors and homebuilders as the House prepares to vote on a housing bill that would allow bankruptcy judges to reduce or cram down the principal amount of residential mortgages.

The National Association of Realtors is supporting passage of the bill (H.R. 1106) because it enhances the FHA Hope for Homeowners program that allows certain troubled borrowers to refinance and provides legal protections for servicers that engaged in loan modifications. The National Association of Home Builders recently changed its position on bankruptcy cramdowns. And the trade group is willing to accept a temporary change in the bankruptcy code to facilitate loan modifications. Meanwhile, the House is slated to vote Thursday (Feb. 26) on the housing bill and financial services lobbyists are working to narrow the negative effects of the bankruptcy provisions.

Some GOP Members Open to Cramdowns

February 24, 2009
Key Republican congressmen say they are willing to work with the Obama administration on bankruptcy cramdown legislation that exempts Fannie Mae, Freddie Mae, the Federal Housing Administration and government-related loan programs.

Four high-ranking Republicans on the House Judiciary and Financial Services committees said they oppose the "broad" bankruptcy bill that the House is scheduled to vote on this Thursday. "It is our hope the Obama administration will work with us in a bipartisan effort to narrow the proposed changes to the bankruptcy code," the four House members said in a letter to Treasury secretary Timothy Geithner. Reps. Lamar Smith (Texas), Trent Franks (Ariz.), Spencer Bachus (Ala.) and Shelly Capito (W.Va.) signed the Feb. 23 letter. Meanwhile, financial services trade groups are urging House leaders to strip the bankruptcy provisions from the housing bill (H.R. 1106) that is slated to go to a vote on Thursday. "We appreciate the fact that provisions have been added to H.R. 1106 that improve the bill reported by the Judiciary Committee (H.R. 200) with respect to FHA and VA loans and how losses are allocated to investors in mortgage backed securities pools. However, H.R. 1106 still does not address the president's recommendations for narrowing the scope of the cramdown to a targeted approach that makes bankruptcy a last resort rather than a first option," says a joint industry letter to House Democratic and Republican leaders.

FBRG Changes Name to Arlington Asset Investment

February 23, 2009
Friedman, Billings, Ramsey Group Inc., a real estate investment trust headquartered in Arlington, Va., is changing its name to Arlington Asset Investment Corp.

It will begin doing business under its new name immediately but needs to get approval from shareholders to amend its charter to reflect the name change at its next annual shareholders meeting in June 2009. "We believe this is a logical step for the organization," said Eric Billings, chairman and chief executive. "The new name more clearly distinguishes the company from FBR Capital Markets." FBR Capital Markets is an investment banking firm that was spun out of FBR Group in 2007 and is separately traded. Arlington Asset has notified the New York Stock Exchange of the name change and has requested a new ticker symbol, which it expects to trade under within the next 60 days.

NAMB Sues FHFA Over New Appraisal Rule

February 23, 2009
The National Association of Mortgage Brokers has filed suit against the Federal Housing Finance Agency to block implementation of a new GSE appraisal rule, claiming it could put brokers out of business and allow appraisal management firms to profit at the expense of independent appraisers and consumers.

The new 'Home Valuation Code of Conduct,' which goes into effect May 1, prohibits loan officers and mortgage brokers from directly ordering appraisals. NAMB claims the code has a "bias toward mortgage lenders" and that major banks are already requiring brokers to order appraisals through their affiliated appraisal management companies. The trade groups says the new code of conduct is a result of an investigation led by New York Attorney General Andrew Cuomo into the relationship between an appraisal management company (AMC) and the now defunct Washington Mutual, which sold mortgages to Fannie Mae and Freddie Mac. "Although the WaMu lawsuit ostensibly related to how WaMu's relationship with its AMC generated fraudulent appraisals and contributed to WaMu's financial demise, the resulting agreements focused on mortgage brokers, which had nothing to do with the claims alleged in the WaMu lawsuit," NAMB says. The new appraisal code stems from a GSE/FHFA settlement with the New York AG. The valuation code's "abolition on broker-ordered appraisals will force mortgage brokers and customers to rely on lenders and their affiliates for home value appraisals, disrupting the established business practices of mortgage brokers, decreasing the efficiency of the marketplace and increasing the costs to consumers," NAMB says.

Mission Hires New Managing Director

February 19, 2009
Mission Capital Advisors, LLC, a commercial, residential and consumer loan sale advisor with offices in New York, Florida and Texas, has hired Jason Cohen as a managing director in the firm's New York office.

In his new role, Mr. Cohen will originate loan sales, trade loans and create loan sale financing platforms. For the past five years he was a managing director with the Ackman Ziff Real Estate Group, where his volume of deals completed exceeded $3 billion and he originated and placed senior debt, mezzanine debt, preferred equity, and equity for all types of real estate. "Jason joins us at a time when there is a significant amount of commercial and residential loan portfolios on the market, with an expected increase throughout 2009 and beyond," said David Tobin, principal at Mission Capital Advisors.

Trade Groups Push for RESPA 'Coordination'

February 17, 2009
Once again industry trade groups are trying to get HUD to backpedal on a Real Estate Settlement Procedures Act rule, claiming the department should work with the Federal Reserve Board on making mortgage disclosures complementary with the Fed's so consumers will not get confused.

The Fed is working on making disclosure changes that fall under the Truth in Lending Act. "We urge that HUD and the board to join together, with industry, consumers and other stakeholders, to make the disclosures as effective as possible," according to a Feb. 9 letter sent to HUD secretary Shaun Donovan. The eight groups contend that the Department of Housing and Urban Development should withdraw or suspend a recently finalized RESPA that revamps the good-faith estimate disclosure. However, the housing industry is no longer united in opposition to the final RESPA rule. Stalwart opponents of past RESPA reforms -- the National Association of Realtors, RESPRO and the American Land Title Association -- did not sign the letter. The American Bankers Association, Mortgage Bankers Association and five other lender groups did. The eight trade groups noted that last summer 243 congressmen signed a petition urging HUD to pull back from issuing a final RESPA rule and coordinate its disclosures with the Fed's Truth in Lending Act mortgage disclosure project.

First Tennessee Sells $14B in Mortgage Servicing Rights

February 13, 2009
First Tennessee Bank said it has sold $14 billion in Fannie Mae/Freddie Mac residential servicing rights to an undisclosed third-party.

No purchase price was disclosed. The sale was brokered by Milestone Advisors LLC of Miami. FTB is a subsidiary of the publicly traded First Horizon National Corp. of Memphis. In June of last year Metropolitan Life bought most of FHN's residential origination business, including 230 retail and wholesale offices scattered across the nationwide. The bank, though, continues to originate in its depository footprint and service loans.

MBS Broker-Dealer Expands, Adds Execs

February 11, 2009
The Austin, Texas-based Amherst Securities Group L.P., a broker-dealer specializing in residential mortgage-backed securities, said it has hired executives to expand its reach in securitized products.

Joining the firm are Andrew Beal, managing director, agency collateralized mortgage obligation trading and Kenneth Dinovo, senior vice president, agency CMO structuring and trading. Also joining the firm are Daniel Farrell, senior managing director, structured products group; and Mark J. Castiglione, managing director, structured products group. Mr. Beal - who will be specializing in secondary and new issue CMOs for Amherst -previously worked at Merrill Lynch for 12 years, where he traded CMOs with a focus on secondary and new issue fixed and derivatives. Mr. Dinovo - who will be responsible for structuring and trading CMOs for Amherst - previously worked at Merrill Lynch in the agency CMO area, where he traded new issues, ran the new issue business and served as head structurer. Mr. Farrell, the former founder of a venture capital firm, and Mr. Castiglione, a former hedge fund manager, will help develop Amherst's non-mortgage asset-backed securities and structured finance business.

BlackRock Ups Stake in PHH

February 11, 2009
Subsidiaries controlled by BlackRock Financial have increased their stake in PHH Corp., Mt. Laurel, N.J. -- a top 10 ranked residential servicer -- to 9.67%, according to a new filing with the Securities and Exchange Commission.

Previously, BlackRock affiliates controlled about 5% of PHH's outstanding common stock. The new SEC filing says the investment-banking firm now owns 5.27 million shares of PHH's common stock. Previously they owned 2.5 million common shares. At press time spokespersons for both PHH and BlackRock had not returned telephone calls about the investment. The publicly traded BlackRock owns the stake on behalf of five different advisory subsidiaries, all of which carry the BlackRock name. PHH Mortgage, the nation's largest private label lender, services about $146 billion in home mortgages. Based in New York, BlackRock is headed by Larry Fink, a pioneer in the mortgage-backed securities market.

REOMAC Creates Commercial Real Estate Committee

February 9, 2009
REOMAC, a trade association serving the mortgage default industry, has created a commercial real estate committee.

Until now, the group had been primarily focused on residential real estate owned. The new committee is led by co-chairs John Murray and Peter Monroe. "In light of the imminent tsunami of commercial mortgage defaults and foreclosures, it is crucial that our organization find new and innovative ways to help the private REO industry respond," said Shelley Kaye, president of REOMAC. Mr. Monroe is currently the president and chief executive of a venture capital firm. He served as the president of the Resolution Trust Corp. Oversight Board during the late 1980s and early 1990s. "There are more than a half a trillion dollars of commercial mortgages requiring refinancing over the next three years," Mr. Monroe said. "Given the state of the economy, the debt markets and the great number of commercial mortgages in complex conduit structures, a commercial meltdown of historic proportions is inevitable." Mr. Murray is a managing member of an investment firm.

MBA Asks for Meeting with Treasury on Warehouse Crisis

February 9, 2009
The Mortgage Bankers Association is asking the Treasury Department to take quick action on a plan to offer federal guarantees on warehouse lines of credit, warning that many non-banks are facing a severe liquidity crisis as refinancing applications swell.

In a letter to Treasury secretary Timothy Geithner, MBA president John Courson requested a meeting with the government to discuss the issue. Among other ideas, the trade group wants regulators to relax the risk-based capital charge on warehouse lines. MBA's plea comes as rumors mount that some non-banks are struggling to maintain warehouse lines and complaints from loan brokers about delivery fees and turnaround times. The government has yet to adopt a policy or plan on warehouse lending but lobbyists say both the Treasury and Federal Reserve are rapidly being educated on the issue. Glenn Corso, who runs a group called The Warehouse Lending Project, said he has a meeting with Federal Reserve officials next week to discuss the matter. Mr. Corso said the Federal Housing Finance Agency is aware of the warehouse crisis "and they understand it." One idea being promoted by the industry is to have Fannie Mae and Freddie Mac buy participation interests in warehouse lines, thus adding liquidity to the market. (For more on the story see the Monday, February 9 issue of National Mortgage News.)

MBA Asks for Meeting with Treasury on Warehouse Crisis

February 6, 2009
The Mortgage Bankers Association is asking the Treasury Department to take quick action on a plan to offer federal guarantees on warehouse lines of credit, warning that many non-banks are facing a severe liquidity crisis as refinancing applications swell.

In a letter to Treasury secretary Timothy Geithner, MBA president John Courson requested a meeting with the government to discuss the issue. Among other ideas, the trade group wants regulators to relax the risk-based capital charge on warehouse lines. MBA's plea comes as rumors mount that some non-banks are struggling to maintain warehouse lines and complaints from loan brokers about delivery fees and turnaround times. The government has yet to adopt a policy or plan on warehouse lending but lobbyists say both the Treasury and Federal Reserve are rapidly being educated on the issue. Glenn Corso, who runs a group called The Warehouse Lending Project, said he has a meeting with Federal Reserve officials next week to discuss the matter. Mr. Corso said the Federal Housing Finance Agency is aware of the warehouse crisis "and they understand it." One idea being promoted by the industry is to have Fannie Mae and Freddie Mac buy participation interests in warehouse lines, thus adding liquidity to the market. (For more on the story see the Monday, February 9 issue of National Mortgage News.)

MBA Looking at Layoffs, 'Re-engineering' Its Staff

February 6, 2009
The Mortgage Bankers Association -- whose members have been decimated by the credit crisis and rising residential delinquencies -- is making contingency plans to cut staff and re-engineer its organization for leaner times.

A spokeswoman for the trade group, which currently employs about 134 full-timers, stressed that no decision on layoffs is imminent. "We are going through a general re-engineering exercise," she told MortgageWire. "We want to make sure MBA is the right size and strong going forward." Former MBA employees said the trade group continues to struggle from poor leasing on its new 10-story headquarters in downtown Washington. The 160,000 square-foot building, which was completed last year, is about half leased. "The building is an albatross around their neck," said one former MBA executive.

MERS to Manage MISMO, MBA Tech VP Departs

February 4, 2009
The Mortgage Bankers Association and MERSCORP Inc. have entered into a management agreement under which MERSCORP will be responsible for managing the day-to-day operations of MISMO, and the MBA vice president responsible for the technology standards initiative has left the trade group.

Under the management agreement, MBA retains full control of the Mortgage Industry Standards Maintenance Organization Inc. and will maintain a permanent seat on the MISMO board of directors. John A. Courson, president and CEO of the association, said, "It has always been the intent for MBA to develop and nurture MISMO and then align with another entity to conduct day-to-day management of the company in a way that best serves the real-estate finance industry. MERS, as an industry utility owned in part by MBA, provides an ideal infrastructure for MISMO and will ensure the user experience of current MISMO participants remains constant at its current high level." When asked how this affected Harry Gardner, the MBA's VP of technology who had been charged with MISMO's oversight, an MBA spokeswoman said he was no longer with the association and referred further comment to trade group executives who were not immediately available Wednesday. Mr. Gardner could not be reached for comment at press time.

MBA Asks Congress for Government Backing of Warehouse Lines

February 3, 2009
The Mortgage Bankers Association Tuesday afternoon asked Congress to provide short-term government guarantees on warehouse lines of credit to address what it believes is a liquidity crisis facing non-depository residential funders.

The trade group also thinks it might be a good idea to allow Fannie Mae and Freddie Mac to buy participations in warehouse lines of credit, a move it thinks will add liquidity to the sector. In years past mortgage bankers -- and warehouse executives -- were adamantly opposed to allowing the GSEs to get anywhere near the warehouse niche. MBA claims warehouse lending capacity has shrunk to just $25 billion or so compared to $200 billion two years ago. "This sub-crisis is the result of a shortage of warehouse lines of credit, meaning independent mortgage bankers are doubly hamstrung to originate new mortgages threatening their viability," said MBA chief John Courson in written testimony before the House Financial Services Committee. According to exclusive survey figures compiled by National Mortgage News, there are just 10 or so active warehouse lenders compared to 30 two years ago. Many warehouse providers have either failed or closed down that line of business including most of the Wall Street firms that played in the space. Active warehouse firms include Horizon Bank, Flagstar, GMAC-RFC, National City, and a few others. MBA wants the government to provide federal guarantees on warehouse lines for 12 to 24 months -- but only on Fannie Mae, Freddie Mac and government-backed loans, which currently accounts for most of the market.

California Starts Were Fewest Ever in '08

January 30, 2009
It's official: Total housing production in California in 2008 slammed to the lowest level on record, according to the California Building Industry Association.

Just 65,380 building permits were issued statewide last year for new homes, condominiums, townhouses and apartments, the trade group said. That's down 42 percent from 2007 and 69 percent -- 147,580 units - compared to 2004, the peak of the current cycle. Continuing the industry's siren call for help in bringing buyers back into the market, CBIA President Robert Rivinius said a temporary tax credit enacted in the 1970s during a similar downturn did the trick back then and could do so again. Just a few months after the credit was put in place, sales had increased by 100 percent, Mr. Rivinius said. And within two years, construction in the Golden State was back to normal levels. He also said the state's lagging economy is not likely to recover until homebuilding does. "Because homebuilding has declined so dramatically, California has lost nearly 300,000 jobs and $46 billion in economic impact in just the last three years, enough to plug the budget deficit and lift our economy out of the doldrums," he said. "New-housing construction creates jobs, generates revenue for state and local coffers and puts California back on the path to economic recovery."

Former First Bank Mortgage Pres Pleads Guilty to Scam

January 29, 2009
Mark Turkcan of Kirkwood, Missouri, pleaded guilty before U.S. District Judge Donald J. Stohr to the misapplication of funds connected with his position at First Bank Mortgage, causing a loss of $35 million.

According to Catherine L. Hanaway, U.S. attorney for the Eastern District of Missouri, the losses began as early as 1987 when Turkcan was employed by Sheahan Financial. In 1990, First Bank purchased Sheahan Financial without knowing about the losses concealed on the books of Sheahan Financial, causing First Bank to overpay in the purchase. After the purchase of Sheahan in 1990, Turkcan became president of First Bank Mortgage, where he continued to buy and sell mortgage-backed securities as part of his job. However, losses from the unauthorized and unapproved borrowings rose to approximately $35 million. They were covered up and concealed from First Bank by destroying or changing records and posting profits on the books and records of the Bank. To cover the losses, Turkcan borrowed against the mortgage-backed securities of First Bank Mortgage. These loans were also concealed from First Bank. To conceal the true nature of these transactions, Turkcan created fictitious trade tickets and Bear Stearns confirmations. Ultimately these losses rose to a level of approximately $35 million, which First Bank had to pay Bear Stearns. Sentencing is scheduled for Apr. 17, 2009. "It was strictly a solo operation," said Michael Reap, first assistant U.S. attorney, who is prosecuting the case. Mr. Reap added that Turkcan was immediately terminated when bank officials interviewed him about this matter.

SecondMarket to Add Markets for MBS, CDOs

January 28, 2009
Illiquid asset marketplace SecondMarket, New York, plans to launch its markets for mortgage-backed securities, collateralized debt obligations and certain limited partnership interests in the first quarter of this year.

The limited partnership interests that will be allowed when the platform is expanded will be in hedge funds, venture capital funds and private equity funds, the company said. The company provides a free online trading platform that uses a proprietary matching algorithm to connect buyers and sellers, with bidding on listed assets restricted to qualified institutional buyers and accredited investors. The platform also provides access to research and market activity information. The company has traded $1 billion face value of securities since 2004, including auction-rate securities, bankruptcy claims and illiquid blocks of restricted securities in public companies.

Broadpoint Creates MBS 'Repurchase' Desk

January 27, 2009
Broadpoint DESCAP, the mortgage-backed security/asset-backed security trading division of Broadpoint Capital Inc., New York, has launched a new repurchase desk and expanded its structured products group.

The repurchase desk will be headed by Joanmarie Pusateri, a former Bear Stearns managing director. Before joining Broadpoint, Ms. Pusateri worked for 22 years building her career at Bear Stearns with an emphasis on fixed-income trade settlements. In 2003, Ms. Pusateri joined Bear Stearns Asset Management where she was a managing director responsible for creating and managing a multibillion-dollar repurchase book for three fixed-income/structured product hedge funds. Broadpoint Capital is the broker-dealer subsidiary of Broadpoint Securities Group Inc.

MBA: Cramdown Supporters Gaining Momentum

January 26, 2009
While remaining steadfast in their opposition to "cramdowns," the Mortgage Bankers Association acknowledges that supporters are gaining momentum and the trade group has outlined parameters it would like to see included in legislation that would allow bankruptcy judges to reduce the secured portion of a mortgage loan.

In a conference call with reporters, MBA representatives said a bill that allows bankruptcy judges to alter the contractual terms of a mortgage should limit the discretion judges have to reduce principal, lower rates or extend terms on a mortgage. MBA chairman David Kittle said that if Congress does go this route, cramdowns should only be allowed after a "waterfall" of other loss mitigation options have been exhausted, including repayment plans, loan modifications, an extension of terms and principal deferral. He also proposed that cramdowns be limited to subprime loans originated during the peak of the housing boom and that cramdown relief should be temporary. "We need to set a permanent sunset date after which judges will no longer have this extraordinary power to alter the terms of a mortgage," Mr. Kittle said, noting that two thirds of bankruptcy repayment plans fail, in which case the borrower typically loses their home to foreclosure anyway. Steve O'Connor, MBA's senior vice president of government affairs, acknowledged that "clearly there is political momentum" favoring supporters of cramdown relief. "We recognize the realities of the landscape. And if in fact cramdowns are implemented, we think there should be some constraints to limit damage to the marketplace."

FTC Challenges Exec's Characterization of Pricing Practices

January 23, 2009
The Federal Trade Commission has challenged the way a Gateway Funding Diversified Mortgage Services LP executive characterized his company's previous pricing practices and the FTC's understanding of them in commenting on a December 2008 settlement between the company and the federal agency related to those practices.

In a letter responding to the Horsham, Pa.-based Gateway's president and chief executive Bruno Pasceri's comments denying that his company's past pricing practices were discriminatory and suggesting that the FTC did not understand those practices, Peggy L. Twohig -- associate director in the FTC's Division of Financial Practices/Bureau of Consumer Protection -- said, "In fact, the FTC conducted an extensive investigation, and our analysis was based on a thorough understanding of Gateway's loan pricing practices. On that basis, the commission concluded that Gateway's policy and practice of allowing loan officers to charge discretionary overages resulted in African-Americans and Hispanics being charged higher prices because of their race or ethnicity -- price disparities that were substantial, statistically significant, and could not be explained by factors related to underwriting risk or credit characteristics of the applicants." Ms. Twohig also noted that the commission "voted unanimously to file these fair lending charges." Gateway in December 2008 agreed to pay $200,000 to settle the charges.

FTC Challenges Exec's Characterization of Pricing Practices

January 22, 2009
The Federal Trade Commission has challenged the way a Gateway Funding Diversified Mortgage Services LP executive characterized his company's previous pricing practices and the FTC's understanding of them in commenting on a December 2008 settlement between the company and the federal agency related to those practices.

In a letter responding to the Horsham, Pa.-based Gateway's president and chief executive Bruno Pasceri's comments denying that his company's past pricing practices were discriminatory and suggesting that the FTC did not understand those practices, Peggy L. Twohig - associate director in the FTC's Division of Financial Practices/Bureau of Consumer Protection - said, "In fact, the FTC conducted an extensive investigation, and our analysis was based on a thorough understanding of Gateway's loan pricing practices. On that basis, the commission concluded that Gateway's policy and practice of allowing loan officers to charge discretionary overages resulted in African-Americans and Hispanics being charged higher prices because of their race or ethnicity - price disparities that were substantial, statistically significant, and could not be explained by factors related to underwriting risk or credit characteristics of the applicants." Ms. Twohig also noted that the commission "voted unanimously to file these fair lending charges." Gateway in December 2008 agreed to pay $200,000 to settle the charges.

HUD to Announce Foreclosure Scam Campaign

January 13, 2009
The Department of Housing and Urban Development is launching a new advertising campaign on Jan. 14 to alert troubled homeowners about foreclosure rescue scams.

Outgoing HUD secretary Steve Preston will make the announcement along with New York City Mayor Michael Bloomberg at a press conference that morning to be held at the offices of Neighborhood Housing Services in New York. The new campaign, called "Keep Your Home. Know Your Loan." seeks to fight the proliferation of rescue scams that "often victimize struggling homeowners and push them closer to financial ruin," HUD said. The Federal Trade Commission recently sanctioned a Florida-based operation, Mortgage Foreclosure Solutions, which promised, for a $1,200 fee, to stop foreclosures and save their clients' homes. "Many consumers who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts," FTC said.

Impac Reverse Stock Split Effective

January 12, 2009
Impac Mortgage Holdings Inc., Irvine, Calif., said that its common stock underwent the planned 1-for-10 reverse stock split and began to trade on a split-adjusted basis at the open of business on Jan. 12.

The stock is now traded-over-the-counter under the new ticker symbol "IMPM." Impac primarily invested in non-conforming alt-A mortgage loans and to a lesser extent small balance commercial and multi-family loans.

First Industrial Has New CEO

January 12, 2009
First Industrial Realty Trust Inc., Chicago, has hired Bruce W. Duncan as president and chief executive.

He presently serves as chairman of Starwood Hotels & Resorts Worldwide Inc., a position he has held since 2005. Mr. Duncan also served as Starwood's interim chief executive from April to September 2007. From 2002 through 2005, he was president and CEO of Equity Residential, the largest publicly traded apartment REIT. In a related move W. Ed Tyler, who has served as the company's interim chief executive since October 2008, has been appointed the new non-executive chairman of its board. Jay H. Shidler has resigned as chairman, but will continue to serve as a member of the board and the chairman of the investment committee.

Foreign Investment in U.S. RE to Increase in 2009

January 12, 2009
Foreign real estate lenders may grow their activity by 58% in the United States this year, according to a trade group's survey of its investor members.

"Our investor members have expressed a growing confidence and interest in U.S. real estate," said James A. Fetgatter, chief executive of the Association of Foreign Investors in Real Estate, Washington, D.C. Foreign RE lenders also plan to increase global lending by 54%, according to the survey, which was conducted in the early part of 2008's fourth quarter. Survey respondents ranked preferred property types as follows: multifamily, office, industrial, retail and hotels.

New Century Co-founder Gotschall Dead at 53

January 12, 2009
Edward Gotschall, co-founder of New Century Financial Corp. - once one of the largest subprime lenders in the nation - died late last week of natural causes, according to a report in The Orange County Register.

He was 53. New Century's collapse is now the subject of a criminal investigation by the Department of Justice. Mr. Gotschall and three others founded New Century in 1995. He managed the books of the publicly traded company and worked with Wall Street investment banking firms. The company failed in early 2007. At one time, Merrill Lynch had considered buying it but passed on the deal. At its peak it was funding $60 billion in mortgages, according to the Quarterly Data Report.

RESPA Suit Gets Airing in April

January 9, 2009
In early April a U.S district court judge will hear arguments in the National Association of Home Builders' case against the government, challenging newly issued Real Estate Settlement Procedures Act regulations that could hurt builders.

NAHB originally filed for a preliminary injunction to block implementation of the "required use" section of the RESPA rule that bans builders from offering discounts and upgrades to buyers that are contingent on their use of an affiliated mortgage company. The trade group dropped that request after the Department of Housing and Urban Development agreed to delay the effective date. HUD extended the implementation date from Jan. 16 to April 16. NAHB claims the RESPA rule will force them to divest their affiliated mortgage and title companies, which could "greatly obstruct" the industry's effort to stimulate demand and sell off the excess supply of newly constructed homes. "In promulgating the final rule, HUD has flouted consumer satisfaction surveys and dampened the housing sector's efforts toward economic recovery," NAHB said in a filing with the U.S district court in Alexandria, Va.

Pending Home Sales Fall to New Low

January 6, 2009
The National Association of Realtors' Pending Home Sales Index fell 4% between October and November and is now at the lowest point since the trade group started tracking this data in 2001.

Job losses and low consumer confidence were the driving factors, the group said. The new index is 82.3, compared with 85.7 in October and 86.9 for November 2007. And according to NAR chief economist Lawrence Yun, "December's housing market activity could be comparably lower due to ongoing problems in the economy, so a real-estate focused stimulus plan is urgently needed. With a properly real-estate focused stimulus measure, home sales could rise more than expected, by more than 10% to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country." NAR calls for expanding a $7,500 tax credit to all homebuyers and permanently raising the conforming loan limits. "The unique housing affordability conditions in today's market underscore the opportunities in giving consumers the necessary incentives to stimulate our economy through a housing recovery," Mr. Yun said.

First American Offers New ARM Portfolio Audit

January 5, 2009
First American Outsourcing and Technology Solutions has developed a new auditing solution designed to reduce the cost and risk of servicing, acquiring and selling adjustable-rate mortgage portfolios.

The solution identifies data issues with existing ARM portfolios and can "scrub" loan-pool acquisitions during the transfer and boarding process or as pre-sale due diligence. The new service can correct errors uncovered by the audit and re-post the changes to the servicer's system. Specifically, the solution can re-amortize and repair loan files and customer histories and automatically generate corrected borrower loan statements. The highly automated, scalable solution identifies exceptions and provides comprehensive loan work-ups for clients. Audits can be conducted 24 hours a day, six days a week and maintain a 99.97% data accuracy rate. The ARM Audit and Repair offering includes triple-key data auditing, historic re-amortization of ARMs, forensic loan history analysis, and due diligence and pre-acquisition or pre-sale scrubbing. "Industry-wide as much as $350 billion of unsecuritized ARMs are still held in portfolios," said Scott Brinkley, executive vice president of First American Outsourcing and Technology Solutions. "Whether they are traded or retained by the servicer, there are significant data issues that can result in incorrect rate adjustments, defaults, foreclosures and lawsuits."

MBA: App Numbers Plateau

December 31, 2008
Mortgage Bankers Association data on mortgage applications from the week ended Dec. 26 show the number of apps to be "little changed" from week to week.

"The Market Composite Index, a measure of mortgage loan application volume, was 1245.7, essentially unchanged, on a seasonally adjusted basis from 1245.4 one week earlier," the MBA said. The trade group noted that its adjustments included one that accounts for the fact that the week was shortened by the Christmas holiday. On an unadjusted basis, the index fell 40% from the previous week and 155% from a year earlier. However, the four-week moving average for the seasonally adjusted Market Index was up 10.3%, and while this same seasonally adjusted average for the Purchase Index was down 3.2%, it was up 15.7% for the refinance index. On a week-to-week basis, purchases inched up by 1.4% and refinance volume inched down by 0.4%, with refinances representing 82.9% of the applications in the market, down slightly from 83.2% the previous week. The seasonally adjusted Conventional Purchase Index edged up by 1.1% from the previous week and the Government Purchase Index increased by 2.2% during the same period. Adjustable-rate mortgage activity remained unchanged from the previous week at 0.8% of total applications.

ALTA: Assets Help Industry Contend with Mounting Losses

December 24, 2008
The American Land Title Association's third-quarter results continue to show accelerating losses, but the Washington-based trade group said it feels the industry remains in a relatively strong financial position thanks to its asset levels.

ALTA said the title industry saw an operating loss of $332.1 million in the third quarter, compared to an operating gain of $168.7 million for same period in 2007. The former period "marked the 10th consecutive quarter in which title premiums written declined from the prior year's equivalent quarter," ALTA said. "Despite these struggles, the industry remains in a very strong financial position with admitted assets of over $9.5 billion, including over $8 billion in cash and invested assets," the association said. "Also, statutory reserves were in excess of $5.3 billion and statutory surplus was up almost $2.6 billion," it added.

Figures Suggest U.K. Housing Challenges Will Continue

December 24, 2008
The latest monthly gross United Kingdom mortgage lending figures suggest challenges for the U.K. housing market will continue next year, although government measures may mitigate them somewhat.

"In looking ahead to the coming year, the housing market will remain extremely subdued," said Michael Coogan, director-general of the Council of Mortgage Lenders, London. However, the trade group noted that its forecast should be viewed as "indicative, rather than as a precise assessment of likely activity" due to the uncertain nature of the current market. Gross U.K. mortgage lending fell 22% month-to-month and 51% year-to-year in November when it dropped to £1.46 billion ($2.14 billion).

Hope Now Servicers to Double Mod Effort in '09

December 22, 2008
Hope Now servicers are planning to step up their loss mitigation efforts in 2009 and modify two million loans -- double the number of modifications this year, according to the private sector alliance.

The alliance said servicers completed 107,800 repayment plans and 99,800 loan modifications in November to help homeowners avoid foreclosure. Hope Now projects the tally for modifications for all of 2008 will be 950,000. "We expect to double that to two million for 2009," said Steve Bartlett, president and chief executive of the Financial Services Roundtable. Mortgage Bankers Association chief operating officer John Courson stressed Hope Now will be more aggressive and employ new strategies to help troubled homeowners. "Stay tuned," he told reporters. The two trade group executives said they would welcome federal funding for foreclosure prevention efforts. And they support a FDIC plan would provide federal loan guarantees for modified loans.

White House Pulls the Plug on 'FHA Secure'

December 19, 2008
The White House is pulling the plug on the Federal Housing Administration's "FHA Secure" refinancing program at yearend, according to industry sources.

FHA Secure has helped at least 460,000 subprime borrowers refinance into Federal Housing Administration-backed loans. The Bush Administration launched the program in August 2007 as part of President Bush's first response to the subprime crisis which later morphed into a global financial meltdown. FHA Secure was meant to be a temporary program that expired at the end of 2008. However, lender and consumer groups have urged the Department of the Housing and Urban Development and the White House to extend it through 2009. "The expanded loan options offered by FHA Secure are an essential component of our collective efforts to help the largest possible numbers of at-risk borrowers," according to a November letter signed by several trade groups. Under the program, FHA loosened its underwriting standards to allow borrowers with adjustable-rate mortgages to refinance into fixed-rate FHA mortgages. The program was expected to help refinance borrowers who were behind on their payments, but only 4,000 delinquent borrowers were refinanced.

NAMB Sues to Block RESPA Changes

December 19, 2008
The National Association of Mortgage Brokers on Friday sued the Department of Housing and Urban Development, seeking an injunction to coming changes under the Real Estate Settlement Procedures Act.

In an interview with MortgageWire NAMB president Marc Savitt said, "We're asking for an injunction so the rule will not be finalized." NAMB has a number of complaints with the changes proposed by HUD. The new rules -- which go into effect a year from now -- require yield spread premiums to first be disclosed as a borrower paid item and then a broker credit back to the borrower. NAMB believes this will only confuse mortgage applicants and does not create a level playing field because mortgage bankers are not required to disclose servicing and secondary marketing fees paid to them. The trade group also does not like the new three-page good faith estimate (GFE) disclosure form because it is not itemized (as it is now) and quotes the borrower only one figure. Mr. Savitt said his brokerage has been asking customers whether they prefer an itemized explanation of their closing costs, "and all of them told us yes -- that they want to know how we arrived at that number." In a statement, HUD said, "In this housing market, the nation is crying out for reasonable regulation to help families shop for and save money on the largest purchase of their lives. This rule is that reasonable regulation and it helps consumers to avoid getting into trouble in the first place. It's mystifying why anyone would stand in the way of the kind of transparency this rule brings to the marketplace."

Compass & Radar Logic Complete Integration, Plan Another

December 17, 2008
Compass Analytics LLC, San Rafael, Calif., and Radar Logic Inc., New York, have integrated the latter's property index into the former's mortgage analytics and will expand on the business relationship going forward.

The existing integration allows investors, portfolio managers, servicers and whole loan traders to "update property values as part of data load processes and leverage better loan-level property value, loan-to-value ratio and equity data for more accurate valuations," the companies said. Compass also will integrate the Radar Logic's residential price index derivatives into its CompassPoint mortgage analytics in the future. The derivatives integration would "enable analysts to mark-to-market RPX derivatives and model and employ the derivatives to hedge property value and credit risk in loan portfolios," according to the companies.

U.K. Moves to Increase Liquidity

December 17, 2008
The United Kingdom Treasury's recent changes to its credit guarantee plan will make it cheaper for U.K. lenders to access government guarantees and market funding, a U.K. industry trade group said.

"The government now seems to be hearing the message that lenders cannot realistically deliver all that is expected of them under current conflicting expectations, and [is] moving to address some of these," said CML director general Michael Coogan. The U.K. Treasury said it has adjusted the formula that determines the fees paid by participating institutions for the use of government guarantees, "reducing their cost of funding" and "more closely aligning" the program with "those in other countries." The Treasury also said it would lengthen the term of its guarantee program and allow borrowing in a greater range of currencies to reach a wider range of investors.

GFDMS Pays to Settle FTC Charges

December 17, 2008
Gateway Funding Diversified Mortgage Services, Horsham, Pa., has agreed to pay $200,000 to the Federal Trade Commission to settle charges that it engaged in discriminatory lending practices, even though it refutes the allegations.

The FTC had originally levied a $2.9 million judgment against the non-bank lender, which was once headed by a top officer of the Mortgage Bankers Association. Gateway had been battling the FTC for three-and-a-half years. The agency alleged that in 2004 and 2005 the lender violated the Equal Credit Opportunity Act. During these two years, Diversified was managed by Regina Lowrie, who served as annual chairman of the Mortgage Bankers Association for 2005/2006. The FTC alleged that Gateway allowed its loan officers to charge overages that resulted in African-Americans and Hispanic applicants paying higher fees and interest rates than whites. But Gateway president and chief executive Bruno Pasceri says the company uses the term overage in an unusual way and it does not mean loan officers can charge overages. "We tried to explain," he said. "But they could not get their heads around that we don't operate like other people." FTC began its investigation in 2005 when Ms. Lowrie was president and CEO of Gateway and MBA chairman. She could not be reached for comment. She left Gateway about two years ago. "We do not discriminate," Mr. Pasceri said. "The only we reason we agreed to settle is because the legal fees are destroying us. Our legal bills were $100,000 a month," he added.

NAHB Cuts 52 Positions, MBA Losing Members

December 15, 2008
The National Association of Home Builders has trimmed 52 positions from its workforce as the housing and mortgage crisis shows no signs of abating any time soon.

Of the 52 jobs eliminated, roughly half were vacant. A spokeswoman for NAHB declined to provide any details about the layoffs or its membership ranks. She would only say that NAHB has 235,000 "membership companies" as of December and offered no comparisons to the same month a year ago. Last month, the trade group's chief economist David Seiders retired. Meanwhile, industry executives are saying the Mortgage Bankers Association is losing many members. According to a report in The Washington Post, MBA has lost roughly 500 members over the past year, noting that membership stands at 2,550. At press time, MBA's spokeswoman had not returned a telephone call about the matter.

Jumbo Servicer/Investor Cuts Deal with Bankers

December 12, 2008
Thornburg Mortgage Inc., Santa Fe, N.M., on Friday reached an agreement with several of its reverse repurchase counterparties allowing for it to make the interest payment on its 8% senior notes that was due last month.

The past-due payment will be made within the 30-day grace period allowed under the indenture. The counterparty lenders agreed that during the override period, which expires on March 16, 2009, they will not invoke any margin calls on the jumbo investor. Thornburg's common shares have been delisted but continue to trade on the "pink sheets." Thornburg agreed to pay the counterparties the remaining $110 million out of the liquidity reserve fund except for $41.2 million, which the company can utilize to make the foregoing senior notes interest payments and for forecasted operating expenses and debt service payments through March 2009. The company has also agreed to pay to the counterparties all of the principal and interest collected on the underlying collateral subject to the override agreement to further reduce the outstanding financed balance on an accelerated basis. The reverse repurchase agreement counterparties and their affiliates who entered the override agreement include JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland PLC and UBS AG.

RMIC Gives M&A/Consultancy to Founder

December 12, 2008
Republic Mortgage Insurance Corp., Winston-Salem, N.C., has handed over the keys to its mergers and acquisitions unit to its founder, Larry Charbonneau.

Mr. Charbonneau said the former Republic Strategic Advisory Inc., Houston, will now carry the name Charbonneau & Associates. He said there was no animosity between him and RMIC but that the company wants to concentrate on its core business of mortgage insurance. Besides M&A work, Charbonneau & Associates will focus on advisory work and warehouse lending consulting. Last decade, Mr. Charbonneau ran a well-regarded M&A boutique called Charbonneau-Klein Inc. He joined RMIC four years ago. The MI is a subsidiary of the publicly traded Old Republic International of Chicago. On Thursday, Old Republic paid its regular quarterly dividend of 17 cents a share.

Trade Group: Bank of England Rate Cut Meaningless

December 4, 2008
The Bank of England's decision to lower the Bank Rate by 1% to 2% is unlikely to translate universally into lower mortgage rates, an industry trade group said.

"It is not realistic to expect ... all [lenders] to react in the same way to the rate cut - although where they believe they can cut mortgage rates, they will," said the Council of Mortgage lenders director-general Michael Coogan. The group warned that funding constraints for both deposit- and non-deposit-taking lenders remain and may limit the extent to which United Kingdom mortgage rates can be lowered. The European Central Bank also made plans to cut key rates, effective Dec. 10. Specifically, it cut by 75 basis points the interest rates on the main refinancing operations of the Eurosystem and its marginal lending and deposit facilities.

Thornburg Won't Appeal NYSE Delisting

December 3, 2008
Thornburg Mortgage of Santa Fe, once a top ranked jumbo lender, said it will not appeal a decision by the New York Stock Exchange to delist the company.

It's expected that Thornburg will be officially kicked off the NYSE before the market opens on this Friday. The company - whose shares trade for about 25 cents compared to a 52-week high of $140 - will trade, instead, on the OTC Bulletin Board or "pink sheets." In a recent interview with National Mortgage News, company CEO Larry Goldstone said TM has "four to five months" to find alternative financing for its $21 billion portfolio. TM no longer funds new loans. In the third quarter the company posted a net profit of $140 million but only because the value of some of its liabilities fell. Mr. Goldstone said TM - which as of September 30 had just 300 delinquent loans - "is seeing a noticeable increase in our defaults." The interview took place in late November. The publicly traded REIT narrowly escaped bankruptcy in April thanks to a new fundraising plan and a renegotiation of its bank lines.

Freddie Facing Delisting on the NYSE

November 21, 2008
Freddie Mac said in a public filing Friday it received notice that it may lose its listing on the New York Stock Exchange because its share price has been under $1 for more than 30 days.

In a filing with the Securities and Exchange Commission, the mortgage investing giant -- now a ward of the government -- said it received the notice on Monday. The NYSE requires that the average closing price of a stock remain above $1 per share. The company continues to buy mortgages from its seller/servicers. Its regulator seized control of the GSE in September. The company is, more or less, owned by the government, though its shares still trade on the NYSE. It recently hit a low of 25 cents.

Houston Broker Sentenced to 10 Years

November 20, 2008
Revis Otto Willis, a former mortgage broker from Houston, has been sentenced to 121 months in federal prison without parole followed by three years of supervised release for his leadership role in a mortgage fraud scheme.

According to Tim Johnson, U.S. attorney for the Southern District of Texas, Willis was a mortgage broker who owned and operated Advanced Mortgage Services in Houston. Between October 2004 and May 2008, Willis recruited straw buyers to make false statements about their income, employment and bank account balances on loan applications to purchase residential properties in the Houston area. He encouraged the buyers to apply for mortgages in amounts greater than the actual sales price of the home. The loan applications containing the false statements were submitted to various financial institutions that traded mortgages on the secondary market. The difference between the actual sales price and the exaggerated loan amount was divided among Willis and others involved in the scheme. Almost all the loans secured as part of the scheme were defaulted upon and resulted in foreclosures. Willis' scheme involved 21 different residences and resulted in $2 million in losses.

CTX Transitioning From Branches to 'Production Center'

November 20, 2008
CTX Mortgage of Dallas is in the process of closing its remaining retail branches, shifting its originations to a call center-like production center that caters only to consumers that are buying homes from its parent company.

CTX Financial Services CEO Wayne Norton told MortgageWire that he expects the transition from branches to mortgage/call center to be completed by March at the latest. CTXFS is a subsidiary of the publicly traded Centex Homes. Area managers and mortgage counselors will work in the field to funnel customers to the mortgage center in Dallas. Offering GSE and FHA products, CTX will originate home mortgages in 21 states where it has Centex subdivisions. The production center will employ between 70 and 80 people.

Starts Fall to Another Multiyear Low

November 19, 2008
Construction of new one-to-four family homes fell to an annualized rate of just 531,000 units in October with the nation's largest homebuilding trade group describing the market as a crisis situation.

According to figures compiled by the U.S. Census Bureau and the Department of Housing and Urban Development, the results were the lowest since 1959. The previous low was January 1991. Compared to the same month in 2007, starts fell by 40%. The sequential decline was a more modest 3.3%. "The housing downturn has already cost America three million jobs in construction and related industries, and this downward momentum cannot be stemmed without substantive government intervention," said NAHB's new chief economist David Crowe. Not surprisingly, NAHB's Builder Confidence index now stands at its lowest level since January 1985 when the trade group first launched the measurement. Multifamily starts fell to 247,000 units during the month, a 30% decline from a year ago.

Ailing Genworth Borrows $930MM on LOC

November 14, 2008
Genworth Financial - which posted a large third-quarter loss - said it has borrowed $930 million of a $1.7 billion credit line.

Among other things, Genworth is considering selling its mortgage insurance division, one of the largest in the U.S. Formerly a division of General Electric, Genworth offers not only mortgage insurance but life, long-term care, retirement and other policies. In the third quarter, the publicly traded company lost $258 million, compared to net income of $339 million in the same period last year.

Commercial RE Firm Delisted

November 10, 2008
The New York Stock Exchange has permanently suspended trading in the common stock of CBRE Realty Finance Inc., Hartford, Conn., as of the close of market on Nov. 7.

The delisting is the result of the fact that the company has fallen below the NYSE continued listing standard regarding average global market capitalization over a consecutive 30 trading day period of at least $25 million. As of Nov. 10, 2008, CBRE's common stock will trade over-the-counter under the ticker symbol CRTYZ. CBRE Realty Finance is a commercial real estate specialty finance company focused on originating, acquiring, investing in, financing and managing a diversified portfolio of commercial real estate-related loans and securities. The company's website is located at http://www.cbrerealtyfinance.com/.

Fannie/Freddie Conforming Loan Limit to Remain Unchanged

November 7, 2008
The Fannie Mae/Freddie Mac conforming loan limit will remain at $417,000 in 2009, unchanged from 2008, according to the Federal Housing Finance Agency.

The FHFA monthly purchase-only index declined by 5.9% over the 12 months ending in August. The two GSEs can purchase conventional mortgages with a loan amount of up to $417,000 anywhere in the country. In higher cost markets, the loan limit is based on a percentage of the area median price calculated by the Department of Housing and Urban Development. Starting January that limit will be set at 115% of the local median price and capped at $625,500. Currently, the Fannie/Freddie loan limit in high cost areas is based on 125% of the local median price with a cap of $729,750. The cap expires at yearend but some industry trade groups are urging Congress to extend it.

Momentum Builds For Credit Union-Specific Bailout

October 30, 2008
With increasing portions of the $700 billion TARP bailout money being earmarked for banks and even insurance companies, credit unions are looking to develop a rescue plan of their own, according to a report in The Credit Union Journal.

The Credit Union National Association, the largest trade group representing CUs, is calling on its regulator, the National Credit Union Administration, to create a "shadow" asset relief program that would purchase distressed mortgage loans and mortgage-backed securities from credit unions. (TARP stands for Troubled Asset Relief Program and was legislated into existence under the Emergency Economic Stabilization Act.) This effort would include corporate credit unions, which are sitting on more than $10 billion of losses on MBS, the newspaper reported. The program would be managed by the National CU Share Insurance Fund, which already provides emergency loans to troubled credit unions.

MIs May Use TARP

October 29, 2008
Now that the Treasury is handing out TARP investment money to insurance companies (or is about to), speculation is beginning to center on the nation's seven mortgage insurers.

According to a new research report from Sandler O'Neill, MIs are potential participants in the "capital investment program" under TARP where Treasury buys preferred stock in selected financial service firms, including insurers. But a spokesman for the Mortgage Insurance Companies of America said the trade group has not seen any of its members apply for a capital infusion. The Troubled Asset Relief Program initially involved Treasury buying problem loans and securities from financial services firms. Instead of buying problem mortgages Treasury has earmarked $250 billion of the $700 billion bailout money to buy preferred stock in banks and others, believing the firms will use the cash to lend, freeing up the so-called logjam in the commercial paper market. The Sandler report notes that with TARP MI firms would be on "new regulatory ground," adding that, "It is unclear how insurers can or will access TARP."

Treasury Eyes TARP Asset Suggestions

October 29, 2008
Treasury Department officials will have to decide how broad it wants to make its loan guarantee program as commenters are suggesting it could be used for almost any troubled assets - mortgages, auction rate securities, collateralized debt obligations and insurance-linked securities.

The American Securitization Forum and the Securities Industry and Financial Markets Associations "believe the guarantees should be considered for use for a full spectrum of financial assets." However, it could be used to guarantee single-family mortgages to promote loan modifications, the two Wall Street trade groups say in a comment letter. The American Bankers Associations and the Mortgage Bankers Associations contend the guarantee program should be used to insure against losses on residential and commercial mortgages, not mortgage-backed securities initially. "The program can be expanded to include residential and commercial MBS once the challenges in structuring such a program for securitized products have been addressed," MBA says in its comment letter. The law firm Kelley Drye & Warren recommends that Treasury use the guarantees so small and mid-size institutions can pool performing mortgages. "The guarantee program should initially focus on promoting stability in the market for performing assets that are not severely distressed," partner Paul Keenan commented.

MBA Revenue Falls In Latest Filing

October 27, 2008
The Mortgage Bankers Association saw its revenue fall by 27% in its latest available fiscal report while its departing president earned compensation of more than $1.4 million.

According to the trade group's http://www.nationalmortgagenews.com/documents/mba990.pdf">tax filing for the year ending Sept. 30, 2007 (the latest available), it took in $57.1 million in revenue against expenses of $50.4 million. Its surplus was $6.7 million compared to $9.2 million the year prior. Its form 990 tax filing is not made available for almost a full year. (MBA filed its tax form in May 2008 after requesting an extension.) At press time a trade group spokeswoman had not returned a telephone call about the filing. MBA president and CEO Jonathan Kempner, who is stepping down from the trade group in December, earned a base salary of $1.18 million for the year with additional employee benefits valued at $250,928. (For the full story see the Monday edition of National Mortgage News.

MBA Names Lobbyist

October 24, 2008
The Mortgage Bankers Association has named Catherine Cruz Wojtasik associate vice president of legislative affairs.

Among other duties, Ms. Wojtasik will focus her efforts on commercial mortgage issues as they affect MBA's members. She joins the trade group from Popular, Inc. where she served as vice president and director of government affairs. She will report to Francis Creighton, MBA's vice president and chief lobbyist.

Realtors Urge Treasury to Increase MBS Purchases

October 17, 2008
To counter rising mortgage rates, the National Association of Realtors is urging the Treasury Department to "aggressively" increase its purchase of Fannie Mae and Freddie Mac mortgage-backed securities.

"We believe that more active MBS purchases will reduce spreads and therefore mortgage interest rates and help bring more homebuyers into the market," NAR says in a letter to Treasury secretary Henry Paulson. Treasury purchased $5.1 billion in agency MBS in September and has pledged to purchase more in an effort to increase market liquidity. Fannie and Freddie also are expected to increase purchases of their MBS. But so far, market watchers say the impact has been minimal. The trade group says that "investment is flooding away from agency MBS to bank credit products" now that the Federal Deposit Insurance Corp. has guaranteed unsecured bank debt. This "unintended" consequence, NAR says, has pushed mortgage rates up to 6.5%. "For this reason, we urge Treasury and Federal Housing Finance Agency to more aggressively participate in the MBS market by increasing purchases of agency MBS." The FHFA regulates Fannie and Freddie.

U.K. Lenders Hope Rescue will Jump Start Mortgage Market

October 14, 2008
A United Kingdom mortgage lending trade group believes government moves to support financial markets eventually may help revive flagging U.K. purchase loan origination volumes, which have fallen to their lowest point since 2002.

U.K. government support is expected "to have a positive effect, but it will take time for it to feed through to the mortgage market," said CML director general Michael Coogan. The CML said purchase loan volume in the U.K. fell 63% year-to-year in August, when mortgages in this category totaled £6 billion ($10 billion).

Homebuilder/lender Centex Suspends Quarterly Dividend

October 10, 2008
Centex, a large publicly traded home builder that also controls a top 30 residential originator, said that it will suspend its regular quarterly cash dividend due to "deteriorating economic conditions."

Among residential funders the Centex-owned CTX Mortgage ranks 26th, according to the Quarterly Data Report. The company said it is suspending the dividend payable to common shareholders to conserve capital and build liquidity "during this difficult business environment." Over the past four quarters it paid out $20 million in dividends to shareholders. In the second quarter CTX Mortgage originated $1.6 billion in home mortgages, a 40% decline from the same period a year ago.

Frank Wants Systematic Approach to Foreclosures

October 9, 2008
House Financial Services Committee chairman Barney Frank, D-Mass., is demanding that other major servicers follow Bank of America's model and adopt plans for "immediate mass modifications" to stem the flood of foreclosures.

Rep. Frank also put 10 major banks and servicing companies on notice that they are expected to report to his committee by Oct. 17 on their plans to adopt a systematic approach to loan modifications. "Hope Now and other industry initiatives have had too little impact to meet the large and growing need for widespread relief," Rep. Frank says in a letter to the companies and industry trade groups. The committee chairman stresses the BoA/Countrywide settlement agreement to modify nearly 400,000 subprime and payment-option mortgages should serve as a template for the rest of the industry. "It is essential that every mortgage servicer firmly commit to implement plans for immediate mass modifications based on, or stronger than, the measures BoA/Countrywide has undertaken," Rep. Frank says in the Oct. 8 letter.

FHFA: GSEs off the Hook on Capital Classifications

October 9, 2008
The regulator of Fannie Mae and Freddie Thursday morning suspended capital classifications for the two GSEs, which have been operating under government control since early September.

Both mortgage giants continue to buy loans from their seller/servicers. Through the purchase of senior preferred stock, the Treasury Department owns most of both companies although their common shares continue to trade on the New York Stock Exchange. In a statement, the Federal Housing Finance Agency said it will continue to "closely monitor" their capital levels but noted that any minimum capital requirements "will not be binding during the conservatorship." Agency director James Lockhart said he is officially classifying the two mortgage giants as "undercapitalized" as of June 30, even though both reported second quarter results saying they met FHFA's statutory requirements for capital. FHFA's actions today were not unexpected.

Hanover to Merge With JWH Holding

October 1, 2008
Hanover Capital Mortgage Holdings Inc., a financially troubled real estate investment trust based in Edison, N.J., has announced an agreement to merge with JWH Holding Co., the parent company of Walter Mortgage Co. and Jim Walter Homes.

JWH Holding is a wholly owned subsidiary of Walter Industries Inc., a producer and exporter of U.S. metallurgical coal, which plans to distribute 100% of its interest in JWH Holding to its shareholders. Before the distribution, Jim Walter Homes will be sold or otherwise separated from JWH Holding and will not be part of the spinoff entity, Hanover said. The merger will occur immediately after the spinoff, and the combined company, named Walter Investment Management Corp., will continue to operate as a publicly traded REIT. "Walter Mortgage Co. brings a strong balance sheet and track record to the combined companies," said John A. Burchett, Hanover's chairman and chief executive officer. After the merger, the new company is expected to be headquartered in Tampa, Fla. Hanover's stock, which trades on the American Stock Exchange, has a 52-week high of $2.15 per share and a 52-week low of only $0.08. It was trading at $0.25 per share late Wednesday morning. Hanover can be found online at http://www.hanovercapitalholdings.com.

Vertice Included in Citi/Wachovia Deal

September 29, 2008
Vertice, the wholesale lending operation of Wachovia Corp., Charlotte, N.C., which was once run by former Mortgage Bankers Association chairman John Robbins, will be making the transition to Citigroup, according to a company spokeswoman.

Although Vertice operated under the Wachovia Securities banner, it is part of the parent's corporate and investment group, she explained. (Wachovia did not sell Wachovia Securities or Evergreen Asset Management as part of the deal.) In after-hours trading, before the markets opened, Wachovia's common stock was down to $0.94 per share after closing at $10 on Sept. 26. As of midday on Sept. 29, it had not started to trade. Vertice combined American Mortgage Network, the San Diego-based wholesaler formed by Mr. Robbins, with another Wachovia wholesale operation. Mr. Robbins recently retired as managing director and special counsel for Wachovia Securities. He had not been responsible for the day-to-day operations at Vertice for a couple of years.

Foreclosure Deed Filings Dip in Massachusetts

September 26, 2008
After consistently climbing by large percentages, the number of foreclosure deeds filed in Massachusetts fell 2% in August from the level recorded a year earlier, according to The Warren Group, publisher of Banker & Tradesman.

There were 998 foreclosure deeds recorded in August, down from 1,018 in August 2007, the company reported. However, year-to-date foreclosure activity has surged in Massachusetts. A total of 8,804 foreclosure deeds (the final step in the foreclosure process) were filed in the first eight months of the year, up 79% from 4,920 in the same period of 2007. Foreclosure petitions (the first step in the process) have risen in the past two months after a temporary lull that started in May due to state legislation requiring lenders to give homeowners 90 days to cure mortgage defaults. A total of 943 foreclosure petitions were filed in August, an 87.8% jump from 502 in July but 69.7% lower than the 3,112 filed in August 2007. The company can be found online at http://www.thewarrengroup.com.

As Economy Weakens, Resales Fall Again

September 24, 2008
Existing-homes sales totaled 4.91 million units in August on an annualized basis -- a 2.2% decline from the level recorded in July -- as mortgage financing became more expensive and Americans continued to worry about their jobs.

According to figures compiled by the National Association of Realtors, resales fell 10.7% from the level of a year earlier. The bad news on home sales came as Federal Reserve Chairman Ben S. Bernanke told a joint committee of Congress that U.S. "economic activity appears to have decelerated broadly," adding that new unemployment claims "are at elevated levels." Noting that the national unemployment rate is now 6.1%, the Fed chairman added that "real after-tax income has fallen this year." Traditionally, mortgage lenders rely on strong employment to drive home sales. The NAR and other trade groups believe that the government's bailouts of Fannie Mae and Freddie Mac have already caused interest rates to fall, which will make home financing more affordable. "With higher [loan limits for the government-sponsored enterprises and the Federal Housing Administration] and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability," said NAR chief economist Lawrence Yun.

Clayton Chairman/CEO Retires

September 24, 2008
Frank Filipps has stepped down as chairman and chief executive officer of Clayton Holdings, a contract underwriting and due-diligence firm that underwrote subprime mortgages for several Wall Street firms.

A company official confirmed Mr. Filipps' departure, noting that he officially retired from the company this summer when it was bought out by Greenfield Partners, an investment fund. "Frank left on good terms," said the official, who speculated that Mr. Filipps might "make a run at Radian," a mortgage insurance company that he once headed. Mr. Filipps did not return telephone calls about the matter. Earlier this year, New York Attorney General Andrew Cuomo granted Clayton immunity from prosecution in exchange for providing information on the due-diligence work it conducted for Wall Street firms that securitized subprime mortgages over the past five years. One key issue AG Cuomo is looking at is underwriting "exceptions" granted by project managers working for Clayton on Wall Street accounts. Clayton, which was publicly traded when Greenfield bought it, is based in Shelton, Conn. Greenfield's president and CEO, Eugene Gorab, replaced Mr. Filipps as chairman of Clayton.

MBA Raps 'Cramdown' Provision of Bailout Bill

September 23, 2008
The nation's largest mortgage trade group says it is against a pending legislative provision that would allow judges to reduce or "cram down" outstanding residential loan amounts, arguing that it could set a judicial precedent that is not needed.

In a statement released late Monday afternoon, Mortgage Bankers Association chief operating officer John Courson said the new government fund that will buy up to $700 billion in illiquid mortgage assets does not need judicial approval to reduce or rewrite the loan balance. Mr. Courson said the fund can do cramdowns without a judge's approval. He added that the cramdown is "really irrelevant to the current discussion. Once the fund purchases the distressed mortgages, it doesn't need a bankruptcy judge to rewrite the loan balance without Congress giving bankruptcy judges that authority."

Fitch Rating Mortgages Based on VantageScore

September 22, 2008
Fitch Ratings is the first rating agency to rate mortgage loans based on VantageScore, the algorithm created by the three credit bureaus to compete with Fair Isaac.

"The mortgage crisis has not only shown that a multitude of factors influence the performance of high risk loans, but has also underscored the need for an improved generic consumer scoring model against which mortgage lenders can more reliably make their loans," said group managing director Huxley Somerville, who heads Fitch's U.S. RMBS group. "Built using data that includes the dramatic rise in consumer indebtedness in recent years and regularly revalidated to ensure the model's continued predictiveness, VantageScore has shown to be more accurate than FICO because it excludes the use of authorized trade lines." The latest version of FICO had originally excluded authorized trade lines, but Fair Isaac said the feature is being added back into FICO 08 because of concerns related to the Equal Credit Opportunity Act. Fitch has fully incorporated VantageScore into ResiLogic 2.1, a quantitative model that provides credit risk analysis at the individual loan and pool level for residential mortgage loans.

Market Extends Rally in Financial Stocks

September 19, 2008
Buoyed by government plans to create a mortgage bailout program and a new ban on shorting financial stocks, mortgage-related companies added to their gains Friday morning.

That helped fuel a broader rally, with the Dow Jones industrial average up almost 400 points, or 3.6%, at noon (and more than 800 points since late Thursday). Shares of Washington Mutual rose 88 cents, or 29%, to trade at $3.87 at noon. Nine of 14 industry stocks routinely tracked by MortgageWire were up by double-digit percentages, including major banks such as Bank of America and mortgage insurers PMI, Radian, and Triad Guaranty.

Broker Ads Becoming Regulatory Issue?

September 18, 2008
"Advertising is definitely an issue" for state regulators, attorney Bonnie S. Nachamie told attendees Thursday at the New York Association of Mortgage Brokers annual convention in Melville, N.Y.

The New York Banking Department has hired an advertising specialist, and state regulators are not just looking for compliance with state laws in this area, but federal ones as well. Ms. Nachamie said the banking department has "new friends" at the Federal Trade Commission. The FTC, the New York Banking Department, and the Department of Housing and Urban Development are all chatting with each other and making referrals. Another area where the banking department is spilling over into a federal issue involves mortgage brokers who are doing Federal Housing Administration loans without having a "mini-eagle," she said. There is also a crackdown by state regulators on mortgage brokers who take applications at unlicensed locations. Ms. Nachamie also warned the audience that mortgage brokers are not exempt from making a Home Mortgage Disclosure Act filing if they have 100 applications per year. This has not been on the regulators' radar screen in the past, but the issue is starting to come up.

Preston Vows to Push RESPA by Year's End

September 17, 2008
Housing Secretary Steve Preston vowed Wednesday morning to implement permanent changes to the Real Estate Settlement Procedures Act by year's end even though industry groups are fighting the agency's proposals on consumer disclosures.

Speaking at a luncheon in Washington, HUD Secretary Preston said, "Our goal is to get RESPA completed by the end of this year and then provide the industry with a full year to implement the rule." He added, "I firmly believe this will be a big step forward for restoring trust and transparency between the industry and homeowners." Industry trade groups do not like what the Department of Housing and Urban Development has proposed and want the department to work with the Federal Reserve on simplified disclosure forms. HUD's proposal is now under review at the Office of Management and Budget. Fed staffers have urged HUD to take a more coordinated approach in revamping consumer disclosures. HUD has made major modifications to its original proposal based on conversations with the Fed and other government agencies, as well as 12,000 comment letters HUD has received, according to a HUD spokesman. It sent the final RESPA rule to the OMB on Aug. 21.

MBA Names Chief Lobbyist

September 12, 2008
The Mortgage Bankers Association has promoted Francis Creighton to be the trade group's chief lobbyist.

He replaces Erick Gustafson, who is leaving the MBA to head the government relations department of a multinational company. The new vice president and chief lobbyist will be responsible for leading the federal and state legislative activities of the association, according to MBA senior vice president Steve O'Connor. "His background and leadership skills are an ideal fit for managing the day-to-day responsibilities of our legislative and political teams," Mr. O'Connor said. On Capitol Hill, Mr. Creighton previously worked for Rep. Steve Israel, D-N.Y., and the late Sen. Daniel Patrick Moynihan, D-N.Y.

EMC Okays $28M FTC Settlement

September 10, 2008
EMC Mortgage Corp. has agreed to $28 million settlement with the Federal Trade Commission for allegedly engaging in "unlawful" servicing practices, abusive collection practices, and charging unauthorized fees.

The FTC conducted a multiyear investigation of the Lewisville, Texas, servicing company and found that the subsidiary of Bear Stearns & Co. "allegedly paid inadequate attention to the integrity of consumers' loan information" and made inaccurate claims on consumers. "Like other companies that send a bill, mortgage servicers must make sure that the amount they say is due is really the amount due," said Lydia Parnes, the FTC's director of consumer protection. "Consumers have a right to expect accuracy from the company that collects their mortgage payments." The $28 million will be distributed to homeowners affected by EMC's practices. JPMorgan Chase & Co. acquired Bear Stearns and EMC last May following the collapse of Bear Stearns. The settlement does "not apply" to JPMorgan Chase, the final order says. JPMorgan Chase declined to comment on the settlement. EMC serviced $86.5 billion in mortgage loans as of March 31.

Analysts Still Covering GSEs' Shares, But...

September 10, 2008
Wall Street analysts that cover the stocks of Fannie Mae and Freddie Mac are expected to keep covering the companies, at least for the time being, but the two government-sponsored enterprises are facing eventual delisting from the New York Stock Exchange .

One veteran Wall Street analyst put it like this: "They're still public. And we've been in this position before with them -- remember when they weren't reporting earnings? If they're on the pink sheets, we may still cover them." NYSE rules stipulate that companies whose shares close (on average) below $1 over a 30-day period receive a warning letter giving them six months to get their share price back above $1. In some cases, the exchange has given extensions on the six-month rule. Since Sunday's takeover, the two GSEs have traded and closed at under $1, but both were up in trading Wednesday. Fannie's shares stood at $1.13 at deadline time. Fannie can be found on the Web at http://www.fanniemae.com, and Freddie can be found at http://www.freddiemac.com.

Year-to-Year UK Mortgage Lending Falls Again

September 9, 2008
Total gross United Kingdom mortgage lending continued to fall on a year-to-year basis in July, declining 28% to £24.7 billion ($43.4 billion), according to the Council of Mortgage Lenders, London.

The decline marks the ninth consecutive monthly year-over-year drop recorded by the trade group. "Tighter lending criteria have clearly made it more difficult for first-time buyers to enter the market," said CML director-general Michael Coogan. The CML can be found online at http://www.cml.org.uk.

ISDA to Publish Protocol on GSE Derivatives

September 9, 2008
The International Swaps and Derivatives Association, New York, has announced that it will publish a protocol to facilitate settlement of credit derivative trades involving Fannie Mae and Freddie Mac.

The decision to establish the protocol was made after consultation with industry participants, the ISDA said. The protocol will be open to ISDA members and nonmembers alike. Fannie and Freddie were taken over and placed in conservatorship by the U.S. government on Sept. 7. The association can be found on the Web at http://www.isda.org.

GSE Takeover Raises Many Questions

September 8, 2008
The government takeover of Fannie Mae and Freddie Mac has raised as many questions as it has answered in lenders' minds about what it will be like to do business with the government-sponsored enterprises in the months ahead.

A stated goal of placing Fannie and Freddie into conservatorship (an action that has made "GSE" something of a misnomer) is to ensure that money keeps flowing into the mortgage market. But the Treasury Department's plan also envisions whittling away their portfolios after a brief period of expansion. Meantime, the Federal Housing Finance Agency said it plans to tighten regulation of the companies as mandated by the law that created it. Many market observers and lenders predicted Monday that the regulators' near-term actions would reduce mortgage rates, sparking a wave of refinancings, which would benefit lenders. Further, some said, the takeover could lead to a reduction of the guarantee fees that Fannie and Freddie charge. These sources pointed to Treasury Secretary Henry Paulson's remark Sunday that the GSEs should examine the structure of such fees "with an eye toward mortgage affordability." But other observers said having the government running Fannie and Freddie could make guarantee pricing less favorable for bigger lenders. No longer concerned about volume or market share, this line of thinking goes, Fannie and Freddie will be less inclined to give breaks on guarantee fees to their bigger suppliers. David Zugheri, the president of First Houston Mortgage Ltd., a retail lender that specializes in prime conforming loans, said he expects a change from the times during which the GSEs "paid up for volume." "What they should do is look at everyone's book of business and lower the g-fees for those lenders that have less risk, not volume," he said. "They should be paying more for quality" by reducing the guarantee fees for less risky loans, he said. In an e-mail to clients on Sunday, Joe Garrett of the consulting firm Garrett, Watts & Co., wrote that Fannie and Freddie might "cut way back on offering lower guarantee fees in return for promised volume. If this were to occur, it will suddenly be much more attractive to sell directly to them, as opposed to selling to the big aggregators who get lower ... fees." Joseph P. Bowen, the chief operating officer and head of secondary marketing at Franklin American Mortgage Co., a privately held lender in Franklin, Tenn., said he expects the fees to drop. "With the federal government intervening and providing that backstop, you would anticipate that credit costs would go down and the fees would go down," he said. During the past nine months, Fannie and Freddie have imposed several loan-fee increases to reflect higher market risk and to bolster their profits. Industry trade groups complained that the increases were making mortgage credit too expensive for consumers, but GSE executives insisted the increases were needed. "Rates were artificially high because Fannie and Freddie were paying for the sins of the past with the g-fees of the future," Mike Drury, an executive vice president at the M&T Bank unit of $65 billion-asset M&T Bank Corp. in Buffalo, said Monday.By Kate Berry and Paul Muolo. Brian Collins, Harry Terris, and Steven Sloan contributed to this article.

Will Takeover Reduce GSE Fees?

September 8, 2008
Some industry executive are hoping the government takeover of Fannie Mae and Freddie Mac will lead to reduction in the guarantee fees the mortgage giants charged lenders and a rollback in the loan fees the pair increased this year.

"We are hoping they will reduce the fees that they raised," said one group executive who did not want to be identified. Over the past nine months, Fannie and Freddie implemented several loan fee increases as price adjustments for market risk and to increase their profits. Lender and industry trade groups complained that the increases were making mortgage credit too expensive. But the government-sponsored enterprises insisted that the increases were necessary. Now that the Federal Housing Finance Agency has placed the GSEs in separate conservatorship, the regulator has an opportunity to lower these fees. "If they do that, that will help further stem this decline in house values and spur consumer demand. It is the exact right thing to do," said Jerry Howard, chief executive of the National Association of Home Builders. The FHFA is supposed to examine the "guarantee fee structure with an eye toward mortgage affordability," Treasury Secretary Henry Paulson said. The FHFA also intends to establish rules for setting guarantee fees. Several years ago, the guarantee fees charged by Fannie ranged from 16 to 19 basis points. In the second quarter, the average guarantee fee charged on new loans was 27 bps.

Rates Decline

September 4, 2008
The average 30-year fixed mortgage rate fell from 6.40% to 6.35% over the seven-day period ended Sept. 4, according to Freddie Mac's Primary Mortgage Market Survey.

The average 15-year fixed mortgage rate fell from 5.93% to 5.90%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.03% to 5.97%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.33% to 5.15%, Freddie Mac reported. Fees and points averaged 0.7 of a point for 30-year fixed-rate mortgages and 0.6 of a point for ARMs and 15-year fixed-rate mortgages. "Mortgage rates eased a bit over the holiday-shortened week following release of economic data that suggest consumer spending may slow," said Frank Nothaft, Freddie Mac's chief economist. "The economy grew at an upwardly revised 3.3% pace in the second quarter, boosted by the smallest trade deficit in eight years, and residential fixed investment slowed growth by 0.6%, the least amount since the same period a year ago." A year ago, the average 30-year and 15-year fixed mortgage rates were 6.46% and 6.15%, respectively, and the average hybrid and one-year ARM rates were 6.32% and 5.74%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Merrill Lynch Makes Two Key Hires

September 2, 2008
Michael Nierenberg from JP Morgan will be joining New York-based Merrill Lynch & Co. to head global mortgages and securitized products businesses, and James De Mare from Citigroup will also be joining to run the company's mortgage trading operations.

Mr. Nierenberg will report directly to Thomas K. Montag, head of global sales and trading, and Mr. De Mare will report to Mr. Nierenberg. Mr. Nierenberg was most recently JP Morgan's head of global securitized products, a position he held after moving to that firm following its purchase of Bear Stearns earlier this year. Mr. Nierenberg joined Bear Stearns in 1994, moving quickly through the ranks to hold positions such as head of interest rate and foreign exchange trading operations, co-head of structured products and co-head of mortgage-backed securities trading. Before Bear Stearns, Mr. Nierenberg spent seven years at Lehman Brothers, where he was instrumental in building up that firm's adjustable rate mortgage business. Mr. De Mare was with Citigroup for 11 years, having most recently served as the global head of mortgage trading, which included the trading of all securitized products in Citigroup's fixed income currencies and commodities group. He joined Salomon Brothers in 1997 to run its adjustable rate trading business. Prior to joining Salomon in 1997, Mr. De Mare traded agency and non-agency adjustable rate mortgages at Bear Stearns and Prudential Securities.

HMDA Data Could Misclassify Prime

September 2, 2008
The Federal Reserve Board needs to adjust its benchmark for subprime loans so it does not "misclassify" prime jumbo loans, as well as prime loans with government or private mortgage insurance, and reduce the availably of mortgage credit, according to five major trade groups.

Without adjustments for these types of loans, the Home Mortgage Disclosure Act data will misclassify prime loans and many prime loans will be treated as subprime under the Home Ownership and Equity Protection Act, according to their comment letter. The American Bankers Association, American Financial Services Association, Consumer Bankers Association, Consumer Mortgage Association and Mortgage Bankers Association sent the Aug. 29 letter in response to a HMDA proposal. "Applying the new HOEPA rules - and liability - to large segments of the prime market will decrease the availability and affordability of mortgages," the signers warn. As part of an overhaul of its HOEPA regulations in July to stop deceptive subprime lending practices, the Fed adopted the weekly Freddie Mac primary mortgage market survey plus 150 basis points as its benchmark for determining subprime loans. Now the Fed is proposing to use the same benchmark for HMDA reporting. The industry commenters point out that the interest rate on the average jumbo loan has exceeded the benchmark for almost every week for the past six months.

RBS Adds 16 to MBS Team

August 28, 2008
RBS Greenwich Capital, Greenwich, Conn., has announced an expansion of its mortgage business via the addition of 16 professionals to its mortgage-backed securities team, 15 of them from Bear, Stearns & Co.

Leading the new hires is Scott Eichel, who will co-head asset-backed and mortgage trading with RBS veteran David Cannon. The other 15 new employees include seven traders and eight salespeople who join RBS's institutional MBS sales team, the company said. RBS, a wholly owned subsidiary of The Royal Bank of Scotland, can be found online at http://www.rbsgc.com.

MBA Names Chief Economist

August 26, 2008
The Mortgage Bankers Association has promoted Jay Brinkmann to be the trade group's chief economist and senior vice president for research and economics.

Mr. Brinkmann joined the MBA in 2001, and the economist has been in charge of research for much of that time. He previously worked at Fannie Mae in the portfolio strategy and credit pricing areas. He replaces Douglas Duncan, who left the MBA in February to be Fannie's chief economist. Mr. Brinkmann has a Ph.D. in finance from Purdue University and a master of business administration from Tulane University.

LO Owed Money by MBA Chief's Defunct Firm?

August 26, 2008
Loan officer Yale Bertolucci says he is owed $5,650 by Central Pacific Mortgage of Folsom, Calif., a defunct mortgage firm controlled and managed by incoming Mortgage Bankers Association president John Courson.

In a recent interview with National Mortgage News, Mr. Bertolucci said he has a state-sanctioned judgment against the company for unpaid wages, adding that he is none too happy that Mr. Courson (who closed CPM in early 2007 after it couldn't handle loan buyback requests from investors) is now in charge of the nation's large mortgage trade group. "He left thousands of employees without their last paychecks," said Mr. Bertolucci, who has yet to collect on his judgment. Mr. Courson declined to comment directly on the judgment. A spokeswoman for the MBA said, "John was trying to sell the company [CPM]. When the sale didn't happen, he was forced to close it. He was unable to make the last payroll." She said there are at least eight judgments against CPM. "I don't know the amounts," the spokeswoman said. "The judgments are against CPM, not John."

Impac Given Time to Fix Stock Noncompliance

August 22, 2008
Impac Mortgage Holdings Inc., Irvine, Calif., has been given a four-month cure period to fix noncompliance issues regarding its listing on the New York Stock Exchange.

The regulatory arm of NYSE notified Impac that it had once again fallen out of compliance with the continued-listing standards because, as of July 1, its 30-day average price had fallen below the $1 average requirement. This counted as a repeat instance of quantitative noncompliance within 12 months of a cure of a first notice of noncompliance. NYSE Regulation reviewed materials on the real estate investment trust's plans to address the current share price deficiency and gave Impac four months to cure the problem. NYSE Regulation will also continue to closely monitor Impac regarding share price levels and progress on planned initiatives. The last time Impac traded above $1 was on June 2, according to Yahoo! Finance. The stock traded as low as $0.69 on June 30. On Aug. 21, it closed at $0.77 per share.

New FTC Scrutiny Deemed Likely for Servicers

August 12, 2008
An attorney who spoke at the Western States Loan Servicing Conference in Las Vegas predicts that the Federal Trade Commission will produce a "significant enforcement action" involving a major mortgage servicer within the next several months.

Anand Raman, a partner at Skadden, Arps, Slate, Meagher & Flom, said the FTC has broad authority to scrutinize loan servicing practices under its broad authority to address "unfair and deceptive trade practices," and that even practices that are not "manifestly illegal" may get servicers into trouble. Issues the FTC and other regulatory agencies are likely to investigate include internal documentation, monthly billing statement information, and customer service, he said, noting that regulators are under political pressure to get tough with the mortgage industry. "There is a lot of pressure to bring home scalps," Mr. Raman said during a panel session at the conference, which was sponsored by the California Mortgage Bankers Association. "Unfortunately, those servicers that are not operating at a best-practices level make easy targets."

NMHC: Apartment Demand Holding Up

August 8, 2008
The turmoil in the financial markets is affecting the apartment sector, but apartment demand is holding up reasonably well, according to the National Multi Housing Council's latest quarterly survey.

The trade association reported that its Market Tightness Index, which measures changes in occupancy rates and rents, fell from 44 in the first quarter to 40 in the second. Meanwhile, the availability of debt funding for multifamily properties declined to the second-lowest reading on record for the NMHC's Debt Financing Index, which dropped from 22 to 13. "Demand for apartment residences is holding up relatively well despite the weakening job market and sluggish economy," said Mark Obrinsky, the association's chief economist. "If employment continues to fall, however, we'll likely see apartment demand follow suit." The survey's respondent pool consisted of 89 chief executive officers and other senior executives in the multifamily industry who also serve on the NMHC's board of directors or advisory committee. The council can be found online at http://www.nmhc.org.

Fitch Downgrades More B&C-Linked CDOs

August 7, 2008
Thirty-six classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings and removed from Rating Watch Negative.

The affected securities are seven classes from G-Star 2004-4 Ltd. and six classes from G-Star 2005-5 Ltd., both cash flow CDOs; six classes from G-Star 2003-3 Ltd./Corp., a cash flow structured finance CDO; seven classes from E*Trade ABS CDO IV Ltd., a cash flow structured finance CDO; six classes from Vertical ABS CDO 2006-2 Ltd./Corp., a hybrid cash flow and synthetic structured finance CDO; and four classes from Commodore CDO III Ltd./Inc., a cash flow structured finance CDO. The downgrades were attributed to collateral deterioration in, and underlying exposure to, subprime RMBS, as well as (in two cases) structured finance CDOs with underlying exposure to subprime RMBS and (in one case) alternative-A RMBS. Fitch can be found online at http://www.fitchratings.com.

Lawmakers Urge Foreclosure Forbearance

August 6, 2008
The chairman and three other Democratic members of the House Financial Services Committee have sent a letter to leading mortgage trade associations and the largest mortgage servicers urging them to hold off on certain foreclosures until a new mortgage rescue program becomes effective on Oct. 1.

The rescue plan, which would refinance qualified borrowers into more affordable Federal Housing Administration loans, was enacted in July but doesn't become effective until October. The committee chairman, Rep. Barney Frank, D-Mass., said he plans to hold a hearing in mid-September to assess compliance with the new law. Given the delayed start date for the "Hope for Homeowners" program, the letter urges servicers to "forbear foreclosures for potentially eligible homeowners over the next few months, review their loan documents and prepare to refinance eligible borrowers by October 1." The letter, also signed by Reps. Maxine Waters, D-Calif., Melvin L. Watt, D-N.C., and Brad Miller, D-N.C., asks servicers a series of questions about their forbearance and loan modification practices, requesting that they provide the committee with a reply by Aug. 31.

Fitch Downgrades Subprime-Linked CDOs

August 5, 2008
Forty-five classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings.

The affected securities include 13 classes from Delphinus CDO 2007-1 LLC/Ltd., a hybrid structured finance CDO; eight classes of notes from Duke Funding XIII Ltd. and Duke Funding XIII Corp., both hybrid structured finance CDOs; seven classes from Glacier Funding CDO V LLC/Ltd., a cash flow CDO; seven classes from Volans Funding 2007-1 Ltd., a hybrid structured finance CDO; six classes from West Trade Funding CDO I LLC/Ltd., a cash flow CDO; and four classes from Solstice ABS CDO III Ltd., a cash flow structured finance CDO. The downgrades were attributed in most cases to "significant collateral deterioration" in the portfolios' subprime RMBS and structured finance CDOs with underlying exposure to subprime RMBS. Fitch can be found online at http://www.fitchratings.com.

WCI Stock Shifts to Pink Sheets

August 5, 2008
WCI Communities Inc., a luxury homebuilder and real estate services company that filed for Chapter 11 bankruptcy protection on Aug. 4, has reported that its common stock will now be traded on the Pink Sheets.

The Bonita Springs, Fla.-based company said the move stems from the New York Stock Exchange's decision to suspend trading in WCI's common stock. In light of its bankruptcy filing, WCI said it will not appeal the exchange's decision. The company's stock will trade on the Pink Sheets under the symbol WCIMQ. WCI can be found on the Web at http://www.wcicommunities.com.

Behringer Harvard Names EVP/Finance

August 4, 2008
Michael A. Ernst has been named executive vice president of finance of Harvard Property Trust LLC and for both Behringer Advisors LLC (the adviser for Behringer Harvard REIT I Inc.) and HPT Management Services LP (the property manager for the REIT).

Mr. Ernst was most recently executive vice president and chief financial officer of UDR Inc., a publicly traded real estate investment trust. Before joining UDR, Mr. Ernst was executive vice president and CFO of Prentiss Properties Trust. Behringer Harvard, an Addison, Texas-based commercial real estate company, can be found on the Web at http://www.behringerharvard.com.

Groups Urge Withdrawal of RESPA Proposal

August 4, 2008
The Department of Housing and Urban Development should reconsider its approach to RESPA reform and withdraw its current proposal, according to a letter to HUD Secretary Steve Preston signed by 10 industry trade groups.

"We have serious concerns about HUD's current Real Estate Settlement Procedures Act proposal, and we oppose its finalization in anywhere near its current form," the July 31 letter says. The trade groups want HUD to work with the Federal Reserve Board and harmonize the RESPA and Truth in Lending Act mortgage disclosures. "If HUD adopts a final rule now, without coordinating with the [Fed] board, it will be to the detriment of consumers, forcing them to confront a baffling host of disclosures, and forcing the mortgage industry to comply with inconsistent rules," the industry groups say in the letter, which was also sent to the White House budget office. The Fed is working on TILA disclosures that provide borrowers with a better understanding of financing costs and mortgage broker fees. The American Bankers Association, the Mortgage Bankers Association, and the National Association of Realtors are among the signers. The associations can be found online at http://www.aba.com, http://www.mortgagebankers.org, and http://www.realtor.org.

MBA Chief Departing at Year's End

July 23, 2008
Mortgage Bankers Association president Jonathan L. Kempner is resigning from the trade group effective at the end of the year and will be replaced by industry veteran John Courson.

During the mortgage crisis, the trade group has seen both its membership and its revenues decline. It has also been hurt by its investment in a new Washington office building that became its headquarters this spring. With the commercial real estate market softening, the MBA has had difficulty leasing other floors in the building. Mr. Courson's company, Central Pacific Mortgage, Folsom, Calif., collapsed early in 2007 after being margin-called by its warehouse lenders. Mr. Courson founded CPM, a nondepository, in 1977. At its peak, CPM was table-funding about $180 million a month.

WaMu Shares Stable Despite Big Loss

July 23, 2008
Shares of Washington Mutual traded within a close range of Tuesday's closing price Wednesday morning, despite the company's substantial second-quarter loss reported after trading closed on Tuesday.

In a conference call with investors and analysts Tuesday evening, WaMu chief executive Kerry Killinger said it will take time for housing markets to recover from the housing bubble. He said WaMu continues to reduce its residential mortgage exposure, with the company's owned mortgage portfolio declining by $8.5 billion, or 4%, on a year-to-date basis. He also said WaMu's troubled payment-option adjustable-rate mortgage portfolio is actually performing better than those pooled for securitization, noting that 81% of WaMu's option ARM borrowers made a downpayment of at least 20%.

Freddie Registers With SEC -- Finally

July 21, 2008
Freddie Mac has reaffirmed its commitment to raise $5.5 billion in new capital, and the publicly traded company said it has finally become a Securities and Exchange Commission registrant.

"Becoming an SEC registrant marks an important milestone for the company and demonstrates our commitment to enhanced transparency and financial reporting," Freddie Mac chairman and chief executive Richard Syron said. The government-sponsored enterprise was expected to register its stock in 2003, but a $5 billion accounting scandal forced Freddie to concentrate on repairing its accounting systems and internal controls. Back in May, Freddie and Fannie Mae pledged to issue stock to raise additional capital. Fannie has issued $7.4 billion in common and preferred stock, but so far Freddie has not followed through. In the past two weeks, both GSEs have seen the value of their stock plummet. And the Federal Reserve Board granted Fannie and Freddie access to its lending window to head off any short-term funding problems. Freddie Mac has not set a date for its offering of common and preferred stock. The company said the date will depend on a "variety of factors, including prevailing market conditions."

Lawmakers Urge RESPA Rule Withdrawal

July 18, 2008
The Department of Housing and Urban Development should withdraw its RESPA proposal and work with the Federal Reserve Board in developing "more simplified mortgage and real estate settlement cost disclosure forms," according to a "dear colleague" letter being circulated in the House.

Reps. Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., are leading the effort to get Housing Secretary Steve Preston to abandon HUD's proposed Real Estate Settlement Procedures Act rule. The two House Financial Services Committee members are urging fellow members of Congress to sign a letter that petitions HUD to immediately commence a joint rulemaking process with the Fed, which is working on improving Truth in Lending Act disclosures for mortgage borrowers. "It is critically important for consumers that any revision to RESPA achieve the following goals: simplify, clarify and reduce the cost of mortgage and real estate settlement processes," the letter to the HUD secretary says. However, HUD's RESPA proposal does not meet those goals, according to Reps. Hinojosa and Biggert. "We are profoundly concerned that HUD's proposed RESPA rule will hinder rather than help the recovery of the housing market." Over a dozen banking, mortgage, and settlement provider trade groups will be lobbying lawmakers to sign the letter.

Cogent Road Tool Detects Credit Piggybacking

July 15, 2008
Cogent Road, San Diego, Calif., has launched an automated tool for detecting if a credit score has been artificially inflated due to questionable or untrustworthy "authorized user" accounts within the borrower's profile.

This process is known as "piggybacking," because the borrower's credit score "piggybacks" on the seasoning and payment history of the actual card holder. The tool is available free of charge to Cogent Road's existing Funding Suite clients. The application examines credit reports to detect the probability that a borrower's credit score is being artificially manipulated based on a different individual's payment history. Using a series of comparative algorithms, this detection tool analyzes the borrower's credit profile as a whole to detect whether or not authorized user tradelines are consistent with his or her historical payment pattern. This tool can also differentiate the bona fide authorized user relations that occur in joint credit applications, however it does identify if the spouse's credit score is influenced by authorized user accounts. The company can be found on the Web at http://www.cogentroad.com.

Taylor, Bean & Whitaker Complete Platinum Deal

July 11, 2008
Taylor, Bean & Whitaker Mortgage Corp., Ocala, Fla., has completed its acquisition of a controlling interest in Platinum Bancshares Inc., a thrift holding company based in Rolling Meadows, Ill.

Neither company is publicly traded. Office of Thrift Supervision approval of the deal was granted in late June. William Leaming, the chief executive of Platinum Community Bank, commented, "We are excited about the resources that TB&W will provide to Platinum. They are one of the premier national players in the prime residential mortgage arena. The transaction will allow Platinum to diversify the products and services that it offers." Platinum Community Bank's only office is located in Rolling Meadows. Its loan activities are concentrated primarily in the Chicago metropolitan area and consist of one-to-four-family residential mortgage loans, but it also originates and participates in commercial real estate and small business loans as well. "Platinum Community Bank is an opportunity for TB&W to participate in the community bank process and essentially pilot the offerings we ask our community bank customers to adopt," said Lee Farkas, chairman of TB&W. "The infusion of technology, resources and strength allows Platinum to offer more to their customers."

Barclays Welsh Sub to Stop Making New Loans

July 9, 2008
Firstplus, a second-lien home loan business in Wales owned by Barclays PLC, plans to stop making new loans to customers early next month.

About 300 staff will be affected by the move, and approximately 130 people "will be retained in Cardiff to look after existing customers," Barclays said. "Every effort is being made to find them alternative roles across the Barclays business." Unite, a United Kingdom trade union, said it understood that "market conditions mean the Firstplus product is no longer viable," but it questioned Barclays' ability to place cut workers from Cardiff, as "Barclays has few large centers in Wales compared to other large banks."

Jersey Bank Bear of Day

July 2, 2008
Zacks Equity Research's Bear of the Day for July 2, 2008 is Hudson City Bancorp, Paramus, N.J.

In its statement, the Chicago-based investor research firm said "Even though the shares trade at a discount to the peer median (on a P/E basis), with 67% of the loan portfolio in residential real estate in the New York metropolitan area, considering the industry overhangs, we remain cautious given the current valuations. Our rating remains a sell, though a weaker one. Our six-month price target of $15.50 per share equates to a negative 11.7% expected total return."

Florida Sues Countrywide

July 2, 2008
Florida Attorney General Bill McCollum has sued Countrywide Financial Corp. and its former chairman Angelo Mozilo for allegedly engaging in deceptive and unfair trade practices in originating subprime loans.

The AG's lawsuit says the Calabasas, Calif.-based lender failed to ensure that borrowers could repay their loans and even placed prime borrowers into higher interest rate subprime loans. "To foster a culture of loan approvals regardless of a borrower's capacity to pay, Defendants compensated underwriters with bonuses," says the lawsuit filed in Broward Country circuit court. "Defendants' underwriters had incentives to approve as many loans as possible, regardless of credit risk." Countrywide declined to comment on the specifics of the case. The Florida AG filed the lawsuit on June 30, one day before Bank of America completed its acquisition of Countrywide. Attorneys general in Illinois and California have filed similar lawsuits against Countrywide.

Mall REIT to Move to OTC Market

July 1, 2008
Feldman Mall Properties Inc., Great Neck, N.Y., has announced that it will begin trading on the Over the Counter Market as of July 7.

The real estate investment trust said it will no longer trade on the New York Stock Exchange. Feldman said it has not yet been assigned a trading symbol. The REIT can be found online at http://www.feldmanmall.com.

MicroBilt, PRBC to Merge Payment Data

June 30, 2008
MicroBilt Corp., Kennesaw, Ga., and Annapolis, Md.-based PRBC have announced a planned merger of payment data to help small to medium-size companies do more business with consumers who have thin credit histories.

The data will be merged in PRBC's data repository, and MicroBilt will make an equity investment in PRBC under the arrangement. The companies said the credit crunch is forcing smaller businesses to be very cautious in originating new loans, making it "more difficult than ever" for consumers with thin (or no) established credit histories to qualify for competitive rates. "PRBC has done a tremendous job in developing methods and systems of aggregating nonreported bill payment data to help consumers demonstrate good payment track records and qualify for credit at competitive rates," said MicroBilt chairman Bob Raleigh. "By combining PRBC's data with the trade line data reported to MicroBilt by thousands of smaller companies, we can help this large sector build credit histories and receive FICO Expansion scores much faster, and in turn [enable] businesses to grant more credit with less risk." The companies can be found online at http://www.microbilt.com and http://www.prbc.com.

Mortgage Stocks Clobbered Again

June 27, 2008
Financials were not spared in Thursday's big market selloff, with some mortgage-related stocks falling by double-digit percentages.

The Dow Jones industrial average fell 358 points, or 3%, and all but one of the 15 industry stocks tracked by MortgageWire were down, with the largest loser in percentage terms being IndyMac. The company's already beleaguered shares fell $0.29, or 27%, to close at $0.79. Mortgage insurers PMI, Radian, and TGIC were also down sharply, as their share prices fell 19%, 17%, and 14%, respectively. All the remaining publicly traded mortgage insurers saw their shares fall to new 52-week lows. Fannie Mae and Freddie Mac both saw their shares fall by 7%. And Washington Mutual's shares fell another 9%, also putting the company at a new 52-week low. As of midday Friday, the Dow was down more than 50 additional points.

FDIC Urged to Relax Covered Bond Standards

June 27, 2008
The Financial Services Roundtable is urging the Federal Deposit Insurance Corp. to follow the European model and relax its mortgage underwriting standards if it wants to jump-start a market for U.S. covered bonds.

Specifically, the Roundtable is urging the FDIC to drop the conservative eligibility requirements for mortgages that can be used as collateral for covered bonds and provide more flexibility to use existing whole mortgages and mortgage-backed securities. Otherwise, it would take years for banks and thrifts to build mortgage portfolios that meet the eligibility requirements, and the fledging U.S. covered bond market would "wither," FSR president and chief executive Steve Bartlett says in a comment letter. The comment period on the FDIC's interim policy statement on covered bonds ended June 23, and many community banks expressed concerns that the agency might impose a deposit insurance surcharge on covered bonds and other secured liabilities like Federal Home Loan Bank advances. The Independent Community Bankers of America generally supports the policy statement, but "strongly disagrees with including any secured liabilities and particularly FHLBank advances as part of an institution's assessment base," the trade group says.

30-Year Rate Hits 9-Month High

June 19, 2008
The average 30-year fixed mortgage rate rose from 6.32% to 6.42%, its highest level since last September, over the seven-day period ended June 19, according to Freddie Mac's Primary Mortgage Market Survey.

The average 15-year fixed mortgage rate rose from 5.93% to 6.02%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.70% to 5.89%, and the average rate for one-year Treasury-indexed ARMs increased from 5.09% to 5.19%, Freddie Mac reported. Fees and points averaged 0.6 of a point for ARMs, and 0.7 of a point for fixed-rate mortgages. "Fixed-rate mortgage rates continued to climb this week to the highest point in nearly nine months following the release of May's consumer and producer price indexes, both of which showed stronger levels of inflation," said Frank Nothaft, Freddie Mac's chief economist. "Additionally, consumer prices rose 0.6%last month, the most since November 2007, and traders began to fully price in a Federal Reserve rate hike by the end of September, based on the federal funds futures market." A year ago, the average 30-year and 15-year fixed mortgage rates were 6.69% and 6.37%, respectively, and the average hybrid and one-year ARM rates were 6.31% and 5.66%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Builders Back Housing Bill, Urge Flexibility

June 19, 2008
The National Association of Home Builders is supporting the housing bill despite it limitations, and the trade group is urging others to compromise so that the landmark legislation can be passed and sent to the president.

"We are urging everyone to stop demagoguing and start compromising for the sake of economy," NAHB chief executive Jerry Howard said. The NAHB wanted a broader homebuyer tax credit and a net operating loss carry-back provision so builders could deduct losses in 2008 and 2009 from their profits in prior years and receive a tax rebate. But the housing bill now under consideration in the Senate limits the tax credit to first-time homebuyers, and the NOL provision has been dropped. Mr. Howard said the organization is willing to support the limited tax credit and expressed hope that "others on Capitol Hill that have a couple of outstanding issues will realize the value and necessity of being flexible, too." Otherwise the most important housing bill since 1992 "could go down the tubes," he said.

Groups Plan to Develop Asian RE Indices

June 18, 2008
Global index provider FTSE Group and a group of Asian, European, and U.S. professional associations have formalized a partnership to develop new indices for Asia Pacific's real estate sector, according to FTSE.

The trade groups involved are the Asia Public Real Estate Association, the National Association of Real Estate Investment Trusts, and the European Public Real Estate Association. "This is a landmark development for Asia Pacific's public real estate industry," said Peter Mitchell, APREA's chief executive. "It will give more visibility to Asian real estate markets, thereby enhancing the region's access to global capital."

Luminent Cites 'Triggering Event' for Notes

June 17, 2008
Luminent Mortgage Capital Inc., a real estate investment trust based in Philadelphia, says a triggering event has occurred under the indenture agreement for its convertible senior notes.

The event is related to the delisting of Luminent's common stock by the New York Stock Exchange on May 3. The delisting of the stock by NYSE for 30 consecutive trading days constitutes a triggering event, Luminent said. The holders of the $90 million in convertible senior notes may surrender their notes for conversion. The company's common stock currently trades on the over-the-counter bulletin board. On June 16, the common stock closed at $0.20 per share. At the end of March, Luminent announced plans to convert from a REIT to a publicly traded partnership. The company can be found online at http://www.luminentcapital.com.

Builders Drop Rebate Plea, Seek Big Tax Credit

June 17, 2008
The National Association of Home Builders has dropped demands that struggling builders receive tax rebates, and now the trade group is urging Congress to pass a "robust" homebuyer tax credit to stimulate the housing market.

"That tax credit needs to be as big and unencumbered and as rapid-acting as Congress can make it," NAHB chief executive Jerry Howard told reporters. In February, the NAHB cut off political contributions to legislators because Congress refused to include a net operating loss carry-back provision in an economic stimulus package. The NOL provision would have allowed homebuilders and other unprofitable companies to deduct losses in 2008 and 2009 from their profits in prior years and receive tax rebates. In April, the Senate passed a foreclosure prevention bill that included an NOL provision, but it came under heavy criticism. House tax writers did not include an NOL provision in a bill that gives first-time homebuyers a $7,500 tax credit. However, the tax credit works like an interest-free loan that has to be paid back in 15 years. The builders want a real tax credit that is not limited to first-time homebuyers. The NAHB's analysis shows that a robust tax credit would have a more stimulative effect on the economy than an NOL provision, Mr. Howard said.

Accredited Names New CEO

June 9, 2008
Jeff Walton has been named chief executive officer of Accredited Home Lenders Holding Co., a troubled San Diego-based subprime lender that recently confirmed an undisclosed number of layoffs.

Mr. Walton replaces Jim Moran, who has served as interim CEO since February 2008. A veteran of 25 years in the mortgage industry, Mr. Walton was previously president, CEO, and senior managing director of Bear Stearns Residential Mortgage Corp., Accredited said. Before launching BSRMC, he served as president of the mortgage division for First National Bank of Arizona and First National Bank of Nevada. Accredited, once a top-ranked publicly traded subprime lender, was sold last fall to Lone Star, a private equity fund. Accredited can be found on the Web at http://www.accredhome.com, and Lone Star can be found at http://www.lonestarfunds.com.

Accredited Confirms Layoffs

June 5, 2008
Subprime lender Accredited Home Lenders of San Diego has laid off an undisclosed number of workers, MortgageWire has learned.

A spokesman for the company confirmed the cutbacks, noting that, "The restructure was done in order to maintain Accredited's financial position in the marketplace and improve the company's long-term prospects by realizing efficiencies." He declined to comment further. According to a posting on the BrokerUniverse website (an affiliate of National Mortgage News), Accredited closed operation centers in Orange, Calif.; Beaverton, Ore.; St. Petersburg, Fla.; and Woodcliff Lake, N.J. However, the information could not be confirmed and the spokesman would not comment. Last fall Accredited, once a top-ranked publicly traded subprime lender, was sold to Lone Star, a private equity fund.

Fremont Sells Remaining MSRs to Litton

June 3, 2008
Fremont General Corp., Brea, Calif., has completed the sale of the remaining mortgage servicing rights on its $12.2 billion portfolio to Litton Loan Servicing.

Fremont received support for the sale agreement from the California Department of Financial Institutions and the Federal Deposit Insurance Corp. The troubled California thrift's stock was suspended from the New York Stock Exchange earlier this year and now trades via the "pink sheets" service. Litton Loan Servicing is an affiliate of Goldman Sachs & Co.

Ranieri Named Interim CEO at Struggling Bank

May 21, 2008
Lewis S. Ranieri, co-inventor of the mortgage-backed security, has been named interim chief executive officer of Franklin Bank Corp., Houston, an institution that is struggling under the weight of bad real estate loans.

Mr. Ranieri, who is also the largest shareholder in Franklin, helped found the institution back in 2002 but has not played a role in its day-to-day operations. He replaces Anthony Nocella as CEO. Mr. Nocella, a longtime friend and associate of Mr. Ranieri's, will retire but remain as a director. The publicly traded Franklin is under investigation by the Securities and Exchange Commission for accounting and related issues. According to a statement put out by Franklin management, the bank recently completed is own 10-week investigation of its problems, concluding that it did not charge off "certain uncollectable" second liens, or take proper mark-to-market writedowns on some of its assets. It's anticipated that Franklin, whose shares trade for about $1, will eventually be sold. During its brief history, Franklin avoided the subprime market.

Impac Lost $2B in '07, Shifts NIMs to Survive

May 21, 2008
Impac Mortgage Holdings, Irvine, Calif., posted a net loss of $2 billion for 2007, compared with a $75 million loss the year before.

Impac, a nondepository real estate investment trust that once specialized in alternative-A lending, is no longer funding new loans and is surviving off its servicing and master servicing portfolios. According to a new filing with the Securities and Exchange Commission, the company, in an attempt to stave off its lenders, is transferring "certain net interest margin" certificates and subordinated bonds held on its balance sheet to satisfy "reverse repurchase agreements." In 2007 it took $1.4 billion in charges to cover loan losses. It also had real-estate-owned charges of $281 million. Impac's shares continue to trade on the New York Stock Exchange. At deadline time, its stock price stood at $1.20, compared with a 52-week low of $0.20 and a high of $6.75.

Company Forms RE Hedging Venture

May 19, 2008
Commercial Defeasance LLC, Charlotte, N.C., has announced the formation of Custom Hedging Solutions LLC to help real estate companies manage interest rate risk via derivatives such as interest rate swaps, caps, and options.

"We have a broad knowledge of derivative products and hedge providers in the market that we can leverage for the benefit of our customers," said Jennifer Imler, managing director of Custom Hedging. Before leading the new hedging team, Ms. Imler traded and marketed derivative products at Wachovia and worked on its commercial mortgage trading desk. Custom Hedging Solutions can be found online at httop://www.customhedgingsolutions.com.

Former American Home TPO Chief Investing in REO

May 16, 2008
Don Henig, former president of third-party lending at American Home Mortgage, Melville, N.Y., has found a new career after mortgages, investing in foreclosed properties at public auctions.

Since the end of November, Mr. Henig has been involved in 30 home purchases. His goal is to buy the homes at a deep discount for cash, fix them up and resell them quickly. He is out raising capital through his firm, First Light Capital, Farmingdale, N.Y. He works with another company, Island Properties, also of Farmingdale, to fix up the homes and then find investors that eventually will buy what he acquires. For now, he is concentrating on buying homes in New York and New Jersey but not the five boroughs of New York City. American Home, a publicly traded REIT that specialized in both prime and nonprime lending, filed for bankruptcy protection last summer after being margin-called by its lenders on Wall Street. Most of the company's assets have been liquidated.

ISGN Rebrands All Subsidiaries

May 15, 2008
ISGN Technologies Ltd., a mortgage technology provider based in Bensalem, Pa., has announced a rebranding of MortgageHub and Dynatek as well as all its other subsidiary companies.

ISGN said software providers MortgageHub and Dynatek will be known as ISGN; onDemand service provider Inuva and Tradewinds Mortgage Document Preparation Co., a provider of document preparation/fulfillment services, will be known as ISGN Fulfillment Services; and Cocamar, a provider of cost analysis/risk mitigation services, will be known as ISGN Inspection Services. "By design, our company's products and services can offer companies a unified and complete end-to-end solution to dramatically streamline and improve their mortgage processes, which is one of the reasons why we are rebranding all our divisions under one name," said Krishna Srinivasan, chief executive officer at ISGN. All the individual company websites will be redirected to http://www.ISGN.com.

1Q Home Price Decline Steepest in 26 Years

May 13, 2008
Prices paid for single-family homes fell 7.7% in the first quarter from the level of a year earlier, the steepest decline ever recorded by the National Association of Realtors, which has been tracking sales for 26 years.

The trade group did offer one piece of good news (if it can be deemed such): 48 out of 149 metropolitan statistical areas tracked (or 32.2%) showed higher median prices in the quarter. In the first quarter, the average median sales price was $196,300, compared with $212,600 a year earlier. The NAR reported that there were "very few jumbo loan originations" in the quarter, "so sales are much slower in high-cost areas." Lawrence Yun, chief economist for the trade group, added that, "Neighborhoods with little subprime exposure are holding on very well." According to preliminary figures compiled by National Mortgage News and the Quarterly Data Report, mortgage bankers funded less than $4 billion worth of subprime loans in the first quarter. The NAR can be found online at http://www.realtor.org.

NMHC: MF Sales Slowing Sharply

May 12, 2008
The credit crunch is causing the volume of apartment property sales to slow "sharply" and making it harder for apartment firms to access the debt and equity markets, according to the National Multi Housing Council's multifamily industry survey.

The trade association reported that its Market Tightness Index, which measures changes in occupancy rates and rents, rose significantly, from 33 in January to 44 in April, as more respondents reported tighter conditions. The availability of debt funding for multifamily properties declined significantly, according to the NMHC's Debt Financing Index, which dropped from 45 in January to 22 in April. "The bursting of the for-sale housing bubble has greatly slowed the outflow of renters into ownership"," said Mark Obrinsky, the association's chief economist. "More than 80% of the survey respondents reported a decrease in the number of renters leaving to become homeowners." The survey's respondent pool consists of 87 chief executive officers and other senior executives in the multifamily industry who also serve on the NMHC's board of directors or advisory committee. The council can be found online at http://www.nmhc.org.

ALPS, Cohen & Steers Launch Global RE ETF

May 12, 2008
ALPS Holdings Inc., Denver, and Cohen & Steers, New York, have announced the launch of a global real estate exchange-traded fund.

The fund, Cohen & Steers Global Realty Majors ETF, is advised by ALPS Advisers Inc. It will seek investment results that correspond to the performance of the Cohen & Steers Global Realty Majors Index, which comprises securities of companies that have been evaluated on management strength and track record, market position, the composition and quality of their real estate portfolios, and other factors, the companies said. The fund targets "75 industry-leading real estate companies from an initial universe of 500 that are located in developed markets across North America, Asia Pacific, and Europe," they said. The companies can be found on the Web at http://www.alpsetfs.com and http://www.cohenandsteers.com.

Lenders Urge Reversal on Appraisal Reforms

May 1, 2008
Mortgage lenders are urging the Office of Federal Housing Enterprise Oversight to withdraw its support for appraisal reforms that Fannie Mae and Freddie Mac agreed to implement as part of a settlement with New York Attorney General Andrew Cuomo.

The agreement "permits the NYAG to unlawfully exercise authority that resides exclusively with the federal government," according to eight financial services trade groups. And they contend that OFHEO "violated its statutory directive" to be the sole regulator of the two government-sponsored enterprises when it entered into the agreement with the New York attorney general. "We urge OFHEO to withdraw its assent to the agreement, to not permit the GSEs to implement the agreement, and take steps to assure that this type of rulemaking by settlement does not occur in the future," the joint letter says. In comment letters on the appraisal reforms, the same groups strongly oppose the ban on the use of in-house appraisers and subsidiary appraisal firms.

EMC Okays 'Consent Negotiations,' FTC Says

April 30, 2008
The Federal Trade Commission's multiyear investigation into the servicing practices of a Bear Stearns affiliate could lead to the filing of a complaint, but EMC Mortgage Corp. executives have agreed to resolve the matter through "consent negotiations," according to the FTC.

Lydia Parnes, the FTC's director of consumer protection, told a Senate panel that FTC staff "believes EMC and its parent Bear Stearns have violated a number of federal consumer protection statutes in connection with its servicing activities." The FTC director indicated that negotiations have not started yet. "The FTC cannot comment further on this ongoing law enforcement investigation," she testified. Ms. Parnes also revealed that the FTC has launched "several nonpublic investigations of mortgage originators for possible violations of fair lending laws." In addition, the consumer protection agency is investigating more than a dozen mortgage companies for deceptive advertising. The FTC can be found online at http://www.ftc.gov.

Execs Depart From Money-Losing E*Trade

April 28, 2008
E*Trade Financial, New York, which has been stung by large mortgage losses over the past year, has announced the departure of two top executives.

The company said chief financial officer Robert J. Simmons resigned his position effective May 9 and Arlen Gelbard, general counsel and corporate secretary, left E*Trade on April 22. No reason was given for their departures. In the first quarter E*Trade lost $91 million, compared with a $1.7 billion loss in the fourth quarter. In the first quarter $177 million worth of single-family loans went delinquent, increasing its nonperforming loan portfolio to $655 million. The company also recorded a $27 million impairment charge on mortgage bonds rated triple-A and double-A. E*Trade named current controller and executive vice president Matthew Audette to be the new CFO. It also appointed former general counsel Russell Elmer to be the new acting general counsel. Mr. Elmer, who is returning to the company, left E*Trade in June 2007. The company can be found on the Web at http://www.etrade.com.

Hersha Okayed for Listing on NYSE

April 22, 2008
Hersha Hospitality Trust, a Philadelphia-based real estate investment trust, has been approved for listing on the New York Stock Exchange, according to the REIT.

Hersha, which is now traded on the American Stock Exchange, said its common stock will begin trading on the NYSE under the ticker symbol "HT" on May 5, and its series A preferred stock will trade under the symbol "HT PR A." The lodging REIT can be found on the Web at http://www.hersha.com.

RBS Takes $12B Hit; Rumors Swamp Sub

April 22, 2008
Royal Bank of Scotland -- the parent of Greenwich Capital, for years a major player in subprime asset-backed securities -- early Tuesday morning said it would take almost $12 billion in mortgage-related writedowns and raise $24 billion in new capital.

Great Britain's second-largest bank blamed its problems on the U.S. subprime mess and the spreading credit crunch that is now affecting many sectors of the financial services industry. Based in Connecticut, Greenwich has been a major securitizer of subprime mortgages. Its client list once included some of the largest subprime funders in the United States, including Ameriquest Mortgage of California. Sources say Greenwich has slashed its warehouse lending business to the bone and is even margin-calling investors in delinquent mortgages. One investment banker who visited Greenwich recently described the atmosphere in Connecticut as "a lot of traders sitting around gabbing" and "people going home early." Greenwich has not responded to telephone calls from National Mortgage News.

Freddie Touts Jumbo Commitments

April 17, 2008
Freddie Mac has enlisted three major mortgage lenders to start up its jumbo mortgage program, and it is looking to enter into agreements with other lenders, according to a Freddie executive.

Freddie Mac will provide 90-day forward pricing on jumbos originated by Wells Fargo Home Mortgage, Chase Home Finance, and CitiMortgage and purchase those newly originated mortgages for its portfolio, according to Freddie vice president Bob Ryan. "We expect to take some deliveries in April, and for sure in May," Mr. Ryan said. Separately, Fannie Mae said it has provided 90-day forward pricing for its lenders since April 1. "We have 90-day forward MBS commitments available as well and already have several in place," Fannie spokesman Brian Faith said. Fannie and Freddie can also purchase seasoned jumbos that were originated after June 30, 2007, under the economic stimulus bill Congress passed in February, which temporarily raises the conforming loan limit to 125% of median home prices in high-cost areas, with a maximum cap of $729,750. "We have consummated some trades" on seasoned jumbos, "but those are small amounts," Mr. Ryan said.

NYSE Suspending Trading in Fremont

April 15, 2008
NYSE Regulation Inc., the regulatory arm of the New York Stock Exchange, has announced that it will suspend trading in the common stock of Fremont General Corp., Brea, Calif., before the start of trading on April 17.

At the same time, trading is also being suspended in Fremont General Financing I's trust preferred securities. Fremont's common stock had fallen below the NYSE's continued-listing standard with an average closing price of less than $1 over a period of 30 consecutive trading days. NYSE Regulation also considered the "abnormally low" price of Fremont's common stock, which closed at $0.45 on April 11, with a resultant common market capitalization of $35.8 million. Fremont said the common stock and trust preferred securities would trade on the pink sheets starting April 17. The delisting news came one day after Fremont entered into a deal to sell the assets of Fremont Investment & Loan to CapitalSource Inc., Chevy Chase, Md. In late morning trading on April 15, Fremont's stock stood at $0.32 per share, down $0.22 on the day. Fremont can be found online at http://www.fremontgeneral.com.

Bear Reports EMC Civil Probe

April 15, 2008
Bear Stearns said in a recent SEC filing that it generated a $115 million net profit in the quarter ended Feb. 29 and indicated that developments in the troubled period since then have included a civil investigation of its EMC Mortgage Corp. unit.

In a Securities and Exchange Commission filing for the first fiscal quarter, which showed Bear's net income had fallen about 79% on a year-to-year basis, Bear Stearns said it has been cooperating with a March Federal Trade Commission demand for "documents and data relating to EMC's business and servicing practices." The company also said that liquidators of mortgage-related hedge funds named Bear Stearns as a defendant in an April lawsuit. In the fall, Bear had said in a filing that there was a criminal probe of the funds. Bear Stearns can be found online at http://www.bearstearns.com.

P&C Insurers' Subprime Exposure 'Manageable'?

April 10, 2008
The exposure of U.S. property-and-casualty insurance companies to subprime mortgage-related collateral is "manageable," according to Fitch Ratings.

In a special report on the subject, Fitch analyzed 2007 financial results for publicly traded U.S. property-and-casualty insurers and found "manageable impact on stockholders' equity" from writedowns and realized and unrealized losses related to residential mortgage-backed securities, asset-backed securities, and collateralized debt obligations. Fitch noted that it has taken "very limited" negative rating actions in the P&C sector due to subprime exposure, but said it expects "poor collateral performance in subprime-related investments to continue in 2008, and has growing concerns in the [alternative-A] sector." The rating agency added that "highly illiquid, volatile market conditions have spread somewhat to other asset classes which could impact insurers' broader investment portfolio performance." Fitch can be found online at http://www.fitchratings.com.

IndymacBank Reports $335M Alt-A Deal

April 9, 2008
IndymacBank has announced the securitization of $335 million of prime jumbo and alternative-A credit hybrid adjustable-rate mortgages that it traded in a private-label deal slated to settle on April 15.

The company said it is taking an approximately $2 million pretax loss on the transaction, which is part of its "capital reduction/capital generation strategy." Indymac sold about $235 million of triple-A rated mortgage-backed securities and retained $100 million in primarily investment-grade bonds. "Other investors have expressed similar interest in these types of bonds, so we will continue to pursue these transactions," the company said. The IMB Report, the bank's online news page, can be found at http://www.theimbreport.com.

ALTA Names Marketing SVP

April 8, 2008
Michelle Korsmo has been named senior vice president for marketing and member programs at the American Land Title Association, the national trade association for the title insurance industry.

Ms. Korsmo was most recently executive vice president of the Americans for Prosperity Foundation, a Washington, D.C.-based nonprofit group dedicated to educating citizens about economic policy. Before joining the foundation, Ms. Korsmo served three years as deputy chief of staff to U.S. Secretary of Labor Elaine L. Chao. ALTA can be found on the Web at http://www.alta.org.

Apartment Owners Shrinking as Managers Grow?

April 3, 2008
The average portfolio size of the apartment industry's largest owners is declining, while concentrations among apartment management firms are growing, according to a survey by the National Multi Housing Council.

Apartment Investment and Management Co., Denver, was the nation's largest apartment owner for the third year in a row in 2007, although it shed more than 14,000 units to fall below 200,000 for the first time since 1988, the annual NMHC rankings found. Equity Residential, the No. 4 owner, sold 11,500 units. Meanwhile, most of the top managers boosted their portfolio holdings, with Riverstone Residential Group, Dallas, adding 64,000 units for a 70% increase. "The apartment industry has historically been dominated by smaller local and regional firms, particularly in the area of property management," said NMHC president Doug Bibby. "But that is clearly changing, as we see the emergence of several powerful national property managers. These firms are using economies of scale to overcome thin margins and to refute the conventional wisdom about property management being a low-growth area." The trade group can be found online at http://www.nmhc.org.

Luminent Plans to Drop REIT Status

April 1, 2008
Luminent Mortgage Capital Inc., Philadelphia, has announced a proposed restructuring under which it would convert from a real estate investment trust into a publicly traded partnership.

Luminent said maintaining its REIT status is no longer beneficial to the company or its stockholders, and that freeing itself from the REIT income and asset tests will "significantly enhance its flexibility for investment diversification and cash management." After the restructuring, the company says it plans to offer fee-based services such as credit risk management, asset management advisory services, and sub-manager services for investment funds. Luminent can be found online at http://www.luminentcapital.com.

NRMLA Seeks Higher HECM Loan Limits

March 27, 2008
High loan limits for Federal Housing Administration reverse mortgages could help refinance seniors out of subprime loans and enable them to stay in their homes free from monthly mortgage payments, according to the National Reverse Mortgage Lenders Association.

"A significant proportion of subprime loans have been made to older homeowners," said NRMLA president Peter Bell. "As they look to refinance out of those onerous loans, a HECM should be an option for them." (The FHA's reverse mortgage is called a home equity conversion mortgage.) The FHA reform bill, currently stalled in conference, raises the HECM loan limit to $417,000 nationwide. But there are discussions about raising the FHA loan limit for single-family loans higher, and NRMLA wants HECMs included. The trade group also has reopened negotiations with AARP, a lobbying group for older Americans, on HECM origination fees. Last year the two parties agreed to reduce the 2% HECM fee to 1.5%, and it was written into the FHA reform bill. But the credit markets have changed since then, and NRMLA says it wants an adjustment because it is no longer profitable to make HECMs if the property value is less than $250,000. "We are in negotiations," Mr. Bell said.

Probe Faults New Century Management

March 27, 2008
Senior management at New Century Financial Corp. "largely rejected or ignored" staff recommendations to tighten credit standards in 2004, which evidentially lead to a "tsunami of impaired and defaulted mortgages" and the subprime lender's bankruptcy, according to a court-appointed investigator.

"The increasingly risky nature of New Century's loan originations created a ticking time bomb that detonated in 2007," according to 550-page report filed in a U.S. Bankruptcy Court by investigator Michael Missal. The Irvine, Calif.-based company was the second-largest subprime lender when it filed for bankruptcy in April 2007. The examiner found numerous accounting problems and faulted KPMG, New Century's independent auditor, for allowing the publicly traded company to reduce its repurchase reserve in 2006 when it was being "flooded with repurchase claims" from investors. "New Century understated its repurchase reserve by as much as 1000% in the third quarter of 2006, reported a profit of $63.5 million ...when it should have reported a loss," the Missal report says. A KPMG spokesman said the firm "strongly" disagrees with the report's conclusions. A New Century representative said the submission of the report will allow the bankruptcy process to continue, and "we can take the next steps of confirming the liquidation plan."

Fitch Eyes Ocwen's Debt Ratings

March 17, 2008
Fitch Ratings has placed a "negative outlook" on its short-term and long-term debt ratings for Ocwen Financial Corp. after a deal to privatize the publicly traded company fell through.

The failure of Ocwen CEO William Erbey and his investor group to buy all of the outstanding common shares of the company is "a ratings neutral event," Fitch said. But the rating agency added that the "fluid state" of Ocwen's corporate structure, a difficult environment for servicing subprime mortgages, and the challenges related to dislocation in the capital markets all add negative pressure to the company's debt ratings. Fitch said that while recent performance has supported Ocwen's current ratings, higher delinquency and foreclosure rates will increase Ocwen's direct servicing costs and make the financing of servicing advances ore expensive as well. In addition, the company faces long-term pressure because demand for third party, subprime mortgage servicing may diminish, Fitch said.

HUD Issues Bold RESPA Proposal

March 14, 2008
The Department of Housing and Urban Development has issued its long-awaited RESPA reform proposal, and it is more ambitious than the industry expected or wants to implement during the current market turmoil.

Most observers expected HUD to issue a Real Estate Settlement Procedures Act proposal narrowly focused on providing consumers with concise and understandable disclosures of loan terms and settlement costs. However, HUD has "cast a wider net," according to RESPA attorney Phillip Schulman, who says the RESPA proposal is "complicated," "confusing," and "controversial." The RESPA proposal mandates the use of a standardized four-page good faith estimate that discloses loan terms and settlement costs, including the mortgage broker's compensation. HUD also wants the closing agent to read a closing scripting that summarizes important loan terms and highlights differences between the GFE and the HUD-1 settlement sheet. HUD Assistant Secretary Brian Montgomery expects industry opposition, but he told reporters it is "no longer acceptable" for industry to stand in the way of giving consumers clear disclosures. HUD has issued the proposal for a 60-day comment period. Seven major financial services trade groups, including the American Bankers Association and the Mortgage Bankers Association, have asked HUD to extend the comment period to 120 days.

MHI Trading on NASDAQ

March 12, 2008
MHI Hospitality Corp., a real estate investment trust based in Williamsburg, Va., has announced that its common stock is now trading on the NASDAQ Stock Market.

The stock, which trades under the symbol MDH, will no longer trade on the American Stock Exchange. The lodging REIT can be found online at http://www.mhihospitality.com.

MBA: Commercial/MF Debt Hits $3.3T

March 12, 2008
Commercial and multifamily mortgage debt outstanding rose to $3.3 trillion at the end of 2007, a 12% increase from the level recorded a year earlier, according to the Mortgage Bankers Association.

The Washington-based trade group said that, based on an analysis of Federal Reserve data, commercial and multifamily mortgage debt outstanding increased by $84.6 billion in the fourth quarter alone. Multifamily debt outstanding stood at $831 billion at the end of 2007 after a record increase of $28.2 billion, or 3.5%, in the fourth quarter. "Fourth-quarter increases in the level of mortgage debt outstanding were driven by increases in the holdings of commercial banks and the government-sponsored enterprises Fannie Mae and Freddie Mac," said Jamie Woodwell, the MBA's senior director for commercial/multifamily research. "Both groups took advantage of capital market disruptions and the lack of [commercial mortgage-backed securities] competition to increase their holdings of commercial and multifamily mortgages." Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with almost $1.4 trillion, or 42% of the total.

PBRC, NCRA Release New Credit Protocols

March 11, 2008
Payment Reporting Builds Credit, a national credit bureau based in Annapolis, Md., and the National Credit Reporting Association have released new protocols for manually verifying credit applicants' identity and bill payment accounts and histories.

The new procedures include safeguards to prevent conflicts of interest and to audit members' compliance, the organizations said. PBRC said only trade line histories that have been manually verified using the new procedures will be incorporated in PRBC's credit data repository and its credit reports. "For some time, mortgage and some auto lenders have considered rent and utility payment histories to assess creditworthiness and price loans when borrowers lacked traditional credit histories," said Michael Nathans, PRBC's founder. "But the collection and verification of such trade line data has been inconsistent, un-monitored, and un-scored. As a result, we have been told by secondary-market investors and mortgage insurers that the repayment performance of loans approved using this data has varied widely from lender to lender and that data quality is the suspected cause." PBRC can be found online at http://www.pbrc.com.

NMHC: Apartment Sector Still Strong

March 10, 2008
In contrast to the downturn in the single-family residential sector, conditions in the apartment sector remain strong, according to the National Multi Housing Council's latest Market Trends report.

The multifamily industry trade association reported that the number of renters in professionally managed apartments increased last year by the largest amount since 2000, and was as large as that of the previous five years combined. "While the so-called shadow rental market (unsold houses and condos that have left the for-sale market to enter the rental market) may attract some apartment renters, thus far the lowest homeownership rate in almost seven years seems to have increased demand for apartment residences, especially professionally managed apartments," said Mark Obrinsky, the association's chief economist. According to the Washington-based NMHC, the number of renters nationwide is projected to rise by nearly four million households over the next 10 years, and half are likely to rent apartments. The council can be found online at http://www.nmhc.org.

Mortgage Banking Jobs Stabilizing?

March 7, 2008
Mortgage brokerage firms cut 4,100 employees in January, while employment at mortgage banking companies appeared to stabilize, according to a government jobs report.

The U.S. Bureau of Labor Statistics reported that 3,900 full-time employees in the mortgage banker/broker sector lost their jobs in January. Total employment in the sector fell from 368,800 in December to 364,900 in January. Over the past 12 months, mortgage bankers have cut their payrolls by 25% and eliminated 86,700 jobs, while 23,900, or 17%, of the brokers counted by the BLS have lost their jobs or left the sector. But the recent uptick in refinancings along with rising defaults and workout cases that are straining servicing departments must have forced mortgage banking companies to stop cutting, at least for now. They added 200 workers to their payroll in January. Friday's job report also shows that the troubled homebuilding industry has lost 346,000 jobs since September 2006. Homebuilders laid off 14,400 employees in February, and residential specialty trade contracts cut another 16,300 employees. (There is a one-month lag in the BLS's reporting of jobs data on the mortgage industry.) The BLS can be found online at http://stats.bls.gov.

Resales Edge Up

February 25, 2008
Sales of single-family existing homes edged up 0.5% in January -- the first rise since February of last year -- and it appears that sales are "scratching the bottom," according to Lawrence Yun, chief economist of the National Association of Realtors.

Sales have been "soft but fairly steady" over the past five months, Mr. Yun told reporters, and he said he expects sales to move higher later this year as higher loan limits for Fannie Mae, Freddie Mac, and Federal Housing Administration mortgages take effect. The National Association of Realtors reported that resales rose from a seasonally adjusted annual rate of 4.32 million in December to 4.34 million in January. The median price of previously owned homes was $198,700 in January, down 5.1% from that of a year earlier, while the inventory of unsold single-family homes rose 7.7% to 3.65 million. This inventory translates into a 10-month supply at the current sales pace. An NAR survey found that 80% of sellers put their homes on the market because they want to trade up or purchase another home. Mr. Yun said a homebuyer tax credit could break this logjam and bring into the market more buyers that are cautiously waiting on the sidelines.

FBR Loses $270M in 4Q

February 21, 2008
Friedman, Billings, Ramsey Group lost $270 million in the fourth quarter and is blaming its performance partly on the bankruptcy of its subprime division, First NLC Financial Services of Florida.

For the year, the publicly traded real estate investment trust -- once a major player in the subprime sector -- lost $660 million. On Wednesday, FBRG's affiliate, FBR Capital Markets Corp., posted a $27.8 million loss for the quarter. FBRG is traded on the New York Stock Exchange, FBR Capital on the Nasdaq. (FBRG owns 52% of the affiliate.) In a statement, company president Rock Tonkel said the firm has "eliminated" most of its subprime whole-loan mortgages and on-balance-sheet residuals. Its exposure in this asset category is roughly $30 million. The REIT is putting its available cash into agency-quality mortgage-backed securities. It had $1.1 billion invested in MBS at the end of December.

Maryland Probing Ocwen's Servicing Practices

February 20, 2008
The Maryland Department of Labor, Licensing and Regulation is examining the servicing practices of Ocwen Loan Servicing, West Palm Beach, Fla., one of the largest subprime servicers in the United States.

A spokeswoman for the agency told MortgageWire that "We don't randomly conduct exams," adding that "we saw some flags." She did not elaborate. Ocwen was singled out by Maryland Gov. Martin O'Malley at a news conference on Tuesday. Bill Rinehart, vice president and chief credit officer for the publicly traded Ocwen, said, "We received an examination request in the ordinary course of business. That's as much as we know. If they find something in the exam, we'll address it." Ocwen services $53.5 billion in loans. At year's end, its foreclosure rate was 6.47%, compared with 3.21% a year earlier. Mr. Rinehart noted that less than 1% of Ocwen's foreclosure cures result from "short sales" or "deeds in lieu."

OTS Mulls 'Underwater' Refis

February 20, 2008
To deal with so-called underwater mortgages, the Office of Thrift Supervision wants to develop a refinancing program that provides lender/servicers with certificates for writing down the principal amount of a mortgage to enable them to possibly recoup "some or all" of the immediate loss when the property is sold or refinanced again.

OTS Director John Reich said he is trying to find a way to assist homeowners who cannot refinance to lower their mortgage costs and have negative equity in the homes. "We are concerned this reality is encouraging an increasing number of people to walk away from their homes," Mr. Reich told reporters. The OTS is looking at the Federal Housing Administration Secure program as a refinancing vehicle now that the FHA can insure mortgages above the $417,000 conforming loan limit. The OTS director said there is a potential for the certificates to be sold, like warrants, to investors and traded. OTS officials are promoting and developing the concept and say they hope to get other regulators, the FHA, and the American Securitization Forum on board in a few weeks.

Mismarkings Spur CS Asset Reductions

February 19, 2008
Mismarkings and pricing errors by "a small number of traders" at Credit Suisse, Zurich, have led to increases in the fair-value reductions of "certain asset-backed positions" in the company's structured credit business within investment banking.

The fair-value reductions to these positions "reflect significant adverse first quarter 2008 market developments" and are estimated at approximately $2.85 billion, with an estimated net income impact of approximately $1 billion, Credit Suisse reported. The company said that so far, even with the increased reductions, it remains on track to turn a profit in the first quarter. The reductions may also affect previously released 2007 results. The investment banking/structured credit business on Wall Street has generally been hard hit by the credit crunch stemming from U.S. mortgage woes.

Guidelines Updated for Higher-Balance Deals

February 15, 2008
Higher-balance loans now temporarily eligible for Federal Housing Administration and government-sponsored enterprise programs are slated to be securitized outside the "to-be-announced" market under updated Securities Industry and Financial Markets Association guidelines.

The new higher-balance FHA/GSE loans are slated to trade under unique pool codes on a specified pool basis or to be included in real estate mortgage investment conduit transactions, according to SIFMA. SIFMA can be found on the Web at http://www.sifma.org.

NMHC: Positive Impact on Multifamily Industry

February 8, 2008
The downturn in the housing market and tighter availability of credit is having a positive impact on the multifamily industry, according to the National Multi Housing Council's first-quarter survey of executives.

"While the 'shadow' rental market (unsold houses and condos that have left the for-sale market to enter the rental market) may attract some apartment renters (and potential renters), thus far, the lowest homeownership rate in five and a half years seems to have increased demand for apartment residences," said Mark Obrinsky, chief economist, NMHC. The Washington-based apartment industry trade group also reports that debt financing for apartment financing is more readily available, with an index measuring this rising from 17 in the prior quarter to 45 in the current quarter. Tightened underwriting standards and the "still-frozen" commercial mortgage-backed securities market have impacted debt financing availability.

LendingTree Writedown Hammers IAC's Q4 Results

February 6, 2008
The LendingTree posted a stunning $502 million loss in the fourth quarter, compared to a net profit of $14 million a year ago.

The company's publicly traded parent, IAC/Interactive Corp., New York, wrote down the value of the loan brokerage unit by $452 million in the fourth quarter. In a statement IAC chairman Barry Diller said, "Lending continues to be negatively impacted by the mortgage crisis." IAC, which calls itself an "interactive commerce" company, is in the process of spinning off some of its divisions, including the LendingTree. The company blamed the poor performance on "fewer loans sold in the secondary market."

MuniMae Stock Being Delisted by NYSE

January 31, 2008
Municipal Mortgage & Equity, a Baltimore-based multifamily lender and investment manager, has reported that it will not be traded on the New York Stock Exchange after Feb. 6.

After that date, the stock will be traded on the over-the-counter market. MuniMae said the NYSE is suspending trading in its shares because the company will not be meeting a March 3 deadline to file its audited financial statements for the 2006 fiscal year. The company is eligible to apply to be relisted on the NYSE after it meets the exchange's requirements. MuniMae stock closed at $7.13 on the NYSE on Jan. 30, a steep decline of over 50% from its Jan. 2 opening of $15.

Lenders Oppose Broker Surety Bonds

January 31, 2008
Five lender groups that are supporting quick passage of a Federal Housing Administration reform bill want the House and Senate banking committee leaders to drop a provision that would allow mortgage brokers to buy a $50,000 surety bond in lieu of meeting FHA net-worth and audit requirements.

Because there is no federal oversight of brokers, "it is critical that they continue to submit the annual audited financial statements to the FHA in order to participate in the program, and more importantly, protect the integrity of the FHA," the five trade groups say in a letter to the committee chairmen. The National Association of Mortgage Brokers maintains that more brokers would be willing to distribute FHA loans if they didn't have to pay for an expensive audit. The surety bond provision in the House-passed FHA bill has "belts and suspenders to protect the FHA program," NAMB executive vice president Roy DeLoach said. He stressed that the FHA commissioner can control the number of brokers using surety bonds. In addition, every broker has to be coupled with an FHA-approved direct endorsement lender, who reviews every loan before the closing. The Mortgage Bankers Association, the Lenders One/National Alliance of Independent Mortgage Bankers, the Independent Community Bankers of America, the American Bankers Association, the American Financial Services Association, and the American Institute of Certified Public Accountants signed the Jan. 30 letter.

Countrywide Loses $422M; Production Dives

January 29, 2008
After predicting that it would earn money in the fourth quarter, Countrywide Financial Corp. posted a $422 million loss for the period.

Over the past six months, the nation's largest lender/servicer has lost $1.6 billion. It also reported fourth-quarter loan production of just $61 billion, a 48% decline from the level recorded a year earlier. The company originated just $65 million in subprime loans, compared with $9.1 billion a year ago. It set aside $924 million for credit losses in the fourth quarter, compared with $937 million in the third quarter. It also took an impairment charge of $831 million tied to what it called "retained interests" in prime-quality, junior-lien home equity securitizations. Countrywide's servicing business lost $198 million (pretax) in the fourth quarter, and the firm wrote down the value of its $1.46 trillion mortgage servicing portfolio by $1.6 billion. The publicly traded lender is slated for sale to Bank of America. In a statement, Countrywide chairman and chief executive Angelo Mozilo blamed the company's performance on "further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets." For the year, Countrywide lost $704 million, its first annual net loss in more than 30 years.

Ellie Mae Unveils Encompass Enhancements

January 28, 2008
Ellie Mae, a Dublin, Calif.-based provider of software for the mortgage industry, has announced the release of Encompass Banker Edition 3.0 and Encompass Custom Edition 3.0.

Custom Edition offers "extensive configurability" in a loan origination system, and Banker Edition is "a complete end-to-end business solution" designed for small to midsize correspondent mortgage lenders, mortgage bankers, community bankers, credit unions, and brokers interested in becoming bankers, Ellie Mae said. Most of the system enhancements will benefit both editions of Encompass. "Now, mortgage bankers can service loans prior to selling loans on the secondary market, track their profitability on trades, and configure notifications that alert them of key servicing activities, such as when statements must be sent out, when accounts go past due, and when they're scheduled to make upcoming disbursements," said Jonathan Corr, chief strategy officer for Ellie Mae. The company can be found online at http://www.elliemae.com.

Clayton Gets Immunity for Due Diligence Info

January 28, 2008
New York Attorney General Andrew Cuomo has granted Clayton Holdings immunity in exchange for providing information on its due diligence work for Wall Street firms that securitized subprime mortgages.

The publicly traded company says it has provided due diligence reports to the New York AG since it was first subpoenaed in June. "Now, at the request of the New York attorney general, we have entered into a cooperative agreement with his office," said Frank Filipps, Clayton's chairman and chief executive. The New York Times first reported the immunity agreement. The New York attorney general's office has not replied to requests for confirmation. Clayton performs due diligence on loans purchased by conduits, and identifies "exceptions" to the issuers' loan guidelines. The Shelton, Conn.-based company also evaluates the performance of loans once they are securitized. A company executive said the percentage of loans securitized in 2006 that had exceptions was about 30%.

Société Générale Takes 2B-Euro Mortgage Hit

January 25, 2008
The Paris-based Société Générale is taking a 2 billion euro ($2.9 billion) U.S. mortgage-related writedown and an even larger 4.9 billion euro ($7.2 billion) loss linked to fraud by a rogue trader.

As a result, Standard & Poor's has placed the French bank's long-term counterparty ratings, as well as those of its core subsidiaries, on CreditWatch with negative implications. The New York-based rating agency said the CreditWatch placement was primarily due to the fraud, but it also indicated that it will be monitoring SocGen's mortgage-related exposures.

FHA Loan Limits Rise

January 24, 2008
House and Senate banking committee chairmen have agreed to raise the Federal Housing Administration loan limit to 125% of median house prices with a $730,000 cap as part of a FHA reform bill that is expected to be included in an economic stimulus package Congress wants to pass in a few weeks.

House Financial Services Committee chairman Barney Frank, D-Mass., and Senate Banking Committee chairman Chris Dodd, D-Conn. want a similar loan limit increase for Fannie Mae and Freddie Mac on a temporary basis. However, House leaders struck a deal with the White House to increase the GSE loan limit from $417,000 to $625,000. Sources suspect it is limited to high cost areas. But several housing trades, including the Mortgage Bankers Association and National Association of Realtors, want the $625,000 loan limit to be nationwide. Meanwhile, Rep. Frank told reporters the sticking points to reconciling the House and Senate FHA bills involve minimum FHA downpayment requirements, allowing mortgage brokers to substitute surety bonds for FHA net worth/audit standards and downpayment assistance provided by nonprofit groups.

MGIC Projecting $1.3B in 4Q Incurred Losses

January 23, 2008
MGIC Investment Corp., Milwaukee, is projecting incurred losses for the fourth quarter of around $1.3 billion.

This is more than double what Friedman, Billings, Ramsey analysts Steve Stelmach and Paul Miller Jr. had previously estimated, the pair say in a new report. MGIC blamed a continued deterioration in cure rates, leading to a higher percentage of loans that became claims. In addition, average claim size continues to increase. For 2008, MGIC is projecting paid losses in the area of $1.8 billion to $2.0 billion. The company said it decided during the fourth quarter to stop writing bulk business insuring loans in Wall Street securitizations. In their report, the FBR analysts forecast that MGIC will have a tangible book value of $2.6 billion by year-end 2008, down from $4.5 billion at the end of the first quarter of 2007. "This will bring MGIC uncomfortably close to breaching its minimum net worth requirement of $2.0 billion," the analysts said. "As a result, we view rating agency risk as growing, as well as the need for a potential capital raise. Also, we do not view other MIs as immune from the troubles seen at MGIC and would expect the group to trade lower in sympathy." MGIC can be found on the Internet at http://www.mgic.com.

Ex-B&C Chief in Murder-Suicide

January 22, 2008
Walter Buczynski, a former top executive of Fieldstone Mortgage, jumped to his death over the weekend from the Delaware Memorial Bridge after allegedly killing his wife, authorities say.

Among subprime firms, Columbia, Md.-based Fieldstone ranked 23rd, according to the Mortgage Industry Directory. The company filed for bankruptcy protection in November. According to combined news reports, police said marital problems led Mr. Buczynski to kill his wife, not the financial woes of the now-defunct lender. In February 2007, C-BASS bought Fieldstone, a publicly traded real estate investment trust, for $260 million. (Last summer, in the wake of the margin calls, MGIC and Radian wrote down their interest in C-BASS by $1 billion.) The Burlington County (N.J.) prosecutor's office said the former executive, 59, left a suicide/murder note inside his car indicating that his wife could be found in their home in Southern New Jersey. Authorities said their two sons were safe.

NAHB, FSR Put Aside Differences on GSE Reform

January 16, 2008
The National Association of Home Builders and the Financial Services Roundtable have decided to put aside their differences and work toward the quick passage of a GSE reform bill that temporarily increases the conforming loan limit for Fannie Mae and Freddie Mac.

The two trade groups have battled over legislation to strengthen regulatory oversight of the government-sponsored enterprises for many years. But now the two antagonists have agreed to support a House-passed GSE bill in an effort to bring liquidity to the jumbo market and complete action on comprehensive GSE reform. The House bill has a provision that increases the conforming loan limit from $417,000 to $625,000 in high cost areas and allows the GSEs to securitize those higher balance mortgages. Under the compromise, the increase would expire in two years "if the jumbo market returns to a normal spread between conforming and nonconforming mortgage rates." NAHB and the FSR Housing Policy Council executives also pledged to work with other banking and housing groups to get them on board. "We also hope the [Bush] administration will embrace this," NAHB executive vice president Jerry Howard said.

NovaStar Shuts Retail Brokering Biz

January 15, 2008
NovaStar Financial Inc., Kansas City, Mo., may have taken one step closer to the end of the line, as the company shuts its retail mortgage brokering business.

In a Securities and Exchange Commission filing, NovaStar said it could no longer meet minimum licensing requirements because of the net worth and financial condition of the company. It is firing 170 employees, leaving it with just 30 to handle its mortgage portfolio management operations. NovaStar said it will take a charge of $1.3 million to $1.8 million as a result, most of which should be booked in the first quarter. Separately, NovaStar announced that its common and preferred stock listings on the New York Stock Exchange would be suspended prior to the opening of the market on Jan. 17. An appeal by the company of the original delisting notice in October was denied based on NovaStar's termination of its real estate investment trust status and its failure to qualify for original listing as a corporation. As of Jan. 17, NovaStar will trade on the pink sheets. The company can be found online at http://www.novastarmortgage.com.

MBA Forecasts 8-Year Low in Originations

January 14, 2008
Single-family originations will decline by 16% in 2008 and drop below $2 trillion for the first time since 2000, according to the Mortgage Bankers Association.

Originations will total $1.94 trillion in 2008, down from $2.37 trillion last year, as home sales continue to decline into the third quarter and refinancing activity remains sluggish, the association is forecasting. "We do not expect a large pickup in refi activity," MBA chief economist Doug Duncan said, despite expectations that the Federal Reserve will continue to cut interest rates. Mr. Duncan pointed out that refinancings will be constrained due to tighter lending standards, declining house prices, and larger-than-normal spreads between Treasury and mortgage rates. Nevertheless, refinancing will make up 51% of originations this year, compared with 50% in 2007, the trade group predicts. The MBA chief economist also noted that banks are running up against their capital limits as they write down the value of their mortgage assets. "Fortunately, the banking system entered the current credit crunch well capitalized, so the danger of a sharp and widespread contraction of credit availability does not seem imminent," he said. The MBA can be found online at http://www.mortgagebankers.org.

Countrywide's CIO Departs for Fiserv

January 14, 2008
Countrywide Financial Corp., which is slated for sale to Bank of America, has lost its chief information officer, Richard K. Jones -- a 12-year veteran of the lender -- to technology giant Fiserv Inc.

On Friday Fiserv said it had hired Mr. Jones to be its CIO and executive vice president. At Countrywide, Mr. Jones also held the title of managing director. A publicly traded company, Fiserv sells information and technology systems to mortgage lenders, servicers, and other types of financial institutions. The companies can be found online at http://www.countrywide.com and http://www.fiserv.com.

E*Trade Sells $3B More in MBS, Munis

January 9, 2008
E*Trade Financial -- which is undergoing a wrenching restructuring -- said Wednesday that it has sold an additional $3 billion worth of bonds, including mortgage-backed securities and municipals.

The bank/online brokerage firm said it took a $5 million loss on the sales which occurred in separate transactions over the past several weeks. (In November it sold $3 billion in asset-backed securities.) The New York-based E*Trade also said its home equity portfolio is continuing to "run off as anticipated" and totaled just under $12 billion in loans at year's end. Early in the fall, E*Trade closed its wholesale residential unit and booked a $245 million charge against earnings because of bad home equity loans and what it called a "deterioration in the mortgage market."

Behringer Harvard Completes REIT Offering

January 8, 2008
Behringer Harvard Opportunity REIT I, a nontraded real estate investment trust, has reached full subscription, according to Behringer Harvard, a Dallas-based commercial real estate company.

The REIT generated approximately $530 million in gross offering proceeds through the sale of approximately 53.1 million shares in its primary offering, the company reported. The company said the REIT will invest primarily in commercial real estate with "value-added and opportunistic characteristics" that are either operating or newly constructed and that may require development, redevelopment, or repositioning to achieve favorable returns. Behringer Harvard can be found on the Web at http://www.bhfunds.com.

IAC Names Chair/CEO of RE Businesses

January 7, 2008
Doug Lebda, president and chief operating officer of IAC, has been named chairman and chief executive officer of the company's financial services and real estate businesses, including LendingTree, HomeLoanCenter, GetSmart, RealEstate.com, Domania, and iNest.

C.D. Davies, CEO of LendingTree, and Bret Violette, president of RealEstate.com, will report to Mr. Lebda, who joined IAC in 2003 after the company acquired LendingTree. IAC announced in November that it plans to separate itself into five publicly traded entities (including LendingTree). The company said the latest announcement was the first in a series that will deal with the structure for each of the separate entities. IAC, Lending Tree, and RealEstate.com can be found online at http://www.iac.com, http://www.lendingtree.com, and http://www.realestate.com.

Mortgage Stocks Sink Again

January 7, 2008
A major selloff in the stock market hit industry stocks particularly hard on Friday.

All the 15 mortgage-related stocks tracked by MortgageWire traded down for the day, with many approaching 52-week lows. Six stocks -- Freddie Mac, KB Home, LandAmerica Financial Group, IndyMac Bancorp, PMI, and Triad -- saw their prices fall by more than 7%. IndyMac's shares fell 9% to $6.27, making it the biggest percentage decliner. Overall, the Dow Jones industrial average was down 257 points, or 1.96%. The S&P 500 was down 36 points, or 2.46%; and the NASDAQ was down 98 points, or 3.77%. Analysts blamed a weak December employment report for sparking renewed concern that the economy may slip into a recession. In the first three trading days of 2008, the broad stock market gave up half its gain from 2007. As of midday Monday, the Dow was up about 10 points.

California Returning to 'Slow Growth'?

January 4, 2008
The term "slow growth" was the bane of the homebuilding business for years, but now builders in the Golden State, where "a modest recovery" is expected to begin sometime around midyear, welcome the idea.

Alan Nevin, chief economist of the California Building Industry Association, is projecting a "slight increase in new-home sales" in 2008. He bases his forecast on continued population growth, a continued reduction in inventory, and a "return to normalcy" in the credit markets. Specifically, Mr. Nevin is projecting sales of 80,000 new houses this year vs. about 70,000 in 2007. With the upturn, he is also forecasting an increase in starts to 128,400, a number that is almost 90,000 shy of the record 212,960 units begun in 2004. The economist also expects multifamily production to bump higher this year, from some 44,000 units in 2007 to 46,700 in 2008. CBIA is a statewide trade group representing more than 7,000 businesses -- builders, remodelers, subcontractors, and allied professionals -- that employ more than 500,000 people.

REITs Recorded Negative Return in '07

January 3, 2008
The U.S. real estate investment trust sector turned in a negative total return of 17.83% for 2007, trailing other major equity indices, according to the National Association of Real Estate Investment Trusts.

The return is based on the FTSE NAREIT series of indices maintained by the Washington-based REIT industry trade group. Taking into account only mortgage REITs, total return was down 42.35%. The only REIT sectors to show a positive total return for the year were the industrial (0.38%), health care (2.13%), and specialty (14.56%) sectors. "Following seven consecutive years of outperforming the broader equity market, U.S. REIT returns suffered in 2007 as some investors began to reduce their REIT positions early in the year," said Michael Grupe, NAREIT's executive vice president for research and investor outreach. "The downturn continued later in the year as many investors shied away from real estate investments, including REITs, in the wake of illiquidity in the credit markets." NAREIT can be found online at http://www.nareit.com.

Sale of 11th-Largest Servicer Nixed

January 2, 2008
PHH Corp. -- which controls the nation's 11th-largest residential servicer -- has called off its sale to General Electric, which had planned to flip the mortgage and fleet lender to The Blackstone Group, an investment banking firm.

Back in September, Blackstone first admitted that it was having trouble securing enough debt financing to complete the deal. The publicly traded PHH Corp. owns PHH Mortgage, Mt. Laurel, N.J., a nondepository that has a bank affiliate. In a Jan. 2 filing with the Securities and Exchange Commission, PHH said it had called off the sale because GE could not complete the transaction by year's end. PHH is now seeking a $50 million termination fee from Blackstone. PHH can be found online at http://www.phh.com.

Florida Resales Drop

December 31, 2007
Sales of existing single-family homes in Florida totaled 8,106 in November, a decrease of 30% from the level recorded a year earlier, according to the Florida Association of Realtors.

The median sales price of homes sold in November declined to $215,800, down 10% from $239,800 in November 2006, FAR reported. Among the state's larger markets, resales decreased 35% in the Orlando metropolitan statistical area and 59% in the Miami MSA, while median resale prices fell to $239,000 in Orlando, down 9% from $263,600 a year earlier, and to $359,300 in Miami, down 4% from $372,400 a year earlier, the trade group said. FAR can be found on the Web at http://media.living.net.

Deutsche Bank Reviewing Entire Mortgage Biz

December 28, 2007
Deutsche Bank, a top-ranked issuer of subprime mortgage-backed securities, will conduct a top-to-bottom review of its entire mortgage business in the first quarter, according to officials at the company.

A spokeswoman for the bank confirmed that a review will soon be under way, adding that, "there may be a reallocation of assets." Like many Wall Street firms, Deutsche Bank has both an active trading desk and a warehouse lending group that caters to the nonprime sector, a business that is in the throes of a historic correction. Deutsche Bank's trading desk is overseen by Michael Commaroto, who is listed in Securities and Exchange Commission documents as president of Deutsche Mortgage Securities. In 2006 Deutsche Bank purchased Chapel Funding Corp., Lake Forest, Calif., a privately held nonprime lender. It also acquired the publicly traded MortgageIT Holdings Inc., New York, the nation's 21st-largest lender, for $429 million. Deutsche Bank can be found online at http://www.deutsche-bank.com.

MBA: Fixed-Rate Market Share Jumps

December 21, 2007
The market share of fixed-rate mortgages among all mortgage originations jumped in the first half of 2007, according to the latest Mortgage Bankers Association originations surveys.

Fixed-rate loans (including interest-only loans) accounted for 53.4% of first mortgages (or 67.4% based on the number of loans) in the first half compared with 46.2% (or 60.5%) in the second half of 2006, the MBA reported in its Mortgage Originations Survey. Meanwhile, the MBA's Subprime Mortgage Originations Survey found that the FRM share of subprime mortgage originations grew from 25% in the second half of 2006 to 31% in the first half of 2007. Other first-half results from the overall survey included findings that IOs accounted for 31.1% of all originations, compared with 28.5% in the second half of 2006, and that first-time homebuyer purchases represented 26.9% of home purchases, unchanged from that of the second half of 2006. Among first-half originations, 37.1% were for single-family attached homes, 58.5% for single-family detached homes, 0.7% for manufactured and mobile homes, and 3.8% for two- to four-unit structures, according to the trade group. The MBA can be found online at http://www.mortgagebankers.org.

Impac Posts $1.2B Loss

December 21, 2007
Former alternative-A giant Impac Mortgage Holdings posted a $1.2 billion loss in the third quarter, $790 million of it tied to markdowns on various types of collateral, including derivatives.

The company -- whose shares now trade for about 60 cents each -- is expected to file for bankruptcy protection within the next two months, according to executives close to the lender. Impac is no longer funding nonconforming loans, but originated $261 million in agency product during the quarter. Its balance sheet includes $19.4 million in assets, which threw off interest income of $313 million in the third quarter. Impac, echoing statements made by several other players in the business, blamed its problems on "deteriorating market conditions, higher delinquencies, and higher severities." The company also said its executive vice president and chief financial officer, Gretchen Verdugo, resigned effective Nov. 30 but was given a $200,000, six-month consulting contract. Impac can be found online at http://www.impaccompanies.com.

FTC Advises What to Do if Servicer Fails

December 20, 2007
The Federal Trade Commission has published a four-page report advising consumers to continue making mortgage payments "as usual" in the event that their lender closes or files for bankruptcy.

The FTC informed consumers that loans and the rights to service loans are often bought and sold, so that the originating lender may not end up servicing its loan. The FTC noted that even if a servicer files for bankruptcy, its assets are typically sold under the supervision of a bankruptcy court and the servicing rights will be transferred to another lender.

NovaStar CEO/Founder Resigns

December 20, 2007
The ailing NovaStar Financial, one of the last of the remaining subprime shops, says its co-founder, chief executive, and chairman Scott Hartman will resign effective Jan. 3.

Also departing is Greg Metz, senior vice president and chief financial officer. Lance Anderson, another co-founder who serves as president and chief operating officer, will assume the CEO and chairman duties. Vice president Rodney Schwatken will assume the CFO duties. Messrs. Hartman and Anderson founded the publicly traded real estate investment trust in 1996. NovaStar recently sold its $15 billion servicing portfolio (estimated) to an affiliate of Morgan Stanley & Co. for $175 million in cash. NovaStar is no longer funding subprime loans and, like many nonconforming funders, has laid off most of its production staff. It can be found online at http://www.novastarmortgage.com.

Blackstone Closes $1.3B Liquidity Fund

December 14, 2007
The Blackstone Group, New York, has reported the final closing of its Blackstone Credit Liquidity Partners LP with capital commitments in excess of $1.3 billion.

The fund was created "to capitalize on the recent dislocations in the credit markets" by investing in a range of debt and debt-related securities, including bank debt, publicly traded debt securities, bridge financings, and securities issued by collateralized debt obligations. Blackstone can be found on the Web at http://www.blackstone.com.

MBA: Commercial/MF Debt Up 2.8% in 3Q

December 13, 2007
Commercial and multifamily mortgage debt outstanding rose 2.8% in the third quarter, or $87.7 billion, exceeding the $3.2 trillion level, according to the Mortgage Bankers Association.

Multifamily mortgage debt outstanding alone rose to $813 billion, an increase of $23.5 billion, or 3%, from that of the second quarter. "The third quarter included the periods immediately before and immediately after the dramatic adjustments in the capital markets," said Jamie Woodwell, MBA's senior director of commercial and multifamily research. "As a result, commercial/multifamily mortgage debt outstanding grew to a new record -- $3.2 trillion -- but the quarter-over-quarter change in mortgage debt outstanding fell from $107 billion last quarter to $87.7 billion this quarter. Even with the drop, the $87.7 billion increase in Q3 still marked the fourth-largest increase on record." The trade group gets input for the report from Federal Reserve data. Commercial banks continue to hold the largest share of commercial and multifamily mortgages, at $1.35 trillion, or 42% of the total. Securitization avenues (issuers of commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities) hold the second-largest share, at $760 billion, or 24% of the total.

First Industrial Expands JV With CalSTRS

December 6, 2007
First Industrial Realty Trust, a Chicago-based real estate investment trust, has expanded its joint venture with the California State Teachers' Retirement System to $1.6 billion from the $950 million capacity originally planned in 2006.

The venture invests in land and developments in markets that are seen as benefiting from developments such as "supply chain reconfiguration, international trade, demographic trends, and economic expansion." The venture invests across North America and has an initial term of up to 2016, the REIT said. CalSTRS has put in an additional $200 million in equity, making for a 90% equity interest in the venture, and the REIT has put in an additional $22 million, First Industrial reported. New credit facilities of $500 million have been obtained from WestLB AG, the lead lender on the transaction. The target for the venture is to use 35% equity funding and 65% debt funding. The REIT is managing the venture and receiving management fees.

REIT Cites NYSE Warning

December 5, 2007
Impac Mortgage Holdings Inc., a real estate investment trust based in Irvine, Calif., has reported receiving notification from the New York Stock Exchange that it is not in compliance with the exchange's continued-listing standards.

The warning letter from NYSE Regulation Inc. said the mortgage REIT had failed to meet the standard requiring a company to maintain a 30-consecutive-day average closing price of over $1 per common share. Impac said its 30-day average price was $0.91 per share as of Nov. 27. Under NYSE rules, the company now has six months to bring its average share price back above $1 per share. Impac's common and preferred stock will continue to be listed and traded on the NYSE, subject to reassessment by NYSE Regulation.

MBA: Wachovia Topped '06 MF Lender Ranks

December 4, 2007
The leading multifamily lenders for 2006 were Wachovia, Washington Mutual Bank, and Deutsche Bank Commercial Real Estate, according to a multifamily lending report from the Mortgage Bankers Association.

Retaining its 2005 position, Wachovia was again the largest multifamily lender in 2006 in dollar terms, closing 1,465 multifamily loans for a total of $16.1 billion. The average loan size was $11 million. WaMu Bank and Deutsche Bank CRE were the No. 2 and No. 3 multifamily lenders, with multifamily lending activity of $9.2 billion and $6.3 billion, respectively. Multifamily lending rose by $5 billion in 2006, according to the MBA. The multifamily lending market grew by 4%, from $133 billion in closed loans in 2005 to $138 billion in 2006, the trade group said. The report, which focuses on apartment buildings with five or more units, also found an average loan size of $2.7 million based on 50,959 loan originations. Very small multifamily loans saw a dropoff in dollar volume of 13% in 2006, the MBA reported. The organization can be found online at http://www.mortgagebankers.org.

Primary New MI Reaches YTD High

December 4, 2007
October was the best month of the year so far in terms of traditional primary new mortgage insurance written by members of the Mortgage Insurance Companies of America.

However, because that same month was the worst in the bulk category since the trade group began releasing its statistics using the current format, overall production was down 9%. Primary new insurance written totaled $26.3 billion in October, down from $28.9 billion in September. The traditional channel's volume totaled $25.3 billion, compared with $23.1 billion in September. But the bulk channel had just $911.5 million in volume, down from September's $5.8 billion. Application volume increased from 168,073 in September to 183,560. New pool risk written fell from $55.1 million in September to $23.6 million. October's cure/default ratio was the lowest of the year so far, falling over five percentage points to 56.1%. There were 33,290 cures and 59,308 defaults. MICA can be found online at http://www.micanews.com.

REIT Tagged 'Bear of the Day'

December 3, 2007
Post Properties, an Atlanta-based multifamily real estate investment trust, has been designated the "Bear of the Day" for Dec. 3 by Zacks Equity Research, Chicago.

The Bear of the Day is a stock expected to underperform the markets over the next three to six months. Zacks said the REIT continues to report good quarterly results, but that "there are signs that rental rate growth will slow in the coming quarters and could turn negative in 2008 as the U.S. economy heads toward a recession. Despite a sector-wide selloff over the past six months, Post still trades at an inflated valuation due to persistent buyout rumors." Zacks can be found online at http://www.zacks.com, and Post can be found at http://www.postproperties.com.

MBS Investors Return to Market

November 29, 2007
Mortgage-backed securities investors shook free of some of their liquidity concerns and staged a notable return to the market Wednesday afternoon.

While the sector had given up some of those gains as of Thursday morning, MBS continued to trade relatively well. "We didn't give it all back," Art Frank, director and head of MBS research at Deutsche Bank Securities Inc., said of the improvement in the MBS market Nov. 28. "It was quite a spectacular day."

E*Trade Gets $2B Infusion From Hedge Fund

November 29, 2007
Citadel Investment Group -- which recently bought subprime lender ResMae -- has agreed to pump $2.5 billion in cash into E*Trade Financial, a company that has been struggling under the weight of huge mortgage writedowns.

The New York-based E*Trade revealed the cash infusion plan Thursday morning, noting that its chief executive officer, Mitchell Caplan, had resigned from the company. A few weeks ago E*Trade's share price crumbled after a stock analyst said there was a 15% chance the online financial services firm would go bankrupt. (E*Trade denied the claim.) E*Trade, which has $12.8 billion in mortgage-backed bonds on its balance sheet, lost $58 million in the third quarter. The company can be found online at http://www.investor.etrade.com.

C-BASS-Owned Fieldstone Files for Ch. 11

November 27, 2007
The C-BASS-owned Fieldstone Mortgage of Maryland -- which closed its doors last week -- has filed for Chapter 11 bankruptcy protection.

According to the Mortgage Industry Directory, Fieldstone ranked 26th among all subprime lenders last year, funding $5.2 billion. According to its bankruptcy filing, its creditors include Morgan Stanley, Bear Stearns, and Countrywide Financial, among others. C-BASS (Credit-Based Asset Servicing and Securitization LLC), in turn, is owned by two publicly traded mortgage insurance companies, MGIC and Radian, which have been trying to sell the company and its servicing unit, Litton Loan Servicing of Texas. In February, C-BASS bought Fieldstone, a publicly traded real estate investment trust, for $260 million. This past summer, in the wake of the margin calls, MGIC and Radian wrote down their interest in C-BASS by $1 billion. Fieldstone can be found online at http://www.fieldstoneinvestment.com.

Euro Council Advises Bond Trading Resumption

November 26, 2007
A European Covered Bond Council committee has recommended a conditional resumption of inter-dealer market-making in the mortgage and public-sector covered-bond market, citing an improvement in market conditions that had caused the group to suggest a suspension on Nov. 21.

"Following more normalized trading activity in the last 2.5 days, the committee recognizes the importance of returning to the inter-bank market making system that is a key feature of the covered bond market," the committee said Nov. 26. However, given the fixed-income market's illiquidity, the committee also recommended that market makers through Dec. 14 follow its suggested minimums for trade sizes and frequency. The ECBC can be found on the Web at http://www.hypo.org.

Title Insurance to Recover in 2009 or Later?

November 21, 2007
The title insurance industry will not show significant improvement until 2009 at the earliest, a report from Fitch Ratings, New York, said.

"Fortunately, industry participants took advantage of prosperous years between 2002 and 2005 to strengthen balance sheets and should weather the current down cycle," the rating agency said in its "Review and Outlook 2007-2008: Title Insurance Industry." Fitch noted that for the six publicly traded title insurance underwriters, the average combined ratio worsened by 350 basis points to 101.8% at the end of the third quarter. The report claims "the real story" behind the problems with title insurers is the decline in operating margins, from 6.6% in 2006 to 2.3% this year. Where the subprime crisis affects the title insurance business is in fraud situations, where a default is more likely to result in a claim against a title insurer, Fitch said. Because title insurer resources were stretched thin during the refinance boom, the likelihood that thorough underwriting procedures for policies were not followed increased, it noted.

C-BASS-Owned Fieldstone Mortgage Closes

November 20, 2007
The C-BASS-owned Fieldstone Mortgage of Maryland - which ceased funding loans in late July - has closed its doors and is no longer taking any applications, according to a posting on its website.

"We will continue to work with customers and brokers in providing them with information," Fieldstone said. A non-prime lender, Fieldstone ranked 26th among subprime funders last year, according to the Mortgage Industry Directory. The New York-based C-BASS, which is owned by two publicly traded mortgage insurers, has troubles of its own. In July it was hit by what its parent companies called an "unprecedented amount" of margin calls. In the wake of the margin calls MGIC and Radian wrote down their interest in C-BASS by $1 billion. The two MIs tried to sell some of C-BASS's assets, including its Litton Loan Servicing unit, but a deal with Goldman Sachs fell apart.

Impac Hit by Margin Calls, Delays Financials

November 19, 2007
Former alternative-A giant Impac Mortgage Holdings has revealed that it has been the subject of margin calls from Bear Stearns, noting that it cannot file its third-quarter financials on time and expects to report a larger-than-anticipated loss.

Impac also revealed that it now has a "stockholders' deficit." At deadline time, its shares were trading down 10% to a new 52-week low of $0.68. In a filing with the Securities and Exchange Commission, Impac -- a publicly traded real estate investment trust -- said Bear Stearns had seized $286 million in residential loans from the company because of unmet margin calls. It also said it was in "technical default" on several warehouse lines. In late September, the Irvine, Calif.-based company exited most origination markets, and closed its warehouse and commercial mortgage divisions. Impac can be found online at http://www.impaccompanies.com.

MBA: Commercial/MF Originations Decline

November 16, 2007
Originations of commercial and multifamily mortgage loans fell 4% in the third quarter from the level recorded a year earlier, although multifamily loan originations rose 14%, according to the Mortgage Bankers Association.

Loan originations by conduits and commercial banks saw the biggest declines, at 28% and 18%, respectively, the trade group said. Fannie Mae and Freddie Mac originations declined less than 1%, while life insurance companies bucked the trend with an 11% increase in originations. Major property types other than multifamily and health care saw origination declines, with office properties leading the falloff with a 31% decline. Originations dropped 20% for retail loans, 18% for hotel loans, and 8% for industrial loans, while health care loan originations skyrocketed 149%, according to the MBA. "In addition to the impact of the credit crunch, it's also important to remember that previous periods included large volumes of originations spawned by large portfolio sales (and resales) and the privatizations of numerous [real estate investment trusts]," said Jamie Woodwell, the MBA's senior director of commercial/multifamily research. The MBA can be found online at http://www.mortgagebankers.org.

Analyst: Bankruptcy Possible for E*Trade

November 12, 2007
E*Trade Financial -- which on Friday admitted that it has $450 million in "exposure" on its asset-backed securities portfolio -- saw its stock price crumble 55% Monday morning after an analyst at Citigroup said there's a 15% chance the depository could go bankrupt.

As of MortgageWire's deadline, E*Trade's shares were trading down $4.71, at $3.89. Its 52-week high is $26. In a recent public filing, the New York-based company said it has set aside $240 million to cover "deterioration" in its home equity portfolio. Its ABS portfolio totals $3 billion. Even though E*Trade could take more hits on the portfolio in the quarters ahead, the company said in a statement that it "expects to remain well capitalized based on regulatory standards." In September, E*Trade closed its residential wholesale division. The company can be found on the Web at http://www.etrade.com.

Scratch-and-Dent Player Raises $65M

November 7, 2007
MountainView Capital Holdings, Denver, a player in the red-hot "scratch-and-dent" market, has raised $65 million in equity capital.

Led by president and chief executive officer Mike Morgan, MountainView is an investor and trader of delinquent, performing, and subperforming mortgages. It also functions as a servicing broker and offers analytics. Chris Rooker, a principal in the firm, likened the current mortgage crisis to the savings-and-loan mess of the late 1980s and early 1990s, noting, "We are seeing opportunities in the mortgage space unprecedented since the days of the Resolution Trust Corp." The RTC was a government agency that helped liquidate $500 billion in assets belonging to failed thrifts. MountainView's new investors include Union Square Partners, CLAC Industries, and MountainView management.

NAREIT: REIT Returns Declining

November 6, 2007
Pointing to more evidence of a slowdown in the commercial real estate sector, real estate investment trusts declined 5.92% on a total-return basis as of October, according to the National Association of Real Estate Investment Trusts.

NAREIT reported that considering only equity REITs, total returns on the FTSE NAREIT indices (including price gains and dividend yields) were down 2.37% for the first 10 months of the year. Considering mortgage REITs alone, total returns as of October were down 44%. The specialty and industrial REIT sectors have performed best so far this year, turning in total returns of 16.86% and 13.15%, respectively, the REIT industry trade group said. Concerns about a slowdown in consumer spending notwithstanding, two retail sectors turned in positive returns, with "free-standing" retail posting an 8.08% gain and regional malls 3.98%. The other REIT sector that was positive for the period is health care (0.08%). REITs have been outperforming other investment avenues since 2001, turning in a total return of 34.35% for 2006. NAREIT can be found online at http://www.nareit.com.

Cogent Road Automates Credit, Pricing for Brokers

November 6, 2007
Cogent Road, a provider of Internet-based applications headquartered in San Diego, has launched Funding Suite, a redesigned database architecture underlying the credit report that allows new opportunities and products for brokers.

Included in Funding Suite are the following features: Intelligent Credit Report with X-Ray technology; dynamic reimbursement; PaySaver loan officer billing option; automatic discounting; and universal credit file reissuing. The company said Intelligent Credit Report is a dynamic display of client credit data allowing faster, more accurate prequalifying assessment. In Funding Suite 3.0, all tradelines provide an interpretation of the payment history in easy-to-understand language, making even the most complex tradelines more easily understood, Cogent Road said. X-Ray technology conducts a deep analysis of the underlying credit data used to calculate the credit score to identify potential errors that may be harming the score along with the points gained by fixing such errors. The company can be found on the Web at http://www.cogentroad.com.

IAC Spinoffs Include Lending Tree

November 6, 2007
IAC, New York, has separated itself into five publicly traded companies, one of which is named after and includes LendingTree, an online mortgage lender and realty services exchange based in Charlotte, N.C.

"LendingTree, obviously under pressure from the macro real estate and mortgage environment, is nevertheless a valuable asset with a great brand and will be freed to participate fully with its own currency," IAC said. C.D. Davies will continue to serve as chief executive officer of the new LendingTree, a company that RealEstate.com, Domania, GetSmart, Home Loan Center, and iNest also will be part of. Bret Violette will continue to serve as president of RealEstate.com. IAC can be found on the Web at http://www.iac.com, and LendingTree can be found at http://www.lendingtree.com.

Fannie Slates Final 'Catch-Up' SEC Filings

November 6, 2007
Fannie Mae has announced that it will file its first-, second-, and third-quarter financial reports with the Securities and Exchange Commission on Nov. 9 and host a conference call to brief investors and analysts.

"With these filings, the company will become current in its financial reporting requirements," the giant mortgage company said. Fannie Mae has not filed a quarterly report (Form 10-Q) since the second quarter of 2004 after it was discovered that the company manipulated accounting standards and overstated earnings by billions of dollars. The publicly traded company paid a $400 million fine to the SEC and restated earnings for 2001, 2002, 2003, and the first half of 2004. Fannie's regulator currently requires the company to maintain a 30% capital surplus until it returns to timely financial reporting and corrects its internal controls and accounting systems. Analysts will be waiting to hear how much longer the expensive process of rebuilding those systems will take. Fannie Mae can be found online at http://www.fanniemae.com.

NAMB Urging Members to Fight YSP Language

November 2, 2007
Saying that mortgage brokers are facing "extinction," the National Association of Mortgage Brokers is urging its members to learn about pending legislation that would "outlaw" yield-spread premiums and then call their members of Congress to complain.

The trade group has set up two conference calls -- one scheduled Nov. 2 -- to inform its members about Rep. Barney Frank's Mortgage Reform and Anti-Predatory Lending Act of 2007, which, among other things, would require all brokers to have a minimum net worth or a bond requirement of $100,000. A Democrat from Massachusetts, Rep. Frank is chairman of the House Financial Services Committee. NAMB government affairs chair Denise Leonard sent an e-mail message to members saying that if the bill passes, "all subprime lending will cease to exist." The association can be found online at http://www.namb.org.

RESPA Rule Requires Upfront Comp Disclosure

October 31, 2007
The Department of Housing and Urban Development would require upfront disclosure of mortgage brokers' compensation in a proposed revision of the good-faith estimate the department is expected to send to the Office of Management and Budget any day now.

"Lender payments to mortgage brokers tied to the interest rate of the loan (yield-spread premiums) would be disclosed on the GFE because of the borrower's need to understand the trade-off between the upfront settlement costs and the interest rate," HUD says in an outline of the proposal that it used to brief key members of Congress Oct. 30. The outline obtained by MortgageWire says HUD's testing of the GFE shows that consumers could identify the cheapest loan 90% of the time whether the offer was made by a lender or a mortgage broker. The National Association of Mortgage Brokers has already pledged to oppose HUD's revisions to the GFE. The outline also shows that HUD will ask Congress to amend the Real Estate Settlement Procedures Act to require delivery of the HUD-1 settlement three days before closing and to provide for civil money penalties for RESPA violations. "A lack of enforcement authority and clear remedies for violations of critical sections of RESPA negatively impact consumers and diminish the effectiveness of the statute," HUD says.

Triad Posts 3Q Loss

October 25, 2007
Triad Guaranty, Winston-Salem, N.C., has reported a net loss of $31.8 million in the third quarter, blaming its problems on the "rapid deterioration" of the nation's housing market.

A year earlier, Triad earned $19.4 million. According to the Quarterly Data Report, the publicly traded Triad is the smallest of the nation's seven mortgage insurers, in terms of both policies in force and new policies written. Company president and chief executive officer Mark K. Tonnesen said the quarter "marked an escalation of the market changes that began earlier this year. Our portfolio experienced significant pressures on the heels of the liquidity issues that affected the availability of mortgage lending." The company said one of its near-term goals will be to invest in "areas of loss mitigation." Triad can be found online at http://www.triadguaranty.com.

FNIS Plans Spinoff of Lender Processing

October 25, 2007
Fidelity National Information Services Inc., a Jacksonville, Fla.-based provider of technology services to financial institutions, has announced a plan to spin off its Lender Processing Services division as a publicly traded company.

The plan, recently approved by the company's board of directors, contemplates that FNIS will contribute the assets of the division to a newly formed subsidiary in exchange for 100% of the new company's common stock and approximately $1.6 billion of its debt securities. If approved by the Securities and Exchange Commission and favored with a tax-free ruling by the Internal Revenue Service, FNIS would distribute 100% of the new company's common stock to FNIS shareholders in a tax-free spinoff, the company said. William P. Foley II, executive chairman of FNIS, said the reason for the spinoff is that the company's Transaction Processing Services and Lender Processing Services divisions are "distinct and unique businesses that serve different customers, operate in different markets, and attract different investors." The company can be found online at http://www.fidelityinfoservices.com.

Moody's Cautions on REIT Governance Changes

October 24, 2007
New leaders are replacing founders at many real estate investment trusts, and this represents a negative for investors, says Moody's Investors Service in a new report on REIT corporate governance.

Of 20 leading REITs studied for the report, 15 had replaced founding chief executive officers over the past 10 years, a majority of them with professional managers rather than family members, Moody's said. The rating agency said it generally views family control of a REIT as a credit positive because it "leads to conservative financial policies and decision-making that takes in a longer-term perspective." But there are signs that founding families are more open to new strategies or are chafing under the demands of remaining a publicly traded company. "[T]his change in perspective is a negative for bondholders: selling out typically means higher leverage and an investor base with a short-term investment horizon," says Moody's associate analyst Constantine Nestoras. "Going private, even when the family remains involved, means higher leverage, less transparency, and less investment in core controls." Moody's can be found online at http://www.moodys.com.

ICBA Renews Alliance With Fannie

October 22, 2007
The Independent Community Bankers of America has renewed and enhanced its five-year-old partnership with Fannie Mae, as the mortgage giant agreed to provide enhanced delivery services for bulk sales and reduce its Desktop Underwriter licensing and transaction fees.

"The ICBA-Fannie Mae partnership offers expanded services to ICBA member banks, increases the value of their membership, and helps them maintain relationships with their customers," said Dave Petro, president of the ICBA's mortgage program. Most ICBA members retain the servicing when they sell to Fannie. ICBA also has an "alliance" with Freddie Mac. Separately, Taylor Bean & Whitaker, Ocala, Fla., has purchased $3.76 billion in mortgages (servicing released) from ICBA members since February, when the Ocala wholesaler entered into a partnership with the banking trade group. The ICBA can be found online at http://www.icba.org.

Mortgage Stocks Mixed After Big Sell-Off

October 22, 2007
Mortgage-related stocks were mixed Monday morning after being hit hard amid Friday's 366-point, 3% decline in the Dow Jones industrial average.

Countrywide, which saw its stock price slide 7% on Friday, was up 2.69%, trading at $15.64 just before 1 p.m. Monday. Washington Mutual, which fell 4% on Friday, remained down Monday morning, trading at $29.05, or 4 cents below its opening price for the day. Mortgage giants Fannie Mae and Freddie Mac also continued to trade lower. Fannie Mae's share price declined by $0.95, or 1.6%, Monday morning. Freddie Mac was down $0.22 per share, or 0.41%. Both Fannie and Freddie saw their equity value decline by 3% on Friday.

UK Mortgage Lending Up Slightly

October 19, 2007
Gross mortgage lending in the United Kingdom increased an estimated 2.5% year-to-year in September, according to the Council of Mortgage Lenders, London.

The estimated 30 billion pounds (about $61.4 billion) of gross U.K. mortgage lending in September represented the lowest annual percentage increase in two years and indicates that the market, while still generating year-to-year gains, is slowing, the CML said. The combined effect of five short-term interest rate increases since August 2006 and the global market's liquidity woes are expected to generate a relative drop in year-to-year volumes in coming months, the trade group reported. The CML can be found on the Web at http://www.cml.org.uk.

10-Year Yield Plummets

October 19, 2007
The long-term rate-indicative 10-year Treasury yield plummeted to 4.40% Friday morning following a more gradual downward trend during the week from a previous trading range near 4.65%.

The Friday morning move was due to a rise in oil prices and some negative earnings results, according to Yahoo Finance/AP. The notable drop in rate-indicative yields, and the ensuing concern that certain mortgage-backed securities might be exposed to the risk of prepayment and shortened durations, sparked significant hedging of the risk through trades into mortgage assets with lower rates and less risk of refinancing, according to RBS Greenwich Capital MBS analyst Pankaj Jha.

Thornburg Posts $1.1B Loss in 3Q

October 17, 2007
Forced to sell high-quality jumbo loans at a discount, Thornburg Mortgage, Santa Fe, N.M., posted a $1.1 billion loss in the third quarter.

Company president and chief operating officer Larry Goldstone argued that the liquidity crisis in the nonconforming market -- at least as it pertains to Thornburg -- reflects "investor perception, not investment reality." At the end of September, the publicly traded real estate investment trust had assets (mostly adjustable-rate mortgages) of $36.3 billion, compared with $52.7 billion at the end of December. At the end of the third quarter it boasted a delinquency rate of just 0.27%. However, because of the liquidity crisis, the company has been forced to sell high-quality assets as a way to keep its lenders happy.

NovaStar Selling Servicing to Saxon

October 17, 2007
Subprime servicer NovaStar Financial, Kansas City, Mo., has agreed to sell its servicing portfolio to an affiliate of Morgan Stanley & Co. for $175 million in cash.

According to the Quarterly Data Report, at the end of June NovaStar serviced $15 billion in subprime loans, ranking 19th nationwide. The publicly traded NovaStar said it would use the proceeds to reduce debt. "As we continue to endure a difficult period for the mortgage industry and the secondary market for mortgage loans, our focus is on managing our portfolio of mortgage securities, along with brokering loans with a retail team that continues to serve homeowners," NovaStar president Lance Anderson said in a statement. NovaStar added that it is evaluating "the impact of this transaction on its servicing organization, including its servicing work force of approximately 300 persons, but expects that substantial reductions in both its organization and work force will result." NovaStar can be found online at http://www.novastarmortgage.com.

Ellie Mae Upgrades Encompass Banker Functions

October 16, 2007
Ellie Mae has launched Encompass Banker Edition 3.0, which it says enables mortgage originators to service their own loans and take advantage of broader banking process management and more comprehensive secondary management functionality.

The product also enables users to manage the bulk sale of loans in the secondary market while closely tracking overall profitability on trades, Ellie Mae said. Encompass Banker 3.0's additional upgrades, according to the company, include purchase advice reconciliation that enables users to reconcile funds received from investors when selling loans in the secondary market; audit trails that offer a view of changes, including who made each change and when the change was made; and MERS/MIN registration functions that allow users to generate and register MERS/MIN numbers from within Encompass. Enhancements to secondary management functions include integration to a leading product and pricing engine. The company can be found on the Web at http://www.elliemae.com.

FHASecure Mortgages to Go Into Ginnie II MBS

October 16, 2007
Ginnie Mae has finally decided that the new Federal Housing Administration Secure mortgages should be placed into new multiple-issuer pools under the Ginnie Mae II mortgage-backed securities program.

These special Ginnie II pools will consist of mortgages that are available to delinquent homeowners who want to refinance into a fixed-rate FHA loan. It will also include FHASecure loans in which a conventional borrower refinances into an FHA mortgage and the lender takes out a "silent" second mortgage to cover closing costs or reduce the principal amount to meet FHA requirements. Ginnie Mae officials have been wrestling with the issue of how to deal with new mortgages since President Bush announced the FHASecure program just before Labor Day. Bond traders opposed placing FHASecure mortgages in Ginnie I MBS or even putting them into a standard Ginnie Mae II pool and limiting them to 5% or 10% of the pool. Ginnie Mae said in a notice to MBS issuers that it would start guaranteeing FHASecure pools Dec. 1.

Street Dealers to Invest in TradeWeb

October 12, 2007
Nine Wall Street dealers plan to invest $180 million in Thomson Financial's TradeWeb platform, which handles mortgage-backed securities trades as well as other fixed-income and derivative deals.

The dealers that have agreed to buy a minority stake and participate in TradeWeb are: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, The Royal Bank of Scotland, and UBS. Thomson and the dealers also separately agreed to fund an expansion of the platform.

Zacks: Hard Times Still Ahead for MI Industry

October 12, 2007
An analyst for Zacks Equity Research, Chicago, says difficult times will continue for the private mortgage insurance industry until 2008.

Neena Mishra said the current valuations on the publicly traded companies in the sector already price in to a great extent the bad news in the housing market and the companies' resulting higher losses. "Further, many of these companies have operations outside of the U.S.," Ms. Mishra said. "[Walnut Creek, Calif.-based] PMI Group, for example, derives 40% of its earnings from international operations and other diversified activities. However, we will continue to remain cautious on this segment till there is greater visibility on the U.S. mortgage default situation in the near to intermediate term." Zacks can be found online at http://www.zacks.com.

Lone Star Completes Accredited Purchase

October 12, 2007
Lone Star Fund V (U.S.) LP, Dallas, has completed its acquisition of Accredited Home Lenders Holding Co., San Diego, at the revised price of $11.75 per share in cash.

The deal takes Accredited private, and the company is requesting that its common stock be delisted from the NASDAQ Stock Market. However, the 9.75% series A perpetual cumulative preferred shares (par value $1.00) of Accredited Mortgage Loan REIT Trust will remain outstanding and trade on the New York Stock Exchange. Of the current members of Accredited's board, only James A. Konrath, chairman and chief executive, and Joseph J. Lydon, president and chief operating officer, remain. Lone Star appointed six representatives of its own as directors: Len Allen, Michael Thompson, Marc Lipshy, Catharon Miller, Leigh Rea, and Benjamin D. Velvin III. Accredited can be found online at http://www.accredhome.com.

SEC Asked to Probe Stock Sales by Mozilo

October 11, 2007
The North Carolina state treasurer has asked the Securities and Exchange Commission to investigate stock sales by Countrywide Financial Corp. founder, chairman, and chief executive Angelo Mozilo.

The letter to SEC Chairman Christopher Cox from North Carolina Treasurer Richard H. Moore says, "I was shocked to learn that CEO Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." According to the letter, Mr. Mozilo accelerated his stock selling as the publicly traded lender's fortunes continued to wane. (Over the past few years, Mr. Mozilo has exercised options and sold more than $300 million worth of stock.) North Carolina pension funds own at least 500,000 shares of Countrywide stock. The request to investigate comes as Mr. Mozilo continues to exercise options and sell shares in the ailing lender. (On Oct. 10, Mr. Mozilo exercised options at $9.94 and sold $2.6 million worth of stock.) In about two weeks, Countrywide will release its third-quarter earnings. Morgan Stanley recently said Countrywide could lose at least $2.4 billion in the quarter. At deadline time, Countrywide's spokesman Rick Simon had not returned a telephone call about the North Carolina request.

Citing RE Market, Downey Reveals 3Q Hits

October 10, 2007
Downey Financial Corp., Newport Beach, Calif., citing a "continued weakening in the housing market," says it will take a charge of $82 million in the third quarter to cover credit losses on its mortgage business.

It is forecasting an "operating loss" of $23 million for the quarter when it reports earnings on Oct. 17. According to the Quarterly Data Report, Downey ranked 43rd among all residential lenders in the second quarter. The thrift is just the latest in a long line of publicly traded lenders pre-announcing bad earnings news for the third quarter. "The continued weakening and uncertainty relative to the housing market, coupled with the third-quarter disruption in the secondary mortgage markets, unfavorably impacted our borrowers and the value of their loan collateral," said company chief executive Daniel D. Rosenthal. "This has been particularly true in certain geographic areas such as the greater Sacramento and Stockton areas of Northern California and San Diego County."

Tishman/Lehman Complete Archstone-Smith Buy

October 9, 2007
The acquisition of Denver-based Archstone-Smith by a joint venture of Tishman Speyer Real Estate and Lehman Brothers, which will take Archstone-Smith out of the publicly traded space, has been completed.

After the transaction's originally scheduled closing was delayed, and in the difficult credit environment, there was market speculation about whether the transaction would close. Fannie Mae and Freddie Mac were also involved in financing the approximately $22.2 billion acquisition, which includes the assumption of the real estate investment trust's debt outstanding. In addition to equity input from Tishman Speyer and Lehman Brothers, financing was also obtained from Banc of America Strategic Ventures and Barclays Bank, Archstone-Smith reported. The multifamily REIT's shareholders are to receive $60.75 per share. R. Scot Sellers, chief executive officer of the REIT, will remain CEO of the new entity. The Archstone-Smith portfolio includes 359 communities, with 87,667 units, located on the East and West coasts. Fannie Mae was involved in the purchase of a $7.1 billion credit facility, secured by 105 properties that are a part of the deal, and Freddie Mac's input was in the form of a $1.8 billion structured transaction backed by 47 properties. Archstone-Smith can be found online at http://www.archstonesmith.com.

Thornburg Expects $1.1B Loss on Loan Sales

October 9, 2007
Jumbo lender Thornburg Mortgage, Santa Fe, N.M., says its loss on asset sales will total $1.1 billion in the third quarter, or $236 million more than it originally anticipated.

The publicly traded real estate investment trust -- which is slated to report earnings on Oct. 16 -- said it has sold $22 billion worth of what it calls "high-quality" adjustable-rate mortgages since Aug. 10. Even though its delinquency ratio is among the lowest in the mortgage industry, it has been selling assets as a way to bolster its liquidity. At the end of September its seriously delinquent ratio was just 0.27%. Commenting on the revised loss estimate, company president Larry Goldstone noted that, "The global dislocation of the mortgage finance and credit markets this past summer has had a greater impact on our balance sheet than we initially estimated. However, we have begun to see a modest improvement in financing conditions since August. Despite the greater-than-previously-reported losses, we believe we have adequate liquidity to support our current borrowings portfolio and excess capital to continue to fund new loans." Thornburg can be found online at http://www.thornburg.com.

BLS: 27K Mortgage Jobs Lost in August

October 5, 2007
The mortgage industry suffered an astounding job loss of 27,200 positions in August as the subprime industry collapsed amid concerns about foreclosures and a near-dormant secondary market for many nonconforming loan types.

In mid-September, National Mortgage News reported that publicly traded lenders alone had cut at least 20,000 positions during August. On Friday, the U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell to 428,300 positions from 455,500 in July. Revised figures show that 4,200 mortgage full-timers lost their jobs in July, not 2,100 as originally reported. The government says 76,800 jobs have been lost in the mortgage industry since the start of this year. The BLS can be found online at http://stats.bls.gov.

Fannie Says It's Not Buying C-BASS

October 3, 2007
Federally chartered mortgage giant Fannie Mae said it is not pursuing an acquisition of C-BASS LLC and its "scratch-and-dent" servicing affiliate, Litton Loan Servicing.

When asked by MortgageWire whether Fannie Mae, in the past, had been pursuing the companies, the spokesman declined to comment. A source told MW that Fannie, during the summer, was exploring the possibility of buying C-BASS and Litton. It was well known in the marketplace that their owners, MGIC Investment Corp. and Radian Corp. -- two publicly traded mortgage insurers -- were exploring a sale. Goldman Sachs has been mentioned as a bidder for the pair. (Goldman declined to comment.) C-BASS, which is based in New York, was hit by margin calls in July, forcing its two mortgage insurance company owners to write down its value by more than $1 billion. According to the Quarterly Data Report, Litton ranks 12th among subprime servicers, with $46 billion in receivables. Fannie Mae can be found online at http://www.fanniemae.com.

XShares Launches Adelante RE Funds

September 28, 2007
XShares Advisors LLC, New York, has announced the launch of its newest family of funds, Adelante Shares Real Estate Exchange-Traded Funds, which offer a new approach to investing in real estate investment trusts.

The seven Adelante real estate ETFs include a composite fund plus funds that focus on: U.S. nonresidential, nonlodging property; the residential sector; REITs with conservative dividends; inflation-protected RE exposure; REITs with fast-growing funds from operations; and undervalued REITs. Jeffrey L. Feldman, founder and chairman of XShares Group LLC, said the funds are "completely different from the other real estate-focused investment products already available." XShares can be found online at http://www.xsharesadvisors.com, and Adelante Shares LLC can be found at http://www.adelanteshares.com.

Freddie Settles Fraud Charges

September 28, 2007
Freddie Mac has agreed to pay a $50 million civil money penalty to settle government charges that the giant mortgage company engaged in securities fraud from 1998 to 2002.

The Securities and Exchange Commission alleged that the publicly traded government-sponsored enterprise manipulated earnings and engaged in transactions to nullify the effects of a new hedge accounting rule. This resulted in the misrepresentation of the company's financial results and forced Freddie to restate its earnings for 2000, 2001, and 2002. "We take these charges seriously, and that's why the Freddie Mac of today is a very different company from the Freddie Mac of the past," said Freddie Mac chairman and chief executive Richard Syron. As part of the settlement, four former Freddie executives settled charges of negligent conduct without admitting or denying the charges (see item below). Freddie Mac can be found online at http://www.freddiemac.com.

Ginnie Mulling Customized MBS Pools

September 26, 2007
Bond market traders don't want the new FHASecure mortgages for subprime borrowers placed in Ginnie Mae I mortgage-backed securities, so Ginnie officials are considering using customized pools with multiple issuers.

Ginnie Mae officials are expected to make an announcement this week, sources say. The Federal Housing Administration estimates that the new FHASecure program could help 60,000 subprime borrowers that are delinquent because of the reset of their mortgage to avoid foreclosure. But bond traders expect investors to react negatively, so they are urging Ginnie officials to look for alternatives, such as limiting FHASecure loans to 5% or 10% of a Ginnie Mae II pool. Meanwhile, FHA issuers are divided on the issue and many are skeptical that the FHA will achieve anything near the loan volume it expects.

Option One Parent Taps $250M of Credit Line

September 25, 2007
An affiliate of H&R Block, the publicly traded parent of subprime giant Option One Mortgage, has tapped a $250 million credit facility, citing deteriorating conditions in the commercial paper market.

The loan is the responsibility of Block Financial Group, a subsidiary of H&R Block. The tax preparation giant is trying to sell the Irvine, Calif.-based Option One. In a new filing with the Securities and Exchange Commission, Block cites, as one of its risks, the uncertainty surrounding the sale. Hedge fund giant Cerberus Capital has agreed to buy Option One, but it recently threw its existing subprime unit, Aegis Mortgage, into bankruptcy. Option One can be found online at http://www.optiononemortgage.com.

Nationstar Shuts B&C Wholesale Unit

September 24, 2007
Nationstar Mortgage, Dallas, on Friday closed its subprime wholesale division, which ranked 18th nationwide.

A posting on the lender's broker site says, "We have made the decision to stop all wholesale originations effective September 21, 2007," but offers no other details. Company executive Rick Cardillo, who manages secondary marketing for Nationstar, had not returned a telephone call as of MortgageWire's deadline. In March 2006 Fortress Investments, a publicly traded investment fund, paid $585 million for Centex Home Equity, a nondepository subprime lender/servicer. It then changed the lender's name to Nationstar Mortgage. Nationstar is also a retail originator. In the second quarter it funded $609 million through that channel, a 33% decline from the level recorded a year earlier, according to the Quarterly Data Report.

HSBC Shuts B&C Wholesale Unit

September 21, 2007
British bank HSBC Holdings pulled the plug Friday on Decision One Mortgage, its subprime wholesale division, and will incur various charges of almost $1 billion by closing the unit and a related business.

By exiting the subprime wholesale channel, 750 Decision One employees -- housed mostly in Charlotte, N.C.; Fort Mill, S.C.; and Phoenix -- will lose their jobs. Among B&C wholesalers, Decision One ranked 12th, according to the Quarterly Data Report. In March the bank exited the subprime correspondent channel. In 2003, HSBC paid $14 billion for Household Finance, a publicly traded subprime lender that included Decision One. Over the past year HSBC has whittled down what's left of Household. It has vowed to remain a subprime retail lender and will maintain the Beneficial and HFC retail brand names. A spokeswoman said HSBC Mortgage Corp., Depew, N.Y., is not affected by the decision to close Decision One. HSBC Mortgage continues to fund mostly conventional loans through three channels: retail, wholesale, and correspondent. Decision One can be found online at https://www.d1online.com.

S&P/GRA CRE Index Contracts to Trade on CME

September 19, 2007
The CME Group, formed by the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade, has announced that S&P/GRA Commercial Real Estate Indices futures and options contracts will begin trading on the exchange on Oct. 28.

The exchange said 10 quarterly cash-settled contracts based on property type and geography will be available, including a national composite index; indices on retail, office, apartment, and warehouse properties; and regional indices covering the Desert Mountain West, the Mid-Atlantic South, the Northeast, the Midwest, and the Pacific West. The exchange can be found online at http://www.cmegroup.com.

E*Trade Closing Wholesale Unit, Taking Hits

September 18, 2007
E*Trade Financial Corp., Menlo Park, Calif., said Tuesday that it will close its wholesale residential unit and take a $245 million charge against earnings in the second half because of bad home equity loans and what it calls a "deterioration in the mortgage market."

The company also said it may take a $100 million hit because of impairments on its second-lien, asset-backed security, and collateralized debt obligation holdings. The New York-based E*Trade will focus on residential lending through its retail outlets only. The company can be found on the Web at http://www.etrade.com.

ACB Board Okays Merger With ABA

September 17, 2007
The joining of America's Community Bankers and the American Bankers Association has moved another step closer with a unanimous vote by ACB's board of directors to approve the merger.

The membership of the two trade groups will cast their votes to ratify the merger at their annual conventions in October. "Today's vote underscores our board's belief that we are combining two great organizations into one extraordinary organization that will serve its members well through outstanding advocacy, an experienced and talented staff, a wealth of education and training programs, and an unmatched breadth and depth of products and services," ACB chairman Mark E. Macomber said. The organizations can be found online at http://www.acbankers.org and http://www.aba.com.

Nonperforming Asset Ratio Jumps at Downey

September 17, 2007
Downey Financial Corp., a savings and loan engaged in mortgage banking activities, has reported that its nonperforming assets jumped to 1.96% at the end of August, compared with 1.30% three months earlier.

On a percentage basis, its NPA ratio spiked 50% over the time period. Based in Newport Beach, Calif., the publicly traded Downey services $5.74 billion in mortgages for others. In August it funded $171 million in residential loans for its investment portfolio. The previous month it funded just $94 million. Downey can be found online at http://www.downeysavings.com.

Sale of 11th-Largest Servicer PHH in Doubt

September 17, 2007
PHH Corp. -- which controls the nation's 11th-largest residential servicer -- says its sale to General Electric is in doubt because investment bankers arranging the acquisition believe there will be a significant shortfall in the amount of debt financing needed.

In a statement, the Mt. Laurel, N.J.-based PHH said it was informed by J.P. Morgan and Lehman Brothers that there could be a $750 million "shortfall" in debt financing. In March, General Electric Capital Corp. agreed to buy PHH in its entirety for $1.9 billion. GECC then planned to flip PHH's mortgage business (the company's biggest asset) to The Blackstone Group. Blackstone arranged to buy PHH Mortgage through a limited liability corporation called Pearl Mortgage Acquisition. In a letter sent to PHH by Pearl, Pearl said it is looking at alternative financing but is not optimistic that the sale will be completed. On Monday afternoon, PHH's shares traded down 17% to $23.74, reaching a new 52-week low. Its high is $31.52.

Survey: Hispanics Face Mortgage Hurdles

September 14, 2007
Hispanic and low- and moderate-income borrowers are having trouble getting mortgage financing, according to the National Association of Hispanic Real Estate Professionals, which is urging Congress to pass a Federal Housing Administration reform bill to help alleviate the credit crunch.

"Our members overwhelming favor reform and believe a majority of their customers could benefit from an FHA loan," NAHREP chairman Felix DeHerrera said. The House is expected to vote on an FHA reform bill (H.R. 1852) during the week of Sept. 17. Nearly 67% of the NAHREP members surveyed by the trade group and Wells Fargo Home Mortgage said they have turned away one-third of their customers because they could not qualify for conventional mortgage products. "However, 77% of respondents said that more than half of their customers could be helped if proposed changes in FHA programs are enacted," NAHREP said. About 58% of NAHREP's 14,000 members are real estate agents and 34% are mortgage brokers and lenders.

REIT Reports Delisting by NYSE

September 12, 2007
New York Mortgage Trust Inc., a New York-based real estate investment trust, has reported that its shares are being delisted from the New York Stock Exchange.

The REIT said it will now be traded on the OTC Bulletin Board under the symbol NMTG. The company said it has applied to list its common stock on another national securities exchange.

Correction Presents Opportunities for Some

September 12, 2007
The ongoing correction in the capital markets and reassessment of risk present opportunities for some, it emerged at the recent International Council of Shopping Centers' capital marketplace conference in New York.

Dana Roffman, a director with Angelo, Gordon & Co., New York, said she expects the situation to get a little gloomier, depending on how badly people get hurt, what players are eliminated, and how it will affect the U.S. economy. But there are "a lot of interesting opportunities in this interim period," including a chance for mezzanine and other players to fill the void left by mortgage lenders, she said. Ms. Roffman said there is a group that is setting up a fund to buy some of the market's oversupply of securities. If the risk to return makes sense and the paper is priced right, she said she expects it to trade at about a 5%-15% discount. Aaron Walsh, a managing director at Barclays Capital Inc., New York, also said there are opportunistic funds looking at the available paper. "People are circling right now, and there is still a disconnect," he said, adding that it will take a while for Wall Street to digest the paper.

FTC Eyeing Deceptive Mortgage Ads

September 12, 2007
The Federal Trade Commission has stepped up its surveillance of deceptive mortgage advertising, and it has warned 200 mortgage brokers, lenders, and media outlets to be careful about touting low interest rates without adequate disclosures.

"Many mortgage advertisers are making potentially deceptive claims about incredibly low rates and payments without telling consumers the whole story -- for example, that these low rates and payments apply for a short period only and can go up substantially after the loan's introductory period," said Lydia Parnes, the FTC's consumer protection director. In June, the FTC conducted a nationwide review of mortgage advertisements that might be deceptive or violate the Truth in Lending Act. Many advertisements touted rates as low as 1% but failed to adequately disclose the actual interest rate on the mortgage or the annual percentage rate, the FTC said.

KBW Expands Coverage to Equity REITs

September 11, 2007
KBW Inc., a New York-based investment bank that specializes in financial services, has announced an expansion into the equity REIT sector.

KBW said it has already initiated coverage on 31 publicly traded real estate investment trusts and expects the number to increase to about 50 by the end of the year. KBW also announced that it has hired nine employees to staff the new REIT effort, including Sheila McGrath and Steve Swett as senior vice presidents of research and Andrew Crossfield as senior vice president of equity sales. According to KBW research, financial services companies now account for roughly 21% of the S&P 500 Index's total market capitalization, and 6% of those companies are categorized as REITs. The company can be found online at http://www.kbw.com.

Countrywide Cuts 900 Jobs

September 6, 2007
Countrywide Financial Corp., Calabasas, Calif., said late Wednesday that it had laid off 900 workers across the United States, most of whom worked in production-related jobs.

Earlier this week MortgageWire reported that the company was contemplating layoffs of between 7,000 and 10,000. Last month Countrywide, the nation's largest lender, cut 500 workers in its subprime division. The company has exited that business for now, concentrating instead on government-sponsored enterprise mortgages and loans insured by Ginnie Mae. Meanwhile, the publicly traded lender has rescheduled its annual Investor Forum from Sept. 5 and 6 to Nov. 12.

Regulators Urge 'Proactive' Servicing

September 4, 2007
Federal and state regulators are urging mortgage servicers to be "proactive" and assist homeowners who are facing a jump in their monthly payments due to an approaching reset of their adjustable-rate mortgage.

Servicers should assess the full extent of their authority under pooling and servicing contracts to see if they have the flexibility to contact borrowers in advance of loan resets, according to a joint Statement of Loss Mitigation Strategies for Servicers issued by the regulators. "With declines in housing prices in some areas and tighter credit for subprime loans, it is vital that mortgage servicers work proactively with borrowers facing much higher payments as their interest rates reset," FDIC Chairman Sheila Bair said. "Our work with leading accountants, attorneys, trade groups and market participants has confirmed that servicers of securitized mortgages have the authority under the accounting and tax rules, as well as securitization documents, to proactively help deserving borrowers."

Wachovia Tops Commercial Servicer List

August 30, 2007
Wachovia Securities was the largest commercial and multifamily mortgage servicer as of midyear, at $356.6 billion in primary and master servicing volume, according to the Mortgage Bankers Association.

According to the Washington-based trade association's midyear update, the other large commercial mortgage servicers are: Capmark Finance ($252.3 billion), Midland Loan Services ($245.5 billion), Wells Fargo ($153.2 billion), and KeyBank Real Estate Capital ($133.2 billion). Breaking out the rankings by the largest master and primary servicers of U.S. commercial mortgage-backed securities, collateralized debt obligation, and other asset-backed securities, Wachovia, Capmark, Midland, Wells Fargo, and Bank of America are the largest servicers, the MBA reported. While in the past the midyear update has focused on large servicers of CMBS loans, this year's update was expanded to include all large commercial/multifamily servicers, regardless of investor group, the MBA said. The association can be found online at http://www.mortgagebankers.org.

New Group Wants 'Fiduciary Duty' for Brokers

August 28, 2007
To ensure that mortgage borrowers are treated fairly, Congress should impose a fiduciary duty on loan officers and mortgage brokers, according to a newly formed trade association of mortgage professionals.

"The National Association of Mortgage Professionals is calling for legislation that would establish a higher level of trust and accountability for mortgage agents who enter into a relationship with borrowers," the NAMP said. The association was launched in March to help clean up the mortgage industry, a spokeswoman said. Getting a mortgage is usually the most significant financial transaction in a person's life, and it should not be treated simply as a "retail transaction," the NAMP said. The group can be found on the Web at http://www.namp.org.

Commercial Originations See Growth

August 22, 2007
Originations of commercial and multifamily mortgage loans continued strong in the second quarter the Mortgage Bankers Association reports, and were up 40% compared to last year's second quarter.

Originations were also up 26% from first quarter levels. At the helm of the increased origination activity was a rise in commercial mortgage-backed securities loans and loans backed by hotel properties, the mortgage bankers' trade association reports. Volume was also positively influenced by real estate investment trust (REIT) privatizations. "A number of large deals helped boost commercial/multifamily origination volumes in the second quarter," said Jamie Woodwell, MBA's senior director of commercial/multifamily research. "As a result, the quarter saw significant growth in CMBS and hotel loans. Overall, second quarter commercial/multifamily originations remained strong despite the initial phases of a general re-pricing of risk in the commercial/multifamily and other capital markets." Compared to the second quarter of 2006, loans for hotel properties were up 330%.

Accredited Shuts Production Operations

August 22, 2007
With its acquisition by Lone Star Fund V (U.S.) LP in doubt, Accredited Home Lenders Holding Co., San Diego, has announced a restructuring program that shuts down its U.S. mortgage originations operations for the time being.

The company said it is closing all of its retail operations as of Sept. 5. This consists of 60 retail branches, five support locations and 480 people. The only retail to continue to operate will be the San Diego-based customer retention unit. Furthermore, five of the 10 wholesale divisions will shut on Sept. 5. Overall, it will reduce its wholesale workforce by 490 people, leaving 340 people employed. In addition, Accredited said it is not accepting any new applications in the U.S. Its headquarters staff will be cut by 180 positions. The company said the moves do not affect its Canadian mortgage originations business or its U.S. loan servicing platform. Accredited said this restructuring, plus the $1 billion loan trade will allow it to survive off of securitization cash flows, servicing income and other income until it can resume loan origination operations.

CRE Brokerage Index Inches Up to Record

August 21, 2007
An index that gauges the prospects for commercial real estate brokerage activity was up 0.5% in the second quarter to a record reading of 120.7, according to the National Association of Realtors.

The Washington-based Realtors' trade group said that this suggests "improved business opportunities for commercial real estate practitioners in the months ahead." Lawrence Yun, NAR's chief economist, said, "The rise in the index means net absorption of space in the industrial and office sectors is likely to expand over the next six to nine months. In addition, an improvement in returns on investment implies healthy rent increases for commercial property owners." Net absorption of space in the office and industrial sectors is likely to be 30 million to 40 million square feet in the fourth quarter, according to the association. The NAR index is based on input from 13 economic variables.

Lone Star Denies Breach in Accredited Deal

August 21, 2007
Lone Star Fund V (U.S.) LP, Dallas, denies it is in breach of its obligations to purchase Accredited Home Lenders Holding Co., San Diego.

The company has made a formal legal filing in response to Accredited's lawsuit of Aug. 13 seeking to force Lone Star to complete the tender offer for the nonprime wholesaler. In its counterclaim, Lone Star said Accredited has suffered a material adverse effect and has materially breached other obligations and that Lone Star is entitled to terminate the merger agreement. Lone Star claims Accredited's only contractual remedy is the payment of a reverse break-up fee of $12 million. Meanwhile Accredited has agreed to trade $1 billion of loans under a 90-day purchase agreement with an unnamed investor at an advance rate comparable to the advance rates it receives from its warehouse lenders. The initial settlement of an approximately $500 million pool occurred on Aug. 17. Accredited at its discretion can repurchase of all the traded loans through mid-November 2007 at a premium to the advance rate. "If the market improves to a rational level, our intention is to repurchase these quality loans by mid-November and sell or securitize them," said Accredited chairman and chief executive James Konrath. The deal takes away Accredited's exposure to margin calls on these loans.

KKR to Sell Shares, Board OKs Offering

August 20, 2007
KKR Financial Holdings LLC has agreed to sell 16 million of its common shares to seven unaffiliated institutional investors in separately negotiated transactions and its board of directors has approved a public rights offering of up to $270.0 million to its common shareholders.

The investors in the 16 million shares are certain funds managed by Farallon Capital Management, L.L.C., Fir Tree Partners, JGE Capital Management, Marsico Capital Management, Morgan Stanley, Oak Hill Advisors, and Sageview Capital LP, according to the company. The proceeds from the 16 million shares total $230.4 million, KKR Financial Holdings said. The publicly traded affiliate of buyout firm Kohlberg, Kravitz, Roberts & Co. had previously said after suffering damage from the market's credit crunch that it no longer intends to invest in residential home loan assets and would dispose of its portfolio either through runoff or through a "strategic alternative," which may include a sale of the common stock of its real estate investment trust subsidiary. KKR can be found online at http://www.kkrfinancial.com.

Thornburg Loan Sale May Restart Lending

August 20, 2007
Thornburg Mortgage Inc. has sold $20.4 billon or 35.5% of its portfolio of highly rated jumbo mortgage securities at a loss in an effort to ride out the market's liquidity squeeze and resume lending again.

The publicly traded real estate investment trust will realize a $930 million loss as a result of the mortgage sales that involved assets with the lowest yields that were trading at negative spreads. It was "painful," Thornburg president and chief operating officer Larry Goldstone said during an interview on TV-CNBC. "But essentially, we just solved the repricing risk of our portfolio over the course of the last week." The sales helped the Santa Fe, NM, mortgage REIT raise cash and reduce its funding needs. Now it is planning to reopen its loan lock desk and resume normal lending operations over the next two weeks. "Going forward, we can be somewhat optimistic," Mr. Goldstone said.

NovaStar Suspends Wholesale Again, Cuts Jobs

August 17, 2007
Subprime lender NovaStar Financial on Friday suspended wholesale production once again and cut 37% of its work force as the secondary market for all nonprime loans continued its severe downturn.

Among subprime wholesalers, NovaStar ranks 17th, according to National Mortgage News and the Quarterly Data Report. In total, 500 workers lost their jobs. "This reduction in force includes stepping back temporarily from pursuing new loans in the wholesale market, a decision we are also seeing among some of our peer companies," company president Lance Anderson said in a statement. "For now, we believe this is the right thing to do economically. Our retail channel will be the dominant source of new loans in the coming months." A few weeks ago, the publicly traded real estate investment trust suspended production for a few days but then started up again.

Fannie Reports Plunge in '06 Earnings

August 16, 2007
Fannie Mae reported 2006 earnings of $4.1 billion, down from $6.3 billion in the prior year, due to a 41% drop in net interest income and a 22% drop in the profitability of its single-family business.

The mortgage giant said net income from the single-family business fell to $2.04 billion last year, despite an increase in revenues. Fannie attributed the drop-off in profitability to a $308 million increase in losses on single-family guaranty contracts, a $533 million increase in administrative costs, a $123 million increase in loan loss reserves, and a $218 million increase in foreclosure expenses. "We anticipate the losses we incur at inception of guaranty contracts will more than double in 2007 compared to 2006, primarily as a result of the decline in home prices, as well as continued investment in loans that support the company's housing goals," the government-sponsored enterprise said. Fannie executives also affirmed that the publicly traded company will file its 2007 annual report by the end of February 2008, which would be in compliance with the Securities and Exchange Commission's filing deadline. The GSE can be found online at http://www.fanniemae.com.

Countrywide Off 15% After Bankruptcy Comment

August 16, 2007
Countrywide Financial Corp. saw its share price plunge Wednesday to a four-year low ($19.25) after a Merrill Lynch analyst told clients that if enough "financial pressure is placed" on the nation's largest lender it may file for bankruptcy protection.

At deadline time, Countrywide chairman and chief executive Angelo Mozilo was in meetings and could not be reached for comment. Rumors also began anew that it might be talking to potential suitors, including Bank of America. Meanwhile, sources told MortgageWire that CFC was contemplating exiting the correspondent loan market where it is, by far, the largest player. The Merrill report notes that Countrywide, which owns a depository, has $185 billion in credit facilities available to the company but that the lines of credit can be "terminated or changed meaningfully." Merrill downgraded the stock to "sell" from a "buy." Though Countrywide's shares traded as low as $19.25 on Wednesday, the price recovered to $20.84, down 15% on the day.

E*Trade CDO Classes Downgraded

August 15, 2007
Three classes of notes issued by E*Trade ABS CDO I Ltd/LLC have been downgraded by Fitch Ratings and removed from Rating Watch Negative.

The downgrades were as follows: class B, from BBB to B/DR1; class C-1, from CC/DR3 to C/DR6; and class C-2, from CC/DR3 to C/DR6. Fitch also affirmed the rating on one other class in the deal. E*Trade I is a static cash flow collateralized debt obligation backed by collateral consisting of asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and other CDOs. The downgrades were attributed to collateral deterioration and decreased credit enhancement. The securities were placed on Rating Watch Negative on July 12 due to the negative credit migration of subprime RMBS assets.

B&C Woes Due to Lack of CDO Due Diligence?

August 15, 2007
The deterioration of subprime lending standards can be traced to the lack of due diligence by investors in collateralized debt obligations who bought about 70% of the lower-rated classes of subprime securitizations, according to the Consumer Mortgage Coalition.

CDO investors relied on the rating agencies and CDO managers and "did not even realize they were the key risk takers" in the subprime market, CMC explains in a letter to the Federal Reserve Board. CMC executive director Anne Canfield stresses that these "absentee" investors created a "dysfunctional" market that can be fixed by imposing capital requirements on all mortgage lenders and brokers and by imposing constraints on CDO managers and rating agencies to make the secondary market more transparent. In presenting this backdrop, the industry trade group urges the Fed to be cautious in amending its Home Ownership and Equity Protection Act regulations so that it does not exacerbate liquidity problems in the subprime market. "Ultimately the mortgage market can only function properly when those who bear the risk of mortgage investments are closely involved in the process of mortgage origination," Ms. Canfield says.

KKR Warns of Mortgage Loss

August 15, 2007
KKR Financial Holdings, a publicly traded affiliate of buyout firm Kohlberg, Kravitz, Roberts & Co., says it will take a $40 million loss on the sale of $5.1 billion of residential mortgage loans.

The company bought floating-rate and hybrid-rate assets that were hedged with interest rate derivatives. KKR Financial continues to own $5.8 billion of home loan assets, mostly in the form of mortgage-backed securities, after the sale. Because of volatility in the secondary market, KKR Financial said it may have to record an additional charge of $200 million to $250 million to resolve potential funding disruptions. The company said its portfolio consists of home loan assets with a weighted average FICO score of 728 and a weighted average loan-to-value ratio of 71%. KKR Financial Holdings said it no longer intends to invest in residential home loan assets and will dispose of its portfolio either through runoff or through a "strategic alternative," which may include a sale of the common stock of its REIT subsidiary. KKR can be found on the Web at http://www.kkrfinancial.com.

Impac Posts 2Q Loss of $153M

August 15, 2007
Impac Mortgage Holdings, Irvine, Calif., a top-ranked nonprime lender, lost $153 million in the second quarter, citing higher delinquencies, deteriorating market conditions, and a large increase in its loan loss reserves.

Last week the publicly traded real estate investment trust -- the subject of margin calls from its warehouse lenders -- suspended originations of alternative-A loans, which until recently accounted for most of its production. During the quarter Impac funded or bought $1.3 billion in mortgages, a 41% decline from the levels recorded in both the previous quarter and the second quarter of last year. Over the past two weeks its shares have traded as low as $0.95, compared with a 52-week high of almost $10. In the second quarter of 2006, it posted a $26 million profit. Impac, a mortgage REIT, can be found online at http://www.impaccompanies.com.

Thornburg Hit With Margin Calls; Stock Plunges

August 15, 2007
Super-jumbo lender Thornburg Mortgage of Santa Fe, N.M., saw its stock plunge 46% on Tuesday after research firms raised concerns about its liquidity.

Credit Suisse analyst Moshe Orenbuch cited "heightened concerns surrounding liquidity at the company" in connection with his downgrade to "underperform." In a research note, the analyst wrote: "As a result of rising funding costs, margin calls on its short-term funding instruments and the deleveraging of its balance sheet, we expect TMA will have to cut its dividend significantly." (TMA is Thornburg's stock symbol.) According to the Quarterly Data Report, the publicly traded real estate investment trust ranks 38th among residential funders. Its stock closed at $7.58, down 46% on the day, reaching a new 52-week low. Its 52-week high is $28.40.

NAREIT: REITs Still Negative YTD

August 13, 2007
Real estate investment trusts continued to produce negative returns on a year-to-date basis in July, according to the National Association of Real Estate Investment Trusts.

The FTSE NAREIT All REIT index recorded a negative-15.14% return for the first seven months of the year, the trade group reported. Considering only mortgage REITs, the return was negative-37.67% for the period, and equity REITs alone returned a negative-13.23. This compares with a return over the same period of 3.64% on the S&P 500, 6.01% on the Dow Jones industrial average, and 5.42% on the NASDAQ Composite, according to NAREIT. The association can be found online at http://www.nareit.com.

HomeBanc Files for Ch. 11

August 10, 2007
HomeBanc Mortgage, Atlanta, filed for chapter 11 bankruptcy protection Thursday, listing a slew of creditors, including foreign and U.S. banks.

The publicly traded nondepository -- the nation's 52nd-largest residential funder -- listed debts of $4.9 billion. However, it claims assets of $5.1 billion. Its unsecured U.S. creditors include Bear Stearns, Fannie Mae, Freddie Mac, J.P. Morgan Chase, and KeyBank, among others. Its foreign creditors include Bank Hapoalim, BNP Paribas, Commerzbank Aktiengesellschaft, and Liquid Funding of Ireland. Some of these creditors had loan repurchase requests out with the lender. Last week HomeBanc agreed to sell assets belonging to five of its retail branches to Countrywide Home Loans.

NAMB Raps Clinton, Calls for System Reform

August 8, 2007
The National Association of Mortgage Brokers, responding to criticism of the mortgage brokerage industry by Sen. Hillary Rodham Clinton, D-N.Y., has criticized the senator for advocating policies that "single out small business America" and called instead for an examination of the entire mortgage system.

"The entire mortgage system needs to be examined from stem to stern -- from the home shopping phase, bankers, brokers, and lenders all the way to Wall Street and the rating agencies," the NAMB said in a statement. "NAMB welcomes Sen. Clinton's proposal to create a registry database, but it needs to go one step further -- it should be applied to all mortgage originators, not just mortgage brokers." In a recent speech, Sen. Clinton called for upfront disclosures of mortgage brokers' compensation, a ban on prepayment penalties, and a requirement that all subprime mortgages have escrow accounts. Regarding disclosures, the NAMB noted that it has also called for reform, pointing to Federal Trade Commission studies suggesting that "our entire mortgage disclosure system is broken and it needs a comprehensive fix." The association can be found on the Web at http://www.namb.org.

Transnational Exits Mortgage Biz

August 7, 2007
Transnational Financial Network Inc., San Francisco, says it is getting out of the mortgage business after entering into an agreement to acquire Telava Networks Inc., a provider of wireless broadband connectivity, also in San Francisco.

"We believe that our shareholders will have the benefit of new enterprise in a new, expanding industry, an opportunity that would not otherwise be available to our shareholders," said Joseph Kristul, Transnational's chief executive officer. "Consistent with the challenges in the mortgage industry, Transnational has seen its operations and capital position deteriorate. Given the current difficulties in the mortgage industry and our anticipation that these problems will continue for an indefinite time, this acquisition holds promise for our shareholders that they would not otherwise see in the mortgage industry for some time." The mortgage operations are being sold to an entity not disclosed in the Transnational statement. Transnational's stock, which trades on the pink sheets, more than doubled in price by midday on Aug. 7, rising by $0.33 to $0.50 per share.

MF Debt Funding Dived in July

August 6, 2007
The availability of debt funding for multifamily properties went down significantly in July, according to the National Multi Housing Council's multifamily industry survey.

The multifamily industry trade association reported that its debt-financing index dropped from 54 in April to 26 in July. According to the Washington-based NMHC, this may be a low point for the index unless lenders continue to restrict credit further. "While debt financing conditions took a turn for the worse, equity capital remains abundant," said Mark Obrinsky, the association's chief economist. "If current conditions remain in place, highly leveraged private buyers may lose their place to REITs and institutional investors who rely more heavily on equity financing." The survey was conducted July 23-30, with a respondent pool comprising 80 chief executive officers and other senior executives in the multifamily industry nationwide who also serve on the NMHC's board of directors or advisory committee. The council can be found online at http://www.nmhc.org.

Bear Co-Prez Resigns in Wake of B&C Mess

August 6, 2007
Bear Stearns co-president and co-chief operating officer Warren Spector resigned Aug. 5 in the wake of a costly collapse of two Bear-sponsored hedge funds that invested in risky subprime-related assets.

The two funds -- once valued at more than $40 billion -- filed for bankruptcy protection early last week. Bear told investors in the funds that one was worthless, and the other had lost 90% of its value. The two funds were housed in an asset management group that Mr. Spector oversaw. Alan Schwartz, who had been Bear Stearns' other co-president and co-COO, was named sole president. "In light of the recent events concerning [Bear Stearns Asset Management's] High Grade and Enhanced Leverage funds, we have determined to make changes in our leadership structure," Bear chairman and chief executive James Cayne said. "I have every confidence in this team to continue Bear Stearns' 84-year legacy of success and profitable growth." Spector, 49, had spent his entire career at Bear Stearns since joining the firm as a trader in 1983. Bear Stearns can be found at http://www.bearstearns.com.

Wells, Countrywide to Buy From ACB JV

August 2, 2007
Wells Fargo Funding Inc. and Countrywide Institutional Mortgage Services Group have agreed to purchase mortgages from 32 community banks that are part of a joint venture put together by a for-profit subsidiary of America's Community Bankers.

The trade group launched ACB Mortgage LLC in February to act as a negotiating agent with investors to get the best secondary-market execution. "We anticipate that this new venture will immediately benefit" from Countrywide's and Wells Fargo's inclusion, said Deborah Whiteside, president of ACB Mortgage. CIMSG president Doug Jones said a "coordinated execution" involving ACB Mortgage and Countrywide "is designed to offer product solutions and help community banks become more successful in today's environment of declining market shares, reduced margins, and increased competition."

Capital Lease Changes Name

August 1, 2007
Capital Lease Funding Inc., a New York-based real estate investment trust, has announced that it is changing its name to CapLease Inc.

"CapLease is our well-known trade name and emphasizes our transition to primarily a commercial net lease property owner, from a net lease lender," said Paul McDowell, chief executive officer of the company. CapLease said it has become a portfolio investor across the capital structure of net lease and other single-tenant properties since its initial public offering in 2004.

AHM Stock Reopens; Lender Not Funding

August 1, 2007
Trading in the stock of American Home Mortgage Investment Corp. finally resumed Tuesday afternoon, but not before plunging almost 90% to just over $1 a share.

The publicly traded prime/alternative-A real estate investment trust revealed that it could not fund up to $850 million in loan commitments because its warehouse backers are demanding "substantial unpaid margin calls." AHM also said it has retained Milestone Advisors and Lazard to explore "strategic options." On Monday, MortgageWire broke the news that IndyMac Bancorp of California had talked to AHM about buying its retail network but that attorneys for IndyMac balked at the deal, believing that a possible bankruptcy filing by AHM would pose too many legal hurdles. Based in Melville, N.Y., AHM is the nation's 10th-largest residential funder, according to the Quarterly Data Report. Over the past year its stock has traded as high as $36.40.

AHM Stock Not Trading; Bankruptcy Rumored

July 31, 2007
For the second day in a row, the stock of American Home Mortgage Investment Corp., Melville, N.Y., did not trade as rumors began to circulate that the REIT is contemplating filing for bankruptcy protection.

As of MortgageWire's deadline, AHM's spokeswoman could not be reached for comment. Industry executives have told MW that IndyMac Bancorp, Pasadena, Calif., has broken off talks with AHM about buying all or part of the troubled lender's retail platform. On Friday, AHM's stock closed at $10.47 but fell to just over $6 a share in after-hours trading when the nondepository revealed that it would delay a dividend payment after being hit with significant margin calls from its warehouse lenders. AHM, a real estate investment trust, is the nation's 10th-largest residential funder, according to the Quarterly Data Report. Since Friday the company has not issued any clarifying statements on its situation. It has not filed any reports with the Securities and Exchange Commission since July 2. The mortgage REIT can be found online at http://www.americanhm.com.

Specialty Servicer C-BASS Hit by Margin Calls

July 31, 2007
New York-based C-BASS LLC, which controls the nation's 10th-largest subprime servicer, has been hit by what its parent companies are calling an "unprecedented amount" of margin calls.

According to the Quarterly Data Report, the C-BASS-owned Litton Loan Servicing, Houston, owns the right to service $48 billion in mostly subprime loans. C-BASS is controlled by two publicly traded mortgage insurance firms: MGIC Investment Corp. and Radian Group Inc., which are in the process of merging. (See related story below.) In a statement issued July 31, the two MIs said C-BASS "remains confident in the overall credit quality of its portfolio and the performance of its highly rated servicing subsidiary Litton Loan Servicing." Citing a "tumultuous time" in the subprime market, the two MIs said C-BASS was asked to meet $290 million worth of margin calls during the first half. (At the beginning of the year it had $302 million in liquidity.) C-BASS -- Credit-Based Asset Servicing and Securitization LLC -- can be found online at http://www.c-bass.com.

Trading in American Home Halted

July 30, 2007
The New York Stock Exchange halted trading in the stock of American Home Mortgage Investment Corp., Melville, N.Y., on Monday after the company revealed that it was the subject of "significant margin calls" from its warehouse lenders.

As of MortgageWire's deadline, the company's spokeswoman had not returned telephone calls about the matter. According to the Quarterly Data Report, AHM is the nation's 10th-largest funder of home mortgages, and eighth-largest wholesaler. Late Friday the publicly traded REIT said its board had decided to delay its dividend payment. In a statement, it also revealed that it had suffered "major writedowns" on its loan and securities portfolios that in turn had caused margin calls "with respect to its credit facilities." A month ago, hedge funds managed by Marathon Asset Management LLC purchased $125 million worth of preferred securities in AHM. The mortgage REIT can be found online at http://www.americanhm.com.

Bear Fund Loses Nearly All Its Value

July 19, 2007
One of two inordinately troubled Bear Stearns mortgage funds appears to have virtually no value remaining.

"Preliminary estimates show there is effectively no value left for the investors in the [High-Grade Structured] Enhanced Leverage Fund," Bear said in a letter to clients. Meanwhile, the value of the other fund -- the High-Grade Structured Credit Strategies Fund -- has fallen to "less than a 10th of its value from a few months ago after its subprime trades went bad," according to a July 18 article in The Wall Street Journal. Bear Stearns did not directly confirm the extent of the latter decline but did indicate in the letter that the second fund was estimated to have "very little value left." Despite this drastic decline, the High-Grade Structured Credit Strategies Fund appears to have "sufficient assets available" to "fully collateralize" a more than $1 billion repurchase facility the firm provided to it last month, Bear said.

Feds Target B&C Mortgage Subs

July 18, 2007
The federal regulators are targeting a few subprime mortgage subsidiaries of bank and thrift holding companies for special consumer protection compliance reviews in the fourth quarter.

The feds plan to coordinate with state regulators so the state-licensed mortgage brokers working with those mortgage subsidiaries also come under scrutiny. "Additionally, the states will conduct coordinated examinations of independent state-licensed subprime lenders and their associated mortgage brokers," the agencies said. The Federal Reserve Board, the Office of Thrift Supervision, and the Federal Trade Commission, along with the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are participating in the pilot program. The nonbank subsidiaries of holding companies are generally overlooked in the examination process. "At the conclusion of the reviews, the agencies will analyze the results and determine whether the project is to be continued," the regulators said.

Mission West on the Auction Block

July 17, 2007
Mission West Properties is looking at a possible sale of the company in a transaction valued at about $1.8 billion.

The Cupertino, Calif.-based real estate investment trust reported that it is negotiating a deal with a "leading real estate private equity fund" to acquire its common shares at $13.55 per share in cash. The transaction is subject to due diligence by the buyers and also contingent on their arranging financing for the deal, the industrial REIT said. Commenting on the development, the JP Morgan equity REIT research team noted, "With the announcement of negotiations before a definitive agreement has been reached and a price that is below that of the last trade, MSW could be leaving open the door for other potential bidders to come in and take a look." Mission West can be found online at http://www.missionwest.com.

Groups Rap Proposed Loan-Limit Formula

July 16, 2007
Three major housing trade groups want to stop the Office of Federal Housing Oversight from moving forward with a proposed formula that could trigger a decline in the conforming loan limit in 2009 if house prices decline by 1% or more this year.

In a letter to Congress, the Mortgage Bankers Association, the National Association of Home Builders, and the National Association of Realtors warn that a reduction in the $417,000 confirming loan limit could be "detrimental" to the economy, homebuyers, homeowners, and the housing industries. "[W]e respectfully request that you encourage OFHEO to withdraw the proposed guidance," the trade groups say in a letter to the ranking members of the House and Senate banking committees. OFHEO's formula would allow a decline in the conforming loan limit as house prices decline, but with a one-year lag. So a possible decline in house prices this year would not affect Fannie Mae and Freddie Mac mortgage purchases until 2009. The CLL also serves as a benchmark for loan limits on Federal Housing Administration-insured and Department of Veterans Affairs-guaranteed loans.

TransUnion Takes On 'Authorized User' Abuse

July 13, 2007
TransUnion, Chicago, has announced the introduction of a customized approach to help mortgage lenders identify consumers who may have added "authorized user" accounts to artificially inflate their credit standing.

The company said it examined nearly 2 million approved mortgage applicants and developed a set of "highly predictive" credit characteristics. The product is customized based on a lender's credit criteria and risk threshold. "The practice of artificially boosting one's credit score is not just limited to the mortgage industry, and the practice is not going to go away for quite some time," said Dina Anderson, a senior director in TransUnion's Analytic and Decisioning Services. "The key is to help the industry and our customers determine the difference between a legitimate use of an authorized user trade line and provide a meaningful risk assessment when the practice is being abused." The company can be found on the Web at http://www.transunion.com.

REITs Fall Behind Other Equity Investments

July 10, 2007
Real estate investment trusts have fallen behind other equity market benchmarks for the first half of 2007, following years of continued outperformance.

The FTSE NAREIT All REIT Index turned in a total return of negative-6.96% for the first half, according to the National Association of Real Estate Investment Trusts. The Washington-based REIT industry trade group reported that this compares with a return of 6.90% on the S&P 500 for the first half, 7.59% on the Dow Jones Industrials, and 7.78% on the NASDAQ. Taking into account only mortgage REITs, total return for the first half of 2007 was even worse, at negative-19.97% (with the home financing sector turning in a return of negative-20.86%, and the commercial financing sector at negative-18.03%). NAREIT can be found online at http://www.nareit.com.

Zacks Dubs Public Storage 'Bull of the Day'

July 3, 2007
Public Storage, a real estate investment trust based in Glendale, Calif., was named the "Bull of the Day" for July 2 by Zacks Equity Research, Chicago.

Shares of the self-storage REIT "have traded down about 17% since mid-April," Zacks said, attributing the phenomenon to a correction in the sector during which investors have taken profits after multiyear gains. "We think the sell-off has been overblown," Zacks said, citing the REIT's "strong earnings momentum" and predicting "even greater returns" as the economy strengthens. "With the acquisition of Shurgard, [Public Storage] removed a major competitor, and is by far the largest self-storage operator in the U.S.," the research firm said. The companies can be found online at http://www.zacks.com and http://www.publicstorage.com..

Private MIs Score Top #s Since '03

July 2, 2007
May was the best month since October 2003 for the members of the Mortgage Insurance Companies of America for writing primary new mortgage insurance policies.

There was $30.2 billion of primary insurance written in May, compared with $20.7 billion in April. Back in October 2003, $30.6 billion of primary new mortgage insurance was written. Comparisons of data prior to July 2003 are not meaningful because that is when Radian withdrew its membership in the trade group. Traditional insurance totaled $21.9 billion in May and bulk insurance totaled $8.3 billion, up from $17.4 billion and $3.3 billion, respectively, in April and from $13.0 billion and $5.2 billion in May 2006. The number of applications topped 200,000 billion for the first time in 2007, at 208,596. The bad news in the May report is that the cure/default ratio had fallen to its lowest level since January, to 65.1%. There were 29,941 cures and 45,986 defaults in the month. In January, the ratio stood at 60.2%, with the highest number of defaults so far this year, 52,528.

3 Ex-CFC Execs Plead Guilty to Insider Trading

June 27, 2007
Three former executives of Countrywide Financial Corp., Calabasas, Calif., pleaded guilty June 26 to insider trading in a scheme that generated more than $100,000 in profits.

The three former executives (all vice presidents) are: Alan Cao and Quan Zhu, who worked in Countrywide's Calabasas, Calif. headquarters; and Jun Shi, who worked in the Thousand Oaks office of CFC's bank affiliate. According to the U.S. Attorney's Office for the Central District of California, the three traded on information relating to profits for the third quarter of 2004. The three obtained confidential information revealing that Countrywide would not meet analysts' expectations for that quarter and traded on it. Each man pleaded guilty to one count of securities fraud, which carries a maximum penalty of 20 years in prison. According to the Quarterly Data Report, Countrywide is the nation's largest residential lender. The company can be found online at http://www.countrywide.com.

FTSE Launches Euro REIT, Non-REIT Indices

June 26, 2007
FTSE Group has announced the launch of two European indices focused on real estate investment trusts and non-REITs.

The FTSE EPRA/NAREIT Europe REITs and Non-REITs indices, a subset of the company's EPRA/NAREIT Global REITs and Non-REITs Index Series, are suitable for the creation of financial products such as index funds, warrants, certificates, and exchange-traded funds, FTSE said. The global series enables investors to differentiate REIT from non-REIT constituents according to country-specific legislation, the company said. At launch, the European REITs index included 36 companies from six countries: Belgium, France, Germany, Greece, Netherlands, and the United Kingdom. (EPRA stands for the European Public Real Estate Association, and NAREIT stands for the National Association of Real Estate Investment Trusts.) FTSE can be found online at http://www.ftse.com.

Fidelity Buys Mortgage Tech Company

June 26, 2007
Fidelity National Information Services Inc., Jacksonville, Fla., has announced the acquisition of Applied Financial Technology, a provider of risk analytics, analysis, and data for the mortgage industry.

The terms of the transaction were not disclosed. Fidelity said AFT's qualitative analytics can be fully integrated into various third-party systems and are used by brokers, banks, and investors to price, fund, trade, and hedge mortgages and mortgage-backed securities. "The importance of the analytic component that AFT will provide to FIS customers cannot be overemphasized," said Greg Whitworth, president of FIS Loan Portfolio Solutions. "In today's environment, lenders, loan servicers, and investors alike must incorporate meaningful analytics in the pricing and ongoing evaluation of loan performance." The company can be found online at http://www.fidelityinfoservices.com.

Sentinel Omaha Buying America First

June 25, 2007
America First Apartment Investors, an Omaha, Neb.-based real estate investment trust, is being acquired by Sentinel Omaha for about $532 million, including the assumption of debt, in a deal that will take the multifamily REIT out of the publicly traded arena.

Sentinel Omaha, an affiliate of the privately held Sentinel Real Estate Corp., is paying $25.40 in cash for each America First common share, the REIT reported. This represents a 24.9% premium over America First's recent share price on April 2, just prior to its announcing plans to explore its strategic alternatives with the help of Lazard Freres, the REIT said. David Weiner, vice chairman of Sentinel Real Estate, said he expects the REIT's portfolio to complement Sentinel's existing portfolio. He said he also expects to see "significant economies of scale" by integrating the REIT's approximately 7,000 units with the approximately 50,000 units Sentinel currently manages.

FTC: Mortgage Disclosures Inadequate

June 14, 2007
Mortgage disclosures currently required by federal regulators fail to convey key mortgage costs and terms to consumers, leaving them susceptible to deceptive lending practices, according to a Federal Trade Commission study that tested 819 recent mortgage customers.

The FTC study found that prime and subprime mortgage customers were confused by the standard good-faith estimate and would benefit from enhanced disclosures. The consumer protection agency tested a prototype GFE with enhanced disclosures that produced better results. "Eighty percent of the respondents viewing the prototype form were able to answer 70% or more of the questions correctly, compared to 29% of the respondents viewing the current form," the FTC said. The study also suggests that subprime borrowers "may benefit the most from improved disclosures," FTC Chairman Deborah Platt Majoras said.

Freddie Sets Quarterly Report Date

June 8, 2007
Freddie Mac plans to release its first quarterly financial report since mid-2003 on June 14 when it reports the company's first quarter results.

"We are very proud that next week for the first time in five years we will return to quarterly reporting," Freddie chairman and chief executive Richard Syron said at the company's annual shareholders meeting. Freddie suspended its quarterly reporting in 2003 when massive accounting problems were uncovered and the publicly traded company had to restate earnings. Separately, Fannie Mae, which is behind Freddie in repairing its accounting systems, said its 2006 annual financial report will be released in the third quarter of this year. Fannie also has scheduled its annual shareholders meeting for Dec. 14. Freddie reported its 2006 annual results in March.

Zacks Still Negative on Block

May 30, 2007
The Zacks Equity Research Analyst Blog for May 29 said the rating company is not yet ready to upgrade its sell rating on H&R Block, Kansas City, Mo., despite the fact that the pending sale of a mortgage affiliate is positive in the long term.

The firm views the pending sale of Option One Mortgage Corp., an Irvine, Calif.-based nonprime lender, as "a long-term positive." But it added that "the ultimate terms of the deal are still unknown. In the near-term, we expect that [Block's] stock should continue to trade near the lower half of its historical multiple range, and we do not believe that significant price appreciation is warranted at this time." Zacks can be found on the Web at http://www.zacks.com.

Impac Buying Pinnacle, a $5B Funder

May 22, 2007
Impac Funding Corp., Irvine, Calif., has agreed to buy Pinnacle Financial Corp. of Florida, a $5 billion-a-year funder that plays in both the conventional and alternative-A markets.

No purchase price was disclosed. In years past, Pinnacle, a retailer, had been selling alt-A loans to IFC on a correspondent basis. IFC, a subsidiary of a publicly traded real estate investment trust, is the nation's 10th-largest alt-A funder, according to figures compiled by the Alternative Products Quarterly Data Report. The sale was brokered by Milestone Merchant Partners. Pinnacle operates 133 branches in 26 states. It was founded in 1988 by Douglas L. Long and Jeffrey Vratanina. The companies can be found on the Web at http://www.impaccompanies.com and http://www.pinnaclefinancial.com.

Trade Groups Back Feds' Subprime Efforts

May 21, 2007
Mortgage lenders support the efforts of federal regulators to strengthen underwriting standards on subprime loans and will help troubled borrowers avoid foreclosure, according to a joint statement issued by five industry groups.

The trade groups have been very wary of proposed subprime guidance the banking regulators are expected to finalize soon, and they are very concerned about proposed legislation aimed at providing relief for subprime borrowers facing foreclosure. "We believe the efforts of our members, together with the actions of the regulators, will be effective in dealing with current problems in subprime mortgage lending," the joint statement on responsible subprime lending says. "We urge the federal regulators to ensure that the proposed statement on subprime lending strikes a careful balance that provides enhanced consumer protections without unintentionally limiting the availability of home ownership to creditworthy borrowers." The Financial Services Roundtable, the American Bankers Association, the Mortgage Bankers Association, the Consumer Bankers Association, and America's Community Bankers signed the statement.

Technology to Predict Nonperforming Loans?

May 17, 2007
Interthinx, Agoura Hills, Calif., has released the results of its latest data analysis, which it says can accurately predict which loans will be nonperforming over time.

The Interthinx score predicts the likelihood of foreclosure and early payment default. In this study, Interthinx configured and evaluated performance data on over two million loan application records from its database. Through an alliance with one of the top three U.S. credit bureaus, Interthinx analyzed late payments, defaults, and foreclosure data from mortgage trade lines and compared the data with previous scores and red flags for possible mortgage fraud within loan applications. Using the Interthinx scoring system, the analysis quantitatively demonstrated that loans with a low score have a much higher level of risk than loans with a high score, the company said. For example, the risk of foreclosure in the first year is 20 times higher for loans with a score in the 0-200 range than for loans with a score in the 800-1000 range. The statistical analysis was led by Derek Stanford, director of analytics for Interthinx. The company can be found on the Web at http://www.interthinx.com.

Countrywide Sells $4B in Bonds; Will Buy Shares

May 17, 2007
Countrywide Financial Corp., Calabasas, Calif., has announced the sale of $4 billion of convertible bonds through a private placement and said it will use some of the proceeds to buy back up to 23 million shares of its common stock.

On Thursday Countrywide's stock was the most actively traded on the New York Stock Exchange, rising 2% to $41.16, with 41 million shares changing hands by noon. (Its average daily volume is 11 million shares.) The bonds (debentures) were issued in two separate series, A and B, and are due in 30 years. The series A bonds have a conversion rate representing a 30% premium over Countrywide's close-of-day stock price on Wednesday ($40.33) while the B bonds carry a 45% premium. In unrelated news, Countrywide chairman Angelo Mozilo recently told analysts that he could not see the company being absorbed by a large bank, "as that could destroy the franchise value that had been created." The company can be found online at http://www.countrywide.com.

Opteum Has Huge 1Q Loss, Stock Hammered

May 11, 2007
Opteum Inc., Vero Beach, Fla., posted a $78.1 million loss in the first quarter, blaming its problems on its residential mortgage business and "significant distress" in the secondary market.

A publicly-traded real estate investment trust, Opteum's shares were hammered in trading the morning of May 11, falling by 23% to just over $4 a share. Its 52-week high is $9.24. The company recently announced that it would exit the residential funding business entirely, selling its retail network and shutting its wholesale/correspondent channel. In 2006 Opteum Financial Services, the residential arm of Opteum, funded $6.3 billion in loans, ranking 49th in the U.S., according to figures compiled by the Quarterly Data Report. (The ranking excludes subprime specialists.)

Impac Loss Due to Buybacks, Derivatives

May 11, 2007
Impac Mortgage Holdings, one of the nation's largest alt-A funders, posted a $121.7 million loss in the first quarter, citing market-to-market losses on derivatives and charges tied to large loan buyback requests.

Over the past two quarters the publicly traded Impac has lost $181 million. The Irvine-based company signaled that it is moving "aggressively" on settling loan buyback requests tied to early payment defaults. "We have closely monitored our reverse repurchase facilities to manage our margin call exposure," said CEO Joe Tomkinson. The nation's 10th largest alt-A originator, Impac funded or bought $2.2 billion of product in the quarter, compared to $2.1 billion in the year ago quarter. (In the fourth quarter in bought and funded $4.1 billion.) In response to a declining market it also laid off 15% of its 800 staffers.

FTSE Licenses Exchange-Traded RE Index Funds

May 7, 2007
FTSE Group, a global index provider, has announced the licensing of Barclays Global Investors to create five new iShares Exchange Traded Funds that track the FTSE NAREIT U.S. Real Estate Index Series.

FTSE said the new iShares funds will be the first exchange-traded funds to track real estate market subsectors in the United States. FTSE and the National Association of Real Estate Investment Trusts partnered in March 2006 to collaborate on domestic U.S. real estate indexing. The iShares Funds will be linked to the FTSE NAREIT Residential, Industrial/Office, Retail, Mortgage REIT, and Real Estate 50 indices. "REITs provide a transparent window for investors into the real estate asset class, and the use of the FTSE NAREIT index sectors by BGI spotlights key property types of traditional interest to investors," said Steven A. Wechsler, NAREIT's president and chief executive officer.

NAMB: Prime, Fixed-Rate Loans Gain Popularity

May 7, 2007
The residential mortgage market may be returning to more traditional products this year, according to a survey by the National Association of Mortgage Brokers and Wholesale Access.

More than 60% of all loans originated by brokers in January involved prime borrowers with FICO scores of 650 or greater, according to the NAMB. Moreover, fixed-rate mortgages are gaining in popularity, representing nearly 54% of new loans in January compared with less than half in 2006. "This is a particularly timely reminder that, even with all the attention that nonprime loans receive in the media, most homebuyers have the proper credit for more traditional loan products," said Harry Dinham, president of the trade association. "The data also point out that brokers are the most popular originators in the market, accounting for more than 60% of all mortgages today." The survey, covering more than 200 brokers, was conducted by Wholesale Access. The NAMB can be found online at http://www.namb.org.

Groups Urge Updating of REMIC Regs

May 4, 2007
Regulations governing real estate mortgage investment conduits are outdated and should be amended, according to the Mortgage Bankers Association and other trade groups in the commercial real estate arena.

In a comment letter to the Internal Revenue Service, the groups argue that the current regulations were adopted 15 years ago and don't address situations that now arise in the market for securitized commercial mortgage loans. The groups are urging the IRS to "amend the REMIC regulations to include additional types of permitted loan modifications that are responsive to situations that now arise regularly in the context of commercial loans." Some of the changes the groups want include additional flexibility in making changes in loan collateral, in the time a loan can be prepaid, and in the recourse/nonrecourse nature of a loan. The other signatories to the letter include the American Securitization Forum, the Commercial Mortgage Securities Association, and the National Association of Real Estate Investment Trusts.

MBA: Commercial/MF Originations Rose 10%

May 3, 2007
Commercial and multifamily mortgage originations were up 10% in 2006, with mortgage bankers closing a record high $406.1 billion in commercial and multifamily loans, according to the Mortgage Bankers Association.

The trade group said loans backed by office properties and loans for commercial bank and savings institution portfolios led the increase. "Conduits packaging loans for commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities continued to be the dominant investor group in 2006, and office properties surpassed multifamily as the dominant property type," said Jamie Woodwell, the MBA's senior director for commercial/multifamily research. The increase in originations in 2006 was driven both by higher loan amounts -- the average loan size rose to $11.5 million -- and by the closing of a greater number of loans. Among major investor groups, real estate investment trusts saw the greatest percentage increase in volume in 2006, followed by commercial banks/thrifts.

RESPRO Elects New Chairman

May 2, 2007
Arthur Sterbcow, president of New Orleans-based Latter & Blum Realtors Inc., has been elected chairman of the Real Estate Services Providers Council, a Washington, D.C.-based trade association.

Other newly elected RESPRO officers are: vice chairman, Ronald Peltier, president and chief executive officer of HomeServices of America Inc., Minneapolis; president, Susan E. Johnson, RESPRO executive director; secretary, Stephen D. Morrison, vice president of Wells Fargo Mortgage Corp., Des Moines, Iowa; and treasurer, George Eastment III, president of Long & Foster Financial Services Inc., Fairfax, Va. The organization can be found on the Web at http://www.respro.org.

New MI Has Banner Month

May 1, 2007
March was the best month for the traditional category of primary new insurance written in terms of dollar volume since August 2005, according to data from the Mortgage Insurance Companies of America.

By application volume, it was the best month since October 2003. Overall dollar volume of primary new insurance written was $26.6 billion, up 57.1% from February's $16.95 billion. The traditional category totaled $15.9 billion written, up from $12.6 billion the previous month. In August 2005, just under $16.0 billion was written. Bulk primary new insurance written totaled $10.7 billion. Bulk production tends to rise at the end of each quarter -- in March 2006, just under $9 billion of bulk volume was recorded. The number of applications received totaled 191,525, up 55.6% from February's 123,059. October 2003 was the last time MICA members had received over 200,000 in applications. (Comparisons with periods prior to July 2003 are not valid because that is when Radian withdrew as a member of the trade group.) New pool risk written totaled $185.1 million. The cure/default ratio stood at 92.3% in March, down four percentage points from that of February.

McQuade to Step Down at Freddie

May 1, 2007
Freddie Mac president and chief operating officer Eugene McQuade has unexpectedly turned down an offer to be the mortgage company's chief executive, and he plans to relinquish his executive duties Sept. 1.

The former Boston commercial banker will continue to serve as a member of the board of directors. The announcement by Freddie Mac is particularly surprising because Mr. McQuade was widely expected to take over the CEO duties from CEO and chairman Richard Syron. Over the past year, Mr. McQuade has led Freddie's effort to repair its accounting systems, and the publicly traded company is expected to return to regular quarterly financial reporting this year. The first quarter 2007 report is scheduled to be released in June. "He's been a great partner for me, and his record here is impressive," Mr. Syron said. Freddie Mac also announced that board member Ronald Poe is retiring and that the board has nominated Nicholas Retsinas, the director of the Joint Center for Housing Studies at Harvard University and a former federal housing commissioner, to be a director.

Coalition: FHA Needs to Realign Procedures

April 30, 2007
The Federal Housing Administration may not be able to revive its single-family program unless the agency adopts private-sector policies and procedures in originating, insuring, and servicing mortgages, according to the Consumer Mortgage Coalition.

So the trade group is working to add language to an FHA reform bill (H.R. 1852) that requires the FHA to swiftly align its processes and procedures with those of the conventional market. The CMC contends that the FHA's outdated underwriting processes and severe penalties for noncompliance force lenders to conduct their FHA business as separate operations. This is expensive and discourages lenders from participating in the FHA program, according to CMA executive director Anne Canfield. "It is really important for FHA to align their processes and procedures with the way the world works," she said. The House Financial Services Committee is scheduled to mark up H.R. 1852 on May 1.

Opteum Exits Conduit, Wholesale Channels

April 20, 2007
Opteum Inc., Vero Beach, Fla., is no longer accepting applications in Opteum Financial Services' conduit and wholesale channels and will exit those lines of business.

The company blames deterioration in the secondary market for closed loans and continuing weakness in consumer demand for mortgage products and services. "Recently, some secondary-market investors in closed mortgage loans have changed their terms and have delayed settling whole-loan trades involving certain alt-A mortgage product," said Jeffrey J. Zimmer, chairman, president, and chief executive of Opteum Inc. "This has forced OFS to re-market loans in respect of which it believed it had already obtained purchasing commitments, and has resulted in an estimated $22 million pretax loss associated with mortgage loans originated by OFS." Mr. Zimmer said the company decided to exit the conduit and wholesale origination businesses because it believes that the adverse market environment may continue for some time. OFS will keep open its retail operation, consisting of 24 offices in Georgia, Florida, Illinois, New Jersey, and Massachusetts. The parent company, structured as a real estate investment trust, can be found on the Web at http://www.opteum.com.

REIT Era Not Over, Exec Says

April 19, 2007
The era of publicly traded real estate is not over, as some have speculated following the privatization of a number of real estate investment trusts, and the REIT structure is likely to gain more favor as it catches on worldwide, according to Sam Zell, chairman of Equity Group Investments.

Speaking at an annual REIT symposium in New York sponsored by New York University's Real Estate Institute, Mr. Zell said he expects U.S. real estate markets to be positive for the rest of 2007. The first quarter of 2009 is when he expects any negative developments, considering that a new president will be in office (and new presidents "tend to take medicine early") and that it will be the tail end of a very strong period of recovery. He noted that he did not sell Equity Office Properties in a bid to cash in at the top of the cycle and to "get out before they bring in the troops." At two different panel sessions at the symposium, eight of 11 panelists indicated that they expect the wave of mergers and acquisitions in the REIT world to continue.

NovaStar Eyes 'Strategic' Options

April 12, 2007
NovaStar Financial, the nation's 16th-largest subprime funder, has revealed that it may sell the company and has hired Deutsche Bank Securities as its adviser.

The Kansas City, Mo.-based lender also said it has received a $100 million loan commitment from Wachovia Capital Markets LLC. About three weeks ago, the publicly traded real estate investment trust cut its work force by 17%, or 350 positions, citing the changing landscape of the mortgage industry. Last week it said it would close its warehouse lending division. The company is being sued by investors who have seen the value of their sales get hammered over the past few months.

American Home Share Price Still Falling

April 10, 2007
American Home Mortgage, a real estate investment trust based in Melville, N.Y., saw its stock price continue to fall on Tuesday, sliding another 6%.

At deadline time its shares were trading at $20.53, compared with a 52-week high of $36.96. On Friday afternoon the publicly traded mortgage REIT forecast lower earnings for the first quarter and full year, citing rising delinquencies on its alternative-A loans, among other things. "While nonperforming loans increased during the quarter, the company did experience a decline in early-stage delinquencies, with loans in early-stage delinquencies lower at the end of the first quarter than at year-end 2006," AHM said in a statement. On Monday, the lender's shares fell 15% to $21.92. The stock market was closed on Friday.

Fieldstone Cutting Work Force

April 9, 2007
In a cost-cutting move, Fieldstone Investment Corp. says it is reducing its work force by 125 employees and consolidating its wholesale operations into three offices.

The subprime mortgage banking company, based in Columbia, Md., is planning to close six wholesale operating centers along with nine of its smaller retail offices. "In all, Fieldstone expects the operations consolidation and retail branch closings to reduce its work force by approximately 125 persons, or 14% of its work force, and is currently evaluating the size of the home office staff reductions," the publicly traded company said. Fieldstone originated $5.4 billion in mortgages in 2006, but the real estate investment trust reported a $68.4 million loss for the year and is trying to reduce its cost structure. The REIT can be found online at http://www.fieldstoneinvestment.com.

Citi Renews ACB Partnership

April 5, 2007
CitiMortgage has renewed its partnership with America's Community Bankers' for-profit subsidiary to continue providing ACB members with secondary-market execution and services.

"This agreement rewards our members for delivering high-quality loans, giving them a competitive edge in the marketplace," said William Kroll, ACB Business Partners president and chief executive. In other news, ACB has appointed Barbara L. Shyoff to be senior vice president/ legislative counsel and run the trade group's lobbying shop. She was previously special counsel in the Office of Thrift Supervision's regulation and legislation division.

Fannie Plans Hundreds of Layoffs

April 4, 2007
Fannie Mae says it will reduce its work force by several hundred full-time employees as part of an effort to cut operating expenses by $200 million in 2007.

"While determinations are still being made as we undertake this restructuring, we anticipate that the company will have several hundred fewer full-time employees at the end of this year," Fannie spokesman Brian Faith said. The publicly traded company has 6,500 full-time employees, and its operating expenses have ballooned in the aftermath of an accounting scandal that has forced it to restate earnings. Now the government-sponsored enterprise is trying to catch up and file timely financial reports with the Securities and Exchange Commission. Fannie's administrative expenses totaled $3.1 billion in 2006, including $850 million in costs associated with the restatement process and related regulatory examinations, investigations, and litigation defense, according to a Feb. 27 SEC filing. The GSE also wants to cut back on contractors who are working on the restatement process. Fannie Mae can be found online at http://www.fanniemae.com.

80/20 Stated EPDs Hurt Pennsylvania Bank

March 28, 2007
Fulton Financial Corp. of Pennsylvania said it will take a $5.5 million pretax charge in the first quarter because of early payment defaults on 80/20 stated-income loans it sold into the secondary market.

The publicly traded depository said it has been asked to repurchase $22 million in 80/20 loans, all of which were funded last year. (The minimum Fair Isaac & Co. credit score on the product was 620.) Another $72 million in these loans are "subject to potential repurchase," it said in a statement. The bank suspended the loan program in February after having originated $247 million in such loans in 2006, and another $22 million this year. The loans were sold to secondary investors by FFC's affiliate, Resource Bank. The investors were not identified. FFC is based in Lancaster.

Fannie Terminates New Century as Seller/Servicer

March 21, 2007
Fannie Mae has cut ties with ailing subprime lender New Century Financial Corp., informing the company that it can no longer sell loans to the government-sponsored enterprise or service its mortgages.

New Century, which is expected to file for bankruptcy protection, disclosed the news March 20 in a filing with the Securities and Exchange Commission. The Irvine, Calif.-based wholesaler also said it has been hit with cease-and-desist orders from several states, including California, Florida, and New York. The C&Ds accuse the company of not funding loans after closing. (New Century has not funded a mortgage in at least two weeks.) All of its warehouse providers cut off credit to the company. It services about $40 billion in loans, according to the Quarterly Data Report. One investment adviser told MortgageWire that New Century has enough cash to last 60 days. Its stock was delisted by the New York Stock Exchange and now trades on the "pink sheets." The companies can be found online at http://www.fanniemae.com and http://www.ncen.com.

People's Choice Files for Bankruptcy

March 21, 2007
Subprime lender People's Choice Financial Corp. and affiliates -- which had hoped to go public one day -- filed for bankruptcy protection late Monday, leaving behind as unsecured creditors several banks and Wall Street warehouse lenders.

In total, warehouse providers -- including GMAC-RFC and Merrill Lynch -- are owed close to $100 million, all of it unsecured. The Irvine, Calif.-based wholesaler could not be reached for comment. Its chief executive is Neil Kornsweit, a former top executive at Aames Financial. In its March 19 issue, National Mortgage News broke the news that People's Choice was in financial trouble. According to court documents relating to People's Choice and affiliates, its warehouse-related unsecured creditors include: GMAC-RFC ($17.4 million owed), EMC Mortgage ($15.3 million), Merrill Lynch ($14.6 million), and Washington Mutual ($14.2 million), among others. EMC is owned by Bear Stearns. Subprime lender Option One Mortgage of Irvine, a competitor, is owed $361,327 and is listed as both a landlord and "trade vendor." Sources told MortgageWire that People's Choice, which had not funded a loan in two weeks, is in the process of closing offices and letting workers go. The company, a privately held real estate investment trust, ranked among the top 40 subprime lenders in the United States, according to the Quarterly Data Report.

MF Developer Reports '06 Profits

March 20, 2007
Tarragon Corp., a New York-based developer of multifamily housing, has reported net income of $9.8 million ($0.31 per share) for 2006, compared with $88.5 million ($2.93 per share) for 2005.

The company reported that its 2006 income was "adversely impacted by unusual items," which include "market-driven margin reductions and impairments" on cost of sales. Adjustments were made to reflect price reductions, slower absorption, and increased marketing costs on unsold units, Tarragon said. Tarragon is also proposing to spin off its homebuilding division as a separate, publicly traded company, while continuing to operate its real estate services business as Sage Residential. For the fourth quarter, Tarragon reported a net loss of $25.1 million ($0.89 per share), compared with net income of $7.8 million ($0.26 per share) for the fourth quarter of 2005. The company can be found online at http://www.tarragonsite.com.

FTC Cites Foreclosure Guidelines

March 19, 2007
Servicers should not start foreclosure proceedings until a borrower has missed three monthly payments of principal and interest, according to a Federal Trade Commission attorney.

That is a "key provision" in the Fairbanks settlement agreement, FTC attorney Allison Brown told a National Community Reinvestment Coalition conference. The 2003 settlement spelled out best practices that the FTC expects all servicers to follow. And the consumer protection agency said it does not want to find servicers charging delinquent borrowers a lot of fees and using those unpaid fees as justification for initiating a foreclosure. The FTC is also concerned that some forbearance agreements are unworkable, because the borrowers are expected to make double payments when they resume making their monthly payments. "That is an area we are looking at," Ms. Brown said, as well as "how we can encourage better forbearance practices."

NHEMA Members Fall Out of MBA

March 15, 2007
When the National Home Equity Mortgage Association merged into the larger Mortgage Bankers Association late last year, the MBA registered a net gain of 77 new members -- but almost half those companies have never paid dues to their new trade master.

The MBA said the 37 firms in question likely failed. "They just didn't make it," said Paul Green, the MBA's senior vice president of corporate relations. Mr. Green noted that NHEMA also had its billing cycle last summer -- while the merger was under way. The deal closed in November. NHEMA had 192 members, but 115 were already members of MBA. According to figures compiled by National Mortgage News, at least 30 nonprime-related shops or wholesale platforms have shut down since last year. (See the March 19 issue of NMN for details.)

MBA: Commercial/MF Debt Nearing $3T

March 14, 2007
Commercial and multifamily mortgage debt outstanding went up to $2.95 trillion at the end of 2006, a 12.7% increase from the level recorded at the end of 2005, according to the Mortgage Bankers Association.

The Washington-based mortgage bankers trade group said that, based on an analysis of Federal Reserve data, commercial and multifamily mortgage debt outstanding increased by $99 billion, or 3.5%, in the fourth quarter alone. Multifamily debt outstanding stood at $731 billion at the end of 2006, an increase of 7.5% over the year and of 2.1% ($15 billion) in the fourth quarter alone. "The most recent Federal Reserve Beige Book characterized commercial real estate markets as strong, solid, and firming," said Jamie Woodwell, the MBA's senior director for commercial/multifamily research. "We also see low delinquencies and other signs of mortgage performance continuing to show strength." Commercial banks continue to hold the largest share of commercial/multifamily mortgages, with almost $1.3 trillion, or 44% of the total, while Fannie Mae, Freddie Mac, and Ginnie Mae hold the largest share, at 30%, of the multifamily debt outstanding.

Icahn Affiliates to Make Tender Offer to WCI

March 14, 2007
High River Limited Partnership and entities managed by Icahn Management LP, intend to initiate an "any and all" tender offer, not subject to any minimum condition, for the common stock of WCI Communities Inc. at $22 per share.

The tender offer will not be subject to due diligence or financing. "We believe that the board and CEO of WCI have not enabled the company to maximize the potential of its unique set of assets, which trade at a discount to their GAAP book value," said Mr. Icahn. "If elected, we expect our slate, in a manner consistent with their fiduciary duties, to ensure these unique assets are properly marshaled through the current residential housing industry downturn." WCI's board and chief executive officer have stated emphatically, and more than once, that now is not the time to sell the company.

VirPack Receives Patent

March 13, 2007
Vienna, Va.-based VirPack has been awarded a patent for its document management and imaging technology, MortgageWire has learned.

"This certifies that the e-packaging and e-delivery technology pioneered by VirPack is truly unique and provides value to both the lender and investor," stated VirPack president and CEO Michael Coar. The VirPack e-package contains all data, documents, images and other files permitting a business to share loan and other files with their partners, allowing fully automated processing through a free downloadable browser. The patent number is 7,191,392, issued by the U.S. Patent and Trademark Office.

NAHREP Favors Accountability Standard

March 9, 2007
There is a consensus within the National Association of Hispanic Real Estate Professionals that mortgage wholesalers and brokers should be held accountable for the loans they originate, but the trade group is still in discussions on how to formulate a suitability standard.

"Clearly the lenders need to have more accountability with respect to the types of loans they deliver to consumers," said NAHREP executive committee member Gary Acosta. The San Diego mortgage broker noted that mortgage brokers and other lenders at the point of sale should be more accountable than wholesalers. But wholesalers have the ability to ensure that a loan has some "tangible benefit" for the consumer, Mr. Acosta said. Meanwhile, NAHREP released a survey at its annual legislative conference in Washington showing that 65% of its members are counseling homeowners who can no longer afford their house payments due to an upward adjusting mortgage. Large majorities of the 500 respondents favor capping mortgage broker compensation and eliminating lender incentives for making loans with prepayment penalties. Nearly 50% of the respondents said they are not aware of Fannie Mae's and Freddie Mac's community-based lending programs.

Sandler Suspends Coverage of Countrywide

March 9, 2007
Investment banker Sandler O'Neill has suspended coverage of Countrywide Financial Corp., a bellwether stock for the mortgage industry, citing a "change in research department personnel."

Sandler analyst Mike McMahon has covered Countrywide -- the nation's largest mortgage banker -- for several years. He has consistently been bullish on CFC. Mr. McMahon could not be reached for comment as of MortgageWire's deadline. His phone at Sandler did not pick up. In addition to Countrywide, Sandler suspended coverage on 18 publicly traded financial institutions, most of which are community banks.

Zacks Spotlights American Home

March 8, 2007
Zacks Investment Research, Chicago, has put American Home Mortgage Investment Corp., a lender based in Melville, N.Y., on its High Rank Value Profit Track list.

The company said value investors look for stocks that trade at a price-to-earnings multiple below 15 and a price-to-book multiple below 3. The list is created from stocks that meet those criteria and are ranked by Zacks as either "#1 Strong Buy" or "#2 Buy." American Home had a P/E multiple of 5.21 and a P/B multiple of 1.19 as of the morning of March 8. Zacks noted that American Home's fourth-quarter earnings amounted to $1.21 per share, well above the fourth-quarter 2005 EPS of $0.27, beating the consensus estimate by nearly 2%.

'Activist' New Century Director Departs

March 8, 2007
David Einhorn, considered to be an "activist" shareholder of the struggling New Century Financial Corp., resigned from the company late Wednesday night, according to a new filing with the Securities and Exchange Commission.

The resignation comes amid rumors that the subprime funder is negotiating a new warehouse line of credit with a major Wall Street firm to avoid being in violation of its warehouse covenants. As of MortgageWire's deadline, the company could not be reached for comment. Mr. Einhorn's hedge fund, Greenlight Capital, owns 3.49 million shares of New Century, or 6.3% of the company. Over the past week New Century's share price has plunged, causing huge paper losses for Greenlight. The subprime giant's stock now trades at just over $5, compared with a 52-week high of almost $52. New Century is the focus of a criminal probe by the U.S. attorney's office in central California regarding trading in the company's securities and errors tied to its accounting for loan repurchases.

Amex Trading Options on RAIT

March 7, 2007
The American Stock Exchange has launched trading in options on RAIT Financial Trust, a real estate investment trust based in Philadelphia.

The options were scheduled to open with strike prices of 25-30-35 and position limits of 7.5 million shares. The specialist will be Group One Trading LP. The options will trade on a January expiration cycle. Amex can be found online at http://www.amex.com, and the REIT can be found at http://www.raitft.com.

Countrywide Insiders Sold $288M in Stock

March 7, 2007
Amid the meltdown in the subprime sector, insiders at Countrywide Financial Corp. -- including chairman and chief executive Angelo Mozilo -- have sold 7.8 million shares over the past six months, according to figures compiled by Thomson Financial.

Based on an average share price of $37, that means insiders -- officers and directors alike -- have unloaded $288 million worth of stock. Since March 1, Mr. Mozilo has exercised options, selling 186,000 shares at a market price of $6.77 million. According to the Quarterly Data Report, Countrywide is the nation's largest subprime servicer, and third-largest funder. Countrywide recently disclosed that $22 billion, or 19%, of its subprime receivables are in some form of delinquency. Its shares now trade at $4 above its 52-week low. Its high is $45.

NYSE May Delist ECC Cap

March 6, 2007
ECC Capital Corp., the Irvine, Calif.-based real estate investment trust that sold its production operations to Bear Stearns, has been notified by the New York Stock Exchange that it has fallen below the exchange's continued listing standard related to minimum share price.

The NYSE requires firms to have a minimum average closing price of $1 per share during a 30-day period. According to Yahoo! Finance, the last time ECC shares closed above $1 was on Jan. 29. The next day the company issued a $0.24 dividend. The last time ECC even traded at $1 was on Feb. 7. The sale of Encore Credit Corp. closed on Feb. 9, with ECC keeping a mortgage investment portfolio. Since that day shares have drifted further downward, closing at $0.75 on March 5. ECC has 10 business days to submit a plan to the NYSE showing how it intends to regain compliance and meet the standards within six months. ECC said it intends to continue to communicate with NYSE regarding compliance.

Accredited Downgraded to 'Sell'

March 5, 2007
Brokerage firm Stifel Nicolaus has downgraded subprime lender Accredited Home Lenders, San Diego, from "hold" to "sell."

The downgrade came a few days after the publicly traded Accredited said it will delay its annual 10-K filing with the Securities and Exchange Commission, adding that income for 2006 will likely be $100 million less than in 2005, when it earned $155 million. Accredited, a nondepository, said the delay in filing its annual 10-K is caused by its purchase of Aames Financial, another subprime lender. The integration of Aames into Accredited has slowed the company's reporting, it told the SEC. According to the Quarterly Data Report, Accredited is the nation's 13th-largest subprime funder. In trading Monday, Accredited's share price was down 20%.

New Century Will Delay 10-K Filing

March 2, 2007
Subprime giant New Century Financial Corp., Irvine, Calif., says it expects to tell the Securities and Exchange Commission that it will delay the filing of its annual 10-K report for the year ending Dec. 31.

A few weeks ago, the publicly traded nondepository said it would report a loss for the fourth quarter and restate earnings for the previous three quarters. According to the Quarterly Data Report, New Century ranked second among all subprime originators in the fourth quarter, funding $12.2 billion in loans, an 8% decline from the level of the fourth quarter of 2005. HSBC Finance, Prospect Heights, Ill., ranked first, with $12.2 million.

Profit Outlook Affects NovaStar Stock

February 22, 2007
Subprime wholesaler NovaStar Financial, Kansas City, saw its share price fall by as much as 44% on Wednesday after a controversy over its profit outlook for the next several years.

At one point, its shares traded down to $9.80 before recovering slightly after the REIT issued a statement clarifying its outlook on "taxable" income vs. GAAP profits. The company said its stock fell dramatically after certain news stories "mistakenly" reported that the subprime lender does not expect to generate profits the next several years. NovaStar -- whose 52-week high is $38.49 -- said it "generally" will be profitable on a GAAP basis over the next several years but will show little, "if any," taxable income from 2007 to 2011. The company said accounting rules allow it to accelerate income recognition during the "early life" of its portfolio. As a REIT it must pay out 90% of its earnings in the form of dividends to shareholders. When it released fourth-quarter earnings on Tuesday -- it lost $14.4 million -- it also said it may give up its REIT status. Besides being a subprime funder it manages a $16.3 billion portfolio.

CBOT Launches Commercial RE Index

February 21, 2007
The Chicago Board of Trade has launched a new futures contract based on the Dow Jones U.S. Real Estate Index.

DJUSRE Index futures contracts are designed to help market participants capitalize on changes in the real estate sector of the stock market and better manage commercial real estate exposure. The new index is intended to accommodate the needs of institutional real estate investors and the commercial real estate market. It settles the value of the DJUSRE Index, which is comprised mostly of REITs. The CBOT also introduced three market makers for the new product including Susquehanna Investment Group, Wolverine Trading LLC and Allston Trading LLC.

C-BASS Buying Fieldstone for $260M

February 16, 2007
Credit-Based Asset Servicing and Securitization LLC -- which is backed by two mortgage insurance giants -- has agreed to pay $260 million for Fieldstone Investment Corp., Columbia, Md., a publicly traded nonprime lender.

As of midday Friday, Fieldstone's shares had almost doubled in value to just over $5 each. Fieldstone services just shy of $6 billion in loans, ranking 28th among subprime firms, according to the Quarterly Data Report. It ranks 24th among subprime lenders. C-BASS -- a specialty servicer controlled by MI giants MGIC and Radian -- said it would pay $5.53 a share for the mortgage banking REIT, which lost $37.2 million through the first nine months of last year. According to a statement issued by the companies, the per-share purchase price is subject to a $0.20 reduction "in the event Fieldstone does not complete settlement of certain litigation pending prior to the merger." The company is a defendant in at least four civil cases, involving different matters, including a shareholder suit that could cost it $19 million.

Quadra Realty Prices IPO

February 15, 2007
Quadra Realty Trust Inc., a New York-based real estate investment trust, has priced an initial public offering of 16.67 million shares of common stock at $15 per share.

Quadra said it invests in a diversified portfolio of commercial mortgage investments and related projects, including construction, mezzanine, and bridge loans, and fixed- and floating-rate whole loans, among others. The company has granted the underwriters an option to buy up to 2.5 million additional shares to cover any overallotments. The joint book-running managers for the IPO were Credit Suisse Securities (USA) LLC and Wachovia Capital Markets LLC. Quadra said its shares will trade on the New York Stock Exchange under the symbol QRR. The REIT can be found online at http://www.quadrarealty.com.

Fremont to Brokers: No More Seconds

February 14, 2007
Fremont Investment & Loan, the nation's fifth-largest subprime wholesaler, told loan brokers Tuesday that it will no longer fund second mortgages.

In an e-mail message provided to MortgageWire, Fremont predicted that its competitors will make "similar changes in the next few weeks." Seconds are used in popular "80/20" combo loan programs and "piggyback" arrangements used to avoid private mortgage insurance. The e-mail message says, "Due to general negative Industry sentiment, due to recent articles in the media, and the ripple effect in the secondary market," Fremont is making changes to its loan menu, including the immediate elimination of second mortgages. In the message, the company warns brokers that have 80/20 "combo" loan "prequals" with Fremont that they will need to contact the wholesaler to obtain new pricing. Based in Santa Monica, Calif., Fremont is a publicly traded nondepository.

Countrywide Sub Buys Assets of CCM Futures

February 13, 2007
Countrywide Financial Corp., Calabasas, Calif., has announced an agreement by one of its subsidiaries to acquire the assets and assume certain liabilities of Chicago-based CCM Futures LLC, a futures trading broker.

The terms of the deal were not disclosed. CCMF trades on the Chicago Board of Trade and the Chicago Mercantile Exchange. "The acquisition of CCMF will strengthen our existing futures Introducing Broker business by expanding our product line and customer base, while diversifying our revenue streams," said Ron Kripalani, president and chief executive officer of Countrywide Capital Markets and executive managing director of Countrywide Financial. Countrywide can be found on the Web at http://www.countrywide.com.

ACB Sub, Banks Form Mortgage Co-op

February 12, 2007
The for-profit subsidiary of America's Community Bankers and 32 member banks have formed a joint venture to achieve better secondary-market execution for their mortgage loans.

ACB Mortgage LLC, consisting of member banks from 20 states, will act as a negotiating agent with aggregators, government-sponsored enterprises, and Wall Street firms, according to Michael Young, president and chief executive of Cenlar FSB, Ewing, N.J. "This newly formed venture was created to leverage the power of joint ownership by like-minded community banks to obtain the best execution possible from a full range of secondary-market investors," Mr. Young said at ACB's annual convention in Las Vegas. The trade group's for-profit subsidiary, ACB Business Partners, has alliances with Fannie Mae, Freddie Mac, and private wholesalers. ACB can be found online at http://www.americascommunitybankers.com.

MBA Spotlights Int'l Privacy Law

February 7, 2007
Differences between privacy laws in other countries and those in the United States may affect commercial and residential market participants, according to a new report prepared for the Mortgage Bankers Association by Hunton & Williams LLP.

"In light of the global nature of information, and the ease and speed with which personal data travels around the world, businesses will need to contend with widely varied regulatory schemes worldwide," said MBA chairman-elect Kieran Quinn. The MBA said U.S. privacy laws tend to be "sectoral," affecting only certain industries, while laws overseas are often "comprehensive in scope." The trade group further noted, "Outside the European Union, where all member countries have similar data protection laws, there is little uniformity when comparing the data protection regimes of various jurisdictions."

CBOT Sets Date for RE-Based Stock Futures

February 6, 2007
The Chicago Board of Trade has designated Feb. 21 as the date of launch for its previously announced stock index futures contract based on the Dow Jones U.S. Real Estate Index.

The contract, which will allow market participants to capitalize on changes in the real estate sector of the stock market and manage their commercial real estate exposure, will settle to the value of the Dow Jones U.S. Real Estate Index, which is composed primarily of real estate investment trusts. The CBOT can be found online at http://www.cbot.com.

Wachovia Still Tops Commercial Servicer List

February 5, 2007
Wachovia Securities has retained its position at the top of the Mortgage Bankers Association's annual ranking of commercial and multifamily mortgage loan servicers in total primary and master servicing volume, at $306.6 billion.

Following Wachovia are Capmark Finance, with $229.3 billion; Midland Loan Services, with $213.4 billion; Wells Fargo, with $132.9 billion; and KeyBank Real Estate Capital, with $105.5 billion. (These companies are also the top primary and master servicers, in the same rank order, for commercial mortgage-backed securities, except that Bank of America NA ranks fifth instead of KeyBank.) Rankings of servicing for life company loans place GEMSA Loan Services at the head of the list, the trade group reported, followed by Prudential Asset Resources, Midland, NorthMarq Capital, and Capmark. Midland is ranked No. 1 for servicing of Fannie Mae and Freddie Mac loans, followed by Deutsche Bank Commercial Real Estate, Wachovia, Capmark, and ARCS Commercial Mortgage. Wachovia is No. 1 for servicing of commercial bank and savings institution loans. The MBA can be found online at http://www.mortgagebankers.org.

Tech M&A Activity on the Rise

February 1, 2007
Global M&A activity totaled $3.79 trillion last year, with technology mergers and acquisitions accounting for $612 billion, according to Scott Cooley, principal at Cooley Consulting.

Speaking at the 10th Annual SourceMedia Mortgage Technology Conference, Tempe, Ariz., Mr. Cooley said most technology buyers looking for an acquisition target are in the market for return on investment, strategic, or cross-sell opportunities. They are seeking to fill a hole in their current offering, to roll up like firms, or to buy a technology provider instead of building that technology on their own, he said. In the M&A process, Mr. Cooley stressed the importance of talking to every potential buyer; creating a company book with all the company's trade secrets for use by potential buyers; giving certain buyers special treatment; and qualifying the buyer on a variety of levels. The successful acquisition, according to Mr. Cooley, includes developing a stronger management team, properly evaluating joint business plans, taking advantage of synergies, and proving out growth.

CRE Service Provider Prices IPO

January 31, 2007
HFF Inc., a Pittsburgh-based provider of commercial real estate and capital market services, has announced the pricing of its initial public offering of 14.3 million shares of class A common stock at $18 per share.

The underwriters have been granted an option to buy up to 2.145 million additional shares to cover any overallotments. The joint book-running managers of the IPO are Goldman, Sachs & Co. and Morgan Stanley & Co. HFF, the parent company of Holliday Fenoglio Fowler LP and HFF Securities LP, said the shares are slated to trade on the New York Stock Exchange under the symbol HF.

Trio Launch Global RE Securities Fund

January 25, 2007
Dow Jones Indexes, Wilshire Associates, and Wells Real Estate Funds have announced the launch of Wells' newest mutual fund, the first licensed to track the Dow Jones Wilshire Global Real Estate Securities Index.

The Wells Dow Jones Wilshire Global RESI Index Fund marks the first time the full global RE securities index -- including publicly traded securities of about 240 real estate operating companies and real estate investment trusts in 24 countries -- has been licensed for an investment product, the companies said. The new mutual fund will seek to provide corresponding investment results by investing in the stocks included in the index. "We're seeing an explosion of interest in REITs and other investment vehicles around the world," said Leo Wells, president of Wells Real Estate Funds. " .... [T]wo dozen countries have created, or are considering, REIT-like structures for investors. We think the time is right to bring this global opportunity to Wells investors." The companies can be found online at http://www.djindexes.com, http://www.wilshire.com, and http://www.wellsref.com.

New Process for FHLBank Appointments?

January 19, 2007
The Federal Housing Finance Board is moving ahead with a new process for appointing outside directors to the boards of the 12 Federal Home Loan Banks that is designed to be a merit-based system aimed at avoiding political interference.

Effective immediately, the new procedures allow the individual FHLBanks to identify two candidates for each public interest director seat and submit their names and qualifications to the Finance Board for approval. The Finance Board reserves the right to approve one candidate or reject both under an interim rule approved Jan. 18. "The process of initially identifying such persons and ascertaining their willingness to serve is best executed by each individual bank," Finance Board Chairman Ronald Rosenfeld said. It is understood that this process is widely supported by the FHLBanks and banking trade groups that represent members of the banks. The Bush administration has blocked appointments for the past three years, and there are currently 57 vacant public interest director seats.

Maryland Lender Closes

January 18, 2007
Bay Capital, a Maryland-based mortgage banking firm, has closed its doors after its parent company declared itself insolvent.

At deadline time, no details were available on Bay's production. The parent firm, Clear Choice Financial, Tempe, Ariz., was traded on the "pink sheets." CCF said in a statement that it had closed two offices belonging to Bay, one in Owings Mills, Md., and another in Irvine, Calif. Roughly 120 out of 150 workers lost their jobs. The statement says Bay was "forced" to shut down its warehouse lines. David Birdsell was recently named chief restructuring officer to the company, and the law firm of Keller Rohrback was hired as bankruptcy counsel. (For more details, see the Jan. 22 issue of National Mortgage News.)

MBA: Hundreds of Lenders Could Fail

January 17, 2007
A "couple of hundred" mortgage banking firms could fail in the next year or so as the industry works out its excess capacity, according to the chief economist for the Mortgage Bankers Association.

"It could be a significant" number of firms, said the MBA's Doug Duncan at a forecast conference hosted for the media. "There's a lot of capacity in the industry," he said. The trade group, though, does not think residential production will fall off the cliff this year. The MBA is forecasting that home lenders of all stripes will fund $2.4 trillion in loans this year -- 45% of it refinancings -- compared with $2.5 trillion in 2006. (The MBA's volume number for 2006 differs from that of the Quarterly Data Report, which found lenders funded about $3 trillion in 2006.) Over the past three months several mortgage firms have exited the business, either through merger or failure. (For a partial listing, see the Jan. 15 issue of National Mortgage News.) The MBA can be found online at http://www.mortgagebankers.org.

CBOT Launches RE-Based Stock Futures

January 9, 2007
The Chicago Board of Trade is launching a stock index futures contract in the first quarter based on the Dow Jones U.S. Real Estate Index.

The contract, which will allow commercial real estate investors to take a view on the market and manage their exposures, will settle to the value of the Dow Jones U.S. Real Estate Index, which is composed primarily of real estate investment trusts. The CBOT said it believes that REIT securities reflect the underlying U.S. commercial real estate market because market fundamentals are all reflected in REIT share prices. "Commercial real estate remains one of the largest classes of tradable assets not currently served by an exchange-traded futures instrument," said Robert D. Ray, senior vice president of business development at the CBOT. "We developed this contract after researching the U.S. commercial real estate market and conducting various conversations with real estate portfolio managers and pension funds who seek new avenues for managing the risks associated with property ownership. Moreover, since the underlying instrument is an equity index, it also provides investors with an efficient means to express their views on movements in the real estate market, with the added advantages of transparency, leverage, liquidity and the ability to more efficiently short the market." The CBOT can be found online at http://www.cbot.com.

Coalition: Don't Treat Hybrid ARMs as Exotics

January 8, 2007
Industry groups are warning a group of senators that bringing hybrid adjustable-rate mortgages under the nontraditional mortgage guidance could adversely affect existing homeowners with ARMs, increase defaults, and even put downward pressure on home prices.

The Consumer Mortgage Coalition has sent the first letter to the six senators who are urging bank regulators to include hybrid ARMs, such as 2/28 ARMs, under the nontraditional mortgage underwriting guidance. Other trade groups are expected to send letters soon. The CMC warns that such an expansion could harm existing ARM borrowers who are trying to refinance. "Some borrowers would be unable to refinance existing loans because they no longer qualify for a loan -- not because the lending industry has changed its mind about their qualifications -- but because the government had made an arbitrary and unjustified decision to require all lenders to tighten their standards," CMC executive directive Anne Canfield says. The CMC contends that lenders have extensive experience in underwriting ARMs and that tighter underwriting standards are "unjustified." The CMC also warns that tightening underwriting on all ARMs could reduce the pool of potential homebuyers and contribute to downward pressures on home prices.

Hanover Managing Director Resigns

January 5, 2007
Hanover Capital Mortgage Holdings Inc., a real estate investment trust, says senior managing director George Ostendorf has resigned from the company, effective Dec. 29.

Mr. Ostendorf, who concentrated his efforts on Hanover's taxable subsidiaries (which include due-diligence reviews), said he is parting on good terms. He was a co-founder of Hanover's predecessor firm, which commenced business in 1989. The REIT primarily invests in subordinate mortgage-backed securities. Company chief executive John Burchett said Mr. Ostendorf "has been a valued member of our management team and our board since inception," but noted that the firm has reduced "many activities of its taxable subsidiaries." The publicly traded Hanover is based in Edison, N.J. Its stock is trading near a 52-week low. Mr. Ostendorf told MortgageWire that he will still have a "business relationship" with the firm but is looking at other opportunities.

No Sign of Reported Suit Against Countrywide

January 5, 2007
A New York law firm says it has "commenced" a shareholder lawsuit against Countrywide Financial Corp., but so far there is no evidence a lawsuit has been filed.

As previously reported, Stull, Stull & Brody alleges that certain Countrywide executives and directors backdated and "manipulated the prices of stock option grants." But Countrywide officials have not seen a complaint, and attorneys at the law firm have not responded to inquiries about the supposed filing. "The company has not seen a copy of any lawsuit brought by Stull, Stull and Brody, and we generally do not comment on pending litigation matters," Countrywide said in a statement. It added: "However, we believe the allegations laid out in the news release to be improper and lacking any merit and if the suit moves forward we will defend against it vigorously." The publicly traded company, based in Calabasas, Calif., can be found online at http://www.countrywide.com.

NAREIT: REITs Record 34% Return

January 3, 2007
The real estate investment trust sector recorded a total return of 34.35% for 2006, according to the National Association of Real Estate Investment Trusts.

The return, based on the FTSE NAREIT index, puts REITs ahead of all other major U.S. equity market benchmarks for the seventh year in a row, the Washington-based REIT trade association said. NAREIT attributed the robust showing to strong fundamentals across the U.S. commercial real estate sector; increasing portfolio allocations to commercial real estate, especially among large institutional investors; strong mergers-and-acquisitions activity; and steady economic growth. Office properties had the best showing in 2006, with a total return of 45.22%. Health care came in next, at 44.55%, followed by self-storage, at 40.95%, and apartments, at 39.95%. NAREIT can be found online at http://www.nareit.com.

FHFB Ditches Controversial Cap Rule

December 22, 2006
The Federal Housing Finance Board has ditched a controversial capital proposal that would have required Federal Home Loan Banks to cut dividends by 50% if they did not meet a high level of retained earnings.

Finance Board Chairman Ronald Rosenfeld agreed with critics that the proposal was "flawed" and said he is now committed to working on a way to tie the level of retained earnings to the risk profile of the individual FHLBanks. As originally proposed last March, FHLBanks had to maintain retained earnings of a least $50 million plus 1% of non-advance assets, which created widespread opposition from banking trade groups and the FHLBank community. Board members Allan Mendelowitz and Geoff Bacino said they are committed to strengthening retained earnings, but not in a way that restricts dividends. "Whatever route we choose, it is this board member's opinion that the Finance Board should use dividend limitations only in extreme circumstances," Mr. Bacino said at a Dec. 22 board meeting. The Finance Board did approve a watered-down capital rule at the meeting. The final rule simply prohibits FHLBanks from paying dividends in the form of stock if they have excess stock that exceeds 1% of their assets. This rule will affect only the Cincinnati FHLBank, one FHFB staffer said.

Feds Warned About Applying Guidance to 2/28s

December 20, 2006
Industry groups are warning federal banking regulators that any sudden action to expand the nontraditional mortgage guidance to include "2/28" adjustable-rate mortgages could create a "major disruption" in the primary and secondary mortgage markets.

"For these reasons and others, we believe that a full economic analysis and a notice and comment process is essential before consideration of an expansion of the guidance to hybrid ARMs," says a Dec. 20 letter signed by the nine trade groups. Federal regulators appear to be divided on the issue, but they are under pressure from Congress and consumer groups to clarify that the nontraditional mortgage underwriting guidance applies to hybrids like 2/28 and 3/27 ARMs (which have initial fixed-rate periods of two and three years, respectively). But the trade groups stress that they would have "strong concerns" about such an expansion of the guidance without a careful and deliberative process.

Morgan Slashes 170 Jobs at Saxon; CEO Gone

December 20, 2006
Morgan Stanley has slashed 170 jobs at its newly acquired subprime unit, Saxon Mortgage, including president and chief executive Mike Sawyer, MortgageWire has learned.

One source familiar with Saxon said senior managers Jeff Parkhurst (wholesale), John Trapp (underwriting), and Dick Shepherd (legal) have also left the company. A spokesman for Morgan Stanley confirmed the job cuts. The investment banker officially took control of the publicly traded Saxon Mortgage on Dec. 4. The Richmond, Va.-based firm ranks among the top 30 subprime lenders and servicers, according to the Quarterly Data Report. Kevin Rodman, a Morgan Stanley executive, will replace Mr. Sawyer. The Morgan spokesman said Saxon will focus its efforts on "wholesale lending and servicing." It recently closed Saxon's retail division and is consolidating different servicing locations into its platform in Fort Worth, Texas.

NAR: CRE Setting Investment Record

December 15, 2006
The commercial real estate markets are setting another record for investment this year, although performance varies among the CRE sectors, according to the National Association of Realtors.

More than $236 billion in CRE transaction volume (outside the hotel sector, and excluding properties valued at less than $5 million) was reported in the first 10 months of 2006, up from $231.9 billion in the same period of last year, the NAR reported in its latest Commercial Real Estate Outlook. "The office and industrial markets continue to shine, supported by job growth and trade, while the rental apartment sector is seeing healthy rent increases," said NAR chief economist David Lereah. "The retail sector is essentially flat, but the hotel industry is doing better than at any time since 2001." The association can be found on the Web at http://www.realtor.org.

Fieldstone Mortgage For Sale?

December 12, 2006
Fieldstone Investment Corp., Columbia, Md., a top-25-ranked nonprime lender, has put itself on the auction block, hiring Lehman Brothers as its adviser, according to investment banking officials.

"There's definitely a book out on them," said one mergers-and-acquisitions adviser, requesting anonymity. Another investment banker confirmed this. Fieldstone president and chief executive officer Michael Sonnenfeld did not return a telephone call about the matter. The company is publicly traded. News of the sale was first reported in the Dec. 11 issue of National Mortgage News.

MBA: Commercial/MF Originations Fall

December 5, 2006
Pointing to a slowdown in activity, originations of commercial and multifamily mortgage loans fell 6% in the third quarter from the level recorded a year earlier, according to the Mortgage Bankers Association.

Loan originations for conduits, life insurance companies, and credit companies saw the biggest dropoffs, leading the third-quarter decline, the trade group said. All the major property types saw origination declines, with only hotel properties bucking the trend with a 5% increase. However, third-quarter loan originations were up 5% compared with those in the second quarter, and originations through the third quarter remained higher than at the same time last year. "Mortgage bankers' commercial/multifamily origination activity is down compared to last year's third quarter, but origination levels remain extremely strong," noted Jamie Woodwell, the MBA's senior director of commercial/multifamily research. The MBA can be found online at http://www.mortgagebankers.org.

CRE Barometer Reaches Highest Level Since 1990

November 22, 2006
A leading indicator for commercial real estate market activity rose 0.4% in the third quarter to a 120.1 reading, the highest level since 1990, the National Association of Realtors reports.

The Washington-based trade association said this means that the sector is poised for continued growth, with net absorption of industrial and office space improving in the next six to nine months. Also, completions of overall retail, office, warehouse and lodging structures are expected to rise. The NAR expects leasing and sales activity in the first quarter of 2007 to be 2.9% higher than in the first quarter of 2006. David Lereah, NAR's chief economist, noted, "Although we have a strong uptrend in the commercial sectors, the rise in the index over the last two quarters shows a lower rate of expansion in comparison with late 2005 and early 2006. This means that commercial sectors will continue to grow, but at a more modest pace." The NAR index incorporates 13 variables that are seen as reflecting future commercial real estate market activity, with each given a suitable weighing in the index.

Mini-Shake-Up at LendingTree's Mortgage Unit

November 17, 2006
Home Loan Center, Irvine, Calif., the mortgage arm of LendingTree LLC, has dismissed its head of production, and another executive, MortgageWire has learned.

A source familiar with the situation confirmed that production chief Sean Wilson has left the firm along with Peter McDonald, who was described by the source as being "just shy of executive level." A spokeswoman for LendingTree declined to comment on the situation. LendingTree, an online exchange that boasts it can get the best loan rate for consumers, bought Home Loan Center, a mortgage banker, in September 2004. Last month, a class action lawsuit was filed against both LendingTree and HLC alleging that there is no competition at LendingTree, and that the company uses the website to generate leads for HLC. LendingTree argues that the suit is without merit and has vowed to fight it vigorously. The two companies are owned by the publicly traded IAC/Interactive, New York, whose chief executive officer is media titan Barry Diller.

ECC/Encore Takes Huge Loss

November 15, 2006
Subprime lender ECC Capital Corp., Irvine, Calif., posted a stunning $54 million loss in the third quarter, citing loan buybacks and early payment defaults.

Through the first nine months of the year, the publicly traded nondepository lost almost $80 million. In October, investment banker Bear Stearns & Co. agreed to purchase the money-losing subprime production arm of ECC Capital. In an interview with MortgageWire, a Bear Stearns spokeswoman denied that there were any buyback issues between the Wall Street firm and Encore Credit Corp., the mortgage unit of ECC. (Bear had been warehousing and purchasing loans from Encore.) In its earnings statement, ECC said it is continuing to "experience higher levels of repurchase claims generally relating to early payment defaults." Almost 6% of Encore's loans are in foreclosure. The company also has a 30-plus day delinquency rate of 3.3%. (For more details, see the Nov. 20 issue of National Mortgage News.

NRMLA Launches New Website

November 13, 2006
The National Reverse Mortgage Lenders Association has announced the development of a new trade website, NRMLAOnline.org, that it terms "a comprehensive resource for lenders that are adding new sales staff or just entering the business and want to know how to be successful."

The new site features a Reference/Publications section with links to articles on such topics as getting started in the reverse mortgage business; marketing and origination; processing and underwriting; and industry statistics. Other features include: a Vendor Directory with contact information for NRMLA members that provide ancillary services such as title insurance; a NRMLA section with links to membership information and the association's Code of Conduct and Best Practices; and an Events section with information on programs and conferences. The new site can be found at http://www.nrmlaonline.org.

Fidelity Minority Equityholders Sell Stock

November 10, 2006
Meanwhile, Fidelity National Information Services announced the sale of about 5.55 million shares of the company's common stock by its minority equity shareholders in a secondary public offering.

The shares were sold in a block trade after the close of trading Nov. 9 by Thomas H. Lee Partners, Texas Pacific Group, and Evercore Inc. Bear, Stearns & Co. agreed to purchase the shares and then sell them to public investors.

Fidelity Completes Complicated Split

November 10, 2006
Fidelity National Information Services has completed its acquisition of Fidelity National Financial Inc., Jacksonville, Fla., a major step in a complicated transaction that splits FNF's title insurance and information service businesses into two separate companies.

Until now, FNF had been the majority owner of two other publicly traded firms, FNIS and Fidelity National Title Group Inc. As part of the transaction, most of FNF's assets were transferred to Fidelity National Title and the shell that remains of FNF was merged with FNIS. FNF shareholders received slightly over one-half of one share of FNIS for each FNF share. The last day of trading for the old FNF shares was Nov. 9. Meanwhile, Fidelity National Title is changing its name to Fidelity National Financial Inc., and its ticker symbol is changing to FNF effective Nov. 10. FNIS can be found online at http://www.fidelityinfoservices.com.

BRT Boosts Credit Facility

November 3, 2006
BRT Realty Trust, a real estate investment trust based in Great Neck, N.Y., has reported closing on an amendment to its credit facility that boosts its line of credit from $155 million to $185 million.

The facility is provided by North Fork Bank, VNB New York Corp., Signature Bank, and Manufacturers and Traders Trust Co., the company said. It has a maturity date of Feb. 1, 2008, and provides for two one-year renewal options. "The line of credit is secured primarily by mortgage receivables held by BRT, and the maximum availability is contingent on the collateral posted from time to time," the company said. BRT, a mortgage REIT, can be found online at http://www.brtrealty.com.

Mortgage Jobs Rise

November 3, 2006
Mortgage lenders added 2,600 full-time employees to their payrolls in September, according to a government report, despite a slowdown in lending in the third quarter.

The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector increased from a seasonally adjusted annual rate of 501,900 in August to 504,500 in September. Preliminary results from a National Mortgage News survey show that some top lenders experienced loan production declines of 30% or more, compared with loan volumes of a year earlier. Refinancing activity has remained fairly strong, at 40% of mortgage applications, according to a Mortgage Bankers Association survey. But home sales have been declining, and Friday's jobs report shows a sharp drop in construction jobs. While the homebuilders have been holding on to their core employees, the BLS reported that concrete contractors, plumbers, and other specialty trades cut 17,300 employees in September and another 30,700 employees in October. The BLS can be found online at http://stats.bls.gov.

FBR Touts PMI, Radian, MGIC

October 31, 2006
A report from Friedman, Billings, Ramsey & Co., Arlington, Va., says the company continues to recommend that investors purchase the stocks of PMI Group, Walnut Creek, Calif., Radian Group, Milwaukee, and MGIC Investment Corp., Milwaukee.

FBR cited data from the September 2006 Mortgage Insurance Companies of America report [see previous item] that show a 1.0% gain in primary insurance in force, making it 11 straight months of growth. The MICA data do not include information from Radian, which is not a member of the trade group. "Year to date, insurance in force has increased an impressive 5%," FBR said. "Persistency also improved from 68.7% to 69.8%. Despite the continue growth in the top-line revenue drivers, investors' concerns remain focused on the credit side of the story, and 3Q06 earnings results did not provide much comfort." Another positive factor, FBR said, was the 72.3% cure/default ratio for September, down slightly from what it termed a "surprisingly strong" 74.4% in August and slightly higher than the 72.1% recorded in September 2005. The MIs have also been regaining market share from piggyback loan products. FBR noted that investors have shunned the stocks. But trading at 1.1 times tangible book value, "we believe that the stocks offer an attractive opportunity," the company said.

CAMB Targeting Abusive Lending Practices

October 27, 2006
The California Association of Mortgage Brokers is promoting what it terms "a comprehensive solution to curbing abusive lending practices."

The trade group has issued a "best-practices guide" and conducted a conference call on the subject. "Mortgage brokers are the bridge for consumers in the loan process because they provide loan options that meet the exact needs of the borrower," said CAMB president Jack Williams. "Like a fine tailor, quality mortgage brokers go the extra mile to find a loan that fits the borrower's financial needs or objectives." The guide calls for: uniform licensing standards with mandatory pre-education, continuing education, and criminal background checks for all loan originators; updated information booklets and key disclosures to address nontraditional mortgages; the enforcement of existing abusive lending laws; workplace efforts on integrity and consumer education; and expanded financial literacy programs. Michael Faust, the CAMB's government affairs chairman, said the guide grew out of the recent dialogue over nontraditional products and abusive lending practices. But that dialogue, he said, "has broken down, with everyone taking their sides and screaming their interest points as loud as they can," affecting the ability to reach a compromise.

MLS Operators Settle With FTC

October 12, 2006
Five real estate groups have entered into consent agreements with the Federal Trade Commission to stop certain anti-competitive practices that prevent homesellers from getting their properties listed on important public websites if they use discount brokers.

The FTC alleged that real estate groups use multiple-listing services to discriminate against low-cost brokers and prevent competition. "Buying and selling a home is one of the biggest financial transactions most consumers ever make," FTC Director Jeffrey Schmidt said. "That makes it all the more important that consumers have a full range of options to pick the level of real estate services that meet their needs." MLS operators in Colorado, New Hampshire, New Jersey, Virginia, and Wisconsin entered into the consent agreements. The FTC also filed administrative complaints against two real estate groups in Michigan that refused to change their MLS rules.

Online Leads Exchange Touts Cap Infusion

October 11, 2006
LeadPoint, an online leads exchange marketplace with offices in Los Angeles and London, has obtained $2 million in series C financing from the European Founders Fund, a venture investment company.

LeadPoint said it will use the funding to drive growth in the United Kingdom and the rest of Europe. "We believe LeadPoint could be the next Ebay or Google in the B2B Internet space," said Oliver Samwer, principal of the European Founders Fund. "What is revolutionary about LeadPoint is that it brings an auction-style model to the lead generation business. Buyers can bid for the specific types of leads they are looking for and lead sellers can reach the broadest possible range of pre-screened buyers in one location, making the entire lead-gen value chain more efficient and profitable for all parties involved." Founded in 2004, LeadPoint is the world's largest online leads exchange marketplace, according to the company, and has traded over 900,000 leads in 2006. It be found online at http://www.leadpoint.com.

August 3rd-Best Month for MIs

October 2, 2006
Boosted by the highest volume of 2006 for traditional primary new mortgage insurance written, August ranked as the third-best month of the year for the private mortgage insurers.

According to the Mortgage Insurance Companies of America, the member companies of the trade group wrote $19.3 billion of primary new insurance during the month, up from $17.4 billion in July. In August 2005, the total stood at $22.2 billion. In August, the firms wrote $14.3 billion in traditional MI, surpassing the $14.1 billion recorded in June, while bulk insurance increased from $4.7 billion to $4.9 billion. Application volume increased from 116,906 in July to 135,689 in August, and new pool risk written rose from $26.9 million to $40.7 million. The cure/default ratio improved from 69.8% to 74.4%. MICA can be found online at http://www.micanews.com.

Merrill Downgrades Wachovia Stock

September 25, 2006
The stock of Wachovia Corp. was been downgraded from Buy to Neutral by Merrill Lynch.

Merrill Lynch analyst E. Najarian said the Wall Street firm has "reassessed" its view since the acquisition announcement last year regarding Golden West Financial Corp. and now sees more earnings-per-share risk. "As the mortgage cycle slows, investors are likely to remain concerned about the EPS risk of [Golden West's] two-dimensional business mix (mainly option ARMs and CDs)," the analyst said. The Golden West deal and "the realization that Wachovia may, over time, pursue more large deals" are likely to keep Wachovia at one of the lowest price/earnings ratios among banks, Merrill said. Therefore, Wachovia deserves to trade at "about a 10% discount to our large regional bank group, which implies fair value of $56-$57," the analyst opined.

Amex Trading Options on REIT

September 22, 2006
The American Stock Exchange has launched trading in options on Health Care REIT Inc., a Toledo, Ohio-based real estate investment trust.

The options opened with position limits of 7.5 million shares and will trade on a March expiration cycle, Amex said. The specialist is AGS Specialist LLC. Amex can be found online at http://www.amex.com.

MBA: Commercial/MF Debt Hits $2.76T

September 22, 2006
Commercial and multifamily mortgage debt outstanding rose to $2.764 trillion in the second quarter, a 2.8% increase from the level recorded in the first quarter, according to the Mortgage Bankers Association.

Multifamily mortgage debt outstanding alone reached $703 billion at the end of the second quarter, up 1.3% from that of the first quarter, the trade association said. "With mortgage bankers' originations up 24% in the first half of the year and servicing volumes at record levels, the industry is more efficient than ever at connecting real estate with capital," said Doug Duncan, the MBA's chief economist. Commercial banks hold the largest share of commercial/multifamily mortgages, at 44% of the total (including "commercial and industrial" loans, as well as loans on income-producing properties). Commercial mortgage-backed securities pools are next, holding 20% of the total, followed by life insurance companies, with 10% of the total. Considering just multifamily mortgages, the government-sponsored enterprises and Ginnie Mae hold the largest share of multifamily mortgages, at 30% of total multifamily debt outstanding. The MBA based its statistics on an analysis of Federal Reserve Board flow-of-funds data. The association can be found online at http://www.mortgagebankers.org.

CBOT Buys Stake in Ranieri Exchange

September 15, 2006
The Chicago Board of Trade has announced a $1 million investment in ROOT, a commodities exchange for Internet-generated consumer leads co-founded by Lewis Ranieri, the inventor of the mortgage-backed security.

New York-based ROOT now operates a commodities exchange for Internet-generated mortgage leads, but the platform is designed to be easily adapted for use with automobile and insurance leads, among others, according to the CBOT. "More than 30 years ago, the CBOT was the first exchange to trade interest rate futures contracts," said Bernard W. Dan, president and chief executive officer of the CBOT. He said the partnership with ROOT "represents an opportunity to be at the forefront of Internet lead futures trading." Mr. Ranieri, chairman of ROOT, said the exchanges "plan to explore new financial instruments based on the underlying fundamentals of Internet advertising and lead generation." The companies can be found online at http://www.cbot.com and http://www.rootexchange.com.

Enforcement Nearing on Subprime Pricing?

September 11, 2006
The first enforcement actions relating to investigations into the pricing of 2004 subprime loans could be announced in the next three to six months, according to industry attorney Andrew Sandler.

"I would expect over the course of the next three to six months there will be at least several consent decrees or lawsuits by federal enforcement agencies and/or state attorneys general involving mortgage loan pricing that reflect the conclusion of investigations related to 2004 HMDA data," Mr. Sandler told MortgageWire. The release of 2004 Home Mortgage Disclosure Act loan pricing data last year initiated investigations and special exams of nearly 200 banks and mortgage companies for possible discriminatory pricing practices. Investigations by the Department of Justice, the Federal Trade Commission, the Department of Housing and Urban Development, federal banking regulators, and state AGs can take up to two years. Mr. Sandler, a partner in the Washington office of Skadden Arps, indicated that additional enforcement actions are possible. Based on the newly released 2005 HMDA data, the Federal Reserve Board referred 270 lenders to their primary regulators for further fair-lending reviews. A Fed spokeswoman said there is a lot of overlap between lenders on the 2004 list and the 270 lenders on the 2005 list.

Bond Group Seeks 9/11 Moments of Silence

September 7, 2006
The Bond Market Association has recommended that there be two moments of silence on Sept. 11 to commemorate nearly 1,000 market participants who lost their lives in the terrorist attacks on that day in 2001, among them a number of mortgage-backed securities professionals.

The association suggested that the moments of silence be observed at 8:46 a.m. EDT, the time the first of two hijacked planes involved in the attacks hit New York's World Trade Center, and 10:29 a.m. EDT, the time the second WTC tower collapsed as a result of the attacks. The group said its recommendations apply to trading of U.S. government securities, mortgage- and asset-backed securities, over-the-counter investment-grade and high-yield corporate bonds, municipal bonds, and secondary money-market trading in bankers acceptances, commercial paper, and Yankee and Euro certificates of deposit. The association can be found online at http://www.bondmarkets.com.

Zacks Still Bearish on Block

September 7, 2006
Zacks Equity Research, Chicago, in its analyst blog for Sept. 7, maintains its bearish outlook on the stock of H&R Block, Kansas City, Mo., the parent company of nonprime lender Option One Mortgage Corp., Irvine, Calif.

The research company said it is maintaining its sell rating on Block. "Until we see evidence that the mortgage business has stabilized, we expect limited upside movement in the share price," Zacks said. It said it expects Block's stock to trade at the low end of a 10 times/20 times forward 12-month earnings range. Right now its six-month target price of $18 is based on 11 times its 2007 earnings estimate, Zacks reported. According to Yahoo! Finance, Block's 52-week range is $19.80 to $26.96 per share. As of 11:30 a.m. on Sept. 7, Block was trading at $21.08 per share. Zacks can be found online at http://www.zacks.com.

Feds Float Basel II Option for Big Banks

September 6, 2006
Federal banking regulators are seeking comment on whether the largest banks in the United States should have the option of adopting a "standardized," or less complex, Basel II risk-based capital standard.

During the summer, several banks and their trade groups urged the regulators to give U.S. banks the option of adopting the standardized approach, which is more advanced than the current Basel I standard and includes more risk buckets for mortgages and other assets. The standardized approach also takes into account securitization risks and wholesale lending commitments, and encourages banks to obtain guarantees and derivatives to mitigate credit risk. Comptroller of the Currency John Dugan noted that the largest foreign banks have the option of implementing the standardized approach or the Basel II approach, which is based on internal risk models. "To ensure that all the interested parties have an opportunity to comment on this fundamentally important issue, the agencies added the question to the Basel II preamble," Mr. Dugan told a Federal Deposit Insurance Corp. board meeting. The FDIC board voted 5-0 to issue the Basel II proposal with the standardization question for a 120-day comment period.

Traditional New MI Dips as Apps Dive

September 5, 2006
July saw a slight decrease in the amount of traditional new primary mortgage insurance written, but there was a large falloff in the number of applications received, according to data gathered by the Mortgage Insurance Companies of America.

The trade group's members wrote $17.4 billion of primary new insurance in July, a decline of 21.6% from $22.3 billion in June. However, much of the decline came in the bulk category, which fell from $8.2 billion to $4.7 billion. The traditional category fell by just $1.3 billion, from $14.1 billion in June to $12.8 billion in July. Application volume fell by 21.6% in July, from 148,332 in June to 116,906; application volume stood at 130,661 in July 2005. New pool risk written in July totaled $26.9 million, down from $70.7 million the previous month. The cure/default ratio reached its lowest level of the year, 69.8%, with 31,099 cures and 44,561 defaults. MICA can be found online at http://www.micanews.com.

Commercial/MF Originations Up 17.3%

August 31, 2006
Originations of commercial and multifamily loans by mortgage bankers were up 17.3% in the second quarter, compared with those of the second quarter of last year, according to the Mortgage Bankers Association.

Originations were also up 23.3% from those of the first quarter, the trade association reported. However, in one sign that the pace of originations may be slowing, the second-quarter volume increase is the smallest in percentage terms on a year-over-year basis since the fourth quarter of 2004, which saw a 9.8% increase. (All quarters since then have seen double-digit percentage gains ranging from 25% to 64% on a year-to-year basis.) "Origination activity remains strong and, while the Federal Reserve has been raising short-term rates, long-term rates have actually been falling recently," noted Doug Duncan, the MBA's chief economist. The largest percentage increase in lending over last year's second quarter was for health care properties, which saw a 177.4% increase. Among investor types, commercial banks and life insurance companies were the most active. The MBA can be found online at http://www.mortgagebankers.org.

M&A Firm Says Mortgage Companies Undervalued

August 17, 2006
A New York-based merger and acquisitions advisory firm is claiming mortgage companies for sale are undervalued.

The chairman and chief executive of RJ Easton, Richard Easton said, "Several privately held mortgage companies are available for acquisition at two to three times their lowest earning before taxes. Compared with like companies that sold during the boom years at five to six times their highest EBT, today's privately held mortgage companies are a bargain at one-third the purchase price. We see the opportunity to acquire healthy mortgage companies now at bargain basement prices." Recently his firm was the advisor for Bay Capital Corp., an Owings Mills, Md.-based retailer and wholesaler that was acquired by Clear Choice Financial, a publicly traded company headquartered in Tempe, Ariz. RJ Easton was an investor in this transaction.

Condo Prices Fall Nationally

August 15, 2006
The real estate downturn has hit the condo market -- though it's not exactly a blood bath, at least not yet.

According to figures compiled by the National Association of Realtors, condominium prices in metropolitan areas fell 0.3% in the second quarter compared to the same quarter a year ago. According to the trade group, the national median existing condo price was $225,800 in the second quarter. Condo markets suffering the most include the MSA of Palm Bay-Melbourne-Titusville, Fla. (down 11.8%), and Toledo, Ohio (down 9.7%). NAR also reported that median prices in the single-family market rose 3.7% in the second quarter. "With more sellers competing for the pool of buyers, the pressure on home prices has evaporated in most metro areas," said NAR chief economist David Lereah. He described the price slowdown and correction as a "soft landing in the housing sector."

Sizeler Agrees to Acquisition

August 8, 2006
Sizeler Property Investors, a New Orleans-based retail and multifamily real estate investment trust, has signed a letter of intent with Revenue Properties Co. for the acquisition of Sizeler at a cash price of $15.10 per Sizeler common share.

The REIT reported that the merger transaction hinges on whether the two companies enter into a "mutually acceptable definitive merger agreement" prior to Aug. 17. Revenue Properties is a publicly traded owner and operator of property in which Morguard Corp., a Canada-based real estate and property management company, has a 68% interest, Sizeler said. Earlier this year, Sizeler had retained Wachovia Capital Markets to explore its "strategic alternatives."

MIs Record Best Month in June

August 1, 2006
June was the best month of the year business-wise for the members of the Mortgage Insurance Companies of America.

According to the trade group, $22.25 billion of primary new insurance was written in June, up 22% from $18.17 billion in May. It was also the best month of the year for the traditional primary new insurance component, at $14.08 billion. The previous top month in 2006 for total insurance had been $20.92 billion in March, while for traditional, May had been the best month, at $13.01 billion. Applications hit a yearly high, at 148,332; the previous high in 2006 had been in March, at 141,177. There is now $632.14 billion of primary insurance in force, and $143.33 billion of primary risk in force, MICA reported. In June, $70.7 million of new pool risk was written. Pool risk in force at the end of the second quarter totaled $8.47 billion. The cure/default ratio for June was 74.4%, a slight improvement over that of May, with 31,588 cures and 42,477 defaults reported for the month. MICA can be found online at http://www.micanews.com.

Exec Leaves UK Mortgage Group

July 31, 2006
Peter Williams, deputy director general of the Council of Mortgage Lenders, has decided to leave to become an independent consultant after a dozen years of service at the United Kingdom trade group.

Mr. Williams plans to leave his current post on Sept. 30 but continue to work with the council in his new capacity. The council said it has no plans to recruit a new deputy director general. Mr. Williams originally joined the council in 1994 when the CML and the Building Securities Association shared a single secretariat and become the deputy director general when the two groups separated in 1997.

FirstAm, NAREB Form Alliance

July 28, 2006
The First American Corp., Santa Ana, Calif., and the National Association of Real Estate Brokers have announced the formation of a partnership aimed at boosting the rate of African-American homeownership.

Under the five-point plan, First American will provide lead generation data resources; offer its proprietary credit scoring products to assist NAREB's Rebuild America Homeownership Counseling Division; and make available a Web-based, point-of-sale technology platform to streamline loan origination by NAREB members, known as Realtists. In addition, NAREB -- which calls itself the oldest and largest minority real estate trade association in the nation -- and First American will join with municipal housing agencies in 10 urban areas to offer downpayment assistance to first-time homebuyers. The fifth point involves selecting and funding the top 10 NAREB local boards to assist in rolling out a co-branded real estate financial literacy program next year. First American can be found online at http://www.firstam.com, and NAREB can be found at http://www.nareb.com.

Danica Patrick's Link to Argent in Doubt?

July 26, 2006
Danica Patrick, who serves as a spokeswoman and trade show booth attraction for Argent Mortgage, will be switching from Rahal Letterman Racing to Andretti Green Racing for the 2007 Indy Racing League season, raising questions about her continued association with Argent.

Argent had sponsored her car when she raced in the lower levels of open-wheel racing for Rahal Letterman. Besides sponsoring Ms. Patrick's car, Argent sponsors the car of her teammate, Buddy Rice, a former winner of the Indianapolis 500. A news release from Andretti Green did not mention the sponsorship situation. Published reports had Bobby Rahal, one of the owners of Rahal Letterman (the other being television personality David Letterman), saying the Argent sponsorship was the team's and not Ms. Patrick's. Argent had not replied to a request for comment by MortgageWire's deadline. At the end of June, Argent said it would use Ms. Patrick in the marketing of its new alternative-A product line.

First Industrial Forms JV With CalSTRS

July 26, 2006
First Industrial Realty Trust, a Chicago-based industrial real estate investment trust, has formed a $950 million joint venture with the California State Teachers' Retirement System.

The REIT said the venture will invest in "strategically located land parcels and vertical development" in markets projected to benefit most from supply chain reconfiguration, international trade, demographic trends, and economic expansion. "Sourcing competitive private capital is an important part of our strategy," said Mike Brennan, president and chief executive of First Industrial. "Our new joint venture with CalSTRS will accelerate the long-term growth of our business as we acquire strategic sites and develop new facilities for our expanding customer base." The venture, which has an initial term of 10 years, may be expanded to $1.6 billion once the initial $950 million investment level has been reached. It is expected to be funded with 35% equity and 65% debt, with initial equity contributions of up to $300 million by CalSTRS and up to $33 million by First Industrial, the REIT reported.

MBA to Seek Views on RESPA Options

July 14, 2006
The Mortgage Bankers Association is actively seeking input from its members on three RESPA reform options as it prepares for the Department of Housing and Urban Development to issue a RESPA proposal later this year.

The trade group has scheduled a July 20 town hall teleconference with members to discuss the options and gauge their members' appetite for reform of the Real Estate Settlement Procedures Act. The first option would revise the good-faith estimate disclosure that borrowers receive shortly after applying for a mortgage so that it is comparable to the HUD-1 settlement sheet at closing. The revised GFE would disclose that the lender is making a yield-spread premium payment to the mortgage broker "in a manner that would inform the borrower of such payment but not confuse the borrower and undermine competition," a summary of Option 1 says. The second and third options build on Option 1 and would permit lenders to do average cost pricing for lender fees (Option 2) and permit volume-based discounts on third-party fees (Option 3). Many large lenders want the second and third options, but settlement service providers, title companies, and real estate agents are opposed to giving lenders that kind of pricing power.

FTC Cites Austin Realty Settlement

July 13, 2006
The Austin Board of Realtors has agreed to stop certain anti-competitive practices that prevented homesellers in Texas from getting their properties listed on important public websites if they use a discount broker, according to the Federal Trade Commission.

The FTC charged that ABOR's website rules created significant roadblocks for real estate brokers who want to offer customers alternatives to full-service brokerage agreements. "We expect this action will put homesellers back in the driver's seat in deciding what sort of a brokerage agreement they chose to enter into in the Austin area, and enable homebuyers to enjoy the benefits of accessing MLS listings on the Internet," said Jeffrey Schmidt, director of the FTC's Bureau of Competition. Mr. Schmidt added that the FTC is conducting investigations of other multiple listing services.

FHFB Cap Proposal Stirs Controversy

July 3, 2006
House Financial Services Committee Chairman Michael Oxley, R-Ohio, says proposed capital changes could "actually harm" the Federal Home Loan Banks, and he has announced plans to hold a hearing on the Federal Housing Finance Board proposal in September.

The committee's ranking Democrat, Rep. Barney Frank (Mass.), joined Rep. Oxley in raising concerns about the proposed rule, which would require the FHLBanks to increase their retained earnings and buy back excess stock. "We are concerned that the proposed changes may go too far and actually harm the FHLBank System more than protect it," Reps. Oxley and Frank say in a letter to Finance Board Chairman Ronald Rosenfeld. The June 30 letter poses seven questions the congressmen expect the regulator to answer when the committee holds the hearing. "The fact that the proposal has been criticized by the leadership of all 12 FHLBanks and key industry trade groups indicates to us a need for a pause," the two ranking committee members say.

Hangup Delays Mississippi Katrina Grants

June 29, 2006
Over 16,000 Mississippians have signed up for federal grants to rebuild their homes damaged in Hurricane Katrina, but a hangup over an environmental assessment has postponed disbursement of the first checks.

Lenders' groups have warned the Mississippi Development Authority that it cannot avoid making a full environmental assessment simply because it has no control over the homeowners' use of the assistance grants. "The EA fails to explain how it can conclude a direct grant program is so vague and limitless that the state cannot begin to evaluate the environmental impact of these expenditures," says a June 16 letter by the Mortgage Bankers Association, the Consumer Mortgage Coalition, and the Housing Policy Council. The MDA has asked the Department of Housing and Urban Development for a ruling on this issue, which the state agency expects to receive in a few days, a spokesman said. In developing its assistance program, Mississippi rejected lender recommendations that the assistance grants be placed in escrow accounts with the homeowners' mortgage lender. Nevertheless, the trade groups still insist that the use of escrow accounts will ensure that more of the Community Development Block Grant funds are used for rebuilding. "The program must be capable of ensuring that the money is in fact used for the purposes authorized by Congress," the trade groups say.

Global Inflation Deemed Still a Concern

June 16, 2006
A relative decline in inflation over the past few decades appears to be behind the "conundrum" of lower long-term rates and flatter yield curves seen around the world, but that doesn't make global inflation any less of a concern today, according to Federal Reserve Governor Randall S. Kroszner.

Speaking at a Bankers Association for Finance and Trade conference in New York, Mr. Kroszner said inflation looks lower today than it did in decades past. But "that's not to say one can be complacent" about it, he said when asked whether the global market was wrong to react as strongly as it did recently to inflation fears given the historical trend. Mr. Kroszner, a recent addition at the Fed, told the BAFT Conference for International Financial Institutions that while inflation is no less of a concern today, it is "in a different context" than it was 10 or 20 years ago.

Trade Groups Rebel Against Cap Rule

June 16, 2006
The Federal Housing Finance Board should withdraw a proposed rule that would require the Federal Home Loan Banks to increase retained earnings and buy back excess stock, according to six financial services trade groups.

The capital proposal could cause "irreparable harm" to the FHLBank System and would negate a multiyear effort by the 12 FHLBanks to convert to a risk-based capital system mandated by the 1999 Gramm-Leach-Bliley Act, according to a joint letter to the regulator. "We are not trying to take them on and just say no," said Joe Pigg, senior counsel for the American Bankers Association. "We're trying to engage them and say we want to work constructively to address concerns they have raised about retained earnings and the whole capital structure." The ABA, America's Community Bankers, the Consumer Bankers Association, the Financial Services Roundtable, the Independent Community Bankers of America, and the Mortgage Bankers Association signed the June 16 letter.

NCC Expands Central American Housing Biz

June 12, 2006
National City Corp. has received approval from the Overseas Private Investment Corp. for securing a $350 million lending facility to expand international housing loan business in signatory countries of the Central American-Dominican Republic-United States Free Trade Agreement.

The facility will fund home lending programs through correspondent banks with $100 million set aside for low- and middle-income housing construction loans, the corporation said. National City Corp. can be found on the Web at http://www.nationalcity.com.

RAIT Acquiring Taberna

June 9, 2006
RAIT Investment Trust, a Philadelphia-based commercial real estate lender, is acquiring Taberna Realty Finance Trust, a private Philadelphia CRE lender, for 0.5389 of a RAIT share per Taberna common share.

Taberna -- whose chairman and chief executive officer, Daniel G. Cohen, is the son of RAIT chairman and CEO Betsy Z. Cohen -- will become a subsidiary of RAIT. The exchange ratio is based upon the relative book value of the companies, RAIT said. Taberna is a provider of long-term subordinated debt and trust preferred securities financing. RAIT provides structured financing and also acquires real estate for its own account. Ms. Cohen said the combined company would meet the needs of real estate companies for both secured and unsecured structured finance. And Mr. Cohen said they expect to combine Taberna's collateralized debt obligation funding capacity with RAIT's origination platform. The combined company will continue to trade on the New York Stock Exchange and have total shareholders' equity of about $1.2 billion, with RAIT shareholders owning about 54% of the equity, RAIT reported. Ms. Cohen will be chairman and Mr. Cohen will be CEO of the combined company. The companies, both real estate investment trusts, can be found online at http://www.raitinvestmenttrust.com and http://www.tabernacapital.com.

10-Year Trading Below 5%

June 9, 2006
The long-term rate-indicative 10-year Treasury yield has begun to trade more frequently below 5%.

The 10-year yield just after midday June 9 was trading at about 4.98%, according to Yahoo! Finance. Previously it had been trading in a range primarily above the benchmark 5% level.

E*Trade, NeighborWorks Launch Website

June 2, 2006
E*Trade Financial Corp., New York, and NeighborWorks America, Washington, D.C., have announced the launch of the "Keys to My Home" website, which offers bilingual, user-friendly information about preparing for and maintaining homeownership.

Resources on the new website include "The Top 10 Questions to Ask Your Lender," a primer on home insurance, mortgage loan affordability and debt calculators, and a mortgage comparison worksheet. "Keystomyhome.org provides customized budget tables that fit the unique needs of each consumer," said Ken Wade, chief executive officer of NeighborWorks America. "This tailored approach is ... the perfect blend of technology and a human touch." The English version of the website launched June 1, and the Spanish version will be available this summer. The website is one of several education initiatives supported by E*Trade Financial and NeighborWorks America, including neighborhood computer-lab homebuyer kiosks in target minority and low- to moderate-income markets. The new site can be found online at http://www.keystomyhome.org.

FTC Conference Speakers Weigh in on Exotic Products

May 24, 2006
Sharply divergent views of so-called exotic mortgages were presented at a Federal Trade Commission conference today to assist the consumer watchdog agency in understanding interest-only, option-arm and 40- and 50-year loans.

Allen Fishbein, of the Consumer Federation of America said that while interest-only borrowers tend to have higher incomes and credit scores then those that choose traditional loans "many" have only average or even weaker scores. But even with higher scores, Mr. Fishbein charged that credit scoring does not accurately measure the ability of some borrowers to repay given the risk involved. Robert Broeksmit, president of Chevy Chase Bank, a Maryland savings bank, said the majority of lenders qualify borrowers at the fully indexed rate. He also pointed out his bank's borrowers with interest-only loans tend to pay their loan balances down by a greater amount then those with fixed payments. Stella Adams, executive director of the North Carolina Fair Housing Center, said, exotic arms are not appropriate for subprime borrowers. "If they can't manage their money to stay in prime, they have to recognize that they can't manage their money well enough to handle these loans." One thing most of the two dozen speakers agreed on is the need for financial education. "Few borrowers have any idea of their financial health," Ms. Adams said.

Snow Calls For GSE Portfolio Limits

May 22, 2006
The government-sponsored entities pose a potential risk to the financial markets and they need a regulator that has the authority to limit their entry into new products and see that their portfolios are not larger than necessary to make a secondary market, according to John Snow, the Secretary of the Treasury.

Speaking at the Bond Market Association's annual meeting in New York, Mr. Snow noted that Fannie Mae and Freddie Mac trade paper as though they are affiliated with the U.S. government, even though they are not, and this is "not a healthy thing." Touching on the housing market, Mr. Snow said that it is seeing some moderation, signs of which include rising inventories. However, he sees this as a sign of "normal adjustment" after a period of attracting capital and high mortgage lending volumes. He doesn't expect this moderation in the housing market to impact the U.S. economy, which he sees as "extraordinary in its capacity to take blows and adapt."

Securities Law Firm Indicted

May 19, 2006
The high-profile securities law firm of Milberg Weiss, and two of its top attorneys were indicted on Thursday on charges of conspiracy, money laundering and racketeering, following a six-year investigation regarding whether the law firm made illegal payments to clients who agreed to act as plaintiffs in the firm's lawsuits against publicly traded companies

. U.S. Attorneys office of Los Angeles alleges that the 120-lawyer, New York City-based law firm and two of its partners, David Bershad and Steven Schulman, bribed clients to get them to agree to act as plaintiffs in their lawsuits. Court documents claim the law firm gave $11.3 million in illegal kickbacks to clients from 1981 through 2004. "This case is about protecting the integrity of the justice system in America," said Debra Wong Yang, U.S. attorney in Los Angeles, in a press release. "Class-action attorneys and named plaintiffs occupy positions of trust in which they assume responsibility to tell the truth and to disclose relevant information to the court. This indictment alleges a wholesale violation of this responsibility."

Trade Groups Push for FHA Reform

May 17, 2006
Ten housing trade groups are urging members of Congress to co-sponsor and support a bill to reform and modernize the Federal Housing Administration single-family program.

The coalition of mortgage lenders, real estate agents and homebuilders is backing an FHA bill (H.R. 5121) introduced by Reps. Bob Ney, R-Ohio, Maxine Waters, D-Calif., that is modeled after a FHA reform package proposed by the Bush administration. "Modernizing FHA will improve competition in the prime home loan mortgage industry and effectively assist the industry in combating abusive and/or discriminatory lending practices," the coalition says in a joint letter to members of the House of Representatives. The coalition also claims the FHA reform will increase homeownership opportunities for low- and moderate-income and minority families. House Financial Services Committee members want to mark up the Ney-Waters bill before Memorial Day. In the other chamber, Sen. Elizabeth Dole, R-N.C., is expected to introduce a FHA reform bill soon. The American Bankers Association, National Association of Independent Mortgage Bankers, Mortgage Bankers Association, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Realtors, National Association of Real Estate Brokers-Investment Division, National Council of State Housing Agencies and National Reverse Mortgage Lenders Association signed the May 15 letter.

ECC Reports 1Q Loss

May 12, 2006
ECC Capital Corp., a real estate investment trust based in Irvine, Calif., has reported a net loss of $6.4 million ($0.06 per share) in the first quarter, a big improvement from the fourth-quarter results of the troubled mortgage REIT but a bigger loss than it recorded a year earlier.

The company reported a loss of $49.8 million ($0.50 per share) in the fourth quarter, and a loss of $2.7 million ($0.04 per share) in the first quarter of 2005. ECC Capital also announced that it will not pay a dividend for the second quarter. "The loss on the sale of loans was significantly reduced during the first quarter of 2006 as compared to the fourth quarter of 2005 largely due to marking down our inventory at Dec. 31, 2005, on most trades settling during the first quarter of 2006," said Shabi Asghar, co-chief executive officer and president of ECC Capital. "While we do not expect to see the full positive impact of our restructuring efforts in operating costs until the latter half of the year, we are starting to see some improvement in whole loan execution on loans originated in 2006." The company announced earlier this year that it would consolidate seven wholesale loan processing centers into three and lay off more than 440 employees. The REIT can be found online at http://www.encorecredit.com.

Integration Deemed Key to Mortgage Banking

May 10, 2006
The mortgage banker of the future will be an organization that is both horizontally and vertically integrated, along the lines of Countrywide Financial Corp., according to Paul Miller, a buy-side equity analyst for the Friedman, Billings, Ramsey Group.

Speaking at the Mortgage Bankers Association National Secondary Market Conference in Chicago, Mr. Miller said the continued evolution of the nonagency securitization market will disintermediate the government-sponsored enterprises and other Wall Street nonproducers of mortgage assets. Countrywide is the model, as two-thirds of its production is traded on the secondary market, not by Wall Street, but by its internal operations. In the future, mortgage bankers will have to do all four loan categories -- prime, subprime, alternative-A, and niche -- to stay in business, Mr. Miller said. Many of their best loans will have to be put into portfolio in order to be profitable. Finally, mortgage bankers will need to be better at retaining their servicing portfolio, something they have not done a good job of so far, Mr. Miller said. The successful mortgage banker will retain over 40% of its servicing customers and cut out the mortgage broker, he said.

Freddie et al. Join NeighborWorks Coalition

May 9, 2006
Freddie Mac, American General Financial Services Inc., and ABN Amro Mortgage Group Inc. have joined the coalition headed by the NeighborWorks Center for Foreclosure Solutions to help avert home foreclosures.

The coalition now consists of 15 financial services institutions, NeighborWorks, and the Homeownership Preservation Foundation. It aims to minimize foreclosures by providing better research and early alert systems, improving counseling capacity, and expanding partnerships among cities, lenders, and servicers. The program was launched April 11 in Ohio, where foreclosures have more than doubled in the past five years, NeighborWorks said. "The national program will target key hotspots across the country where foreclosure rates have skyrocketed," the organization said. The lenders will provide more than $1 million to the NeighborWorks Center for the campaign, along with trade insights and information, NeighborWorks said.

NMHC: Rates Hurting Apartment Finance

May 8, 2006
A steady rise in interest rates has resulted in a "sharp decline in debt financing conditions" for apartment properties, according to the National Multi Housing Council.

The NMHC's April 2006 quarterly survey of apartment market conditions found that an index of debt financing conditions had dropped to 21, its lowest level since January 2000, and the third-lowest level in the survey's history. Over 69% of survey respondents, the second-highest ever, said that borrowing conditions for debt financing had worsened in the last three months, based on interest rates and nonrate conditions. However, they also see mortgage financing as being widely available, the NMHC said. Another index showing availability of equity financing edged down only a little, indicating that equity finance conditions are "unchanged" compared with those of three months ago, according to the multifamily industry trade association.

Mortgage Jobs Inch Downward

May 5, 2006
Employment in the mortgage industry edged down in March after lenders added 6,500 full-time employees to their payrolls in February.

The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector slipped by 400 jobs to 504,400 in March. During March, the 30-year mortgage rate inched up to 6.4%, but mortgage applications held fairly steady compared to the previous month. Friday's jobs report also shows that hiring in the construction trades has come to a halt after large gains in January and February. As previously reported, single-family housing starts fell 11.2% in March. Meanwhile, the U.S. economy created 138,000 new jobs in April compared to 200,000 in March. The unemployment rate remained unchanged at 4.7%.

RBS Beefs Up CMBS Trading Desk

May 3, 2006
Chris Lau and Kin Lee have been named to co-head the commercial mortgage-backed securities secondary trading desk of RBS Greenwich Capital, Greenwich, Conn.

Mr. Lau is a veteran of the firm's CMBS desk, while Mr. Lee is a veteran trader who was most recently a CMBS secondary trader with CSFB. Both will hold the titled of managing director and co-head of CMBS secondary trading. They will report to Chris McCormack, the head of CMBS trading for RBS Greenwich Capital. The company can be found online at http://www.rbsgc.com.

Retired Broker Pleads Guilty to Kickback Charge

May 2, 2006
A retired mortgage broker from New Jersey recently pleaded guilty to taking $2.5 million in illegal kickbacks from securities law firm Milberg Weiss and lying about it, according to Reuters.

Howard Vogel was charged and entered his plea to one count of making a false declaration before a court in documents filed April 28 by the U.S. attorney in Los Angeles. In the agreement, Reuters said Mr. Vogel admitted to falsely denying having a secret deal to take a portion of legal fees earned by the firm in exchange for serving, or inducing family members to serve, as plaintiffs in about 40 suits between 1991 and 2005. The firm, which split in two in 2004, said it continues to cooperate fully with the investigation. According to Reuters, Mr. Vogel, who signed the plea deal, is the third person to be charged in connection with a five-year-old investigation of Milberg Weiss, a prominent securities law firm. He is the first to plead guilty, and has agreed to cooperate with federal investigators as part of a plea agreement. The investigation centers on whether the law firm made illegal payments to clients who agreed to act as plaintiffs in the firm's prolific lawsuits against publicly traded companies. Mr. Vogel faces up to five years in prison and agreed to pay $2 million in fines.

NAHB Calls Tax Proposals Devastating

May 1, 2006
The president of the National Association of Home Builders says the housing-related proposals advanced by the President's Commission on Tax Reform would have a devastating impact on homeowners, rural America, and people searching for affordable rental houses.

Anyone with a home loan of $225,000 or more would lose the entire deduction for mortgage interest under the panel's idea to switch the sacrosanct writeoff to a 15% tax credit, said Statesville, N.C., builder David Presley at the National Association of Real Estate Editors annual conference in Charlotte, N.C., over the weekend of April 29-30. The panel would also eliminate the interest deduction for home equity loans, the interest writeoff for second home mortgages, and the low-income housing tax credit, steps Mr. Presley labeled "draconian measures" that would take away a key source of cash consumers need to pay for medical bills and college tuition, destroy small-town vacation home markets, and remove practically the only source of funding for low-cost apartments. The NAHB president said his 225,00-member organization would "fight to the death" to prevent these changes in the tax code. President Bush has said he has no intention of advocating a change in the mortgage interest deduction. But some trade groups, including the Mortgage Bankers Association, fear the housing tax benefits will be a logical target when Congress looks for funds to pay for the growing budget deficit.

Alesco Financial to Merge With Sunset

April 28, 2006
Alesco Financial Trust, a Philadelphia-based specialty finance real estate investment trust, has agreed to merge with Sunset Financial Resources, a Jacksonville, Fla.-based specialty finance REIT.

Sunset will issue 1.26 shares of its stock for each Alesco share. The REITs said the merged company will pursue Alesco's strategy of focusing on trust preferred securities issued by banks and insurance companies, middle-market loans, and residential mortgage-backed securities. Alesco is managed by Cohen Brothers Management LLC, Philadelphia. Sunset has entered into an interim management agreement with Cohen Brothers that allows the REIT to convert its existing assets into assets consistent with the investment strategy of the merged companies. Alesco is currently not publicly traded, while Sunset trades on the New York Stock Exchange. Based on Sunset's April 27 closing price of $8.85 per share, each Alesco share is valued at $11.15 per share.

NAHB: Speculators Leaving Home Market

April 27, 2006
The nation's homebuilders are reporting that purchase cancellation rates are up and that housing speculators are walking away from properties, according to the industry's leading trade group.

At a forecast conference Thursday morning, National Association of Home Builders economist David Seiders told the audience: "I want speculators out of the business, and so do builders." He added, however, that the industry doesn't want speculators dumping properties back on the market. The NAHB is forecasting a slight decline in new-home sales this year and an 8% decline in existing units. "I'm starting to worry about rates," he said, noting that 30-year conventional fixed-rate mortgages could rise to 6.7% by year-end. Speaking at the same conference, J.P. Morgan Chase economist Jim Glassman said housing has shifted "from a seller's market to a buyer's market."

Wachovia Tops MBA Commercial/MF Ranks

April 26, 2006
The top commercial and multifamily loan originators for 2005 were Wachovia, Wells Fargo, and Capmark Financial Group (previously GMAC Commercial Mortgage), according to the Mortgage Bankers Association.

Others in the top 10 list, based on the MBA's annual origination volume report, are: HFF; KeyBank REC; CBRE/Melody; Lehman Brothers; Column Financial/Credit Suisse; Bank of America; and PNC Real Estate Finance. Doug Duncan, the trade association's chief economist, said 2005 was a record year for commercial/multifamily originators, adding that the MBA listings "show the breadth and depth of those doing business in this expanding market." The MBA report also lists originators by investor groups. Wachovia was the top originator for commercial bank/savings institutions and conduits; Capmark Financial Group for Freddie Mac and FHA/Ginnie Mae investors; MetLife for life insurance companies; Deutsche Bank Berkshire for Fannie Mae investors; TIAA-CREF for pension funds; Cohen Financial for credit companies; Key Bank for real estate investment trusts, investment funds, and other investors; and Tremont Realty Capital for specialty finance companies.

Fannie Unveils Benchmark REMICs

April 20, 2006
Fannie Mae has announced the introduction of Benchmark REMICs, a multiclass real estate mortgage investment conduit security with enhanced structural, price transparency, and liquidity features for fixed-income investors.

The company said it expects to issue the first Benchmark REMIC in this quarter and up to two deals per quarter thereafter. Fannie said the securities will have four characteristics designed to improve liquidity and price transparency: syndicated dealer distribution; a large Guaranteed Maturity Class, with a stated final maturity; a minimum new-issue size of $1 billion for each GMC; and live price quotes on TradeWeb for the GMCs. The securities will generally be collateralized by pools of Fannie Mae fixed-rate, first-lien, single-family mortgages. Peter Niculescu, executive vice president for capital markets, said the move "should help us better serve our affordable housing mission by attracting more capital to the U.S. housing market through broadened distribution of Benchmark REMICs to a potentially more diverse mortgage investor base globally." Freddie Mac introduced a similar program, Reference REMICs, last year.

Amherst Touts Alt-A Conduit Pact

April 17, 2006
Amherst Funding Group LP, an Austin, Texas-based company that buys and trades newly originated residential mortgage loans, has announced an agreement with Denver-based SN Capital Markets LLC to market Amherst's alternative-A correspondent conduit.

SNCM (formerly known as Matrix Bancorp Trading) provides whole loan and servicing trading and analytics for financial institutions and mortgage bankers. Touting Amherst's "income and asset verification combinations, ease of delivery, and flexible forward delivery program" for correspondents, Amherst president Phillip Daskevich said SNCM is "the perfect business partner to bring AFG's correspondent conduit and capital markets experience to mortgage bankers across the country." Jonas Roth, SNCM's national sales director, said the arrangement with Amherst to source newly originated residential loans "goes a long way towards offering a more complete menu of services to our client relationships nationwide." The companies can be found online at http://www.amherstfunding.com and http://www.snsc.com.

Zacks Blog Cautions on Saxon

April 12, 2006
Zacks.com, the online unit of Zacks Investment Research Inc., Chicago, has reported a recent posting on its Analyst Blog noting that the company is maintaining its Hold recommendation on Saxon Capital but cautioning about its risks.

In the Zacks weblog commentary on Saxon, the analyst said the company had a weak fourth quarter and noted that competition is driving down margins. "We feel that the company will have a difficult time making money in 2006; margins will remain low and production volumes will be stagnant," the analyst said. "On the other hand, the dividend yield is extremely attractive and the company now trades at a significant discount to book value. However, this is a risky stock, and large dividend cuts could come if the mortgage business does not improve in the next year." Saxon, a residential mortgage lender and servicer based in Glen Allen, Va., is a real estate investment trust. Zacks can be found online at http://www.zacks.com.

FICC Plans Central MBS Counterparty

April 12, 2006
Fixed Income Clearing Corp., New York, has announced plans to develop services to support a central counterparty for mortgage-backed securities that it hopes to establish within two years.

In phase I of a three-phase process, FICC said it will allow for the matching of specified pool trades via its real-time trade matching service. Phase II will focus on simplifying and automating routines for substituting the mortgages allocated to a pool, and phase III will allow for central counterparty netting and guaranteed settlement of specified pool trades, the company said. "When we get the central counterparty fully operational, we expect to lower clearing costs, reduce operational and counterparty risk, decrease our customers' capital charges, and bring down the fail and financing expenses of our clearing members," said Tom Costa, head of FICC and managing director of clearance and settlement for The Depository Trust & Clearing Corp., FICC's parent company. DTCC can be found online at http://www.dtcc.com.

Lenders, NeighborWorks Target Foreclosures

April 11, 2006
Twelve major mortgage lenders have allied with the NeighborWorks Center for Foreclosure Solutions, Washington, D.C., to launch a campaign to avert foreclosures in demographic and geographic hot spots.

The national partnership aims to minimize foreclosures by providing better research and early alert systems, improving counseling capacity, and expanding partnerships among cities, lenders, and servicers. The lenders will provide more than $1 million to the NeighborWorks Center for the campaign, along with trade insights and information, NeighborWorks said. "This show of support from the lending community demonstrates the enormous stake we share with lenders in the effort to stop foreclosures," said Ken Wade, chief executive officer of NeighborWorks America. The participating lenders are Bank of America, Citigroup, Countrywide Home Loans, HSBC-North America, Chase, National City Mortgage Co., New Century Financial Corp., Ocwen Loan Servicing LLC, Option One Mortgage, Residential Capital Corp., Washington Mutual, and Wells Fargo.

Feds Fear Basel Ia Too Burdensome

April 10, 2006
In designing a more risk-sensitive capital standard for small and midsize banks, federal regulators are concerned that a Basel Ia proposal could become too complex and burdensome.

"In short, we are faced with a tradeoff," said Federal Reserve Governor Susan Bies. By expanding the number of risk factors -- loan-to-value ratios, credit scores, and external credit rates -- the proposal increases the burden of calculating regulatory capital, she explained. Basel Ia is supposed to offset any competitive advantage large banks with international exposures could receive from Basel II, which is a complex overhaul of the current Basel I risk-based capital standard. As the agencies develop the Basel Ia proposal, they will have to "analyze very carefully where we want to end up on the risk-sensitivity-versus-burden tradeoff," Ms. Bies said. Some industry groups have suggested that small banks should be able to opt out of Basel Ia and stay with Basel I. The regulators are expected to issue a notice of proposed rulemaking for Basel II in a few months, and they are working toward issuing an NPR for Basel Ia by summer.

Longua to Lead NYU REIT Center

April 3, 2006
New York University has appointed Lawrence Longua to be director of the NYU REIT Center, a forum for the study and analysis of publicly traded real estate investment trusts within NYU's Real Estate Institute.

Mr. Longua is an associate professor in NYU's graduate real estate program as well as the senior managing director of Multi Capital Group, a real estate investment company based in New York. He is also a principal of Canopy Development, a Massachusetts-based developer of resort properties domestically and in the Caribbean. He is also a co-founder and principal of UrbAnalysis, a real estate research firm. Mr. Longua has more than 35 years of experience in commercial real estate, having held senior positions in the real estate units of Chemical Bank, Irving Trust Co., Bankers Trust Co., and the Mitsubishi Trust and Banking Corp. He was a director of Acadia Realty Trust.

Morgan Stanley Calls PHH a Bargain

March 29, 2006
Morgan Stanley has initiated coverage on PHH Corp., Mt. Laurel, N.J., the nation's 10th largest residential servicer, saying the company is undervalued.

In research note Morgan analyst Ken Posner said, "The stock seems to be discounting an implausibly tough scenario where the housing market suffers from flat home prices and falling sales." Morgan has given the company an "overweight" rating, establishing a price target of $38. PHH currently trades at $27. In recent weeks PHH has been slapped with a handful of civil action suits which claim the company and its executives made false statements about its finances. On March 3 the company canceled its fourth quarter earnings release, and delayed its 10-K filing. Upon the news its share price fell 11% on the day, but has since recovered somewhat.

Real Estate Index's Stock Begins Trading

March 28, 2006
INREEX, formally the International Real Estate Exchange, announced that its stock has begun trading as a Pink Sheet issue under the symbol IRXI.

INNREEX, based in London, describes itself as a real estate prediction exchange to meet the needs of global real estate investors. "Our goal as a company is to efficiently create an online real estate speculation exchange," said Paul Rozenberg, CEO of the company. He said the system is designed to be as close as possible to stock market trading. The electronic exchange trades contracts of all 50 U.S. states as well as a USA contract reminiscent of a stock index. The contracts are based on official home price index data published by the Office of Federal Housing Enterprise Oversight. The company's trading technology allows investors to log in from anywhere in the world and buy, sell or short housing markets in the U.S.

NAMB EVP Resigns

March 22, 2006
Mike Nazankiewicz has resigned as executive vice president and chief executive officer of the National Association of Mortgage Brokers, ending a six-year run at the helm of the trade group.

His resignation was effective March 20. For now, his duties will be taken over by senior vice presidents Roy DeLoach and Cathi Eifert. Mr. Nazankiewicz, who joined the NAMB from the American Heart Association, is leaving for a career in "organizational guidance and leadership development," according to a statement released by the NAMB. A NAMB spokeswoman noted that he has spent a great deal of time working on the state level with broker trade groups, helping some states form their own trade organizations.

FTC Slates Alternative Mortgage Workshop

March 22, 2006
The Federal Trade Commission will host a workshop May 24 on the benefits and risks associated with interest-only and payment-option mortgages.

These nontraditional adjustable-rate mortgage products help some people buy homes that they could not afford with a traditional fixed-rate 30-year mortgage, according to the consumer protection agency. At the same time, IOs and option ARMs may present unexpected risks, such as "payment shock," that consumer don't fully understand, the agency said. FTC staff members will identify and invite panelists to participate in the workshop. "Those interested in participating as panelists must notify the FTC in writing on or before April 2," the agency said.

S&P Unveils Euro MBS/ABS Pricing Service

March 21, 2006
Standard & Poor's has announced the introduction of what it says is the first service using cash flow analysis and modeling to evaluate prices of European structured finance securities.

The S&P Evaluated Pricing Service provides fund managers and securities firms with daily and intraday evaluations of the prices of securities -- initially asset- and mortgage-backed bonds -- based on collateral and cash flows, S&P said. "The rapid growth in securitization issuance in Europe in recent years has not been matched by the development of a liquid secondary market, and this has raised concerns about the transparency, reliability, and consistency of valuing many structured bonds," said Peter Jones, director of European securities evaluations at S&P. "Our new service provides an independent, rigorous, and credible answer for daily valuation and mark-to-market problems within this important but thinly traded market." S&P can be found online at http://www.standardandpoors.com.

MBA Asks Senate Panel for More FBI $

March 10, 2006
The Mortgage Bankers Association has asked a Senate subcommittee to push for an additional $6.25 million in government spending to combat mortgage fraud.

In a letter sent to Sen. Richard Shelby, R-Ala., chairman of the Appropriations subcommittee on commerce, justice, and science, the trade group asks that the money be spent over a five-year period to help the FBI track down and prosecute mortgage fraud. The MBA says the money can be used to hire 30 additional FBI field agents and two prosecutors. Back in December, National Mortgage News, quoting FBI figures, reported that the industry suffered $1.01 billion in losses during 2005 due to mortgage fraud.

E*Trade CDO Classes Downgraded

March 8, 2006
Four classes of securities issued by E*Trade ABS CDO I Ltd., a collateralized debt obligation supported in part by residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.

The downgrades are as follows: classes C-1 and C-2, from CCC to CC; and $12.50 million of preference shares and approximately $4.97 million of composite securities, from CC to C. The rating agency said the downgrade of the class C notes was due to a low projected principal recovery for the notes. The downgrade of the preference shares "reflects the likelihood that there will not be future distributions to this class," Fitch said, and the downgrade of the composite securities was based on the likelihood that they will be limited to interest distributions from class C-1. The CDO is supported by RMBS, CMBS, CDOs, and asset-backed securities. Fitch can be found online at http://www.fitchratings.com.

MBA Sees 'Chilling' Effect From MD Law

March 6, 2006
The Mortgage Bankers Association says a pending law in Maryland will have a "chilling" affect on lenders and loan investors working in the state's most prosperous county because it affects both the primary and secondary markets.

During a March 6 press briefing, the trade group also blasted Montgomery County executive Douglas Duncan -- who is running for governor -- for not vetoing the law. (The county executive is not related to Doug Duncan, the MBA's chief economist.) Passed by the Montgomery County Council, the law in question carries a minimum penalty of $500,000 per violation for discriminatory lending practices. The bill has stirred controversy because it penalizes lenders for charging "excessive" fees without defining what excessive means. To date, 40 lenders have decided to curtail lending in the county, at least for now. On Tuesday a judge will consider a motion to block the law. Standard & Poor's said it analyzed the ordinance but concluded that investors have no "assignee" liability. Still, the MBA says it believes investors are weary, despite S&P's conclusion. The MBA can be found online at http://www.mortgagebankers.org.

Groups Warn of Threat to Ginnie Program

March 3, 2006
A Bush administration budget proposal poses a "serious threat" to the future of the Ginnie Mae mortgage securitization program, according to a letter circulated on Capitol Hill by housing and financial services groups.

The fiscal year 2007 budget proposal would impose a new up-front 6-basis-point fee on Ginnie Mae single-family and multifamily securitizations. "The Ginnie Mae program faces a serious threat from this new fee, which will disproportionately affect the lower income borrowers" who rely on government-guaranteed loan programs, the letter says. The industry groups also note that administration proposals to increase fees on Federal Housing Administration-insured multifamily loans and U.S. Rural Housing Service loans would impose "significant new taxes on homeowners and renters." While the intent of the budget proposals is to increase revenues, "it is important to realize that their practical effect may be to drive consumers into other loan programs or out of the housing market altogether," says the letter to key congressmen and senators. "Thus, anticipated federal revenue may not materialize." The industry trade groups also maintain that the Ginnie Mae program is "highly efficient" and point out that its income (after expenses) netted the federal government $737.7 million in fiscal 2004. The Bond Market Association, the Consumer Mortgage Coalition, the Housing Policy Council of the Financial Services Roundtable, the Mortgage Bankers Association, the National Association of Home Builders, and the National Association of Mortgage Brokers signed the Feb. 22 letter.

Morgan: Short Golden West

March 2, 2006
Morgan Stanley is recommending to clients that they short the stock of Golden West Financial Corp., Oakland, Calif., one of the nation's largest originators of adjustable-rate mortgages

In a research note released March 2, analyst Ken Posner suggests that the company is overpriced compared with two of its peers, Countrywide Home Loans, Calabasas, Calif., and IndyMac, Pasadena, Calif. (All three lenders are active ARM funders.) Both Countrywide and IndyMac trade at 1.6 times book value, compared with 2.6 times for Golden West. In addition, the market is valuing GWF's production franchise at twice that of Countrywide's -- $7.7 billion versus $3.8 billion, according to Morgan Stanley research. At midday Thursday, GWF's shares were trading down 47 cents, at $70.40.

PHH, Saxon Delay Financial Reports

March 2, 2006
Two publicly traded mortgage lenders -- one prime, the other subprime -- are delaying financial disclosures because of valuation and accounting concerns.

PHH Corp., Mt. Laurel, N.J., which owns the nation's 10th-largest servicer, said it will not file its annual 10-K statement with the Securities and Exchange Commission on March 16 as originally scheduled. At MortgageWire's deadline on Thursday, PHH's shares were trading down 16%, at $24.17. Fitch Ratings placed the company on Rating Watch Negative. PHH gave several reasons for the holdup, saying it needs more time to document and analyze goodwill, intangibles, and "certain tax assets." Meanwhile, Saxon Mortgage, Glen Allen, Va., a top-40-ranked subprime funder, is delaying is fourth-quarter and full-year results for several weeks as management reviews its application of Statement of Financial Accounting Standards No. 133, accounting for derivatives and hedging.

Resales Weakest Since Early '04

February 28, 2006
Existing-home sales fell by almost 3% in January to their weakest level in almost two years, according to figures released Tuesday morning by the National Association of Realtors.

Compared with resales in the same month a year ago, the performance was even worse -- down 5.2% (to 6.56 million units, annualized) with the Northeast taking the most severe hit, 13.2%. Moreover, the supply of existing homes has risen by a startling 43% over the past 12 months. The trade group says there is now a 5.3-month supply of housing in the United States. Scott Anderson, senior economist for Wells Fargo & Co., described the situation as a "housing glut" but said his biggest concern is declining home values. He said a drop in prices will lead to a shutdown of the "home equity fountain of youth." Mr. Anderson said he believes consumers have kept the U.S. economy chugging along despite higher energy costs by tapping home equity.

Blackstone to Acquire Meristar Hospitality

February 22, 2006
MeriStar Hospitality, Bethesda, Md., is being acquired by an affiliate of The Blackstone Group in an approximately $2.6 billion transaction.

The merger consideration includes $10.45 per common share of the hotel real estate investment trust and the same amount per operating partnership unit of MeriStar's operating partnership, the REIT reports. This represents a 20% premium over MeriStar's closing stock price on November 10, 2005, according to MeriStar. The transaction, which has been approved by the MeriStar board and is expected to close in the second quarter, means that yet another REIT will be moving away from the publicly traded arena to the private equity space. Paul Whetsell, MeriStar's chairman and CEO, said that the deal "represents attractive value" to MeriStar shareholders. A proposal for MeriStar to merge with Felcor Lodging a few years ago fell through. On Feb. 21, MeriStar common shares closed at $10.28.

RESPRO Elects New Chair

February 21, 2006
Brian Levy, senior vice president and general counsel of Milwaukee-based Shelter Mortgage, has been elected chairman of the Real Estate Services Providers Council, a Washington, D.C.-based trade association.

Other newly elected RESPRO officers are: vice chair, Arthur Sterbcow, president of Latter & Blum Inc. Realtors, New Orleans; president, Susan E. Johnson, RESPRO; secretary, Stephen D. Morrison, Wells Fargo Mortgage Corp., Des Moines, Iowa; and treasurer, George Eastment III, Long and Foster Real Estate Inc., Fairfax, Va. The organization can be found on the Web at http://www.respro.org.

NAHREP, NAMB Join Forces

February 21, 2006
The National Association of Hispanic Real Estate Professionals and the National Association of Mortgage Brokers have announced an alliance to promote the exchange of information, training, and services between their combined 41,000 members.

The goal of the partnership is to give mortgage professionals the information and tools they need to better serve Hispanic homebuyers, the trade groups said. The organizations noted that the rapidly growing Hispanic consumer segment is becoming a "formidable force" in the housing market. They said they will share professional and consumer education programs that help members meet the needs of Hispanic homebuyers; work cooperatively to attract new members; seek to create a unified voice on legislative issues; and cross-promote events and services that expand the understanding of the Hispanic market. The organizations can be found online at http://www.nahrep.org and http://www.namb.org.

NAREIT Allies With Index Provider

February 16, 2006
In a bid to make investment in real estate investment trusts more attractive, especially to institutional capital, the National Association of Real Estate Investment Trusts has joined forced with index provider FTSE Group.

The Washington-based trade group is transferring the management of its REIT-related indices to FTSE, which manages a number of global indices. At a news briefing in New York, Mark Makepeace, chief executive officer of the FTSE Group, said he expects the FTSE NAREIT US Real Estate Index Series to "provide unparalleled benchmarks spanning all sectors of the REIT industry" and to "foster the growth of tailored investment products" related to REITs. FTSE said it plans to maintain the continuity of the indices while "modernizing and providing additional facilities." Of 18 REIT indices that FTSE will maintain, 14 will be real-time, a feature that is expected to appeal to exchange-traded funds. Steven Wechsler, president and CEO of NAREIT, said he expects interest in the U.S.-style REIT model to grow as people worldwide look to invest in real estate on a liquid, securitized basis.

Ex-Freddie Exec Named AREAA COO

February 16, 2006
Jim Park, a former executive at Freddie Mac, has been named chief operating officer of the Asian Real Estate Association of America, San Diego.

Mr. Park, a partner at Prado Mortgage, served as the vice president of industry relations and housing outreach at Freddie Mac before joining AREAA. At Freddie Mac, he worked with key housing finance industry trades, capital markets organizations, and community and housing-related organizations. Mr. Park previously held a senior political position at the Department of Housing and Urban Development, where he oversaw HUD's efforts to overhaul single-family and multifamily programs, AREAA said.

Fannie, TradeWeb Unveil New Trading Tech

February 13, 2006
Fannie Mae and Thomson TradeWeb, a fixed-income trading network based in Orlando, Fla., have announced the introduction of technology that will enable institutional investors to directly access and trade Fannie Mae's Discount Notes online through authorized dealers.

Robert Dolecki, director of short-term funding at Fannie Mae, said the move offers investors a "significantly easier" way to view and trade the government-sponsored enterprise's Discount Notes. "Additionally, the technology will increase the liquidity and transparency of our short-term securities," Mr. Dolecki said. The companies can be found online at http://www.fanniemae.com and http://www.tradeweb.com.

Wachovia Tops Commercial Servicer List

February 7, 2006
The Mortgage Bankers Association's ranking of top commercial and multifamily mortgage loan servicers places Wachovia at the top of the list in total primary and master servicing volume, at $233.2 billion.

Following Wachovia are GMAC Commercial, with $231.5 billion, Midland Loan Services, with $159 billion, and Wells Fargo, with $95.5 billion. (They are also the top four primary and master servicers for commercial mortgage-backed securities.) Rankings of servicing for life company loans place Prudential Asset Resources at the head of the list, the trade group reported, followed by GMAC, NorthMarq Capital, and Q10 Capital. Deutsche Bank is ranked No. 1 for servicing of Fannie Mae and Freddie Mac loans, followed by Washington Mutual, GMAC, and ARCS Commercial Mortgage. Wachovia is No. 1 for servicing of commercial bank and savings institution loans. The MBA can be found online at http://www.mortgagebankers.org.

MBA: Commercial Originations Surged in '05

February 7, 2006
Originations of commercial and multifamily loans were 48% higher in 2005 than in 2004, according to the Mortgage Bankers Association.

Fourth-quarter 2005 originations were also 16% higher than third-quarter originations, and the highest ever recorded in the trade association's quarterly survey, according to the MBA. "The favorable conditions that led to records in 2005, such as continued low interest rates, an abundance of capital, and a strong economy, should remain strong as we progress through 2006," said MBA chief economist Doug Duncan. For 2005, originations for commercial banks rose 60%, commercial mortgage-backed securities conduit originations rose 83%, and originations for life insurance companies increased 25%. Multifamily was the dominant property type for the year, accounting for 36% of originations. In a press briefing at the MBA's commercial real estate finance convention in Orlando, Fla., Mr. Duncan said he expects this year to be as good as 2005, or even better, in terms of loan production. He said he expects consumer spending to slow down this year, and his forecast calls for the 10-year Treasury note to be in the 4.8%-5.0% range and for the Federal Reserve to raise its target federal funds rate at least once more.

TRAC Reports Name, Symbol Changes

January 27, 2006
TRAC Financial Group Inc., Huntington Beach, Calif., which says it will pursue merger-and-acquisition candidates in the mortgage industry, has announced a change in its trading symbol to reflect its name change from Paramco Financial Group.

The company will now trade on the Pink Sheets under the symbol TCFG. TRAC said it has undergone a restructuring of its capital and will operate as a financial services holding company. The company said it plans to acquire mortgage brokers and mortgage bankers with production consisting of loans to entry-level Federal Housing Administration borrowers as well as luxury homebuyers.

7WTC Signs Major Tenant

January 26, 2006
A major tenant, Beijing Vantone Real Estate, has been signed on for at least 200,000 square feet of space on the top five floors of 7 World Trade Center, and a preliminary, nonbinding agreement has been signed on the deal, according to Silverstein Properties.

Beijing Vantone, a Chinese real estate developer and the anchor tenant at the property, says it expects to use the space, floors 47 through 52, as a hub for Chinese companies locating offices in New York and for U.S. and other firms looking to invest in China. The development "represents a significant demonstration of confidence in downtown's rebuilding and again reinforces Lower Manhattan's position as the financial capital of the world," said New York Gov. George E. Pataki.

MBA Predicts 19.5% Production Decline

January 26, 2006
Citing a cooling housing market and higher interest rates, the Mortgage Bankers Association is forecasting that residential production will drop by almost 20% this year.

The trade group says it expects residential funders of all stripes to originate $2.24 trillion in 2006, compared with $2.79 trillion last year. According to the Quarterly Data Report, a MortgageWire affiliate, mortgage bankers funded $3.02 trillion in 2005 (preliminary) and $2.87 trillion in 2004. Compared with the QDR figure for 2005, loan production could slip by 26% if the MBA's forecast proves true. MBA officials -- including MBA chairman Regina Lowrie -- acknowledged declining profit margins as a huge concern for the industry. "Investors are no longer paying premium prices for loans," Ms. Lowrie said at a press briefing. Despite the bad news for residential, the trade group says 2006 could be a good year for commercial mortgage bankers. "Capital continues to flow into the commercial and multifamily real estate markets on both the debt and equity sides," said MBA chief economist Doug Duncan. The MBA can be found online at http://www.mortgagebankers.org.

HUD Earmarks $58M for YouthBuild

January 25, 2006
The Department of Housing and Urban Development has earmarked $58 million in grants as part of its YouthBuild Program, which offers job training and continuing education to an estimated 4,300 low-income young people.

HUD said the funds will be used to help them return to school, graduate, begin new careers in various homebuilding and construction trades, and at the same time build or renovate nearly 2,000 affordable homes "for lower-income families, many facing homelessness." In addition, HUD said the grants are expected to generate millions of additional dollars from other public and private sources. HUD Secretary Alphonso Jackson said the grants are expected to help young people (of ages 16 to 24) earn their high school diplomas and "open the door to their economic futures."

AHM Buying Most of Waterfield

January 13, 2006
A day after disclosing that its fourth-quarter earnings would be smaller than expected, American Home Mortgage Investment Corp., Melville, N.Y., has announced an agreement to purchase Waterfield Financial, a top-50-ranked residential lender based in Fort Wayne, Ind.

No purchase price was disclosed. A spokeswoman for AHM said the publicly traded mortgage real estate investment trust is not acquiring the $19 billion residential servicing portfolio of WF's Waterfield Mortgage unit. "They have other plans for that portfolio," the spokeswoman said. (Waterfield said in a statement that it has reached a tentative agreement to sell the portfolio to an undisclosed buyer.) However, AHM will take control of Waterfield's 46 retail, wholesale, and correspondent branches, which are spread out among 16 states. Officials at the bank-owned mortgage firm could not be reached for comment by deadline time. AHM ranks 16th among all residential funders, according to the Quarterly Data Report, a MortgageWire affiliate. Michael Strauss, AHM's chief executive officer, apologized for the timing of the acquisition announcement, saying purchase talks had been under way "for some time." AHM can be found online at http://www.americanhm.com.

BRT Obtains New Credit Facility

January 12, 2006
BRT Realty Trust, a real estate investment trust based in Great Neck, N.Y., has reported closing on a new credit facility of up to $150 million.

The new facility, which replaces an $85 million line of credit and a $15 million credit line, is provided by North Fork Bank, Valley National Bank, Merchants Bank Division, Signature Bank, and Manufacturers and Traders Trust Co., the company said. It has a maturity date of Feb. 1, 2008, and provides for two one-year renewal options. BRT, a mortgage REIT, can be found online at http://www.brtrealty.com.

NAR Raps Grant of CRE Development Authority

January 11, 2006
The National Association of Realtors is objecting to authority granted to Bank of America and PNC Financial Services Group by the Office of the Comptroller of the Currency to develop commercial real estate.

The Washington-based trade association says the move puts national banks "uncomfortably close" to the area of commercial real estate brokerage and sees this as a conflict with the Gramm-Leach-Bliley Act. PNC is investing $122 million in a commercial real estate complex near its Pittsburgh headquarters, the NAR said, and PNC employees are expected to occupy only 22% of the office and hotel space at the property. Bank of America plans to develop a hotel in Charlotte, N.C., and use more than 37.5% of the rooms annually. NAR president Tom Stevens said the OCC approvals "bring banks closer to controlling commercial real estate projects from top to bottom" and that if they get into real estate brokerage activities, leading to consolidation in this area, consumers stand to suffer. The NAR has filed a Freedom of Information Act request to determine whether the OCC has granted similar permission to other banks.

Saxon Touts New Mortgage Trade Name

January 6, 2006
Saxon Capital Inc., a real estate investment trust based in Glen Allen, Va., has announced that it is now conducting the retail business of Saxon Mortgage Inc., a wholly owned indirect subsidiary, under the trade name Saxon Home Mortgage.

The move, representing a consolidation of all the residential mortgage REIT's production channels into Saxon Mortgage, was accomplished by merging another wholly owned indirect subsidiary, America's MoneyLine Inc., into Saxon Mortgage. "This name change is an important step in the company's continuing effort to restructure its direct-to-consumer lending platform," said James V. Smith, executive vice president of production at Saxon Capital. The company can be found online at http://www.saxoncapitalinc.com.

REIT Returns Lead the Pack

January 5, 2006
The real estate investment trust sector recorded a total return of 8.3% in 2005, beating other market benchmarks for the period, according to the National Association of Real Estate Investment Trusts.

This return on the NAREIT Composite index compares with a 4.91% return on the S&P 500 index and a 1.37% return on the NASDAQ Composite, according to the Washington-based REIT industry trade group. Taking into account only changes in REIT prices, and leaving out dividend payouts, the REIT sector recorded a total return of 2.51% last year. NAREIT can be found online at http://www.nareit.com.

FTC Investigating Bear's EMC

January 3, 2006
The Federal Trade Commission has launched a preliminary investigation into the residential servicing practices of Bear Stearns' servicing affiliate to see whether the company is violating consumer protection laws.

The investment banker disclosed that it has received a civil investigative demand from the FTC "seeking documents and data relating to EMC Mortgage Corp.'s business and servicing practices." Based in Irving, Texas, EMC Mortgage services $51.8 billion in first and second mortgage loans, according to the Quarterly Data Report, a MortgageWire affiliate. The company is known in the industry as a "scratch-and-dent" servicer, specializing in troubled mortgages. The FTC confirmed the investigation, and Bear Stearns said EMC Mortgage is cooperating with the government. Bear disclosed the inquiry in a mortgage securitization filing with the Securities and Exchange Commission.

Republic Property Trust Prices IPO

December 19, 2005
Republic Property Trust, a real estate investment trust based in Washington, D.C., has priced its initial public offering of 20 million common shares at $12 per share.

The office REIT said it plans to use the net proceeds of the offering to repay debt, redeem the ownership interests of certain partners in its predecessor, and satisfy certain tax and other liabilities and fees. The stock will trade on the New York Stock Exchange under the symbol RPB. Lehman Brothers Inc. and Bear, Stearns & Co. were the joint book-running managers of the offering.

Corrections REIT Changing Name

December 16, 2005
Correctional Properties Trust, Palm Beach Gardens, Fla., has announced that it will change its name to CentraCore Properties Trust at the close of business on Dec. 20.

The real estate investment trust said it will continue to acquire and develop correctional facilities. "However, we have expanded our scope to include essential real estate projects outside the corrections sector, including mental health and higher education facilities," said Charles R. Jones, the REIT's president and chief executive officer. The company's common stock will continue to trade under the symbol CPV. The trust can be found on the Web at http://www.correctionalpropertiestrust.com.

NAR Ads Favor Mortgage Deduction

December 6, 2005
The National Association of Realtors has launched a new print advertising campaign, warning that home values could fall 15% if the mortgage interest deduction were capped and converted into a tax credit.

The NAR ads began running in Roll Call, a political newspaper, and also will appear in The Hill, the Washington Times, and The Weekly Standard. An NAR spokeswoman declined to say how much the Realtor trade group is paying for the ads. A month ago the president's tax panel recommended capping the mortgage interest deduction at $227,147 (in some areas), while eliminating tax breaks for home equity loans and second homes. The NAR can be found online at http://www.realtor.org.

REIT Changes Name to Winthrop

December 1, 2005
First Union Real Estate Equity and Mortgage Investments, Boston, has changed its name to Winthrop Realty Trust, and its operating partnership, First Union REIT LP, has changed its name to WRT Realty LP.

Michael L. Ashner, Winthrop's chairman and chief executive officer, said the name change "enables us to more closely identify with our management team and the investment philosophy we have developed at Winthrop over the past nine years and eliminate the continuing confusion engendered by the similarity between the trust's former name and that of the former First Union bank." Winthrop, a real estate investment trust, will continue to trade on the New York Stock Exchange under the ticker symbol FUR.

Genworth to Join S&P 500

November 30, 2005
Genworth Financial Inc., the Richmond, Va.-based insurance company whose units include the former GE Capital Mortgage Insurance Corp., Raleigh, N.C., will be added to the S&P 500 at the close of trading on Dec. 1, according to Standard & Poor's.

It will be replacing the 500th-largest company in the index, Calpine Corp., whose sub-industry is listed as independent power producers and energy traders. In a related announcement, GE, which spun off Genworth in May 2004 and still holds a substantial amount of its shares, will be selling 38 million shares of Genworth common stock in a secondary offering that will price after the close of trading Dec. 1. GE said the timing of the offering "will allow shares to be sold to meet anticipated investor demand for Genworth shares" when it becomes part of the S&P 500. GE added that it will not sell any more Genworth shares this year, but reiterated that it will totally divest itself of Genworth by the end of 2006. Morgan Stanley & Co. is the sole bookrunner and manager for the offering. Genworth closed on Nov. 29 at $34.00 per share, opened the following day (after the S&P announcement) at $34.99 per share, and as of midday Nov. 30 had settled back to $34.35 per share.

Commercial/MF Originations Set Record

November 17, 2005
Commercial and multifamily mortgage loan originations surged to a record $58.3 billion in the third quarter, 31.2% higher than in the second quarter and 64% higher than in the third quarter of 2004, according to the Mortgage Bankers Association.

In addition, year-to-date originations are 43.6% higher than they were last year at this time, the trade association said. "Capital continues to flow into the commercial and multifamily real estate markets on both the debt and equity sides," said Doug Duncan, the MBA's chief economist. The $22.8 billion increase in lending over that of last year's third quarter was led by a 531% increase in loans on hotel properties. Lending volume on other property types also increased, with office-backed loans up 55%, multifamily lending up 45%, lending on retail properties up 33%, and lending on industrial space up 80%. Originations for commercial mortgage-backed securities conduits were up 144% from those of the third quarter of 2004, followed by originations for commercial banks, which were up 33%.

Nonbank Subs May Face Fed Scrutiny

November 9, 2005
The Federal Reserve Board is prepared to examine nonbank subsidiaries of bank holding companies in certain cases where Home Mortgage Disclosure Act data point to possible fair lending violations, according to a Fed official.

Although the Fed regulates BHCs, it rarely examines the mortgage banking and consumer finance subsidiaries of holding companies. The Federal Trade Commission has enforcement powers over those entities. But a Federal Reserve Board policy allows for exceptions under special circumstances, according to Fed special counsel Robert Cook. In cases where the HMDA data are "fairly definitive," Mr. Cook said, Fed examiners would approach an institution to seek more information about the disparities that showed up in the subprime loan pricing data. "We would ask what they have done about it and then work out something on whether they will share it with us," Mr. Cook told MortgageWire. In severe cases, "they could go in and do an exam," he said. The Fed special counsel indicated that Fed examiners have approached four or five BHC subsidiaries where the pricing data have raised concerns about disparate treatment of minority borrowers. The Fed can be found on the Web at http://www.federalreserve.gov.

1st Advantage, FirstAm Buy Stake in LeadClick

November 8, 2005
First Advantage Corp., St. Petersburg, Fla., and First American Corp., Santa Ana, Calif., have jointly acquired a 75% ownership share of LeadClick Media Inc., an online lead generation and marketing company based in San Francisco.

The purchase price is $150 million, of which First American contributed $45 million in cash and First Advantage the rest in a combination of cash, stock, and notes. LeadClick provides its services to the real estate, automotive, and financial services markets. "These lead generation data services will complement both First American and First Advantage by adding a valuable line of high-quality business leads that we can sell to our customers," said Parker S. Kennedy, chief executive of First American and chairman of First Advantage. "The services will improve the sales efficiency of our customers, helping them to close more transactions and, in turn, consume more of our other products and services." The terms of the agreement have the buyers acquiring the remaining 25% of LeadClick over the next three years. First Advantage became a publicly traded company in June, with First American owning the majority of its stock.

Nearly 100 Mortgage Banks Under HMDA Review

November 7, 2005
Nearly half of the 200 lenders identified by the Home Mortgage Disclosure Act data for possible fair-lending violations are independent mortgage banks, according to a Federal Reserve Board official.

Speaking at a Consumer Bankers Association fair-lending conference in Washington, Fed senior adviser Glenn Canner also noted that most of the 200 lenders (who have been notified that they will have to explain their lending practices to regulators) operate nationally and accounted for 48% of owner-occupied HMDA-reported loans in 2004. Mr. Canner said the independent mortgage banks were referred to the Federal Trade Commission, the Department of Justice, and the Department of Housing and Urban Development for further review. The rest of the 200 lenders are depository institutions, and they are being examined by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the Fed. Only two lenders are credit unions. The Fed, which began notifying banks on its list back in June, officially released its 2004 HMDA data in early September.

Exchange to Trade CBRE Options

November 3, 2005
The Pacific Exchange, San Francisco, has begun trading options on CB Richard Ellis Group, the real estate investment management firm based in Los Angeles.

The options will trade on the March expiration cycle with exercise limits set at 7.5 million shares. The issue will be traded by lead market makers Ross Goodheart, Ken Keating, and Barterv Vartanian of Group One Trading LP.

September Best Month for MIs

November 2, 2005
Helped by an increase in the amount of bulk primary new mortgage insurance written, September was the best month of the year for the private mortgage insurers.

According to the Mortgage Insurance Companies of America, the member companies of the trade group wrote $23.9 billion of primary new insurance during the month, up 7.7% from $22.2 billion in August. In September 2004, the total was $19.2 billion. However, the mortgage insurers wrote less traditional primary new insurance in September. In August, these firms did almost $16 billion in such business, but it fell to $14.7 billion in September. Bulk insurance increased from $6.2 billion to $9.2 billion. Application volume decreased slightly, from 156,899 in August to 156,630 in September. New pool risk written rose from a revised figure of $40.6 million in August to $81.8 million the following month. September's cure/default ratio, after improving in August, fell back to 72.1%. There were 32,221 cures and 44,711 defaults during the month. MICA can be found online at http://www.micanews.com.

Cut in Mortgage Tax Break Headed to Bush

November 1, 2005
A final recommendation to cap the mortgage interest deduction at $300,000 was headed to the White House and Treasury Department on Tuesday with the home finance and real estate industries in stiff opposition.

Trade organizations and their lobbyists are girding for battle, even though many believe the recommendation will likely not be adopted. (The proposal is part of a larger effort by the executive branch to simplify the U.S. tax code.) On Tuesday afternoon the National Association of Mortgage Brokers joined Reps. Robert Wexler, D-Fla., and Katherine Harris, R-Fla., at a news conference after the two elected officials introduced a resolution calling for protection of the current mortgage interest tax deduction of $1 million. Edward Yingling, president of the American Bankers Association, said lowering the deduction ceiling "would have negative implications for the value of investments people have made in their homes."

Prime Property Fund to Buy AMLI

October 27, 2005
Prime Property Fund, a real estate fund managed by Morgan Stanley Real Estate, New York, is acquiring AMLI Residential Properties Trust for about $2.1 billion in an all-cash transaction that will take the REIT out of the publicly traded real estate arena.

The management of the Chicago-based real estate investment trust will continue in their roles after the acquisition closes, Prime reported. Prime will acquire all of AMLI's common shares and operating partnership units for $37.75 per share/unit in cash. This represents a 20.7% premium over AMLI's closing price of $31.27 on Oct. 21. The total merger consideration also includes AMLI's debt and preferred securities. "Multifamily is attractive because of its volatility and higher risk-adjusted returns relative to other property types," said Dave Hardman, Morgan Stanley's head of U.S. real estate investing. "AMLI represents an opportunity to acquire a large portfolio of high-quality multifamily assets, an outstanding multifamily management team and organization, strong development capabilities, and a recognized brand name in the sector."

10-Year Yield Nears '05 High

October 26, 2005
The long-term rate-indicative 10-year Treasury yield approached its highs for the year Wednesday morning when it was trading around 4.57%.

The benchmark yield has traded roughly between 3.90% and 4.60% in the past 12 months, according to Yahoo! Finance. The 10-year yield hasn't been this high since the spring.

Flagstar Introduces Digital Doc Platform

October 24, 2005
Flagstar Bank, Troy, Mich., has announced the general availability of its Digital Document Transfer platform and specification for electronic document exchanges through six mortgage technology companies.

The six companies partnering with Flagstar are Advectis Inc., Investor Purchase and Delivery Services Inc., Pyramid Solutions Inc., Stewart Mortgage Information, Tradewinds Mortgage Document Preparation Co., and VirPack. The partners have enhanced their electronic document management products or services to allow for the creation or acceptance of SMART (securable, manageable, archivable, retrievable, and transferable) documents and electronic packages that conform to the DDT specification, Flagstar said. The specification is based on the SMART document format established by the Mortgage Industry Standards Maintenance Organization. Flagstar can be found online at http://www.flagstar.com.

MBA Chair to Form Leadership 'Think Tank'

October 24, 2005
In her first official act as chair of the Mortgage Bankers Association, Regina Lowrie says she will create a new council to develop a "tactical plan" that will serve as a guide for the now 3,000-member trade group through the next decade.

Described by the Horsham, Pa., lender as a "think tank," the panel of 15-20 members will include "some of the most accomplished leaders" in the housing finance field, Ms. Lowrie said at the MBA's annual convention in Orlando. She said she has "someone in mind" to chair the council but declined to name the person because he, or she, hasn't been asked as yet. Ms. Lowrie told MortgageWire that the group will consist of nonpartisan, independent thinkers who represent all facets of the "food chain," including large and small, commercial and residential, and all the production channels. The MBA's current three-year strategic plan is entering its second year, and Ms. Lowrie expects the council's report, due by the end of summer 2006, to set the framework for the trade group's next blueprint. "I think that, as the trade association that speaks for the housing finance industry, this is a major undertaking," she told MW. "This will be a big part of my legacy."

MBA: Show Will Go On Despite Hurricane

October 20, 2005
The Mortgage Bankers Association said Wednesday that its annual convention will begin on schedule in Orlando, Fla., this Sunday despite the fact that Hurricane Wilma is threatening the southern part of the state.

"Nothing has changed," said a trade group spokeswoman. "We are not canceling." Paul Green, the MBA's senior vice president of corporate relations, issued a statement saying that the MBA is closely tracking the hurricane but that, based on "facts being provided by the National Hurricane Center," Hurricane Wilma will be "well south" of Orlando. The storm is expected to make landfall in the next few days, reaching the South Florida mainland late Saturday night.

Bush Tax Panel Targets HELOCs, 2nd Homes

October 18, 2005
The president's tax reform panel is recommending that "no more tax preferences" be given to home equity loans and second homes.

At a public hearing Oct. 18 discussing major changes to the U.S. tax code, panel member Elizabeth Garrett said the current mortgage interest deduction would be changed to a "home credit" where up to 15% of mortgage interest paid to build or acquire a home would count as a tax credit. The panel reiterated a previously disclosed recommendation to cap the mortgage interest deduction at loan sizes of about $300,000, down from the current $1 million level. The panel also wants to eliminate the tax-deductibility status of local real estate taxes. Jeffrey Zeltzer, president of the National Home Equity Mortgage Association, said his trade group is against eliminating the current tax breaks for HELOCs. "For the middle class, what else is there?" he asked. "We disagree with the idea."

NAR: Deduction Issue Chilling Market

October 17, 2005
The possibility that the president's tax reform panel will recommend a reduction in the mortgage interest tax deduction is "already chilling" parts of the housing market, particularly in high-cost areas, according to the National Association of Realtors.

The tax reform panel "must understand that limiting or eliminating tax benefits will have an adverse impact on housing markets and the value of housing," NAR president Al Mansell says in the letter. At a public meeting Oct. 11, panel members discussed a proposal to reduce the $1 million mortgage cap on the interest deduction to about $300,000. America's Community Bankers is warning that the panel's "ill-advised proposal" could push the economy into a recession. And the trade group is urging the tax reform panel to reconsider any decision to reduce the MID. "Changing the interest deduction as proposed would constitute an abandonment of support for the housing aspirations of millions, and greatly diminish the net wealth of middle-class families," ACB executive vice president Robert Davis says in a letter. The panel is scheduled to report its tax reform recommendations to President Bush by Nov. 1.

CFC Cites Strong Volume, but Stock Falls

October 11, 2005
Countrywide Home Loans, the nation's largest residential lender, funded $49 billion in mortgages during September, a 58% gain from the volume in the same month last year, but the news didn't help its stock price.

For the quarter ended Sept. 30, Countrywide funded a record $146 billion, according to figures released by the company Oct. 11. In trading Tuesday, its share price fell about 1% to $30.70, just 40 cents above its 52-week low. Even though Countrywide's September-to-September production increased nicely, it was down 7.8% from the August level. At the end of the third quarter its servicing portfolio totaled $1.047 trillion, a 32% annualized gain. Over the past two months many publicly traded subprime stocks -- especially real estate investment trusts -- have tested new lows. Countrywide, though, is not a REIT. It ranks third among subprime funders, according to the Quarterly Data Report.

Fannie Shares Regain Some Ground

September 29, 2005
Fannie Mae shares rose 3.5% in morning trading Sept. 29 after falling almost 11% Wednesday in the wake of a critical news report.

In heavy trading volume, Fannie Mae shares rose by $1.56 and stood at $43.27 shortly after noon. Almost 11 million shares had traded hands Thursday morning, making Fannie Mae one of the New York Stock Exchange's volume leaders. Dow Jones had published an article online Sept. 28 citing unnamed sources saying that Fannie Mae's accounting scandal might be more widespread than previously reported, touching off Wednesday's selloff of the stock.

Commercial/MF Debt Passes $2.4T

September 27, 2005
Commercial and multifamily mortgage debt outstanding passed the $2.4 trillion mark in the second quarter, an increase of 3.1% from the level recorded in the first quarter, according to the Mortgage Bankers Association.

Commercial banks held the largest share of the total, at $1.05 trillion, or 43%, the trade association said. Commercial mortgage-backed securities conduits were next, holding $467 billion, or 19%, of the debt outstanding. Life insurance companies held $258 billion, or 11% of the total, and savings institutions held $191 billion, or 8%. The government-sponsored enterprises held another 8% of the total. "This sustained investment in commercial and multifamily real estate shows up in record origination volumes, record loan servicing volumes, record levels of CMBS issuance and, here, in record levels of commercial/multifamily mortgage debt outstanding," said Doug Duncan, the MBA's chief economist. The MBA can be found online at http://www.mortgagebankers.org.

MBA, NHEMA, NAMB Make History

September 15, 2005
For the first time ever, leaders from the Mortgage Bankers Association, the National Home Equity Mortgage Association, and the National Association of Mortgage Brokers came together on the same stage Sept. 14 for the Nonprime Forum in Philadelphia.

At the conference, co-sponsored by the NAMB and NHEMA, the trade groups said a uniform national lending standard is necessary for the good of the industry. "Five or ten years ago, I never would have thought this could happen," said Debbie Rosen, chair of NHEMA and managing director of subprime lending at Countrywide Home Loans. "Issues with [the Home Mortgage Disclosure Act and the Real Estate Settlement Procedures Act] opened our eyes. We are better and stronger together rather than separate." Ms. Rosen said financial literacy is more important than ever before. Programs like Borrow Smart focus on consumer choice and education, she said. "Consumer groups can't say we aren't doing anything," Ms. Rosen declared. "We are getting people out of apartments and into homes, creating opportunities in their community." The organizations can be found online at http://www.mortgagebankers.org, http://www.nhema.org, and http://www.namb.org.

MBA Fears Katrina-Related Liquidity Crisis

September 15, 2005
The nation's largest mortgage trade group has asked Congress for assistance in dealing with a possible liquidity crisis for lenders brought on by Hurricane Katrina-related damage.

In prepared testimony before Congress on Thursday, the Mortgage Bankers Association said that in regard to Katrina, "The most immediate need of mortgage companies is liquidity." Testifying for the MBA, IndyMac Bank senior vice president J.K. Huey applauded Freddie Mac for allowing servicers to suspend interest payments on loans affected by Katrina, while expressing her desire that other "holders, guarantors, or owners of mortgage loans will follow with similar policies." The trade group estimates that almost $7 billion in government-insured loans are in the Katrina disaster area. It wants Ginnie Mae to continue making payments on loans it has guaranteed there, but without declaring an affected issuer in technical default. "Such a determination of default creates a sizable business hardship for any financial institution," Ms. Huey said in her prepared testimony.

Lenders Gird for HMDA Onslaught

September 9, 2005
On the eve of the release of the 2004 Home Mortgage Disclosure Act data, lenders are preparing for an onslaught of inquiries from the press, regulators, federal investigators, and class action attorneys to explain any racial disparities in their pricing of subprime loans.

The 2004 HMDA data includes subprime pricing data for the first time, coupled with the race, ethnicity, and sex of the borrowers, along with geographic location. Lenders should have a good understanding of their own HMDA data, but they won't know how they stack up against competitors until federal regulators release their annual summary of the HMDA data, possibly as soon as Sept. 12. "Where you stand relative to other organizations is really going to be the best indicator of what your risk is with respect to enforcement, examination, and litigation," Skadden, Arps attorney Andrew Sandler told a Mortgage Bankers Association compliance conference. The Department of Justice, the Federal Trade Commission, and the Department of Housing and Urban Development, along with the banking regulators, will be analyzing the HMDA data to identity lenders with the worst disparities. "I would suspect that three, five, or seven lenders will have letters from the Justice Department some time in the next several weeks," Mr. Sandler said.

Appraisal Group Offers Disaster Info

September 7, 2005
The Appraisal Institute has announced a Web board to enable members in areas affected by Hurricane Katrina to discuss appraisal issues online and find publications related to appraising property after a natural disaster.

The organization said it has organized a bibliography of articles and publications on the subject that can be accessed in the members-only section of its website. The institute is offering a 40% discount on its publications to members located in Louisiana and Mississippi, and to members in other affected states on a case-by-case basis. The trade group can be found on the Web at http://www.appraisalinstitute.org.

Illinois Lender Inks Deal With Investment Fund

September 6, 2005
United Financial Mortgage Corp., Oak Brook, Ill., a fast growing, publicly traded lender, has agreed to sell its business to the Airlie Group, a private investment fund based in Greenwich, Conn.

Airlie affiliates ARH Mortgage and Airlie Opportunity Master Fund have agreed to pay $5.64 a share for UFMC, a 30% premium from its share price when the market closed Sept. 2. National Mortgage News broke the news in its Sept. 5 issue that Airlie was talking to UFMC about a deal. For its fiscal year ending April 30, UFMC funded $2.7 billion in loans. It has 50 branch offices, compared with 35 a year ago. Founded almost 20 years ago, UFMC has a $1.7 billion mortgage servicing portfolio and $258 million in assets, according to documents filed with the Securities and Exchange Commission. (See NMN for more details.) UFMC can be found online at http://www.ufmc.com.

UK Mortgage Disclosures Falling Short?

August 15, 2005
Two U.K. mortgage disclosures need to be provided more consistently to customers at the right time in the sales process, according to a recent Financial Services Authority survey that examined firms' sales processes under new mortgage rules.

In reaction to the survey, the U.K.'s Council of Mortgage Lenders acknowledged that "there is still work to do to make sure that the Initial Disclosure Document (IDD) and Key Facts Illustration (KFI) are consistently provided to customers at the right time in the sales process." However, the trade group noted that the FSA's survey also "found various examples of good practice within the industry." The CML can be found on the Web at http://www.cml.org.uk.

HUD Chief: Input Yes, Negotiation No

July 29, 2005
The nation's housing secretary on Thursday cautioned participants in HUD's third public RESPA forum that, although the government values their input, "this is not negotiated rulemaking."

Department of Housing and Urban Development Secretary Alphonso Jackson reminded industry executives and trade group representatives that, "We all realize that there has to be change" when it comes to the Real Estate Settlement and Procedures Act. The agency, though, has offered no specific timetable on when it will issue a new rule and has offered no guidance on what might change in regard to loan closing practices and disclosures. One broker participant in Thursday's forum told HUD officials that, "When you give a consumer too many choices, they can't decide." HUD revealed that back in 2004 it tested new RESPA disclosure forms with at least 600 consumers, but then scuttled RESPA reform entirely. The agency is now vowing to change RESPA in some fashion, soliciting the industry's advice. (See the Aug. 1 issue of National Mortgage News for the full story.)

KBW Launches Mortgage Finance Index

July 25, 2005
Keefe, Bruyette & Woods Inc., New York, has announced the launch of the KBW Mortgage Finance Index, consisting of 24 mortgage bankers, mortgage insurers, title insurers, government-sponsored enterprises, and banks and thrifts with considerable mortgage portfolios or operations.

The index includes Fannie Mae, Freddie Mac, Countrywide Financial Inc., Golden West Financial Corp., and Washington Mutual Inc. Options on the index were scheduled to begin trading July 26 on the Philadelphia Stock Exchange. "Our growing family of publicly traded index products empower market participants to make and hedge investments in each of the primary subsectors of the financial services sector of the market," said Thomas Michaud, KBW's vice chairman and chief operating officer. KBW can be found on the Web at http://www.kbw.com.

NAMB Wants Testing Before RESPA Reform

July 22, 2005
The National Association of Mortgage Brokers would like to see outside testing applied to any final revision of the Real Estate Settlement and Procedures Act introduced by the Department of Housing and Urban Development, says the group's president, Jim Nabors.

Speaking at the annual convention of the Florida Association of Mortgage Brokers in Kissimmee, Fla., Mr. Nabors said such testing should be done before the rule goes into effect and should be like the testing done by the Federal Trade Commission on the rule HUD ended up withdrawing last year. During his brief remarks, Mr. Nabors noted that the NAMB was one of three groups that HUD invited to all six roundtables (three in Washington and three small-business meetings being held across the nation), a fact he termed "pretty impressive." Nothing is close to being finalized, he said, adding that he believes HUD is "keeping an open mind." Regarding packaging of services, which the NAMB opposes, Mr. Nabors said it is too new a concept to be made law under RESPA reform.

RESPA Participants Not So Sure About Reform

July 15, 2005
Participants in the Department of Housing and Urban Development's first-ever RESPA reform forum voiced the opinion that perhaps significant changes in settlement practices are not needed after all.

At the end of a three-hour public forum on reforming the Real Estate Settlement Procedures Act, HUD moderator Charles Field asked the 35-plus participants whether they would be upset if nothing were done to change the regulation. Those who replied suggested that the market would be just fine. "If nothing is done, it would be okay," an official from the Nebraska Realtors Association said. "The market is working. If you change it, you would have to educate the consumer all over again." An executive from First American Land Title added, "We don't need a rule to accomplish changes." Representatives from consumer groups want mortgage customers to have the ability to comparison-shop for a one-price closing package, but lenders and others in real estate finance, while open to the idea, are not certain how to accomplish such a task. Regina Lowrie, chairman-elect of the Mortgage Bankers Association, told Mr. Field that "whatever we do in RESPA we need to do it right, not fast." The MBA also voiced concern that the trade group, which represents 2,900 mortgage-related firms, was invited to participate in just one of HUD's six public forums on RESPA reform. (For the full story, see the July 18 issue of National Mortgage News.)

Digital Realty Announces Stock Offering

July 14, 2005
Digital Realty Trust Inc., San Francisco, has announced a public offering of 4.2 million shares of common stock and 2.2 million shares of series B cumulative redeemable preferred stock.

The company said it intends to grant the underwriters an option to buy up to 630,000 additional shares of common stock and up to 330,000 shares of the preferred stock to cover any overallotments. Citigroup and Merrill Lynch & Co. are the joint book-running managers for the common stock offering and, together with UBS Investment Bank, for the preferred stock offering. Digital Realty, which describes itself as the first publicly traded real estate investment trust to focus solely on the ownership of technology real estate, can be found online at http://www.digitalrealtytrust.com.

CapTech to Seek Amex Listing

July 14, 2005
CapTech Financial Group, a Lighthouse Point, Fla.-based holding company for title agencies, says it will apply for listing on the American Stock Exchange in view of its planned acquisition of Your Title Choice Inc., which has offices in Fort Lauderdale and Tampa.

The deal would add $4 million in revenues to CapTech, which currently trades over the counter, thus qualifying it to pursue listing on Amex, the company said. The agencies that CapTech owns do business as National Security Title. CapTech acquired the original National Security Title, which has offices in Lighthouse Point and Tampa, in June. The company said then that the goal was to build a nationwide business of title agencies. As of midday July 14, it was trading at 32.7 cents per share, up 5.7 cents on the day.

Roundtable Stirs Hopes of RESPA Revelation

July 13, 2005
Lenders and others attending a Real Estate Settlement Procedures Act roundtable Thursday afternoon are anticipating that HUD will finally reveal a RESPA reform rule it shelved in March 2004 due to industry and congressional opposition.

One source indicated that the Department of Housing and Urban Development might provide a description of the rule, which was developed by former HUD Secretary Mel Martinez, but not an actual copy. HUD declined to comment. "I think that would be very, very useful because we would have something specific to talk about and not talk in generalities," said mortgage banking attorney Robert Lotstein. Many participants are approaching the four-hour roundtable discussion with skepticism and caution because HUD Secretary Alfonso Jackson has not revealed his approach to RESPA reform, and 35 groups will be attending Thursday's event. "How can it be constructive with that many people in the room?" one trade group executive asked. Others are wondering why HUD is pushing RESPA reform without putting something on the table. "We have no reason to be positive about something we haven't seen," said Tim Gearan, senior legislative representative for the AARP.

Irwin Advises of MSR Impairment

July 7, 2005
Irwin Financial Corporation, Columbus, Indiana, said it expects to report net impairment of about $27 million against its mortgage servicing rights for the second quarter.

The pre-tax impairment charge reflects the difficulty of hedging MSRs under Irwin's accounting methods and a decline of about 60 basis points in the 10-year Treasury rate during the quarter, the company said. The continued flat yield curve in the bond market hampered option-based hedging as well, the company said. To reduce the risk of continued MSR impairment, Irwin said it sold servicing rights on $3.2 billion of home loans in bulk trades, resulting in a pre-tax gain on sale of about $7 million during the quarter. MSRs on another $1.6 billion of loans were sold on a flow basis. Irwin said its MSR portfolio would be about $20 billion after the sales, down from $29 billion a year earlier.

Former E*Trade Execs Now at AHMIC

July 6, 2005
A number of executives who formerly worked for E*Trade's correspondent unit have joined a new correspondent division at American Home Mortgage Investment Corp.

Rick Pishalski, AHMIC's new executive vice president and correspondent lending director, previously was correspondent channel senior executive and business manager at E*Trade Financial Mortgage Services; Jim Chatman, AHMIC's new vice president and Southeast account executive, previously was VP, Southeast Lending at E*Trade; Dan Ferris, AHMIC's new VP and Pacific Northwest AE, previously was VP, Southeast Lending, at E*Trade; and Brideen Gallagher, AHMIC's new VP and Northeast AE, previously was VP, Northeast lending at E*Trade. E*Trade said earlier this year that it planned to phase out its correspondent division. AHMIC can be found online at http://www.americanhm.com.

Groups Seek Provision to GSE Reform Bill

July 6, 2005
Four trade groups want the House to strike a provision from the GSE regulatory reform bill that would raise the conforming loan limit in high-cost areas and allow Fannie Mae and Freddie Mac to purchase jumbo loans.

The bill would allow the two government-sponsored enterprises to purchase loans of up to $540,000 in high-cost metropolitan areas of California, Massachusetts, New York, Washington, D.C. and Florida. The conforming loan limit is currently $359,650. America's Community Bankers, Association of Financial Guaranty Insurers, Consumer Mortgage Coalition, and the Financial Services Roundtable/Housing Policy Council argue that raising the conforming loan limit would produce little benefit for higher income families since an active secondary market for jumbo loans already exists. However, it would "unnecessarily expand the systemic risks inherent to the operations of the enterprises, and would divert attention and resources from the [GSEs'] mission of servicing low- and moderate-income homebuyers," the trade groups say in the July 1 letter to House members.

10-Year Yield Dips to 3.9%

June 27, 2005
The rate-indicative 10-year Treasury yield has been falling, and as of Monday morning had slipped back to the 3.9% level at which refinancing may pick up.

"Most originators are reporting good production," said Alec Crawford, a mortgage-backed securities researcher at RBS Greenwich Capital, in a Monday morning report. On the servicing side, Mr. Crawford said things have been "quiet," but that RBS Greenwich Capital expects that "further yield curve flattening may be greeted by unwinds of servicer flattening trades." The RBS Greenwich Capital Market researcher also recommended that market participants "keep in mind, most servicers look at sub 4% as approaching net positive convexity on their overall book."

Resales Down Slightly

June 23, 2005
Sales of existing homes fell 0.7% in May to a seasonally adjusted annual rate of 7.13 million units, the second-best reading ever for the industry.

According to figures compiled by the National Association of Realtors, sales of single-family homes fell 1.1% but were offset by a 2.2% gain in condominiums and co-operatives. Meanwhile, home prices rose year over year by a robust 12.5%. Commenting on May's number, NAR chief economist David Lereah called homes sales "red hot," adding, "I don't see an end to this." Mortgage rates are near their historic lows, but so is fixed-rate mortgage production, the trade group said. The NAR can be found online at http://www.realtor.org.

KKR Financial Plans IPO

June 21, 2005
KKR Financial Corp., San Francisco, an affiliate of the leveraged buyout firm Kohlberg Kravis Roberts, is making an initial public offering of 29.167 million shares of its common stock.

The shares, including approximately 2.909 million shares being sold by current stockholders, are expected to be priced between $23 and $25 per share and trade on the New York Stock Exchange, according to KKR Financial's offering prospectus. The company, which is opting for real estate investment trust status, said it plans to invest in four areas: residential mortgage loans and mortgage-backed securities; corporate loans and debt securities; commercial real estate loans and debt securities; and asset-backed securities. In addition, KKR Financial said it intends to "invest opportunistically in other types of investments from time to time." The company plans to use additional debt financing to maximize its investment potential. KKR Financial's principal executives are Saturnino S. Fanlo and David A. Netjes.

Wells RE Fund Reports Record Distribution

June 16, 2005
Wells Real Estate Funds, Atlanta, has reported what it says it believes to be a record distribution of net proceeds from the sale of 27 office and industrial properties to more than 120,000 investors in Wells Real Estate Investment Trust Inc.

The distribution, equal to $1.62 per share, represented Wells REIT's portion of the April sale. The company said it is believed to be the largest single distribution of capital to investors in the history of nontraded REITs. The portfolio, which included properties wholly or jointly owned by Wells REIT, was sold to Lexington Corporate Properties Trust, New York, for $786 million. Wells Real Estate Funds can be found online at http://www.wellsref.com.

Experian Launches Credit Simulation Tech

June 14, 2005
Costa Mesa, Calif.-based Experian-Scorex has announced the release of ScoreRight, a credit simulation tool.

ScoreRight provides a side-by-side comparison of an applicant's credit information from all three credit reporting agencies, a tradeline level view of the applicant's accounts, and the ability to simulate credit-related actions to help educate applicants about what they need to do to help their credit rating, the company said. Experian-Scorex can be found on the Web at http://www.experian-scorex.com.

Ginnie to Issue $1K MBS

June 8, 2005
Ginnie Mae has issued a final rule that allows the secondary-market agency to issue mortgage-backed securities in small denominations of $1,000 starting July 8.

Ginnie now has a minimum denomination limit of $25,000, and the proposed rule change stirred opposition from some trade groups representing community banks. Agency executives contend that Ginnie has a different investor base than depository institutions and that MBS are not considered substitutes for certificates of deposit. "Removing the $25,000 minimum denomination limit on Ginnie Mae MBS should thus have little impact on the ability of community banks to raise funds through the use of insured deposits," the final rule says. America's Community Bankers objected to the Ginnie Mae rule change. The trade group has also raised similar objections to the sale of senior debt in $1,000 denominations (through securities brokers) by Fannie Mae and Freddie Mac.

Mortgage Insurance Volume Slips

June 1, 2005
The good times that the private mortgage insurance companies had in March did not last into April, as both dollar volume of primary new insurance and the number of applications received both declined, according to the Mortgage Insurance Cos. of America.

Its most recent data for its members (all private mortgage insurers with the exception of Radian), found that in April, they wrote $16.16 billion of primary new insurance, of which $12.52 billion was traditional and $3.65 billion was bulk. This is down 6% from a revised total for March of $17.18 billion (the original report was $17.15 billion). Applications fell by 14%, from 147,105 in March to 126,596 in April. A sign of how much the business has slowed is that in April 2004, the industry received 181,471applications, the second highest total in that year (behind March 2004). Defaults slightly outweighed cures in April, 35,268 compared with 34,084 respectively, for a cure/default ratio of 96.6%. The trade group can be found on the Internet at http://www.micanews.com.

Housing Price 'Hedgelets' Unveiled

May 26, 2005
HedgeStreet Inc., San Mateo, Calif., has announced the introduction of Housing Price Hedgelets, which enable its online investors to hedge, or speculate on the direction of, home values in major U.S. real estate markets.

The company said it is the first U.S. government-designated online financial market that lets traders directly buy and sell "innovative financial instruments" based on economic events. The Housing Price Hedgelets are tradable as both yes/no and variable contracts with three-month and six-month durations. They are benchmarked against the median sales price of existing single-family homes reported by the National Association of Realtors for Chicago, Los Angeles, Miami, New York, San Diego, and San Francisco, HedgeStreet said. "For most Americans, their home is their single largest investment and, as such, the desire to reduce risks surrounding that asset is important," said John Nafeh, the company's chief executive officer. "Housing Price Hedgelets provide a unique way for them to hedge against depreciation in the value of a home, or conversely, speculate on the degree to which housing prices will appreciate." The company can be found online at http://www.hedgestreet.com.

Moody's Eyes FNF Ratings

May 24, 2005
The Baa3 senior debt ratings of Fidelity National Financial Inc. have been placed on review for possible downgrade by Moody's Investors Service following FNF's announcement that it intends to create a publicly traded, majority-owned title insurance holding company.

The restructuring calls for borrowing an additional $500 million under a new bank credit facility at the new holding company, which would subordinate the creditors of the ultimate holding company, the rating agency said. Moody's also affirmed the insurance financial strength ratings of FNF's primary insurance operating subsidiaries at A3, but the rating outlook was changed to negative because of concern that FNF may increase its use of financial leverage. Moody's also affirmed the ratings (Ba3 senior) of FNF's 75%-owned subsidiary, Fidelity National Information Services. Moody's said several factors point toward further strain on the company's leverage profile, including FNF's "history of aggressive use of debt, a demonstration of management's willingness to maximize shareholder value to the potential detriment of creditors, and management's indication that it is considering large-scale acquisitions that could be financed in part through debt."

Resales Break Record

May 24, 2005
The sales of existing homes rose 4.5% in April to 7.18 million units on a seasonally adjusted annualized basis, breaking the record of 7.02 million set in June 2004, according to figures compiled by the National Association of Realtors.

The total, which includes single-family homes, townhomes, condominiums, and co-operatives, was up significantly from the downwardly revised rate of 6.87 million units recorded in March, the trade group said. The figure was up 5.7% from the 6.79 million rate of April 2004. "A new record is a bit unexpected, but so is the performance of mortgage interest rates, which have been lower than forecast," said NAR chief economist David Lereah. "When we look at recent job gains, we see all the positive factors coming together to coincide with a powerful demographic demand for housing." Single-family resales alone totaled 6.28 million units in April on an annualized basis, also a record high and 5% higher than the 5.98 million rate recorded in April 2004. The NAR can be found online at http://www.realtor.org.

Commercial Originations Surge

May 23, 2005
Originations of commercial and multifamily mortgage loans totaled $31.3 billion for the first quarter, up 39.6% compared with those of the first quarter of 2004, according to the Mortgage Bankers Association.

The MBA said multifamily property loan originations jumped 62% compared with the volume in the first quarter of 2004; office property originations climbed 29% over the same period; industrial property originations saw a 31% gain; hotel and motel properties originations rose 96%; and retail property-backed originations were up 4%. However, originations of health care loans by mortgage bankers fell 4% from those of a year earlier, the mortgage bankers' trade association reported. "With these new record origination volumes, 2005 is setting a pace well above anything we've seen in the past," said MBA chief economist Doug Duncan. Multifamily properties remained the leading property type originated, at 37.5% of the total originations. The MBA can be found on the Web at http://www.mortgagebankers.org.

FNF to Revamp Title Insurance Ops

May 17, 2005
Fidelity National Financial Inc., Jacksonville, Fla., has announced a restructuring plan to distribute 17.5% of its title insurance operations to existing stockholders.

Under the plan, FNF would form a title insurance holding company that would act as the parent company for FNF's title insurance operations. FNF said it would then make a taxable distribution of 17.5% of the shares of the holding company's common stock to FNF stockholders, while retaining ownership of the remaining common stock. "We believe that it has been difficult to appreciate the full value of our distinct business lines in a single publicly traded security," said William P. Foley II, FNF's chairman and chief executive officer. "Separating the businesses that comprise FNF into distinct companies will provide improved transparency for the investment community and a potentially simpler means of valuing the assets of FNF." The company can be found online at http://www.fnf.com.

CRE Fundamentals Seen as Positive

May 13, 2005
The four major sectors of the commercial real estate market are likely to see improvement over the next two years, according to a forecast presented at a commercial real estate forum at the National Association of Realtors Midyear Legislative Meetings & Trade Expo.

NAR chief economist David Lereah said that although there are some uncertainties that could potentially affect the major commercial sectors -- office, retail, industrial and multifamily -- on balance the fundamentals are improving. "We've seen a strengthening in the job market, capital has been flowing back into commercial real estate at record levels, the modest rise in interest rates in not [affecting] long-term investment, and there's been a healthy restocking of business inventories," he said.

French Company Forms U.S. MBS Group

May 12, 2005
SG Corporate and Investment Banking, a subsidiary of French Bank Societe Generale, has created a U.S. mortgage-backed securities group and hired U.S. industry veterans to launch the business.

"The new initiative allows SG CIB to develop U.S. RMBS capital market capabilities to complement its existing RMBS businesses in Europe and Australia," the company said. "The move also enhances SG CIB's global structuring and distribution capacity to help issuers tap the U.S. or European markets." The following MBS professionals have joined the new unit as directors: David Chang, who previously traded seasoned and distressed mortgage credits at Deutsche Bank; Abner Figueroa, who worked for Eurohypo AG; Carole Mortensen, who worked for UBS; Rob Pak, who was part of SG CIB's collateralized debt obligation group; and Graham Henley, who was responsible for the residential mortgage warehouse program at Garban-Intercapital. Yuan Zhou, who previously worked for C-BASS, has also joined the SG CIB unit and has been named a vice president.

NAR: Expensive Oil = Strong Home Sales

May 9, 2005
Higher oil prices are likely to restrain economic growth, causing mortgage interest rates to rise less than expected and home sales to remain strong through next year, according to the National Association of Realtors.

The forecast, released at the start of the NAR's Midyear Legislative Meetings & Trade Expo in Washington, calls for the 30-year fixed mortgage rate to rise gradually to 6.4% in the fourth quarter and then average about 6.8% in 2006. "The essentially sideways movement in mortgage interest rates recently has defied the consensus of earlier forecasts, with only a modest uptrend detectable over time," said David Lereah, the NAR's chief economist. "The simple effect, in an economy with an improved labor market, is a higher demand for homes." The NAR can be found online at http://www.realtor.org.

FHFB Wants GSE Portfolio Caps

May 9, 2005
The Federal Housing Finance Board chairman also told the trade conference that the nation's housing government-sponsored enterprises should be subject to portfolio caps and that he isn't too keen about the idea of having Federal Home Loan Banks securitize mortgages.

Speaking before the Independent Community Bankers Association Monday morning, Finance Board Chairman Ronald Rosenfeld said any new GSE regulator should have the ability to limit the GSEs' portfolios, but told reporters that he doesn't think there is a "magic number" on what the caps should be. He also said he has no official position on whether FHLBanks should issue mortgage-backed securities, but noted that securitization "certainly is not part" of the bank system's "historical mission."

FHFB to Issue Predatory 'Advisory'

May 9, 2005
Federal Housing Finance Board Chairman Ronald Rosenfeld vowed Monday that the agency will "soon" issue predatory-lending guidelines for depositories that are members of the Federal Home Loan Bank System.

Mr. Rosenfeld would not specify when the guidelines would be released, but suggested that it will be in the next 60 to 90 days. Speaking at an industry trade conference sponsored by the Independent Community Bankers Association, he said all 12 FHLBanks "ought to have a uniform standard that outlines the types of loans that are, and are not, acceptable." He noted that the predatory standards "should apply not only to mortgages held in portfolio but to member loans used as collateral."

Nasdaq SmallCap Market to List UFMC

May 4, 2005
The common stock of United Financial Mortgage Corp., Oak Brook, Ill., has been approved for listing on the Nasdaq SmallCap Market, according to UFMC.

The company said the first trading date for its stock on Nasdaq is expected to be May 18, and that it will continue to trade on the American Stock Exchange until the close of business on May 17. The expected ticker symbol is UFMC. Steve Khoshabe, president and chief executive officer of UFMC, said the company has been pleased with its dealings with Amex but that the move to Nasdaq is expected to "improve the liquidity in our common stock and increase our visibility, while at the same time providing investors in our common stock with better pricing and faster execution." The company can be found online at http://www.ufmc.com.

FBI Seeks Broker Fraud Report Mandate

May 4, 2005
The U.S. government, which is fighting a rising tide of mortgage fraud cases, is pushing for regulations that would require loan brokers to report suspicious activity in the origination process.

At a press briefing at FBI headquarters in Washington May 4, government officials said suspicious activity reports, or SARs, are only filed by federally insured or regulated financial institutions because loan brokers do not have to comply with the Bank Secrecy Act. The agency said it is talking to trade groups about the broker reporting issue. At the briefing, the FBI released a top-10 ranking of mortgage fraud "hot spots." States on the list include California, Florida, Georgia, Illinois, Nevada, and five others. The agency said SARs filings increased by 147% in 2004 to 17,127 instances of suspected fraud. In 2004 there were 241 indictments or guilty pleas in regard to mortgage fraud, compared with 174 the year before. Currently, the FBI has 642 open cases of mortgage fraud, compared with 436 in 2003. (See the May 9 issue of National Mortgage News for more details.)

NAHB to Push for FHLBank Securitization

April 29, 2005
The National Association of Home Builders intends to keep pushing for changes that will allow the Federal Home Loan Bank System to securitize mortgages.

It is unclear at this point whether FHLBank securitization language will be part of a final regulatory bill on housing government-sponsored enterprises. (A mark-up on GSE legislation is expected to start in May.) NAHB executive vice president Bill Kilmer told MortgageWire recently that if securitization powers are not passed in this session, the trade group intends to keep pushing the issue. It's possible that if such powers are not specified in legislation, a new GSE regulator might have the authority to grant them. Fannie Mae and Freddie Mac, historically, have been against giving the FHLBank system the right to securitize mortgages because it would increase competition.

Resales Hold Strong

April 25, 2005
Existing-home sales rose 1% in March to 6.89 million units on an annualized basis, matching the third-highest reading on record, according to figures compiled by the National Association of Realtors.

The trade group said overall "economic improvements" are aiding the housing market. The NAR credited historically low mortgage rates and gains in employment for the strong performance. "There's no question there is a strong demand for housing from a growing population," said NAR chief economist David Lereah. Greenwich Capital analyst Steve Stanley noted that demand for homes "remains torrid." Greenwich said it believes Tuesday's new-home sales report for March may post a sharp decline, but only because poor weather conditions may have affected building. In March 2004 resales totaled 6.57 million units on an annualized basis. The NAR can be found online at http://www.realtor.org.

Shelby Plumps for More AU Competition

April 20, 2005
Senate Banking Committee Chairman Richard Shelby, R-Ala., says he would like to see more competition between lender and GSE automated underwriting systems in the conforming loan market.

The senator indicated his concern at a Tuesday committee hearing that Congress may be creating a "monopoly" for Fannie Mae's and Freddie Mac's AU systems if a new regulator does have not authority to allow other AU providers to compete with the two government-sponsored enterprises. "Wouldn't we be better off if there's more competition?" Sen. Shelby asked one banking trade group witness who objected to a "bright-line" test. The bright-line test in a Senate GSE bill would give the regulator more authority to regulate Fannie's and Freddie's activities when they encroach on lender activities. The committee chairman also said he wants more transparency in the guarantee fees Fannie and Freddie charge lenders. In testimony prepared for a Wednesday GSE hearing, Fannie interim chief executive Daniel Mudd said the regulators should be able to review the way GSEs conduct their business, but "g-fees are proprietary and should not be made public." Mr. Mudd also raised concerns about a bright-line test.

RBS Greenwich Names CMO Chief

April 13, 2005
David Cannon has been named managing director and head of the Collateralized Mortgage Obligation Trading Desk at RBS Greenwich Capital, Greenwich, Conn.

Mr. Cannon will be responsible for the structuring and trading of agency and nonagency CMOs, the company said. He has 12 years of experience in the mortgage business, most recently as a CMO trader at UBS. Mr. Cannon previously held similar positions with Chase Manhattan Bank and Paine Webber. RBS Greenwich Capital also announced the addition of Cass Tokarski to the CMO trading desk as a senior vice president. The company can be found online at http://www.gcm.com.

Annaly Expands Into Canada

April 6, 2005
Michael A. J. Farrell, chairman, chief executive officer and president of Annaly Mortgage Management Inc., New York, rang the opening bell on the Toronto Stock Exchange April 5 to celebrate the expansion of the company's investment advisory business to Canada.

"We are pleased that our asset management business continues to grow in Canada and around the world," Mr. Farrell said. Annaly's subsidiary investment adviser is the investment manager for two trusts traded on the Toronto Stock Exchange, Mortgage-Backed Securities Trust and MBS Adjustable Rate Income Fund, the company said. Annaly's investment adviser also plans to serve as investment manager for a third trust, Sentry Select Adjustable Rate Income Fund II, which has filed a final prospectus and is expected to begin trading in mid-April. Annaly can be found online at http://www.annaly.com.

ACB Opposes Forced GSE Divestment of AU

March 24, 2005
America's Community Bankers would oppose legislative language in a GSE bill that forces Fannie Mae and Freddie Mac to divest their automated underwriting systems, the trade group says in a letter to Senate Banking Committee leaders.

However, ACB says congressional legislation to strengthen regulation of the two government-sponsored enterprises should encourage competition and "prevent the GSEs from preempting or excluding" private lenders from using their own AU systems. A GSE bill introduced by Sen. Chuck Hagel, R-Neb., has a "bright line" test that keeps the two GSEs from encroaching on the business activities of lenders in the primary market. (The GSEs were chartered to be secondary market agencies.) ACB supports a bright-line test, but says the Hagel language needs to be clarified to ensure that its members would continue to have access to Fannie's and Freddie's AU systems. The Mortgage Bankers Association supports the bright line in the Hagel bill, but also says it wants its members to have access to the GSE AU systems. "We just want a little more competition," MBA's top lobbyist Kurt Pfotenhauer said. The new GSE regulator could require Fannie and Freddie to certify other AU systems for the delivery of loans, he suggested.

Former Fannie Honcho Buying Thrift

March 24, 2005
A group headed by former Fannie Mae executive Stuart McFarland is buying a controlling stake in a small Indiana thrift chaired by Chuck Chamness, a former Federal Housing Finance Board official.

The thrift, Assurance Partners Bank, Carmel, Ind., is owned by the National Association of Mutual Insurance Cos., an Indianapolis-based trade group that represents 1,200 property/casualty insurers with $90 billion in premiums. The thrift, which makes first- and second-lien loans, has about $38 million in assets. (The mortgage products are actually offered to the public through NAMIC's member insurance firms.) Assurance has been losing money since its inception in 2000. Under Mr. McFarland, the thrift will expand by adding retail branches in Indiana as well as Washington, D.C., and Maryland. (See the March 28 issue of National Mortgage News for more details.)

BNP Paribas Names MBS Trading Chief

March 21, 2005
Andrew McConnell has been named head of pass-through mortgage-backed securities trading in the New York office of BNP Paribas, a European bank.

Mr. McConnell was most recently a pass-through MBS trader at RBS Greenwich Capital Markets. He was previously employed by Donaldson, Lufkin & Jenrette and Bear Stearns & Co. The bank can be found on the Web at http://www.bnpparibas.com.

FDIC to Seek Comment on Interstate Issue

March 21, 2005
The Federal Deposit Insurance Corp. will be soliciting public input on a proposal by an industry group to simplify the compliance burden on state-chartered banks that conduct interstate operations.

The Financial Services Roundtable contends that a state bank should be able to conduct interstate operations based on the laws and regulations of its home state, and the FDIC has the authority to implement such a rule under a 1997 banking law. In a petition to the FDIC, the trade group, which represents 100 of the largest U.S. financial services companies, urges the agency to promulgate a rule. "Such an action would ensure the continued vitality of the dual banking system," the FSR says. In response, the FDIC has decided to hold a public hearing on May 24 to solicit testimony. "The FDIC believes that public participation will provide valuable insight into the issues presented by the petition and will assist FDIC in responding to the rulemaking request," the regulator said. Currently, the branches and operating subsidiaries of state banks with interstate activities have to follow the laws and regulations of the host state, which places state banks at a competitive disadvantage to national banks. This disparity has resulted in an "unprecedented mass migration of assets to the national banking systems," the FSR says in its petition.

SL Green Names 2 EVPs

March 14, 2005
Edward V. Piccinich has been named executive vice president and director of operations and construction at SL Green Realty Corp., a New York-based real estate investment trust, and Steven M. Durels has been named EVP and director of leasing.

Mr. Piccinich, 42, joined SL Green as senior vice president and director of property management and construction in 2002. The REIT said he is responsible for overseeing the management of 28 office buildings. Before joining SL Green, Mr. Piccinich was a vice president at J.P. Morgan and general manager of the World Trade Center. Mr. Durels, 45, joined the REIT in 1998 as a senior vice president. Before joining SL Green, he spent 16 years with Helmsley-Noyes, a commercial real estate firm, the company said. SL Green can be found online at http://www.slgreen.com.

TRIA Extension Bill Introduced

March 10, 2005
A bill has been introduced to extend the Terrorism Risk Insurance Act of 2002, which is due to expire by the end of the year, until 2007.

The main sponsors of the Terrorism Insurance Backstop Extension Act of 2005 are Reps. Michael E. Capuano, D-Mass., Steve Israel, D-N.Y., Barney Frank, D-Mass., Paul Kanjorski, D-Pa., and Joseph Crowley, D-N.Y., according to the Mortgage Bankers Association. "There is a growing Hill recognition for the vital role TRIA plays in maintaining the stability of the commercial real estate finance industry," said Kurt Pfotenhauer, the MBA's senior vice president of government affairs. The trade association said it is "hopeful that the House Financial Services Committee can forge a bipartisan solution and act now to extend the program." In the absence of such a backstop, there may be fewer commercial real estate finance transactions, the MBA says. And servicers might have to "force-place" terrorism insurance, an action that could lead to litigation.

FTC Settlement Sinks Brokerage

March 8, 2005
A small mortgage brokerage shop in Fairfax, Va., is closing its doors because the owner said he couldn't afford the cost of complying with the Federal Trade Commission's requirements for protecting customers' personal and financial information.

Nationwide Mortgage Group president John Eubank said it would cost $60,000 to meet the security requirements the FTC expects as part of a settlement. "I just can't afford that," he told MortgageWire. The company has one office and five employees. Last year the FTC alleged that NMG failed to protect consumer information adequately as required by a 1999 privacy law. The FTC did not cite any specific incidents of lost or stolen information. But after consulting with an attorney, the mortgage broker concluded that it was useless to fight the agency. The settlement also requires Mr. Eubank to periodically report on his compliance activities to the FTC over the next 10 years, including where he is working and his responsibilities and duties. "It makes it difficult for me to find a job," he said. The FTC first contacted his 12-year-old firm as part of a random survey. "We have never had any information lost from this company," Mr. Eubank said.

SPS (Fairbanks) Servicer Ratings Hiked

March 7, 2005
Fitch Ratings has upgraded the residential primary servicer ratings of Select Portfolio Servicing Inc. (formerly Fairbanks Capital Corp.), Salt Lake City.

The servicer ratings were upgraded as follows: for alternative-A loans, from RPS3 to RPS2-minus; for subprime and home equity loans, from RPS3-minus to RPS2-minus; and for special servicing, from RSS3 to RSS2-minus. The upgrades "reflect sustained improvements based on process and procedural changes initiated by SPS to correct deficiencies noted during Fitch's prior reviews in addition to those detailed in the November 2003 settlement with the Federal Trade Commission and the Department of Housing and Urban Development," Fitch said. Among the changes cited by Fitch are the restructuring of the senior management team; systems upgrades; compliance training; increased frequency and scope of internal audits; and the development of a consumer assurance review department, which reviews each loan prior to foreclosure referral.

Student Housing Rev Bonds Downgraded

March 4, 2005
Will County, Ill.'s student housing revenue bonds (Joliet Junior College project), series 2002A, and taxable series 2002B, have been downgraded from C to D by Fitch Ratings.

The downgrade to default status was attributed to a March 2 disclosure filing indicating that the scheduled March 1 interest payment on the bonds was not made. Fitch said the filing reported that First Midwest Bank "did not make the payment in response to a direction by the holders of 69% of the outstanding bonds." The filing indicated that the bondholders are replacing First Midwest as trustee with Manufacturers and Traders Trust Co., Baltimore. Fitch can be found online at http://www.fitchratings.com.

UK Lenders Name Chair for Scottish Arm

March 4, 2005
The United Kingdom's Council of Mortgage Lenders has named Norrie Henderson the chairman of CML Scotland.

Mr. Henderson is head of mortgages at Lloyd's TSB Scotland. As chairman of the CML group, he will head an arm of the trade group that represents 23 lenders in Scotland. The CML can be found online at http://www.cml.org.uk.

Bond Group Backs FICC Proposal

March 3, 2005
The Bond Market Association has asked the Securities and Exchange Commission to support a recent Fixed Income Clearing Corp. rule proposal that would expand FICC's trade submission requirements, arguing that its potential to reduce risk outweighs the trade group's concerns about the additional requirements.

In a letter to the SEC, the association said the proposed rule would, for example, "enhance FICC's ability to reduce operational risk by facilitating the resolution of unsettled transactions associated with 9/11-type disruption events and endemic fail situations." The association has been looking to remedy concerns about the effect of certain rules surrounding trades when an endemic fail situation occurs. When such a situation last occurred, many mortgage-backed security and Treasury dealers found themselves adversely affected. The Bond Market Association can be found online at http://www.bondmarkets.com.

Bill Aims to Update REMIC Structure

March 3, 2005
Legislation aimed at making the structure of real estate mortgage investment conduits more responsive to today's environment has been reintroduced by Reps. Mark Foley and Earl Pomeroy, according to the Mortgage Bankers Association.

The REMIC structure governs commercial mortgage-backed securities transactions, and The REMIC Modernization Act seeks to make it more flexible. The MBA said the changes would enable commercial real estate property owners to upgrade the property and undertake some property management activities even after a mortgage has been securitized, and is subject to the REMIC structure, without the need to get "costly and burdensome" tax opinions. "The REMIC tax law is nearly 20 years old and has not kept pace with current transactional requirements and market structures," said Daniel Phelan, chairman of the MBA's commercial real estate/multifamily finance board of governors. "The legislation will make changes that will both protect the investments of CMBS bondholders and allow borrowers to make improvements to their property. It is good government at its best." The modernization of REMIC provisions in the tax code that the legislation seeks will not have much impact on federal tax revenue, the trade association said. The MBA can be found online at http://www.mortgagebankers.org.

NAR Shocker: 36% of Homes Sold Are Seconds

March 2, 2005
More than one-third of all residences sold last year were second homes, according to new research conducted by the National Association of Realtors.

The trade group, which for the first time did extensive research on the subject, found that 23% of all homes purchased last year were for investment while another 13% functioned as vacation homes. In 2004 a record 2.82 million in second homes were acquired. Mortgage bankers fund second homes, which are referred to as "investor properties." Homes that are non-owner-occupied tend to have stricter underwriting standards, with some mortgage bankers requiring at least 20% down and charging a higher note rate. After analyzing Census Bureau figures for 2003, the NAR estimates that there are 43.8 million second homes in the United States, compared with 72.1 million owner-occupied units. The NAR can be found online at http://www.realtor.org.

NAR, NAHB Issue Warning on GSE Limits

March 2, 2005
The National Association of Realtors and the National Association of Home Builders are warning Congress that they would oppose legislation that reduces the capacity of Fannie Mae and Freddie Mac to provide low-cost housing finance.

In a letter to Congress, the two trade groups express their support for legislation that strengthens regulation of the housing government-sponsored enterprises to ensure that they operate in a safe and sound manner. However, they would oppose legislative efforts to privatize the GSEs, impose higher minimum capital requirements, cut their lines of credit to the U.S. Treasury, or prevent the GSEs from developing new products and programs. It also appears that they would fight efforts to limit the size of Fannie's and Freddie's mortgage portfolios. Rep. Richard Baker, R-La., is considering such a limitation as he moves toward introducing a GSE bill later this month.

Fog Cutter Delisting Appeal Denied

February 28, 2005
Fog Cutter Capital Group, Portland, Ore., has announced that the company's appeal of the NASDAQ Stock Market's decision to delist Fog Cutter's common stock has been denied.

Fog Cutter said the company's stock will continue to be traded on the OTC Pink Sheets. "We are disappointed with this result and will continue in our efforts to have the company's stock listed on a major exchange, which may include further appeals of the NASDAQ decision," said Donald Berchtold, Fog Cutter's chief executive officer. Fog Cutter has several operating segments, including commercial real estate mortgage brokerage activities.

Cap City Settles With FTC

February 25, 2005
The Federal Trade Commission has reached a $750,000 settlement with a former subprime lender, ending a seven-year legal stalemate over allegations of deceptive lending practices.

The settlement permanently bars Capital City Mortgage Corp., Washington, from engaging in deceptive and fraudulent home equity lending and servicing practices. And it requires CCMC to pay up to $750,000 in consumer redress. The CCMC largely exited the residential market before the FTC filed its complaint in 1998, but it will have to stop doing "take-back" loans under the settlement, according to the company's outside attorney, Philip Musolino. Its main business today is commercial real estate lending. "We are pleased with the settlement on terms that do not disrupt Capital City's ongoing operations," the Washington attorney said. The settlement reflects the "FTC's acknowledgement that its $12 million claim was ill-advised," he added. Under the settlement, CCMC agrees not to misrepresent loan amounts and fees and to use standard industry forms in originating a loan. The settlement also places severe restrictions on its servicing practices. "The result of the settlement is they are no longer going to be able to defraud consumers," FTC attorney Alain Sheer said. CCMC did not admit to any wrongdoing as part of the settlement.

FTC Conducting Credit Score Survey

February 22, 2005
The Federal Trade Commission is seeking comment on how credit scores affect availability and pricing of financial products, including mortgage loans and homeowners insurance, as part of a study mandated by Congress.

The request for public comments lists 24 questions on the effect that credit scores and scoring systems have on consumer credit and another 21 questions related to credit-based insurance scores. In one question, the FTC asks, "What steps, if any, do score developers, lenders or other users of credit scores take to ensure the use of credit scores does not result in negative or differential treatment of protected categories of consumers under the Equal Credit Opportunity Act?" The FTC is also seeking comment on secondary-market activities. "In what ways has the availability of credit scores affected the development of the secondary market for credit products?" the agency asks. "Has the use of credit scoring increased or decreased creditors' access to capital?" The comment period ends April 25.

Greenspan: Cap GSE Portfolio Growth

February 18, 2005
Federal Reserve Board Chairman Alan Greenspan made a strong pitch Thursday to control the growth of Fannie Mae and Freddie Mac, suggesting that lawmakers might cap each government-sponsored enterprise's mortgage holdings at $100 billion to $200 billion.

Such a move, if it became law, would dramatically downsize the two GSEs, whose combined portfolios now total $1.55 trillion. Chairman Greenspan has previously warned Congress that the continued growth of the portfolios poses substantial risk to the financial system. In his Feb. 17 testimony before the House Financial Services Committee, the Fed chairman warned that financial problems are "almost inevitable" unless Congress acts to control the size of the GSE portfolios. Rep. Richard Baker, R-La., said he is considering portfolio limits in drafting a GSE bill that he is expected to unveil in mid-March. Talk about possible portfolio limits sparked a sell-off in GSE stock Thursday and Friday. Fannie's stock fell to a new 52-week low, and Freddie's shares traded down 1.5% on Thursday and another 1.5% by midday Friday. Fannie and Freddie maintain that their portfolios provide liquidity and stability to the mortgage market. The mortgage portfolios are also an important source of their profits and growth.

Condos and Co-ops See Record Sales

February 10, 2005
Sales of existing condominium and cooperative units eased in the fourth quarter of 2004, the National Association of Realtors, Washington, reports, but hit a record for the ninth consecutive year considering sales for the entire year.

The total of 970,000 condo and co-op properties sold for 2004 reflects an 8% increase from the previous record of 898,000 units for 2003, the realtors' trade association said. In the fourth quarter, sales of the units slid 3% to a "seasonally adjusted annual rate" of 972,000, from 1 million units in the third quarter. However, sales were 3.4% above the 940,000 units sold in the fourth quarter of 2003. Pricewise, the median price for an existing condo or co-op was $203,200 in the fourth quarter, 16.7% higher than the price a year ago. In comparison, a typical single-family home cost $187,500 in the fourth quarter, up 8.8% from a year ago, the NAR said. David Lereah, the NAR's chief economist, said, "The condo market has clearly matured over the last decade, accounting for a market share almost as big as the new home market, and has been appreciating faster than single-family homes." Consequently, the NAR will include condo sales in its monthly tracking of overall existing home sales, beginning with its January report, the trade association reports.

New Trade Group Opposes GSE Bill

February 4, 2005
The National Alliance of Independent Mortgage Bankers, a newly formed trade group that represents small- to medium-sized funders, says recently introduced GSE legislation will hurt both borrowers and the industry.

The NAIMB says S. 190 -- introduced by Republican Sens. Chuck Hagel (Neb.), John Sununu (N.H.), and Elizabeth Dole (N.C.) -- would force Fannie Mae and Freddie Mac to "withdraw" their automated underwriting systems, which many of the group's members use. The trade group says it believes the result would be that lenders would not know "for days or perhaps weeks" whether Fannie or Freddie would purchase a loan that is under consideration. The trade group also contends that S. 190 would reduce competition and innovation in the creation of new products. Small- to medium-sized lenders benefit the most from the GSEs' AU offerings because it provides them with scoring products at a fraction of what it would cost them to build such systems from scratch.

OCC Issues Predatory Lending Reg

February 3, 2005
The Office of the Comptroller of the Currency has incorporated its 2003 anti-predatory-lending guidelines into a regulation to emphasize its commitment to take enforcement actions when it discovers unfair and deceptive lending practices at national banks.

"It responds to critics who have said OCC does not have sufficient enforcement authority," said James McLaughlin, director of regulatory affairs at the American Bankers Association. Rep. Barney Frank, D-Mass., has been critical of OCC consumer protection efforts and remains "skeptical" of OCC authority to take action against unfair and deceptive practices, as provided in the Federal Trade Commission Act. "It is a good-faith effort by the OCC, and I welcome it," he said. "But it shows there are legal limitations on their ability to carry this out." Meanwhile, the National Community Reinvestment Coalition complained that the OCC's guidelines are vague and ridden with holes. "While the guidance attempts to address common predatory lending practices, in fact, these standards provide little consumer protections in our communities."

Countrywide Earnings Fall

February 2, 2005
Countrywide Financial Corp., Calabasas, Calif., has reported that fourth-quarter earnings declined to $343 million ($0.56 per share) from $564 million ($0.94) in the fourth quarter of 2003 as a hedging loss took a bite out of the company's results.

Overall, Countrywide said loan production volume totaled $95 billion in the fourth quarter, up 25% from the fourth quarter of last year. For the full year, loan production totaled 363 billion, down 17% from the record-breaking volume of 2003. The servicing portfolio grew to $838 billion, maintaining Countrywide's status as the largest originator and servicer of home loans. Fourth-quarter results were hurt by the loan servicing sector, where earnings declined by $255 million from those of the third quarter as a result of a flattening of the yield curve, a tightening of mortgage swap spreads, and a reduction in interest rate volatility. These factors diminished the value of hedging instruments. At the same time, flat mortgage rates meant that the value of the MSR asset did not increase as much as expected to offset the hedge losses. Countrywide was the most actively traded stock on the New York Stock Exchange Wednesday morning. It was down 4.2% ($1.61) at noon. The company can be found online at http://www.countrywide.com.

New MI Up in December

February 1, 2005
The dollar volume of primary new mortgage insurance written by the members of the Mortgage Insurance Cos. of America increased 12.5% in December, according to the trade group.

A total of $19.0 billion of primary new insurance was written during December, of which $14.6 billion was traditional and $4.4 billion bulk. (The total compares with $16.6 billion in November and $20.7 billion in December 2003.) Meanwhile, application volume in December was 129,645, up from 124,731 in November but down from 145,213 in December 2003. For calendar year 2003, the MI companies' best month for dollar volume was June, at $21.6 billion, while March was the best month for applications, with 189,311. At the end of the year, $609.2 billion of primary insurance was in force and $141.6 billion of primary risk was in force, down from $619.1 billion and $143.7 billion, respectively, at the end of 2003. New pool risk written totaled $52.4 million in December, bringing the total pool risk in force to $10.8 billion, down from $13.6 billion one year ago. There were 34,747 cures and 44,608 defaults in December, a ratio of 77.9%. (There were only two months in 2004 with more cures than defaults.) All the private MI companies belong to MICA except for Radian Guaranty. MICA can be found online at http://www.micanews.com.

Amex Trading Options on Crescent

January 28, 2005
The American Stock Exchange has launched trading in options on Crescent Real Estate Equities Co., a Fort Worth, Texas-based real estate investment trust.

The options opened with position limits of 3.15 million shares and will trade on a January expiration cycle, Amex said. The specialist will be Stuyvesant Trading Group. Amex can be found online at http://www.amex.com.

Subprime Lenders Donate to Inauguration

January 20, 2005
Some of the nation's largest subprime lenders have made sizable donations to President Bush's inaugural celebration, according to public records.

Ameriquest Mortgage of California and its wholesale arm, Argent Mortgage, donated at least $500,000 combined. New Century Financial, Irvine, Calif., donated $100,000. Ameriquest and New Century, ranked first and third, respectively, among subprime funders through the third quarter of 2004, according to figures compiled by National Mortgage News. Other mortgage-related financial service firms and trade groups donating to the $40 million event include GMAC ($100,000), Goldman Sachs ($100,000), HSBC ($25,000), Long Beach Acceptance Corp. ($250,000), the National Association of Home Builders ($250,000), and others.

OFHEO Eyeing GSE G-Fees

January 18, 2005
The Office of Federal Housing Enterprise Oversight started looking at the way Fannie Mae and Freddie Mac set loan guarantee fees for different sellers several months ago, according to a recently released letter to Congress.

"We have started to analyze the data to assess how the fees vary across sellers," OFHEO Director Armando Falcon Jr. says in an Oct. 27 letter to Rep. Richard Baker, R-La. The study is still under way, and there is no timetable for its completion, an OFHEO spokeswoman told MortgageWire. The two government-sponsored enterprises negotiate "g-fees" with their largest customers and generally offer fixed prices to their smaller customers. This disadvantage has prompted smaller sellers to form cooperatives or to use their trade groups to negotiate special deals. In the Oct. 27 letter, the OFHEO director comments that Fannie and Freddie are able to charge high g-fees due to their GSE status and to limited competition in the conforming loan market. "While the fees received prudently cover costs and provide essential risk protection, they also contribute to the Enterprises' unusually high rates of return," Mr. Falcon says.

BNP Paribas Expands U.S. MBS Biz

January 14, 2005
A Paris-based company has expanded its U.S. mortgage-backed securities business.

BNP Paribas has reported the hiring of six MBS professionals from Freddie Mac as well as plans to open a Tysons Corner, Va. office. The Paris-based company hired Kevin Heal, who was an institutional sales manager at Freddie Mac, as managing director and head of sales at the Tysons Corner office. BNP Paribas also hired the following institutional sales alumni from Freddie Mac as directors in U.S. MBS sales at the new office: George Livingston, who sold fixed-income securities; Eric Salzman, who was responsible for marketing agency MBS products and strategy; and Bill Ludmer, who sold agency mortgage-backed bonds. In addition, BNP Paribas hired Bill Poulos, formerly an institutional sales representative at Freddie Mac, as a Tysons Corner office director and MBS originator, and Tom Coyne, who was a senior MBS trader, as an MBS trader based in New York.

Global TransNet Cites Acquisition Goals

January 13, 2005
Global TransNet Corp., Severna Park, Md., has announced its 2005 financial services business plan, which includes a goal of acquiring businesses in three distinct segments, two of them involving mortgages.

GTN says it plans to acquire a conventional mortgage company and a nonconventional lending company. The third business is barter exchanges. The company said conventional mortgages are expected to grow over the next 10 years as housing starts continue at the same rate as in the 1990s, or better. For the nonconventional lending business, GTN said only when there is ample collateral will the subsidiary make a loan. GTN is a holding company that is thinly traded over the pink sheets. (The last trade was on Dec. 16, 2004, according to Yahoo Finance.)

Liberty Bond Funding OK'd for 7 WTC

January 12, 2005
The New York City Industrial Development Agency has authorized $475 million in Liberty Bond funding for reconstruction of 7 World Trade Center, the first Ground Zero building on which rebuilding activity has begun.

Larry Silverstein, the developer of the property, had initially applied for up to $400 million in the tax-exempt Liberty Bond funding, the IDA said, and more money was required because of "lower-than-expected insurance proceeds and increased financing costs." The 52-story building will incorporate about 1.7 million square feet of commercial space. The funding is available under the Liberty Bond Program that was put in place in the aftermath of 9/11 to revitalize Lower Manhattan and New York City. Fitch Ratings sees this as a positive development for 7 WTC bondholders. "While a number of things still need to fall into place, including the approval of the increase by the governor and mayor and the actual sale of the bonds, Fitch sees today's recommendation as an important step toward the repayment of the existing bonds," said Karen Trebach, a director in Fitch's commercial mortgage-backed securities group.

Firm Hires Partner for Mortgage Reputation Risk

January 11, 2005
Rob Cone has been hired as managing partner of the reputation risk practice in the mortgage origination and servicing areas for Imag, a New York-based consulting firm.

Mr. Cone has 24 years of experience in the international capital markets as a trader, salesman, and manager of risk products and people, according to Imag, which provides practical advice on reputation risk issues in the financial services industry. Mr. Cone is a former president of National Australia Capital Markets. "The mortgage industry has been tarnished by recent predatory lending and financial accounting scandals and is in dire need of the reputation risk tools and solutions that Imag provides," said Imag president Gary Peterson. The company can be found online at http://www.imagny.com.

Amex Trading Options on REIT

January 10, 2005
The American Stock Exchange has launched trading in options on American Home Mortgage Investment Corp., a Melville, N.Y.-based real estate investment trust.

The options opened with position limits of 3.15 million shares and will trade on a March expiration cycle, Amex said. The specialist is Stuyvesant Trading Group. Amex can be found online at http://www.amex.com.

CMSA Forms PAC

January 10, 2005
The Commercial Mortgage Securities Association has formed a federal political action committee to deal with issues affecting the commercial mortgage-backed securities industry on Capitol Hill.

"Since the inception of the CMBS market in the mid-1980's, the market has grown to over $540 billion in CMBS globally," said Dottie Cunningham, chief executive officer of the New York-based trade association. "Over the last several years there has been a steady increase in regulatory and legislative activity affecting the commercial real estate capital markets. The creation of a PAC will enhance CMSA's efforts to aggressively tackle these issues on Capitol Hill." Richard Jones, the CMSA's president, noted that the effort will enable the association "to be engaged at all levels on the issues of concern to the CMBS industry, such as the extension of the Terrorism Risk Insurance Act and the enactment of REMIC reforms." An advisory committee will direct the PAC's fundraising efforts and contributions to candidates for federal elected office, the CMSA said.

Broker Review Enhancements Unveiled

January 6, 2005
First Line Data Inc., Boulder, Colo., has announced the launch of its exclusive Alert! Summary and Firstline Score on the company's Broker Verification Review reports.

The enhancements provide wholesale mortgage lenders the decision-support information needed to more quickly determine the approval of a third-party originator, the company said. Alert! messages are for material discrepancies between submitted information and records found or any derogatory information found within a BVR report. An Alert! summary is also provided on the front page, along with the Firstline Score&trade, which uses a risk-based scoring model that calculates the combined weighted average of all Alerts found in the report. "A First Line Data BVR report in a file will quickly demonstrate to a third party the procedures employed in determining the initial approval of a business partner," said Nancy Cowley, senior account executive at First Line. "Our reports provide clear evidence of a sound due-diligence process." First Line can be found online at http://www.firstlinedata.com.

FBR Forms MBS Biz With Freddie Alumni

January 6, 2005
Friedman, Billings, Ramsey Group Inc., Arlington, Va., has announced the formation of an institutional mortgage-backed securities trading business based on a team of MBS professionals from Freddie Mac.

The team will be led by Michael Swell, formerly vice president and head of Freddie Mac's Securities Sales and Trading Group, and its trading operation will be led by Robert Cole, formerly head trader at Freddie's SS&TG. The new MBS team will be combined with FBR's asset-backed securities trading unit. "Having a meaningful ABS and MBS sales and trading effort is one of our key growth initiatives as a company and directly supports our increasing commitment to the mortgage- and asset-backed sectors of the capital markets," said Richard J. Hendrix, FBR's president and chief operating officer. FBR can be found online at http://www.fbr.com.

Inland REIT Buys 4 Affiliates

January 5, 2005
Inland Retail Real Estate Trust Inc., Oak Brook, Ill., has reported the acquisition of four affiliated companies that have provided it with advice and property management services.

The acquired companies are: Inland Retail Real Estate Advisory Services Inc., Inland Southern Management Corp., Inland Mid-Atlantic Management Corp., and Inland Southeast Property Management Corp. The terms of the transaction were not disclosed. The transaction is "an integral part of our business plan of becoming a self-administered and self-managed real estate investment trust, which is generally considered a prerequisite for publicly traded REITs," said Robert D. Parks, chairman of Inland Retail Real Estate Trust. The company can be found online at http://www.inlandgroup.com.

REIT Index Shows 30% Return for '04

January 3, 2005
The NAREIT Composite REIT Index closed 2004 with a total return of 30.4% for the year, according to the National Association of Real Estate Investment Trusts.

Last year was the fifth consecutive year that the real estate investment trust index has outperformed other stock market benchmarks, the REIT industry trade association said. For 2005, REIT industry analysts are looking for total returns ranging from negative-10% to as high as 16%, NAREIT said, with the average forecast in the 5%-10% gain range (which is "in line with historical performance," according to NAREIT).

Ginnie Urged to Beef Up Disclosures, Products

January 3, 2005
Mortgage-backed securities researchers and traders in New York have suggested that Ginnie Mae beef up its disclosures, loan products, and bond structures and give borrowers who warrant it a break on some mortgage insurance premium requirements, according to The Bond Market Association.

Nadine Cancell, the association's vice president and assistant general counsel, told MortgageWire that these were the four areas that market participants agreed in recent discussions would both be cost-effective for Ginnie Mae and "have a big impact on the market." The association is among those that recently submitted suggestions to Ginnie in response to a recent request for comments that was aimed at determining "whether any existing requirements and procedures represent unnecessary hindrances to Ginnie Mae's business partners."

2 NAHB Members Quit Fannie Advisory Panel

December 23, 2004
Two top officers of the National Association of Home Builders have resigned from Fannie Mae's national advisory council, a move that was prompted by the trade group's review of its GSE policies.

The NAHB will release its findings and recommendations in regard to its policies toward government-sponsored enterprises in January, NAHB executive director Jerry Howard told MortgageWire. The NAHB confirmed that two of its elected officials resigned from Fannie's NAC -- Bobby Rayburn, who served as chairman of the panel, and NAHB first vice president Dave Wilson. Mr. Rayburn is president of the NAHB, an elected position. (The NAHB has one member remaining on the NAC.) The two resignations occurred in the fall, when the trade group formed a special task force to study its GSE policies. Meanwhile, Mr. Howard is urging legislators to be careful in drafting new legislation to more tightly regulate Fannie Mae and Freddie Mac, noting that "housing finance has been the backbone of our economy." The NAHB and Fannie Mae have been major political allies for years, particularly in regard to legislation affecting housing finance. The NAC meets about four times a year to discuss issues affecting the industry. The panel historically consists of trade association officials, mortgage banking executives, nonprofits organizations, and others involved in the industry.

10-Year Yield Back Over 4.2%

December 17, 2004
The long-term rate-indicative 10-year Treasury bond yield, which earlier in the week had dropped to a point just above 4.0%, had risen back above 4.20% as of Friday morning, according to Yahoo! Finance.

Prior to the aforementioned drop, the benchmark yield had traded as high as 4.25%.

10-Year Bond Rate Falls

December 15, 2004
The long-term rate-indicative 10-year Treasury yield slipped to a level just above 4.0% the morning of Dec. 15, according to Yahoo! Finance.

Previously the benchmark yield had traded as high as 4.25%.

United Financial to Buy CA Lender

December 14, 2004
United Financial Mortgage, Oak Brook, Ill., has agreed to purchase Plus Funding of Carlsbad, Calif., for an undisclosed amount.

The acquisition of the privately held Plus Funding is the second franchise purchase by UFM in four months. Plus, a retail mortgage banker/broker, employs 66 and operates seven branches in Southern California and one in Nevada. According to figures compiled by the Quarterly Data Report, a MortgageWire affiliate, the publicly traded UFM funded $687 million in the third quarter, ranking 71st in the United States. (UFM's fiscal quarter ended Oct. 31.) Through the first seven months of the year, Plus originated $275 million in loans.

Mortgage REIT Prices Stock Offering

December 10, 2004
American Home Mortgage Investment Corp., a real estate investment trust based in Melville, N.Y., has priced a public offering of 3 million shares of 9.25% series B cumulative redeemable preferred stock at $25 per share.

The stock will be noncallable for five years and is expected to trade on the New York Stock Exchange under the symbol "AHM PrB," the mortgage REIT said. The underwriters have been granted an option to buy up to 450,000 additional shares to cover any overallotments. The lead manager and sole bookrunner of the offering is Friedman, Billings, Ramsey & Co. American Home can be found on the Web at http://www.americanhm.com.

Completion of WTC Rebuilding Seen by '13

December 9, 2004
New York City developer Larry Silverstein says he expects the entire rebuilding effort at Ground Zero to be done by 2013, at an estimated total cost of $13 billion.

Delivering the keynote address at a New York University capital markets conference in New York, Mr. Silverstein estimated that $7 billion of that total would come from private investors for the commercial real estate component, including an expected additional $1.1 billion insurance payout and Liberty Bond funding. Commenting on the recent jury verdict that found that the two planes flown into the World Trade Center towers on 9/11 constituted two separate attacks, he said, "It's extremely gratifying to have your position validated and your judgment call vindicated by a jury of your peers." The redevelopment schedule calls for 7 WTC building (a 52-story structure on which construction has already begun) to go up first, by the end of 2005 or early 2006. As for tenants, he said "active negotiations" are under way and expressed amazement at the amount of interest in the space. The Freedom Tower, which will be the tallest building in the world, at 1776 feet -- "for at least 10 minutes," until some developer tries to top it, he said -- is slated for completion in 2009.

Jury Finds 9/11 Involved 2 Attacks on WTC

December 7, 2004
In a major victory for New York real estate developer Larry Silverstein, a New York jury has decided that the 9/11 attacks on the World Trade Center Towers constituted two attacks for insurance purposes, which could result in an additional payout of as much as $1.1 billion for rebuilding commercial real estate space at Ground Zero.

In a written statement, Mr. Silverstein said the verdict means that an additional one billion dollars of insurance proceeds will be available for the rebuilding. This, combined with Liberty Bond financing, "will ensure a timely and complete rebuild of the World Trade Center," he said. Mr. Silverstein added: "I strongly felt, and the jury agreed, that the destruction of the Twin Towers by two separate airplanes at two separate times was two separate occurrences, and that these insurers have an obligation to pay their fair share to help make Lower Manhattan whole again." Of the nine insurance companies affected by the decision, at least one, Germany-based Allianz, said it would appeal the jury decision.

Lenders Brace for More Consumer Disputes

November 24, 2004
Residents in California and 12 other Western states will be able to get free credit reports starting Dec. 1, and lenders are bracing for more consumer disputes about the information they provide to credit reporting agencies.

Under major changes to the Fair Credit Reporting Act enacted last year, residents nationwide will be eligible to get one free credit report a year from Equifax, Experian, and TransUnion when the rollout is complete (by Sept. 1, 2005). Consumers can apply for copies at a central source by mail, phone, and online. The Federal Trade Commission is advising consumers to notify the agencies if they find inaccurate information so it can be investigated and corrected, which means going back to the lender who furnished the information. "For the furnishers, it means they will field more consumer disputes," Helen Foster told an American Financial Services Association seminar on the new FCRA law. A former FTC staffer, Ms. Foster is now with Wilmer, Cutler, a Washington law firm. Also starting Dec. 1, lenders must notify customers if they send negative information to a credit reporting agency. The notice can be sent prior to reporting the negative information or no more than 30 days later. It applies to new and existing customers. The online address where consumers can apply for copies of their credit report is http://www.annualcreditreport.com.

FTC Charges 2 Mortgage Companies

November 17, 2004
The Federal Trade Commission has charged two mortgage companies with failing to protect consumers' personal and financial information and violating the agency's 2003 information safeguard rules.

Sunbelt Lending Services, Clearwater, Fla., has agreed to settle the charges and undergo regular audits by the FTC. A subsidiary of Cendant Mortgage, Sunbelt said the complaint stems from a "seldom-accessed" lead generation program. "To date, neither Sunbelt nor the FTC has any evidence that any customer information was compromised in any way," Sunbelt president Chris Cope said. Nationwide Mortgage Group, a small mortgage broker shop in Fairfax, Va., has not settled because its president, John Eubank, contends that he cannot afford to implement the compliance program the FTC wants. "I am trying to negotiate something with them so that I can just shut the company down and go out of business," Mr. Eubank said.

MortgageIT Names Cap Markets SVP

October 27, 2004
Jack Radin has been named senior vice president for capital markets at MortgageIT Inc., the New York City-based mortgage lending subsidiary of MortgageIT Holdings.

Mr. Radin, a 24-year veteran of the residential mortgage banking business, was most recently director of mortgage finance at E*Trade Financial, MortgageIT said. Before that he was a managing director of finance and business development for Pedestal Inc. in Washington D.C., where he developed a virtual Internet mortgage conduit. Mr. Radin has also held positions at Mellon Mortgage Co., Weyerhaeuser Mortgage Co., and Mason-McDuffie Mortgage Corp.

LoanPerformance Unveils Prepay Scorer

October 26, 2004
LoanPerformance, San Francisco, has announced the introduction of PreTell, a prepayment scoring platform developed with the aid of originators, servicers, traders, investors, and guarantors to form an industry standard.

PreTell provides a numeric score on an index of zero to 1,000 designed to predict the likelihood that an individual loan will prepay within a six-month forecast window. Scoring is currently available for 30-year fixed-rate, jumbo 30-year fixed-rate, 30-year alternative-A, subprime 2/28 hybrid adjustable-rate, and subprime 3/27 hybrid adjustable-rate mortgages. The announcement was made at the Mortgage Bankers Association convention in San Francisco. LoanPerformance can be found online at http://www.loanperformance.com.

U-Store-It Prices IPO

October 25, 2004
U-Store-It Trust, a Cleveland-based real estate investment trust, has priced an initial public offering of 25 million shares of common stock at $16 per share.

The shares will trade on the New York Stock Exchange under the symbol YSI, the self-storage REIT said. Lehman Brothers Inc. was the sole bookrunning manager of the offering. The underwriters have been granted an option to buy up to 3.75 million additional shares to cover any overallotments.

Bank Offers Pledged-Asset Mortgage

October 25, 2004
Charles Schwab Bank, Reno, has introduced a pledged-asset mortgage that allows well-heeled borrowers in certain states to use their stock portfolio as collateral for buying a home.

Rather than selling stock to get cash for a downpayment and closing costs, the loan leverages eligible securities in a client's investment portfolio as a guarantee for a mortgage loan. Applicants must have at least $250,000 in assets and meet other requirements to qualify. "Our clients told us they want to be able to buy a home without having to liquidate assets and alter their investment strategy," Richard Musci, the bank's chief lending products officer, said at the Mortgage Bankers Association convention in San Francisco. The Schwab Pledged Asset Mortgage provides up to 100% financing, and borrowers have access to their accounts and execute trades during the loan's term. There are no interest rate premiums or private mortgage insurance requirements. However, clients cannot pledge more than 60% of their liquid assets and cannot pledge retirement assets or volatile securities such as options and low-value stocks.

Resales 3rd-Best Ever in September

October 25, 2004
Existing-home sales rebounded in September as buyers took advantage of lower interest rates.

According to the National Association of Realtors, existing homes sold at an annual rate of 6.75 million units in September, a 3% gain from August and 1% higher than in the same month of last year. September's home sales reading was the third-best ever, the trade group said. NAR economist David Lereah noted that interest rates have been "fairly stable over the last month, hovering near generational lows." Mr. Lereah said continued low rates are increasing the purchasing power of homebuyers "trying to get into the market." Greenwich Capital economist Steve Stanley said September's sales figures underscore "the stellar underlying demand" for housing. At deadline time, the yield on the 10-year Treasury note was still under 4%. The NAR can be found on the Internet at http://realtor.org.

Archstone-Smith Swats Acquisition Rumor

October 22, 2004
Responding to market speculation, Archstone-Smith, a Denver-based multifamily real estate investment trust, has reported that the company "is not currently engaged in any discussions to acquire another publicly traded company."

Scot Sellers, Archstone-Smith's chairman and chief executive officer, said it is not the company's practice to comment on rumors, but that "the level of speculation reached a point that we felt that it was appropriate to clarify our position." He added that the REIT is in the process of marketing some of its "noncore" assets to pay a special dividend. The REIT owns and operates multifamily properties in a number of key metropolitan areas.

FHLBanks Urged to Let SEC Review Stock Forms

October 19, 2004
Federal Housing Finance Board Chairman Alicia Castaneda is urging Federal Home Loan Banks to take advantage of the Securities and Exchange Commission's unique offer to review draft registration forms for their stock.

"The time for purely hypothetical questions is past," Ms. Castaneda told the America's Community Bankers annual convention. "It is time to actually submit draft forms." The chairman also said the Finance Board is releasing guidance on registration issues in response to requests by industry groups. She told reporters that she has not seen a letter by four banking trade groups asking for a delay in SEC registration. However, she said the Finance Board has given the FHLBanks plenty of time to complete the registration.

Housing Starts Decline

October 19, 2004
Single-family housing starts fell 8.2% in September to a seasonally adjusted rate of 1.54 million units, according to new figures released Oct. 19 by the Commerce Department.

Compared with the level of a year earlier, new housing starts rose 0.2%. Analyzing the results, Greenwich Capital noted that groundbreaking activity in the Northeast plunged 27%, but the firm blamed the decline on "weakness in the region" exaggerated by hurricane-related flooding that reached the Northeast. Overall starts, which include multifamily construction, came in at 1.90 million units, a 6% decline from the level of the previous month. Even though September's results were negative, the National Association of Home Builders released a new survey that finds builder confidence at a yearly high. The trade group says builders are optimistic because of improving economic conditions, low mortgage rates, and strong house-price performance. The Commerce Department can be found online at http://www.doc.gov.

Delay Sought in FHLBank Stock Registration

October 18, 2004
Four major banking trade groups are asking the Federal Housing Finance Board to delay the registration of Federal Home Loan Bank stock until all 12 district banks have completed their capital plans.

The Finance Board has directed the Federal Home Loan Banks to register with the Securities and Exchange Commission by August 2005, but it appears that three FHLBanks may not complete their capital conversion plans by August. The trade groups are concerned that some banks may have to have their capital plans reviewed by the SEC and not just the Finance Board. "We understand that a Federal Home Loan Bank that has not implemented its capital plan will have to file [SEC] registration documents twice," says a joint Oct. 15 letter. "We strongly urge you to reconsider the required effective date for registration to give all the Federal Home Loan Banks the time necessary to fully implement their capital plans." The letter was signed by America's Community Bankers, the American Bankers Association, the Financial Services Roundtable, and the Independent Community Bankers of America.

NASDAQ Delists Fog Cutter

October 14, 2004
Fog Cutter Capital Group, Portland, Ore., has announced that the company's common stock has been delisted from the NASDAQ Stock Market, but that it will continue to appeal the delisting decision.

Fog Cutter said the company's stock will continue to be traded on the OTC Pink Sheets, and that the company will seek to establish relationships with market makers to provide other trading opportunities. Fog Cutter has several operating segments, including commercial real estate mortgage brokerage activities.

Citing Regs, RE Firm to Deregister Stock

October 12, 2004
Citing regulatory burdens, Kennedy Wilson Inc., Beverly Hills, Calif., has announced that it intends to deregister its common stock with the Securities and Exchange Commission.

The real estate investment and services firm said it intends to file a Form 15 with the SEC on Nov. 1 to suspend its reporting obligations (including Form 10-K) under the Securities Exchange Act of 1934. Kennedy Wilson said its stock will no longer be listed on the NASDAQ National Market. The company said it expects its stock to be traded over the counter on the so-called Pink Sheets, but that it "can make no assurances" that any broker will make a market in its stock. William J. Morrow, the company's chairman and chief executive officer, said the board "has determined that the increasing financial cost and commitment of management's time to ever-increasing regulatory requirements have become an excessive burden that will only grow over time." Freeing up the resources "will allow us to better execute both tactical and strategic plans," he said.

NAHB Rethinking GSE Policies

September 29, 2004
One of Fannie Mae's staunchest allies, the National Association of Home Builders, is re-evaluating its relationship with the government-sponsored enterprise as a result of the accounting problems exposed by the Office of Federal Housing Enterprise Oversight.

"I am shocked and appalled that this has happened," NAHB chief executive Jerry Howard told MortgageWire. The NAHB's board of directors is meeting in Columbus, Ohio, this week, and they will be re-evaluating the trade group's position on Fannie Mae and Freddie Mac. The trade group has an obligation to defend the housing finance system, Mr. Howard said, but not necessarily the status quo. "The housing finance system is bigger than any single component," he added. Meanwhile, the NAHB has stopped all lobbying on behalf of the GSEs, including efforts to get the Department of Housing and Urban Development to compromise on its proposal to raise the GSEs' affordable housing goals. "Everything has been put on hold" until the directors have a chance to re-evaluate everything, Mr. Howard said. "That order came from me, specifically," he said.

AmNet Stock Moving to NASDAQ

September 28, 2004
AmNet Mortgage Inc., San Diego, has announced that the listing of its common stock is moving from the American Stock Exchange to the NASDAQ National Market System.

The shares will begin trading on NASDAQ under the stock's new symbol, AMNT, on Sept. 29, AmNet said. Meanwhile, the stock will continue to trade on Amex until the move is completed. AmNet, the parent company of American Mortgage Network, can be found on the Web at http://www.amnetmortgage.com.

Freddie's Share Price Passes Fannie's

September 28, 2004
Freddie Mac's share price exceeded that of Fannie Mae on Monday and continued to trade above its larger rival's price in morning trading on Tuesday.

Just as Freddie Mac's stock price languished when it was in the throes of an accounting scandal, the new focus on accounting practices at Fannie Mae is taking a toll on its stock. Fannie Mae shares were trading at $66.69 just before noon Tuesday, and Freddie shares were trading at $67.25. Reuters reported that this marks the first time since 1988 that Freddie Mac shares have traded at a higher price than Fannie Mae shares. Freddie Mac can be found online at http://www.freddiemac.com.

Bond Group Counsel Shifts to New Post

September 24, 2004
George Miller, deputy general counsel of The Bond Market Association, is stepping down from that post in order to step up to his new position as executive director at one of the association's affiliates, the American Securitization Forum.

An ASF spokeswoman said she had no immediate comment on how the move would affect the work Mr. Miller has been responsible for at the association. The Bond Market Association is a trade group that has long worked to promote best-practices guidelines for sell-side debt market participants. The ASF is a newer affiliate that more specifically focuses on U.S. securitization market issues and has a broader membership that includes buy-side as well as sell-side market participants. The memberships of both groups include mortgage industry professionals. TBMA can be found on the Web at http://www.bondmarkets.com.

REIT Management Company Formed

September 24, 2004
A partnership sponsored by Robert M. Bass has announced the formation of Oak Hill REIT Management LLC in conjunction with Jon Fosheim and John Herold, who have been named chief executive officer and chief operating officer, respectively, of the new firm.

The firm will trade the capital of its sponsors and operating principals in various investment strategies. Mr. Fosheim and Mr. Herold were most recently associated with Green Street Advisors Inc., a research and consulting firm focused on publicly traded real estate securities. Mr. Fosheim was co-founder and co-CEO of Green Street, and Mr. Herold was its senior analyst responsible for strip retail and manufactured housing real estate investment trusts.

Freddie Slates Investor Call on Earnings

September 24, 2004
Freddie Mac is planning to hold an investor conference call on Nov. 1 to lay out a timetable for releasing its 2004 financial results.

As a result of its restatement process, Freddie has not released any quarterly financial reports this year -- although the publicly trade company has pledged to deliver both quarterly and full-year 2004 results by March 31. Meanwhile, Freddie Mac released its 2003 annual report on Sept. 24, and it warns investors that 2004 results, as measured by generally accepted accounting principles, will be volatile due to changes in the value of nonhedged derivatives. "We expect this type of volatility to adversely affect our GAAP results in the first half of 2004," the annual report says. Freddie Mac can be found online at http://www.freddiemac.com.

B&C Margins Dropping, NHEMA Says

September 15, 2004
A researcher for the nation's leading subprime trade group has confirmed what lenders have been talking about for months -- that profit margins in the niche are falling.

Discussing his new study on subprime lending in New Jersey, Professor Richard DeMong of the University of Virginia noted that margins are "clearly" falling, saying one reason for the decline is that more lenders are flooding into the niche. At a Sept. 15 legislative conference sponsored by the National Home Equity Mortgage Association, Mr. DeMong said New Jersey's predatory-lending law (first enacted in 2002) has caused subprime lending to drop "significantly" in the state -- particularly first liens. The study, based on first-quarter results and sponsored by NHEMA, confirms the findings of two previous studies on how the Home Ownership Security Act reduced subprime lending in the state. NHEMA attorney Wright Andrews conceded that the group may have a credibility problem in Washington because even though "we keep saying the sky is falling," loan volumes keep going up. NHEMA is trying to combat this perception and believes its members (particularly national lenders) are "cross-subsidizing" difficult markets by charging higher rates in states where nonconforming loan laws are less onerous.

Court OKs Amended Complaint by Calyx

September 14, 2004
In a decision rendered by U.S. District Judge Susan Illstion, Calyx Software, San Jose, Calif., has been given the OK to file a second amended complaint against Dublin, Calif.-based Ellie Mae alleging copyright infringement and unfair competition.

According to Calyx, the amended complaint elaborates on its claim that Ellie Mae deliberately copied Calyx's Point product when creating screens for its Encompass program in an attempt to attract Calyx users. The amended complaint also accuses Ellie Mae of unfair advertising in marketing its Encompass offering. The court said that Calyx "had sufficiently pled that the screen displays in its software had acquired distinctiveness and that Calyx had sufficiently met the distinctiveness requirement for a trade dress cause of action." Calyx started the suit back in May when it alleged that Ellie Mae had perpetrated copyright infringement, false designation of origin, and violations of the California Unfair Competition laws. The case was filed in the Northern District of California. Ellie Mae could not be reached for comment by MortgageWire's deadline.

Seattle FHLBank Pushing for MBS Program

September 13, 2004
The Seattle Federal Home Loan Bank is trying to generate support among various trade groups for its application to start a mortgage-backed securities program, which has been pending before the Federal Housing Finance Board since July 20.

"I anticipate we will weigh in with the Finance Board," said American Bankers Association senior counsel Joe Pigg. "We have been getting positive feedback from our members." The MBS program would allow the Seattle bank to purchase highly rated senior MBS tranches from member banks and thrifts, with the option to resell the securities into the capital markets. Seattle FHLBank officials also briefed the Independent Community Bankers of America about the MBS program, but the trade group still has a lot of questions about the proposal, according to ICBA director Ann Grochala. "We are looking at how it would benefit small community bankers," Ms. Grochala said. "We want to know if it is just for the largest members." America's Community Bankers has not taken a position, either. The trade groups are sponsoring a forum on FHLBank issues in Washington Sept. 14-15, which is closed to the press. Seattle FHLBank executive vice president David Bley is scheduled to make a presentation about the MBS program.

NAMB Prez Discounts RESPA Rumors

September 10, 2004
National Association of Mortgage Brokers president Bob Armbruster says he does not believe rumors that the Department of Housing and Urban Development will issue a revised Real Estate Settlement Procedures Act rule in October.

Speaking at the Southeast Mortgage Brokers Conference sponsored by the Georgia Association of Mortgage Brokers in Biloxi, Miss., Mr. Armbruster said it is more likely that action will occur after the November elections, especially if there is a change of control in the White House or the Senate. Furthermore, HUD Secretary Alphonso Jackson has promised the NAMB and other housing industry trade groups that he would call them back to the table to discuss any RESPA proposal. Mr. Armbruster said he believes Mr. Jackson will keep his word.

5th FTC Commissioner Sworn In

September 7, 2004
The Federal Trade Commission has five commissioners again with the swearing in of Jon Leibowitz on Sept. 7.

President Bush appointed the new commissioner while Congress was on its August recess. Like that of FTC Chairman Deborah Majoras, Mr. Leibowitz's confirmation was held up in the Senate, so the president made a recess appointment. Chairman Majoras was sworn in two weeks ago. A Democrat, Mr. Leibowitz was vice president of congressional affairs for the Motion Picture Association of America. From 1997 to 2000, he was the Democratic chief counsel and staff director for the U.S. Senate Antitrust subcommittee. He began his Capitol Hill career in 1986 working for Sen. Paul Simon, D-Ill. He replaces former FTC commissioner Mozelle W. Thompson, whose term expired over a year ago.

Feds Taking Their Time on RBP Disclosure?

September 3, 2004
Federal regulators are likely to take their time in tackling one of the trickiest disclosures -- involving risk-based pricing -- that Congress imposed on mortgage lenders during its rewrite of the Fair Credit Reporting Act last year.

The new law requires lenders to provide an RBP disclosure when they can't offer standard pricing on the loan because of the borrower's credit score. However, House and Senate lawmakers had such a hard time in specifying the timing and content of the disclosure, they simply left the job to the Federal Trade Commission and the Federal Reserve Board. "This is a sticky one," said attorney Jeremiah Buckley of Buckley Kolar in Washington. He said he doubts the regulators will be able to issue a proposed rule on the risk-based pricing disclosure before October. He noted that the regulators have other FCRA issues on their plate that they consider more urgent -- such as the affiliated marketing and the medical information rules. "Congress wanted the regulations in place by the end of the year," Mr. Buckley said. "But the regulators have more flexibility in extending the disclosures for risk-based pricing."

Resales Fall in July

August 24, 2004
The pace of existing single-family home sales fell in July -- the first down month since January.

According to figures compiled by the National Association of Realtors, resales fell by 2.9% to a seasonally adjusted annual rate of 6.72 million units. However, compared with those of the same month last year, sales rose 8.5%. "Prior to this year, the July sales pace would have been a real eye-popper," said NAR chief economist David Lereah. The trade group found that resales in the western U.S. suffered the most, declining 6.6%. The South had the best performance, with resales rising 0.4%. Meanwhile, the median price of an existing home rose 8.7%, to $191,300, compared with that of the same month last year. The NAR can be found online at http://realtor.org.

Countrywide Launches $675M Exchange

August 20, 2004
Countrywide Financial Corp., Calabasas, Calif., has started an exchange offer of up to $675 million of its Convertible Securities (also known as the "Exchange Securities") due in 2031 for an equal amount of its Liquid Yield Option Notes.

It will trade $1,000 of the Exchange Securities plus $2.50 in cash for each $1,000 of the LYONs. Among the features being touted by Countrywide is that the Exchange Securities can be converted into a mix of cash and Countrywide stock, while the LYONs can only be exchanged for stock. The offer is good for 20 days after the "Launch Date" of Aug. 20.

Freddie Earnings in Question

August 19, 2004
Freddie Mac has received a notice from the staff of the Securities and Exchange Commission that the agency is considering enforcement actions against the mortgage giant for underreporting its earnings by $5 billion.

The Wells notice cites possible violations of federal securities laws and gives Freddie Mac officials an opportunity to respond before SEC staff present their recommendations to the commission for final action. "The Wells notice indicates that in connection with the contemplated action, SEC staff may seek a permanent injunction and a civil money penalty,' Freddie Mac said in disclosing the Wells notice. In December, the Office of Federal Housing Enterprise Oversight imposed a $125 million civil penalty on Freddie Mac for engaging in inappropriate conduct and earnings management. Last summer, Freddie Mac's board of directors admitted senior executives manipulated earnings reports to show steadily increasing profits over several years. The $5 billion accounting scandal led to the ouster of three top executives and the publicly traded company restated its earnings for 2000, 2001 and 2002. Freddie Mac finally released its 2003 financial results on June 30.

E*Trade CDO Classes Downgraded

August 12, 2004
Five classes of notes issued by E*Trade ABS CDO I Ltd., as issuer, and E*Trade ABS CDO I LLC, as co-issuer, have been downgraded by Fitch Ratings and removed from Rating Watch Negative.

The downgrades were as follows: class B third-priority senior secured floating-rate notes, from AA-plus to A-minus; class C-1 mezzanine secured floating-rate notes, from BBB to B-plus; class C-2 mezzanine secured fixed-rate notes, from BBB to B-plus; preference shares, from BBB-minus to CCC-minus; and composite securities, from BBB-minus to CCC-minus. Fitch also affirmed the ratings on two classes. The transaction, a static cash flow collateralized debt obligation, is supported by a diversified portfolio of asset-backed securities, residential mortgage-backed securities, commercial MBS, and CDOs. Fitch attributed the downgrades to a "deterioration in the credit quality of E*Trade I's collateral pool and the negative impact of its interest rate hedge." If expected recovery estimates on the securities are not realized, Fitch said it may take further action on the notes. Fitch can be found online at http://www.fitchratings.com.

Student Housing REIT Prices IPO

August 12, 2004
American Campus Communities, Austin, Texas, has priced an initial public offering of 12 million shares of common stock at $17.50 per share.

The real estate investment trust, which focuses on the financing, development, and management of student housing, said the shares will trade on the New York Stock Exchange under the symbol ACC. Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were the joint book-running managers of the offering. ACC said it has granted the underwriters an option to buy up to 1.815 million additional shares to cover any overallotments.

Kite Realty Prices IPO

August 11, 2004
Kite Realty Group Trust, an Indianapolis-based real estate investment trust, has priced an initial public offering of 16.3 million shares of common stock at $13 per share.

The shares will trade on the New York Stock Exchange under the symbol KRG. Lehman Brothers acted as the sole bookrunner for the IPO, and Wachovia Capital Markets LLC was the joint lead manager. The shopping center REIT has granted the underwriters an option to buy up to 2.445 million additional shares to cover any overallotments.

Restaurant REITs to Merge

August 9, 2004
U.S. Restaurant Properties, Dallas, is acquiring CNL Restaurant Properties, a unit of Orlando, Fla.-based CNL Financial Group, and 18 CNL income funds in a $540 million transaction that is expected to create a "one-stop" financing source for restaurant-related real estate transactions.

The new company, which will continue trading on the New York Stock Exchange and operate under the CNL Restaurant Properties name, will be the largest restaurant real estate investment trust in the United States, according to U.S. Restaurant Properties, owning 1,900 properties and having financial interests in about 3,000 properties in 49 states. "Not only will we own and trade properties, but we will provide the full range of financial services and M&A advisory expertise that owners and operators require today," said Robert Stetson, chief executive officer of U.S. Restaurant Properties. Curtis McWilliams, president and CEO of CNL Restaurant Properties, will continue in the same positions at the merged company, the companies said.

FTC Chair Stepping Down Soon

August 2, 2004
Federal Trade Commission Chairman Timothy Muris says he is stepping down on Aug. 15 now that President Bush has signaled his intention to appoint Deborah P. Majoras to be the new chairman.

By announcing his intention to make a recess appointment, the president "ensures the FTC's ability to continue its strong record of competition and consumer protection," Mr. Muris said. During Mr. Muris' tenure, the FTC successfully pursued several predatory lending cases that resulted in large settlements, including a $215 million settlement involving Associates First Capital Corp, Irvine, Texas. Earlier this year, Chairman Muris announced his intention to step down in August, but a Democratic senator has held up Ms. Majoras' confirmation by the Senate. By making a recess appointment, the president can bypass the Senate, which is on recess until Sept. 7. Ms. Majoras has worked in the Justice Department's antitrust division. The president also announced his intention to appoint Democrat Jon Leibowitz to an FTC panel.

MortgageIT Prices IPO

July 30, 2004
MortgageIT Holdings Inc., a New York-based real estate investment trust, has priced an initial public offering of 14.6 million shares of common stock at $12 per share.

The company said the proceeds of the IPO (gross proceeds totaled $175.2 million) will be used to fund and retain in portfolio high-quality single-family and hybrid adjustable-rate mortgage loans, as well as for general corporate purposes. The offering was led by UBS Investment Bank and Merrill Lynch & Co., and the underwriters were granted an option to buy up to 2.19 million additional shares to cover any overallotments. The shares will trade on the New York Stock Exchange under the symbol MHL.

Abbey Agrees To Be Acquired

July 26, 2004
Abbey National PLC, London, the second-largest mortgage lender in the United Kingdom, has agreed to be acquired by Banco Santander, Madrid.

According to the Council of Mortgage Lenders, a British trade group, Abbey had an 11.5% market share last year for mortgages in the country, behind only HBOS (the combination of Halifax and Bank of Scotland) at 22.5%, but ahead of the Nationwide Building Society and Lloyds TSB, both at 9.3%. In 2001 Lloyds TSB made a hostile bid for Abbey that was set aside by regulators. The bid was prompted by Abbey's negotiating with Bank of Scotland for a friendly deal, but the negotiations were fruitless. In 2002, Bank of Ireland submitted a hostile bid for Abbey, while National Australia Bank (the former owner of HomeSide Lending) admitted that it had been in negotiations with Abbey. At current conversion rates, the deal is worth $15.6 billion. "Abbey's leading position in the U.K. mortgage market, combined with its strong distribution network, represents ... a value-creating opportunity based on the application of Banco Santander's commercial and technological best practices to Abbey's banking operations," said Emilio Botin, chairman of Banco Santander.

Fitch Eyes E*Trade CDO Classes

July 23, 2004
Fives classes of securities issued by E*Trade ABS CDO I Ltd. and E*Trade ABS CDO I LLC and supported in part by residential and commercial mortgage-backed securities have been placed on Rating Watch Negative by Fitch Ratings.

The affected securities are as follows: class B third-priority secured floating-rate notes due 2037; classes C-1 and C-2 mezzanine secured floating-rate notes due 2037; $12.5 million of preference shares due 2037; and approximately $4.9 million of composite securities due 2037. The collateralized debt obligation is supported by RMBS, CMBS, CDOs, and asset-backed securities, Fitch said. The rating agency said a June 30 trustee report on the transaction indicates that 0.86% of the portfolio had defaulted. "The portfolio default and rating performance has increased the risk to the notes to a point where the risk may no longer be consistent with their respective ratings," Fitch said.

Nasdaq Plans to Delist Fog Cutter

July 21, 2004
Nasdaq has notified Fog Cutter Capital Group, Portland, Ore., of its intention to delist the company effective July 29, an action that follows an agreement by Fog Cutter with its convicted chief executive officer, Andrew Wiederhorn, the company has reported.

Fog Cutter said it will challenge the delisting decision. Mr. Wiederhorn became embroiled in a controversy related to the activities of Wilshire Credit Corp., a Portland company he owned in partnership with Lawrence Mendelsohn that traded in debt-related investments, Fog Cutter said. That company became insolvent following the Russian crisis of 1998, and on June 3, 2004, Mr. Wiederhorn pleaded guilty to two felony violations relating to its activities and received an 18-month prison term in addition to a monetary penalty. Fog Cutter then entered into a leave-of-absence agreement to prevent adverse consequences to the company. If Mr. Wiederhorn leaves his position as CEO and chairman of Fog Cutter, the minority shareholders of George Elkins Mortgage Banking, a commercial mortgage banker and broker, will have the right to buy FogCutter's 51% stake in George Elkins at a "significant" discount to its current market value, Fog Cutter said.

MBA Reports COMBOG Appointments

July 16, 2004
The Mortgage Bankers Association has reported appointments to its 2005 Commercial Real Estate/Multifamily Finance Board of Governors, which focuses on commercial/multifamily real estate finance policy issues and initiatives.

The COMBOG officers are: Dan Phelan, president and chief executive officer of San Diego-based Pacific Southwest Realty Services, chair; Ed Hurley, managing director of Charlotte, N.C.-based Wachovia Securities, vice chair; and Kieran Quinn, president and CEO of Atlanta-based Column Financial, who remains vice chair. The trade association also announced six new members of the 30-member COMBOG: Sally Gordon, Moody's Investors Service, New York; Steven K. Graves, Principal Global Investors, Des Moines, Iowa; Thomas C. Jensen, Allstate Investments, Northbrook, Ill.; Henry J. Schwendiman, Q10 Bonneville Mortgage, Salt Lake City; Brian F. Stoffers, L.J. Melody & Co., Houston; and Deborah C. Towner, Genworth Financial, Seattle. The MBA can be found online at http://www.mortgagebankers.org.

Court Backs OTS Parity Stance

July 16, 2004
A U.S. appeals court has upheld the authority of the Office of Thrift Supervision to decide which state restrictions on lending should be pre-empted by the Alternative Mortgage Transaction Parity Act.

The decision is a defeat for the National Home Equity Mortgage Association, which argued before the appeals court in Washington that the Parity Act gives state-licensed lenders the same immunity from state laws and regulations that federally chartered thrifts enjoy when they make adjustable-rate mortgages and other alternative mortgages. In particular, the subprime lending association wanted the court to overturn an OTS regulation that denies state-licensed lenders immunity from state restrictions on prepayment penalties and late fees. The Parity Act regulation went into effect in July 2003. NHEMA said it "regrets" the court's ruling. The OTS regulations "will hurt many consumers ... by making home loans more expensive and more difficult to obtain," the trade group said.

Barclays Cap Names 2 MBS Traders

July 14, 2004
Barclays Capital has made two more appointments to its new mortgage-backed securities trading desk operation.

Chris Leslie, who previously worked in MBS sales at Citigroup, has been named managing director responsible for MBS sales in the United States at Barclays, and Steve Cozine, who was head of non-agency collateralized mortgage obligations at Citigroup, has been named director and senior mortgage CMO trader and structurer. Barclays Capital can be found online at http://www.barcap.com.

Groups Voice Concern Over SEC ABS Rules

July 13, 2004
Bond and securitization trade groups that represent mortgage-related securities market participants, among others, are voicing concerns about the Securities and Exchange Commission's proposed rules for asset-backed securities.

The Bond Market Association said that among its concerns are "the risk that shelf registration statements may no longer be available, far-reaching and inflexible static pool disclosure requirements" and "inappropriate regulations covering repackaging transactions." The association's affiliate, the American Securitization Forum, also has concerns about the proposed rules and has detailed them in a 130-page comment letter to the SEC. The forum can be found online at http://www.americansecuritization.com, and the association can be found at http://www.bondmarkets.com.

MICA Members' MI Slips in Month

July 2, 2004
The members of the Mortgage Insurance Cos. of America wrote $19.3 billion of new primary mortgage insurance in May, down slightly over 1% from April's $19.4 billion.

In May 2003, MICA members wrote $35.4 billion, but those numbers include Radian Guaranty, which dropped its membership in the trade group last July. Application volume, which for the two prior months topped 180,000, slipped to 152,880 in May, back to the level seen at the end of the refinance boom in November 2003. New pool risk written in May was $85.3 million, down from $81.1 million in April. There were 33,928 cures and 39,188 defaults in May, for a cure/default ratio of 86.6%. This is down from 90.6% in April, but a slight increase over May 2003's 81.3%.

Nationwide Inks Pact With Cops

June 30, 2004
The Fraternal Order of Police has signed an agreement with Nationwide Advantage Mortgage Co., Des Moines, Iowa, for the latter to provide mortgage services to the group's over 320,000 members across the country.

Chuck Canterbury, FOP president, said, "law enforcement officers are an especially financially savvy, information-conscious group. Access to home purchasing programs is very important to our members because many of them have limited time to apply for a mortgage and ensue the homebuying process." NAMC offers approvals within 10 minutes. Its trademark is "speed, simplicity and savings." The company is a subsidiary of Nationwide Mutual Insurance Co., Columbus, Ohio.

U.S., Mexican Builders Form Alliance

June 29, 2004
Builder trade groups in the United States and Mexico have announced the formation of an alliance.

The agreement between the National Association of Home Builders in the United States and Mexico's Camara Nacional de la Industria de Desarrollo y Promocion de Vivienda is "the latest positive offshoot of the historic Partnership for Prosperity alliance established by U.S. President George W. Bush and Mexico President Vicente Fox in February of 2001, and it establishes a powerful precedent for international cooperation," said NAHB president Bobby Rayburn. The alliance aims to create more accessible trade channels and exchange technology and skills aimed at improving the quality, affordability, and efficiency of building on both sides of the border.

FTC Mandates Free Credit Reports

June 9, 2004
The Federal Trade Commission has issued a final rule that requires the three major credit-reporting agencies to provide consumers with a free copy of their credit report once every 12 months.

As mandated by Congress, the final rule requires Equifax, Experian, and Trans Union to create a centralized facility that consumers can contact by mail, the Internet, or a toll-free telephone number to request a free credit report. Access to free credit reports is being phased in, however, and it will not be universal until Sept. 1, 2005. Eligibility for free reports depends on the state where the consumer lives. Western states will become eligible on Dec. 1, 2004; Midwestern states on March 1, 2005; Southern states on June 1, 2005; and Eastern states and all U.S. territories on Sept. 1, 2005.

GMAC Dismisses Suit Against LendingTree

June 9, 2004
Lending Tree Inc., Charlotte, N.C., has reported that General Motors Acceptance Corp. has dismissed a recently filed complaint alleging that LendingTree was attempting to trade on GMAC's reputation by using or appropriating GMAC's trademark as a domain name.

LendingTree quoted GMAC counsel Charles H. Ellerbrock as stating, "Once we learned that LendingTree had not used 'GMAC' in an Internet domain name, we withdrew the complaint. LendingTree was very gracious about the whole thing." LendingTree, an operating business of IAC/InterActiveCorp., can be found online at http://www.lendingtree.com.

REITs in Store for UK?

June 8, 2004
Publicly traded real estate investment trusts could become a reality in the United Kingdom by next May, according to Nicholas Ritblat, executive director of The British Land Co.

Speaking at a panel session at the National Association of Real Estate Investment Trusts' institutional investor forum in New York, Mr. Ritblat said the U.K. government is inviting public comment on the proposal, and he urged convention attendees to "write in" if they think that having REITs in the United Kingdom is a good idea. A U.K. general election scheduled for next year could delay the process, Mr. Ritblat said, but he does not see "too many obstacles outside the political process." If the proposal goes through, there could be a major impact, since there is a "huge, unsatisfied demand for real estate in the U.K.," according to Mr. Ritblat. He noted that about 207 trillion pounds is invested in U.K. residential real estate and about 300 billion pounds in commercial real estate. Entities such as Fannie Mae and Freddie Mac don't exist in the United Kingdom, and fixed-rate mortgages are not available.

NAHB Urges FHA to Change Default Standards

June 7, 2004
The mortgage affiliates of homebuilders are starting to get clipped under the Federal Housing Administration's Credit Watch program, and their trade group is urging the FHA to change its default standards so they are not penalized for concentrating on home purchase loans.

The FHA should have separate default standards for refinancings and purchase mortgages, because refis have much lower default rates, according to a letter to FHA Commissioner John Weicher from the National Association of Home Builders. "Otherwise, the Department of Housing and Urban Development will be conducting investigations and inquiries that discourage builders and their lending subsidiaries from selling homes and making loans to the very group that President Bush has targeted for increased homeownership," the NAHB says in a March 17 letter. On April 1, HUD suspended the FHA lending privileges of the Charlotte, N.C., branch office of DHI Mortgage Co., which is an affiliate of the nation's largest homebuilder, D R Horton Inc., Arlington, Texas. HUD announced the DHI suspension June 4 along with other Credit Watch suspensions. DHI Mortgage, based in Austin, Texas, did not return phone calls by MortgageWire's deadline. Under the Credit Watch program, the FHA can suspend a branch office when the default/claim ratio is twice the national average. The Charlotte branch has a default/claim ratio that is more than four times the 2.11% national average. Overall, DHI Mortgage has a 2.04% default/claims ratio.

New NAMB Chief Seeks Quicker Prosecutions

June 7, 2004
The new president of the National Association of Mortgage Brokers has called for an industry-government alliance at the state and local level to expose and, most importantly, to prosecute predatory lenders.

Bob Armbruster, a broker from Lawrenceville, Ga., outside Atlanta, envisions a system that would "grease the judicial process" to bring bad actors to court more quickly." Mr. Armbruster admitted his idea is "a little visionary," and said he's still not sure about all the legal whys and wherefores. But he told MortgageWire at the NAMB's annual convention in Salt Lake City that if state and local authorities don't take some steps to curb abusive lending practices, federal regulators will. "The feds are loaded up, so the states need to act more effectively and quicker," the 40-year housing finance veteran said. "As it is now, it takes five years to get predatory lenders into court. We need to lubricate the process." The new NAMB president, who heads Armbruster Mortgage, also vowed not only to continue his predecessor A.W. Pickel's efforts to create a national registry of all loan originators, but also to formalize the effort within the now 24,000-member association's governing system. Mr. Pickel said during a news conference that interest in a registry that would report and track unscrupulous players is growing. "I think more people than ever favor it," he said, noting that Fannie Mae, Freddie Mac, the Federal Housing Administration, and even the Federal Trade Commission have indicated their interest in a self-policing system to eliminate the business's rotten apples.

MBA: Terror Coverage Worries Servicers

June 3, 2004
Commercial servicers expect that only 20% of their portfolios, representing $132 billion in loans, will have terrorism risk insurance in place by next spring if the "make available" provision of the Terrorism Risk Insurance Act is not extended, according to a survey conducted by the Mortgage Bankers Association.

The MBA said this represents a reduction of 76% in the balance of loans that would be covered by terrorism insurance. "It [the survey] underscores the significant need for an extension of the 'make-available' provision to ensure that terrorism insurance is priced within reach and that there is continued availability," said Gail Davis Cardwell, senior vice president in the MBA's commercial/multifamily group. "The MBA is urging the U.S. Department of the Treasury to extend this provision to avoid a potential market collapse." The organization reported that 94% of the servicers responding to the survey expect their expenses to rise if the "make available" provision is not extended. The survey covered servicers representing one-third of the $2 trillion commercial/multifamily servicing market, according to the trade association. The MBA can be found online at http://www.mortgagebankers.org.

Private MI Dips

June 2, 2004
Members of the Mortgage Insurance Cos. of America wrote $19.5 billion of private mortgage insurance in April, down 3.7% from $20.3 billion in March.

Of April's total, $16.6 billion came from traditional insurance, down from $16.8 billion the previous month. Both the total volume and traditional volume results represent the industry's second-best month of the year so far. Bulk purchases fell from $3.4 billion in March to $2.9 billion in April. Application volume totaled 181,471, down 4.1% from 189,311 in March, but still well ahead of the application volume for January and February. New pool risk written amounted to $81.1 million, compared with $83.4 million in March. After two months of having more cures than defaults, the cure/default ratio once again slipped below 100%. The April ratio stood at 90.6%, with 34,872 cures and 38,490 defaults. Since July 2003, MICA data do not include information from Radian Guaranty Inc., Philadelphia, which dropped out of the trade group in a policy dispute. MICA can be found online at http://www.micanews.com.

Economists: Originations to Average Nearly $3T

May 27, 2004
Mortgage originations will average close to $3 trillion a year from 2004 to 2013, according to the chief economists of three trade groups and two secondary market agencies.

"America's families will need 125 million new mortgage loans for home purchase or refinancing totaling $27 trillion in mortgage originations," Freddie Mac chief economist Frank Nothaft said at a press conference. Meanwhile, mortgage debt will grow at a rate of 8.25% a year, he said, which is close to the growth rate experienced over the last decade. The chief economists from Freddie, Fannie Mae, the National Association of Realtors, the National Association of Home Builders, and the Independent Community Bankers of America collaborated on the report, which is called "America's Home Forecast: The Next Decade for Housing and Mortgage Finance." The bullish report, sponsored by the Homeownership Alliance, predicts that the homeownership rate will exceed 70% by 2013.

FNF Plans Noninsurance Ops Spinoff

May 27, 2004
Fidelity National Financial Inc., Jacksonville, Fla., has announced a filing with the Securities and Exchange Commission relating to a proposed spinoff of its noninsurance operations into a separately traded public company.

The new company, Fidelity National Information Services Inc., would issue common stock in an initial public offering. FNF said it plans to later distribute all its ownership interest in the new company in a tax-free spinoff through a special dividend to FNF common stockholders. FNF chairman and chief executive officer William P. Foley II said the spinoff will allow FNF to better position its financial institution processing, outsourcing, and real estate information businesses and "provide a separate, publicly traded currency that can be used in its business, including helping to finance future acquisitions." FNF will focus on title insurance and its other specialty insurance businesses, he said. The new company will consist of three main segments: Financial Institution Software and Services, including FNF's mortgage processing business; Lender Outsourcing Solutions; and Information Products and Services. Mr. Foley will become chairman and CEO of the new company. He will remain chairman of FNF, and Randy Quirk, now president, will assume the role of CEO. FNF can be found online at http://www.fnf.com.

FTC Probing Aames

May 25, 2004
The Federal Trade Commission is investigating Aames Financial Corp., a subprime lender based in Los Angeles, according to a public filing.

Aames also disclosed that the FTC might be launching investigations of other subprime lenders. On April 8, FTC commissioners authorized the investigation of "various unnamed subprime lenders and loan brokers to determine whether there have been violations of certain consumer protections laws," Aames says in a May 21 filing with the Securities and Exchange Commission. The 50-year-old company indicated that it is cooperating with the FTC and the agency's demand for company documents and data about its business and subprime lending practices. Aames is the 15th-largest subprime lender, according to the Quarterly Data Report, a National Mortgage News affiliate. The California-based retail and wholesale lender originated $1.9 billion in mortgage loans in the first quarter. The company sells most of its production as whole loans (servicing released), and it services a $2.4 billion loan portfolio mostly for other investors. Aames said it received a "civil investigative demand" from the FTC on April 27.

NAHB Sees End of MF Slump

May 24, 2004
The National Association of Home Builders is seeing signs that the slump is over for the multifamily sector, the Washington-based trade association has reported.

Citing its Multifamily Market Index, the NAHB said the component that gauges current market conditions for for-sale units jumped to 64.0 in the first quarter, up from 46.7 in the first quarter of 2003. The indexes gauging current market conditions for low-income and market-rate apartments both were "well above" their levels of a year earlier, at 49.4 and 48.1, respectively. The MMI is based on a quarterly survey of multifamily builders and property owners. "The evolving upswing in the job creation numbers bodes well for the multifamily sector," said David Seiders, the NAHB's chief economist. "Since job creation often leads to new household formation -- and new households often tend to be renters or first-time condo buyers -- it looks like there are better days ahead for the multifamily segment of the housing market." The NAHB can be found online at http://www.nahb.com.

CRE Late Pays Below 0.5% in California

May 18, 2004
Commercial mortgage delinquencies in California are below 0.5% for the 22nd consecutive month, the California Mortgage Bankers Association has reported.

Based on a quarterly delinquency survey conducted by the CMBA, the trade group said that as of March 31, 99.69% of the California-based commercial real estate loans serviced by 17 mortgage banking firms were either current or only one payment delinquent, making for a delinquency ratio of 0.31%. This compares with a delinquency rate of 0.35% three months ago and 0.18% a year ago, the CMBA said. Nineteen different loans were two or more payments past due. Of these, the three largest loans were backed by a hotel property, an office property, and a "single-purpose" property. The 19 delinquent loans represent 0.19% of the 9,917 commercial real estate loans included in the survey, the CMBA said.

NFIP Extension Hits Delay

May 18, 2004
Sen. Mary Landrieu, D-La., possibly as well as other senators, has placed a hold on a bill to extend the National Flood Insurance Program, and lenders are worried that Congress may miss a June 30 deadline to pass the bill and prevent a shutdown of the flood insurance program.

The Senate Banking Committee passed the NFIP extension bill (S. 2238) in March. But recent efforts to get the full Senate to vote on the bill have been held up by Sen. Landrieu. Sen. Richard Durbin, D-Ill., recently released a hold on the bill. The Senate bill and a House-passed flood insurance bill are designed to reduce the cost of insurance claims on properties that are repeatedly hit by floods. Homeowners who refuse federal buyouts or other forms of assistance to shore up, elevate, or move their properties will see their flood insurance premiums increase. Louisiana has one of the highest incidents of repetitive flood claims, according to Sen. Landrieu's press secretary, Gina Farrell. "The senator just wants to completely understand what is going to happen to the people of Louisiana once this bill goes through," she said. "We are certainly trying to get through this as quickly as we can." Meanwhile, lender groups are reminding Senate leaders that the NFIP is the primary source of flood insurance. "Time is of the essence because the program will shut down on June 30th," six trade groups say in a May 17 letter.

MBS Fell in 1Q, but HEL Deals Rose

May 14, 2004
Although the volume of new home equity securitizations increased in the first quarter, the bulk of the mortgage-related securities market saw a decline in issuance, The Bond Market Association has reported.

New-issue activity in the home equity sector increased to $88.9 billion, up 74.3% from that of a year earlier and up 56.4% from that of the fourth quarter of 2003. New issuance of other types of mortgage securities dropped to $404.4 billion between January and March of this year from $776.1 billion in the first quarter of 2003 and $552.2 billion in the fourth quarter, the association said. The trade group can be found on the Web at http://www.bondmarkets.com.

Amex Trading Options on Boston Properties

May 13, 2004
The American Stock Exchange has launched trading in options on Boston Properties Inc., a Boston-based real estate investment trust.

The options opened with position limits of 3.15 million shares and will trade on a January expiration cycle, Amex said. The specialist will be LaBranche Structured Products LLC. Boston Properties specializes in office, industrial, and hotel properties. Amex can be found online at http://www.amex.com.

AFSA Warns Against HMDA Data Misuse

May 12, 2004
The scheduled release of the new Home Mortgage Disclosure Act data next year presents severe reputational risk for subprime lenders, and the Federal Reserve Board needs to prevent the misuse of the data, according to the American Financial Services Association.

"We are hopeful that the Board will do everything in its power to prevent the misuse of the data, up to and including public denunciations of subprime industry detractors who attempt to equate risk-based pricing with race discrimination," the AFSA says in a comment letter. The release of the 2004 HMDA data in the summer of 2005 will include pricing information on subprime loans for the first time. But it does not include data that will relate price to the actual risk of the loans. "We believe that this shortfall will permit industry detractors to draw erroneous conclusions concerning risk-based pricing of loans," the trade group contends. The AFSA is recommending that the Fed include a disclosure with the HMDA data that says the information "does not include several factors that are integral in determining the price of a loan."

Raines: Banks Will Lose Interest in Mortgages

May 12, 2004
Fannie Mae chairman and chief executive Franklin Raines is predicting that commercial banks will soon loose their appetite for investing in mortgages as short-term interest rates rise.

"The one thing we know is that the carry trade that banks conduct in mortgages doesn't last forever," he told a UBS Warburg financial services conference. In response to critics such as Federal Reserve Board Chairman Alan Greenspan, Mr. Raines argued that Fannie's ability to purchase and portfolio mortgage loans and securities plays an important role in providing liquidity to the market when other investors no longer find it lucrative to invest in mortgages. "Without our mortgage portfolio, both investors and consumers would feel the pain," he said. Investors would not be able to find a ready buyer when they want to sell their mortgage holdings and mortgage rates would skyrocket -- hurting consumers, according to Fannie's CEO. "But we will be ready to stabilize the mortgage market," Mr. Raines said.

Senate Passes Bill With MI Deduction

May 12, 2004
The Senate has passed by a 92-5 vote a huge tax bill called the Jumpstart Our Business Strength Act that includes a temporary one-year deduction for mortgage insurance premiums.

The JOBS bill (S. 1637) is considered must-pass legislation to repeal U.S. export tax incentives that are considered illegal by the World Trade Organization. But it has become a huge magnet for special-interest tax provisions, and Senate leaders agreed to include an MI deduction amendment, sponsored by Sen. Gordon Smith, R-Ore. Under the Smith amendment, homeowners with incomes of up to $100,000 would be able to deduct all their mortgage insurance premiums paid during the 2005 tax year. Like many new tax provisions, the deduction expires after one year. The House has not passed a similar tax bill. However, 23 members of the House Ways and Means Committee have co-sponsored an MI deduction bill (H.R. 1336) that is similar to the Smith amendment.

Origen Prices IPO

May 7, 2004
Origen Financial Inc., Southfield, Mich., has priced an initial public offering of 8 million shares of common stock at $8 per share, for a total offering of $64.0 million.

Since the start of trading on Nasdaq, the stock has traded in a narrow range between $7.99 and $8.05 per share. Lehman Brothers is the managing underwriter and Credit Suisse First Boston and Flagstone Securities are the co-managers. Origen is a manufactured home loan originator and servicer that has elected to take real estate investment trust status.

Fairbanks OKs Florida Settlement

May 7, 2004
Subprime servicer Fairbanks Capital Corp. has agreed to refund Florida homeowners $1.65 million for allegedly charging improper fees, according to state officials.

The settlement agreement is the result of an extensive review of Fairbanks' records by state examiners. The $1.65 million does not come out of the $40 million pot that Fairbanks created as part of a settlement with the Federal Trade Commission last November. "It goes above and beyond" the Fairbanks/FTC settlement, said Bob Tedcastle of Florida's Office of Financial Regulation. Florida regulators alleged that the Salt Lake City servicing company charged unwarranted fees for appraisals and improper fees for releasing borrowers from mortgages that were paid off. They also alleged that Fairbanks improperly charged interest to cover advances the company paid for force-placed insurance, appraisals, and credit reports. A Fairbanks spokeswoman said the possibility of such settlements was disclosed last year.

American Residential Changes Name to AmNet

May 6, 2004
American Residential Investment Trust Inc., San Diego, has completed its name change to AmNet Mortgage Inc.

AmNet is the abbreviated name of its primary operating subsidiary, American Mortgage Network. In addition, the company announced that it plans to move from the American Stock Exchange, where it trades under the symbol INV, to the Nasdaq National Market System. The move is expected to take place in mid-June, at which time the company's ticker symbol will change to AMNT. John M. Robbins, chief executive of AmNet, said the company believes that listing on Nasdaq "will help us attract a broader range of investors through greater visibility." The company can be found on the Web at http://www.amerreit.com.

REMIC Tax Bill Gets Boost

May 6, 2004
Commercial real estate interests are stepping up their efforts to pass a REMIC modernization bill now that they have received a favorable revenue ruling from the Joint Committee on Taxation.

The joint House-Senate tax committee determined that the bill (H.R. 4113), which would make it easier to renovate existing buildings after the loans have been securitized in a real estate mortgage investment conduit, would reduce revenues by $4 million the first year and by only $11 million over 10 years. This bill, sponsored by Reps. Mark Foley, R-Fla., and Earl Pomeroy, D-N.D., will have a negligible effect on government revenues, according to six CRE groups. "Perhaps more importantly, by facilitating renovation of commercial properties, this legislation will help spur new economic growth and employment," the trade groups say in a letter to members of Congress. The Commercial Mortgage Securities Association, the International Council of Shopping Centers, the Mortgage Bankers Association, the National Association of Real Estate Investment Trusts, the National Association of Realtors, and the Real Estate Roundtable signed the letter. "It is something we strongly support and have been building support [for] since the beginning of the year," said MBA's top lobbyist Kurt Pfotenhauer.

NASD: 100% LTV Mortgages Very Risky

May 4, 2004
The National Association of Securities Dealers has issued a warning to investors about the risks associated with mortgages having a 100% loan-to-value ratio, also known as pledged-asset mortgages.

In an Investor Alert, the NASD noted that customers of brokerage firms offering 100% mortgages can pledge their stocks, bonds, mutual funds, and other securities in lieu of a downpayment for a mortgage. The firms often tout the fact that such mortgages allow investors to avoid private mortgage insurance or liquidating their securities to come up with a downpayment, but they may "overlook, or consign to the fine print," the associated risks, the trade group said. "There 100% mortgages are not suitable for everyone, and investors should approach them with extreme caution," said Mary L. Schapiro, NASD vice chairman and president of regulatory policy and oversight. "Many investors aren't aware of the considerable risks involved. We're especially concerned that they don't understand that the securities they pledge in lieu of a downpayment may be liquidated if the value of those securities drops below a certain level, or if they default on their mortgage." The association can be found online at http://www.nasd.com.

Private MI Jumped in March

May 4, 2004
The lower interest rate environment that sparked a brief boom in March boosted volume for the member companies of the Mortgage Insurance Cos. of America.

The total dollar volume of primary new insurance written was $20.25 billion, up from $14.45 billion in February. The March total included $16.84 billion in traditional insurance and $3.4 billion in bulk. Application volume increased 25% in March, from 140,648 to 189,311, and new pool risk written totaled $83.4 million. The cure/default ratio was well over the 100% line for the second straight month, at 114.4%. There were 43,489 cures and 38,014 defaults. Beginning in July 2003, all data from MICA excludes information from Radian Group, which is no longer a member of the trade association. MICA can be found online at http://www.micanews.com.

PacificEx Trading Impac, UDRT Options

May 3, 2004
The Pacific Exchange has announced the beginning of trading in options on Impac Mortgage Holdings Inc. and United Dominion Realty Trust Inc.

The options of both companies will trade on the January expiration cycle, with exercise limits set at 3.15 million shares. The lead market makers will be Steven D. Juno and Ethan Dorr of Cutler Group LP. The exchange can be found on the Web at http://www.pacificex.com.

Accredited's Nix to REIT Status Lauded

May 3, 2004
Piper Jaffray analyst Robert Napoli has applauded the decision of Accredited Home Lenders, San Diego, to buck the growing trend of publicly traded subprime lenders converting to real estate investment trust status.

Accredited announced the decision in a recent news release on its first-quarter earnings. "While the company found certain arguments for becoming a REIT to be compelling, it also found the structure would add significant administrative complexity," Accredited said. "The company received divergent advice concerning how a hybrid REIT should be structured and how it would be valued." Mr. Napoli commented that "[t]his is a different decision than most competitors who are choosing the REIT structure, and we like it. Accredited can still choose to become a REIT at a later date after it reviews the success of its peers. We recommend aggressive purchase of Accredited stock if it sells off because of this less 'popular' decision."

Boardwalk to Reorganize as REIT

April 30, 2004
Boardwalk Equities Inc., Calgary, Canada, has received the shareholder and regulatory approvals needed to reorganize as a real estate investment trust.

Boardwalk said its units will begin trading May 5 if it has satisfied the conditions imposed by the Toronto Stock Exchange by May 3. "The common shares of the company will continue to trade on the exchange in the interim period between May 3, 2004 until close of market on Tuesday, May 4, 2004 and will, on Monday, May 3, 2004 and Tuesday, May 4, 2004, represent an entitlement to REIT units," the company said.

FTC to Refer Credit Reporting Complaints

April 27, 2004
The Federal Trade Commission has found a new approach to making sure that the three national credit reporting agencies are working with consumers to correct inaccurate or incomplete credit reports.

Instead of just fielding complaints from consumers who say their disputes with the credit reporting agencies have not been resolved to their satisfaction, the FTC has decided to refer those complaints directly to the agencies -- Equifax, Experian, and TransUnion. "The FTC will not make any determination about the merits of the complaints," the consumer protection agency said. However, the commission will require the credit reporting agencies to provide periodic reports on the "disposition of a sample" of the complaints. "Accurate and complete information is not only essential to our credit-based economy, but also to the fair treatment of consumers," FTC consumer protection director Howard Beales said. "We look forward to working with the [credit reporting agencies] on this complaint-sharing program."

Ney Sets Zero-Down Mark-up

April 27, 2004
Rep. Bob Ney, R-Ohio, chairman of the House Financial Services housing subcommittee, has scheduled an April 28 mark-up of a bill to create a federally insured zero-downpayment mortgage program.

The bill, sponsored by Rep. Patrick Tiberi, R-Ohio, would eliminate the 3% downpayment requirement on Federal Housing Administration loans for first-time homebuyers who complete a housing counseling requirement. The bill (H.R. 3755) has the support of the Bush administration and lender groups. In a joint letter to Rep. Ney, six trade groups said the bill would increase homeownership opportunities without adversely affecting the health of the FHA insurance fund. "This legislation would allow FHA to continue its rich tradition of innovation and address one of the primary obstacles that prevent many minority and low- and moderate-income families from becoming homeowners: the funds necessary for the downpayment," the April 26 letter says. The American Bankers Association, America's Community Bankers, the Consumer Bankers Association, the Independent Community Bankers of America, the Mortgage Bankers Association, and the National Association of Home Builders signed the joint letter.

Freddie Claims Success in Reducing Price Gap

April 20, 2004
Freddie Mac's effort to prop up the pricing of its newly issued mortgage-backed securities is working, according to a company official.

Over the past four months, the pricing of Freddie's "to-be-announced" mortgage securities (which the company calls participation certificates) has improved by 4/32nds, according to Mike May, senior vice president for mortgage sourcing, operations and funding. On Oct. 29, Freddie announced that it would begin purchasing its own PCs, which generally trade at a discount to Fannie Mae mortgage-backed securities. Freddie said that to fund these purchases, it would sell its holdings of Fannie Mae MBS. The results have been "most encouraging" and bond market analysts are starting to notice, Mr. May told reporters at the Mortgage Bankers Association secondary market conference. Freddie officials would not disclosure the amount of their PC purchases.

ALTA: '03 Revs Tops for Title Insurers

April 19, 2004
A recent study indicates that last year was the strongest on record for title industry revenues, according to the American Land Title Association.

Gross revenue totaled $16.56 billion for the industry, up 31% from that of the previous year, ALTA reported. The loss ratio (losses as a percentage of total operating income) was 4.0%, compared with 4.6% in 2002. Net income after taxes totaled $1.11 billion, compared with $558.6 million the year before. "This report proves what our members have been telling us: that in 2003 they were busier than they have been in years," said Richard McCarthy, ALTA's director of research. "No one could have predicted that consumers would refinance multiple times in six months or a year due to interest rates that continued to spiral downward to 40-year lows." The trade group can be found online at http://www.alta.org.

MBA Hikes '04 Forecast, With Caveat

April 15, 2004
The Mortgage Bankers Association hiked its production forecast for 2004 on Wednesday but cautioned that the Federal Reserve could tighten credit sooner than most think -- maybe even by June.

The MBA now believes that residential production will total $2.6 trillion this year, compared with its January forecast of $2 trillion and an April update to $2.5 trillion. The trade group's chief economist Doug Duncan said he believes the yield on the 10-year Treasury -- which has been rising steadily for two weeks -- should end the year at 4.4%. (At the close of business Wednesday, the 10-year was yielding 4.38%.) Mr. Duncan said that even though the yield has been increasing of late, he is confident that the run-up is not sustainable. Until recently many economists believed the Fed would not hike short-term rates until December, but better-than-expected job numbers and retail sales have spurred many Fed watchers to change their minds. (See the April 19 issue of National Mortgage News for more details.)

DeepGreen Names Nat'l Sales Director

April 14, 2004
DeepGreen Financial, a Cleveland-based home equity lender, has announced the hiring of mortgage industry veteran James L. Gear Jr. as national sales director.

Mr. Gear has more than 25 years of industry experience in sales, secondary marketing, technology, and mortgage insurance, the company said, including positions at Amerin Guaranty, Loantrader.com, IMX, Bear Stearns Mortgage Capital, and MGIC. The company also announced the following promotions: Jeff Bell to the new position of chief information officer; Michael Moore to director of business & product development; and Felipe Obando to director of marketing. In addition, David Hadley, DeepGreen's chief technology officer, will take on added responsibilities in the areas of strategic planning, mergers and acquisitions, and special projects. DeepGreen can be found online at http://www.deepgreenfinancial.com.

Mortgage Vet Joins E*Trade

April 13, 2004
E*Trade Bank, New York, has hired industry veteran Terry Rowland to head its correspondent lending division.

According to figures compiled by National Mortgage News, E*Trade is the nation's 15th-largest correspondent funder and ranks 31st overall. A company spokeswoman said E*Trade does not yet have a presence in wholesale lending, but that could change under Mr. Rowland, who joins the online financial service provider from RBC Mortgage in Raleigh, N.C. Prior to that he worked for Pedestal Inc., Washington, a business-to-business mortgage platform that eventually folded. He is widely known in the mortgage industry. During his career he has also worked for First Nationwide Mortgage, which last year was bought by Citigroup. His official title at E*Trade will be national correspondent lending manager.

7WTC Deal Downgraded

April 8, 2004
Banc of America Large Loan Inc.'s commercial mortgage pass-through certificates, series 2001-7WTC -- secured by mortgage loans on a leasehold interest in 7 World Trade Center -- have been downgraded by Fitch Ratings.

All classes in the deal remain on Rating Watch Negative. The downgrades were as follows: class A, from AAA to A; interest-only classes X-1 and X-2, from AAA to A; class B, from AA-plus to BBB-plus; class C, from AA to BBB; class D, from AA-minus to BBB-minus; class E, from A-plus to BB-plus; class F, from A to BB; class G, from BBB-plus to B-plus; and class H, from BBB to B. The certificates are secured by ownership in a trust that owns a $383 million loan backed by certificates secured by four mortgage loans to the underlying borrower on a leasehold interest in 7WTC. Fitch said the rating actions reflect the fact that "the credit characteristics of the underlying loan are now similar to that of a construction loan, a position for which the original ratings are inconsistent." It cited several contributing factors, including: the decline in net effective market rents; the smaller size of the building planned for construction; and the use of insurance proceeds to fund construction because other sources are not yet available.

Arbor Prices IPO

April 7, 2004
Arbor Realty Trust, New York, has priced an initial public offering of its common stock at $20 per share.

The commercial real estate financing company expects to realize gross proceeds of $135 million from the sale of 6.2725 million shares, of which 22,500 are being offered by a stockholder of the company. The stock will trade on the New York Stock Exchange under the symbol ABR, Arbor said. The company said it expects to use the net proceeds from the offering to repay debt under a credit facility and a "master repurchase agreement." The offering, which is expected to close April 13, is led by Wachovia Securities.

Analyst: Jobs Report Sparked MBS Illiquidity

April 2, 2004
Mortgage-backed securities experienced a brief period of illiquidity Friday morning following the release of a stronger-than-expected March employment report (see item above), according to Art Frank, director of MBS at Nomura Securities International Inc.

Just after the release of the report, MBS were "illiquid" for several minutes, Mr. Frank said. Trade quickly resumed, but as of noon it was still relatively light, he added.

Shelby Bill Cites 'Unique' FHLBank Structure

March 29, 2004
The Senate's GSE bill directs the Securities and Exchange Commission to recognize the unique structure of the Federal Home Loan Banks as a way to facilitate voluntary registration of FHLBank stock.

The GSE regulatory bill, proposed by Senate Banking Committee Chairman Richard Shelby, R-Ala., does not mandate SEC registration, according to America's Community Bankers managing director Robert Davis. However, the bill removes a "huge stumbling block" to voluntary registration, he said. The bill directs the SEC to address the unique nature of the FHLBanks' Refcorp payments, redeemable capital stock, and the joint-and-several liability of the banks' issuances of consolidated debt. Over the past 18 months, the FHLBank members have resisted Bush administration efforts to get the FHLBanks to register because of concerns that the SEC could not adapt its rules to deal with institutions that are cooperatives with a form of stock that is not publicly traded. "We are very happy with the bill," Mr. Davis said. The Shelby bill would also convert the Office of Finance, which manages FHLBank issuances of consolidated debt, into a jointly owned subsidiary of the 12 FHLBanks.

S&P 500 to Include E*Trade

March 26, 2004
Standard & Poor's has announced that E*Trade Financial Corp., a New York-based provider of online discount brokerage services and retail mortgage lending, will replace FleetBoston Financial Corp. in the S&P 500 Index as of the close of trading on March 31.

S&P said FleetBoston is being replaced in the index because it is being acquired by Banc of America Corp., which is also a constituent of the S&P 500. Concurrently with the move, E*Trade will be deleted from the S&P MidCap 400 Index and replaced by Ryland Group Inc., a homebuilder and provider of mortgage-related financial services based in Calabasas, Calif. Ryland, in turn, will be deleted from the S&P SmallCap 600 Index and replaced by Sterling Financial Corp., Spokane, Wash., which will be added to that index's Thrifts & Mortgage Finance Sub-Industry Index, S&P said. S&P can be found online at http://www.standardandpoors.com.

FTC Finalizes Telemarket 'Scrub' Rule

March 24, 2004
The Federal Trade Commission has finalized a rule that will require telemarketers to "scrub'" their call lists every 31 days to make sure they include all phone numbers listed on the national "do-not-call" register.

Telemarketers are currently required to scrub their lists quarterly. Based on a recent poll, the FTC says it believes most businesses have been diligent in meeting the quarterly requirement. The FTC decided to postpone the effective date of the new rule until Jan. 1, 2005, to give businesses time to implement new systems and procedures to accommodate the more frequent scrubbing. To date, consumers have registered 58.4 million phone numbers on the do-not-call list.

Analyst Raises Freddie Target

March 19, 2004
Sandler O'Neill & Partners has raised its price target for Freddie Mac's stock to $74, citing "too steep a discount" in the current price relative to Fannie Mae's shares.

Previously, Sandler O'Neill had pegged a $65 target to Freddie Mac. Analyst Mike McMahon said that currently Freddie Mac's stock trades at about a 40% discount to Fannie Mae. The new 12-month price target reflects a more rational 25% discount, he said in a report. A likely catalyst for an increasing share price is the release of the company's 2003 earnings at the end of June, he said. Freddie Mac shares were trading at $59.27 just before 1 p.m., down nearly 2% from its opening price.

MBA and BOMA Form Training Partnership

March 17, 2004
The Mortgage Bankers Association and the Building Owners & Managers Association International have joined forces to provide information and training on the commercial real estate industry to each group's members.

Through CampusMBA, the educational arm of the mortgage trade group, both associations will offer Web-based courses on topics such as mold and its impact on commercial buildings, tenant retention strategies, security and emergency preparedness, property and corporate facilities management, asset and portfolio management, and building operations.

MBA Raises '04 Production Forecast to $2.5 T

March 15, 2004
The Mortgage Bankers Association on Monday hiked its 2004 production forecast by 25% to $2.5 trillion, predicting that the Federal Reserve will not raise interest rates until December -- at the earliest.

The trade group predicts that refinancing will account for 46% of all production this year, or $1.1 trillion. Purchase money loans will total $1.4 trillion, according to the MBA. The trade group thinks 30-year fixed rate mortgages will average 5.6% through the third quarter. Refis account for the biggest change to the trade group's forecast, said MBA chief economist Doug Duncan. "Rates have fallen again, stimulating the urge to refi," he said. Last week, Fannie Mae, citing lower interest rates, increased its 2004 production forecast by 28% to $2.43 trillion.

Fairbanks Servicer Ratings Off Watch

March 2, 2004
The servicer ratings of Fairbanks Capital Corp. have been removed from Rating Watch Negative by Fitch Ratings.

Fitch also affirmed the company's servicer ratings as follows: residential primary servicer for subprime and home equity products, RPS3-minus; servicer for alternative-A product, RPS3; and special servicer, RSS3. (Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating.) Fitch said it found in recent onsite reviews of Fairbanks' servicing facilities in Utah, Florida, and Pennsylvania that its restructured management team had made many procedural improvements. The changes were aimed at correcting problems cited in an earlier Fitch review and in a November 2003 settlement with the Federal Trade Commission and the Department of Housing and Urban Development, the rating agency said. They include system upgrades, compliance training, expanded internal audits, the formation of a Consumer Advocacy Department, and the development of a Consumer Assurance Review Department that reviews each loan before referral to foreclosure. The changes "have significantly reduced the number of customer disputes, as well as the time required to resolve these disputes," Fitch said.

Fraud Management Platform Unveiled

March 1, 2004
TransUnion, Chicago, and Acxiom, Little Rock, Ark., have announced the release of a comprehensive fraud management platform to combat the multibillion-dollar problem of fraud, citing Federal Trade Commission estimates that identity theft alone will grow to an $8.6 billion problem by 2006.

The platform uses TransUnion's and Acxiom's multiple reference databases to verify a consumer's identity at any point of sale (call centers, websites, credit applications, etc.). The system also leverages TransUnion's analytics expertise "to deliver practical, actionable results that allow customers to easily implement the most effective fraud strategies," the companies said.

FTC: Broker Comp Proposal Confusing

March 1, 2004
The Department of Housing and Urban Development should drop its proposal for disclosing mortgage broker compensation, according to the Federal Trade Commission, because testing shows that the disclosures are confusing to consumers.

The FTC conducted tests with 500 consumers and found that the broker compensation disclosures made it difficult for the consumers to identify the less expensive loan option. "The study concludes that consumer confusion and mistaken loan choices arising from the compensation disclosure are likely to increase mortgage costs for many consumers," the FTC said. The FTC submitted its study to HUD back in October, but just released it publicly on Feb. 27. Since HUD first proposed its Real Estate Settlement Procedures Act disclosures in July 2002, the National Association of Mortgage Brokers has complained that the disclosures would be confusing and unfairly single out brokers, because banks and other retail lenders wouldn't have to disclose the compensation they pay to their loan officers. "The FTC report clearly supports the points NAMB made all along," NAMB president A. W. Pickel III said. He also said the FTC study is another reason why HUD needs to step back and re-propose the RESPA rule so everyone can see if it will work. HUD is on track to issue a final RESPA rule, but the department and the Bush administration are under a lot of pressure to re-propose the rule for another public comment period.

Amex Trading Homestore, Saxon Options

February 26, 2004
The American Stock Exchange has launched trading in options on Homestore Inc., a provider of real estate media and technology systems based in Westlake Village, Calif., and Saxon Capital Inc., an originator and servicer of nonconforming mortgage loans based in Glen Allen, Va.

The Homestore options were scheduled to open with strike prices of 2.5-5.0-7.5 and position limits of 75,000 contracts, Amex reported. The specialist will be Charlton Specialist Partners LLC. The Saxon Capital options were scheduled to open with strike prices of 22.5-25.0-30.0 and position limits of 22,500 contracts. The specialist will be Kellogg Specialist Group LLC. Both options will trade on a January expiration cycle. Amex can be found online at http://www.amex.com.

Weicher: FHA Has Enough Power to Police Lenders

February 25, 2004
The Department of Housing and Urban Development has the necessary legal authority to effectively police Federal Housing Administration lenders that are engaged in abusive or predatory lending, according to FHA Commissioner John Weicher.

Mr. Weicher told the Senate Special Committee on Aging that a new regulation to prevent a predatory practice known as "property flipping" has been "successful." Under the new regulation, which went into effect in June, the FHA does not insure loans if the underlying property has been resold within 90 days. "We think we can target the individual [predatory] practices that we see," Mr. Weicher told Sen. Debbie Stabenow, D-Mich. "We haven't felt the need to come to you to request additional legislative authority." Mr. Weicher's written testimony reveals that HUD expects to publish a final rule in the second quarter that would hold FHA lenders responsible for inflated appraisals. However, six trade groups, including the Mortgage Bankers Association, contend that the FHA does not have the legal authority to hold lenders responsible for property value estimates made by independent appraisers.

Ambiron Buys E-Trading Tech Developer

February 19, 2004
Ambiron LLC has acquired Chicago-based Tekom Inc., which builds and maintains secure and reliable screen-based order-entry systems access to both electronically traded and open outcry markets.

The terms of the acquisition were not disclosed. However, as a result of the deal Ambiron will now offer an array of information security and infrastructure services to electronic trading firms and electronic exchanges. Specifically, Ambiron will offer 24-hour, 7-day-a-week help desk services to financial services clients. In addition, Tekom president Mike Persico will now become a partner of Ambiron and will head up the company's business development efforts in the financial services area. Ambiron can be found on the Web at http://www.ambiron.net.

'Do Not Call' Registry Upheld

February 18, 2004
A U.S. appeals court in Denver has upheld the authority of the federal government to enforce a "do not call" list and protect consumers from unsolicited telemarketing calls.

"We hold that the do-not-call registry is a valid commercial speech regulation because it directly advances the government's important interests in safeguarding personal privacy and reducing the danger of telemarketing abuse without burdening an excessive amount of speech," the court's opinion says. "The Tenth Circuit's ruling represents a major a victory for American consumers," said Timothy Muris, chairman of the Federal Trade Commission. "In upholding the constitutionality of the National Do Not Call Registry, the court has made it clear that the FTC and Federal Communications Commission can and will continue to protect consumers' privacy at home." The FCC has already threatened to fine one mortgage company, California Pacific Mortgage, Irvine, Calif., for making telemarketing calls to telephone lines that are listed on the Do Not Call Registry. The company also goes by the name CPM Funding.

Top Broker Joins LoanToolbox

February 17, 2004
Greg Frost, one of the nation's top-producing mortgage brokers, has joined LoanToolbox, Westlake Village, Calif., as vice president for new product development.

Tim Braheem, chief executive of LoanToolbox, said he and Mr. Frost are "much alike in that we're 'ham-and-egg' loan officers. We focus on things that are easy to implement -- that is, the basic building blocks of what it takes to be a great loan officer." Beginning in March, LoanToolbox members will have free access to five of Mr. Frost's trademarked marketing systems. He also plans to host live conference-call interviews, provide voice broadcast tips on time-sensitive issues, and continue to develop new products based on the changing needs of industry professionals. Members will also have the ability to call in twice a month for personal coaching and to discuss their immediate challenges. In 2002, Mr. Frost was ranked the nation's 19th-largest individual producer of mortgages, with volume of $143.80 million, according to Broker magazine, a MortgageWire affiliate.

Lenders Try to Block Appraisal Liability

February 11, 2004
Lender groups are making a last-ditch effort to stop the Department of Housing and Urban Development from issuing a final rule that would make lenders accountable for inaccurate appraisals on Federal Housing Administration loans.

In a letter to the Office of Management and Budget, six trade groups contend that the FHA does not have the legal authority to hold lenders responsible for the property value estimates made by independent appraisers. The letter includes a legal opinion commissioned by the Mortgage Bankers Association. "The legal opinion indicates that the FHA has no specific authority to create a rule of 'no-fault' liability for appraisals and that HUD may not challenge the validity of FHA insurance on a loan or impose penalties absent lender knowledge of any loan deficiencies," the joint letter says. "We believe the rule, as proposed, violates both of these standards." The American Bankers Association, the American Financial Services Association, America's Community Bankers, the Consumer Bankers Association, and the MBA signed the Feb. 4 letter.

Fair Isaac Launches Rate Search Option

February 10, 2004
Fair Isaac Corp., San Rafael, Calif., has introduced what it's calling the first service to help consumers find the best loan rates based on the FICO Credit Score, which can be accessed through the company's website free of charge.

The service, called Loan Center, allows the customer to compare national and local lenders' rates in their area who have FICO credit scores similar to their own. Specifically, visitors see a comparison of interest rates offered by participating lenders for five different mortgage products, all matched to the customer's FICO score or suggested score range. The initial lineup of participating lenders includes Countrywide Home Loans, E-Loan, E-Trade Mortgage, IndyMac Bank, and Pricelinemortgage. FICO scores can be accessed via the company's website at http://www.myfico.com.

NAHB Open to Independent GSE Regulator

February 5, 2004
Meanwhile, the National Association of Home Builders says it is willing to explore the idea of an independent agency to regulate Fannie Mae and Freddie Mac, according to the trade group's chief executive Jerry Howard.

However, the NAHB will "fight" to make sure the Treasury Department does not get control of mission regulation and the approval of new products and activities. That authority over Fannie and Freddie should not "belong to people who are anti-housing," Mr. Howard told MortgageWire. The NAHB chief executive made his comments in reaction to statements by Treasury Assistant Secretary Wayne Abernathy that the Bush administration is not willing to compromise on its proposals to create a new regulator for the government-sponsored enterprises. "We are going to stand just as strong as Mr. Abernathy," he said. The NAHB prefers assigning safety-and-soundness regulation to the Treasury and leaving mission regulation with the Department of Housing and Urban Development. "We are going to defend the importance of a flexible housing finance system that is regulated by people who understand housing and place housing finance as a priority," Mr. Howard said.

MBA Names CRE Lobbyist

February 3, 2004
Josh Denney has been named director of government affairs of the Mortgage Bankers Association, where he will be chiefly responsible for lobbying Capitol Hill on issues involving commercial real estate finance.

Mr. Denney joins the MBA from the office of Sen. Chuck Hagel, R-Neb., where he was legislative assistant for banking issues and staff director for the Senate Banking subcommittee on international trade and finance.

NMHC: Apartment Sector Looking Up

January 30, 2004
Market conditions in the apartment sector improved in the fourth quarter, as all four indices used by the National Multi Housing Council's quarterly survey stood above an important threshold for the first time in the survey's nearly five-year history.

The Survey of Apartment Market Conditions found that the indices -- the Market Tightness Index, the Sales Volume Index, the Equity Financing Index, and the Debt Financing Index -- all stood above 50, which means that more respondents saw improving conditions than saw worsening conditions. "The January survey results provide further evidence that the worst may be over for the apartment industry," said Mark Obrinsky, the NMHC's chief economist and vice president of research. "There have been several signs of improvement in several months. The question now is whether these improvements will be sustained." The trade group can be found online at http://www.nmhc.org.

Amex Trading Options on Subprime Lender

January 29, 2004
The American Stock Exchange has launched trading in options on Accredited Home Lenders Holding Co., a San Diego-based subprime lender and servicer.

The options opened with position limits of 75,000 contracts and will trade on a March expiration cycle, Amex said. The specialist will be Tanstaafl Research & Trading LLC. Amex can be found online at http://www.amex.com.

Freddie Touts Seniors Housing Deal

January 28, 2004
Freddie Mac has announced the recent purchase of an $85 million portfolio of mortgages that enabled a new Freddie Mac borrower to finance eight housing campuses for seniors in Pennsylvania.

The portfolio of eight cross-collateralized and cross-defaulted mortgages was purchased from Holliday Fenoglio Fowler/Lend Lease Mortgage Capital. Freddie Mac said the mortgages have an interest rate based on the 30-day Freddie Mac Reference Bill index, which historically has traded at a discount relative to the London interbank offered rate. Each has a 10-year term and a 25-year amortization period. "By choosing a Freddie Mac Capped ARM to finance their seniors housing portfolio, the borrower was able to achieve what is perhaps the lowest cost of capital available in the seniors housing market," said Jack Killough of Holliday Fenoglio Fowler. Freddie Mac can be found on the Web at http://www.freddiemac.com.

NAR Restates Anti-Bank/RE Stance

January 26, 2004
The Office of the Comptroller of the Currency's recent actions to pre-empt state real estate lending laws is another reason banks should not be allowed to engage in real estate brokerage activities, according to the National Association of Realtors.

"This trend could create federal regulation of real estate finance and perhaps also real estate brokerage if it is allowed to continue," NAR president Walt McDonald said. In light of the OCC rulings, the NAR will increase its efforts to pass legislation that would prohibit bank holding companies from getting into the real estate business. The NAR's legislative and regulatory agenda also calls for increasing the conforming loan limits so that Fannie Mae and Freddie Mac can purchase more loans in high-cost areas. The NAR wants to "ensure that Fannie Mae and Freddie Mac and the secondary market remain viable and healthy," as Congress moves toward strengthening the regulation of the two government-sponsored enterprises. And the NAR is committed to blocking the Department of Housing and Urban Development from finalizing its Real Estate Settlement Procedures Act rule. "NAR supports efforts to improve RESPA," the trade group said. "However, NAR believes that there are serious flaws with the current proposal and that it would create more problems than it solves."

New Asset-Backed Conduit Launched

January 23, 2004
Paramax Capital Group plans to launch a new multi-seller, asset-backed commercial paper program, Paramax Capital Funding.

The new vehicle will target financing various asset pools including trade receivables, consumer credit assets, mortgages and highly rated securities. Paramax is broadening its product set to provide additional services to complement its "expected loss note activities." Gordon Baird, chief executive officer of Paramax Capital, said the company's executives believe "there is a need and demand for third party conduits in this new structured finance paradigm." Paramax Capital Group is a specialty structured finance firm headquartered in Stamford, Conn., with over $8 billion of consolidated assets. Paramax provides subordinated capital to the structured finance markets including FIN 46 expected loss and mezzanine ABS capital as well as the advisory and administrative services.

MBA to Seek Structural Change at FHA

January 22, 2004
The Mortgage Bankers Association plans to push for legislation this year that makes structural changes at the Federal Housing Administration to improve the performance of the agency's single-family and multifamily insurance programs.

The MBA's legislation proposals would provide the FHA with statutory flexibility to test new loan products, fund technology improvements, and exercise more discretion in hiring and compensating staff. "FHA plays a critical role in helping first-time homebuyers, and low- and moderate-income homebuyers, and minority homebuyers," MBA vice president Stephen O'Connor said. "It has done a fantastic job over the years, and we want to enable it do even more." The MBA is fleshing out its legislative proposals, which will be presented at the trade group's Washington conference in March.

CA Wholesaler Expects Loss

January 20, 2004
Citing increased competition among residential mortgage lenders, California wholesaler American Residential Investment Trust now anticipates a loss for the fourth quarter.

Late Friday the publicly traded company said it expects to lose $400,000 in the fourth quarter, or $0.05 a share. Previously, it had projected a profit. Industry veteran John Robbins, who serves as chief executive officer of the San Diego-based company, noted that refinancing plunged in the quarter. "The market has recalibrated very quickly," Mr. Robbins said. "Like many other mortgage lenders, we experienced lower mortgage volume coupled with increasingly competitive pricing pressures." Another wholesaler, Don Henig of American Home Mortgage, Melville, N.Y., recently told MortgageWire that he has seen "crazy pricing" over the past month. American Residential's share price plunged 15% on Friday before recovering somewhat. In trading on Monday, the stock was down slightly to $8 a share.

E*Trade Deal Dead

January 20, 2004
E*Trade Financial Corp., New York, and TD Bank Financial Group, Toronto, have said the parties mutually agreed to terminate discussions that could have led to a possible merger transaction.

The statement said both companies agree that "while there were potential benefits to concluding a transaction that merited serious discussions, they were unable to arrive at mutually agreeable terms." E*Trade originates mortgages through E*Trade Mortgage. TD Bank Financial Group is the parent of investment firm TD Waterhouse and of Canadian retail banker TD Canada Trust. E*Trade can be found on the Web at http://www.etrade.com.

ACB to FHFB: Drop SEC Registration Proposal

January 15, 2004
America's Community Bankers is asking the Federal Housing Finance Board to withdraw a proposal that would require the Federal Home Loan Banks to register their stock with the Securities and Exchange Commission.

"ACB strongly believes that the Finance Board does not have the authority to repeal the FHLBanks' long-recognized exemption from SEC registration," the trade group says in a comment letter. ACB recommends that the Finance Board use its authority to adopt and enforce relevant SEC disclosures to enhance financial reporting by the 12 FHLBanks. The FHLBanks of Boston and Pittsburgh also registered their opposition to the proposal before the comment period ended on Jan. 15. Boston FHLBank chairman William Morrissey raised concerns that SEC registration could hinder the FHLBanks' debt issuance process. Finance Board Chairman John Korsmo and the Treasury Department have been urging the FHLBanks to register with the SEC.

Links Names New Co-Chief of MBS Trading

January 14, 2004
Matthew Weinberg, a veteran mortgage trader, has been named managing director and co-head of the mortgage-backed securities trading desk of Links Securities LLC, New York.

The company said Mr. Weinberg replaces George Sykes, who recently joined Guggenheim Partners, a Links affiliate, in fixed-income investment management. Mr. Weinberg was most recently in the arbitrage trading group of Greenwich Capital. He will join Ted Murphy as co-head of the MBS trading desk.

E*Trade Cites Talks With TD Bank

January 13, 2004
E*Trade Financial Corp., New York, in a brief media advisory, said it is holding discussions with TD Bank Financial Group, Toronto, regarding a possible transaction.

The announcement said the companies would not issue further comment unless a deal is reached or the discussions terminated. E*Trade originates mortgages through E*Trade Mortgage. The company can be found on the Internet at http://www.etrade.com.

Economists: No Reason for Fed to Tighten

January 13, 2004
If there are upward pressures on interest rates this year, they probably won't come from the Federal Reserve Board, a panel of top housing economists agreed.

Participating in a conference call sponsored by the Homeownership Alliance, the chief economists of the Alliance's five founding members said if the central bank does tighten monetary policy, it won't start until midyear at the earliest. But David Berson of Fannie Mae said he doubts that the Fed will ratchet up the federal funds rate at all. The Fed "could remain on the sideline" for the entire year, Mr. Berson offered. Paul Merski of the Independent Community Bankers of America concurred, saying the funds rate "could remain at 1% for all of 2004." But even if the rate doubled to 2% over the course of the year, the Fannie Mae economist maintained, the Fed's posture would "still be extraordinarily expansionary." If the Fed tightens, added David Seiders of the National Association of Home Builders, it will be "easing off the accelerator, not putting on the brakes." David Lereah of the National Association of Realtors said significantly higher rates are not likely. But if they do rise, he added, the increase is likely to be caused by government borrowing to cover the huge budget deficit and greater dependence on foreign funds to pay for the growing trade deficit. Freddie Mac's Frank Nothaft offered the most optimistic forecast for mortgage rates, saying they shouldn't go any higher than 6.25% by year's end.

New MI Plunges

January 7, 2004
The amount of primary new insurance written by the members of the Mortgage Insurance Cos. of America totaled $22.0 billion in November, down 28% from $30.6 billion in October.

November was mortgage insurers' worst month of the year by far in terms of volume, as the total fell below the levels of the traditional category alone in the earlier months. Rising mortgage rates seem to have put a damper on the volume of business written, but many in the industry are welcoming the rise because it will stem the problems the companies are having with persistency. (The data were affected by the fact that Radian Guaranty left MICA in July 2003 and no longer supplies data to the trade group.) By type, there was $17.2 billion of traditional and $4.9 billion of bulk insurance written. The number of applications received fell from 233,393 in October to 154,348 in November. Pool risk written totaled $124.5 million in November, and the cure/default ratio was 95.5%, with 40,071 cures and 41,979 defaults. MICA can be found on the Web at www.micadc.org.

Correction

January 6, 2004
A stock index of multifamily companies compiled by the National Association of Home Builders did not outperform the Standard & Poor's 500 stock index in 2003.

Final figures for 2003 show that the S&P 500 had a 28.6% total return, while the NAHB's multifamily stock index posted a 23.9% total return. MortgageWire reported Dec. 31 that the NAHB's stock index of 24 real estate investment trusts and four other publicly trade multifamily companies had a 20% gain, compared with a 15% gain by the S&P 500. But those results were for the first 11 months of 2003 -- not the full year.

Manzullo to HUD: Drop RESPA Reform Now

January 6, 2004
The Department of Housing and Urban Development got the cold shoulder from a key politician on Tuesday as the agency tried to defend its revamping of the Real Estate Settlement and Procedures Act.

Rep. Don Manzullo, R-Ill., chairman of the House Small Business Committee, was miffed that acting HUD Secretary Alphonso Jackson did not appear before his committee Tuesday and chose instead to send Assistant Secretary John Weicher. Rep. Manzullo would not allow Mr. Weicher to testify at all, but agreed to place his testimony into the record. In his prepared testimony, Mr. Weicher says HUD's final RESPA rule will not disadvantage mortgage brokers, Realtors, title companies, and other small businesses that provide settlement services. Mr. Weicher's remarks were the first by a HUD official regarding the agency's as-yet-unseen version of RESPA reform. The rule is under review by the Office of Management and Budget. Rep. Manzullo, who is no fan of RESPA reform, said at the hearing that HUD is trying to fix a problem that does not exist, urging the agency to "deep six" its proposal. At the hearing, several trade groups urged HUD to reissue the rule for another round of comments.

One Liberty to Trade on NYSE

January 5, 2004
One Liberty Properties, Great Neck, N.Y., has announced that it expects to begin trading on the New York Stock Exchange Jan. 15 under the ticker symbol OLP.

The diversified real estate investment trust -- which has interests in retail, industrial, office, and movie theater properties -- is listed on the American Stock Exchange and will continue to trade there until Jan. 15, the REIT said. Jeffrey Fishman, president and chief executive officer of the company, said he expects the NYSE listing to provide the REIT's shareholders with "greater liquidity and transparency," besides being a "significant milestone" for the company.

RBC Renames Sterling Branches

January 5, 2004
RBC Mortgage Co., Chicago, has announced that all the former branches (over 100) of Sterling Capital Mortgage Co. that it acquired in September are being converted to the RBC Mortgage brand.

"Our goal is to create one RBC Mortgage brand across the country -- and build a strong U.S. presence for RBC Financial Group," said Jon Legg, chief executive officer of RBC Mortgage. RBC Financial Group is the trade name for Royal Bank of Canada. RBC Mortgage can be found online at http://www.rbcmortgage.com.

FASB May Put LC Project on Hold

January 5, 2004
The Financial Accounting Standards Board may put its loan commitment project on the back burner because the issue may be losing its "urgency" in light of an expected action by the Securities and Exchange Commission.

One of the main reasons FASB decided to take up the loan commitment project is that mortgage companies are all over the map in the way they account for LCs. But the SEC is preparing to issue a staff accounting bulletin that would require publicly traded mortgage companies to book loan commitments as liabilities, which should put an end to this diversity in practice. If everyone will be accounting for LCs in the same way, "what is the urgency of this project?", FASB senior project manager Bob Wilkins asked rhetorically. At a Jan. 14 meeting, Mr. Wilkins will ask the board members if they want to put the loan commitment project on hold, while they push ahead with other projects -- involving income recognition and fair value -- that could also affect the way LCs are treated. They may want to push ahead with the loan commitment project, he said, adding, "That is what I am trying to find out from the board." On Oct. 1, the board members decided to start the LC project by a 4-3 vote.

RESPA Hearing on Tap Tuesday

January 2, 2004
As promised, House Small Business Committee Chairman Don Manzullo, R-Ill., is going ahead with a Jan. 6 hearing to examine the Department of Housing and Urban Development's decision to finalize a Real Estate Settlement Procedures Act rule.

Congressman Manzullo has been very critical of HUD's decision to submit a final RESPA rule to the Office of Management and Budget while Congress was in recess. A committee spokesman said acting HUD Secretary Alphonso Jackson is still considering an invitation to testify. At a hearing early last year, former HUD Secretary Mel Martinez and his staff ran into hostile questioning from Chairman Manzullo and other committee members. The RESPA rule is designed to simplify the mortgage application process and reduce closing costs. But Rep. Manzullo maintains that it will allow large lenders to dictate prices for settlement services and hurt small businesses. Representatives from the National Association of Realtors, the Mortgage Bankers Association, the National Association of Mortgage Brokers, and the American Land Title Association are scheduled to testify. These groups have warned the OMB that issuing a final RESPA rule could be disruptive to the housing market. Rep. Manzullo and the trade groups have urged HUD to re-propose the rule so they can review and comment on it before it is finalized.

MF Index Hits Record High

December 31, 2003
A stock index of multifamily companies has hit a record high and outperformed the Standard & Poor's 500 stock index in 2003, according to the National Association of Home Builders.

The NAHB-created multifamily stock index showed a gain of 20%, compared with a 15% gain by the S&P 500 (with dividends reinvested). "Investors are looking at multifamily companies as good, long-term investments and, despite some weakness in the rental market over the past two years, these stocks continue to perform well," said NAHB economist Elliot Eisenberg. The NAHB stock index includes 24 real estate investment trusts and four other publicly traded companies that derive 50% of their revenues from rental properties. Mr. Eisenberg created the index two years ago. The NAHB can be found online at http://www.nahb.com.

FTC: No Free Credit Reports -- Yet

December 30, 2003
Consumers will have to pay $9 for credit reports until December 2004, when a new law goes into effect that provides consumers with one free credit report a year.

Every year the Federal Trade Commission sets the maximum that credit bureaus can charge for credit reports, and the agency just announced that the $9 limit will remain in effect for 2004. However, the FTC is charged by Congress with establishing a central source for obtaining free credit reports under the recently passed FCRA extension bill. And the agency is expected to take the full 12 months allotted under the Fair Credit Reporting Act bill before a distribution system is operational. In drafting a regulation, FTC staffers want to ensure that consumers' credit information is protected from identity theft. They say they also want to shield credit bureaus from a surge of requests when free credit reports first become available.

Trade Groups Mull REMIC Bill Input

December 29, 2003
The Commercial Mortgage Securities Association, the Mortgage Bankers Association, and other real-estate-related trade groups are considering what input to offer for pending congressional legislation on real estate mortgage investment conduits, according to CMSA chief executive Dottie Cunningham.

The legislation, part of the American Jobs Creation Act of 2003, would "modify the definitions of REMIC regular interests, qualified mortgages, and permitted investments, so that certain types of real estate loans and loan pools can be transferred to, or purchased by, a REMIC," the CMSA said. The various real estate trade associations are working together and separately to come up with proposals, Ms. Cunningham told MortgageWire.

GMACCM to Prepay CMBS Backed by WTC

December 23, 2003
GMAC Commercial Mortgage, Horsham, Pa., has obtained the consent of commercial mortgage-backed securities investors for prepayment of CMBS securities backed by a $563 million mortgage on the World Trade Center.

Once the loan is paid off, the mortgage secured by the twin World Trade Center towers, as well as WTC 4 and WTC 5, will be satisfied, the mortgage lender said. GMACCM is the servicer on the loan. "For more than two years since the destruction of the towers, we have devoted considerable time and energy to protecting the rights of the investors in this process," said GMACCM chairman David E. Creamer. One of the challenges has been keeping investors informed of the key developments, according to Mr. Creamer, who describes this as an "incredibly complex process." GMACCM is the lender on the $563 million mortgage that Larry Silverstein used to partly finance his acquisition of a leasehold interest in the World Trade Center commercial space. The loan was securitized into the CMBS market.

Jimenez: I'm Still at HUD

December 23, 2003
Former HUD chief of staff Frank Jimenez is leaving the Department of Housing and Urban Development, but he says he never intended to serve as chief of staff under the newly appointed Acting Secretary Alphonso Jackson.

In the wake of the departure of former HUD Secretary Mel Martinez, Mr. Jimenez says in a memorandum to several trade group executives that he is helping with the transition in the secretary's office. "Camille Pierce has been with the acting secretary for a long time and will do a great job as the chief of staff," he says. The memo appears to be written in response to a MortgageWire story that Martinez's chief of staff has left HUD and that his departure may be related to HUD's decision to issue a final RESPA rule. The decision has upset several members of Congress who understood that HUD would not issue a final rule on the Real Estate Settlement Procedures Act while Congress was in recess. "To our knowledge, no HUD official ever promised that the rule would not be transmitted to the Office of Management and Budget during the recess, and if anyone at HUD ever suggested as much, they did so without authorization," Mr. Jimenez says in a memo obtained by MW. The OMB reviews and clears regulations before they can be finalized and published in the Federal Register.

Lender Cited for Do-Not-Call Violations

December 19, 2003
The Federal Communications Commission has cited a Southern California mortgage lender for violating the national do-not-call rules.

In taking its first enforcement action under the new privacy rules, the federal regulator threatened to fine California Pacific Mortgage, Irvine, if it continues to make unwanted, intrusive calls. The FCC said it received several consumer complaints that CPM made telemarketing calls to telephone lines that are listed on the National Do-Not-Call Registry. The company did not dispute making such calls, according to the FCC. The FCC warned CPM that it would be fined up to $11,000 for each new violation or each day of a continuing violation. "Do Not Call enforcement is the FCC's top consumer