Origination

Industry groups are urging House lawmakers to pass a Federal Housing Administration reform bill while rejecting several amendments that would lower the insurer's loan limit to $500,000, reduce its market share to 10%, and increase downpayments. "We urge you to oppose these amendments that will only hamper this important program," according to a joint letter signed by the Mortgage Bankers Association, National Association of Home Builders, and National Association of Realtors. The House is about to begin debate on the bill (H.R. 5072) which would give FHA more flexibility in adjusting its mortgage insurance premium structure. The measure also strengthens the agency's hand in getting lenders to indemnify FHA for bad loans and to terminate lenders with excessive early default rates. Industry groups oppose an amendment by Rep. Scott Garrett, R-N.J., that would increase the FHA 3.5% minimum downpayment to 5% and prohibit closing costs from being rolled into the loan amount. The Garrett amendment is expected to be voted down. An amendment by Rep. Melissa Bean, D-Ill., that requires FHA to report annually on its downpayment policy discussions is expected to pass. FHA currently has a market share of 30% and Rep. Tom Prices, R-Ga., is offering an amendment to cap it at 10%. Rep. Michael Turner, R-Ohio, wants to reduce the agency's maximum loan limit to $500,000 from $720,000. Industry groups contend the amendment would be disruptive and hurt the housing recovery. Meanwhile, real estate, apartment and low-income housing groups are supporting an amendment by Reps. Anthony Weiner, D. N.Y, and Gary Miller, R-Calif., that increases the FHA multifamily loan limit for elevator properties in high-cost areas. The House is expected to vote on final passage of H.R. 5072 Thursday.

This week we are pleased to share with you one of our favorite columns from Sue.

Inland Real Estate Corp., Oak Brook, Ill. has formed a new joint venture with PGGM, a Dutch pension fund administrator and asset manager, to acquire up to $270 million of grocery-anchored and community retail centers in Midwest U.S. markets. Upon the initial closing, PGGM will contribute $20 million of equity and Inland Real Estate will contribute three retail centers with a gross equity value of $45 million to the joint venture. The three Inland contributed properties include the 97,638-square-foot Shannon Square Shoppes in Arden, Minn., the 82,929-square-foot Mallard Crossing neighborhood retail center in Elk Grove Village, Ill., and the 170,122-square-foot Woodland Commons community retail center in Buffalo Grove, Ill.

A bipartisan panel has issued a subpoena to Goldman Sachs & Co. after the investment banker failed to comply with a documents request and a request for interviews. Chairman Phil Angelides and vice chairman Bill Thomas of the Financial Crisis Inquiry Commission, who made the announcements regarding the subpoenas, stressed the commission's commitment "to using its subpoena power if there is a lack of, or delay in, compliance." They added: "Failure to comply with a commission request is viewed with the utmost seriousness, as the commission will not be deterred from getting desired information." In an e-mailed statement, a Goldman spokeswoman said, "We have been and continue to be committed to providing the FCIC with the information they have requested." Goldman is under investigation on several fronts for selling subprime CDOs to clients while playing a role in helping short sellers bet against the same securities. Meanwhile, renowned banking analyst Dick Bove said Tuesday that Goldman CEO Lloyd Blankfein should resign.

Clayton Holdings, a mortgage analytics provider, has hired Brian R. Clark as senior managing director and chief business officer in charge of commercial real estate. During his 15 years in the business, Clark has worked for both depositories and investment banks, including stints at Merrill Lynch, and ING. At Merrill he oversaw real estate "hybrids" in the firm's alternative asset group.

Farm banks largely stayed out of the muck the past few years, but that hasn't stopped regulators from trying to rein in these lenders. In the first quarter, farm banks - those with at least a quarter of their loans in agriculture - outperformed the broader banking industry, reporting fewer credit problems, stronger capital ratios and higher returns on assets. Only 7.28% of farm banks were in the red, compared with 18.67% of all institutions, according to the Federal Deposit Insurance Corp. Economists doubt an agricultural bust is coming, though they expect growth in the business to slow in coming years. Still, regulators are applying lessons from the recent debacles in construction and commercial real estate and stepping up scrutiny of farm banks to guard against surprises. "We are a little bit less willing to accept that ag is immune to a downturn," said James LaPierre, regional office director of the FDIC's division of supervision and consumer protection in Kansas City, Mo. "It would be foolish for us, or for our bankers, to think that while ag has been good that it will continue forever." So far, some agricultural bankers say, the heightened scrutiny has focused on ensuring they could withstand a downturn, rather than making them write down loans.

Freddie Mac is issuing another $1 billion security backed by apartment loans as part of its 'K-Certificates' program. The mortgage-backed securities are expected to price on or about June 11, and settle later in the month. In total, 83 rental buildings serve as collateral for the multifamily bonds. A few months back Freddie came to market with a $1 billion K-Certificate deal. The GSEs are a key source of liquidity for the apartment market with commercial banks remaining skittish about commercial lending. Bank of America Merrill Lynch, and Deutsche Bank Securities Inc. are the co-lead managers and joint book runners on the transaction. Barclays Capital Inc., Goldman Sachs & Co., J.P. Morgan Securities Inc., Jefferies & Company, and Wells Fargo Securities LLC are the co-managers. The K-007 multifamily MBS deal is the third K-Certificate deal this year. Freddie plans to issue three more K-Certificate deals this year.

Roughly 71% of loan officers pass the national test to become qualified mortgage professionals the first time they take the exam, according to new figures released by the Nationwide Mortgage Licensing System. The state (first-time) pass rate is even better: 78%, according to NMLS. The results reflect tests administered between July 30 of last year and April 30, 2009. "Everyone seems to be passing these days," said Christopher Cruise, a continuing education trainer based in Maryland. The tests, which feature multiple choice questions, are required under the SAFE Act.

The House is likely to reject an amendment that would raise the minimum downpayment on Federal Housing Administration loans to 5% from 3.5%, but legislators might accept language giving the government insurer the authority to raise the downpayment as needed. The Rules Committee meets Tuesday evening to decide which amendments can be offered to the FHA reform bill (H.R. 5072) that the House of Representatives will vote on during Wednesday's session. If approved by the Rules Committee, Rep. Melissa Bean, D-Ill., will offer an amendment giving FHA the authority to raise its downpayment, or minimum cash investment, requirement. The Bean amendment also asks FHA to submit an annual report to Congress discussing proposed or actual increases in downpayment requirements. In the past, Rep. Bean has garnered the support of conservative Democrats and Republicans for her amendments. H.R. 5072 gives the FHA more flexibility in adjusting its mortgage insurance premium structure and rebuilding its capital reserves.

Experian has expanded CreditHorizons for Securities, which delivers Experian's consumer credit information for nonagency mortgage-backed security deals, to offer the ability to link consumer credit data to Lewtan's private-label deal library, ABSNet Loan. This capability expands the CreditHorizons for Securities offering to a broader base of nonagency residential mortgage-backed securities investors. By linking consumer credit data to loan-level data, CreditHorizons for Securities provides an additional set of influences that helps investors better predict delinquency and default probabilities, obtain more granular data about the underlying collateral and understand how consumer trends impact their RMBS portfolios. Using a proprietary matching algorithm developed by Experian's credit and industry experts, Experian has achieved a high consumer-to-loan match rate in linking to Lewtan's data.