Origination

Fitch Ratings has placed $20.6 billion in bonds from 33 floating-rate U.S. CMBS on Rating Watch Negative. The rating also said it also has assigned negative rating outlooks to 22 classes totaling $1.1 billion that currently have fairly high AAA and AA+ investment grade ratings. "The Rating Watch Negative placements are the result of the significant stress on cash flow experienced by floating-rate loans in 2009 and Fitch Ratings' expectation that cash flows will continue to be stressed for the foreseeable future," Fitch said. "Floating-rate loans are transitional in nature and more susceptible to declining market conditions."

The Federal Reserve has purchased more than $1 trillion in agency mortgage-backed securities to support the mortgage market this year and Fed officials are trying to wind down its $1.25 trillion purchase program by March 31. The New York Federal Reserve Bank purchased $1.09 trillion in Fannie Mae, Freddie Mac and Ginnie Mae MBS this year, according to the Federal Housing Finance Agency. At the start of the program in early January, the New York Federal Reserve Bank was purchasing $20 billion to $25 billion in agency MBS a week. Now the Fed is purchasing agency MBS at a $16 billion weekly rate, which means it could continue at that pace for another 10 weeks. At the conclusion of its monetary policy meeting on Wednesday (Dec. 16), Fed officials said they are "gradually slowing" the pace of MBS purchases so the last transactions will be completed by the end of the first quarter of 2010. Mortgage strategists at Credit Suisse say the slowdown in Fed purchases will not affect MBS spreads to any large degree. "The Fed's exit from the MBS purchase program will likely be well absorbed by the market," according to a weekly Credit Suisse "Market Watch" publication. After March 31, the "Fed will likely assume a backstop role for the MBS market to prevent a double dip in housing," Credit Suisse strategists say.

The estimate for gross mortgage lending in the United Kingdom faltered a bit in the latest month, according to an industry group. In November, the U.K.'s gross mortgage lending estimate dropped to £12 billion ($19.4 billion) from £13.3 billion ($21.5 billion) in October and £13.9 billion ($22.5 billion) from November of last year. Observers expect volumes will not drop much from current levels, even though a tax break is due to expire at the beginning of 2010. There "is little reason to expect much underlying change in the coming months," said Paul Samter, economist at the Council of Mortgage Lenders, London. "There has been a modest increase in the availability of mortgage credit recently, including some tentative signs of a few higher LTV products emerging. But there is no sign of a swift recovery in lending volumes," he added.

Concerns that housing and employment woes will persist into the second half of next year have contributed to a rating criteria change at Moody's Investors Service that leaves thousands of prime jumbo residential MBS on review for possible downgrade. Moody's has placed 4,474 tranches of jumbo RMBS with an original balance of $234 billion and a current outstanding balance of $143 billion on review. The rating agency said the move "will have the greatest impact on senior securities issued in 2005." At 3.8%, this vintage's new projected cumulative losses are much less than for 2006 securitizations of this type (8%) as well as 2007 and 2008 jumbo RMBS (10.9% and 12.3%, respectively). "Even though the Case-Shiller index in recent months has reported very modest home price gains, Moody's believes the overhang of impending foreclosures will impact home prices negatively in the coming months," the rating agency said. "Adding to borrowers' financial pressure, unemployment is now projected to peak at around 10.6% from previous projections of 9.8% from the first quarter of this year. Both measures are expected to reach their peaks some time in the second half of 2010, after which recovery is expected to be slow."

By the end of the third quarter the estimated number of homes heading toward foreclosure, but not yet included in "unsold inventory" figures, reached 1.7 million units, up from 1.1 million a year earlier, according to new First American CoreLogic data. The increase in this estimate of real estate-owned by depositories and mortgage firms is affecting home sale rates and is in contrast to the shrinking visible supply of unsold inventory, which decreased from 4.7 million in the third quarter of 2008 to 3.8 units during the same period this year. The visible inventory supply fell to 7.8 months in September 2009, down from 10.1 in 2008. But the supply of REO home estimates, also referred to as "shadow housing inventory," is at 3.3 months, up from 2.4 months a year ago. Combined, the total unsold inventory by September 2009 reached 5.5 million units, down from 5.7 million in 2008. Shadow housing inventory is comprised of mortgages that are 90 days or more delinquent and that are not included in unsold inventory.

Loan Value Group, Rumson, N.J., is close to partnering with a national mortgage lender to begin rolling out a patent-pending program aimed at heading off "strategic defaults," according to industry sources. An LVG representative declined to comment and the lender was not identified. The sources told NMN the program avoids the use of loan modifications or reduction of principal. Instead it provides an alternative way to keep at-risk borrowers who might otherwise be encouraged to default due to negative equity paying on their original mortgage notes. The program is said to be designed to align the interests of lenders, servicers, government-sponsored enterprises and taxpayers while avoiding costs to homeowners or taxpayers. The sources said it is set for roll out and implementation on a private-label basis to eligible homeowners as early as the first quarter of 2010.

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.

AmTrust Mortgage Banking — including its wholesale division — has resumed accepting new loan registrations and rate-lock commitments, according to a message posted by LendingArt Messenger Alert service. At press time, no further information was available. AmTrust Bank and its affiliates were seized by the FDIC two weeks ago with most of its assets sold to New York Community Bank. NYCB has yet to make any long-term decisions regarding AmTrust's wholesale division and its servicing portfolio.

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.

The closure of ISGN Solutions Inc.'s acquisition of Fiserv Inc.'s loan fulfillment services business is helping the former company move forward with its larger plans to reorganize, according to an ISGN spokeswoman. The deal, slated to close in November, took slightly longer simply because of holiday season delays, the spokeswoman told NMN. The company's larger reorganization refocuses servicing and origination functions for marketing purposes, she said. This was done to mirror the organization structure of the lending industry, the company serves, according to the spokeswoman.