Origination

U.S. commercial mortgage-backed securities delinquencies jumped 43 basis points to 4.29% in November, according to a Fitch Ratings index. The rating agency said large hotel and multifamily loan delinquencies were responsible for the increase. But all loan types saw increases during the month. The hotel sector had the highest delinquency rate during the month, 8.07%; followed by multifamily, 7.03%; retail, 3.81%; industrial, 3.20%; and office, 2.50%. Large loans, defined as loans with balances of more than $100 million, continue to default each month, according to Fitch. Five additional large loans became delinquent in November.

The pace of new home sales in California was above the year-ago level in October for the first time since December 2006, according to the state builders' association. Sales in projects with 10 or more units were 25% above the October 2008 figure, and is the first notable increase since the start of the housing downturn, the California Building Industry Association reported. Buyers scooped up 2,294 new home and condominium units in October vs. 1,838 a year ago, according to the joint CBIA-Hanley Wood Market Intelligence report, which covers properties with 10 or more units. But Jonathan Dienhart, director of published research for HWMI, warned about getting too euphoric about the gain. "While this month's figures are encouraging, we must keep in mind that we're comparing the figures to October of 2008, which was the second lowest month of nominal sales we've seen during the downturn," Mr. Dienhart said. He also noted that the numbers could be somewhat distorted because of a last-minute rush to qualify for the federal first-time buyer tax credit, which was to have expired on Nov. 30 until Congress voted to extend it until mid-2010. While Mr. Dienhart expects more improvement in the coming months, he doesn't think a "true recovery" will appear until next year at the earliest.

The inventory of completed but unsold new houses fell to 239,000 at the end of October, according to the National Association of Home Builders. That's the fewest since May 1971, when the inventory stood at 236,000. The months' supply -- that is, the amount of time it would take to sell the current inventory at October's sales rate -- fell to 6.7 months, which the NAHB says is "respectable." The historic high was set in January, when the supply topped out at 12.4 months. Meanwhile, the inventory of unsold existing houses fell in October to 3 million, and the month's supply dipped to 6.8 months. The supply of resale houses hit its cyclical peak in June 2008, when it reached 11 months.

The residential loan broker share of the origination market hit yet another new low in the third quarter, 12.9%, according to exclusive survey figures compiled by National Mortgage News. "Right now it's hard for me to see much support anywhere for loan brokers," said researcher David Olson. NMN found that all originators funded $443 billion in the third quarter with retail lenders capturing 48.3% of the market and correspondent accounting for 38.8%. Since the second quarter of 2007, the broker share has steadily evaporated from a high of 28.2%. (Only loans that are table funded through a wholesaler are included in this category.) A year ago Mr. Olson changed the name of his Columbia, Md.-based firm to Access Research, removing the word "Wholesale." The veteran researcher said all the new regulations being heaped on brokers are making it "impossible" for them to continue. He believes many may convert into correspondent retail shops (if they can) or join net branches.

National quarterly housing price gains, tracked on a rolling monthly basis, were at a modest 1.4% at the end of November compared to 3.7% at the end of October and 6.3% in September, according to the Clear Capital Home Data Index Market Report. Meanwhile, at 14.1% Detroit surpassed all other U.S. markets including five-month leader Cleveland where quarterly price gains were 12.8%. Other micromarket analysis data show gains in markets like Atlanta where home price gains of 13.4% over the last two rolling quarters indicate this metropolitan statistical area may have bottomed out and is beginning to recover. Clear Capital analysts find sustainable stable price levels in a growing number of metropolitan statistical areas during the year "after the dramatic fall off in prices in the preceding three years" indicate signs of a price bottom and more hope for further market stabilization. Even returning "seasonal influences" and "a potential increase in REO saturation rates" are not expected to fade the price gain stabilizing effect, according to Clear Capital.

The proceeds from a public offering being made by Provident Financial Holdings Inc., Riverside, Calif., will be used to fund expansion of its Provident Savings Bank FSB's mortgage banking operations and origination of multifamily real estate loans. The 4.5 million share offering has been priced at $2.50 per share, resulting in gross proceeds of $11.25 million and net proceeds of $10.37 million. Sandler O'Neill + Partners LP are the lead book-running manager of the offering and FBR Capital Markets & Co., and FIG Partners LLC are the co-managers. The offering is expected to close on Dec. 15, 2009. At midday on Dec. 10, the company's common stock was trading at $2.68 per share, down $0.26 from the previous close.

U.S. home prices stabilized (relatively) in 2009 after losing trillions of dollars in value during 2008, according to real estate website Zillow.com. Homes lost $489 billion in value during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008, according to Zillow's real estate market reports. Forty-eight of the 154 markets tracked by Zillow showed gains in home values during 2009. The Boston metropolitan statistical area showed the largest gain of $23.3 billion, while the Providence, Rhode Island, MSA was second, with a gain of $12.4 billion. The stabilization in home values reduced rates of negative equity in the third quarter of the year. Twenty-one percent of single-family homeowners had mortgages under water compared with 23% in the second quarter. Most housing markets had a good summer, spurred largely by the government's tax credits for homebuyers, combined with very low mortgage rates, said Stan Humphries, Zillow chief economist. "Unfortunately, we believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high," Mr. Humphries said. "Both these factors will challenge the recent stabilization of home prices." Zillow.com said the biggest home value losses, in terms of total dollars lost in 2009, were in the large MSAs of Los Angeles, down $60.8 billion; Chicago, down $49.6 billion; and New York, down $49 billion.

The fourth quarter home price forecast from Local Market Monitor says the largest market with the best expected performance in home price is Baton Rouge, La. These top markets, identified as those with populations greater than 600,000, include cities in Texas, where good home price increases are likely once the economy improves, and others, notably in New York, where poor economic prospects make future price gains less likely. The other areas on its top markets list are: Columbia, S.C.; Fort Worth-Arlington, Tex.; Houston-Sugar Land-Baytown, Tex.; Little Rock-North Little Rock-Conway, Ark.; New Orleans-Metairie-Kenner, La.; Pittsburgh; Rochester, N.Y.; San Antonio and Santa Ana-Anaheim-Irvine, Calif. "Even our 'top' markets don't yet show price increases; rather, they're markets where prices will be steady," said Ingo Winzer, president and founder of Local Market Monitor in Cary, N.C. "Significantly, we now see Santa Ana-Anaheim among those markets, with Los Angeles not very far behind, as demand for housing from population growth absorbs excess inventory in Southern California." The largest markets with the worst expected performance in price are Bakersfield, Calif.; Bradenton-Sarasota-Venice, Fla.; Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.; Fresno, Calif., Las Vegas-Paradise, Nev.; Miami-Miami Beach-Kendall, Fla.; Orlando-Kissimmee, Fla.; Phoenix-Mesa-Scottsdale, Ariz.; Portland-Vancouver-Beaverton, Oregon-Wash.; San Jose-Sunnyvale-Santa Clara, Calif., Stockton, Calif.; and West Palm Beach-Boca Raton-Boynton Beach, Fla. Further large decreases will mainly be confined to markets in Arizona, California, Florida and Nevada, where massive overbuilding took place, the company said. Overall, national home prices in the 3Q2009 were down 5% from a year ago. The company expects to see a further 5% decrease in home prices during the next 12 months, with double-digit decreases in some markets.

1st Commonwealth Bank of Virginia has become the first to offer the Harmony Loan, a mortgage with a rate that adjusts downward at certain times if the borrower requests it, and has a patented ongoing compensation structure. The bank said it is offering the product as a 3/1, 5/1 or 7/1 adjustable-rate mortgage and will generally allow borrowers to lower their rate as often as every 120 days with a phone call so long as they have paid on time in the past and they meet certain rate reset parameters. Craig Chapman, managing director, mortgage services for 1st Commonwealth Bank of Virginia said it sees the loan as a means to strengthen relationships with both borrowers and loan officers. The loan was designed to mimic a competitive refinance without having to go through a full refi, according to Shane Chalke, president of Mortgage Harmony, Tysons Corner, Va. It aims to allow borrowers to reset their rates based on those rates' updated market values during the reset period.

Freddie Mac's Conventional Mortgage Home Price Index Purchase-Only Series registered a 0.9% gain for the third quarter from the second quarter, marking the second consecutive quarterly increase. Most importantly, Freddie reports that the increases of the past two quarters erased about two-fifths of the declines registered during the final quarter of 2008 and the first quarter of 2009. Year over year home sales prices in the third quarter were down 3.9%. Sales volume increased 15% between the first and the third quarter of this year, said Freddie Mac chief economist Frank Nothaft. He cited the 50-year low interest rates, higher affordability, tax incentives and efforts to stem foreclosures through loan modifications. "Moreover, the price gains were broad-based with increases in seven of nine regions during the third quarter, and all nine regions up from their first quarter values," he said. However, the CMHPI indicates that in most markets prices are still down, compared to their peak levels. For example, Mr. Nothaft said, according to CMHPI measurements home values in the New England, East North Central and Pacific areas are at 2004 levels, on average, and at 2005 levels in the South Atlantic, West North Central, and Mountain states. In the West South Central area values have tied their third quarter 2008 peak, while in the Middle Atlantic values have reached their 2006 levels and in the East South Central states are at their 2007 levels.