Origination

A Fitch Solutions/Portsmouth Financial Systems desktop application that offers loan-level analytics for the U.S. structured finance market will start with a focus on subprime, alternative-A and prime credit residential mortgage-backed securities. Michael Megliola, chief executive officer of Portsmouth Financial Systems, Portsmouth, N.H., said the application differs from others offered in the market because it offers "more granular structured finance analytics at the loan, bond and deal level." Users can define the parameters for the analytics in the application, which is called Deal View. These can include, for example, a comparison of prepayment and default rates for arbitrary loan pools, or interactive yield tables on a collection of loans, the companies said. They plan to add more asset classes to the application going forward.

The Government National Mortgage Association put its stamp on $39 billion of mortgage-backed securities in May, bringing its five-month issuance volume to $163 billion, double its production for the same period last year. The agency's strong showing in its guarantee business is yet another sign that lenders are overwhelmingly choosing the Federal Housing Administration insurance program, which allows for low downpayment mortgages. Based on the current run rate, GNMA could issue a record $391 billion in MBS this year, giving it a 20% market share (of total originations).

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.

New-home sales edged down 0.6% in May after rising during the previous two months and builders continued to trim their inventories of unsold homes. "The housing market is gradually stabilizing, but showing no signs whatsoever of a vigorous rebound," said Mike Larson, real estate analyst at Weiss Research. The U.S. Census Bureau reported that sales of new single-family homes fell to a 342,000 seasonally adjusted annual rate in May from a 344,000 rate in April. Economists were expecting sales of 360,000 and the numbers are a "disappointment," Mr. Larson said. He noted that the results of previous months saw a downward revision by 32,000 units. Meanwhile, builders have trimmed their inventories by 35% over the past 12 months but they still carrying 292,000 unsold homes, which represents a 10-month supply at the current sales pace.

For the first time since the week of May 15 the Mortgage Bankers Association Weekly Applications Survey Market Composite Index increased. The MCI, an overall measure of mortgage applications, was 548.2, an increase of 6.6% on a seasonally adjusted basis for the week ending June 19, when compared with 514.4 one week earlier. The refinance index increased 5.9% to 2116.3 from 1998.1 the previous week and the seasonally adjusted Purchase Index increased 7.3% to 280.3 from 261.2 one week earlier. On an unadjusted basis, the index increased 6% compared with the previous week and increased 17.2% compared with the same week one year earlier. There was a very tiny decline in the share of refi applications to 54%, down from 54.1% the previous week, while the share of adjustable-rate mortgages applications, dropped to 4.1% from 4.3% for the previous week, the MBA said. There was a decrease in the average contract interest rate for 30-year fixed-rate mortgages to 5.44% from 5.5%, with points (including the origination fee) dropping 20 basis points to 0.98 from 0.89 for loans with 80% loan-to-value ratios, according to the association. The MBA can be found online at http://www.mortgagebankers.org.

Almost half of all American adults no longer believe that homeownership is a realistic way to build wealth, according to a new study released by the National Foundation for Credit Counseling. The non-profit, which has been around since 1951, said one-third of those surveyed, do not think they will ever be able to afford a home. NFCC also found that 31% of those surveyed do not think they will ever be able to buy another home which potentially spells bad news for the upgrade and vacation home market. Meanwhile, a new study by Genworth in Canada found that 84% of those surveyed said that owning a home goes beyond its financial value and feel that homeownership pays off in more ways than one.

The economy may be recovering, but even in a recovery residential estate's performance is likely to continue to vary by market and commercial real estate's health is likely to lag that of the broader market, two influential portfolio managers said at a New York Society of Security Analysts meeting in New York. "You've really got to make a decision on a market-by-market basis," said Philip J. Orlando, senior vice president, senior portfolio manager and chief equity market strategist at Federated Investors Inc., when asked at the 4th annual Wall Street Forum how residential RE might perform in a recovery. Commenting on the outlook for CRE, TIAA-CREF's managing director and head of global real estate portfolio management Philip J. McAndrews said its recovery is generally unlikely to occur on a broad basis until after the broader economic recovery becomes more established and credit availability improves. "It's going to take awhile for us to get through this," he said.

Recently foreclosed homes, most of them likely being sold by lenders, are taking up a decreasing portion of Orange County real estate transactions, according to a report in The Orange County Register. The newspaper, citing figures compiled by DataQuick, said that in May homes that had been foreclosed upon in the previous 12 months made up 34.2% of homes sold, excluding newly built home sales. That's the lowest percentage since August. Foreclosures' share of the home resale market peaked in January at 46%. Lenders repossessed more than 1,400 Orange County homes last August — the highest number of any month on record. Orange County — once the home of many subprime lenders — has been one of the hardest hit areas in terms of home prices declines in the state.

Taylor, Bean & Whitaker Mortgage Corp., Ocala, Fla., will pay $9 million to settle a dispute with 13 states and Washington, D.C., over how the wholesale lender handled certain nontraditional mortgages. Taylor, Bean, which is awaiting regulatory approval to buy Colonial BancGroup Inc. in Montgomery, Ala., also agreed to modify loans for certain customers and to hire an independent firm to review nontraditional mortgages originated in 2006 and 2007. The settlement resolves claims that Taylor, Bean altered applicants' incomes and assets to provide nontraditional mortgages. The mortgage lender did not admit wrongdoing as part of the settlement, which was reached with regulators in Arizona, Florida, Georgia, Idaho, Illinois, Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, North Carolina, Pennsylvania, and Vermont.

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.