Origination

Three of the nation's top four residential servicing companies -- which together control almost half of all U.S. home loans -- saw their share prices fall to new 52-week lows on Friday. The three are: Bank of America, Wells Fargo & Co., and Citigroup, which rank first, second and fourth, respectively, among residential servicing firms with a combined market share of 47.75% ($4.65 trillion in loans), according to the Quarterly Data Report. The nation's third largest servicer, JPMorgan Chase, saw its share price fall to $19.03, a dollar and change above its yearly low. At press time the share price of BoA had fallen more than 14% on the day to $3.37, while Citigroup slid about 20% to $2.01. Citigroup briefly fell below the $2 mark. The decline was stoked, in part, by concerns from analysts that Citigroup and BoA could be nationalized.

Sy Naqvi, who ran PNC Mortgage for 11 years until it was sold to Washington Mutual earlier this decade, has returned to the bank-owned lender. According to an official familiar with the matter Mr. Naqvi's chief job will be to evaluate all the mortgage operations of PNC Bank and National City Mortgage, which the bank inherited when it bought National City Corp. of Cleveland at year end. (For the full story see the Monday edition of National Mortgage News.)

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.

The average rate for a 30-year fixed-rate mortgage fell to 5.04% during the week ended Feb. 19 from 5.16% the previous week and from 6.04% a year ago, according to Freddie Mac. The 15-year FRM averaged 4.68%, down from the previous week when it averaged 4.81%. A year ago, the 15-year FRM averaged 5.64%. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.04%, down from the previous week when they averaged 5.23%. A year ago, the five-year ARM averaged 5.37%. One-year Treasury-indexed ARMs averaged 4.80%, down from the previous week when they averaged 4.94%. At this time last year, the one-year ARM averaged 4.98%. "Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing," said Frank Nothaft, Freddie Mac vice president and chief economist. Average points were as follows: 0.7 for 30-year FRMs, 0.6 for 15-year FRMs and five-year Treasury-indexed hybrids and 0.5 for one-year Treasury-indexed ARMs.

Arbor Realty Trust Inc. posted a net loss of $108.2 million for the fourth quarter of 2008, compared to net income of $15.3 million for the year-earlier period. Also during the quarter, the company recorded a $900,000 loss from its $10.2 million equity investment in the Alpine Meadows unconsolidated joint venture, a seasonal ski resort operation. This amount reflects Arbor Realty Trust's portion of the joint venture's losses, including depreciation expense of approximately $200,000, and was recorded in loss from equity affiliates and as a reduction to its investment in equity affiliates on the balance sheet. Arbor Realty Trust is a real estate investment trust that primarily invests in bridge and mezzanine loans, preferred and direct equity investments, mortgage-related securities and other real estate-related assets.

Spectrum Properties Multifamily Acquisitions, Inc., a newly-formed subsidiary of Charlotte-based Spectrum Properties, wants to purchase multifamily assets in markets located in the Southeast, Mid-Atlantic and Midwest regions of the U.S. According to John Gray, president of Spectrum Properties Multifamily Acquisitions, "We believe that there will be an opportunity to acquire apartments and student housing properties at a substantial discount to replacement value during the next few years." The subsidiary plans to own and manage $200-$500 million in real estate assets. Mr. Gray's investment rationale is based on acquiring apartment and student housing assets at a substantial discount to replacement cost due, in part, to expected refinancing problems on maturing loans as well as assets that were underwritten with over-aggressive assumptions. "Our objective is to purchase properties at very attractive pricing, manage them intensively during a three to seven year holding period and then sell them for a substantial profit that produces a handsome return for our investors," he said. The new company is looking to purchase class A, B and C apartments; student housing properties that are located near thriving universities and garden, mid-rise and high-rise property types. It has a preference for portfolios as opposed to single properties.

Corus Bankshares Inc. and its subsidiary Corus Bank NA, both of Chicago, have entered into a written agreement with the Federal Reserve Bank of Chicago and a consent order with the Office of the Comptroller of the Currency. Corus Bank is a nationwide construction lender, specializing in condominium, office, hotel, and apartment projects. These agreements include several requirements related to loan administration as well as procedures for managing the bank's growing portfolio of foreclosed real estate assets. "The regulatory agreements are the result of ongoing discussions between the OCC, the FRB and Corus' senior management over the last few months to address the negative impact that current market conditions are having on Corus and how best to resolve them. We believe the remedial measures agreed upon with the regulators are necessary to address asset quality deterioration and overall risk management," said Robert J. Glickman, president and chief executive. He added the company's board is actively exploring strategic alternatives, including a merger or capital infusion. Corus' outstanding commercial real estate loans and unfunded construction commitments total approximately $5.8 billion.

For the second consecutive year, Stewart Information Services Corp., Houston, has posted a full year loss, but a fair amount of the loss is due to agent fraud. The title company lost $234.5 million ($13.37 per share) for the full year 2008, compared with a loss of $40.2 million ($2.21 per share) for 2007. In the fourth quarter 2008, Stewart lost $158.0 million ($8.72 per share), vs. a loss of $31.3 million ($1.74 per share) one year prior Included in the losses are a strengthening of policy reserves by $32.0 million as a result of unusually large claims payments related to policies issued in 2005, 2006 and 2007. An additional $41.7 million of charges are related to large title losses and defalcations attributable to independent agents of the company. "This difficult economy placed significant financial pressures on owners of independent title agencies which resulted in increased escrow fund defalcations and, therefore, higher title losses for us," said Malcolm S. Morris, chairman and co-chief executive. "To address this, and to reduce the overhead costs associated with low-premium volume agents, we cancelled more than 2,500 agencies during 2008. This action, while lowering revenues an insignificant amount, results in an improved risk profile and profit potential for us in future periods."

CU National Mortgage, a private label funder that served the nation's smaller credit unions, closed its doors recently, according to industry sources. As MortgageWire went to press, CUNM officials could not be reached for comment. A subsidiary of U.S. Mortgage Corp. of Pine Brook, N.J., the company was founded 13 years ago. USMC officials also could not be reached for comment. According to The Credit Union Journal, CUNM had 50 offices and 200 employees. CUMAnet, in Basking Ridge, N.J., told the newspaper that it would assist CUNM's credit union clients. "There are many, many good people at CU National and our hearts go out to them during this difficult time," said CUMAnet president Daniel von Schaumburg. "Even though they are our direct competitor in the credit union space, we do respect them for their work in providing credit unions with mortgage lending packages to members who want to become homeowners."

Obama administration officials have decided to limit refinancings of "underwater" Fannie Mae and Freddie Mac mortgages to a loan-to-value ratio of 105% so the new mortgages can be securitized, according to Federal Housing Finance Agency director James Lockhart. "That is why the line is drawn there," Mr. Lockhart said at a meeting of government accountants. The refinancing program is designed to lower borrowers' mortgage rates, which the Federal Reserve Board and Treasury Department are trying to drive down by aggressively purchasing GSE mortgage-backed securities. About 75% of the mortgages with LTVs above 80% the government sponsored enterprises own or guarantee fit under the 105% cap. If the program is successful, four million to five million mortgages may be refinanced. Servicers are already "overwhelmed," Mr. Lockhart said, and they didn't want to push the LTV any higher because of capacity issues. He also noted that the GSEs have other loan modification programs to deal with more problematic underwater mortgages.