Origination

GMAC Financial Services - which is trying to become a bank holding company and tap the Treasury's TARP program - has extended the deadline for its $38 billion note exchange program until Dec. 26, 2008 at 11:59 p.m. The "early" delivery portion of the note exchange was extended to Dec. 16 at 11:59 p.m. from this past Friday. GMAC, the parent of Residential Capital Corp., the nation's sixth largest servicer, is offering investors $0.55 to $0.85 on the dollar in cash or in the form of new bonds and/or preferred shares. It needs a 75% participation rate from note holders to reach its goal of amassing $30 billion in regulatory capital to form a bank holding company. Late last week, its participation rate was about 25%. ResCap controls roughly $400 billion in mortgage servicing rights. If GMAC does not become a BHC (and tap TARP funds) it may be forced into bankruptcy protection.

Thornburg Mortgage Inc., Santa Fe, N.M., on Friday reached an agreement with several of its reverse repurchase counterparties allowing for it to make the interest payment on its 8% senior notes that was due last month. The past-due payment will be made within the 30-day grace period allowed under the indenture. The counterparty lenders agreed that during the override period, which expires on March 16, 2009, they will not invoke any margin calls on the jumbo investor. Thornburg's common shares have been delisted but continue to trade on the "pink sheets." Thornburg agreed to pay the counterparties the remaining $110 million out of the liquidity reserve fund except for $41.2 million, which the company can utilize to make the foregoing senior notes interest payments and for forecasted operating expenses and debt service payments through March 2009. The company has also agreed to pay to the counterparties all of the principal and interest collected on the underlying collateral subject to the override agreement to further reduce the outstanding financed balance on an accelerated basis. The reverse repurchase agreement counterparties and their affiliates who entered the override agreement include JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets Inc., Greenwich Capital Derivatives Inc., The Royal Bank of Scotland PLC and UBS AG.

Fannie Mae and Freddie Mac - with the blessing of their regulator/conservator - are considering ways to expedite real estate "short sales" and possibly waive appraisals to facilitate refinancings of underwater mortgages. Federal Housing Finance Agency director James Lockhart confirmed that these business changes - and others - are under consideration. Speaking with reporters this past week, Mr. Lockhart said, "If they refinance a borrower rather than modify the loan - do they need a new appraisal if they already own the credit? That's an issue that is being worked on." FHFA has pushed the GSEs into adopting a streamlined modification program that goes into effect next week. Fannie and Freddie have suspended foreclosures and evictions until Jan. 9. In a letter to the National Association of Realtors, Mr. Lockhart said the GSEs are working on ways to streamline their loss mitigation process. "With regard to short sales, a number of initiatives are underway that are specifically designed to eliminate bottlenecks and allow workout decisions to made in a faster and more efficient manner." The letter to the Realtors also notes that one GSE is actively considering raising the limit on loans to one investor, which "reflects an appreciation" of the role real estate investors could play in the housing recovery. The GSE (it's not known which) is considering easing its owner-occupied requirements for condominiums by not counting units owned by banks due to foreclosures.

Republic Mortgage Insurance Corp., Winston-Salem, N.C., has handed over the keys to its mergers and acquisitions unit to its founder, Larry Charbonneau. Mr. Charbonneau said the former Republic Strategic Advisory Inc., Houston, will now carry the name Charbonneau & Associates. He said there was no animosity between him and RMIC but that the company wants to concentrate on its core business of mortgage insurance. Besides M&A work, Charbonneau & Associates will focus on advisory work and warehouse lending consulting. Last decade, Mr. Charbonneau ran a well-regarded M&A boutique called Charbonneau-Klein Inc. He joined RMIC four years ago. The MI is a subsidiary of the publicly traded Old Republic International of Chicago. On Thursday, Old Republic paid its regular quarterly dividend of 17 cents a share.

Loan brokers accounted for just 18.9% of all mortgages funded in the third quarter, according to new survey figures released by National Mortgage News. The broker share of the origination market is the lowest ever recorded by the newspaper. The news is not surprising given the exodus of many large banks and thrifts from wholesale. NMN also found that although the broker channel is waning, correspondent loan acquisitions rebounded from recent lows. In the third quarter, correspondent accounted for 35.6% of production compared to a low of 29.2% two quarters ago. Retail is now the dominant channel for residential loan originations.

Mortgage banker Fortes Financial of Dallas, which had hoped to grow its business by purchasing lending divisions jettisoned by struggling banks, has closed its doors, MortgageWire has learned. The brain child of industry veteran Peter J. Levasseur, Fortes, bought five regional wholesale divisions from National City Mortgage back in July. (NCM's parent bank exited the wholesale business this summer and is now in the process of being sold to PNC Bank of Pittsburgh.) At press time Mr. Levasseur could not be reached for comment. With the backing of private equity money, he founded Fortes in the summer of 2007 along with Janice Ibey. At one point the non-bank lender had 400 employees. The wholesale offices Fortes bought from NCM were located in Atlanta, Chicago, Dallas, Frederick, Md., and San Diego. During his career Mr. Levasseur has worked for subprime lenders AMRESCO Residential and American Business Financial Services, and prime firms including Home Savings of America and ITT Diversified Financial.

ROC USA Capital, Concord, N.H., has received a $10 million line of credit from Merrill Lynch Community Development Co. LLC. ROC USA Capital makes commercial loans to the owners of manufactured homes who have formed a resident corporation to purchase the community in which their homes are located. According to ROC USA Capital, 35% of manufactured homes are located in these communities and the homeowners are vulnerable to the land being sold out from beneath them. "This line of credit provides essential financing that will enable us to act quickly when opportunity knocks for homeowners," notes Michael Sloss, managing director, ROC USA Capital, which is the financing subsidiary of ROC USA LLC, an organization looking to help those living in manufactured home communities to buy, preserve and improve them. ROC USA Capital was founded in August 2008 with investments from the Ford Foundation, CFED, NCB Capital Impact, New Hampshire Community Loan Fund and NeighborWorks America. "Resident ownership has been demonstrated to align ownership interests, preserve affordable communities, and reduce the economic insecurity these homeowners face," said Terri Ludwig, president, Merrill Lynch Community Development Co.

Impac Mortgage Holdings, a Irvine, Calif.-based real estate investment trust, is not paying fourth quarter dividends on its 9.375% Series B Cumulative Redeemable Preferred Stock and its 9.125% Series C Cumulative Redeemable Preferred Stock. These unpaid dividends will accumulate and, until they are paid, Impac may not pay dividends on, redeem, repurchase or make distributions on its common stock. Impac is also deferring payments of interest on its four series of trust preferred securities: Impac Capital Trusts #1, #2 and #4 securities due Jan. 30, 2009, and Impac Capital Trust #3 securities due Dec. 30, 2008. It intends to make a cash offer of $100 for every $1,000 for each of these four trust preferred securities. That offer will expire on Dec. 30, 2008.

CapitalSouth Bancorp, Birmingham, Ala., has hired Sterne, Agee & Leach Inc. as its financial advisor to assess strategic alternatives for the company, including a sale or merger. CapitalSouth is the parent of Mortgage Lion Inc., a wholesaler headquartered in Fitzgerald, Ga. In its third quarter 10-Q filing, CapitalSouth said it has decided to close Mortgage Lion and that action should be completed by the end of 2008. The company lost $5.3 billion for the third quarter of 2008, primarily to a noncash reserve of $5.1 million on its deferred tax assets. It is operating under a cease and desist order from federal and state regulators. The order requires CapitalSouth to raise capital. It had a rights offering for 7.5 million shares of common stock priced at $2 per share. When the offering expired on Dec. 8, only 1.867 million shares were subscribed for, with a value of $3.7 million, and the subscriptions came from the company's directors and senior management. CapitalSouth is doing a public re-offering where common shares will be offered to the public on a best efforts basis. This will terminate on Jan. 20, 2009.

The average rate on the 30-year fixed-rate mortgage during the week ended Dec. 11 fell to a low not seen since 2004, according to Freddie Mac. The average 30-year FRM rate was 5.47%, down from 5.53% the week previous and from 6.11% during the same period last year. This is the lowest it has been since March 25, 2004, the government-sponsored enterprise said. "Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates to ease back a little further," said Frank Nothaft, Freddie Mac vice president and chief economist. The average rate on the 15-year FRM dropped to 5.20% from 5.33% the previous week and from 5.78% a year ago. The average rate on five-year hybrid adjustable rate mortgages rose to 5.82% from 5.77% the week previous but was down from 5.89% a year ago. The average one-year Treasury-indexed ARM rate was 5.09%, up from last week's 5.02% but down from last year's 5.50%. Average points were 0.7 for 30- and 15-year FRMs, 0.6 for five-year hybrids and 0.4 for one-year ARMs.