Origination

Bradford Bank, Baltimore, has reported being notified by the Office of Thrift Supervision that it and its holding company, Bradford Bank MHC, will be receiving a cease-and-desist order. Bradford said it expected that the order would require it to get prior regulatory approval to originate acquisition, development, nonresidential real estate, commercial, construction, or land loans. It will have to prepare a capital plan to maintain a Tier One risk-based capital ratio of 8.0% and a total risk-based capital ratio of 12.0%. To address the need for capital, Bradford Bank has filed a registration statement with the Securities and Exchange Commission for an initial public offering of between 2.125 million and 2.875 million shares of common stock at $10 per share. "Due in part to the deterioration in our loan quality, and resulting provisions for loans losses, coupled with our inability to raise capital through a stock offering to support the asset growth resulting from our previously completed acquisitions, our regulatory capital ratios were negatively impacted," Bradford said in the filing. "Our regulatory capital ratios were reduced below the 'well capitalized' status and at June 30, 2008, we were classified 'adequately capitalized'."

BankUnited Financial Corp., Coral Gables, Fla., has announced layoffs of approximately 160 workers and an agreement on regulatory consent orders that, among other things, bar the bank from originating payment-option adjustable-rate mortgages. The company said the layoffs will come primarily from BankUnited FSB's residential lending operations and will reduce the bank's work force by about 12%. The consent orders with the Office of Thrift Supervision require the company and the bank to take various actions and impose restrictions designed to improve their financial strength, BankUnited said. The orders bar the origination of any loans that may result in negative amortization (including option ARMs) and require the bank, by Dec. 31, to maintain a minimum Tier One core capital ratio of 7% and a minimum total risk-based capital ratio of 14%. The company can be found online at http://www.bankunited.com.

The United Kingdom-based Virgin Group, in a strategy built on its recent acquisition of the Marlborough, Mass.-based Lendia, is set to provide mortgage financing on a broad basis in the United States for the first time through an innovative program. Virgin Money, Waltham, Mass., plans to provide wholesale mortgage financing to brokers as well as offer automation and outsourcing services that can be purchased separately or in tandem with the funding, Greg O'Connor, executive vice president and general manager of Virgin Money USA Inc., told MortgageWire. Some lending has previously been done in the Waltham area, but this is the first time Virgin is making it available on a wider geographic scale. The company is licensed to lend in 23 states and says it plans to expand further. Virgin Money USA can be found on the Web at http://www.virginmoneyus.com/mortgage.

The National Association of Hispanic Real Estate Professionals and Freddie Mac are co-sponsoring a new housing-crisis survival guide titled "The American Nightmare: Strategies For Preventing, Surviving and Overcoming Foreclosure." Written by housing counselors Sylvia Alvarez and Walter Walker Jr., the book offers consumers a step-by-step analysis of the obstacles people face in foreclosure and the practical solutions available to them. "Too many times, people are doing nothing to save their homes simply because they don't know their options," said Rebecca Gallardo-Serrano, chairman of NAHREP. Latinos have been disproportionately affected by the foreclosure crisis and stand to lose about $94 billion in personal wealth, the association said. NAHREP can be found online at http://www.nahrep.org.

Fitch Ratings has placed Washington Mutual Inc., Seattle, which has been rumored to be on the auction block, on Rating Watch Evolving. Fitch attributed the action to "recent market developments," including the waiver by TPG Capital and related entities of price reset rights under an investment agreement (and related warrants) associated with their June 2008 investments. "Because the waiver removes an important potential hurdle to the sale of WaMu, Fitch believes it signals a much higher probability of an imminent transaction which, depending upon the buyer and the specifics of the transaction, could result in the upgrade or downgrade of [WaMu] and related subsidiaries," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Popular Inc., San Juan, Puerto Rico, has sold manufactured housing loans held by its U.S. mortgage subsidiary Popular Financial Holdings to 21st Mortgage Corp. and Vanderbilt Mortgage and Finance Inc.. Popular said the transaction would yield $194 million in cash, but the company would still take a pretax loss of $70 million on the transaction. Richard L. Carrion, Popular's president and chief executive, said the agreement "builds on previous actions we have taken to exit nonstrategic markets and strengthen our balance sheet. We still have work to do and will communicate future actions once completed." Previously Popular entered into an agreement with Goldman Sachs to sell PFH's mortgage loans and servicing assets in a transaction that would bring the company $700 million. These two deals, along with $250 million from an issuance of floating-rate notes and $650 million of cash and investments, will give Popular $1.8 billion in liquidity, more than the amount of debt coming due for the remainder of this year and next. The ultimate parent of both 21st Mortgage and Vanderbilt is Berkshire Hathaway, Omaha, Neb.

Over 25% of mortgage delinquencies and foreclosures involve seniors, according to a study by AARP, and older homeowners with subprime mortgages are 17 times more likely to end up in foreclosure than their peers with prime mortgages. "The public perception is that older Americans are financially secure in their homes," said Susan Reinhard, director of AARP's Public Policy Institution. "But the reality is that while many are in fact secure, hundreds of thousands are not and face unsettling uncertainty over their futures as homeowners." The AARP study found that 28% of delinquencies and foreclosures that occurred during the second half of 2007 involved people 50 years and older. "Over 684,000 older Americans were either delinquent or in foreclosure at the end of 2007," the study says. "Of these, nearly 50,000 were in foreclosure or had already lost their homes." The study also picked up disparities between minorities and whites. Foreclosure rates for senior African-American and Hispanic homeowners were 0.51%, compared with 0.19% for senior Caucasians. African-Americans seniors hold over 6.8% of first mortgages in this age group, but represent 14.4% of the foreclosures among seniors.

Genworth Financial Inc., Richmond, Va., issued a statement on its "sound capital position and financial flexibility" just before the market closed Sept. 18 after seeing its common stock's closing price drop by $8 per share over an eight-day period. The eight-day swoon included one day when it dropped $3.42 per share, and Genworth's stock fell as low as $3.51 per share on Sept. 18 before rebounding to close at $9.15. The company said it has $900 million of cash and cash equivalents at the holding company level and an additional $4.0 billion of cash and equivalents in its operating company investment portfolio. The U.S. mortgage insurance business had its ratings affirmed Sept. 11 by Standard & Poor's, whose report indicated that Genworth's capital was in excess of the triple-A rating requirement. Genworth added that based on current market conditions, third-quarter gross realized investment losses will be at or above second-quarter levels, but that this should not have a material adverse effect on the company. Previously, the company said it had exposure of just under $200 million in debt and equity from Fannie Mae and Freddie Mac, as well as some exposure to Lehman Brothers and American International Group. Investors reacted positively to the statement. Genworth's stock price was up over $7 per share in early trading Sept. 19, but it pulled back quickly. Just after noon, the stock price was up $4.25 to $13.40 per share.

First Chester County Corp., West Chester, Pa., the parent of First National Bank of Chester County, has agreed to acquire American Home Bank NA, Mountville, Pa., in a cash and stock transaction valued at approximately $18.2 million. The valuation was based on First Chester's closing price of $15.25 per share on Sept. 18. American Home originated approximately $1 billion in residential mortgage loans in the 12 months ended Aug. 31, 2008. The consumer and commercial banking services of American Home Bank and its branch offices will be merged into the banking operations of First National. Its mortgage banking operations will be run as a separate division of First National under the American Home Bank name. "The acquisition of American Home Bank is consistent with our strategy to expand our geographic footprint and enhance our fee-based income," said John A. Featherman III, chairman and chief executive of First National. "The merger strengthens the combined mortgage banking platform of both banks and positions First National to take advantage of the recent exit from the mortgage market of many nonbank mortgage originators, and to benefit from both the recovery and future growth of the residential housing market."

The state's top mortgage regulator told attendees at the New York Association of Mortgage Brokers annual convention Thursday what kinds of things the New York Banking Department is looking for as it moves its examination process toward "safety and soundness." Rholda Ricketts, deputy superintendent of the mortgage banking division, used the acronym FILM to describe what the regulator wants to see: financial, internal controls, legal, and management systems. In the financial area, the department wants mortgage brokers to have real net worth. She said regulators are not looking for a specific number at this point and are addressing each broker on an individual basis. If a business has more monthly expenses than revenues, it needs to work on establishing financial reserves, she said. "If you are in this business to be in this business ... you realistically have to have some cushion" to cover the bad times, Ms. Ricketts said. The department is "trying to encourage people to build a strong industry," she continued. The image of the mortgage broker is "here today, gone tomorrow," and the industry "can't leave that impression on the table any longer," Ms. Ricketts warned. The NYAMB convention was held in Melville, N.Y.