Origination

Gregory A. Kares, senior vice president at Wachovia Mortgage FSB in North Las Vegas, has been appointed to the board of directors of the Federal Home Loan Bank of San Francisco. Mr. Kares will fill an open position on the board with a term ending Dec. 31. The FHLBank can be found on the Internet at http://www.fhlbsf.com.

The turmoil in the financial markets is affecting the apartment sector, but apartment demand is holding up reasonably well, according to the National Multi Housing Council's latest quarterly survey. The trade association reported that its Market Tightness Index, which measures changes in occupancy rates and rents, fell from 44 in the first quarter to 40 in the second. Meanwhile, the availability of debt funding for multifamily properties declined to the second-lowest reading on record for the NMHC's Debt Financing Index, which dropped from 22 to 13. "Demand for apartment residences is holding up relatively well despite the weakening job market and sluggish economy," said Mark Obrinsky, the association's chief economist. "If employment continues to fall, however, we'll likely see apartment demand follow suit." The survey's respondent pool consisted of 89 chief executive officers and other senior executives in the multifamily industry who also serve on the NMHC's board of directors or advisory committee. The council can be found online at http://www.nmhc.org.

Barclays PLC, London, continued to suffer mortgage-related writedowns in the first half of this year, but saw 2.75 billion pounds ($5.34 billion) of group pretax profit during the period. Group chief executive John Varley said the pretax figure was positive in that it represented stable year-over-year income. But the company's net income attributable to shareholders for the first half, 1.72 billion pounds ($3.34 billion), was "acutely disappointing" in that it represented a 33% decline in profit, he said. During the period, Barclays saw more than 2 billion pounds ($3.9 billion) in total charges and impairments that were partially related to U.S. mortgages. U.S. subprime mortgage-related charges and other credit market exposures represented about 1.1 billion pounds ($2.1 billion) of those total writedowns.

First American eAppraiseIT, a provider of real estate valuation products and services, has announced the release of a hybrid valuation product designed to help the reverse mortgage industry assess and monitor the value and condition of portfolio properties. The company said ValueView addresses a "major concern" of reverse mortgage lenders: the possibility that properties with reverse mortgages will fall into disrepair. "Reverse mortgage customers frequently have properties requiring repairs, which can affect the lender's ability to sell the loan," the company said. First American eAppraiseIT described ValueView as a "low-cost, data-driven solution" to monitor market value and property condition after a loan has been made. It combines a "drive-by" inspection with a valuation determined by two comprehensive automated valuation models, the company said. Lenders receive a current photograph and a concise on-site inspection report that answers questions concerning the property condition, its overall marketability, and the state of the surrounding neighborhood.

Despite raising its loan fees and pricing several times this year, Fannie Mae says it does not expect to see an increase in revenues in the second half and is beginning to see the Federal Housing Administration take away some of its business. "To date we continue to serve about 45% to 50% of the market -- and we have begun to see some of that market we've previously served move over to FHA," said Fannie executive vice president Thomas Lund. Fannie Mae reported $4 billion in revenues for the second quarter but took $5.3 billion in credit-related expenses, including $3.7 billion loan loss provisions and $1.3 billion in actual credit losses (see above item). Fannie executives told investors and equity analysts that they expect credit-related expenses to accelerate in the second half, especially provisions for loan losses. Due to higher defaults and falling housing prices, Fannie said it expects a 23-to-26-basis-point credit loss ratio in the second half, compared with an annualized 15-bp credit loss ratio in the first half. Despite these headwinds, Fannie executives told analysts that they are comfortable with Fannie's current capital position for the rest of 2008 and that there are no plans to tap Treasury for a line of credit, which Congress recently increased.

Fannie Mae has reported a $2.3 billion loss for the second quarter, up slightly from $2.2 billion in the first quarter, and the mortgage giant said it will cut its dividend to 5 cents and stop purchasing alternative-A mortgages later this year. Credit-related expenses rose to $5.3 billion from $3.2 billion in the first quarter, including $3.7 billion in loan loss reserves, Fannie said. Loan chargeoffs jumped to $942 million from $630 million in the first quarter. The deterioration in credit performance of its $310 billion in alt-A loans was "especially pronounced" and was responsible for 50% of the credit losses on its mortgage guarantee business, Fannie Mae reported. The government-sponsored enterprise said it will stop purchasing alt-A loans effective Jan. 1. The company also warned that it is "ramping up" its default reviews to pursue recoveries from alt-A lenders. Fannie Mae can be found on the Web at http://www.fanniemae.com.

Thirty-six classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The affected securities are seven classes from G-Star 2004-4 Ltd. and six classes from G-Star 2005-5 Ltd., both cash flow CDOs; six classes from G-Star 2003-3 Ltd./Corp., a cash flow structured finance CDO; seven classes from E*Trade ABS CDO IV Ltd., a cash flow structured finance CDO; six classes from Vertical ABS CDO 2006-2 Ltd./Corp., a hybrid cash flow and synthetic structured finance CDO; and four classes from Commodore CDO III Ltd./Inc., a cash flow structured finance CDO. The downgrades were attributed to collateral deterioration in, and underlying exposure to, subprime RMBS, as well as (in two cases) structured finance CDOs with underlying exposure to subprime RMBS and (in one case) alternative-A RMBS. Fitch can be found online at http://www.fitchratings.com.

HCP Inc., a real estate investment trust based in Long Beach, Calif., has announced the pricing of a public offering of 13 million shares of common stock at $33.50 per share. The REIT, which invests primarily in health-care-related real estate, said the proceeds of approximately $435 million will be used to repay debt under its bridge loan facility. The underwriters have been given an option to buy up to 1.95 million additional share to cover any overallotments.

National City Corp., Cleveland, has been labeled the "Bear of the Day" for Aug. 7 by Zacks Equity Research, Chicago. Zacks said National City's second-quarter loss was "substantially worse than estimates," chiefly due to higher loss provisions and a noncash goodwill impairment charge of $1.1 billion. Credit metrics "deteriorated significantly" during the quarter and net interest income fell short of expectations, the research firm said. Although the company has undertaken initiatives to restructure its mortgage operations, "we continue to see elevated risks in NCC's mortgage and residential development loan portfolio and expect higher losses in the coming quarters," Zacks said. "We are maintaining our Sell rating with a six-month target price of $4.50 per share for NCC." The research firm can be found online at http://www.zacks.com.

U.S. homeowners' confidence about the value of their homes remained unrealistically high in the second quarter, as 62% said they believed the value had increased or held steady over the previous year, according to a recent Zillow survey. Zillow.com, an online real estate community based in Seattle, said the reality is that 77% of U.S. homes had declined in value over the previous year. "Our survey reveals a wide gap between the perception homeowners have about their own home's value and the realities of a market in which three-quarters of homes declined in value in the past year," said Stan Humphries, vice president of data and analytics at Zillow.com. "We attribute this gap to a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them." The survey was conducted by Harris Interactive. Zillow can be found online at http://www.zillow.com.