Origination

Monmouth Real Estate Investment Corp., a real estate investment trust based in Freehold, N.J., and One Liberty Properties Inc., a REIT based in Great Neck, N.Y., have been added to the Russell 3000 Index. Russell Investment Group made the additions in connection with its annual reconstitution of the index. Touting the company's inclusion in the index, Monmouth president Eugene W. Landy said it should result in improved liquidity for the REIT's shareholders and "increased efficiency in the valuation of our shares." Patrick J. Callan Jr., president and chief executive officer of One Liberty, said his company's inclusion "will help raise One Liberty's visibility with investors and institutions that rely on Russell indexes as part of their investment strategy."

The Eleventh Federal Home Loan Bank Cost of Funds Index has fallen below 3% for the first time since September 2005. The index for May 2008 is 2.918%, a decline of over 19 basis points from 3.111% in April. Back in September 2005, the index stood at 2.972%, on its way to a peak of 4.396% in December 2006. Since September 2007, when COFI reached its latest high point of 4.383%, the index has fallen over 146 bps in a nine-month period. For comparative purposes, the one-month certificate of deposit secondary-market rate (collected by the Federal Reserve Bank of St. Louis) stood at 5.51% in August 2007. The most recent data, posted on May 1, had the rate at 2.50%. During that same period, the three-month CD rate fell from 5.49% to 2.66%, and the six-month CD fell from 5.40% to 2.84%.

Republic Mortgage Insurance Co., Winston-Salem, N.C., has been ordered by Freddie Mac to come up with a remediation plan to maintain Type I status as a mortgage insurer. This is a result of Moody's Investors Service's downgrading of the insurance financial strength rating of RMIC from Aa3 to A1. Moody's also cut the debt ratings of RMIC's parent company, Chicago-based Old Republic International Corp., from (P)A1 to (P)A2. Moody's said its rating action reflects the deterioration in RMIC's capital adequacy and medium-term prospects for profitability. While mortgage insurance demand and new business quality have both improved in recent months, the performance of RMIC's book of business originated before 2008 has eroded capitalization and the company remains vulnerable to further economic deterioration. For ORI, mortgage guaranty is one of its three businesses, the others being property/casualty and title. "As the second-largest unit of the three, the deterioration in credit quality at the mortgage insurer directly impacts the profile of the parent company," Moody's said. Freddie Mac said RMIC has committed to submit a remediation plan within 60 days. RMIC did not return a request for comment by deadline time.

LandAmerica Financial Group, Richmond, Va., has announced the merging of its Transnation Title Insurance Co. subsidiary into its Lawyers Title Insurance Corp. subsidiary. LandAmerica said the move was part of a broader effort to transform its collection of independent businesses into a unified operating company. The merger "eliminates the capital requirements of maintaining Transnation as a separate entity, while creating additional surplus for the combined operations that would not exist if Transnation and Lawyers Title remained separate," LandAmerica said. The merger will also enhance the delivery of title, closing, and escrow services to LandAmerica's network of agents through more standardized business practices, the company said. LandAmerica can be found online at http://www.landam.com.

TierOne Corp., the holding company for TierOne Bank, Lincoln, Neb., has announced that it will close all nine of its loan production offices across the country. The company said the goal of the closures is to direct its lending activity to its primary market area of Nebraska, Iowa, and Kansas. The lending offices being closed are located in Phoenix; Colorado Springs, Denver, and Fort Collins, Colo.; Orlando, Fla.; Minneapolis; Las Vegas; and Charlotte and Raleigh, N.C. Loans with existing customers will continue to be serviced by TierOne, the company said. The bank can be found on the Web at https://www.tieronebank.com.

Federal Reserve Board staff members are urging staffers at the Department of Housing and Urban Development to work with them in revising key disclosures for mortgage applicants so they don't produce duplicative and inconsistent forms that confuse consumers. "We believe the inconsistencies and other differences between HUD's proposed good faith estimate and the Fed's Truth in Lending Act disclosures are likely to confuse consumers and undermine consumers' ability to make informed shopping decisions and avoid unnecessarily high settlement costs," Fed consumer affairs director Sandra Braunstein said. In commenting on HUD's Real Estate Settlement Procedures Act proposal, Ms. Braunstein points out that the Fed and HUD are on different tracks when it comes to the disclosure of mortgage broker compensation. She says consumers are confused about how brokers are compensated and reports that the Fed's consumer testing raises concerns about the terminology HUD uses to describe broker fees. "Board staff is concerned that the language on the revised GFE will contribute to consumer confusion rather than provide further clarity for consumers," the Fed's consumer affairs director says in the June 13 letter.

Wachovia Corp., Charlotte, N.C., the nation's largest payment-option adjustable-rate mortgage lender, said Monday that it would no longer offer the "negative amortization" option on the controversial loans. In the fourth quarter, Wachovia funded $5.5 billion in option ARMs, according to the Quarterly Data Report, a 44% decline from the level of a year earlier. Option ARMs have been heavily criticized for fueling the housing boom because they offer homeowners four different payment options each month, including "negative amortization," in which the borrower adds to the debt owed but gets a cheaper monthly payment. Option ARMs were a staple product for World Savings of Oakland, Calif., which Wachovia bought two years ago. Wachovia owns about $120 billion in option ARMs. Wachovia recently said it had hired Goldman Sachs & Co. to analyze its loan portfolio.

CIT Group, New York, has cut a deal to sell its residential subprime business -- including a $9 billion servicing portfolio -- to Lone Star Funds for $1.5 billion in cash and the assumption of $4.4 billion in debt. Among subprime servicers, CIT ranks 18th nationwide, according to the Quarterly Data Report. In a separate transaction, CIT agreed to sell a $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance for $300 million. CIT said the two sales will bring in $1.8 billion in cash. Even so, it will book a $2.5 billion pretax loss in the second quarter.

Bank of America, Charlotte, N.C., has announced the completion of its acquisition of Countrywide Financial Corp., Calabasas, Calif., creating the nation's largest mortgage originator and servicer. In January, BoA agreed to buy Countrywide for $4 billion in stock, but as the Charlotte bank saw its share price fall this year, so did the value of the deal. The final sale price is in the range of $2.5 billion, on top of the $2 billion that BoA paid last summer for a 16% stake in Countrywide. (At one time Countrywide had a market capitalization of $25 billion.) BoA said it will focus on "responsible home lending" and plans to offer a variety of first-lien mortgages but no subprime loans. It will also discontinue offering payment-option adjustable-rate mortgages, the company said. Among the first-lien mortgages the company says it will offer are: conforming loans underwritten to standard guidelines of the government and the government-sponsored enterprises; nonconforming loans with terms "expected to produce no greater risk of default than conforming loans"; interest-only mortgages subject to a 10-year minimum IO period; and fixed-period ARMs that provide low initial rates with fixed payments. The company can be found online at http://www.bankofamerica.com.

Class L of LB 2006-LLF C5 commercial mortgage pass-through certificates has been downgraded from BBB-minus to BB-minus by Fitch Ratings. Fitch also affirmed the ratings on 14 other classes in the transaction. The downgrade was attributed to the declining performance of the Sheraton Keauhou Bay Resort & Spa loan and three Praedium Rental Portfolio loans.