Origination

In his final speech as president of the National Association of Mortgage Brokers at the group's annual convention in Indianapolis, George Hanzimanolis told attendees that members have come out of the industry's difficult times "head and shoulders" above the competition. The group has fought for a more level playing field for mortgage brokers and has raised the level of professionalism, Mr. Hanzimanolis said. Members of the group testified 11 times at congressional hearings in the past year and have had an influence, he said, noting changes the NAMB was able to bring about to H.R. 3915. Another triumph cited by Mr. Hanzimanolis is the introduction of the Lending Integrity program. Since the program was unveiled late last year, 1,700 members have qualified and 21 states have met the criteria for program participation. These brokers are being recognized as the cream of the crop, Mr. Hanzimanolis said. The NAMB can be found on the Web at http://www.namb.org.

Federal banking regulators are pressing the Office of Federal Housing Enterprise Oversight to exempt federally regulated institutions from proposed appraisal standards Fannie Mae and Freddie Mac agreed to implement under a settlement with New York Attorney General Andrew Cuomo. The appraisal standards or code would "materially disrupt mortgage lending processes and raise costs," according to a joint letter signed by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration. Comptroller of the Currency John Dugan previously urged OFHEO Director James Lockhart to withdraw the appraisal code, which would ban the use of in-house or affiliated appraisers on loans sold to the two government-sponsored enterprises. "If not withdrawn, the agreements and code should be revised to exempt federally regulated lenders," the June 19 letter says. Meanwhile, the Senate is likely to vote on an amendment to a major housing bill this week that directs OFHEO to issue regulations that establish appraisal standards for Fannie and Freddie. The appraisal amendment by Sen. Elizabeth Dole, R-N.C., would nullify the appraisal code the GSEs worked out with the New York AG. Senate Banking Committee Chairman Christopher J. Dodd, D- Conn., opposes the Dole amendment.

Six classes of notes issued by Bonifacius Ltd. and Bonifacius LLC, which together constitute a collateralized debt obligation consisting partly of subprime mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: classes A-1M and A-1Q, from BBB to CC/DR4; class A-1J, from BB to C/DR6; class A-2, from B-minus to C/DR6; class A-3, from CCC to C/DR6; and class A-4, from CC to C/DR6. Fitch also assigned Distressed Recovery ratings of DR6 to classes B, C, and D. The downgrades were attributed to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with exposure to subprime RMBS. Fitch can be found on the Web at http://www.fitchratings.com.

Paradigm Default Services LLC, Denver, has announced the introduction of third-party servicing of real estate owned designed to serve clients and investors "awash in a sea of subprime foreclosures." The company said it is creating a special default servicing unit that will provide "cradle-to-grave, hands-on" servicing, taking loans from their initial default to reperformance or liquidation. Paradigm said it acts as a third-party facilitator between lenders and real estate brokers around the nation to ensure that the details of local asset management -- taking possession of foreclosed property, readying it for sale, marketing it, and closing the sale -- are "capably discharged without liability." The company can be found on the Web at http://www.paradigmdefaultservices.com.

The Federal Bureau of Investigation is undertaking 19 subprime-related corporate fraud investigations, according to FBI Director Robert Mueller. "The majority of these corporate fraud investigations address accounting fraud, insider trading, and the failure to disclose the proper evaluations of the securitized loans or derivatives," Mr. Mueller said at a news conference. "In many of these investigations, we are working with the Securities and Exchange Commission and the Department of Justice to determine the criminal intent of these identified violations." The FBI director added that targets are "relatively large corporations." He declined to comment on when the first indictments would be issued in the cases.

Over 400 individuals have been charged with mortgage fraud as the result of a national "takedown" led by the Department of Justice and the Federal Bureau of Investigation. The law enforcement operation called "Malicious Mortgage" netted real estate agents, mortgage brokers, appraisers, and others allegedly engaged in lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes. So far, the three-month sweep had led to 287 arrests and 173 convictions, and 82 individuals have been sentenced, the DoJ said. The Mortgage Bankers Association and the American Financial Services Association welcomed the crackdown. "We support efforts to prosecute unscrupulous operators who give the mortgage industry a bad name," AFSA president Chris Stinebert said. MBA president Kiernan Quinn said the sweep shows that federal authorities are taking the issue of mortgage fraud seriously. "We will continue to work with the FBI to help them target these kinds of crimes," Mr. Quinn said. The FBI said it has set up 42 task groups and working groups around the country that are investigating 1,400 mortgage fraud cases.

Cole Operating Partnership II LP, the operating partnership of Cole Credit Property Trust II Inc., recently entered into a $135 million revolving credit facility, according to Cole Cos., a Phoenix-based family of real estate companies. The three-year facility, which can be increased to $235 million and has a one-year extension option, is secured by an assignment of Cole OP II's equity interests in the assets of certain of its limited-liability subsidiaries, Cole said. Banc of America Securities was the sole lead arranger of the facility.

Genworth Financial Inc., Richmond, Va., has made a change in its organizational chart that shifts the reporting responsibility of the head of its U.S. mortgage insurance business. Until now, Kevin Schneider, president of U.S. mortgage insurance, reported to the company's executive vice president, Tom Mann. Mr. Mann will now concentrate on leading the international segment, while Mr. Schneider will report directly to Genworth's chairman and chief executive, Michael D. Fraizer. "Kevin and his organization have kept a clear focus on executing our strategy and positioning the business for the future -- all while mitigating risk during a difficult industry transition," said Mr. Fraizer. Genworth can be found on the Web at http://www.genworth.com.

Washington Mutual Inc., Seattle, has announced the commitment of an additional $1 billion to help homeowners with subprime mortgage loans avoid foreclosure. WaMu noted that the pledge brings the commitment to its borrowers' assistance program to $3 billion. "Since the fund was first established in April 2007, WaMu has helped more than 7,500 homeowners work to avoid foreclosure," said Kerry Killinger, WaMu's chief executive officer. Under the program, eligible WaMu subprime borrowers who remain current on their loans and expect payment increases may apply for new, discounted fixed-rate loans or certain other mortgage products, the company said. The thrift can be found on the Web at http://www.wamu.com.

Shanti Home Loans.com, a mortgage company that offers low-flat-fee closing costs, has been launched by Prem Bajaj, president of Sterling Lending Group Inc., Danbury, Conn. The cost savings promised by Shanti are possible because "today's homeowners are computer-savvy, green-conscious, and can apply online," the company said. Mr. Bajaj said the company will donate 5% of its net profits to local charities. Shanti can be found on the Web at http://www.shantihomeloans.com.