Origination

Mortgage companies cut their payrolls by 3,900 full-time employees in April, and it looks like the industry will continue to shed jobs now that the unemployment rate has jumped to 5.5%, dashing hopes for a recovery in the housing market this year. The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell from 360,700 in March to 356,800 in April. But the real bad news for the industry is that Friday's jobs report showed an increase of 861,000 (to 8.5 million) in the number of unemployed people in May, the biggest monthly increase since 1996. Wells Fargo & Co. senior economist Scott Anderson said the dismal jobs report confirms that the downturn in the housing market will be prolonged. He said he expects house price declines to continue into 2009 and that a bottom for home sales might be pushed back to the end of the year or the first part of 2009. "This is what we were afraid of," Mr. Anderson said, that a weakening jobs market would compound the problems in the housing market.

Six classes in four net-interest-margin mortgage securities from two issuers have been downgraded by Fitch Ratings. The affected securities were as follows: five classes from three Ixis NIM issues; and one class from an Ameriquest NIM issue. The rating agency said the actions "reflect actual pay-down performance of the NIM securities to date compared to initial projections, as well as changes that Fitch previously made to its subprime loss forecasting assumptions for the underlying transactions."

Seventy-three classes of subprime mortgage pass-through certificates from five issuers have been downgraded by Fitch Ratings. The affected securities were as follows: 37 classes from 18 Morgan Stanley deals; 18 classes from seven IndyMac deals; 14 classes from seven Chase deals; three classes from one Industry Mortgage Co. deal; and one class from a Metropolitan Mortgage deal. Fitch also affirmed the ratings on more than 90 classes from over 40 subprime transactions. The rating agency can be found on the Web at http://www.fitchratings.com.

Behringer Harvard, a Dallas-based commercial real estate company, has closed on a $75 million secured credit facility on behalf of Behringer Harvard Opportunity REIT I Inc. The facility may be increased by up to $150 million under certain conditions, including additions to the collateral pool, the company said. Banc of America Securities acted as the lead arranger of the transaction. The company can be found on the Web at http://www.behringerharvard.com.

Weingarten Realty Investors, a Houston-based real estate investment trust, has priced $120.6 million of depositary shares, each representing one one-hundredth of a share of the company's 6.50% series F cumulative redeemable preferred stock. The 6 million depositary shares were priced at $20.10 per share, a discount to the $25 par value, the company said. They will be redeemable, at Weingarten's election, on or after Jan. 30, 2012. The REIT can be found online at http://www.weingarten.com.

Citizens Republic Bancorp., Flint, Mich., has recorded a $180 million noncash goodwill impairment charge and a $47.1 million writedown related to deterioration in the credit quality of its commercial real estate portfolio. The company said the goodwill impairment stemmed from volatility in the financial industry and a decrease in its market capitalization to a level below tangible book value as well as the deterioration in its CRE portfolio. The writedown consists of the following fair-value adjustments: $38.5 million on $131.4 million of nonperforming CRE and residential mortgage loans; $2.7 million on $30.3 million of commercial loans held for sale; and $5.9 million on $37.6 million of commercial and residential repossessed assets. The company can be found on the Web at http://www.citizensbanking.com.

Despite a weak housing market and tight credit conditions, one- to four-family loan originations by banks rose 14% in the first quarter, while federally chartered thrifts reported a decline in loan production. Single-family loan originations by commercial banks and savings banks totaled $288.6 billion in the first quarter, up 14% from the level of the previous quarter, according to the Federal Deposit Insurance Corp. Loan production matched the $286.4 billion in originations during the same period in 2007. In the first quarter, 673 commercial banks and savings banks reported origination data to the FDIC. Meanwhile, 831 federally chartered thrifts originated $115.2 billion in one- to four-family mortgages in the first quarter, down 20% from the level of fourth quarter and down 23% from that of the first quarter of 2007. The Office of Thrift Supervision reported that refinancings constituted 50% of thrift originations and adjustable-rate mortgages made up only 10% of loan volume.

The Federal Deposit Insurance Corp. is accelerating its on-site reviews of insured banks with high concentrations of construction and development loans, according to Sheila Bair, chairman of the Federal Deposit Insurance Corp. Targeted examinations of 27 FDIC-supervised banks earlier this year found that some institutions with C&D concentrations in formerly high-growth markets are "experiencing a rapid increase in problem loans that may translate into losses this year," Ms. Bair told the Senate Banking Committee. As of March 31, 2,535 insured institutions had C&D loan concentrations of 100% or greater to Tier One capital. Nearly 5% of the $632 billion in outstanding C&D loans are 89 days or more past due. Bank chargeoffs on C&D loans skyrocketed from $106 million in the fourth quarter to $1.6 billion in the first quarter.

Subprime lender Accredited Home Lenders of San Diego has laid off an undisclosed number of workers, MortgageWire has learned. A spokesman for the company confirmed the cutbacks, noting that, "The restructure was done in order to maintain Accredited's financial position in the marketplace and improve the company's long-term prospects by realizing efficiencies." He declined to comment further. According to a posting on the BrokerUniverse website (an affiliate of National Mortgage News), Accredited closed operation centers in Orange, Calif.; Beaverton, Ore.; St. Petersburg, Fla.; and Woodcliff Lake, N.J. However, the information could not be confirmed and the spokesman would not comment. Last fall Accredited, once a top-ranked publicly traded subprime lender, was sold to Lone Star, a private equity fund.

The number of loans entering foreclosure and in foreclosure, in addition to the number of loans more than 30 days delinquent, all reached record highs in the first quarter, according to the Mortgage Bankers Association. The MBA's quarterly delinquency survey showed that overall, 8.82% of loans were at least 30 days past due or in foreclosure during the first quarter. When the foreclosure inventory of 2.47% is considered separately, 6.35% of loans were at least 30 days past due. The foreclosure inventory rose 43 basis points from the level of the fourth quarter of 2007 and 119 bps from that of one year earlier. That means the number of loans in foreclosure is nearly double what it was a year earlier. Loans entered foreclosure at a 0.99% rate in the first quarter. Jay Brinkmann, the MBA's vice president for research and economics, said the deterioration in credit quality was largely driven by certain loan products in certain states. Specifically, subprime adjustable-rate mortgage loans, which accounted for 39% of foreclosures started in the first quarter, helped push up foreclosure and delinquency rates. Two states, California and Florida, also continued to drive up national delinquency and default figures, Mr. Brinkmann said. The MBA can be found online at http://www.mortgagebankers.org.