Origination

Financial illiteracy among Americans remains overwhelmingly high when it comes to mortgages and other financial products, according to a new survey from the Center for Economic and Entrepreneurial Literacy. When asked to choose from a list of four most important factors in obtaining a home loan, for example, almost 70% of respondents did not choose the FICO score as they should have, according to the survey. "When so many Americans are unable to answer the most basic questions about personal finance and debt, it is clear that economic literacy is a problem that needs to be corrected in this country," said CEEL senior analyst Kristen Lopez Eastlick.

David Sambol, the Countrywide executive anointed by Bank of America to manage the combined mortgage operations of the two lending giants, abruptly announced his retirement on Wednesday. An e-mail sent out by Mr. Sambol to Countrywide's employees confirms that he is retiring. "I have dedicated the last 24 years of my life to building Countrywide into the greatest mortgage company in the world." BoA confirmed his retirement in a press statement issued this morning, saying it has named executive Barbara Desoer to head the combined mortgage operations of the two. In his e-mail to employees, Mr. Sambol does not expand on his decision to retire. Ms. Desoer is a chief technology and operations officer for BoA. BoA will officially buy the money-losing CFC by the end of the third quarter.

Fitch has taken various rating actions on Citigroup Commercial Mortgage Trust, Series 2006-FL2, including placing on Rating Watch Negative two classes. Fitch placed on RWN the $2 million class RAM-1 and the $2.4 million class RAM-2, citing the "declining performance of the Radisson Ambassador Plaza Hotel and Casino" in San Juan, Puerto Rico, which failed to recover as expected after its occupancy and average daily rate were affected by renovation between October 2005 and May 2006. The rating agency also upgraded class MVP to AAA from BBB- and affirmed the ratings of several other classes.

Robert Rowling, through a company he chairs, TRT Financial Holdings, is making a $38.4 million capital infusion into Guaranty Financial Group Inc., Austin, Tex. Mr. Rowling is purchasing 7.4 million shares of Guaranty's common stock at $5.17 per share. The stock closed on May 23 at $5.43 per share and was up to $6.22 as of mid-morning on May 27, the day the deal was disclosed. Furthermore, within 120 days of the initial stock purchase, Mr. Rowling will purchase convertible preferred stock that will result in him owning 19.9% of Guaranty's outstanding common stock. The sale to Mr. Rowling is in addition to a stock rights offering announced on May 1. Guaranty lost $10 million in the first quarter, as it took a higher provision for credit losses because of loans to homebuilders, particularly in northern and central California. Guaranty is also the nation's 10th largest warehouse lender as of the end of 2006, according to the Mortgage Industry Directory.

Triad Guaranty Inc., Winston-Salem, N.C., said it has been suspended by Freddie Mac as an approved mortgage insurer. The company had previously fallen out of Freddie Mac and Fannie Mae Type I mortgage insurer eligibility requirements due to downgrades by the rating agencies. Triad said it will appeal the decision and that Freddie Mac will continue to purchase loans to be insured or committed to by insured by Triad during appeals process. Mark K. Tonnesen, president and chief executive of Triad, said, "Freddie Mac and Fannie Mae are both continuing to accept new insurance written or committed by Triad. We welcome the opportunity to provide both the GSEs and our regulators with more details concerning our anticipated voluntary run-off plan and the benefits we believe can be achieved by completing the proposed transaction with Lightyear." Triad added it is still in negotiations with Lightyear Capital LLC, New York, over the creation of a new mortgage insurance company.

Five classes from two Nomura Home Equity Loan Net Interest Margin notes have been downgraded by Fitch Ratings. The downgrades were as follows: Nomura Home Equity Loan NIM 2006-FM2, class N-1, from BBB to C/DR6, and class N-2, from B to C/DR6 (and removed from Rating Watch Negative); and Nomura Home Equity Loan NIM 2006-HE3, class N-1, from BBB to C/DR6, and classes N-2 and N-3, from B to C/DR6. Fitch also lowered the Distressed Recovery rating of class N-3 in series 2006-FM2 from DR5 to DR6. "The rating 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," the rating agency said.

Fitch Ratings has announced plans to provide Rating Outlooks on U.S. structured finance bonds in response to a positive reception to its Rating Outlooks for European structured transactions. Fitch introduced the outlooks in June 2007 to European asset-backed securities, commercial mortgage-backed securities, and residential MBS transactions. "Fitch is issuing Outlooks in response to market requests for more forward-looking information about possible future rating changes," said John Bonfiglio, group managing director and head of U.S. Structured Finance. Rating Outlooks -- which may be Positive, Negative, Stable, or Evolving -- indicate the likely direction of any rating change over a one- to two-year period, Fitch said. They will be applied at the individual bond level and updated concurrently with a rating review for each transaction. Fitch can be found on the Web at http://www.fitchratings.com.

A commercial real estate index maintained by the National Association of Realtors edged down in the first quarter, its third straight quarterly decline after hitting a record high last year, according to the NAR. The Commercial Leading Indicator for Brokerage Activity stood at 119.0 in the first quarter, down 0.7% from a downwardly revised 119.9 in the fourth quarter, the association reported. The record high of 120.5 was reached in the second quarter of 2007. "The moderate erosion in the index suggests that commercial activity, as measured by net absorption and the completion of new commercial buildings, will be positive but somewhat weaker over the next six to nine months," said NAR senior economist Lawrence Yun. "Private nonresidential investment in structures is likely to subtract one-third to one-half percentage point off [gross domestic product] growth." The association can be found online at http://www.realtor.org.

Greystone Residential Funding, Middleton, Wis., has announced a change in ownership and a planned transition to a new name, QR Lending. The new equity partner is a group of private investors focused on businesses that serve community banks and credit unions, Greystone said. The company said it does not plan to make operational, management, or personnel changes. The name change will take place in coming months as Greystone's state registrations are completed. The company can be found online at http://www.greystonerf.com.

American Home Bank, Mountville, Pa., has announced the combination of its Northeast and Southeast wholesale units and the promotion of mortgage veteran William J.S. "Bill" Kelley to head the division. The company said it is expanding its whole product offerings and delivery systems at a time when "many major wholesalers are withdrawing from the third-party origination business." Mr. Kelley, whose title will be president of the wholesale division, will be based in Jacksonville, Fla. He previously held positions at Travelers Mortgage Services, Anchor Mortgage Services, Tucker Federal Bank, and FNB Bank. The AHB wholesale division can be found on the Web at http://www.bankahbwholesale.com.