Origination

The second-quarter Core Mortgage Risk Index stands 16% higher than the level of a year ago, reflecting rising delinquency and foreclosure rates, flat or declining price appreciation, and slower job growth, according to First American CoreLogic, Sacramento, Calif. Among the largest 100 markets in the country, CoreLogic reported that the five with the highest risk are: Riverside-San Bernardino-Ontario, Calif.; Los Angeles-Long Beach-Glendale, Calif.; Sacramento-Arden-Arcade-Roseville, Calif.; Stockton, Calif.; and Miami-Miami Beach-Kendall, Fla. "As of March 2008, 33 states were experiencing year-over-year house price declines, up from 28 states in February, demonstrating how quickly home price declines appear to be spreading," the company reported. CoreLogic, a provider of mortgage risk assessment and fraud prevention systems, can be found on the Web at http://www.facorelogic.com.

The Senate has passed a flood insurance reform bill in a 92-6 vote that phases out subsidized premiums for certain commercial properties and vacation/second homes and requires properties protected by dams and levees to have flood insurance for the first time. The bill (S. 2284) also requires lenders to escrow flood insurance premiums and increases penalties on lenders that don't insure homebuyers in flood-prone areas. A House-passed bill expands the National Flood Insurance Program to offer dual coverage for flood and wind damage. The Senate overwhelmingly rejected such an expansion by a 73-19 vote. The Senate bill also forgives $17 billion in debt that the Federal Emergency Management Agency borrowed from the U.S. Treasury to pay flood claims after hurricanes Katrina and Rita in 2005.

Seven tranches from two First NLC Trust 2005 subprime transactions have been downgraded by Moody's Investors Service. The downgrades were as follows: First NLC Trust 2005-1, class M-12, from Baa2 to Ba1, and class M-13, from Baa3 to B1; and First NLC Trust 2005-2, class M-5, from A2 to Baa1, class M-6, from A3 to Baa2, class M-7, from Baa1 to Ba1, class M-8, from Baa2 to Ba3, and class M-9, from Baa3 to B2. Moody's attributed the downgrades to "an increasing proportion of severely delinquent loans." The collateral consists primarily of first-lien subprime mortgage loans.

Prices paid for single-family homes fell 7.7% in the first quarter from the level of a year earlier, the steepest decline ever recorded by the National Association of Realtors, which has been tracking sales for 26 years. The trade group did offer one piece of good news (if it can be deemed such): 48 out of 149 metropolitan statistical areas tracked (or 32.2%) showed higher median prices in the quarter. In the first quarter, the average median sales price was $196,300, compared with $212,600 a year earlier. The NAR reported that there were "very few jumbo loan originations" in the quarter, "so sales are much slower in high-cost areas." Lawrence Yun, chief economist for the trade group, added that, "Neighborhoods with little subprime exposure are holding on very well." According to preliminary figures compiled by National Mortgage News and the Quarterly Data Report, mortgage bankers funded less than $4 billion worth of subprime loans in the first quarter. The NAR can be found online at http://www.realtor.org.

Classes E and F of Mortgage Capital Funding Inc. multifamily/commercial mortgage pass-through certificates, series 1998-MC3, have been placed on review for possible downgrade by Moody's Investors Service. The actions were attributed to interest shortfalls related to the Comfort Inn--Marietta Loan that are expected to begin with the May 2008 payment date. The loan has been in special servicing since October 2001. "The master servicer, Capmark Finance Inc., has advanced approximately $2.0 million on this loan and intends to begin recovering its advances commencing with the May 2008 payment date," Moody's reported.

The credit crunch is causing the volume of apartment property sales to slow "sharply" and making it harder for apartment firms to access the debt and equity markets, according to the National Multi Housing Council's multifamily industry survey. The trade association reported that its Market Tightness Index, which measures changes in occupancy rates and rents, rose significantly, from 33 in January to 44 in April, as more respondents reported tighter conditions. The availability of debt funding for multifamily properties declined significantly, according to the NMHC's Debt Financing Index, which dropped from 45 in January to 22 in April. "The bursting of the for-sale housing bubble has greatly slowed the outflow of renters into ownership"," said Mark Obrinsky, the association's chief economist. "More than 80% of the survey respondents reported a decrease in the number of renters leaving to become homeowners." The survey's respondent pool consists of 87 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.

ALPS Holdings Inc., Denver, and Cohen & Steers, New York, have announced the launch of a global real estate exchange-traded fund. The fund, Cohen & Steers Global Realty Majors ETF, is advised by ALPS Advisers Inc. It will seek investment results that correspond to the performance of the Cohen & Steers Global Realty Majors Index, which comprises securities of companies that have been evaluated on management strength and track record, market position, the composition and quality of their real estate portfolios, and other factors, the companies said. The fund targets "75 industry-leading real estate companies from an initial universe of 500 that are located in developed markets across North America, Asia Pacific, and Europe," they said. The companies can be found on the Web at http://www.alpsetfs.com and http://www.cohenandsteers.com.

Guild Mortgage Co., San Diego, has announced the recent acquisition of Liberty Financial Group, a residential mortgage bank based in Bellevue, Wash. The terms of the transaction were not disclosed. Guild Mortgage was acquired in 2007 through a partnership between its senior management and that of McCarthy Capital, the company said. "McCarthy Capital's approach combines the stability we were looking for in a partner with the resources we needed for continued growth," said Mary Ann McGarry, Guild's president and chief executive officer. Liberty Financial originates nearly $1 billion of prime home loans annually via branches located mainly in Washington and Colorado, Guild reported. Guild Mortgage can be found on the Web at http://www.guildmortgage.com.

Federal banking regulators have closed ANB Financial after finding that the Bentonville, Ark., national bank was undercapitalized and likely to fail. The $1.9 billion-asset bank reported a $59 million loss in the fourth quarter, with nearly $400 million in noncurrent loans. Its parent, ANB Bancshares, closed its wholesale subprime lending business in March. The Federal Deposit Insurance Corp. arranged for Pulaski Bank and Trust Co., Little Rock, Ark., to take over the national bank's nine offices, along with $212.9 million in insured deposits and $39.2 million in uninsured deposits. The Little Rock bank also agreed to purchase $235.9 million of the failed bank's assets.

Freddie Mac lenders may be "unnecessarily" limiting credit in some areas because of an "overly broad interpretation" of the agency's declining-market policy, a Freddie executive says in a letter to the National Association of Realtors. Freddie Mac has advised its lenders to use the Office of Federal Housing Enterprise Oversight's housing price index to determine whether a property is in a market where prices are declining and the maximum amount of financing should thus be reduced by 5%. Freddie executive vice president Patricia Cook said the HPI should not be used as "conclusive evidence" that every market in a metropolitan statistical area is declining. "If a lender and/or appraiser determine that the prices in a particular area are actually stable or increasing, and sufficient supporting evidence is provided, the 5% reduction would not apply," Ms. Cook says in a letter to NAR president-elect Charles McMillan. Ms. Cook also says Freddie is working on a "job aid" suggested by the NAR to help lenders "apply our declining markets policy appropriately." Freddie can be found online at http://www.freddiemac.com, and the NAR can be found at http://www.realtor.org.