Origination

The Market Composite Index, an overall measure of mortgage applications, rose from 567.0 to 655.4 on a seasonally adjusted basis during the week ended May 2, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. On an unadjusted basis, applications increased 15.9% on the week and were down 4.4% from the level recorded a year earlier. The Purchase Index rose from 340.1 to 381.3 on a seasonally adjusted basis, while the Refinance Index climbed from 1905.2 to 2273.8. Refinancings represented 47.1% of total applications, up from 45.7% the previous week, while adjustable-rate mortgages accounted for 6.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.01% to 5.91%, and points (including the origination fee) decreased from 1.26 to 1.12 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Cantor Fitzgerald LP, New York, has announced the formation of Cantor Real Estate LLC and named Andrew N. Stark to lead the group. Cantor said it plans to create a real estate fund focused chiefly on opportunistic investments in various sectors, including dislocated assets. Mr. Stark, who will be executive managing director of Cantor RE, was previously president of the Northeast and mid-Atlantic regions of WCI Communities Inc. after starting his career as a real estate attorney at Lord Day & Lord, Barrett Smith. Cantor can be found on the Web at http://www.cantor.com.

Five classes of notes from Taberna Europe CDO I PLC, a collateralized debt obligation backed partly by commercial mortgage-related securities and the debt of real estate investment trusts, have been downgraded by Fitch Ratings. The downgrades were as follows: class A2, from AAA to AA; class B, from AA to A-minus; class C, from A to BBB-minus; class D, from BBB to B; and class E, from BB to B-minus. Fitch also removed the notes from Rating Watch Negative and affirmed the triple-A rating on the class A1 notes. The rating agency noted that it had placed the notes on Rating Watch in February, citing "moderate credit deterioration" of the collateral and the effect on junior classes of the portfolio's shortened weighted average life. "Proposed remedial actions have not been executed," Fitch said in explaining the downgrades. The collateral consists of senior and subordinated debentures issued by subsidiaries of REITs and real estate operating companies, as well as commercial mortgage-backed securities and commercial mortgage B-notes.

Mortgage Consumer Advocates Inc., a Houston-based nonprofit organization, has unveiled a mortgage consumer advocacy website aimed at educating consumers on the mortgage industry and home loan finance. The website, MortgageChampions.org, will help borrowers evaluate major loan products by offering a list of pros and cons and qualifying guidelines for each product, MCA said. The group also offers the MCA Consumer Protection Plan, under which consumers supply MCA with their initial loan disclosure documents for review by a representative to check for signs of fraud or "gross overcharging," MCA said. The new website can be found at http://www.mortgagechampions.org.

The New Hampshire Community Loan Fund and the Corporation for Enterprise Development have announced the formation of ROC USA, an organization aimed at helping residents of manufactured housing on rented land become homeowners. Resident ownership occurs when owners of manufactured homes form a membership association to purchase their community when it becomes available for sale. "In the United States, roughly 35% of owners of manufactured homes live in communities (or 'parks') where they rent the lot their home sits on," the organizations said. "Unlike other homeowners, whose home is their most important financial asset, homes on rented land depreciate over time." ROC USA, which has received more than $8 million in investments from Fannie Mae, the Ford Foundation, and other sources, is the national expansion of a program that has been operated by the New Hampshire Community Loan Fund since 1984. The organizations can be found online at http://www.rocusa.org, http://www.theloanfund.org, and http://www.cfed.org.

Fitch Ratings has moved all its ratings on Countrywide Financial Corp., Calabasas, Calif., from Rating Watch Positive to Rating Watch Evolving. Fitch said the action stems from further disclosures about Bank of America's planned treatment of Countrywide debt after its proposed acquisition. The rating agency said it believes the acquisition will be completed, but that the rating action reflects "uncertainty over the transaction's final structure." Fitch can be found on the Web at http://www.fitchratings.com.

New York City-based FGIC Corp., the parent of troubled Financial Guaranty Insurance Co., has reported the receipt of a "significant number of indications of interest" from its request for proposals to enhance its capital position. FGIC said it will discuss those proposals with the potential investors over the next several weeks, with definitive proposals to be submitted when the due-diligence process is completed. "We are encouraged to see the high degree of interest that has been expressed in FGIC," FGIC said in a statement. "We plan to work expeditiously to finalize a transaction that is in the best interests of all of our constituents, including our policyholders." The PMI Group, Walnut Creek, Calif., has owned a 42% stake in FGIC since the end of 2003. Lately that stake has been a drag on PMI's earnings. FGIC had a $1.89 billion net loss for the fourth quarter, which resulted in an after-tax loss of $776.1 million for PMI.

Municipal Mortgage & Equity LLC, Baltimore, has announced the suspension of its quarterly dividend and a significant curtailment of its business activities in order to conserve capital. MuniMae said credit market conditions have affected not only some of its assets but also the willingness of certain businesses to participate in MuniMae's activities as equity investors, lenders, or otherwise. "The combination of reduced investor interest and reduced liquidity resulting from these circumstances has led the company to significantly curtail its business activities," the company said. "MuniMae continues, however, to invest in and operate certain businesses, including origination of loans for sale to Fannie Mae and Freddie Mac, activities related to renewable energy generation, and certain new business initiatives." The company can be found online at http://www.munimae.com.

Home values fell 1.6% in the first quarter, dropping to a level 7.7% below that of a year earlier and posting "the most significant year-over-year decline in the past 12 years," according to Zillow.com, an online real estate community based in Seattle. Zillow's quarterly national home value report found that median home values stood at a Zindex level of $213,000, the lowest since the second quarter of 2005. "Home values in most markets continued to slide in the first quarter, falling back to levels we saw three to four years ago, which has left more homeowners than ever 'underwater' on their mortgages," said Stan Humphries, Zillow's vice president of data and analytics. ".... The magnitude of annualized declines has been increasing during each of the last five quarters, which is a strong indication that home values still have further to fall, so we expect it's going to get worse before it gets better." Zillow can be found online at http://www.zillow.com.

A Federal Reserve Board survey has found that banks continue to tighten their underwriting standards on prime mortgages and home equity lines of credit even as demand for these loan products has weakened. About 60% of senior loan officers indicated they had tightened their lending standards on prime mortgages over the past three months, according to the April survey. In a January survey, 55% of respondents reported tightening. The April survey also shows that 70% of respondents tightened their standards on HELOC applicants. In response to "special questions," 50% of loan officers reported tightening terms on existing HELOCs over the past six months, mainly due to declines in house prices. "Large majorities of respondents also cited increased defaults of material obligations under loan agreements, as well as significant changes in borrowers' financial circumstances, as additional reasons for tightening terms on existing HELOCs," the Fed said.