Originations

Investment bank Greenhill & Co. Inc. is building a real estate placement advisory business. The company has hired four managing directors to focus on the effort: Bill Thompson, Fredrik Elwing, Walter Stackler and Pamela Wright. All four previously were senior members of Credit Suisse's real estate private fund group. The new effort's real estate related advisory activities are slated to focus on capital raising for funds, joint ventures and recapitalizations, as well as advice for real estate fund investors seeking to sell interests in the secondary market.

The global Commercial Mortgage Securities Association has changed its name to the Commercial Real Estate Finance Council to reflect the changed market and its aim to serve a broader range of constituencies. The New York-based council will start with five forums representing major market participants with the global CRE industry: investment-grade bondholders, multifamily lenders, portfolio lenders, servicers, and securities and loan investors. Its aim will be to achieve a consensus among these parties and advocate on their behalf. The council, like the CMSA, plans to continue to have a presence in Europe and Japan as well as North America.

Bank of America Merrill Lynch has hired Wall Street veteran Steve Harris as managing director in charge of mortgage sales for its Americas division. Harris will report to Michael Hokin, head of America's mortgages and securitized product sales at the bank. According to StructuredFinanceNews.com, Hokin-who was formerly head of global securitized markets sales at Citigroup-joined Bank of America Merrill last September. Prior to his hiring, Harris had a six-month stint at Rafferty Capital as a manager in structured products. From 1987 to 2009 he worked for Goldman Sachs as a manager in mortgage sales.

CitiFinancial, a nonbank that was once a powerhouse in subprime lending, Wednesday agreed to pay a $1.25 million fine for not correctly reporting its residential origination data to the Federal Reserve via the Home Mortgage Disclosure Act. The settlement, however, was not between the Fed and CitiFinancial but instead was worked out by state banking supervisors who discovered the reporting problems as part of a probe into compliance with consumer protection laws. The deal was worked out between CitiFinancial, an affiliate of Citigroup, and The Conference of State Bank Supervisors/American Association of Residential Mortgage Regulators. (Roughly 35 states were party to the agreement.) The reporting violations occurred on 91,127 loans between 2004 and 2007. Prior to that, the lender was in compliance, regulators said. According to CSBS, CitiFinancial of Baltimore, failed to report the loans in its HMDA filings. The lapse was caused by "internal system errors" at the nonbank, said CSBS. CitiFinancial eventually submitted HMDA reports on the loans in question. Regulators said that even though the loans were omitted by CitiFinancial the lender's behavior "does not in any way demonstrate a pattern or practice of discriminatory lending." The loans accounted for about 10% of CitiFinancial's production volume during the time in question.

Applications to refinance mortgages hit their lowest market share since the end of October, according to the Mortgage Bankers Association's Market Composite Index for the week of March 19. The MCI, a measure of mortgage loan application volume, decreased 4.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 3.9% compared with the previous week. The Refinance Index decreased 7.1% from the previous week and the seasonally adjusted Purchase Index increased 2.7% from one week earlier. The market share of refi applications fell to 65% for the survey period, down from 67.3% during the previous week. On the other hand, the market share of adjustable-rate mortgage applications is back at 4.8%, up from 4.6% for the previous week. The average contract interest rate for the 30-year fixed-rate mortgage has been bouncing back and forth around the 5% mark in recent weeks. For the most recent week, the index is again at 5.01%, up 10 basis points from the previous week's 4.91%, with points declining to 0.76 from 1.30 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs increased by 9 bps to 4.33%. The average contract interest rate for one-year ARMs was unchanged at 6.75%.

New government figures show that home prices fell 0.6% in January after a 2% drop in December, a sign that the housing market is far from being on a steady road to recovery. According to a home price index compiled by the Federal Housing Finance Agency, prices fell in six geographic regions but rose in two: a 2% gain for the Mountain region, and a 0.4% improvement in the West North Central. Prices in the Pacific region remained unchanged. Over a 12 month-period ending in January, home prices are down 3.3% based on residential loans purchased in the secondary market by Fannie Mae and Freddie Mac. The December drop was revised downward from 1.6%, the GSE regulator said. Since January 2009, prices have dropped 3.3% to a seasonally adjusted 194 index value. The FHFA HPI is down 13.2% from the peak in April 2007.

New home sales fell for the fourth consecutive month in February but sales were down by only 2.2%, despite severe winter weather in many parts of the country. The U.S. Census Bureau reported that sales of newly constructed homes fell to a seasonally adjusted annual rate of 308,000 in February from a 315,000 rate in January. The January rate was revised upward from 309,000, which means the drop in sales from December to January was 8.9%, as opposed to 11% as originally reported. The Census Bureau report shows that sales in February fell 20% in the Northeast and 18% in the Midwest. Sales were up 20% in the West. New home sales have slumped to the lowest level since 1963, according to Weiss Research analyst Mike Larson. "The market remains stuck in the doldrums," he said. But he expects some pick up in sales in March and April with the homebuyer tax credit due to expire at the end of April. "The credit-fueled pop won't be anything like what we saw the first time around, however," Larson said.

General Growth Properties, Chicago, one of the largest commercial REITs in the nation, said director Glen Rufrano has resigned from its board. In a new SEC filing, the company said his departure "is not due to any disagreement between Mr. Rufrano" and the company. General Growth is a real estate investment trust that invests and owns shopping malls, master planned communities, and other CRE assets.

Architects are the first to feel the pain of a sagging housing market and the first to see the beginnings of an upswing. So if the recent uptick in project inquiries received by the Dallas- based Humphries and Partners is any indication, the apartment business is starting to look up. The highly-regarded design firm, which last year submitted the largest number of new FHA 221(d)(4) financed market rate projects of any architect in the country, hasn't been overwhelmed by requests from multi-family developers, but "we are encouraged by positive signs in the market," said Mark Humphries. "Not a deluge, but strong," Humphries said of the inquiries. "The wise apartment developers recognize that interest rates will never be this low, construction volume will never be this low, construction costs will never be this low, and the pending demand is going to be the largest growth in apartments ever seen."

The Senate Banking Committee late Monday passed a financial services regulatory reform bill as Republicans agreed to let the measure go through committee and work with Democrats on a possible compromise before it hits the Senate floor. The panel passed the 1,300-page bill by a 13 to 10 vote along party lines. The legislation -- which includes language on MBS risk retention -- largely resembles the bill that Senate Banking Committee chairman Chris Dodd (D-Conn.) introduced last week. The mortgage industry is lobbying against risk retention language that could crimp a revival of the private label MBS market. Sen. Dodd thanked Sen. Shelby (R-Ala.) for allowing the bill to clear committee this week which was Dodd's major goal in calling the markup. Sen. Shelby said he did not want to turn the markup process into a "long march" by offering hundreds of amendments. "Although I have raised a number of serious concerns I remain optimistic that we can, over time, reach an agreement that will garner bipartisan support," said Sen. Shelby. "I just don't think we are quite there yet."

Freddie Mac on Tuesday approved a reactivated subsidiary of The PMI Group Inc., Walnut Creek, Calif., as an eligible mortgage insurer, sending the MI's stock soaring. PMI has effectively created a "good bank" MI unit which allows it to continue writing policies in states where there is a risk-to-capital ratio requirement or a minimum policyholder position requirement. The unit, which is called PMI Mortgage Assurance Co., or PMAC, has $28 million in capital. A PMI spokesman said the company has not determined when PMAC will be implemented. In trading, PMI's shares were up 17%. Several MI firms have used the "good bank" strategy to segregate out the risk inherit in their "legacy" coverage.

Existing home sales fell fractionally in February from the previous month but the housing and mortgage industries received a new dose of bad news Tuesday morning with total inventories rising 9.5% during the month to 3.59 million units. Also, some housing analysts now expect a compressed spring home buying season because of expiring federal tax credits benefiting first-time home buyers and certain move-up customers. Another bad omen for the market, according to analyst Eric Landry of Morningstar, is an increase in listings by non-distressed sellers. The National Association of Realtors reported that existing homes sales slipped 1.4% in February on a seasonally adjusted basis to 4.37 million units. (The figure excludes condominiums and cooperatives.) Compared to February of last year, one- to four-family home sales rose 4.3%. NAR is blaming the poor numbers, in part, on bad weather in the Northeast and mid-Atlantic. "Some closings were simply postponed by winter storms, but buyers couldn't get out to look at homes in some areas and that should negatively impact near-term contract activity," said NAR economist Lawrence Yun. He added that, "Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment."

Loan brokers may not be toast after all. According to new figures compiled by National Mortgage News, wholesale funding picked up slightly in the fourth quarter. Loans that were table funded by wholesalers accounted for 13.4% of all production in 4Q, a bounce from the all-time low of 13% reached in the third quarter. Three years ago table funding through brokers accounted for 28% of all residential loans originated in the U.S. NMN and its Quarterly Data Report found that Provident Funding, Burlingame, Calif., ranked first among all wholesale lenders in 4Q, originating $8.6 billion through loan brokers, edging out Wells Fargo & Co., San Francisco, which table funded $8.1 billion. Bank of America, which owns the old Countrywide Financial wholesale platform, ranked third with $6.4 billion. The nation's top 15 wholesale lenders, as a group, originated $51 billion in residential loans, a 42% increase from 4Q08. Then again, the fourth quarter of 2008 was one of the worst periods in terms of originations for mortgage bankers in 10 years.

Fannie Mae and Freddie Mac will not be buyers -- or active sellers -- of mortgage-backed securities while they remain in conservatorship, Treasury secretary Timothy Geithner declared Tuesday. During this conservatorship period, the secretary said Treasury will continue to provide capital for the GSEs, allowing them to support the primary and secondary mortgage markets. The Federal Reserve is slated to stop buying agency MBS at month's end and there had been speculation that the GSEs might become buyers -- if necessary -- to keep rates from spiking. At the same time, Treasury wants to reduce their giant investment portfolios. "Treasury remains firmly committed to ensuring that the GSEs' retained portfolios are substantially reduced," Geithner told the House Financial Services Committee. The secretary also said it would be "irresponsible" to abolish the GSEs today but he favors a redesign of the nation's housing finance system. At the beginning of Tuesday's hearing, committee chairman Barney Frank raised the issue of whether FHA, GNMA, and the FHLBs should be restructured too. Mortgage Bankers Association president Michael Berman told the panel the Obama administration should begin to wind down the GSEs as the housing finance system transfers to a new model. "Measures such as focusing the GSEs on a narrow range of mortgages and winding down their portfolios can be undertaken now," Mr. Berman said. "Additionally, the use of good/back bank strategy would help retain the best people, processes and infrastructure from the GSEs," the MBA president testified.

The USDA's 'Guaranteed Rural Housing Program,' which has soared in popularity the past two years, could run out of allocated funds shortly, affecting hundreds of lenders and secondary market buyers, including JPMorgan Chase. A memo written by Chase executive Jack Jones notes that the U.S. Department of Agriculture has been allocated $13.5 billion to cover residential guarantees but six months into the fiscal year, $9.6 billion has already been used. A Chase spokesman confirmed the memo to National Mortgage News as well as the fact that the bank is a large investor of USDA-backed residential loans. The GRHP functions like the FHA program but is geared toward properties in towns with populations of 20,000 or less. Word that USDA could run out of guarantee money is beginning to spread. It was acknowledged at a regional meeting held by RE/MAX Realtors in Northern Virginia and in interviews conducted by NMN. Telephone calls to USDA's press office had not been returned at press time. Ron Wright, a mortgage banker based in the Midwest, said the USDA mortgage insurance program "is a big deal for people in rural areas. It also has a low default rate." If GRHP runs out of money Congress must allocate more. Another possible solution would be for lenders to charge higher upfront premiums on the loans, increasing the pool of money available for guarantees. Currently, the upfront premium charged to borrowers is 2%.

Loan Value Group is launching a new website - RHReward.com - The Responsible Homeowner Reward Program, to reward homeowners who continue to pay their mortgage on time. Loan Value Group in Rumson, N.J., created the RH Reward program to offer incentives for homeowners to remain current on their mortgages by providing an opportunity to "earn" a significant cash reward when the mortgage is paid off, or if the home is refinanced or sold. There is no charge to eligible homeowners whose financial institutions choose to participate in the program. To get the program started, the homeowner with negative equity is presented with an initial RH Reward amount. The homeowner makes their full and timely mortgage payments, to keep their RH Reward status active. For a fixed period of time following registration, an additional amount of money will be added to the initial RH Reward amount for each month the homeowner maintains active status. Once the mortgage balance is paid in full either by sale of home, refinance of home, or paying off the mortgage, the homeowner can withdraw the entire RH Reward amount.

MRG Document Technologies in Dallas, a provider of mortgage document preparation, has been named a RegulatorConnect Certified Partner by ComplianceEase, which means that lenders can use the company's solutions to prepare loan data for industry standard electronic submission to state regulators for examinations. MRG's Miracle Online was certified by ComplianceEase due to its examination data export functionality as well as its integration with ComplianceEase's ComplianceAnalyzer product. This enables the electronic transfer of compliance audits to state regulators. "As the regulatory landscape continues to become more complex, it is vital for lenders to have automated processes in place in order to comply with state and federal regulations," said Laura LaRaia, an attorney and director of customer service at MRG.

Excessive concentrations of commercial real estate loans have produced huge losses at banks and regulators need to set "hard limits" on CRE portfolios, according to Comptroller of the Currency John Dugan. The federal banking regulator issued CRE concentration guidance on banks and thrifts in 2006 over the objections of the industry. The comptroller acknowledged his guidance has "obviously not worked" as well as he would have liked, considering the huge number of bank failures stemming from CRE loans -- in particular construction and development notes. The 2006 guidance advised banks and thrifts that C&D loan portfolios exceeding 100% of equity capital would be considered a "high concentration" by examiners. Regulators should consider a range of options, including harder limits, Dugan told the Independent Community Bankers of America. In addition, regulators might weigh increased capital requirements, minimum underwriting standards and a more granular approach to defining concentrations based on CRE loan type. He noted that newly-chartered banks are over-represented among the 195 bank failures in the past 24 months. "I also think we should consider the issue of minimum federal standards for all newly chartered depository institutions, with a particular focus on business plans that call for significant CRE concentrations or reliance on non-core deposits for extended periods," he said.

Fannie Mae purchased $103 billion of single-family loans under an "early-funding" program launched last summer during the height of the warehouse lending crisis, according to new figures released by the GSE. Under the program, Fannie pays cash immediately after a loan funds at the closing table, allowing the originator to make more loans. Previously, lenders had to wait at least one month for a mortgage-backed securities transaction to settle. "We sped up access to funds so a lender receives quicker payments for loans exchanged for Fannie Mae MBS," said the GSE in a statement. Fannie intends to keep the early funding program going for the rest of 2010. Separately, the GSE last month unveiled a $1 billion warehouse lending pilot program to provide additional funding for non-bank residential lenders. Through Natty Mac of Florida it is now providing $50 million to $150 million for warehouse lines. This pilot is slated to end in December. Natty Mac is owned by Guggenheim Partners.

Citigroup -- which has whittled down its third-party lending programs severely over the past year -- is changing course, at least when it comes to correspondent loan production. It a recent interview with Bloomberg, Sanjiv Das, who heads the lender's U.S. mortgage business, confirmed that CitiMortgage, O'Fallon, Mo., will ramp up its purchase of mortgages underwritten by other companies and keep more loans on its balance sheet. Two months ago National Mortgage News reported that CitiMortgage had been selectively contacting certain high performance loan brokers with the idea of expanding its wholesale business. According to the Quarterly Data Report, CitiMortgage bought $3.2 billion of home mortgages through the correspondent channel in the fourth quarter, a stunning 69% decline from 4Q08. Among correspondent buyers, CitiMortgage ranks sixth nationwide but was the only top 10 buyer to post a huge decline in 4Q. (A year ago CitiMortgage cut back its broker network significantly.) Now, based on what Das told Bloomberg, it appears CitiMortgage has changed course on correspondent lending. "We decided that we can't have a consumer bank without a mortgage product," Das said. "Then, we said, 'let's now start to grow this business back in a high-quality way.'"