Originations

Home purchase mortgages in the United Kingdom continue to trend upward to their highest level in nearly two years while refinancing levels hold steady, the most recent data from the nation's industry trade group found. Monthly U.K. purchase loans were at 55,000 at last count in October, according to the Council of Mortgage Lenders, London. This is the highest level seen since December 2007. The number of monthly refinance loans this year has been at some of the lowest levels since the CML began tracking them in 2002. These were at 33,000 per month for the past two months. The only time since 2002 that monthly refinancing has been slower was in August of this year when the rate was 30,000. "We are still in a two-speed mortgage market. It appears that low interest rates for those with substantial deposits, coupled with this year's sustained increases in house prices, are encouraging more people to buy or move home," said CML director-general Michael Coogan. "But the same low interest rates that are driving ... purchase activity provide little incentive for borrowers to refinance their loans." Mr. Coogan said this, combined with tight lending guidelines, continues to constrain refinancing. Also declining in the United Kingdom have been fixed-rate mortgages. These peaked at 80% of the market in July but as of October had fallen to 66% of the market. Recently in the United Kingdom adjustable rates have been competitively low and there have been expectations that rates will remain at or near their current lows for the foreseeable future.

To protect seniors for fraudulent reverse mortgage schemes, the House of Representatives approved an amendment for the proposed Consumer Financial Protection Agency to monitor and regulate the practices of reverse mortgage lenders. "Many seniors are turning to reverse mortgages," said Rep. Jan Schakowsky, D-Ill., in offering her reverse mortgage amendment during debate on the Wall Street Reform and Consumer Protection bill (H.R. 4173). "We must do everything in our power to ensure the fidelity of the system and shield our parents and grandparents from being cheated or misled," she said. As proposed, the CFPA would be an independent regulatory agency that sets mortgage lending standards for all residential originators and has the power to enforce those standards. Rep. Schakowsky's amendment gives the CFPA explicit authority to regulate reverse lending practices. The House passed her amendment by a 277-149 vote. During debate, the Illinois lawmaker noted that CFPA should work with the Federal Housing Administration, which insures a reverse mortgage product called Home Equity Conversion Mortgages, in developing its reverse mortgage regulations.

The House of Representatives on Friday passed a massive regulatory reform bill that, among other things, creates a new consumer protection agency with authority to set mortgage lending standards for all residential originators. The House passed the "Wall Street Reform and Consumer Protection Act" (H.R. 4173) by a 223-202 vote. The accepted language creates the Consumer Financial Protection Agency, a Washington regulatory body that would set industrywide rules for mortgage lending and take over enforcement responsibilities from the federal banking agencies. An industry-backed amendment to gut the CFPA and turn it into a consumer protection council representing 12 regulatory agencies failed by a close vote of 223-208. The American Bankers Association said it opposes several sections of the 1,200-page bill, including the CFPA. "The breadth of authority granted to the director of the proposed new consumer financial regulator is unprecedented," said ABA president Ed Yingling. "This new regulator would not be responsible for considering institutional safety and soundness along with consumer protection." (ABA believes it's essential that the same regulatory body perform safety and soundness and consumer protection oversight.) The Mortgage Bankers Association also has issues with CFPA. But MBA and other industry groups were glad to see a bankruptcy cramdown amendment defeated by a 241-188 vote. "We are gratified that the House saw fit to vote down the bankruptcy cramdown amendment," said MBA chairman Robert Story. Earlier this year, the House passed a bill that would allow bankruptcy judges to cram down or reduce the principal amount of a homeowner's mortgage. The Senate rejected the cramdown bill.

Bridger Commercial Funding, San Francisco, is resuming originating new commercial real estate loans. Loans made under Bridger's new program will be underwritten to eligibility standards for securitization under the Federal Reserve's Term Asset-Backed Securities Loan Facility. Bridger said in addition the program would offer commercial real estate borrowers the flexibility to access a range of alternative financing structures. To date, individual borrowers have been locked out of TALF-supported financings because of the pooling requirement for newly originated loans. The new Bridger program addresses this obstacle by assembling a diversified portfolio of loans from many different borrowers that will be eligible for attractive, nonrecourse securitization funding offered under TALF. "Recent activity in the CMBS market is signaling that the credit logjam plaguing commercial real estate lending for the past two years is starting to break," said Bridger executive vice president Peter Grabell. "CMBS bond yields have fallen throughout the year, to the point where newly originated CMBS loans are becoming a viable financing option once again for borrowers." Loan amounts are between from $2 million to $20 million. Qualifying property types are multifamily, manufactured housing communities, office, retail, industrial/warehouse and self-storage. Fixed-rate loan maturities from three to five years will be offered, with traditional amortization and balloon payment features. Separately, Florida East Coast Industries, Inc., Coral Gables, Fla., has closed a $460 million property financing related to 44 office and industrial properties and certain right-of-way assets. The lender on the transaction was Bank of America NA, which subsequently securitized the loan through Banc of America Securities LLC. The company claims this transaction represents the first new issue, nongovernment supported commercial real estate securitization in 18 months.

On Tuesday, the House Financial Services Committee will hold a hearing on covered bonds backed by high-quality mortgages and consumer loans, a European market some U.S. legislators believe could become more influential in the United States and help fill in the gap left by the still-moribund mortgage-backed securities market. Rep. Scott Garrett, R-N.J., is hoping the hearing will lead to legislative action in the spring and help provide liquidity for the U.S. mortgage market. European banks have issued $180 billion in covered bonds backed by high-quality mortgages and consumer loans this year while U.S. mortgage securitization, outside of the government sponsored or guaranteed market, has been virtually nonexistent. "Because of the problems in the secondary mortgage market," covered bonds offer a way to provide needed liquidity for the U.S. mortgage market, said Mr. Garrett. A covered bond market would enable banks and thrifts to tap a low-cost, long-term financing while keeping the mortgage loans on their balance sheets. Covered bond investors know they have "dual" recourse and they can go after the bank or seize the underlying assets if the bonds go into default. In Europe, covered bonds have "performed well," despite the financial crisis, Rep. Garrett told reporters. (The bonds did suffer during the crisis but not to the extent securitizations did.) In 2008, the Treasury Department and the Federal Deposit Insurance Corp. issued policy statements on covered bonds and a couple large U.S. issuers experimented with them prior to the crisis. However, legislation is needed to assure investors they will be made whole if an issuing bank fails, according to Tim Skeet, head of covered bonds for Bank of America. "A legal framework is a necessary prerequisite to the establishment of a vibrant U.S. covered bond market," Mr. Skeet said at Rep. Garrett's press conference.

Wells Fargo & Co. and Bank of America lead the list of unsecured creditors to Fairfield Residential LLC, one of the nation's largest apartment owners and developers which filed for bankruptcy on Sunday. According to the filing, which came in Delaware, Wells is owed almost $130 million, BoA $84 million. Other leading unsecured creditors include Capmark Finance ($79 million), Compass Bank ($64 million) and Regions Bank ($52 million). Freddie Mac, which buys multifamily loans in the secondary market, is owed $45 million. Capmark, a top-ranked commercial mortgage lender and servicer, itself is in bankruptcy. San Diego-based Fairfield listed assets of between $100 million and $500 million and liabilities north of $1 billion. The company, like many commercial real estate owners, has experienced problems refinancing its loans. None of the creditors had commented at press time.

The commercial origination and servicing business of bankrupt Capmark Financial Group Inc., has been acquired by Berkadia Commercial Mortgage LLC, a joint venture of Berkshire Hathaway Inc. and Leucadia National Corp.The sale includes a commercial servicing portfolio of more than $240 billion. Michael I. Lipson, head of global services and loan originations, and a member Capmark's executive team since 1996, has been named president of Berkadia and will continue to lead the business. Berkadia's board of directors will include two representatives each from Berkshire Hathaway and Leucadia National. Berkadia is in the process of hiring more than 1,000 of Capmark's approximately 1,500 current employees. Berkshire is headed by billionaire investor Warren Buffett. Capmark is based in Horsham, Pa. Three years ago Capmark (then known as GMAC Commercial Mortgage) was sold to an investor group led by Goldman Sachs & Co.

The House of Representatives on Friday passed a massive regulatory reform bill that, among other things, creates a new consumer protection agency with authority to set mortgage lending standards for all residential originators. The House passed the "Wall Street Reform and Consumer Protection Act" (H.R. 4173) by a 223-202 vote. The accepted language creates the Consumer Financial Protection Agency, a Washington regulatory body that would set industry-wide rules for mortgage lending and take over enforcement responsibilities from the federal banking agencies. An industry-backed amendment to gut the CFPA and turn it into a consumer protection council representing 12 regulatory agencies failed by a close vote of 223-208. The American Bankers Association said it opposes several sections of the 1,200 page bill, including the CFPA. "The breadth of authority granted to the director of the proposed new consumer financial regulator is unprecedented," said ABA president Ed Yingling. "This new regulator would not be responsible for considering institutional safety and soundness along with consumer protection." (ABA believes it's essential that safety and soundness and consumer protection oversight be performed by the same regulatory body.) The Mortgage Bankers Association also has issues with CFPA. But MBA and other industry groups were glad to see a bankruptcy cramdown amendment defeated by a 241-188 vote. "We are gratified that the House saw fit to vote down the bankruptcy cramdown amendment," said MBA chairman Robert Story. Earlier this year, the House passed a bill that would allow bankruptcy judges to cram down or reduce the principal amount of a homeowner's mortgage. The Senate rejected the cramdown bill.

Advanced Financial Services, a mortgage banker based in Newport, R.I., has changed its name to Embrace Home Loans. Kurt Noyce, president of Embrace Home Loans, said, "We now find ourselves with many opportunities for future growth, but our name hasn't kept pace with that growth. We have not been available in all markets and we're easily confused with many other financial services companies. So we decided to make a change with a name that defines not only what we do, but also what we care about." The company was founded in 1983 and is a direct lender for Fannie Mae and Freddie Mac, approved by FHA and VA, and an issuer for Ginnie Mae.

Colony Capital LLC, Los Angeles, has acquired a commercial real estate-secured nonperforming loan portfolio from BAG Bakaktiengesellschaft, Hamm, Germany, with a face value of $90 million. "The transaction marks the first NPL acquisition in Europe for Colony during this new distressed cycle," the Los Angeles-based company said. Morgan Lewis was the legal and tax advisor for Colony on the transaction. Dilip Awtani, a managing director who heads Colony's distressed efforts in Europe, said he sees value in underlying real estate in Germany and other European countries that he believes Colony will be able to benefit from. The company seeks to realize this value by helping banks monetize illiquid assets and positioning itself to benefit from an eventual recovery.

Central Pacific Bank, Honolulu, will close its four California commercial real estate loan offices and wind down its West Coast operations by 2012. "We have not made a loan in California in more than 18 months and have been diligent in reducing our loan portfolio there," said Ronald K. Migita, chairman, president and chief executive. "By the end of the third quarter, we've reduced our total loans and leases by $622.6 million, or 15.3% from a year ago, many of which were in California. Our mainland team continues to reduce our exposure in California as we shift gears to fully concentrate on the Hawaii market." He added Central Pacific has accelerated its efforts to reduce credit risk by pursuing loan sales, including potential bulk sales, in addition to loan restructuring and pay downs. As of Sept. 30, 2009, the bank's mainland construction and commercial real estate loans totaled $865.8 million. The offices are in Newport Beach, Pasadena, Rossville and San Diego. In the third quarter, its parent company Central Pacific Financial Corp. lost nearly $72 million.

The Federal Deposit Insurance Corp. is expected to rule on two matters Tuesday stemming from new accounting standards for off-balance-sheet assets. The agency is ready to complete an interagency rule bringing capital levels in line with a decision by the Financial Accounting Standards Board in June that required certain off-balance-sheet holdings, including securitizations, to be brought onto the balance sheet. As a result of the FASB change, the FDIC will also consider a proposal to restrict its safe harbor for securitized assets that are tied to failed institutions. Since securitizations have previously been separate from a bank's balance sheet, the FDIC has ordinarily not seized these assets when resolving failed institutions. But the FASB rule left investors and banks worried that the FDIC might change its policy. Last month, the FDIC said it would maintain the safe harbor until April but -- considering how securitizations contributed to the financial crisis -- propose conditions for use of the safe harbor in the longer term.

Countdown to Buy, Bethel, Conn., which operates an online real estate auction website, has lined up new investor commitments of more than $1.1 million, according to a source familiar with the matter. The official announcement on the capital raise is expected to come next week. Founded in 2008, Countdown hopes to expand from a regional online seller of real estate to a national player.

NetMore America Inc., Walla Walla, Wash., has expanded its mortgage banking operations to the East Coast, obtaining a license to originate in Maryland. The company said it has begun to purchase loans through its wholesale channel in the state, one of the healthier markets in the U.S. It will later, through its Professional Branch System, establish a retail presence there as well. "NetMore is building a nationwide lending platform in a responsible and strategic manner by focusing on states with high potential for quality business," said company president Mark Freedle. He identified those states as being in the Mid-Atlantic region: Maryland, Pennsylvania, New Jersey, Virginia, and Washington D.C. The company is now licensed in 26 states but previously had concentrated its business in the western part of the nation. In its fiscal year 2009, ending Sept. 30, NetMore originated more than $1 billion in loans. It is projecting originations of up to $1.5 billion for 2010. Its current product mix is 50% agency loans and 50% FHA.

U.S. commercial mortgage-backed securities delinquencies jumped 43 basis points to 4.29% in November, according to a Fitch Ratings index. The rating agency said large hotel and multifamily loan delinquencies were responsible for the increase. But all loan types saw increases during the month. The hotel sector had the highest delinquency rate during the month, 8.07%; followed by multifamily, 7.03%; retail, 3.81%; industrial, 3.20%; and office, 2.50%. Large loans, defined as loans with balances of more than $100 million, continue to default each month, according to Fitch. Five additional large loans became delinquent in November.

The pace of new home sales in California was above the year-ago level in October for the first time since December 2006, according to the state builders' association. Sales in projects with 10 or more units were 25% above the October 2008 figure, and is the first notable increase since the start of the housing downturn, the California Building Industry Association reported. Buyers scooped up 2,294 new home and condominium units in October vs. 1,838 a year ago, according to the joint CBIA-Hanley Wood Market Intelligence report, which covers properties with 10 or more units. But Jonathan Dienhart, director of published research for HWMI, warned about getting too euphoric about the gain. "While this month's figures are encouraging, we must keep in mind that we're comparing the figures to October of 2008, which was the second lowest month of nominal sales we've seen during the downturn," Mr. Dienhart said. He also noted that the numbers could be somewhat distorted because of a last-minute rush to qualify for the federal first-time buyer tax credit, which was to have expired on Nov. 30 until Congress voted to extend it until mid-2010. While Mr. Dienhart expects more improvement in the coming months, he doesn't think a "true recovery" will appear until next year at the earliest.

The inventory of completed but unsold new houses fell to 239,000 at the end of October, according to the National Association of Home Builders. That's the fewest since May 1971, when the inventory stood at 236,000. The months' supply -- that is, the amount of time it would take to sell the current inventory at October's sales rate -- fell to 6.7 months, which the NAHB says is "respectable." The historic high was set in January, when the supply topped out at 12.4 months. Meanwhile, the inventory of unsold existing houses fell in October to 3 million, and the month's supply dipped to 6.8 months. The supply of resale houses hit its cyclical peak in June 2008, when it reached 11 months.

The residential loan broker share of the origination market hit yet another new low in the third quarter, 12.9%, according to exclusive survey figures compiled by National Mortgage News. "Right now it's hard for me to see much support anywhere for loan brokers," said researcher David Olson. NMN found that all originators funded $443 billion in the third quarter with retail lenders capturing 48.3% of the market and correspondent accounting for 38.8%. Since the second quarter of 2007, the broker share has steadily evaporated from a high of 28.2%. (Only loans that are table funded through a wholesaler are included in this category.) A year ago Mr. Olson changed the name of his Columbia, Md.-based firm to Access Research, removing the word "Wholesale." The veteran researcher said all the new regulations being heaped on brokers are making it "impossible" for them to continue. He believes many may convert into correspondent retail shops (if they can) or join net branches.

National quarterly housing price gains, tracked on a rolling monthly basis, were at a modest 1.4% at the end of November compared to 3.7% at the end of October and 6.3% in September, according to the Clear Capital Home Data Index Market Report. Meanwhile, at 14.1% Detroit surpassed all other U.S. markets including five-month leader Cleveland where quarterly price gains were 12.8%. Other micromarket analysis data show gains in markets like Atlanta where home price gains of 13.4% over the last two rolling quarters indicate this metropolitan statistical area may have bottomed out and is beginning to recover. Clear Capital analysts find sustainable stable price levels in a growing number of metropolitan statistical areas during the year "after the dramatic fall off in prices in the preceding three years" indicate signs of a price bottom and more hope for further market stabilization. Even returning "seasonal influences" and "a potential increase in REO saturation rates" are not expected to fade the price gain stabilizing effect, according to Clear Capital.

The proceeds from a public offering being made by Provident Financial Holdings Inc., Riverside, Calif., will be used to fund expansion of its Provident Savings Bank FSB's mortgage banking operations and origination of multifamily real estate loans. The 4.5 million share offering has been priced at $2.50 per share, resulting in gross proceeds of $11.25 million and net proceeds of $10.37 million. Sandler O'Neill + Partners LP are the lead book-running manager of the offering and FBR Capital Markets & Co., and FIG Partners LLC are the co-managers. The offering is expected to close on Dec. 15, 2009. At midday on Dec. 10, the company's common stock was trading at $2.68 per share, down $0.26 from the previous close.