Originations

Former chief executive David Moffett is returning to Freddie Mac to run the finance division in the wake of the apparent suicide of the company's acting chief financial officer David Kellermann.Freddie interim chief executive John Koskinen welcomed Mr. Moffett's offer to temporarily return as a consultant while Freddie searches for a permanent CFO. "He knows the company well from his time as the chief executive, and has built an impressive career in finance and accounting...with other leading public companies," Mr. Koskinen said.

Freddie Mac's issuance of mortgage-backed securities totaled $57.7 billion in March — nearly double its activity in February as a result of the surge in refinancings. The mortgage giant purchased $52 billion in refinanced mortgages in March, its largest refinance purchase month since 2003. The company also said it added $45.1 billion in mortgage assets to its investment portfolio, including $19.1 billion of its own MBS. And the mortgage investment portfolio grew to $867.1 billion as of March 31. Meanwhile, delinquencies continue to creep up. In March, the percentage of Freddie single-family loans that are 90 days or more past due or in foreclosure rose to 2.29%, up 16 basis points from the previous month, and up from 0.77% in March of 2008.

DebtX, Boston, will sell more than $269 million in commercial real estate, commercial & industrial and consumer loans from two Federal Deposit Insurance Corp. receiverships on May 12. The first sale consists of $190 million in loans from the Bank of Clark County, Vancouver, Wash., and consists of performing and non-performing loans secured by office, industrial, retail, healthcare, autos, and business assets. The second sale is of $79 million in loans from FirstBank Financial Services, McDonough, Ga., including performing and non-performing loans secured by retail, office, industrial, auto/consumer, and business assets. Due diligence materials for both transactions are now available at http://www.debtx.com.

Parkway Properties Inc., Jackson, Miss., has priced the sale of 6.25 million shares of its common stock in a public offering at $13.71 per share. In addition, Parkway has granted to the underwriter for the public offering an option for 30 days to purchase up to 937,500 additional shares of common stock to cover overallotments, if any. UBS Investment Bank is the sole underwriter for the offering. Subject to customary closing conditions, the offering is expected to close on April 27, 2009. Parkway intends to use the net proceeds from the offering to reduce outstanding borrowings under its line of credit and for general corporate purposes.

The residential mortgage banking business at PNC Bank of Pittsburgh earned $226 million for the first quarter of 2009 driven by strong loan origination activity and favorable income from servicing rights. The company has started reporting this as a separate line of business in the wake of its acquisition of National City Corp. Total loan originations were $6.9 billion for the first quarter, primarily originated under agency guidelines. Residential mortgage loans serviced for others totaled $168 billion at March 31, 2009 compared to $173 billion at Jan. 1, 2009. The decrease was due to payoffs exceeding new direct production during the quarter. Noninterest income at PNC was $440 million in the first quarter of 2009 driven by mortgage servicing rights net hedging gains of $202 million and loan sale revenue of $175 million that resulted from strong loan origination refinance volume. Meanwhile at Cincinnati's Fifth Third Bancorp, mortgage banking net revenue was $134 million in the first quarter of 2009, an increase of $163 million from the fourth quarter 2008 and a $37 million increase from the first quarter of 2008. First quarter originations were $4.9 billion, up from $2.1 billion the previous quarter. Net servicing revenue, before mortgage servicing rights valuation adjustments, totaled $2 million in the first quarter, compared with $22 million last quarter and $8 million a year ago. MSR valuation adjustments represented a net gain of $1 million in the first quarter of 2009, compared with a net loss of $96 million last quarter and a net loss of $3 million a year ago. Including gains in MSR balance sheet hedges reported in securities gains and losses, total mortgage banking revenue increased by $83 million from the previous quarter.

Credit Suisse Group, Zurich, took another sizable commercial mortgage-backed securities writedown during the first quarter but fared well in several other areas including secondary trading of U.S. residential mortgage-backed securities. The company said it took 1.4 billion Swiss francs ($1.2 billion) in commercial mortgage-backed securities writedowns during the period. Strong results in secondary trading of U.S. RMBS and other areas allowed the company as a whole to generate 2.0 billion Swiss francs ($1.7 billion) in net profit during the quarter.

The average weekly 30-year mortgage rate is near its record low but lower than the average short-term mortgage rate for the second week in a row, something Freddie Mac said has not happened since it began tracking adjustable-rate mortgages in 1984. The average rate for a 30-year fixed-rate mortgage was 4.80%, down from 4.82% the previous week and 6.03% a year ago; the average rate for a 15-year FRM was 4.48%, unchanged from the previous week's 1991 survey-record low and down from 5.62% a year ago; the average rate for a hybrid five-year Treasury-indexed adjustable-rate mortgage was 4.85%, down from the previous week's 4.88% and 5.68% a year ago; and the average one-year Treasury ARM rate was 4.82%, down from the previous week's 4.91% and 5.29% a year ago. Average points were as follows: 0.7 for 30- and 15-year FRMs, 0.6 for five-year Treasury hybrids and 0.5 for one-year Treasury ARMs.

StoneWater Mortgage Corp., Tucson, Ariz., is "restructuring" its management team in the wake of a lawsuit filed against several members who had been part of the officers and directors of First Magnus Corp. Karl F.W. Young, president of StoneWater, in a statement said he and the others named in the suit would be stepping aside to focus their attention on defending themselves against the allegations while allowing StoneWater to continue without the distractions associated with it. The changes are effective on May 1. First Magnus Litigation Trust trustee Larry Lattig filed the suit. Among the 40 defendants named besides Mr. Young are Gurpreet Jaggi, former president and chief executive of First Magnus; Thomas Sullivan Sr., former chairman of First Magnus; Thomas Sullivan Jr., former vice president of First Magnus; Bill Gaylord, a former officer of First Magnus; Gary Malis, former chief financial officer of First Magnus and currently managing director of capital markets for StoneWater; and Dominick Marchetti, former First Magnus chief technology officer and current managing direct of loan production at StoneWater. Mr. Lattig alleges the seven men stripped $300 million from First Magnus to start StoneWater. The person answering a call at StoneWater for further details about the management change responded that the company was not answering media inquiries at this time.

Fitch Ratings, Chicago, has dropped Republic Mortgage Insurance Co.'s issuer financial strength rating from "A+" down to "BBB". The rating agency said it feels there is a reduction in the level of commitment at RMIC's parent company Old Republic Corp. to provide additional capital to the mortgage insurer; as a result RMIC is now being rated on a "stand alone" basis. The title insurance subsidiary, Old Republic Title Group, kept its IFS of "A+" but the rating was placed on Ratings Watch Negative in part because of operating results that continued to be challenged by the current operating environment. ORI lost $53.9 million ($0.23 per share) in the first quarter 2009, compared with a loss of $19.0 million ($0.08 per share) one year prior. RMIC had an operating loss of $144.6 million, compared with a loss of $122.3 million one year prior, while Old Republic Title had an operating loss of $9.0 million, an improvement over a loss of $12.6 million one year prior. ORI had previously purchased stock in MGIC Investment Group and The PMI Group as a long-term investment. As of March 31, 2009, those investments had an original cost of $416.4 million; an impaired cost of $106.8 million and a market value of $32.1 million.

Sales of single-family existing homes fell 2.5% in March after a bump up in February, but The National Association of Realtors is noticing more first-time homebuyers entering the market. The group reported that sales of existing single-family homes fell from a seasonally adjusted annual rate of 4.22 million in February to 4.1 million in March. "The share of lower priced home sales has trended up, indicating a return of many first-time homebuyers, which we also see in a parallel member survey," said NAR chief economist Lawrence Yun. "Sales in the upper price ranges remained stalled because of higher interest rates on jumbo loans," he added. The median price of a home sold in March was $174,900, down 11.5% from a year ago. IHS Global Insight economist Patrick Newport expects sales will pick up in the third quarter after house prices drop further, lending increases and first-time homeowners "jump into the market in great numbers to take advantage of the tax credit (worth up to $8,000) that expires Dec. 31.

An increase in a Federal Housing Finance Agency housing price index during February marks the first time it has risen two consecutive months since early 2007. The HPI that tracks Fannie Mae and Freddie Mac purchase mortgage transactions rose 0.7% in February and 1% in January. It last saw two consecutive months of increases in March and April of 2007. Prices in the Pacific Coast states rose 3.8% in February where a large proportion of sales involve foreclosed properties and short sales, particularly in California. FHFA senior economist Andrew Leventis said the agency's HPI is picking up a large proportion of distressed sales — contrary to the belief among some economists that the GSE-based index does not include REO sales. In the fourth quarter, "about 50% of our sample for California involved distressed sales," Mr. Leventis said. For the 12 months ending in February, the FHFA HPI was down 6.5%. "The U.S. index is 9.5% below its April 2007 peak," the government-sponsored enterprise regulator said.

An increase in a Federal Housing Finance Agency housing price index during February marks the first time it has risen two consecutive months since early 2007. The HPI that tracks Fannie Mae and Freddie Mac purchase mortgage transactions rose 0.7% in February and 1% in January. It last saw two consecutive months of increases in March and April of 2007. Prices in the Pacific Coast states rose 3.8% in February where a large proportion of sales involve foreclosed properties and short sales, particularly in California. FHFA senior economist Andrew Leventis said the agency's HPI is picking up a large proportion of distressed sales — contrary to the belief among some economists that the GSE-based index does not include REO sales. In the fourth quarter, "about 50% of our sample for California involved distressed sales," Mr. Leventis said. For the 12 months ending in February, the FHFA HPI was down 6.5%. "The U.S. index is 9.5% below its April 2007 peak," the government-sponsored enterprise regulator said.

Despite an overall decline in year-to-year sales and prices in March, the Houston housing market is entering the traditionally strong spring buying season on an upbeat note, according to the Houston Association of Realtors. While single-family home sales in March dropped 16.1% from the same period a year ago, they were up 27.8% from February, HAR reported. The median selling price for Houston area houses fell 4.4% in March to $145,000, but even at that, it was the highest monthly median so far this year. And when foreclosure sales are removed from the analysis, HAR said the median was flat at $168,000. Unfortunately, foreclosures still accounted for one in every four sales in the area in March. But that figure also is lower than the 34% share reported in January and the 28% share noted in February. The median price of repossessed houses that were sold in March was $84,000, an 11.3% dip from $94,700 a year ago. "It's too soon to predict exactly when the Houston real estate market will be in healthier territory, but the recent moderation in sales and pricing trends is an encouraging sign," said Vicki Fullerton, HAR chair and broker of record at RE/MAX of The Woodlands & Spring.

Refinancings are still driving gains in the Mortgage Bankers Association's Market Composite Index. The overall measure of mortgage applications increased 5.3% on a seasonally adjusted basis to 1172.2 from 1113.2 during the week ended April 17, according to the MBA's Weekly Mortgage Applications Survey. The increase in refis happened even though there was a slight increase in the average contract interest rate for 30-year fixed-rate mortgages. The rate inched up to 4.73% from 4.70% but points (including the origination fee) decreased to 1.12 from 1.23 for loans with 80% loan-to-value ratios, according to the association. On an unadjusted basis, the index increased 5.3% compared with the previous week and increased 76.9% compared with the same week one year earlier. The Purchase Index decreased 4.2% to 253.0 from 264.1 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 7.7% to 6540.7 from 6071.7 the week prior. Refinancings increased to 79.7% of total applications from 77.8% the previous week, while adjustable-rate mortgages accounted for 1.4% of applications, down from 1.5% the week prior, the MBA said. The MBA can be found online at http://www.mortgagebankers.org.

PNC Financial Services plans to close Capstone Realty Advisors, its commercial mortgage banking unit, as part of an ongoing reorganization plan, National Mortgage News has learned. According to Fred Solomon, a spokesman for PNC, the decision to close Capstone was due in part to the current economic landscape. "We determined Capstone did not align with PNC's core business model," he said. Capstone's existing loans in its portfolio will be reassigned to various departments and subsidiary companies of PNC that are the most well-equipped to handle the loans. Mr. Solomon could not specify when the closing will go into effect. About a month ago PNC decided to pull the plug on the warehouse lending operation of National City, a troubled bank it bought at yearend.

United Guaranty Corp., the Greensboro, N.C.-based mortgage insurer owned by American International Group, will remain as a subsidiary of that company following its split with AIU Holdings LLC. AIU is the special purpose vehicle that will be the holding company for AIG's commercial insurance, foreign general insurance and private client groups. Under the terms of the plan, AIG will purchase AIU's interests in UGC and two other AIG units to further separate the property casualty operations. The sales improve the quality of AIU's capital, the company said.

All but three states have committed to join the Nationwide Mortgage Licensing System, and 15 have already enacted a licensing process that meets the standards spelled out in Title V of last year's Housing and Economic Recovery Act, according to the latest count from the Conference of State Bank Supervisors. Under Title V, the Secure and Fair Enforcement Mortgage Licensing Act, all mortgage originators must be licensed or registered with the NMLS, which was launched 15 months ago by CSBS in collaboration with the American Association of Residential Mortgage Regulators. Currently, 24 states and Puerto Rico use the system to manage licensees, and 10 more states should be on the system by the end of the year, CSBS's William Matthews said at the Mortgage Bankers Association's National Secondary Market Conference in Chicago. All states save for Nevada, Ohio and Minnesota will be on the system by the end of 2010, Mr. Matthews told the conference. The system is now managing more than 96,000 licenses, he also reported, and tracking some 15,000 companies, 10,000 branches and 71,000 loan officers. Through NMLS, lenders, bankers, brokerage companies and loan officers in participating states are able to complete a single application online, regardless of the number of states in which they work. Data is housed in a centralized repository available to regulators, and licensees can access their records through the NMLS website to update, amend and renew their licenses.

Net losses on commercial real estate investments totaling $1 billion, in addition to widening debt-related credit spreads, contributed to Morgan Stanley's overall $177 million net loss for the first quarter. The firm said that while some lines of business fared well during the first quarter its results were negatively impacted by a $1.5 billion decrease in net revenues related to the tightening of its credit spreads on certain of its long-term debt and net losses of $1 billion on investments in real estate, "amidst the industry-wide decline in this market." Morgan Stanley also said its asset management unit took a pretax loss of $600 million due to "losses on real estate principal investments in the merchant banking business."

Flagstar Bancorp Inc., Troy, Mich., saw its residential mortgage volumes increase to $9.5 billion in the first quarter from $5.4 billion the previous three months, but said that under its accounting methodology it had to take a net loss for the period. Flagstar said it has adopted the fair value method of accounting for mortgages it originates for sale and thus cannot capitalize and defer recognition of loan fees as it had done previously; it also can no longer defer recognition of a portion of its expenses. It had $32.9 million in loan fees during the quarter and saw a gain on loan sales of $195.7 million. Flagstar also took a $158.2 million provision for loan losses in the first quarter. Nonperforming residential first mortgage loans increased from $432.6 million at the end of last year to $561.5 million at the end of the first quarter, while nonperforming commercial real estate mortgages increased from $164.4 million to $198.3 million during the same time frame. Overall, the company's net loss to common stockholders for the first quarter was $67.4 million ($0.76 per share), as compared with a loss of $10.6 million ($0.18 per share) for the same period one year prior.

Wells Fargo & Co., the nation's second largest residential servicer, said Wednesday that 7% of its $1.6 trillion "owned" servicing portfolio was in some stage of delinquency as of March 31, but mortgage funding volumes and overall earnings were strong. Dollar-wise the delinquencies represent $112 billion in mortgages. Releasing its 1Q results, the San Francisco-based bank also announced loan charge-offs on its mortgage portfolio including: second liens ($847 million), one- to four-family ($391 million), and commercial mortgages ($556 million). The charge-offs include the mortgage operations of Wachovia Corp., the troubled bank it bought at year-end. Despite all the bad mortgage servicing news, Wells said it earned $3.05 billion in the first quarter, a record. The bank funded $101 billion in home mortgages during the period, a 55% gain from the same period a year ago. It has a mortgage application pipeline of $101 billion.