Originations

Fitch Ratings, Chicago, has downgraded the issuer default rating of Stewart Information Services Corp., Houston, to 'BBB' from 'BBB+'. Fitch has also downgraded the insurer financial strength ratings of Stewart Title Guaranty Co., to A- from A. The Rating Outlook has been revised to Negative from Stable. This action was driven by deterioration in Stewart's absolute and risk adjusted capital levels in the fourth quarter of 2008. "An area of concern is Stewart's debt structure whereby the $107.6 million of unsecured debt may be called for any reason by the issuing banks. This constraint places an additional liquidity strain for the company particularly given the current stressful environment. Favorably, the company continues to reduce the amount outstanding by paying the obligations as they mature. Of the $62.4 million due this year approximately half has already been extinguished," Fitch said. The agency added that the company's ratings had been based on the assumption that technology investments may have allowed the title unit to show better margins than its peers in a down market, but this has not been the case.

SigniaDocs, Houston, has integrated its electronic vault technology with Equifax's identity verification engine to address their respective users' interest in using secure automation to counter increasing ID fraud through means in line with new federal rules. The engine, which is called Equifax Secure's eIDverifier, verifies online mortgage applications and the company promises borrower identification that is compliant with the Federal Trade Commission's Fair and Accurate Credit Transactions Act red flag rules. The rules, which first went into effect in November 2008 and are set for full enforcement as of May 1, require companies to look out for and address potential indicators that may be signs of ID fraud. A February report by Javelin Strategy & Research, San Francisco, indicated that the number of identity fraud victims increased 22% to 9.9 million adults in the United States in 2008.

Manhattan Bancorp, Los Angeles has agreed to invest in a new mortgage-related capital markets and advisory business with Bodi Advisors Inc. and a new MB subsidiary called MB Financial Services Inc. The three entities plan to capitalize a new limited liability company that will conduct business under the name BOM Capital LLC. BOM Capital is slated to focus on the trading of residential mortgage-backed securities and whole loans for the accounts of customers and the company will be positioned to potentially expand into the origination, brokerage and sales of mortgages. Manhattan Bancorp, which is the holding company of Bank of Manhattan, is set to initially own a 70% stake in BOM Capital with Bodi retaining a 30% stake.

The Market Composite Index, an overall measure of mortgage applications, increased 11.3% on a seasonally adjusted basis to 723.4 from 649.7 for the week ended March 6, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The catalyst for the move was the average for the 30-year fixed-rate mortgage falling below the 5% barrier for the third time this year. The first time was the week of Jan. 9, when the average was 4.89%, and the second was the week of Feb. 13, when the average was 4.99%. For the current week, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.96% from 5.14%, with points (including the origination fee) increasing to 1.16 from 1.05 for loans with 80% loan-to-value ratios, the association said. On an unadjusted basis, the index increased 11.6% compared with the previous week and 5.7% compared with the same week one year earlier. The Purchase Index increased 7.1% to 253.3 from 236.4 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 13.3% to 3470.7 from 3063.4 the week prior. Refinancings decreased to 67.9% of applications from 66.9% the previous week, while adjustable-rate mortgages accounted for 2.3% of applications, unchanged for the previous week, the MBA said. The MBA can be found online at http://www.mortgagebankers.org.

The Senate has approved final passage of an omnibus appropriations bill that increases FHA's commitment level to $315 billion for this fiscal year, up from $185 billion in FY 2008. Ginnie Mae, which securitizes Federal Housing Administration and other government-backed mortgages, also is getting a $100 billion increase in its commitment level to $300 billion. Lenders originated $66.4 billion in FHA single-family loans in the fourth quarter of FY 2008, which ended Sept. 30. In the first quarter of FY 2009, FHA endorsements totaled $71.9 billion. It appears FHA loan production could easily hit $300 billion as many lenders are using FHA loans to modify and refinance nonprime loans. Congressional appropriators allotted $13 million to the HUD Inspector General to keep a closer watch on the FHA single-family program. The appropriators also instructed the Government Accountability Office to determine whether the Inspector General's office has enough resources to audit FHA's "expanded role" in refinancing subprime, Alt A and other home mortgages.

Rep. Eddie Bernice Johnson, D-Texas, plans to introduce legislation to modernize the Community Reinvestment Act, a measure that reportedly would, among other things, extend CRA requirements to large, mainstream credit unions as well as independent mortgage companies, securities firms, insurance companies and all affiliates of holding companies. The bill has already been denounced by Fred Becker, president of the National Association of Federal Credit Unions, as unnecessary. "Credit unions...have a solid history of serving those of lesser income and minority applicants," Mr. Becker said in a statement. But David Berenbaum, executive vice president of the National Community Reinvestment Coalition, said such a "very significant expansion" of CRA to non-banks is long overdue. "We need to reach all of today's players," he said at the Consumer Bankers Association's annual Community Reinvestment Act Conference in Washington. According to Mr. Berenbaum, the bill by the Dallas legislator, a former chair of the Congressional Black Caucus, will require non-banks to meet tests similar to those institutions already covered by the 32-year-old law, but would "account for differences in their products and capacities." Rep. Johnson is scheduled to hold a press conference Friday in conjunction with NCRC's annual legislative conference.

Already ubiquitous for its credit scoring technology, Fair Isaac Corp., Minneapolis, has officially adopted the brand 'FICO' as its corporate identity. "The FICO brand means empowerment, innovation and value...qualities that we've earned over time, that mean a great deal to our clients and partners, and that distinguish us in the marketplace," said Laurent Pacalin, chief marketing officer at FICO. The company will retain Fair Isaac Corp., as its legal name, and its NYSE ticker symbol, FIC. Effective immediately, however, the company logo, website and all other company materials will reflect its new identity: FICO. "The use of the name FICO is a simplification of the company's identity, not a change in strategy," said Mark Greene, FICO chief executive. "Our commitment remains strong as ever to our clients' businesses. We will continue to offer the full breadth of analytics and decision management products and services they need, and to operate in the geographic areas of the world that matter most to them."

Mark Korell, who once headed the nation's largest mortgage banking firm, has joined JPMorgan Chase and will assist the bank in regard to what he calls "cross strategies" tied to its correspondent lending group.Mr. Korell confirmed that he's joining JPM, but offered no other details on what exactly he'll be doing for the company. JPM is the parent of Chase, both the nation's third largest residential funder and servicer.

Single-family originations by commercial and savings banks totaled $214.6 billion in the fourth quarter, down only 15% from a year ago and 6% from the previous quarter, according to Federal Deposit Insurance Corp. data.Wholesale loan production held up surprisingly well, totaling $148 billion in the fourth quarter, down only 8.6% from a year ago and 6.1% from the previous quarter. Thrifts originated $52.3 billion in 1-4 family loans in the fourth quarter, down 21% from the third quarter, according to the Office of Thrift Supervision. Compared to the fourth quarter of 2007, loan production at OTS-regulated thrifts is down 64% -- mainly due to the failures of Washington Mutual and IndyMac in the third quarter. Meanwhile, an FDIC report shows the delinquency rate on single-family loans held by banks and thrifts jumped dramatically in the fourth quarter. Loans 90 days or more past due or in non-accrual status hit 4.89%, up more than 100 basis points from the third quarter.

Bank of America funded $1.47 billion in reverse mortgages in the fourth quarter, ranking first nationwide, according to preliminary survey figures compiled by National Mortgage News and the Quarterly Data Report.BoA's reverse production business soared by 182% compared to the same period in 2007. Wells Fargo & Co. ranked second among reverse lenders, originating $1.38 billion, a 7% gain.

Zacks Equity Research predicts that when Freddie Mac releases full-year results shortly the GSE will have lost $39.50 a share. Meanwhile, the Chicago based research firm — which has a "sell" rating on the government controlled GSE — says the company will lose $13.12 a share in 2009, and $9.81 next year. In trading Tuesday, Freddie's shares were selling for 39 cents each. "Though recently the government laid out an expanded role for the GSEs in the housing market as part of its Homeowner Affordability and Stability Plan, we anticipate the price volatility to continue as the market looks for further information on the future structure of the GSEs and their role," Zacks says in a new research note. "Further, as the housing situation continues to worsen, we anticipate higher losses and write-offs. As a result, the conservatorship is expected to continue for a long time and this will yield no value to the common shareholders of the company."

Central States Mortgage, Wauwatosa, Wisc., which provided residential origination services to more than 250 credit unions, shut its doors on Monday, the second closure of a major CU-related mortgage firm in as many months.CSM is owned by 25 credit unions and the Wisconsin Credit Union League. Central States originated $538 million in residential loans in 2008, compared to $707 million the year before. The lender has been embroiled in controversy over the past eight months -- first with the firing of its CEO and founder Richard Jungen, then with a suit claiming Mr. Jungen defrauded it of $15 million through a secondary funding vehicle he owned called Interim Funding. (The alleged fraud took place while he was still managing Central States.) Members United Corporate FCU of Illinois, which provided a warehouse line of credit to Central States, is also preparing to write-off millions of dollars in loans to CSM. A message at the Central States switchboard this morning says the company has suspended operations. Mr. Jungen founded Central States in 1984, then sold a majority stake to the credit unions in 1997. He continued to head the operation until last July when he was fired.

Titan Lenders Corp., Denver, has launched a warehouse lending operations service platform to facilitate community bank and credit union entry into warehouse lending, a sector that is badly in need of liquidity. Titan said the platform will help depositories sustain a prudent level of due diligence, compliance and profitability when offering bridge financing to non-depository mortgage bankers. Mary Kladde, president of Titan, has been outspoken in the need for an increase in the availability of warehouse funds, even going as far as calling for the government to use Troubled Asset Rescue Program money for this purpose. (The Mortgage Bankers Association has done the same.) Titan will provide back-office outsourcing services on a per transaction basis. "Regional banks, community banks and credit unions could be great resources for local mortgage bankers that have lost, are in risk of losing, or need to increase the capacity of their warehouse line, at a time when purchase and refinance activity is picking up," said Ms. Kladde.

Reeling from charges related to its mortgage holdings, the Federal Home Loan Bank of Seattle reported deep losses late Monday and became the first bank in the system to exhaust its cushion of retained earnings.The Seattle Home Loan Bank remains positively capitalized with stock used to satisfy membership requirements and advances but the depletion of the retained earnings fund, which totaled $162.3 million on Sept. 30, leaves the bank with almost $1.8 billion in total capital. That is below the regulatory risk-based capital requirement, which means the Home Loan bank is barred from paying dividends to shareholders or repurchasing capital stock. Less clear is whether the Seattle Home Loan Bank "broke the buck," which involves lowering the value of its par-value stock. The Home Loan bank's stock is redeemed in five years so the shares could theoretically regain value if they were damaged in the current climate. Such an occurrence would be a first in Home Loan Bank history and could have dire consequences for members of the Seattle bank.

The Radian Group, the nation's third largest mortgage insurance company, said as of March 15th it will no longer write new policies on "attached" condominium units.At press time the company could not be reached for comment. According to a new bulletin posted on the MI's website, the Philadelphia-based firm also will no longer insure construction-to-permanent loans and interest-only mortgages. In a new filing with the Securities and Exchange Commission, Radian says it expects to incur "significant" losses this year thanks to large claims on alt-A mortgages, high LTV loans, pool insurance and other products. In 2008 Radian had to pay claims on 110,553 first-lien primary defaults, an 82% increase from the year before. Two weeks ago Radian posted a 2008 net loss of $410 million. Its stock is trading at about $1.35 a share.

Single-family originations by commercial and savings banks totaled $214.6 billion in the fourth quarter, down only 15% from a year ago and 6% from the previous quarter, according to Federal Deposit Insurance Corp. data. Wholesale loan production has held up surprisingly well - totaling $148 billion in the fourth quarter, down only 8.6% from a year ago and 6.1% from the previous quarter. Thrifts originated $52.3 billion in 1-4 family loans in the fourth quarter, down 21% from the third quarter, according to the Office of Thrift Supervision. Compared to the fourth quarter of 2007, loan production at OTS-regulated thrifts is down 64% - mainly due to the failures of Washington Mutual and IndyMac in the third quarter. Meanwhile, an FDIC report shows the delinquency rate on single-family loans held by banks and thrifts jumped dramatically in the fourth quarter. Loans 90 days or more past due or in nonaccrual status hit 4.89%, up more than 100 basis points from the third quarter.

Central States Mortgage, Wauwatosa, Wisc., which provided residential origination services to more than 250 credit unions, shut its doors on Monday, the second closure of a major CU-related mortgage firm in as many months. CSM is owned by 25 credit unions and the Wisconsin Credit Union League. Central States originated $538 million in residential loans in 2008, compared to $707 million the year before. The lender has been embroiled in controversy over the past eight months - first with the firing of its CEO and founder Richard Jungen, then with a suit claiming Mr. Jungen defrauded it of $15 million through a secondary funding vehicle he owned called Interim Funding. (The alleged fraud took place while he was still managing Central States.) Members United Corporate FCU of Illinois, which provided a warehouse line of credit to Central States, is also preparing to write-off millions of dollars in loans to CSM. A message at the Central States switchboard this morning says the company has suspended operations. Mr. Jungen founded Central States in 1984, then sold a majority stake to the credit unions in 1997. He continued to head the operation until last July when he was fired.

Fitch Ratings, New York, has placed CMG Mortgage Insurance Co.'s insurer financial strength rating on Rating Watch Negative status, meaning it is likely to be downgraded. CMG is a joint venture between CUNA Mutual and PMI Mortgage Insurance Co., both of which own 50%. CUNA Mutual's IFS was cut from AA- down to A, which was the triggering action for the change in status. The CUNA Mutual downgrade, Fitch said, means that both owners of CMG have experienced downgrades related to deterioration in their capital levels. The rating agency had viewed the ownership structure as a positive, preventing either parent from extracting capital from CMG to the detriment of the other parent. CMG did not pay any dividends to its owners last year and there are no plans to pay dividends this year. "Fitch views the stress experienced by both parent companies and their respective weakened capital positions as raising the probability that both parents would need to extract capital from CMG MI at some point, and thus weakening the protection provided by the 50/50 ownership structure," the rating agency said, adding that if it does cut CMG's IFS, it would likely be limited to three notches. Currently, CMG's IFS "AA" and the downgrade could bring it to "A".

Fitch Ratings blamed deteriorating credit quality in SunTrust's prime mortgage portfolio for downgrading the Atlanta bank's long-term issuer default ratings. The rating agency dropped the company's IDR to 'A-' from 'A+'. "Although the credit problems still arise largely from its home equity, Alt-A mortgage, and residential construction portfolios, problems are beginning to surface in the company's core prime mortgage portfolio," said the rating agency. Additionally, Fitch is concerned that continued economic stress will weigh on SunTrust's commercial book, leading to increased credit problems in that portfolio. In Fitch's opinion, the escalating credit issues will facilitate significantly higher loan loss provisioning, which will make it difficult for SunTrust to return to profitability in 2009 and weaken its capital position.

The former CEO of KB Home, Bruce E. Karatz, has been charged with multiple counts of fraud and other crimes related to a stock option backdating scheme that bilked the homebuilder's shareholders out of millions of dollars.In addition to selling various types of homes, KB Home offers mortgage services in a joint venture with Countrywide KB Home Loans, which is now the property of Bank of America. KB also provides title and insurance services to homebuyers through a subsidiary. The 20-count indictment against Mr. Karatz charges the former chief executive with 15 counts of mail, wire and securities fraud, four counts of making false statements in reports filed with the Securities and Exchange Commission and one count of lying to the company's accountants. Mr. Karatz is expected to make an initial court appearance on March 26, 2009. "We will show a jury that Bruce Karatz, who as a CEO helped create 5,000 jobs and oversaw significant company growth, acted appropriately," said John Keker, Mr. Karatz's attorney, in a statement.