Originations

Mission Capital Advisors, LLC, a commercial, residential and consumer loan sale advisor with offices in New York, Florida and Texas, has hired Jason Cohen as a managing director in the firm's New York office. In his new role, Mr. Cohen will originate loan sales, trade loans and create loan sale financing platforms. For the past five years he was a managing director with the Ackman Ziff Real Estate Group, where his volume of deals completed exceeded $3 billion and he originated and placed senior debt, mezzanine debt, preferred equity, and equity for all types of real estate. "Jason joins us at a time when there is a significant amount of commercial and residential loan portfolios on the market, with an expected increase throughout 2009 and beyond," said David Tobin, principal at Mission Capital Advisors.

The average rate for a 30-year fixed-rate mortgage fell to 5.04% during the week ended Feb. 19 from 5.16% the previous week and from 6.04% a year ago, according to Freddie Mac. The 15-year FRM averaged 4.68%, down from the previous week when it averaged 4.81%. A year ago, the 15-year FRM averaged 5.64%. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.04%, down from the previous week when they averaged 5.23%. A year ago, the five-year ARM averaged 5.37%. One-year Treasury-indexed ARMs averaged 4.80%, down from the previous week when they averaged 4.94%. At this time last year, the one-year ARM averaged 4.98%. "Mortgage rates followed bond yields lower this week as recent economic reports suggest the economy is still slowing," said Frank Nothaft, Freddie Mac vice president and chief economist. Average points were as follows: 0.7 for 30-year FRMs, 0.6 for 15-year FRMs and five-year Treasury-indexed hybrids and 0.5 for one-year Treasury-indexed ARMs.

Arbor Realty Trust Inc. posted a net loss of $108.2 million for the fourth quarter of 2008, compared to net income of $15.3 million for the year-earlier period. Also during the quarter, the company recorded a $900,000 loss from its $10.2 million equity investment in the Alpine Meadows unconsolidated joint venture, a seasonal ski resort operation. This amount reflects Arbor Realty Trust's portion of the joint venture's losses, including depreciation expense of approximately $200,000, and was recorded in loss from equity affiliates and as a reduction to its investment in equity affiliates on the balance sheet. Arbor Realty Trust is a real estate investment trust that primarily invests in bridge and mezzanine loans, preferred and direct equity investments, mortgage-related securities and other real estate-related assets.

Spectrum Properties Multifamily Acquisitions, Inc., a newly-formed subsidiary of Charlotte-based Spectrum Properties, wants to purchase multifamily assets in markets located in the Southeast, Mid-Atlantic and Midwest regions of the U.S. According to John Gray, president of Spectrum Properties Multifamily Acquisitions, "We believe that there will be an opportunity to acquire apartments and student housing properties at a substantial discount to replacement value during the next few years." The subsidiary plans to own and manage $200-$500 million in real estate assets. Mr. Gray's investment rationale is based on acquiring apartment and student housing assets at a substantial discount to replacement cost due, in part, to expected refinancing problems on maturing loans as well as assets that were underwritten with over-aggressive assumptions. "Our objective is to purchase properties at very attractive pricing, manage them intensively during a three to seven year holding period and then sell them for a substantial profit that produces a handsome return for our investors," he said. The new company is looking to purchase class A, B and C apartments; student housing properties that are located near thriving universities and garden, mid-rise and high-rise property types. It has a preference for portfolios as opposed to single properties.

Corus Bankshares Inc. and its subsidiary Corus Bank NA, both of Chicago, have entered into a written agreement with the Federal Reserve Bank of Chicago and a consent order with the Office of the Comptroller of the Currency. Corus Bank is a nationwide construction lender, specializing in condominium, office, hotel, and apartment projects. These agreements include several requirements related to loan administration as well as procedures for managing the bank's growing portfolio of foreclosed real estate assets. "The regulatory agreements are the result of ongoing discussions between the OCC, the FRB and Corus' senior management over the last few months to address the negative impact that current market conditions are having on Corus and how best to resolve them. We believe the remedial measures agreed upon with the regulators are necessary to address asset quality deterioration and overall risk management," said Robert J. Glickman, president and chief executive. He added the company's board is actively exploring strategic alternatives, including a merger or capital infusion. Corus' outstanding commercial real estate loans and unfunded construction commitments total approximately $5.8 billion.

For the second consecutive year, Stewart Information Services Corp., Houston, has posted a full year loss, but a fair amount of the loss is due to agent fraud. The title company lost $234.5 million ($13.37 per share) for the full year 2008, compared with a loss of $40.2 million ($2.21 per share) for 2007. In the fourth quarter 2008, Stewart lost $158.0 million ($8.72 per share), vs. a loss of $31.3 million ($1.74 per share) one year prior Included in the losses are a strengthening of policy reserves by $32.0 million as a result of unusually large claims payments related to policies issued in 2005, 2006 and 2007. An additional $41.7 million of charges are related to large title losses and defalcations attributable to independent agents of the company. "This difficult economy placed significant financial pressures on owners of independent title agencies which resulted in increased escrow fund defalcations and, therefore, higher title losses for us," said Malcolm S. Morris, chairman and co-chief executive. "To address this, and to reduce the overhead costs associated with low-premium volume agents, we cancelled more than 2,500 agencies during 2008. This action, while lowering revenues an insignificant amount, results in an improved risk profile and profit potential for us in future periods."

CU National Mortgage, a private label funder that served the nation's smaller credit unions, closed its doors recently, according to industry sources. As MortgageWire went to press, CUNM officials could not be reached for comment. A subsidiary of U.S. Mortgage Corp. of Pine Brook, N.J., the company was founded 13 years ago. USMC officials also could not be reached for comment. According to The Credit Union Journal, CUNM had 50 offices and 200 employees. CUMAnet, in Basking Ridge, N.J., told the newspaper that it would assist CUNM's credit union clients. "There are many, many good people at CU National and our hearts go out to them during this difficult time," said CUMAnet president Daniel von Schaumburg. "Even though they are our direct competitor in the credit union space, we do respect them for their work in providing credit unions with mortgage lending packages to members who want to become homeowners."

Obama administration officials have decided to limit refinancings of "underwater" Fannie Mae and Freddie Mac mortgages to a loan-to-value ratio of 105% so the new mortgages can be securitized, according to Federal Housing Finance Agency director James Lockhart. "That is why the line is drawn there," Mr. Lockhart said at a meeting of government accountants. The refinancing program is designed to lower borrowers' mortgage rates, which the Federal Reserve Board and Treasury Department are trying to drive down by aggressively purchasing GSE mortgage-backed securities. About 75% of the mortgages with LTVs above 80% the government sponsored enterprises own or guarantee fit under the 105% cap. If the program is successful, four million to five million mortgages may be refinanced. Servicers are already "overwhelmed," Mr. Lockhart said, and they didn't want to push the LTV any higher because of capacity issues. He also noted that the GSEs have other loan modification programs to deal with more problematic underwater mortgages.

The Market Composite Index, an overall measure of mortgage applications, increased 45.7% on a seasonally adjusted basis to 875.3 from 600.6 for the week ended Feb. 13, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. This decline is once again driven by interest rates moving lower, causing consumers to consider refinancing, although there was a slight increase in purchase activity as well. On an unadjusted basis, the index increased 47.7% compared with the previous week and 5.2% compared with the same week one year earlier. The Purchase Index increased 9.1% to 257.3 from 235.9 one week earlier on a seasonally adjusted basis, while the Refinance Index increased 64.3% to 4472.9 from 2722.7 the week prior. Refinancings increased to 74.2% of applications from 66.7% the previous week, while adjustable-rate mortgages accounted for 1.7% of applications, down from 2.5% for the previous week, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.99% from 5.19%, with points (including the origination fee) increasing to 1.37 from 1.2 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Barclays on Tuesday shuttered EquiFirst Corp. of Charlotte, its subprime lending arm. EquiFirst - which at one time had 9,000 approved brokers in its wholesale network - stopped disclosing its subprime production a year ago. Two years back EquiFirst ranked among the top 20 A- to D credit funders in the U.S. EquiFirst told its mortgage brokers on Tuesday that only completed application packages would be processed for funding and that no new loan submissions would be accepted. The move comes about two years after the British bank acquired EquiFirst from Regions Financial. Very little in the way of subprime residential loans are being originated today unless they can be sold to Fannie Mae or Freddie Mac. The private label subprime market has not functioned since early 2008 and shows little hope of coming back any time soon.

The Mortgage Bankers Association generally likes President Barack Obama's foreclosure plan but questions if $75 billion over three years will be enough to solve the problem. Josh Denney, associate vice president, public policy and government affairs, said MBA thinks the plan will "enhance servicers' ability to help borrowers in trouble and those who may be on the edge of trouble." Mr. Denney, who spoke to MortgageWire at MBA's annual servicing conference in Tampa, said the group was pleased that the $75 billion price tag was greater than the $50 billion figure that had been previously reported but said "it's unclear if $75 billion will be enough." He said the group is pleased with incentive payments to servicers in the plan and thinks a buy-down provision between lenders and the government to reduce debt-to-income levels to 31% is "a good structure." MBA would prefer to see incentives to Freddie Mac and Fannie Mae to make refinancings easier to go higher than 105% loan-to-value to "open it up to those a bit more underwater." The group remains opposed to judicial cramdowns other than to certain subprime mortgages of certain vintages, and Denney said the plan "doesn't seem to address mortgages in private-label securities." MBA would like to see a refi plan to assist those people who can't get loan mods because of legal provisions complicating access to a modification.

The Obama administration is creating a Fannie Mae and Freddie Mac refinancing program to give 4 million to 5 million homeowners a chance of obtaining lower interest rate loans even though the value of their homes has eroded and they are having difficulty refinancing under existing standards. This new program is limited to homeowners that owe more than 80% of the value of the house and currently have conforming loans owned or guaranteed by the government-sponsored enterprises. Fannie and Freddie can waive mortgage insurance requirements in refinancing these loans, unless the borrower has private mortgage insurance. In that case, the borrower will continue to pay insurance premiums on the new mortgage. This program will provide "access to low-cost refinancing for responsible homeowners suffering from falling home prices," according to a summary of the president's foreclosure prevention plan. President Barack Obama, Treasury secretary Timothy Geithner and Housing secretary Shaun Donovan unveiled a comprehensive plan to address the foreclosure crisis at an event in Mesa, Ariz.

Residential servicing firms could reap rewards of up to $2,000 per year (per loan) under the White House's new initiative to help struggling homeowners. Under the "stability" portion of the Obama administration's $75 billion Homeowner Affordability and Stability Plan, servicers will receive an upfront payment of $1,000 per loan for each eligible modification. As long as the borrower stays current on his modified loan the same servicer can receive a second payment of another $1,000 at year-end. The White House/Treasury/HUD program also is offering a $2,000 incentive to lenders and mortgage holders if they modify "at risk" loans before the borrower actually goes delinquent. Under this clause the servicer can make $500 and the investor $1,500 per loan. Roughly $75 billion in taxpayer money will be used to help 3 million to 4 million homeowners that might lose their homes to foreclosure.

Barclays on Tuesday shuttered EquiFirst Corp. of Charlotte, its subprime lending arm. EquiFirst -- which at one time had 9,000 approved brokers in its wholesale network -- stopped disclosing its subprime production a year ago. Two years back EquiFirst ranked among the top 20 A- to D funders in the U.S. EquiFirst told its mortgage brokers on Tuesday that only completed application packages would be processed for funding and that no new loan submissions would be accepted. The move comes about two years after the British bank acquired EquiFirst from Regions Financial. Very little in the way of subprime residential loans are being originated today unless they can be sold to Fannie Mae or Freddie Mac. The private label subprime market has not functioned since early 2008 and shows little hope of coming back any time soon.

Commercial loan losses are mounting on balance sheets around the nation, but analysts said banks should not expect any dedicated government help on that front, according to a report in American Banker. Corporate borrowers are likely last in line behind homeowners and consumers when it comes to prioritizing federal aid, analysts said, though they said banks burdened by bad corporate loans should be able to get some indirect assistance from government initiatives already under way, like the Troubled Asset Relief Program and Term Asset-Backed Securities Loan Facility. If those programs work as intended by reviving other credit markets and bolstering consumer confidence, corporate loan quality should also improve, analysts said.

Colonial Properties Trust, a commercial REIT, reported a net loss of $107.2 million for the fourth quarter, compared to income of $3.2 million, for the same period in 2007. Results for the fourth quarter include a non-cash impairment charge of $116.9 million related to some of the REIT's "for-sale" residential properties and writedowns on land held for future development. "The balance sheet and liquidity will be our top priority in 2009," said company CEO Thomas H. Lowder. "We are reducing overhead, postponing any new development and focusing on operations." He added that the outlook for 2009 remains challenging. Colonial is based in Birmingham, Ala.

The Fitch Commercial Real Estate CDO Delinquency Index increased by 111 basis points in January as 20 newly delinquent loans pushed the index to 3.83% for January 2009, compared to 2.72% in December 2008. "The inherently transitional nature of CREL CDO collateral has resulted in an increasing number of these assets becoming delinquent or failing to meet expectations in this stressed economic environment," said Fitch senior director Karen Trebach. Fitch said it anticipates that delinquencies on loans backed by land for development, turnaround projects and construction properties will continue to increase as interest reserves burn off and sponsors become unable or unwilling to come out of pocket to cover debt service payments. Meanwhile, defaults on three 2007 vintage loans ranging in size from $130 million to $225 million led to a 27 basis point increase for January U.S. commercial mortgage-backed securities loan delinquencies to 1.15%, according to Fitch. "High-profile loans secured by larger properties, which were often not stabilized at transaction issuance, have begun to default," said Susan Merrick, managing director and head of the U.S. CMBS group. Fitch said it expects that performance defaults on larger loans will push up the loan delinquency index in coming months, to approximately 3% by year-end 2009. With pools consisting of many larger assets, the 2006 and 2007 vintages are likely to be the largest contributors to delinquencies.

Freddie Mac said there will be no change to its business relationship with three mortgage insurance firms recently downgraded by Moody's Investor Service. The GSE clarified that there is no change to the "Type I" mortgage insurer status it has assigned to Mortgage Guaranty Insurance Corp., Radian Guaranty Inc., or PMI Mortgage Insurance. All three were downgraded by Moody's Investors Service on Feb. 13 to below investment grade. The share price of all three fell sharply Tuesday, along with the overall market. Moody's also downgraded United Guaranty Inc., Genworth Mortgage Insurance Corp. and Republic Mortgage Insurance - but maintained investment grade ratings on all three of those firms. A call to Fannie Mae to confirm if that company was still treating these firms as Type I insurers was not returned by deadline. In a statement, Radian Group chief executive S.A. Ibrahim said Moody's action did not reflect the company's "substantial claims-paying resource and the improving quality of our mortgage insurance portfolio." He added the move should not affect Radian's ability to insure loans sold to Fannie Mae or Freddie Mac. MGIC and PMI said they had no comment about the downgrade.

PHH Corp., which owns the nation's ninth largest residential servicer, said its ability to borrow money under existing lines of credit will not be impacted by a ratings downgrade on its debt taken by Standard & Poor's. S&P lowered its ratings on the company, including its counterparty credit rating, to BB+/B from BBB-/A-3 and maintained a negative outlook on the company. PHH Mortgage of Mount Laurel, N.J. services roughly $144 billion in residential mortgages. Its credit facility, struck back in early 2006, is for $1.3 billion. PHH Mortgage is the nation's largest private label funder and servicer.

The pace of new home sales continued to slow in California - the nation's largest housing market - in December, according to new figures released by the California Building Industry Association. The latest sales and pricing report from the CBIA, in conjunction with Hanley Wood Market Intelligence, found that a paltry 1,117 units were sold in projects of 10 or more units in December. That's 59% fewer than the 2,695 units sold in December 2007. No sector of the for-sale market prospered: Sales of single-family homes were down 55%, townhouse sales were off 73% and condos were down 60%. "December is always slow for new-home sales," said Jonathan Dienhart, director of published research for HWMI, "but the problems with credit, consumer confidence and plummeting resale values made it an especially bad month." Mr. Dienhart said the December sales figures "should be close to the lowest absolute monthly sales number we see during this downturn." But he also warned that "the next couple of months are not likely to be much better."