Originations

Bank of America says that it will remain in the wholesale channel and even sees some potential growth in the broker lending niche. "We see opportunities in the wholesale business," said a company spokesman who called the decision by JPMorgan Chase to exit the channel "interesting." He added that, "We have the scale and ability to grow the relationships we have today." BoA, which bought Countrywide Financial Corp. this past summer, has 8,000 approved brokers working for the company. About two years ago CFC had 30,000 approved brokers. Since buying the lender speculation has been rampant that in time BoA would exit the channel but the bank has repeatedly shot down such speculation. According to figures compiled by National Mortgage News, BoA ranks sixth among wholesale lenders with a market share of 4.84%.

The incoming administration of Barack Obama wants to revamp the Hope for Homeowners program to make the Federal Housing Administration refinancing initiative more "effective," according to Shaun Donovan, Obama's nominee to be the new Housing and Urban Development secretary. Mr. Donovan told the Senate Banking Committee at his confirmation hearing that he is taking an active role in developing a "bold, comprehensive" foreclosure prevention effort that Mr. Obama has advocated. The former New York City housing commissioner and HUD deputy assistant secretary said the H4H program would be an "important piece" of the foreclosure prevention plan. And he said the Federal Deposit Insurance Corp. plan that provides loan guarantees for newly modified loans is "promising." But they want to make sure the incentives are structured to reduce re-defaults and minimize taxpayer costs. The Senate is expected to confirm Mr. Donovan to be the new HUD secretary next week after Mr. Obama is sworn in as president.

Taking umbrage at both JPMorgan Chase's decision to exit the wholesale channel and blaming brokers for poor loan quality, the current president of the National Association of Mortgage Brokers declared that the bank "will have a new competitor" on its hands. In an interview with National Mortgage News, NAMB chief Marc Savitt said, "Chase just dissolved a partnership. We are going to go out there and compete against them using other relationships. We will be using the products of others to go against their products." Mr. Savitt was also angered by comments a JPM spokeswoman made concerning retail loan quality being superior to wholesale. "Chase has told me that in person too -- that their retail delinquency rates are lower," he said. "But brokers do not approve loans. Brokers do not underwrite loans. Those decisions are made by the underwriter. That would be Chase." According to figures compiled by NMN and the Quarterly Data Report, Chase is the nation's largest wholesale funder (as of the third quarter). But Mr. Savitt said he is not particularly concerned about another large wholesaler exiting the market. "There are other lenders with programs out there," he said. He added that as recently as December a representative from Chase told him the bank would be remaining in wholesale. But a source at the bank said the move away from wholesale had been in the works for several months.

Unemployed mortgage professionals should look into working in Billings, Mont., according to one workforce solutions provider. Adecco USA says it has demand for more than 200 mortgage professionals in that locale, which it said is one of the strongest job markets in the nation and has a low unemployment rate of 3.3%. Tasha Mills, Adecco's Billings branch manager, said, "the need for mortgage talent in the area is very hot right now. Mortgage professionals who were negatively impacted by the housing crisis are now in high demand again and should take the opportunity to apply for these great mortgage industry jobs now."

The inventory of distressed homes in Orange County, Calif. - one of the hardest hit real estate markets in California - dropped slightly over the past few weeks. According to a report by Altera Real Estate of Mission Viejo, the inventory of distressed homes (short sales and foreclosures) fell by 401 units over the past month, bringing the total to 5,118, the lowest reading since March of 2008. Distressed homes account for 45.3% of the homes-for-sale inventory, a slight decline over the past few weeks. Altera's findings were first reported by The Orange County Register. Roughly 79% of distressed homes are priced under $500,000.

The commercial real estate market is facing its worst year since the S&L and banking crisis of the early 1990s, according to a new report by Merrill Lynch. "Our outlook is for property values to fall and CMBS credit problems to ratchet up," writes commercial mortgage-backed securities analyst Roger Lehman in a new report. Merrill estimates that $23.5 billion in CMBS loans are set to mature this year - most of it conduit issuance. Property owners have been complaining for months that banks and other funders are unwilling to either lend or renegotiate loans at favorable terms. The Treasury Department is toying with the idea of using Troubled Asset Relief Funds to jump start new issuance in the CMBS market but nothing has been decided yet. How future TARP funds will be spent is now up to the incoming Obama Administration.

The Mortgage Bankers Association wants to raise the net worth requirements for mortgage brokers originating Federal Housing Administration loans from $63,500 to $150,000. But the mortgage brokers want to do away with net worth requirements altogether. "Net worth requirements serve to assure that a vendor has a stake in the mortgage industry and they also provide some resources for a borrower to seek in the event of misfeasance," MBA chairman chief executive John Courson told a congressional panel. The National Association of Mortgage Brokers noted that net worth could disappear quickly as evidenced by the recent failure of hundreds of mortgage bankers, lenders and Wall Street firms over the past two years. NAMB past president George Hanzimanolis suggested that all originators should contribute to an FHA recovery fund instead and eliminate net worth requirements. "There is no evidence to demonstrate that loans originated by high net worth originators perform better that those with a low net worth," Mr. Hanzimanolis testified. The current FHA net worth requirement for mortgage bankers is $250,000. MBA would support a "reasonable increase," Mr. Courson said.

Impac Mortgage Holdings Inc., Irvine, Calif., said that its common stock underwent the planned 1-for-10 reverse stock split and began to trade on a split-adjusted basis at the open of business on Jan. 12. The stock is now traded-over-the-counter under the new ticker symbol "IMPM." Impac primarily invested in non-conforming alt-A mortgage loans and to a lesser extent small balance commercial and multi-family loans.

In what is being billed as "the largest-ever" simultaneous Internet auction of residential properties, 79 loft apartments in a downtown Los Angeles condominium are up for grabs to the highest bidders. Unlike traditional high-pressure auctions, which sell units one at a time, bidders will be able to see the amount other buyers are bidding for every condo in the Rowan during the entire auction on large bidding screens at the auction site or on their own computers through a secure Internet site. The auction clock resets every time a new bid is received so bidders have ample time to consider their next step. The auction ends when there has not been a bid submitted on any of the properties for a specified period of time. Developed by auction pioneer William R. Stevenson, president of Intelligent Market Systems, the proprietary software used for the auction gives potential buyers "ample time to make decisions and switch to other units if they are outbid." This versatility benefits everyone, says Mr. Stevenson, "including the seller who often gets better results because buyers are able to maximize their opportunities to purchase the home they most want." Buyers interested in participating in the auction must first secure pre-qualification for a loan from the seller's preferred lender, complete a registration form and put down a "good fund" deposit. Only 30 of the building's 206 apartments have been sold to date. But if the auction is successful, the property will be more than 50 percent sold at its grand opening.

Brookfield Properties Corp., New York, has made a series of promotions and additions to its executive management team. Steve Douglas has been named president of Brookfield Properties Corp. He was most recently senior managing partner at an affiliated company, Brookfield Asset Management, focused on that company's operations and international property portfolio. Dennis Friedrich has been named president and chief executive of U.S. Commercial Operations. Mr. Friedrich was formerly president and chief operating officer of U.S. Commercial Operations. Paul Schulman has assumed the post of COO of U.S. Commercial Operations. He was formerly senior vice president and head of the company's Washington region. Tom Farley has been named president and chief executive of the Canadian Commercial Operations, where he was formerly president and COO. The new COO of Canadian Commercial Operations is Jan Sucharda. Brookfield Properties CEO Ric Clark has taken on the added responsibility of overseeing Brookfield Asset Management's global real estate activities with the title of senior managing partner and CEO.

First Industrial Realty Trust Inc., Chicago, has hired Bruce W. Duncan as president and chief executive. He presently serves as chairman of Starwood Hotels & Resorts Worldwide Inc., a position he has held since 2005. Mr. Duncan also served as Starwood's interim chief executive from April to September 2007. From 2002 through 2005, he was president and CEO of Equity Residential, the largest publicly traded apartment REIT. In a related move W. Ed Tyler, who has served as the company's interim chief executive since October 2008, has been appointed the new non-executive chairman of its board. Jay H. Shidler has resigned as chairman, but will continue to serve as a member of the board and the chairman of the investment committee.

Foreign real estate lenders may grow their activity by 58% in the United States this year, according to a trade group's survey of its investor members. "Our investor members have expressed a growing confidence and interest in U.S. real estate," said James A. Fetgatter, chief executive of the Association of Foreign Investors in Real Estate, Washington, D.C. Foreign RE lenders also plan to increase global lending by 54%, according to the survey, which was conducted in the early part of 2008's fourth quarter. Survey respondents ranked preferred property types as follows: multifamily, office, industrial, retail and hotels.

Jonathan L. Kempner, who was president and chief executive of the Mortgage Bankers Association until the end of last year, has accepted a position as an independent director of Behringer Harvard Multifamily REIT I Inc. Before joining MBA in 2001, he spent 14 years as president of the National Multi Housing Council. Said Robert S. Aisner, chief executive of Behringer Harvard, "Jonathan brings to this role more than two decades of experience encompassing all facets of the commercial real estate industry. He's developed extensive expertise in both the multifamily property sector and commercial lending, as well as deep relationships with leaders in both industries."

KDX Ventures, Boston, a partnership of DebtX and KEMA Advisors, will sell $144 million in multifamily and healthcare loans for the U.S. Department of Housing and Urban Development. The portfolio includes 15 multifamily loans and four healthcare loans, ranging in size from approximately $1 million to $30 million. The collateral is located in 12 states in the east, south and midwest. Investors may bid on any individual loan or on pre-determined pools of loans. "KDX Ventures is expecting strong interest in these HUD loans due to increasing demand for product from investors around the world," said DebtX chief executive Kingsley Greenland. "Over the past three months, a significant new number of investors have entered the whole loan marketplace. The increasing liquidity is likely to mean very active bidding for the HUD loans." The transaction announced today is the first since KDX Ventures signed a multi-year agreement with HUD in October to sell loans. Bids will be accepted at http://www.debtx.com on Feb. 4, 2009.

Equity Residential, Chicago, is cutting back on the number of planned development projects it will undertake and, as a result, will incur a non-cash charge in the fourth quarter of 2008 of approximately $115 million ($0.39 per share). The charge reflects impairments in the value of land holdings for five potential development projects that the company no longer plans to pursue. The impairment charge is the difference between each parcel's estimated fair value and current capitalized carrying value, which includes pursuit costs. The impairment charge does not affect the company's continued compliance with its financial or debt covenants. "We have said for some time that maintaining ample liquidity and credit capacity are our foremost priorities and as a result we would be very cautious regarding new development projects," said David J. Neithercut, president and chief executive. "Our view on development was solidified by the significant acceleration last fall in the deterioration in the credit markets and economy as a whole. We will not start any new projects for our own account until capital markets and the economy show signs of improvement." For more information on Equity Residential, visit http://www.equityresidential.com.

HFF Inc., a commercial mortgage banker based in Pittsburgh, has reduced its workforce by approximately 12%, equating to 57 positions nationwide. Nearly all of HFF's 18 offices were affected by the reductions during the fourth quarter. Its employee count now stands at 433, including 163 producers. As of the third quarter of 2008, total employees came to 490, including 174 producers. "we are aggressively seeking ways to take advantage of opportunities as well as ensuring we are operating as efficiently as possible which includes tightly managing operating costs and eliminating positions in offices or in lines of business where the business no longer supports these positions," states John H. Pelusi Jr., HFF's chief executive.

Credit Suisse thinks mortgage bankers will originate about $1.75 trillion in new home mortgages this year with refinancings accounting for 58% of the total. CS analyst Moshe Orenbuch notes that his forecast "is subject to variations that may be caused by public policy measures." CS thinks that a loosening of loan-to-value requirements could cause "a significant amount" of refi activity. In 2008 mortgage bankers funded about $1.6 trillion in one- to four-family originations, according to figures compiled by National Mortgage News and the Quarterly Data Report.

Edward Gotschall, co-founder of New Century Financial Corp. - once one of the largest subprime lenders in the nation - died late last week of natural causes, according to a report in The Orange County Register. He was 53. New Century's collapse is now the subject of a criminal investigation by the Department of Justice. Mr. Gotschall and three others founded New Century in 1995. He managed the books of the publicly traded company and worked with Wall Street investment banking firms. The company failed in early 2007. At one time, Merrill Lynch had considered buying it but passed on the deal. At its peak it was funding $60 billion in mortgages, according to the Quarterly Data Report.

The average rate for a 30-year fixed-rate mortgage as tracked by Freddie Mac fell for the 10th consecutive week in a row to another survey-record low of 5.01%, down from 5.09% the week before. "Since the end of October 2008, these rates have declined by almost 1.5 percentage points, or a payment savings of about $184 a month for a $200,000 loan -- an additional $11 dollars from last week," said Freddie Mac chief economist Frank Nothaft in the weekly report. The average 30-year rate was up from 5.87% a year ago. The average 15-year FRM rate was 4.62%, down from 4.83% the previous week and from 5.43% a year ago. It has not been lower since June 13, 2003 when it was 4.6%. The average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was 5.49%, down from 5.57% the previous week and 5.63% a year ago. The average rate for one-year Treasury-indexed ARMs was 4.95%, up from 4.85% the previous week but down from 5.37% a year ago. Average points were 0.6 for 30-year FRMs, 0.7 for 15-year FRMs and five-year hybrids and 0.5 for one-year Treasury-indexed ARMs.

The Mortgage Bankers Association and the Financial Services Roundtable strongly oppose the bankruptcy "cramdown" deal Citigroup stuck Thursday with key Democratic senators. "We remain opposed to bankruptcy cramdown legislation because of the destabilizing effect it will have on an already turbulent mortgage market," said MBA chairman David Kittle. During negotiations, Sen. Dick Durbin, D-Ill., agreed to limit his bill so that bankruptcy judges could only reduce or cram down the amount of existing mortgages -- not new loans originated after enactment of the bill. "The compromise changes are a first step to improve the bill, but the Durbin bill is still far too broad and presents a serious risk to the mortgage markets," said Roundtable senior vice president Scott Talbott. MBA wants the bankruptcy provisions limited to subprime loans (2005- 2007 vintages) along with a specific exemption for Federal Housing Administration and Department of Veterans Affairs guaranteed loans.