Originations

Fannie Mae and Freddie Mac - with the blessing of their regulator/conservator - are considering ways to expedite real estate "short sales" and possibly waive appraisals to facilitate refinancings of underwater mortgages. Federal Housing Finance Agency director James Lockhart confirmed that these business changes - and others - are under consideration. Speaking with reporters this past week, Mr. Lockhart said, "If they refinance a borrower rather than modify the loan - do they need a new appraisal if they already own the credit? That's an issue that is being worked on." FHFA has pushed the GSEs into adopting a streamlined modification program that goes into effect next week. Fannie and Freddie have suspended foreclosures and evictions until Jan. 9. In a letter to the National Association of Realtors, Mr. Lockhart said the GSEs are working on ways to streamline their loss mitigation process. "With regard to short sales, a number of initiatives are underway that are specifically designed to eliminate bottlenecks and allow workout decisions to made in a faster and more efficient manner." The letter to the Realtors also notes that one GSE is actively considering raising the limit on loans to one investor, which "reflects an appreciation" of the role real estate investors could play in the housing recovery. The GSE (it's not known which) is considering easing its owner-occupied requirements for condominiums by not counting units owned by banks due to foreclosures.

Republic Mortgage Insurance Corp., Winston-Salem, N.C., has handed over the keys to its mergers and acquisitions unit to its founder, Larry Charbonneau. Mr. Charbonneau said the former Republic Strategic Advisory Inc., Houston, will now carry the name Charbonneau & Associates. He said there was no animosity between him and RMIC but that the company wants to concentrate on its core business of mortgage insurance. Besides M&A work, Charbonneau & Associates will focus on advisory work and warehouse lending consulting. Last decade, Mr. Charbonneau ran a well-regarded M&A boutique called Charbonneau-Klein Inc. He joined RMIC four years ago. The MI is a subsidiary of the publicly traded Old Republic International of Chicago. On Thursday, Old Republic paid its regular quarterly dividend of 17 cents a share.

Loan brokers accounted for just 18.9% of all mortgages funded in the third quarter, according to new survey figures released by National Mortgage News. The broker share of the origination market is the lowest ever recorded by the newspaper. The news is not surprising given the exodus of many large banks and thrifts from wholesale. NMN also found that although the broker channel is waning, correspondent loan acquisitions rebounded from recent lows. In the third quarter, correspondent accounted for 35.6% of production compared to a low of 29.2% two quarters ago. Retail is now the dominant channel for residential loan originations.

Mortgage banker Fortes Financial of Dallas, which had hoped to grow its business by purchasing lending divisions jettisoned by struggling banks, has closed its doors, MortgageWire has learned. The brain child of industry veteran Peter J. Levasseur, Fortes, bought five regional wholesale divisions from National City Mortgage back in July. (NCM's parent bank exited the wholesale business this summer and is now in the process of being sold to PNC Bank of Pittsburgh.) At press time Mr. Levasseur could not be reached for comment. With the backing of private equity money, he founded Fortes in the summer of 2007 along with Janice Ibey. At one point the non-bank lender had 400 employees. The wholesale offices Fortes bought from NCM were located in Atlanta, Chicago, Dallas, Frederick, Md., and San Diego. During his career Mr. Levasseur has worked for subprime lenders AMRESCO Residential and American Business Financial Services, and prime firms including Home Savings of America and ITT Diversified Financial.

ROC USA Capital, Concord, N.H., has received a $10 million line of credit from Merrill Lynch Community Development Co. LLC. ROC USA Capital makes commercial loans to the owners of manufactured homes who have formed a resident corporation to purchase the community in which their homes are located. According to ROC USA Capital, 35% of manufactured homes are located in these communities and the homeowners are vulnerable to the land being sold out from beneath them. "This line of credit provides essential financing that will enable us to act quickly when opportunity knocks for homeowners," notes Michael Sloss, managing director, ROC USA Capital, which is the financing subsidiary of ROC USA LLC, an organization looking to help those living in manufactured home communities to buy, preserve and improve them. ROC USA Capital was founded in August 2008 with investments from the Ford Foundation, CFED, NCB Capital Impact, New Hampshire Community Loan Fund and NeighborWorks America. "Resident ownership has been demonstrated to align ownership interests, preserve affordable communities, and reduce the economic insecurity these homeowners face," said Terri Ludwig, president, Merrill Lynch Community Development Co.

Impac Mortgage Holdings, a Irvine, Calif.-based real estate investment trust, is not paying fourth quarter dividends on its 9.375% Series B Cumulative Redeemable Preferred Stock and its 9.125% Series C Cumulative Redeemable Preferred Stock. These unpaid dividends will accumulate and, until they are paid, Impac may not pay dividends on, redeem, repurchase or make distributions on its common stock. Impac is also deferring payments of interest on its four series of trust preferred securities: Impac Capital Trusts #1, #2 and #4 securities due Jan. 30, 2009, and Impac Capital Trust #3 securities due Dec. 30, 2008. It intends to make a cash offer of $100 for every $1,000 for each of these four trust preferred securities. That offer will expire on Dec. 30, 2008.

CapitalSouth Bancorp, Birmingham, Ala., has hired Sterne, Agee & Leach Inc. as its financial advisor to assess strategic alternatives for the company, including a sale or merger. CapitalSouth is the parent of Mortgage Lion Inc., a wholesaler headquartered in Fitzgerald, Ga. In its third quarter 10-Q filing, CapitalSouth said it has decided to close Mortgage Lion and that action should be completed by the end of 2008. The company lost $5.3 billion for the third quarter of 2008, primarily to a noncash reserve of $5.1 million on its deferred tax assets. It is operating under a cease and desist order from federal and state regulators. The order requires CapitalSouth to raise capital. It had a rights offering for 7.5 million shares of common stock priced at $2 per share. When the offering expired on Dec. 8, only 1.867 million shares were subscribed for, with a value of $3.7 million, and the subscriptions came from the company's directors and senior management. CapitalSouth is doing a public re-offering where common shares will be offered to the public on a best efforts basis. This will terminate on Jan. 20, 2009.

The average rate on the 30-year fixed-rate mortgage during the week ended Dec. 11 fell to a low not seen since 2004, according to Freddie Mac. The average 30-year FRM rate was 5.47%, down from 5.53% the week previous and from 6.11% during the same period last year. This is the lowest it has been since March 25, 2004, the government-sponsored enterprise said. "Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed-rate mortgage rates to ease back a little further," said Frank Nothaft, Freddie Mac vice president and chief economist. The average rate on the 15-year FRM dropped to 5.20% from 5.33% the previous week and from 5.78% a year ago. The average rate on five-year hybrid adjustable rate mortgages rose to 5.82% from 5.77% the week previous but was down from 5.89% a year ago. The average one-year Treasury-indexed ARM rate was 5.09%, up from last week's 5.02% but down from last year's 5.50%. Average points were 0.7 for 30- and 15-year FRMs, 0.6 for five-year hybrids and 0.4 for one-year ARMs.

Fannie Mae and Freddie Mac are projected to force mortgage originators to buy back over $1 billion in whole loans in 2009 because of misrepresentations or fraud, according to their regulator. "In 2006 and 2007, the underwriting was so poor and there was a lot of mortgage fraud," Federal Housing Finance Agency director James Lockhart told reporters. "They have the right under their agreements to require the originator to repurchase the loan," he added. The government sponsored enterprise regulator indicated the buybacks could range from $1 billion to $1.5 billion. Buybacks can put "some real discipline into the origination system," the GSE regulator told a Women in Housing and Finance luncheon. "If you know you are going to get the mortgage back, you may be a little more careful in the future," he said.

Green Courte Partners LLC, Chicago, will purchase American Land Lease Inc., a Clearwater, Fla., real estate investment trust for $14.20 per share in cash, giving the deal a value of $438 million. The deal is structured in two steps, with Green Courte first making a tender offer for all of American Land Lease's common stock. Under the second step, any shares not acquired in the tender offer will be converted into the right to receive the same cash price per share. The limited partners of Asset Investors Operating Partnership LP, the operating partnership of American Land Lease, will receive $14.20 per share for each of their limited partnership units. Four directors of American Land Lease, who collectively own 12% of the company's common stock, have committed to tender their shares and sell their OP units to Green Courte. American Land Lease's series A cumulative redeemable preferred stock will remain outstanding after the transaction is completed. Wachovia Capital Markets LLC was the financial advisor while Skadden, Arps, Slate, Meagher & Flom LLP and Hill Ward Henderson served as legal counsel for American Land Lease. The legal counsel for Green Courte was DLP Piper LLP (U.S.). GCP is a private equity investment firm focused primarily on the ownership and operation of manufactured housing communities, retail and mixed-use properties, and parking assets. American Lend Lease specializes in retirement homes for "active adults."

Genworth Financial, Richmond, Va., now has a definitive agreement to purchase InterBank FSB, Maple Grove, Minn. The transaction was first announced on Nov. 16. Among the conditions for the transaction continues to be the approval of Genworth to participate in the Troubled Asset Relief Program. InterBank is a subsidiary of Aurora Services Corp. Aurora was represented by Sandler O'Neill & Partners LP and the law firm of Patton Boggs LLP. Terms of the deal were not disclosed.

The Market Composite Index, an overall measure of mortgage applications, decreased 7.1% on a seasonally adjusted basis from 857.7 to 796.8 during the week ended Dec. 5, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The Purchase Index decreased 17.4% to 298.1 on a seasonally adjusted basis, while the Refinance Index decreased 0.9% to 3767.3. The application indexes both shot up during the week ended Nov. 28 as interest rates plummeted. Refinancings continued to boom, representing 73.7% of total applications, up from 69.1% the previous week, while adjustable-rate mortgages accounted for 1.1%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased 2 basis points from 5.47% to 5.45%, and points (including the origination fee) increased from 1.16 to 1.23 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Pending home sales, a forward-looking indicator of housing market activity, slipped by 0.7% to 88.9 in October, down from a reading of 89.5 in September, according to the National Association of Realtors. The level of pending sales is one percentage point lower than a year ago. Lawrence Yun, chief economist at the NAR, said pending home sales have been "remarkably stable" over the past year given the environment of economic turmoil. "We did see a spike in August when mortgage conditions temporarily improved, which underscores two things - there is pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market." Pending home sales improved from year-earlier levels in both California and Florida, markets that have been hard-hit by the housing downturn.

For the second consecutive month, mortgage-backed securities issuance by Ginnie Mae surpassed government-sponsored enterprises Fannie Mae and Freddie Mac, the Department of Housing and Urban Development said. The $27.1 billion issued in November brings the total for the calendar year to date to $246 billion. In the first 11 months of 2007, Ginnie Mae MBS issuance totaled $81.6 billion. By region, $6.7 billion from the West, $4.6 billion from the Midwest, $5.7 billion from the Mid-Atlantic, $8.7 billion from the South and $1.4 billion from the Southwest. "Ginnie Mae has consistently provided liquidity to the market and it is no surprise that our November MBS issuances were strong," said Joseph J. Murin, president of Ginnie Mae. "It is further proof that Ginnie Mae is continuing to thrive and provide stability."

Congress will try to restore the $729,750 loan limit for government-guaranteed single-family loans early next year as part of the newly elected president's economic recovery/stimulus bill, according to Rep. Barney Frank, D-Mass. The maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is slated to adjust downward to $625,000 after Dec. 31. And the Bush administration in its waning days is resisting any attempt to keep the $729,750 limit in place. "There is a chance to get them back up again," the powerful chairman of the House Financial Services Committee said. "And I believe that will be in the economic recovery plan," he told attendees at an Office of Thrift Supervision housing forum. But even a restoration after four or five weeks will cause disruption in the jumbo mortgage market. Some industry groups are hoping Sen. Mel Martinez, R-Fla., will be successful in attaching an amendment to the $15 billion auto industry rescue bill that extends the $729,750 loan limit for one year.

Mortgage bankers will foreclose on 8.1 million homes over the next four years, representing 16% of all outstanding residential loans in the U.S., according to a new report issued by Credit Suisse. Back in April CS forecast 6.5 million foreclosures, or 13% of outstanding mortgages. The Wall Street firm says it favors a plan by Treasury to create a 4.5% mortgage using mortgage-backed security issuance but believes the agency "should target an even lower rate in foreclosure hot zones where entire neighborhoods are at risk." CS analyst/managing director Rod Dubitsky estimates that within two years 72% of consumers with a subprime loan - and 83% of payment-option ARM borrowers - will be in a negative equity position if home prices fall 15%. Mr. Dubitsky spoke at the annual housing forum sponsored by the Office of Thrift Supervision on Monday afternoon.

American Spectrum Realty Inc., Houston, has been granted an extension by the NYSE Alternext US to regain compliance with the exchange's listing standards. Back on Sept. 17, 2008, American Spectrum Realty received a notice stating that it had fallen below the continued listing criteria due to not maintaining stockholders' equity requirements and was subject to delisting. On Oct. 16, 2008 the company submitted a plan of compliance to the exchange. That plan has been accepted by NYSE Alternext US as a reasonable demonstration of American Spectrum Realty's ability to regain compliance by Feb. 17, 2010 and so its listing would be continued. The exchange staff periodically will review the company's implementation of the strategies described in the plan. Failure by American Spectrum Realty to make progress consistent with the plan or to regain compliance with the exchange's continued listing standards by Feb. 17, 2010 could result in company's common stock being delisted.

Centerline Holding Co., New York, started trading over-the-counter market on the Pink Quotes (formerly the Pink Sheets) on Dec. 8, 2008. Its new ticker symbol is CLNH. On Dec. 1, 2008, the New York Stock Exchange delivered a written notice to Centerline saying its common shares would be suspended prior to the market opening on Dec. 8, 2008, because the company did not maintain a market capitalization of at least $25 million over a consecutive 30 trading day period. Centerline said it decided not to appeal the decision. Its subsidiary, Centerline Capital Group is an alternative asset manager focused on real estate funds and financing.

Wilshire Enterprises, Inc., Newark, N.J., has appointed Kevin B. Swill as president and chief operating officer. Mr. Swill joins Wilshire after serving since 2001 as president of Westminster Capital, the financing arm of The Kushner Companies, and president of Kushner Properties. "With his extraordinary combination of directly relevant industry experience, intimate knowledge of the properties and people in the New York and New Jersey real estate markets, and well-established network of senior-level contacts in real estate finance, we expect Kevin to play a major role in helping Wilshire take advantage of the current turmoil in our industry to build long-term value for our shareholders," said Wilshire chairman and chief executive Sherry Wilzig Izak. In 2000, Mr. Swill was an executive director of originations for CIBC World Markets, with responsibility for review and approval of real estate transactions for the commercial mortgage-backed securities market. Earlier, he was senior originator for the Northeastern United States at Deutsche Banc Mortgage Capital LLC, and originator in the Conduit Group at Merrill Lynch Real Estate Investment Banking. On Dec. 4, the proposed merger between Wilshire and NWJ Apartment Holdings Corp. was terminated when Wilshire was informed by NWJ that in the current economic and lending environment, it was not able to secure the financing of the residential properties required to close the merger.

Now that Fidelity National Financial Inc., Jacksonville, Fla., is purchasing some of the units of LandAmerica Financial Group, Richmond, Va., A.M. Best Co., Oldwick, N.J., has once again placed the financial strength rating and issuer credit ratings of FNF and its eight title insurance members under review with negative implications. The ratings had been removed from under review status when the original FNF-LandAmerica deal was cancelled on Nov. 21. Subsequent to that, LandAmerica filed for bankruptcy protection and agreed to sell four of its underwriting subsidiaries to FNF. "The proposed acquisitions are expected to result in a significant increase in underwriting leverage for Fidelity, which may result in adversely impacting its financial strength and risk-adjusted capitalization. Additionally, the acquisition is expected to carry execution risks of integrating two large insurance organizations." the Best statement said. Previously, Fitch Ratings, Chicago, placed the issuer default rating and insurer financial strength ratings of FNF and/or its subsidiaries on Rating Watch Negative as a result of the revived transaction.