Originations

Peter Monroe, a former president of the RTC Oversight Board, and several colleagues have launched a venture capital company to spearhead a "real estate rescue program" in U.S. inner cities. The new company, Wilherst Oxford LLC, Tampa, Fla., will make vacant homes available to inner-city residents through the use of seller financing and low downpayments. "Amid the real estate crisis that led to the current economic difficulties, there are exciting opportunities for Americans to move into millions of already existing, vacant, and therefore affordable houses," Mr. Monroe said. ".... Our fund will invest nationwide and across product lines from residential to income properties." Mr. Monroe, who was president and chief executive of the Resolution Trust Corp. Oversight Board from 1990 to 1993 and chief operating officer of the Federal Housing Administration, said local governments "should encourage entrepreneurs to buy and resell these vacant homes as affordable housing by waiving existing tax/utility liens (which would never be paid anyway) and granting ample time for code compliance." Mr. Monroe can be found online at http://www.petermonroe.com.

American International Group Inc., New York, has signed a definitive agreement with the Federal Reserve Bank of New York, for its $85 million revolving credit facility. The line will have a two-year term, with interest based on the three-month London interbank offered rate plus 850 basis points. There is an initial gross commitment fee of 2%. AIG will also pay a commitment fee on undrawn amounts at the rate of 8.5% per year. Borrowings under the facility are conditioned on whether the New York Fed is reasonably satisfied with AIG's corporate governance, among other things. The facility contains customary covenants, including a requirement to maintain a minimum amount of liquidity. AIG chairman and chief executive Edward M. Liddy said the company is "developing a plan to sell assets, repay the facility, and emerge as a smaller but profitable company. Importantly, AIG's insurance subsidiaries remain strong, liquid, and well-capitalized." A pledge of the capital stock and assets of certain of AIG's subsidiaries will secure the facility. AIG will also give preferred stock worth 79.9% of the company's equity to a trust established for the benefit of the U.S. Treasury.

Chase Wholesale Lending is closing four of its eight regional operations centers, the company says in a memorandum sent to its mortgage brokers. The four centers that are closing are in Garden City, N.Y.; Westmont, Ill.; Tampa, Fla.; and San Ramon, Calif. The centers that will remain open are in Dallas; Charlotte, N.C.; Cleveland; and Orange, Calif. There will be a net loss of 175 jobs, a Chase spokesman said. (The unit currently employs 600 people.) The memo was sent out under the signatures of Rod Brace and Saber Salam, wholesale lending business executives. The company said it plans to expand staffing at these sites to absorb processing from the closing centers. "As anticipated, the national implementation of ChaseLoanCenter has created production efficiencies throughout our organization," the memo said. "We expect to take advantage of scale and become more efficient by operating fewer, but larger centers." ChaseLoanCenter is a loan origination system the company launched this summer. Chase ranked first among all wholesale lenders in the second quarter, table-funding $9.6 billion through loan brokers, a 40% decline from the level of a year earlier, according to National Mortgage News and the Quarterly Data Report. In the first quarter, Chase table-funded $11.4 billion in home mortgages. It ranked first in that quarter as well.

Fannie Mae and Freddie Mac will fall short of their affordable housing goals by a large margin in 2008, according to the Federal Housing Finance Agency, which has asked the government-sponsored enterprises to draw up their own AH goals for 2009. FHFA Director James Lockhart indicated that the affordable housing goals developed by the Department of Housing and Urban Development in 2004 are too ambitious in view of today's market conditions. "With the enterprises now in conservatorships, even if some or all of the goals are found to be unattainable, I will expect each enterprise to develop and implement ambitious plans to support the borrowers and markets targeted by the goals," Mr. Lockhart told the Senate Banking Committee. The FHFA director also noted that his agency is preparing regulations so the Federal Home Loans Banks can use their affordable housing funds to restructure underwater mortgages for borrowers that qualify under a Federal Housing Administration refinancing program called Hope for Homeowners. "FHFA plans to have the regulation in place by Oct.1," he testified.

Commercial real estate prices held steady in June on a national basis and recorded a 12-month increase of 1.5%, according to the S&P/GRA Commercial Real Estate Indices. The highest 12-month rates of return were recorded by the apartment sector, at 3.6%, and the Midwest, at 4.9%, S&P reported. The best monthly performances were turned in by the office sector, at 1.1%, and the Northeast, at 0.8%, according to the company. "While there are some pockets of relative stability in this month's numbers, overall the S&P/GRA Commercial Real Estate Indices appear to be trending down," said David Blitzer, managing director and chairman of S&P's Index Committee. ".... Only one of the regions and two of the property sectors saw price declines during the June/May period; however, most of the regions and sectors continue to show deceleration on an annual basis." The indices can be found on the Web at http://www.standardandpoors.com/indices.

Commercial and multifamily mortgage debt outstanding rose 1.5% ($51.3 billion) in the second quarter, reaching a level of $3.44 trillion, according to an analysis of Federal Reserve Board data by the Mortgage Bankers Association. Considering only multifamily mortgage debt, the amount outstanding rose 1.9%, to $875 billion. The largest increase in percentage terms in holdings of commercial and multifamily mortgage debt occurred in the government-sponsored enterprise sector, where holdings grew by 6% in the second quarter. "Despite the persistent credit crunch, investors increased their holdings of commercial/multifamily mortgages in the second quarter," said Jamie Woodwell, the MBA's vice president of commercial real estate research. "The only major investor group to see a decline in their holdings was the commercial mortgage-backed securities market, which has been most profoundly affected by the credit crunch." The MBA can be found online at http://www.mortgagebankers.org.

Residential Capital LLC, the mortgage lending subsidiary of GMAC LLC, has agreed to sell its real estate brokerage, franchising, and relocation business to the residential property services unit of Brookfield Asset Management Inc., Toronto. Brookfield announced the deal Tuesday but did not say how much it would pay for GMAC Home Services LLC. The deal is expected to close next quarter. ResCap had said this month that it was "evaluating strategic alternatives" for the home services business. At the time, the ailing Minneapolis lender also announced plans to lay off 5,000 employees, or 60% of its work force; close the 200 retail offices that use the GMAC Mortgage brand; and cease originations through its Homecomings wholesale channel.

Amy Brandt, who was the chief executive officer of WMC Mortgage Co. during that alternative-A lender's salad days, has returned to the industry by buying two servicers and an Internet originator. Vantium Capital Inc., her private-equity firm, was planning to announce that it has acquired the assets of Strategic Recovery Group LLC, a Plano, Texas-based company that collects on defaulted and charged-off debts; its Acqura Loan Services LLC, which manages subprime portfolios; and Strategic Recovery's online-only lending business, which uses the brand name Go Financial Solutions. Vantium, a New York company, would not make executives available for interviews. In a press release, Ms. Brandt said, "We will use these companies as a platform to develop, or acquire, new businesses that will serve the financial and investment markets." The firm did not say how much it paid for any of the assets. It has financial backing from Leon Black's Apollo Global Management LLC, the New York private-equity firm that sold WMC Mortgage to General Electric Co. in 2004. Acqura is to service assets bought by a Vantium fund managed by Michael Commaroto, the former head of private-label mortgage-backed securities at Deutsche Bank AG, Vantium said.

Bank of America late Monday fired Drew Gissinger, a top production executive at Countrywide Home Loans who was in charge of retail, wholesale, and correspondent lending, according to company officials. Also let go were: Brian Hale, president of retail; Charlie Rogers, managing director of Countrywide's nationwide retail network; and Tom Hunt, managing director of the western U.S. retail branch network. Mr. Gissinger once carried the title of president and chief operating officer of Countrywide Home Loans. Meanwhile, BoA named Craig Buffie the top executive in charge of sales and fulfillment, overseeing 14,000 employees in the mortgage group. BoA bought Countrywide on July 1.

Before the Senate Banking Committee approves a $700 billion bailout of the credit and mortgage markets, some of its members want assurances that the government will not overpay for subprime MBS -- plus promises that taxpayers will get warrants in companies that sell to the government. At a hearing Tuesday -- attended by every senator on the committee as well as a noisy faction from ACORN that was silenced by committee Chairman Christopher J. Dodd, D-Conn. -- several elected officials wanted to know at what price the government would purchase mortgage-backed securities. "How will the assets be priced?" asked Sen. Robert Menendez, D-N.J. "If the seller doesn't like the price, will the taxpayer be asked to pay a premium?" The question was aimed at Treasury Secretary Henry Paulson, who has been putting together the bailout plan over the past few weeks. Committee members expressed dismay at having to spend so much of the taxpayers' money to help bail out Wall Street. "It's financial socialism," said Sen. Jim Bunning, R-Ky. "And it's un-American."

The Securities and Exchange Commission revealed Tuesday that it has 50 pending subprime-related investigations involving residential lenders, investment banking firms, credit rating agencies, and other players involved in the securitization process. Speaking before the Senate Banking Committee, SEC Chairman Christopher Cox said commercial banks and broker-dealers who sold subprime mortgage-backed securities are also being looked at. "We are investigating whether mortgage lenders properly accounted for the loans in their portfolios, and whether they established appropriate loan loss reserves," he told the committee. The agency, which is responsible for overseeing bond disclosures on publicly registered securities, said it is investigating whether lenders adequately disclosed the risk profiles of the mortgages they were securitizing. In late 2006 Lewis S. Ranieri, the co-inventor of the MBS, criticized the SEC in a speech at the National Press Club, saying the agency needs to play a central role in forcing issuers to increase disclosures on bonds collateralized by nontraditional residential loans. At the time, Mr. Ranieri told National Mortgage News that "this isn't an indictment of the SEC," but added that "the transparencies are not what they should be."

Delinquencies on mortgages supporting commercial mortgage-backed securities increased 1 basis point to 0.44% in August, according to a Fitch Ratings loan delinquency index. The rating agency said it expects retail properties to lead the rise in CMBS delinquencies. "While delinquent retail loans represent only 0.26% of all loans within the sector, retail delinquencies increased 29% over July's total," said Susan Merrick, a Fitch managing director who heads the rating agency's U.S. CMBS group. "Fitch also continues to monitor an additional 45 retail loans which are performing, but have been transferred to special servicing."

General Growth Properties Inc., a Chicago-based real estate investment trust, has announced that the company is reviewing its financial and strategic options to align the value of its common stock more closely with that of its real estate portfolio. The REIT said it expects to be able to offer long-term fixed-rate portfolio mortgage financing to lenders by late November, and will "actively pursue several sources of financing for the company's near-term maturing obligations" in the interim. The options under review for generating capital include asset sales, the sale of joint venture or preferred equity in selected assets, a capital infusion, and strategic business combinations, the company said. The REIT can be found on the Web at http://www.ggp.com.

Fitch Ratings has affirmed the ratings of Detroit-based Comerica Inc. and its subsidiaries but revised their rating outlook to negative in part due to problem loans tied to the residential housing market. While citing the company's "solid tangible capital base, sizable non-interest-bearing deposit base" and "sound risk management practices," Fitch said the negative outlook reflects "rising levels of nonperforming assets, weaker earnings, and deterioration in capital ratios." The outlook revision also takes into account the fact that the company could be hurt by the deteriorating economic environment. "Since the fourth quarter of 2007, problem loans have been increasing due to the downturn in the residential housing market," the rating agency said. "The deterioration in credit quality is largely emanating from [Comerica's] residential construction book, particularly in Michigan and California." Fitch can be found online at http://www.fitchratings.com.

Federal Trust Corp., a thrift holding company based in Sanford, Fla., has entered into a nonbinding letter of intent with an unnamed investor group in New York and Florida that would acquire control of the company by investing $40 million to $55 million. The company is under Office of Thrift Supervision orders to raise capital by Sept. 30, or failing that, enter into a merger agreement by Nov. 15. Federal Trust had reached an agreement with Sidhu Advisors FDT LLC on Aug. 11 under which Sidhu would have invested $30 million in the company. The latest statement from Federal Trust said those negotiations have been discontinued. Jay Sidhu, the former chairman and chief executive of Sovereign Bancorp Inc., Philadelphia, controls Sidhu Advisors.

Bradford Bank, Baltimore, has reported being notified by the Office of Thrift Supervision that it and its holding company, Bradford Bank MHC, will be receiving a cease-and-desist order. Bradford said it expected that the order would require it to get prior regulatory approval to originate acquisition, development, nonresidential real estate, commercial, construction, or land loans. It will have to prepare a capital plan to maintain a Tier One risk-based capital ratio of 8.0% and a total risk-based capital ratio of 12.0%. To address the need for capital, Bradford Bank has filed a registration statement with the Securities and Exchange Commission for an initial public offering of between 2.125 million and 2.875 million shares of common stock at $10 per share. "Due in part to the deterioration in our loan quality, and resulting provisions for loans losses, coupled with our inability to raise capital through a stock offering to support the asset growth resulting from our previously completed acquisitions, our regulatory capital ratios were negatively impacted," Bradford said in the filing. "Our regulatory capital ratios were reduced below the 'well capitalized' status and at June 30, 2008, we were classified 'adequately capitalized'."

BankUnited Financial Corp., Coral Gables, Fla., has announced layoffs of approximately 160 workers and an agreement on regulatory consent orders that, among other things, bar the bank from originating payment-option adjustable-rate mortgages. The company said the layoffs will come primarily from BankUnited FSB's residential lending operations and will reduce the bank's work force by about 12%. The consent orders with the Office of Thrift Supervision require the company and the bank to take various actions and impose restrictions designed to improve their financial strength, BankUnited said. The orders bar the origination of any loans that may result in negative amortization (including option ARMs) and require the bank, by Dec. 31, to maintain a minimum Tier One core capital ratio of 7% and a minimum total risk-based capital ratio of 14%. The company can be found online at http://www.bankunited.com.

The United Kingdom-based Virgin Group, in a strategy built on its recent acquisition of the Marlborough, Mass.-based Lendia, is set to provide mortgage financing on a broad basis in the United States for the first time through an innovative program. Virgin Money, Waltham, Mass., plans to provide wholesale mortgage financing to brokers as well as offer automation and outsourcing services that can be purchased separately or in tandem with the funding, Greg O'Connor, executive vice president and general manager of Virgin Money USA Inc., told MortgageWire. Some lending has previously been done in the Waltham area, but this is the first time Virgin is making it available on a wider geographic scale. The company is licensed to lend in 23 states and says it plans to expand further. Virgin Money USA can be found on the Web at http://www.virginmoneyus.com/mortgage.

The National Association of Hispanic Real Estate Professionals and Freddie Mac are co-sponsoring a new housing-crisis survival guide titled "The American Nightmare: Strategies For Preventing, Surviving and Overcoming Foreclosure." Written by housing counselors Sylvia Alvarez and Walter Walker Jr., the book offers consumers a step-by-step analysis of the obstacles people face in foreclosure and the practical solutions available to them. "Too many times, people are doing nothing to save their homes simply because they don't know their options," said Rebecca Gallardo-Serrano, chairman of NAHREP. Latinos have been disproportionately affected by the foreclosure crisis and stand to lose about $94 billion in personal wealth, the association said. NAHREP can be found online at http://www.nahrep.org.

Fitch Ratings has placed Washington Mutual Inc., Seattle, which has been rumored to be on the auction block, on Rating Watch Evolving. Fitch attributed the action to "recent market developments," including the waiver by TPG Capital and related entities of price reset rights under an investment agreement (and related warrants) associated with their June 2008 investments. "Because the waiver removes an important potential hurdle to the sale of WaMu, Fitch believes it signals a much higher probability of an imminent transaction which, depending upon the buyer and the specifics of the transaction, could result in the upgrade or downgrade of [WaMu] and related subsidiaries," the rating agency said. Fitch can be found online at http://www.fitchratings.com.