Originations

Carteret Mortgage Corp. of Virginia, a large net branch operator that caters to loan brokers, is closing its doors, sources have told MortgageWire. At deadline time, Carteret chief executive Eric Weinstein could not be reached for comment. Officers listed in Carteret's company directory, and some of its net branch managers, did not respond to telephone calls from MW. According to the Mortgage Industry Directory, Carteret originated $2.84 billion of loans in 2006 and $3.4 billion the year before. No figures were available for 2007 and 2008. Carteret also facilitated the origination of reverse mortgages. Its telephone switchboard was reverting to an automated directory Wednesday, and its operator was not picking up. The company, based in Centreville, Va., can be found online at https://www2.carteretmortgage.com.

Fitch Ratings has downgraded two classes of notes from two collateralized debt obligations issued by Blue Heron Funding and backed partly by subprime residential mortgage-backed securities. The class B notes of Blue Heron Funding V Ltd. and Blue Heron Funding IX Ltd. were downgraded from A-minus to C and removed from Rating Watch Negative. Fitch also affirmed the ratings on the certificates issued by the two transactions. The rating agency attributed the downgrades to "significant collateral deterioration" in the portfolios' subprime RMBS, structured finance CDOs with underlying exposure to subprime RMBS, and (in the case of Blue Heron IX) alternative-A RMBS.

Franklin Credit Management Corp., a New York-based company that buys, manages, and sells subprime residential mortgage assets, says it has received a notice of delisting from the NASDAQ Stock Market. The company said trading of its common stock will be suspended at the opening of business on Aug. 29 unless it requests an appeal of NASDAQ's determination, which it said it "expects" to do. The delisting would be based on the failure of Franklin's stock to maintain a minimum bid price of $1 per share. The company said it was notified on Feb. 20 that the stock had failed to maintain the minimum bid price for the preceding 30 business days, and it was given 180 calendar days to regain compliance for at least 10 consecutive trading days. Franklin Credit can be found on the Web at http://www.franklincredit.com.

Sales of existing single-family homes in Florida totaled 11,498 in July, marking the first time in more than two years that resales have risen in Florida on a year-over-year basis, according to the Florida Association of Realtors. The increase was slight -- only six more than the 11,492 recorded in July 2007 -- but FAR said it "could indicate stabilization in Florida's housing sector." The median sales price of homes sold in July stood at $193,600, down 19% from $238,900 a year earlier, FAR reported. Among the state's larger markets, resales decreased 22% in the Miami metropolitan statistical area and 16% in the Orlando MSA, while median resale prices fell to $230,700 in Miami, down 19% from $285,800 a year earlier, and to $121,900 in Orlando, down 17% from $147,700 a year earlier. FAR can be found online at http://media.living.net.

The sales of existing single-family detached homes in California were up 43.4% in July from the level recorded a year earlier, according to the California Association of Realtors. The seasonally adjusted annualized rate of closed-escrow resales totaled 489,080 in July, up from the revised 341,130-unit rate recorded in July 2007, CAR reported. The median price of an existing single-family detached home in California totaled $350,760 in July, down 40.3% from a revised $587,560 a year earlier, the association said. "Sales improved significantly in July 2008 and remained above the 400,000 level for the third consecutive month," said CAR president William E. Brown. "Deeply discounted distressed sales continue to drive volume in many regions of the state." CAR can be found online at http://www.car.org.

People are more focused on their tasks when they are uncomfortable, motivational speaker Michael Stahl told attendees Aug. 25 at the NAMB/Southwest conference in New Orleans. Mr. Stahl said there are three zones of performance: the comfort zone; the performance or "uncomfort zone"; and the panic zone. What makes people feel uncomfortable in sales and marketing strategies is what they need to be doing right now, he said, whereas being in a panic zone will hurt performance. To be comfortable with change, people must leave their comfort zone, he said, adding that change can make them feel vulnerable unless they are open to it. According to Mr. Stahl, there is a "cycle of positive results." When people achieve positive results operating outside their comfort zone, they want to perform the task more and more, he said.

The Commercial Mortgage Professional Program of the National Association of Mortgage Brokers is designed not to compete with the states for members, according to program director Kristi Wallace. At the group's NAMB/Southeast conference in New Orleans, Ms. Wallace said that to be eligible for commercial mortgage membership, the mortgage broker must do commercial mortgage loans exclusively and not have a residential mortgage broker's license (except where state law applies). Commercial brokers will become direct members of the national organization and not of the state affiliate. They will have the right to participate in voice votes on bylaw changes but cannot elect or serve on the NAMB's board or delegate council. State affiliates will receive $150 per commercial member to help defray costs for serving as contact points for these members. Commercial members are not eligible for the Lending Integrity Seal of Approval program, Ms. Wallace said. The NAMB will have a full-day commercial program at its forthcoming NAMB/West show, and a two- or three-day commercial symposium is being planned for 2009.

House prices in June were 15.9% below the level recorded a year earlier but down only slightly from that of the previous month, possibly signaling that the rate of decline is "slowing," according to preparers of the Standard & Poor's/Case-Shiller 20-city house price index. House prices fell only 0.5% in June from those recorded in May, and the decline was far less than the 2% monthly drops earlier this year. "While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level," said S&P economist David Blitzer. In June, nine of the 20 cities posted month-to-month increases in house prices. Denver and Boston were the best-performing markets, with monthly gains of 1.5% and 1.2%, respectively. The index can be found online at http://www.homeprice.standardandpoors.com.

A house price index based on Fannie Mae and Freddie Mac mortgage data shows that house prices plunged in key states -- California and Florida -- where the mortgage giants suffered most of their credit losses in the second quarter. The Office of Federal Housing Enterprise Oversight HPI said house prices (based on purchase mortgage and refinancing data) fell by 6.9% in California, 5.6% in Nevada, 5.3% in Florida, and 4.4% in Arizona in the second quarter. Nationally, the OFHEO HPI fell 1.4% in the second quarter and 1.7% since the second quarter of 2007. "Tighter credit conditions and relatively high inventory levels have led to some sharp price declines in the second quarter," OFHEO Director James Lockhart said in releasing the second-quarter report. OFHEO's purchase-only HPI shows that house prices fell 1.4% in the second quarter and 4.8% since the second quarter of 2007. The purchase-only HPI was flat from May to June. However, the inflation-adjusted price of homes is down 10% from that of a year ago.

State Farm's federally chartered thrift can use the insurance company's independent agents to market residential mortgages and home equity loans without complying with state licensing requirements, according to a U.S. appeals court. However, the circuit judges noted that their decision may be moot once a new federal law goes into effect that sets registration and licensing requirements for all mortgage originators. The 6th Circuit Court of Appeals ruled that operations of State Farm Bank are not subject to an Ohio law that would require the independent agents to be licensed as mortgage brokers. "We reach this conclusion because the Ohio Act's application to State Farm Bank's exclusive agents fits within the categories of state laws that are expressly preempted by OTS regulations," the appeals court said. Banking attorney Steven Kaplan, a partner at K&L Gates, said, "We have to see how this plays out with the new federal [licensing] law. But at the moment, it is a significant victory for federally chartered entities. It allows them flexibility in how and to whom they solicit customers." The NAMB can be found on the Web at http://www.namb.org.

The annualized sales pace of new single-family homes totaled 515,000 units in July, a slight increase since the previous month but a 35% decline from that of a year earlier. Meanwhile, the inventory of new homes for sale fell to a 10.1-month supply, compared with a 10.7-month supply in June. The median sales price was $230,700, compared with $230,100 in June and $246,200 a year earlier. "Single-family new-home sales in July were very close to expectations, but the 515,000 reading turned out to be a rise from the June level, which was revised downward from 530,000 to 503,000," said RBS Greenwich analyst Stephen Stanley. "In any case, new-home sales fell sharply through around March of this year and have been steadier since then. We look for sales to drag along that bottom for the most part in the second half of the year."

Twenty-one classes of notes issued by four collateralized debt obligations with exposure to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The affected securities are as follows: six classes from Independence IV CDO Ltd./Inc., a cash flow structured finance CDO; five classes from C-BASS CBO XVIII Ltd., a static cash structured finance CDO; five classes from C-BASS CBO XIX Ltd., a static CDO; and five classes from Costa Bella CDO Ltd./Corp., a hybrid structured finance CDO. The downgrades were attributed to collateral deterioration in the portfolios, especially in subprime RMBS and structured finance CDOs with underlying exposure to subprime RMBS.

The ratings of American International Group Inc. and its insurance and financial services subsidiaries have been placed on Rating Watch Negative by Fitch Ratings, partly as a result of exposures to residential mortgage-backed securities. Fitch previously had a negative rating outlook on AIG and the majority of its insurance-related subsidiaries that are rated by Fitch, and a stable rating outlook on AIG's financial services subsidiaries (including AIG Capital Corp., International Lease Finance Corp., and American General Finance Inc.). Fitch said the rating actions were based on an updated assessment as part of its ongoing ratings review of AIG and its subsidiaries. The actions reflect "Fitch's uncertainty regarding potential outcomes of AIG's previously announced business unit review, which is expected to be completed in late September," the rating agency said. The actions also reflect uncertainty related to AIG's "potential for additional losses" on various exposures to residential mortgage-backed securities, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

KfW Bankengruppe, Frankfurt, Germany, says it has agreed to sell its shares in IKB Deutsche Industriebank, a German company that has been hard hit by the U.S. subprime mortgage crisis, to U.S. private equity firm Lone Star. The purchase price for the 90.8% stake in the Dusseldorf-based company was not disclosed, but KfW described it as having an "adequate" and "positive" value. KfW also said it has agreed to share "certain portfolio and legal risks" with the Dallas-based Lone Star in the deal, but added that the agreement calls for KfW to acquire a smaller share of IKB's on-balance-sheet portfolio than originally planned. In addition, Lone Star will provide KfW with "additional equity," according to the latter company. Lone Star is a known buyer of subprime mortgage assets. KfW is 80% owned by Germany's federal government.

Reported incidents of residential mortgage fraud in the United States increased by 42% in the first quarter from the level recorded a year earlier, according to a new report from the Mortgage Asset Research Institute. Florida led the states in mortgage fraud, accounting for 24% of all properties with material misrepresentation for loans originated in the first quarter, according to the MARI Quarterly Fraud Report. California ranked second, followed by a three-way tie for third place among Illinois, Maryland, and Michigan. The top fraud incident type was in general application misrepresentation, followed closely by misrepresentations related to income and employment, MARI said. The report is based on data submitted by MARI subscribers about loans originated in the first quarter that have since been classified as fraudulent. MARI, a ChoicePoint company, can be found online at http://www.marisolutions.com.

Citigroup, in a new report, says it is unlikely that the federal government will nationalize Fannie Mae and Freddie Mac, while admitting that in time some type of federal action may be necessary. The report says the government-sponsored enterprises are not entirely without options, adding that their new regulator, the Federal Housing Finance Agency, could ease "the arbitrary capital surplus requirement further." It adds, "given our analysis, which shows that both [Fannie Mae and Freddie Mac] should have sufficient capital through (at least) year-end 2008 under a variety of negative credit scenarios, all parties could wait-it-out until market conditions improve." In Monday's trading, Freddie's share price was up 15% at one point to $3.26, while Fannie's was up 5% to $5.24.

The sales of existing single-family homes jumped 3.1% in July due to strong sales in markets that previously have seen substantial price declines, such as Ft. Myers, Fla., Sacramento, Calif., and Las Vegas, but nationwide sales are slow and properties listed for sale remain at historic highs. The National Association of Realtors reported that sales of previously owned homes rose to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June. Sales were off 12.4% since July 2007, and the median price of a single-family home was down 7.7% since that time, to $210,900. Meanwhile, 3.9 million single-family homes were listed for sale in July, unchanged from the level in June despite the rebound in sales. The Realtors estimate that 33% to 40% of resales involve short sales and foreclosure sales. NAR economists are also hearing that brokers are selling bank-owned properties before posting them on a multiple listing service. These prelisted bank sales don't show up in NAR sales data. In many markets, sales are down 10% to 20% from the levels of a year ago, according to NAR chief economist Lawrence Yun. And he says he is worried that tightening by Fannie Mae and Freddie Mae is crimping sales. For example, the job market is very strong in Texas and home prices are very affordable, which normally translates into increased sales, Mr. Yun told reporters. "But it is not happening in Texas, which is saying there is a credit crunch impacting buyers." The NAR can be found online at http://www.realtor.org.

Three classes from Citigroup Commercial Mortgage Trust commercial mortgage pass-through certificates series 2006-FL2 have been downgraded by Moody's Investors Service. The downgrades were as follows: class L, from Baa3 to Ba1; class RAM-1, from Baa3 to Ba2; and class RAM-2, from Ba1 to Ba3. Moody's said it downgraded pooled class L and rake classes RAM-1 and RAM-2 based on a decline in its estimate of property value for the Radisson Ambassador Plaza Hotel and Casino in San Juan, Puerto Rico.

Impac Mortgage Holdings Inc., Irvine, Calif., has been given a four-month cure period to fix noncompliance issues regarding its listing on the New York Stock Exchange. The regulatory arm of NYSE notified Impac that it had once again fallen out of compliance with the continued-listing standards because, as of July 1, its 30-day average price had fallen below the $1 average requirement. This counted as a repeat instance of quantitative noncompliance within 12 months of a cure of a first notice of noncompliance. NYSE Regulation reviewed materials on the real estate investment trust's plans to address the current share price deficiency and gave Impac four months to cure the problem. NYSE Regulation will also continue to closely monitor Impac regarding share price levels and progress on planned initiatives. The last time Impac traded above $1 was on June 2, according to Yahoo! Finance. The stock traded as low as $0.69 on June 30. On Aug. 21, it closed at $0.77 per share.

Nonprofit housing groups and the National Association of Home Builders are forming a coalition to press Congress to reverse a ban on seller-funded downpayment assistance on Federal Housing Administration-insured loans. "We would like to see it happen this year, but the prospects are bleak," said Jerry Howard, executive vice president and chief executive of the NAHB. Nevertheless, the builders will be talking to the presidential candidates and their campaigns along with senators and congressmen to "make sure we can move this bill early next session," Mr. Howard said. Congress passed a major housing bill in July that bans seller-funded downpayment assistance on FHA loans starting Oct. 1 because of high defaults rates and losses to the FHA insurance fund. The builders are working with Nehemiah Corporation of America, AmeriDream, and other nonprofit housing groups on a grassroots effort to pass a bill sponsored by Rep. Al Green, D-Texas. The Green bill protects the insurance fund by allowing the FHA to charge higher premiums on DPA borrowers with low credit scores.