Originations

Irwin Financial Corp., Columbus, Ind., has announced an agreement to sell its residual interests in approximately $1 billion of home equity loans to Roosevelt Management Co., New York, noting that home equity lending has been "a principal driver" of recent losses. Irwin chairman and chief executive Will Miller also announced a pact with Roosevelt, which specializes in investing in and servicing seasoned residential mortgage loans and securities, to deliver "substantially all of the remaining loans in our home equity business into a securitization structure that will cap our remaining exposure at less than $100 million." The company said the transactions, and several others, were aimed at achieving a strategic restructuring of Irwin Financial and Irwin Union Bank that will enable them to refocus on core banking services to small businesses and branch-based customers. The company can be found online at http://www.irwinfinancial.com.

Nearly 740,000 foreclosure filings were reported nationwide in the second quarter, up almost 14% from the level recorded in the previous quarter and 121% from that of a year earlier, according to RealtyTrac, an online foreclosure marketplace based in Irvine, Calif. The nation's quarterly foreclosure rate was one filing for every 171 households, the company said in its Q2 2008 U.S. Foreclosure Market Report. (Foreclosure filings include default notices, auction sale notices, and bank repossessions.) "Although much of the fallout from foreclosures is being driven by rampant activity in a few states, such as Nevada, California, Florida, Ohio, Arizona, and Michigan, most areas of the country are seeing at least some increase in foreclosure activity," said James J. Saccacio, chief executive officer of RealtyTrac. "Forty-eight of 50 states and 95 out of the nation's 100 largest metro areas experienced year-over-year increases in foreclosure activity in the second quarter." The company can be found online at http://www.realtytrac.com.

The Federal Housing Administration section of a massive housing bill is causing heartburn for lenders because they will have to abandon a newly implemented risk-based pricing structure. The Department of Housing and Urban Development mandated implementation of the RBP structure by July 14, but the housing bill imposes a 12-month moratorium on risk-based pricing starting Oct. 1. "Lenders are angry at HUD and Congress," said Brian Chappelle, a mortgage banking consultant in Washington. It cost millions of dollars to implement risk-based pricing, and "now it will cost millions of dollars to straighten it out," he said. HUD also has to convert back to charging a standard upfront mortgage insurance premium for all borrowers. "Now, FHA will be required to increase prices on all customers," HUD Secretary Steven Preston said. And it will require HUD to eliminate the newly expanded FHA Secure program that relies on RBP, he added. Before July 14, the standard upfront premium was 1.5%. Some expect the FHA to raise the premium to 2%, but HUD could raise it up to 3% under a provision of the housing bill.

Sales of new homes fell to 530,000 units in June, a slight decline from the previous month's level but a 33% drop from that of the same month a year ago. However, in one positive development for the market, the inventory of new homes for sale fell to a 10-month supply, compared with a 10.4-month figure in May, according to statistics compiled by the Census Bureau and the Department of Housing and Urban Development. RBS Greenwich analyst Omar Sharif said the results were better than expected, noting that "perhaps the best piece of news was the sharp drop in the supply of new homes." He added that "more progress will have to be made on the supply front, but June's data provided a glimmer of home."

Class L of Commercial Mortgage Acceptance Corp. commercial mortgage pass-through certificates series 1998-C2 has been downgraded from CC/DR4 to C/DR5 by Fitch Ratings. Fitch also upgraded one class in the transaction and affirmed the ratings on seven other classes. The downgrade was attributed to potential losses on three loans recently transferred to special servicing.

Seven classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. pass-through certificates, series 2007-FL1, have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The downgrades were as follows: class RS-1 from AA-minus to BB-plus; class RS-2, from A-plus to BB; class RS-3, from A to BB-minus; class RS-4, from A-minus to B-plus; class RS-5, from BBB-plus to B; class RS-6, from BBB to B-minus; and class RS-7, from BBB-minus to B-minus. In addition, Fitch affirmed the ratings on 14 other classes in the transaction. The downgrades, which affect the rake classes of the Resorts International loan, stem from a "review of updated financial information, in addition to an analysis of the overall Atlantic City gaming market fundamentals and performance," the rating agency said. Moody's can be found online at http://www.moodys.com.

The Issuer Default Rating and outstanding debt ratings of iStar Financial Inc., a New York-based real estate investment trust, have been downgraded from BBB to BBB-minus by Fitch Ratings. The rating outlook remains negative. Fitch said the downgrades were "driven primarily by the decrease in the earnings power of iStar's loan portfolio, due to asset impairments and loan loss provisions of nearly $725 million that iStar will have taken between Sept. 30, 2007, the first quarter in which iStar owned the assets associated with the Fremont Investment & Loan transaction, and June 30, 2008." Moody's Investors Service recently downgraded iStar's ratings from Baa2 to Baa3, citing the commercial REIT's announcement that it expected to take increased loan provisions of $275 million for the second quarter. Fitch can be found online at http://www.fitchratings.com, and iStar can be found at http://www.istarfinancial.com.

Friedman, Billings, Ramsey Group Inc., Arlington, Va., reported a net loss of $25.1 million ($0.17 per share) for the second quarter, compared with net earnings of $10.2 million ($0.06 per share) a year earlier. The loss included $5.8 million related to writedowns and losses in subprime mortgage investments, a $900,000 cash operating loss for the core mortgage investment business, and $13.0 million for FBR's share of the loss in FBR Capital Markets, in which it holds a 51% stake. "It is our intent -- as market conditions permit -- to continue to execute our core strategy of deploying capital in a conservative, substantially hedged portfolio of agency mortgage-backed securities," said Eric F. Billings, chairman and chief executive of FBR Group. "This strategy, we believe, will produce attractive returns for this asset class as markets stabilize and begin to recover." FBR can be found on the Web at http://www.fbr.com.

Old Republic International Corp., Chicago, has reported a net loss of $45.4 million ($0.20 per share) for the second quarter, compared with net income of $115.1 million ($0.49 per share) a year earlier. The company blamed continued weakness in its mortgage insurance and title insurance business lines for the loss. While operating revenues for the mortgage insurance business were up 18% over those of a year earlier, the segment had a pretax operating loss of $140.7 million, compared with profits of $36.8 million in the second quarter of 2007. The company said it suffered from a continued rise in claim costs, which were driven by higher delinquencies and claim severity. Its claims ratio stood at 192.5%, compared with 65.9% for the second quarter of 2007. The title insurance segment saw its revenues drop by over 24% and its pretax operating income decline by 3.6%. The segment reported a pretax loss of $4.6 million. The company also reported after-tax unrealized investment losses for its investments in the common stock of MGIC Investment Corp., The PMI Group, and LandAmerica Financial Group of $100.5 million, or $0.43 per share. All three holdings are categorized as temporarily impaired.

The Census Bureau has reported that the inventory of vacant homes listed for sale fell 3% in the second quarter to 2.17 million, and the homeownership rate rose from 67.8% in the first quarter to 68.1%. Listings of vacant homes rose dramatically in 2006 to 2.1 million, and this overhang on the real estate market continues to exert downward pressure on house prices. Homebuilders view the inventory as a negative factor that depresses demand for newly constructed homes. The Federal Reserve Board's Beige Book noted that home sales are weak across the country and "inventories of unsold homes and condos were reported higher or excessive" in several areas. The Fed's survey of economic activity in early July also found "increased use of incentives and discounting" to sell homes. The Census Bureau report indicates that the homeownership rate for blacks rose from 47.1 % in the first quarter to 47.8% in the second quarter, while the rate for Hispanics rose from 48.9% to 49.6%.

The House has passed a landmark housing bill that includes a financial backstop for Fannie Mae and Freddie Mac by a 272-152 vote, and the measure now goes to the Senate, where a few Republican stalwarts might delay final passage for a few days. The bill increases Fannie's and Freddie's line of credit at the U.S. Treasury and authorizes the Treasury secretary for the first time to purchase stock in the two government-sponsored enterprises, if necessary. The bill also strengthens regulation of Fannie and Freddie, and passage of the bill should make it easier for the mortgage giants to raise additional capital, according to James Lockhart, director of the Office of Federal Housing Enterprise Oversight. Freddie has pledged to raise $5.5 billion in additional capital. "We are hopeful passage will help them do that quicker," Mr. Lockhart told Bloomberg TV. Once the bill is signed by President Bush, Mr. Lockhart will become the chief regulator for Fannie, Freddie, and the Federal Home Loan Banks. The massive housing bill also updates the Federal Housing Administration mortgage insurance programs and creates an FHA refinancing program to help 400,000 homeowners avoid foreclosure. The foreclosure rescue program will begin Oct. 1. Tax provisions in the bill provide a $7,500 tax credit for first-time homebuyers.

SigniaDocs, a Houston-based provider of electronic mortgage services, has announced a new service aimed at protecting lenders against claims of improper disclosure processes. The service, called eSign eNsure, enforces compliant disclosure and closing practices by warranting the good-faith estimate, the truth-in-lending statement, and annual percentage rate calculations via the creation of electronic date-and-time stamps in key disclosure areas, signifying borrower understanding and acceptance of the loan conditions. Developed in collaboration with Shanks Darby PC, a Houston-based law firm specializing in commercial and residential real estate law, eSign eNsure creates a legal representation and warranty around electronic loan document disclosures. "Electronic initials can be placed anywhere on the document that you want to direct the borrower's attention," said Tim Anderson, president of SigniaDocs. "You can require electronic initialing in those areas of the documents where you want to show electronic evidence of borrower proof of understanding and intent." The company can be found online at http://www.signiadocs.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 522.2 to 489.6 on a seasonally adjusted basis during the week ended July 18, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The Purchase Index fell from 359.7 to 335.6 on a seasonally adjusted basis, while the Refinance Index declined from 1474.9 to 1392.7. Refinancings represented 39.4% of total applications, up from 39.2% the previous week, while adjustable-rate mortgages accounted for 8.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.22% to 6.59%, and points (including the origination fee) decreased from 1.21 to 1.05 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

An online poll of homeowners in the United States and five European countries found that most believe the value of their home, while not rising this year, will increase within five years. The online Financial Times/Harris Poll found 54% of U.S. respondents joining the majority of respondents from Germany, France, Italy, and Spain in saying that the price of their home will be the same one year from now. Slightly more respondents from Great Britain, 43% vs. 42%, said their home value would remain the same than said it would decline. As for the future, 68% of American homeowners joined 64% of Italian, 57% of Spanish, and 56% of British homeowners who believe their property will increase in value within five years. But 48% of German homeowners said they expect their property value to remain the same. Most respondents were not worried about losing their homes if they could not make their mortgage or rent payments: France, 67%; Germany 62%; U.S., 61%; and Great Britain and Italy, each 55%. In Spain, however, 39% were not concerned, compared with 33% who were somewhat concerned.

The majority of subprime loans originated in 2006 were made to non-Hispanic whites and upper-income borrowers, according to ComplianceTech, an Arlington, Va.-based provider of technology and business intelligence. The report concluded that a disproportionate share of loans to minorities and low-income borrowers were subprime loans, but that non-Hispanic whites received 56.2% of the more than 1.9 million subprime loans originated in 2006. Upper-income borrowers got 39.4%, while only 7.6% went to low-income borrowers. Maurice Jourdain-Earl, co-founder and managing director of ComplianceTech, said the problem with portraying the foreclosure crisis as a minority and low-income issue is that it affects the development of possible solutions. "There could be a tendency to write off the subprime lending debacle as a type of affirmative action gone bad," he said. "We must acknowledge that the foreclosure crisis affects broader and more demographically diverse segments of society. This politically responsible approach will likely change the tone, climate, and context of how solutions are crafted." The company can be found online at http://www.compliancetech.com.

Bridger Commercial Funding, a San Francisco-based provider of commercial real estate capital, has announced the completion of a new round of capital financing (of an undisclosed amount) from its management and JMP Capital. Bridger said the investment will enable it to expand its lending and loan sales activities, including its BankXchangeloan sale advisory platform and STAR Loan products. The company said JMP Capital joins Banc of America Strategic Investments as Bridger's only outside investors, and that JMP president Walter Keenan has joined Bridger's board of directors. Bridger also announced that its BankXchange program has been retained on an exclusive basis to sell a $42 million pool of performing commercial real estate loans on behalf of an unnamed bank client. Bridger can be found online at http;//www.bridgerfunding.com.

Thacher Proffitt & Wood LLP, New York, has been hired as counsel to the Federal Deposit Insurance Corp. to act as the conservator for IndyMac Federal Bank FSB, Pasadena, Calif. The engagement pertains to corporate and transactional matters relating to the FDIC conservatorship. Its team is led by Stephen S. Kudenholdt, chairman of Thacher Proffitt's structured financial practice group, and Robert C. Azarow, a partner in the corporate and financial institutions practice group.

Lender Processing Services Inc., Jacksonville, Fla., has announced the acquisition of McDash Analytics, providing access to what LPS called the industry's largest loan-level database of mortgage assets. LPS said it now offers loan-level data for more than 39 million active first- and second-mortgage loans, representing approximately two-thirds of the mortgage market. "McDash's solutions complement our existing analytic forecasting capabilities and will enable us to serve our clients on a more comprehensive level," said Greg Whitworth, president of LPS's applied analytics division. ".... LPS has been successful in bringing together the loan and property-level data and analytics needed to provide mortgage originators, servicers, and investors with a more complete, accurate picture pf their portfolios." LPS can be found online at http://www.lpsvcs.com.

In May, home prices nationwide fell to a level 4.8% below that of a year earlier, but values may be firming up on the West Coast, according to new figures released by the Office of Federal Housing Enterprise Oversight. OFHEO said prices rose 0.3% from April to May in the Pacific region, which includes Alaska, California, Hawaii, Oregon, and Washington. Nationwide, values fell 0.3% from April to May. "It is very hard to draw conclusions from a one-month number, especially in these uncertain times," said OFHEO Director James Lockhart. The index is calculated by the agency using information on mortgages bought or guaranteed by Fannie Mae and Freddie Mac.

Wachovia Corp., the nation's 14th-largest wholesale originator, revealed Tuesday morning that it will exit that channel and shed thousands of mortgage-related jobs. The move was announced in tandem with an earnings report showing a stunning $8.86 billion loss in the second quarter. Overall, the Charlotte, N.C.-based Wachovia will shed 6,350 jobs. It said 1,000 mortgage workers will be "redeployed" to help Wachovia customers refinance "Pick-a-Pay" loans, a product the bank became heavily involved in when it bought World Savings of Oakland, Calif., two years ago. Wachovia blamed the huge losses on writedowns on its "commercial, corporate lending, and investment banking subsegments." Wachovia's investment banking arm was a huge player in the market for mortgage collateralized debt obligations.