Originations

Despite its financial problems, Countrywide Financial Corp. ranked first among all residential originators in the first quarter, funding $73 billion in home mortgages, according to exclusive survey figures compiled by National Mortgage News. Wells Fargo Bank ranked a close second with fundings of $65 billion. Meanwhile, CFC will hold a special meeting of shareholders on June 25 to vote on the sale of the company to financial services giant Bank of America. In January, BoA offered $7 a share for CFC. Over the past week its share price has fluctuated between $4.50 and $5.50. On Wednesday, BoA named Barbara Desoer, its chief technology and operations officer, to head the combined mortgage operations of the two. David Sambol, the Countrywide executive anointed by BoA in January to manage the combined mortgage operations, abruptly announced his retirement on Wednesday.

The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending May 23, 2008, which showed mortgage loan application volume was 593.3, a decrease of 4.6% on a seasonally adjusted basis from 621.6 one week earlier. On an unadjusted basis, the Index decreased 4.6% compared with the previous week and was down 7.5% compared with the same week one year earlier. Similarly, The Refinance Index decreased 8.9% to 2013.5 from 2210.5 the previous week and the seasonally adjusted Purchase Index increased 0.1% to 352.7 from 352.5 one week earlier. The Conventional Purchase Index increased 0.8% while the Government Purchase Index (largely FHA) decreased 2.2%. On an unadjusted basis, the Conventional Purchase Index increased 0.1% to 517.7 from 517.0 the previous week. The four-week moving average for the seasonally adjusted Market Index is up 1% to 636.2 from 629.6. The four-week moving average is up 0.9% to 366.2 from 363.1 for the Purchase Index, while this average is up 1.2% to 2230.0 from 2202.9 for the Refinance Index. The refinance share of mortgage activity decreased to 46.1% of total applications from 48.2% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 9.3% from 10.0% of total applications from the previous week.

A survey conducted for the National Apartment Association found that 67% of current renters do not plan to become homeowners in the next year. Moreover, 80% of those surveyed said the state of the U.S. housing market would not improve over the next six months. "The country is deep into the discussion of the economic fallout of subprime mortgage lending. However, little attention has been paid to how the crisis is impacting people's choices to stay in rental homes and wait out the storm," said NAA president Douglas Culkin. "The results of this survey reflect what our membership is experiencing across the country. Renters are not eager to take a chance on homeownership this year. If the economy improves, that trend may abate, but, for now, people are generally staying put." The survey also found that those who believe in the financial benefits of renting vs. owning has increased by five percentage points over one year ago, from 43% up to 48%. "Just last week, the Commerce Department cited that the main reason for an upswing in U.S. homebuilding is the construction of rental properties - not single-family homes - further supporting our findings of what the average U.S. adult is experiencing," added Mr. Culkin.

Financial illiteracy among Americans remains overwhelmingly high when it comes to mortgages and other financial products, according to a new survey from the Center for Economic and Entrepreneurial Literacy. When asked to choose from a list of four most important factors in obtaining a home loan, for example, almost 70% of respondents did not choose the FICO score as they should have, according to the survey. "When so many Americans are unable to answer the most basic questions about personal finance and debt, it is clear that economic literacy is a problem that needs to be corrected in this country," said CEEL senior analyst Kristen Lopez Eastlick.

David Sambol, the Countrywide executive anointed by Bank of America to manage the combined mortgage operations of the two lending giants, abruptly announced his retirement on Wednesday. An e-mail sent out by Mr. Sambol to Countrywide's employees confirms that he is retiring. "I have dedicated the last 24 years of my life to building Countrywide into the greatest mortgage company in the world." BoA confirmed his retirement in a press statement issued this morning, saying it has named executive Barbara Desoer to head the combined mortgage operations of the two. In his e-mail to employees, Mr. Sambol does not expand on his decision to retire. Ms. Desoer is a chief technology and operations officer for BoA. BoA will officially buy the money-losing CFC by the end of the third quarter.

Fitch has taken various rating actions on Citigroup Commercial Mortgage Trust, Series 2006-FL2, including placing on Rating Watch Negative two classes. Fitch placed on RWN the $2 million class RAM-1 and the $2.4 million class RAM-2, citing the "declining performance of the Radisson Ambassador Plaza Hotel and Casino" in San Juan, Puerto Rico, which failed to recover as expected after its occupancy and average daily rate were affected by renovation between October 2005 and May 2006. The rating agency also upgraded class MVP to AAA from BBB- and affirmed the ratings of several other classes.

Robert Rowling, through a company he chairs, TRT Financial Holdings, is making a $38.4 million capital infusion into Guaranty Financial Group Inc., Austin, Tex. Mr. Rowling is purchasing 7.4 million shares of Guaranty's common stock at $5.17 per share. The stock closed on May 23 at $5.43 per share and was up to $6.22 as of mid-morning on May 27, the day the deal was disclosed. Furthermore, within 120 days of the initial stock purchase, Mr. Rowling will purchase convertible preferred stock that will result in him owning 19.9% of Guaranty's outstanding common stock. The sale to Mr. Rowling is in addition to a stock rights offering announced on May 1. Guaranty lost $10 million in the first quarter, as it took a higher provision for credit losses because of loans to homebuilders, particularly in northern and central California. Guaranty is also the nation's 10th largest warehouse lender as of the end of 2006, according to the Mortgage Industry Directory.

Triad Guaranty Inc., Winston-Salem, N.C., said it has been suspended by Freddie Mac as an approved mortgage insurer. The company had previously fallen out of Freddie Mac and Fannie Mae Type I mortgage insurer eligibility requirements due to downgrades by the rating agencies. Triad said it will appeal the decision and that Freddie Mac will continue to purchase loans to be insured or committed to by insured by Triad during appeals process. Mark K. Tonnesen, president and chief executive of Triad, said, "Freddie Mac and Fannie Mae are both continuing to accept new insurance written or committed by Triad. We welcome the opportunity to provide both the GSEs and our regulators with more details concerning our anticipated voluntary run-off plan and the benefits we believe can be achieved by completing the proposed transaction with Lightyear." Triad added it is still in negotiations with Lightyear Capital LLC, New York, over the creation of a new mortgage insurance company.

Five classes from two Nomura Home Equity Loan Net Interest Margin notes have been downgraded by Fitch Ratings. The downgrades were as follows: Nomura Home Equity Loan NIM 2006-FM2, class N-1, from BBB to C/DR6, and class N-2, from B to C/DR6 (and removed from Rating Watch Negative); and Nomura Home Equity Loan NIM 2006-HE3, class N-1, from BBB to C/DR6, and classes N-2 and N-3, from B to C/DR6. Fitch also lowered the Distressed Recovery rating of class N-3 in series 2006-FM2 from DR5 to DR6. "The rating actions reflect actual pay-down performance of the NIM securities to date compared to initial projections, as well as changes that Fitch previously made to its subprime loss forecasting assumptions for the underlying transactions," the rating agency said.

Fitch Ratings has announced plans to provide Rating Outlooks on U.S. structured finance bonds in response to a positive reception to its Rating Outlooks for European structured transactions. Fitch introduced the outlooks in June 2007 to European asset-backed securities, commercial mortgage-backed securities, and residential MBS transactions. "Fitch is issuing Outlooks in response to market requests for more forward-looking information about possible future rating changes," said John Bonfiglio, group managing director and head of U.S. Structured Finance. Rating Outlooks -- which may be Positive, Negative, Stable, or Evolving -- indicate the likely direction of any rating change over a one- to two-year period, Fitch said. They will be applied at the individual bond level and updated concurrently with a rating review for each transaction. Fitch can be found on the Web at http://www.fitchratings.com.

A commercial real estate index maintained by the National Association of Realtors edged down in the first quarter, its third straight quarterly decline after hitting a record high last year, according to the NAR. The Commercial Leading Indicator for Brokerage Activity stood at 119.0 in the first quarter, down 0.7% from a downwardly revised 119.9 in the fourth quarter, the association reported. The record high of 120.5 was reached in the second quarter of 2007. "The moderate erosion in the index suggests that commercial activity, as measured by net absorption and the completion of new commercial buildings, will be positive but somewhat weaker over the next six to nine months," said NAR senior economist Lawrence Yun. "Private nonresidential investment in structures is likely to subtract one-third to one-half percentage point off [gross domestic product] growth." The association can be found online at http://www.realtor.org.

Greystone Residential Funding, Middleton, Wis., has announced a change in ownership and a planned transition to a new name, QR Lending. The new equity partner is a group of private investors focused on businesses that serve community banks and credit unions, Greystone said. The company said it does not plan to make operational, management, or personnel changes. The name change will take place in coming months as Greystone's state registrations are completed. The company can be found online at http://www.greystonerf.com.

American Home Bank, Mountville, Pa., has announced the combination of its Northeast and Southeast wholesale units and the promotion of mortgage veteran William J.S. "Bill" Kelley to head the division. The company said it is expanding its whole product offerings and delivery systems at a time when "many major wholesalers are withdrawing from the third-party origination business." Mr. Kelley, whose title will be president of the wholesale division, will be based in Jacksonville, Fla. He previously held positions at Travelers Mortgage Services, Anchor Mortgage Services, Tucker Federal Bank, and FNB Bank. The AHB wholesale division can be found on the Web at http://www.bankahbwholesale.com.

More than 11,000 loan officers have already registered with the five-month-old Nationwide Mortgage Licensing System. Add more than 8,700 principals, owners, and branch managers who also have joined the system, and the tally is nearly 20,000, according to figures released at the Conference of State Bank Supervisors' annual conference in Amelia Island Plantation, Fla. The CSBS operates the licensing system, which went live in January in eight states. Created in conjunction with the American Association of Residential Mortgage Regulators, the system is designed to bring greater accountability and transparency to the mortgage business. The system now contains more than 6,100 company, branch, and individual licensees, and nearly 11,200 more applications are pending. Some 330 licenses have been "terminated" since the NMLS went live Jan. 2, most likely because they were voluntarily surrendered but possibly because some were revoked. A total of 18 states are scheduled to participate in the NMLS by the end of the year, and 42 agencies in 40 states have signed letters of intent to join the system eventually.

The chief economist at Moody's Economy.com says the housing market has a long way to go before it turns the corner. "The housing downturn is now comparable to the Great Depression," Mark Zandi told the Conference of State Bank Supervisors' annual meeting at the Amelia Island Plantation in Florida. "And it is evident across the country." The "most fundamental problem" with housing is excess capacity, "and it's getting worse," Mr. Zandi said. Citing Census Bureau data, the economist said the number of "completely vacant" unsold houses now totals 2.25 million units. That's twice the number of houses that were sitting on the shelves in 2004, and the current situation "won't stabilize soon," he told the state regulators. The economist also said most places are now experiencing price declines. Not so long ago, he was predicting that prices would fall 20% or so from peak to trough. But he told the CSBS that the 20% figure "doesn't cut it anymore." Now, he's looking for a 20%-25% drop in prices by the time the free-fall is over, and perhaps 30% in some places in California, Florida, Nevada, and Arizona.

Classes K and L of COMM 2000-C1 commercial mortgage pass-through certificates, series 2000-C1, have been downgraded by Fitch Ratings. Class K was downgraded from B to B-minus, and class L was downgraded from CCC/DR1 to CC/DR4. In addition, Fitch affirmed 10 classes in the transaction. The downgrades are based on increased loss expectations on the four specially serviced assets in the pool, Fitch said.

The percentage of first-time buyers in California able to afford an entry-level home stood at 44% in the first quarter, compared with 26% for the same period a year ago, according to the California Association of Realtors. The minimum household income needed to purchase an entry-level home at $356,350 in California was $67,830 in the first quarter, based on an adjustable interest rate of 5.65% and assuming a 10% downpayment, according to CAR's First-time Buyer Housing Affordability Index. (First-time buyers typically purchase a home equal to 85% of the prevailing median price.) The monthly payment, including taxes and insurance, stood at $2,260. At 64%, Sacramento County and the High Desert region were the most affordable areas in the state, and Monterey was the least affordable, at 29%. CAR can be found on the Web at http://www.car.org.

Commercial real estate recorded a negative-1.0% rate of return in February on a national basis, as well as a 12-month rate of return of 5.5%, according to the S&P/GRA Commercial Real Estate Indices. "The sectors and regions of the market that performed the best for the month are ones that have been relative laggards over the past 12 months," said David Blitzer, managing director and chairman of S&P's Index Committee. "In the property sector, retail was the star performer during the February/January period, up 0.8%, while the region that performed the best was the mid-Atlantic South, up 1.1%." The indices showed an 8.6% 12-month rate of return for the warehouse sector, and a 9.4% rate for the Pacific Northwest, S&P reported. The worst one-month performance, negative-2.4%, was recorded in the Northeast, and the worst one-month performance by property type was negative-1.9% in the office sector, according to the company.

LandAmerica Financial Group Inc., a Richmond, Va.-based provider of real estate transaction services, has announced that it will merge its Residential Services and Lender Services units as of June 30. Melissa Hill will be president of the combined channel. "LandAmerica is leveraging the combined power of its Residential Services relationships and its local sales and service capabilities with the operational efficiencies of Lender Services," Ms. Hill said. LandAmerica can be found on the Web at http://www.landam.com.

Washington Real Estate Investment Trust, Rockville, Md., has priced a public offering of 2.6 million shares of its common shares of beneficial interest at $34.80 per share. The REIT said it will grant the underwriters an option to buy up to 390,000 additional shares to cover any overallotments. Raymond James & Associates Inc. and J.P. Morgan Securities Inc. are the joint book-running managers of the offering. The REIT can be found online at http://www.writ.com.