Originations

Freddie Mac is looking to be a player in the commercial-mortgage securitization niche by pooling together multifamily loans and securitizing them through a dealer. Mike May, Freddie Mac's senior vice president, multifamily sourcing, told Mortgage Wire that the GSE sees the current market disruption as a good opportunity to get into this business. The plan is for Freddie Mac to aggregate the loans, buying them from its network of lenders, and either hold on to or securitize the senior pieces of the loans, while securitizing the 'B' pieces through a dealer. If the senior pieces were to be securitized, they would carry the Freddie Mac label.

The National Association of Mortgage Brokers has rolled out a trio of six-hour online professional training programs designed to help its members earn their Lending Integrity Seal of Approval. NAMB requires all members to meet the requirements to earn the seal by 2009. TrainingPro, Hunt Valley, Md., developed the courses. "These new classes reinforce NAMB's ongoing commitment to the highest level of professional ethics," said NAMB president George Hanzimanolis. "By making the classes available online, TrainingPro has made the high standards of the Lending Integrity Seal attainable for all brokers and originators." All three courses have a two-hours ethics component. Course 1 also discusses fair lending and consumer privacy, Course 2 covers FHA lending and Course 3 talks about recent industry developments and mortgage fraud. "Now, more than ever, it is essential that mortgage brokers, originators and other financial professionals have the continuing education they need to serve their customers," said Chris Nickerson, chief executive of TrainingPro. For more information about NAMB and the Lending Seal of Approval, visit http://www.namb.org/ and http://www.lendingintegrity.org/.

Draper and Kramer Mortgage Corp., Chicago, and 1st Advantage Mortgage LLC, headquartered in the suburb of Lombard, Ill., have combined operations. Draper and Kramer Mortgage is an affiliate of Draper and Kramer, Inc., a privately held real estate service company. The companies believe that integrating their businesses will lead to greater efficiency by combining their technologies, systems and management. This will result in pricing benefits and increased locations while they continue to utilize the best methods to bring clients the highest level of service. Paul Lueken will serve as president of the combined operations. He is currently the president of 1st Advantage Mortgage as well as president of the Illinois Association of Mortgage Professionals. "We are very pleased to announce this business partnership," said Forrest D. Bailey, president and CEO of Draper and Kramer Inc. and CEO of Draper and Kramer Mortgage. "Having been active in residential mortgage industry for over 50 years, this initiative underscores our companies continued commitment to the residential mortgage business as one of the four main pillars that make our company what it is today: a strong, diversified real estate company." Headquarters for the combined mortgage operations will be in Lombard. The company will maintain over a dozen offices in Illinois, Wisconsin, Texas and Arizona.

The Office of Management and Budget is expected to complete its review of HUD's RESPA Rule in a "few days" so it can be issued for public comment by the end of February, according to a Housing and Urban Development official. HUD deputy assistant secretary Gary Cunningham said the Real Estate Settlement Procedures Act proposal will enhance the Good Faith Estimate so mortgage applicants receive a clear disclosure of the loan terms and settlement costs. The new GFE will also provide a better disclosure of the mortgage broker fee. Once OMB clears the RESPA proposal, HUD will submit it to Congress for a 15-day review before it is published for a 60-day comment period.

Home sales will remain flat until Congress passes the economic stimulus bill that allows Fannie Mae and Freddie Mac to purchase jumbo mortgages, according to the National Association of Realtors. The Realtors are concerned that homebuyers in high-cost markets are sitting on the sidelines and waiting for Congress to increase the GSE loan limits to 125% of median home prices with a cap of $729,750. NAR also is concerned that operational problems could delay implementation and Fannie and Freddie will not be ready to stimulate sales during the spring home buying season. It would be "cleaner and faster" for the two government-sponsored enterprises to implement a $625,000 nationwide loan limit, NAR spokesman Walter Maloney said. Separately, GSE regulator James Lockhart told a Senate panel it will take Fannie and Freddie two months to set up the systems and models to purchase higher balance loans.

Freddie Mac's Primary Mortgage Market Survey reported that the 30-year fixed-rate mortgage averaged 5.67% with an average 0.4 point for the week ending February 7, 2008, down slightly from last week when it averaged 5.68%. Last year at this time, the 30-year FRM averaged 6.28%. The 15-year FRM this week averaged 5.15% with an average 0.4 point, down from last week when it averaged 5.17%. A year ago at this time, the 15-year FRM averaged 6.02 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.21% this week, with an average 0.4 point, down from last week when it averaged 5.32%. A year ago, the 5-year ARM averaged 5.99%. One-year Treasury-indexed ARMs averaged 5.03% this week with an average 0.5 point, down from last week when it was 5.05%. At this time last year, the 1-year ARM averaged 5.49%. "Long-term mortgage rates were little changed this week, largely in sync with the movements in the Treasury bond yields during the same time," said Frank Nothaft, Freddie Mac vice president and chief economist. "Additionally, economic news released in the past week showed that the economy continues to be weak."

Senate Banking Committee chairman Chris Dodd, D-Conn., wants Fannie Mae and Freddie Mac to use a 30% capital surplus to buy subprime loans and restructure the loans to prevent foreclosures, but the GSE regulator indicated he is reluctant to lower the capital requirement. Office of Federal Housing Enterprise Oversight director James Lockhart said the two government sponsored enterprises have done a good job of purchasing refinanced subprime loans and they have enough capital to securitize those loans. The director also said the OFHEO is in discussions with the GSEs to free up the capital surplus that was imposed several years ago because of operational problems associated with their accounting and internal controls. But he told Sen. Dodd that Fannie and Freddie are facing new stresses due to raising delinquencies and loan losses. "We need to be careful about taking it off," Mr. Lockhart said. "I would be more comfortable," he added, if OHFEO had more authority to set minimum and risk-based capital requirements.

HOPE NOW, an alliance created by mortgage lenders to aid troubled borrowers, says that approximately 869,000 mortgage borrowers were helped in the second half of 2007, an increase from the group's earlier estimate. "HOPE Now servicers are working hard to help more and more homeowners who are in difficulty, but we know there is much more to be done," said Faith Schwartz, executive director of HOPE NOW. 14 servicers, which manage more than 33 million home loans, or about 62% of the total servicing market, provided the data used for the estimate. In addition to 545,000 subprime borrowers who were helped with repayment plans or loan modifications, the organization says that 324,000 prime borrowers received assistance.

The National Association of Mortgage Brokers has rolled out a trio of six-hour online professional training programs designed to help its members earn their Lending Integrity Seal of Approval. NAMB requires all members to meet the requirements to earn the seal by 2009. TrainingPro, Hunt Valley, Md., developed the courses. "These new classes reinforce NAMB's ongoing commitment to the highest level of professional ethics," said NAMB president George Hanzimanolis. "By making the classes available online, TrainingPro has made the high standards of the Lending Integrity Seal attainable for all brokers and originators." All three courses have a two-hours ethics component. Course 1 also discusses fair lending and consumer privacy, Course 2 covers FHA lending and Course 3 talks about recent industry developments and mortgage fraud. "Now, more than ever, it is essential that mortgage brokers, originators and other financial professionals have the continuing education they need to serve their customers," said Chris Nickerson, chief executive of TrainingPro. For more information about NAMB and the Lending Seal of Approval, visit http://www.namb.org/ and http://www.lendingintegrity.org/.

Federal Reserve rate cuts have prompted a surge in refinancing applications but many mortgage lenders are waiting to see the appraisal reports in two or three weeks before counting their chickens. "Business is booming on refis but they are all wondering what the values are going to be. That is the wildcard," said mortgage banking consultant Brian Chappelle. Lenders also are concerned the American consumers are tapped out, he said, and don't have the savings to pay down the mortgage if the appraisal comes in a little low or even cover the closing costs. But researchers at Friedman Billings Ramsey Investment Management insist there are plenty of qualified borrowers that will be able to refinance. And they expect the 2008 refinancing wave will match the wave of 2001. "We expect the current surge in refinancing to persist as long as agency and non-agency mortgage rates remain below the critical thresholds of 6% and 7% respectfully," FBRIM managing director Michael Youngblood said.

RMBS Fitch plans to update certain modeling assumptions in its ongoing analysts of the financial guaranty industry, citing a "consensus movement towards a view of increased loss projections for U.S. subprime residential mortgage-backed securities" that it supports. Fitch has identified five financial guarantors as "having material subprime exposure within their insured portfolios." These are Ambac Assurance Corp., CIFG Guaranty, Financial Guaranty Insurance Co., MBIA Insurance Corp. and Security Capital Assurance Inc. Fitch has downgraded Ambac, FGIC and SCA. Their ratings and those of the other two aforementioned companies are all on Rating Watch Negative. Fitch also said it will be keeping a close eye on Financial Security Assurance Holdings Ltd. even though its ratings officially remain stable and its subprime-related exposure is not "material."

Wachovia Securities, Charlotte, N.C., with $407.9 billion in U.S. master and primary servicing, heads up the list of commercial and multifamily mortgage servicers at the end of 2007, the Mortgage Bankers Association reports. Wachovia is followed by Midland Loan Services/PNC Real Estate Finance, Pittsburgh, with $268.5 billion; Capmark Financial Group, Inc., Horsham, Penn., with $258.1 billion; and Wells Fargo, San Francisco, with $175.6 billion. Wachovia, Capmark, Midland/PNC and Wells Fargo are the largest master and primary servicers of commercial and multifamily loans that went into U.S. commercial mortgage and asset-backed securitizations, the Washington-based MBA reports. GEMSA Loan Services, Houston; Prudential Asset Resources, Newark, N.J.; Midland Loan Services/PNC Real Estate Finance and NorthMarq Capital are the largest servicers for life companies. Midland/PNC, Wachovia, Deutsche Bank, and Capmark are the largest Fannie Mae and Freddie Mac servicers. Wachovia also tops the list of master and primary servicers of commercial bank and savings institution loans; Capmark is the top servicer of FHA and Ginnie Mae-related loans.

According to the Mortgage Bankers Association¹s Weekly Mortgage Applications Survey for the week ending February 1, 2008, the Market Composite Index, a measure of mortgage loan application volume, was 1086.6, an increase of 3% on a seasonally adjusted basis from 1054.9 one week earlier. On an unadjusted basis, the Index increased 4.4% compared with the previous week and was up 73.2% compared with the same week one year earlier. The Refinance Index decreased 1% to 5054 from 5103.6 the previous week and the seasonally adjusted Purchase Index increased 12% to 405.3 from 362 one week earlier. The Conventional Purchase Index increased 10.4% while the Government Purchase Index increased 20.9%. On an unadjusted basis, the Purchase Index increased 19.1% to 386.5 from 324.4 the previous week. The seasonally adjusted Conventional Index increased 1% to 1552.6 from 1537.6 the previous week, and the seasonally adjusted Government Index increased 23.7% to 309.5 from 250.2 the previous week. According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages increased to 5.61% from 5.6%, with points decreasing to 0.98 from 1.06 (including the origination fee) for 80% loan-to-value ratio loans. The full results of the survey can be found online at http://www.mortgagebankers.org.

Although Single-family residential mortgage lender Thornburg Mortgage Inc. reported net income before preferred stock dividends of $64.8 million for the fourth quarter of 2007, down 19% from the $80.3 million for the same period the year prior, the company¹s credit quality originated and bulk purchased loans has remained exceptional. At December 31, 2007, 60-day plus delinquent loans and real-estate owned properties in the company¹s originated and bulk purchased loans totaled 0.44% of its $24.6 billion portfolio of securitized and unsecuritized loans, up from 0.27% at September 30, 2007, but still significantly below the industry's conventional prime ARM loan delinquency ratio of 4.23% at September 30, 2007.

Federal Reserve rate cuts have prompted a surge in refinancing applications but many mortgage lenders are waiting to see the appraisal reports in two or three weeks before counting their chickens. "Business is booming on refis but they are all wondering what the values are going to be. That is the wildcard," said mortgage banking consultant Brian Chappelle. Lenders also are concerned the American consumers are tapped out, he said, and don't have the savings to pay down the mortgage if the appraisal comes in a little low or even cover the closing costs. But researchers at Friedman Billings Ramsey Investment Management insist there are plenty of qualified borrowers that will be able to refinance. And they expect the 2008 refinancing wave will match the wave of 2001. "We expect the current surge in refinancing to persist as long as agency and non-agency mortgage rates remain below the critical thresholds of 6% and 7% respectfully," FBRIM managing director Michael Youngblood said.

The Eleventh Federal Home Loan District Cost of Funds Index for December is 4.072%, a 10 basis points decline from November's 4.172%. The index is a weighted index calculation of the cost of mortgage funds for thrifts that belong to the Federal Home Loan Bank of San Francisco. Reversing the trend of the previous two years, COFI has declined by 32 basis points between last December and this one; in 2005 and 2006, the index increased by 110 basis points in both years. Out of the preceding 12 months, COFI increased in just three. In May, it rose by 7 bps; in August there was an 8 bps increase, followed by an increase of slightly over 2 bps in September. For comparative purposes, according to the Freddie Mac Primary Mortgage Market Survey, the one-year adjustable rate mortgage was at 5.45% in December 2006. It hit 5.71% in July, before trending down again to 5.50% in December 2007, a net increase of 5 bps during the year.

Fannie Mae also reported record levels of activity for 2006. At a Fannie Mae press briefing at the Mortgage Bankers Association's commercial and multifamily real estate finance convention in Orlando, company executives said that the second half of 2006 saw the conduits sidelined and more business being directed to the GSEs. Phil Weber, senior vice president of multifamily lending, noted that the single-family downturn will have an impact on the multifamily business as well, but long-term multifamily fundamentals are good. Fannie Mae has introduced a mezzanine product for the rehabilitation market.

Freddie Mac purchased a record $44.7 billion in new multifamily business in 2007. "Despite a difficult market, 2007 was a good year for Freddie Mac's multifamily business," said Mike May, senior vice president for multifamily sourcing for Freddie Mac. "The mid-year exit of conduits from the market drove a significant increase in conventional loans to Freddie Mac at a time when we were managing some of the largest and most complex pool transaction in our history," he said. Freddie Mac can be found online at http://www.freddiemac.com.

Capital markets disruptions contributed to a 16% year-to-year drop in commercial and multifamily originations during the fourth quarter but fundamentals in the market remain strong, according to the Mortgage Bankers Association. The association said the decline occurred "across most property types and investor groups." Exceptions to this included the government-sponsored enterprises, which saw a 41% dollar volume increase compared to last year's fourth quarter; and hotel and healthcare property loans, which respectively saw 349% and 3% jumps in volume during the same period. "The increase in hotel originations was heavily influenced by large portfolio sales during the period," the association said.

Mortgage Assistance Center Corp., Dallas, has hired Dennis D. Downey as executive vice president and chief operating officer. He was the founder and chairman of Downey Capital Corp., where he handled the marketing, structuring and closing of commercial real estate financing transactions using a broad range of funding programs. In the late 1980s into the early 1990s, Mr. Downey was the southwest regional director of servicing and real estate owned activities for Freddie Mac. Mr. Downey also currently serves on the board of Lanier Capital REIT Inc.