Originations

Senior Housing Properties Trust, a real estate investment trust based in Newton, Mass., has priced a public offering of 5.0 million common shares of beneficial interest at $22.81 per share.The joint book-running managers of the offering are UBS Investment Bank, Merrill Lynch & Co., and Morgan Stanley. The REIT said it has granted the underwriters an option to buy up to 750,000 additional shares to cover any overallotments. The company can be found online at http://www.snhreit.com.

Behringer Harvard, a Dallas-based commercial real estate company, has closed on a $500 million secured credit facility on behalf of Behringer Harvard REIT I Inc.The deal includes a $200 million term loan and a $300 million revolving credit facility, each with a three-year term and a one-year option, the company said. KeyBanc Capital Markets and Wachovia Securities were the co-lead arrangers of the transaction. The company can be found on the Web at http://www.behringerharvard.com.

Wolters Kluwer Financial Services is offering to help mortgage servicers modify the loans of distressed subprime borrowers who face onerous rate resets.WKFS, a provider of compliance, content, and technology systems to the industry, says it can help servicers modify loans rapidly with a standard but customizable set of documents and packages that let servicers freeze the interest rate of their borrowers' existing adjustable-rate mortgages for a specified period or convert those ARMs to fixed-rate or interest-only loans. The company said it can provide secure electronic delivery of completed document packages to borrowers and all other parties, including electronic signature capabilities for the borrower's acceptance.

The average 30-year fixed mortgage rate rose from a two-year low of 5.96% to 6.11% over the seven-day period ended Dec. 13, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.65% to 5.78%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.75% to 5.89%, and the average rate for one-year Treasury-indexed ARMs rose from 5.46% to 5.50%, Freddie Mac reported. Fees and points averaged 0.5 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "November's employment report showed stronger job growth, no change in the unemployment rate, and a jump in wages, suggesting to some market participants that the probability of an upcoming recession might be lower than originally thought," said Frank Nothaft, Freddie Mac's chief economist. "This led to a rise in interest rates for U.S. Treasury securities this week, and mortgage rates followed." A year ago, the average 30-year and 15-year fixed rates were 6.12% and 5.86%, respectively, and the average hybrid and one-year ARM rates were 5.92% and 5.45%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Commercial and multifamily mortgage debt outstanding rose 2.8% in the third quarter, or $87.7 billion, exceeding the $3.2 trillion level, according to the Mortgage Bankers Association.Multifamily mortgage debt outstanding alone rose to $813 billion, an increase of $23.5 billion, or 3%, from that of the second quarter. "The third quarter included the periods immediately before and immediately after the dramatic adjustments in the capital markets," said Jamie Woodwell, MBA's senior director of commercial and multifamily research. "As a result, commercial/multifamily mortgage debt outstanding grew to a new record -- $3.2 trillion -- but the quarter-over-quarter change in mortgage debt outstanding fell from $107 billion last quarter to $87.7 billion this quarter. Even with the drop, the $87.7 billion increase in Q3 still marked the fourth-largest increase on record." The trade group gets input for the report from Federal Reserve data. Commercial banks continue to hold the largest share of commercial and multifamily mortgages, at $1.35 trillion, or 42% of the total. Securitization avenues (issuers of commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities) hold the second-largest share, at $760 billion, or 24% of the total.

The prospects for Senate passage of a Federal Housing Administration reform bill have improved greatly now that Sen. Tom Coburn, R-Okla., has signaled a willingness to allow a vote if his concerns about FHA reverse mortgages are addressed.Sen. Coburn has been holding up passage of the FHA bill for several weeks. But under pressure from fellow Republicans on the Senate Banking Committee, he finally relented provided he can offer an amendment. The amendment is expected either to restore a cap on the number of reverse mortgages the FHA can insure or require the agency to notify the banking committee if losses on the reverse mortgage program outstrip revenues. A vote on the FHA bill could come at any time.

The House Judiciary Committee approved a narrowly targeted bankruptcy bill by a 17-15 vote Dec. 12 that would give subprime and nontraditional mortgage borrowers facing foreclosure one last chance to get their mortgage restructured so they can stay in their homes.Only homeowners who have received a foreclosure notice could seek a Chapter 13 restructuring under a compromise worked out between committee Democrats and Rep. Steve Chabot, R-Ohio. Under the bill, bankruptcy judges could waive prepayment penalties and reduce the mortgage amount to the fair market value and reduce the interest rate to a conventional rate plus a risk premium. These restructurings would be limited to subprime and nontraditional mortgages originated from 2000 through the date of enactment of the legislation. The Mortgage Bankers Association and the American Bankers Association oppose the bill.

Investigators for the state of Illinois have issued what one official calls "extensive" subpoenas to Countrywide Financial Corp. as part of a far-reaching probe into its origination of subprime and payment-option ARMs.Debra Hagan, chief of the state's consumer protection division, told MortgageWire that investigators are scrutinizing subprime and payment-option adjustable-rate mortgages that Countrywide funded on a retail basis and through loan brokers. "Payment-option ARMs are at the top of our list," she said. Ms. Hagan said the Countrywide probe was sparked, in part, by the state's investigation and subsequent lawsuit against One Source Mortgage, a now-defunct Chicago loan broker accused of misleading consumers about their option ARM teaser rates. Countrywide is cooperating with the investigation, Ms. Hagan said. (See the Dec. 17 issue of National Mortgage News for complete details.)

Fairway Independent Mortgage Corp., a mortgage broker/banker with over 100 branches nationwide, has established a reverse mortgage division."In order to properly service this growing segment, we knew we'd need to establish a division that ensures consistency and compliance," said Gary Nelson, vice president of national sales at Fairway. ".... As baby boomers age, more and more homeowners are becoming qualified for reverse mortgages every day. We're establishing a program to provide standardized delivery of reverse mortgages, so obtaining a reverse mortgage will be just as consistent, convenient, and straightforward as getting a standard mortgage from any Fairway location." Fairway can be found on the Web at http://www.fairwayindependentmc.com.

National Bank of Kansas City, Overland Park, Kan., has announced the introduction of a Mortgage Recovery program by its mortgage division to help borrowers hurt by the turmoil in the subprime mortgage market.Under the program, the bank will review a loan's terms, including prepayment penalties, adjustment dates, and variable rates, and counsel the borrower about the loan and the available options. "With so many stories in the media regarding subprime loans, refinancing, [Federal Housing Administration] loans, rate freezes, and foreclosures, consumers are confused about their options," said Todd Geiman, executive vice president of the Kansas bank's mortgage division. "We were taken aback by the misinformation given to many of the people we've spoken with. Many homeowners don't even realize they fall in the subprime category."

Citizens Republic Bancorp, Flint, Mich., has announced that it will use PHH Mortgage, Mt. Laurel, N.J., for certain outsourced functions in the mortgage originations process.PHH will provide Citizens Republic with mortgage loan processing, servicing of new mortgage originations, certain secondary-market functions, and other mortgage-related loan origination services. The arrangement allows for Citizens Republic loan officers to use Web-based software while PHH does all the processing work under the bank's name. PHH will also take applications directly through a call center and website. In a Securities and Exchange Commission filing, Citizens Republic said it would reduce its work force by 60 employees as a result. It will record $1.1 million to $1.3 million in severance-related costs in the fourth quarter. It also announced plans for "better utilization of part-time employees" that would add an additional $900,000 to $1.2 million of severance-related costs. "Our new mortgage loan operating model increases our ability to originate loans through more channels with quicker loan decisions and closings," said William R. Hartman, president and chief executive of Citizens Republic. PHH Mortgage, a subsidiary of PHH Corp., can be found on the Web at http://www.phh.com.

Genworth Financial -- which owns the nation's fifth-largest mortgage insurer -- says its profit for next year will miss analysts' expectations because of the housing slump.At a recent investor conference, the company said its mortgage insurance division could lose up to 25 cents a share. Genworth's MI group has enjoyed a reputation for being one of the most conservatively managed insurers in the business. Genworth executives have forecast 2008 operating earnings of $2.65 to $3.15 per share for the entire company. Analysts, on average, had forecast 2008 earnings of $3.20 per share. Genworth can be found on the Web at http://www.genworth.com.

Most borrowers have not been negatively affected by the turmoil in the housing market, and overall satisfaction with the mortgage lending industry has remained stable since 2006, according to the J.D. Power and Associates 2007 Primary Mortgage Origination Study.The study, which measures customer satisfaction with four key aspects of mortgage origination (application approval, interaction with the loan representative, closing, and problem resolution), found that overall satisfaction stood at 750 on a 1,000-point scale, and is consistent with 2006 results. "While it's true that borrowers with weaker credit and those seeking larger 'jumbo' loans experience longer approval times and requests for more documentation, satisfaction has remained steady among the 75% of mainstream borrowers with good credit applying for moderately sized loans," said Tim Ryan, senior director of the mortgage practice at J.D. Power. Wachovia ranked highest among primary mortgage lenders, with a score of 827, while SunTrust Mortgage ranked second with 818 and Bank of America ranked third with 760. "The percentage of borrowers working directly with their lender instead of through a third party has increased, which has helped maintain the stability of overall satisfaction since 2006," Mr. Ryan said. The origination study was based on responses from 4,378 consumers who obtained new mortgages between September 2006 and August 2007.

The Market Composite Index, an overall measure of mortgage applications, rose from 791.8 to 811.8 on a seasonally basis during the week ended Dec. 7, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 1.4% on the week and were up 14.2% from the level recorded a year earlier. The Purchase Index rose from 464.3 to 472.0 on a seasonally adjusted basis, while the Refinance Index climbed from 2761.3 to 2879.8. Refinancings represented 57.6% of total applications, up from 56.0% the previous week, while adjustable-rate mortgages accounted for 9.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.82% to 6.07%, and points (including the origination fee) rose from 1.07 to 1.17, for loans with 80% loan-to-value ratios, the association reported.

The Federal Reserve Board will meet Dec. 18 to issue long-awaited revisions to its Home Ownership and Equity Protection Act regulations that address abuses associated with subprime loans.The proposed HOEPA rule will address prepayment penalties, failure to escrow taxes and insurance, stated-income and low-documentation lending, and ability-to-repay standards. In a letter to the Fed, 17 Democrats on the Senate Banking Committee urged the Fed to act "forcefully" to protect consumers. "We appreciate the fact that the Board is moving forward with a rulemaking under HOEPA, and expect the Board to meet the duty Congress entrusted to it to end the abusive practices … that have undermined confidence in the subprime mortgage market and the economy as a whole," the Dec. 7 letter says.

As MortgageWire's deadline approached, the House Judiciary Committee was on track to approve a narrowly targeted bankruptcy bill that would give subprime and nontraditional mortgage borrowers facing foreclosure one last chance to get their mortgage restructured.Only homeowners who have received a foreclosure notice could seek Chapter 13 bankruptcy relief under a compromise worked out by committee Democrats and Rep. Steve Chabot, R-Ohio, who is the only Republican on the committee expected to vote for the bill (H.R. 3609). The Ohio congressman said, however, that he expects more Republicans to support the bill when it comes up for a vote on the House floor next year. Under the bill, bankruptcy judges could waive prepayment penalties and reduce the mortgage amount to the fair market value and reduce the interest rate to a conventional rate plus a risk premium. These restructurings would be limited to subprime and nontraditional mortgages originated from 2000 through 2007 and up to the date of enactment of the legislation. Rep. Brad Sherman, D-Ohio, said the bill exempts prime loans and that he may offer an amendment to exempt prime interest-only mortgages. The Mortgage Bankers Association and American Bankers Association continue to oppose the bill.

Three classes from Ace Securities Corp. mortgage pass-through certificates series 2003-NC1 have been downgraded by Fitch Ratings.The downgrades were as follows: class M-4, from BBB-minus to BB, class M-5, from BB to CC/DR3, and class M-6, from BB-minus to C/DR5. Fitch also affirmed the ratings on four other classes in the deal. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The collateral for the deals consists of fixed- and adjustable-rate, first- and second-lien subprime mortgage loans.

Five classes of mortgage pass-through certificates issued by Ace Securities Corp. have been downgraded by Fitch Ratings as a result of changes in the rating agency's subprime loss forecasting assumptions.The downgrades were as follows: Ace 2005-HE2, class B-1, from BB to C/DR3, and class B-2, from BB-minus to C/DR5; and Ace 2005-HE3, class M-9, from BB to BB-minus, class B-1, from BB-minus to B, and class B-2, from B-plus to C/DR5. Fitch also placed three classes from three Ace transactions on Rating Watch Negative and affirmed the ratings on 28 other classes.

Oxford, Miss.-based FNC Inc. has announced the release of Collateral Headquarters as a desktop tool to enable regional and community lenders and appraisal management companies to automate appraisal ordering, assignment, tracking, and review from a single centralized platform.The system captures best practices in a user-configurable out-of-the-box solution that offers to cut turn times, lower costs, address regulatory compliance, and track performance. Collateral Headquarters also gives lenders an administrative dashboard. Users can assign appraisals automatically to their pre-approved list of vendors; manage jobs by vendor, status, or due date; use a time-and-date stamped record that tracks the progress of each loan in production; and immediately verify completed orders. An FNC spokesman said inquiries about the new service have largely come from mortgage industry players eager to head off regulatory scrutiny along the lines of the New York lawsuit alleging that First American's eAppraiseIT unit inflated appraisals on behalf of Washington Mutual. FNC can be found online at http://www.fncinc.com.

Mortgage lenders do have rights when investors demand that they repurchase loans, according to speakers at the SourceMedia Fraud and Risk Conference in Las Vegas.Chris Stimac, enterprise recovery and repurchase manager at Irwin Financial Corp., told the conference that investors are required to give timely notice of a potentially defective loan. Timely notice is not three years later and after a foreclosure sale, he said. Lenders also must be given an opportunity to cure the defect in the loan, when possible, and conduct loss mitigation. Andrew Liput, senior vice president and general counsel at U.S. Mortgage Corp., added that they also have the "absolute right" to demand to see any evidence the investor has in making its claim to repurchase the loan. In many cases, lenders are in error under the agreements to demand a repurchase. Mr. Stimac said some first payment or early payment defaults are really servicing issues. Some alleged misrepresentations are sloppy work by auditors who are looking for anything to support a repurchase demand, he said. Repurchase demands are not permitted on performing loans. There is "nitpicking going on out there" on some loans, Mr. Stimac said.