Originations

PHH Corp., Mt. Laurel, N.J., lost $38 million in the third quarter as trouble in the mortgage sector hurt the company's business.The company's "segment loss" from mortgage production in the third quarter totaled $113 million, more than double the loss posted in the third quarter of 2006. A $79 million loss on the sale of loans was primarily responsible for the weak performance, the company said. PHH also suffered a $2 million segment loss related to loan servicing in the third quarter. The company serviced $166.9 billion of loans, including subservicing, in the third quarter. The portfolio had a 2.6% delinquency rate. During the third quarter, PHH sold servicing rights on $9.6 billion of loans. The company can be found online at http://www.phh.com.

Delta Financial Corp., Woodbury, N.Y., has reported a net loss of $39.6 million ($1.70 per share) for the third quarter, compared with net income of $8.0 million ($0.33 per share) for the same period in 2006.Hugh Miller, president and chief executive, attributed the loss to "unprecedented events" that affected not only Delta's results but also most of the other companies in the lending sector. "But more recently, the secondary markets, which began to improve since September, took a turn for the worse, initially driven by the rating agencies' sudden downgrade of tens of billions of dollars worth of mortgage-backed and related securities," Mr. Miller said. "This and other developments have severely limited the ability of companies in our sector to complete securitizations as a source of financing at this time." As a result, Delta is negotiating with potential debt or equity investors. Just this past August, the company raised $70 million in working capital. Delta also announced that it has laid off approximately 470 employees and will take a restructuring charge of $7.5 million, of which $1.4 million was paid in severance. The company can be found on the Web at http://www.deltafinancial.com.

Wachovia Corp. said in a federal filing Friday morning that it will take an additional hit of $1.1 billion on the value of subprime-related collateralized debt obligations it owns.The banking giant said its CDOs declined by that much in October alone. When it reported third-quarter earnings, Wachovia revealed a $1.3 billion pretax charge on CDOs, including $347 million in subprime-related valuation losses. The new charge is in addition to the third-quarter hit. Wachovia, the nation's seventh-largest originator of home mortgages, said its remaining asset-backed security CDO exposure is $676 million. The company blamed the writedowns on rising defaults and delinquencies in the subprime market. Wachovia can be found online at http://www.wachovia.com.

Two tranches of Structured Asset Securities Corp. 2003-BC3 have been downgraded by Moody's Investors Service.Class M5 was downgraded from Baa3 to B3, and class M4 was downgraded from Baa2 to Ba3. The downgrades were based on "the analysis of the current credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to the expected loss," Moody's said. The transaction is backed by subprime fixed- and adjustable-rate mortgage loans.

Fourteen tranches from five securitizations issued by Long Beach Mortgage Loan Trust in 2003 and 2004 have been downgraded by Moody's Investors Service.The five deals affected by the downgrades were as follows: series 2003-2, 2003-3, 2003-4, 2004-1, and 2004-2. The actions are based on the analysis of the current credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to expected losses. The collateral consists primarily of first-lien, subprime fixed- and adjustable-rate mortgage loans.

MFA Mortgage Investments Inc., New York, has announced the pricing of 15 million shares of MFA stock at $7.95 per share.Net proceeds are expected to total approximately $113 million, the real estate investment trust said. The company said it has granted the underwriters an option to buy up to 2.25 million additional shares to cover any overallotments. UBS Investment Bank, Bear Stearns & Co., Deutsche Bank Securities Inc., and Morgan Stanley are the joint book-running managers of the offering. MFA, which invests in adjustable-rate mortgage-backed securities, can be found online at http://www.mfa-reit.com.

The global market capitalization of publicly listed real estate investment trusts grew more than 25% in the past 12 months despite the loss of nearly a quarter of public U.S. REITs during that period through privatization and mergers, according to a report by Ernst & Young.The second annual E&Y REIT report, prepared by Ernst & Young Australia, found that global REIT capitalization reached $764 billion as of June 30, up from $608 billion a year earlier. "Essentially, we've seen a dramatic shift in REIT formation away from North America and toward Asia and Europe in the last 12 months," said Michael Frankel, E&Y's global director of REIT services. "While a number of quite large North American REITs have been taken private in the last year, we've seen a tremendous outpouring of capital in Asia and Europe, where REIT regimes in the U.K. and Turkey have helped the rest of the world surpass the U.S. for the first time in total number of REITs." The United States had 169 of North America's 195 public REITs as of June 30, compared with 253 outside North America, according to Bloomberg data used in the report. The company can be found online at http://www.ey.com.

The average 30-year fixed mortgage rate fell from 6.26% to 6.24% for the seven-day period ended Nov. 8, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.91% to 5.90%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.98% to 5.89%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.57% to 5.50%, Freddie Mac reported. Fees and points averaged 0.4 of a point for 30-year fixed-rate mortgages, 0.5 of a point for 15-year fixed-rate mortgages and hybrid ARMs, and 0.6 of a point for one-year ARMs. "Reports of weaker consumer spending in September and a decline in manufacturing activity in October kept mortgage rates at bay this week," said Frank Nothaft, Freddie Mac's chief economist. "Rates for long-term mortgages were little changed while rates for ARMs fell following the Federal Reserve's interest rate cut." A year ago, the average 30-year and 15-year fixed rates were 6.33% and 6.04%, respectively, and the average hybrid and one-year ARM rates were 6.08% and 5.55%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

United Guaranty Corp., the nation's fourth-largest mortgage insurer, lost $215 million in the third quarter, citing "unfavorable loss experience" tied to the declining housing market.The UGC loss was disclosed when its parent company, American International Group, reported its earnings on Nov 7. In the third quarter of 2006, the Greensboro, N.C.-based UGC earned $80 million. AIG's consumer finance division, which includes American General Finance, posted an $80 million profit in the third quarter, a 64% drop from that of a year earlier. AGF said its operating income fell because of reduced originations, higher warranty reserves, and increased loan loss reserves. UGC can be found on the Web at http://www.ugcorp.com.

The federal regulator of Fannie Mae and Freddie Mac has blasted New York Attorney General Andrew Cuomo for subpoenaing the two GSEs in connection with an appraisal fraud probe, arguing that "they have no economic incentive to knowingly purchase or guarantee mortgages with inflated appraisals.""I am disappointed that your office did not contact OFHEO before or even after subpoenaing the GSEs and issuing certain threats regarding their future business activities," writes OFHEO Director James Lockhart in a Nov. 8 letter to AG Cuomo. Mr. Lockhart wants an explanation from Mr. Cuomo in regard to his demand that the government-sponsored enterprises cease doing business with Washington Mutual, a large seller of mortgages to the GSEs. Earlier this week the New York AG said his office would subpoena the GSEs as part of a wider probe into mortgage industry practices. OFHEO is the safety-and-soundness regulator of Fannie and Freddie.

Standard & Poor's has changed its ratings outlook for Morgan Stanley and related entities from stable to negative due to the Wall Street firm's subprime mortgage-related multibillion-dollar revenue decline.S&P said it believes that, given offsetting gains in other business lines, Morgan Stanley "could at least have break-even net earnings for the quarter." However, the subprime-related writedowns have left "little leeway in the ratings to sustain additional setbacks," the rating agency said. Standard & Poor's can be found on the Web at http://www.standardandpoors.com.

Morgan Stanley has written down its revenue by $3.7 billion (about $2.5 billion after taxes) due to the deterioration in value of U.S. subprime mortgage-related exposures since August.The company said the writedowns would likely hurt its fixed-income business' fourth-quarter results, but that relative gains in other business lines may offset the concern. Morgan Stanley also said its subprime-related exposures will likely fluctuate further, but that it does not expect to provide any more updates before its regularly scheduled earnings reports. Morgan Stanley can be found online at http://www.morganstanley.com.

More than 200 classes of mortgage- and asset-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.In addition to the 224 downgrades, Fitch placed 95 classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of approximately $14 billion. Among the securities affected by the latest downgrades were: 36 classes from three Structured Asset Securities Corp. mortgage pass-through certificates; 30 classes from three Credit Based Asset Servicing & Securitization transactions; 29 classes from three Securitized Asset Backed Receivables transactions; 26 classes from two issues of Soundview asset-backed certificates; and 20 classes from two issues of HASCO mortgage pass-through certificates. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness."

The issuer default ratings of Kansas City, Mo.-based Block Financial Corp. and H&R Block Inc. have been downgraded from A-minus to BBB-plus by Fitch Ratings.Fitch also downgraded Block Financial's senior unsecured debt from A-minus to BBB-plus. All ratings remain on Rating Watch Negative. The rating agency said the downgrades "reflect the continued uncertainty surrounding the sale of Option One Mortgage Corp." as well as the addition of three new board members as a result of a proxy fight, a recent change in auditor, and a recent resignation of the company's chief financial officer.

Citing exposure to mortgage, home equity, and residential construction lending, Fitch Ratings has downgraded National City Corp. and revised downward the rating outlooks of Wells Fargo & Co., Washington Mutual Inc., Countrywide Financial Corp., and three other large banks.The long-term issuer default rating of National City was downgraded from AA-minus to A-plus, and its short-term IDR was downgraded from F1-plus to F1. The rating outlook is negative. Fitch cited NatCity's "weakened core financial performance" and opined that its remaining mortgage banking business "is likely to remain pressured." The rating outlooks of Wells Fargo, KeyCorp, Zions Bancorporation, and Capital One Financial Corp. were revised from positive to stable because of "strong reliance on consumer lending businesses such as mortgages and home equity credit as well as exposure to residential construction," Fitch said. The same factors were cited in the revision of WaMu's outlook from stable to negative. Similar factors were also cited in removing Countrywide from Rating Watch Evolving and assigning it a negative outlook, with the additional concern that the company is repositioning its main business, mortgage banking, amid "extremely difficult conditions." Fitch can be found online at http://www.fitchratings.com.

U.S. industrial real estate markets continued to grow in the third quarter, but the slowdown noted in the previous quarter "became more evident," according to Colliers International, a Boston-based global real estate services firm.The markets absorbed 36.1 million square feet of industrial space in the quarter, bringing the total so far this year to 106.6 msf, 31.1 msf less than the year-to-date level of a year earlier, Colliers said. "The financial markets continue to display considerable volatility, and there seems to be no end in sight for the ailing housing market," said Ross Moore, the organization's senior vice president and director of market and economic research. "Thus, occupiers of warehouse space have taken a wait-and-see attitude -- leading to only modest absorption." Colliers can be found online at http://www.colliers.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 681.7 to 670.6 on a seasonally adjusted basis during the week ended Nov. 2, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 2.4% on the week but were up 8.0% from the level recorded a year earlier. The Purchase Index dipped slightly, from 412.9 to 412.7, on a seasonally adjusted basis, while the Refinance Index declined from 2249.0 to 2176.1. Refinancings represented 49.1% of total applications, down from 49.6% the previous week, while adjustable-rate mortgages accounted for 14.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.15% to 6.16%, and points (including the origination fee) rose from 1.05 to 1.08 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

United Dominion Realty Trust, a Richmond, Va.-based multifamily real estate investment trust, has entered into a $650 million joint venture with an institutional partner.The venture will own a portfolio of 3,690 homes located in nine Texas multifamily communities in Austin, Dallas, and Houston, and another 320 homes under development in Dallas, UDRT reported. In addition to a $350 million initial investment from the UDRT multifamily portfolio, the joint venture is looking to acquire up to $300 million in additional properties. The REIT will retain a 20% interest in the venture. "Combined, these markets have added 152,800 jobs in the past 12 months," said Thomas W. Toomey, UDRT's president and chief executive officer. The joint venture has secured a $232 million, seven-year, interest-only, 5.61% nonrecourse mortgage on the properties. The joint venture is looking to acquire additional stabilized properties from third parties, initially in targeted Texas markets. UDRT is managing the properties on behalf of the venture. The company can be found online at http://www.udrt.com.

MountainView Capital Holdings, Denver, a player in the red-hot "scratch-and-dent" market, has raised $65 million in equity capital.Led by president and chief executive officer Mike Morgan, MountainView is an investor and trader of delinquent, performing, and subperforming mortgages. It also functions as a servicing broker and offers analytics. Chris Rooker, a principal in the firm, likened the current mortgage crisis to the savings-and-loan mess of the late 1980s and early 1990s, noting, "We are seeing opportunities in the mortgage space unprecedented since the days of the Resolution Trust Corp." The RTC was a government agency that helped liquidate $500 billion in assets belonging to failed thrifts. MountainView's new investors include Union Square Partners, CLAC Industries, and MountainView management.

ResMae Mortgage of LaBrea, Calif., says it has once again suspended wholesale production but will honor commitments made prior to Nov. 6.Earlier this year ResMae was bought out of bankruptcy by Citadel Investment Group LLC, a hedge fund. Citadel purchased ResMae's assets -- including its servicing operation -- for $180 million, beating out Credit Suisse in an auction. Among subprime wholesalers, ResMae ranked 14th in 2006. The company was founded in 2001 by industry veterans Jack Mayesh, Ed Resendez, and William Komperda. At one time ResMae employed about 1,000. The company can be found on the Web at https://www.resmae.com.