Originations

DiamondRock Hospitality Co., a constituent of the Standard & Poor's REIT Composite Index, will replace Energen in the S&P SmallCap 600 Index after the close of trading Nov. 7, S&P has announced.The reason for the change is that Energen, an oil and gas company, will be moving from the SmallCap 600 to the S&P MidCap 400. DiamondRock, based in Bethesda, Md., is a real estate investment trust that owns and operates upscale hotels and resorts.

Jones Lang LaSalle, an international property services firm headquartered in Chicago and London, has been labeled the "Bull of the Day" by Zacks Equity Research, Chicago.Zacks said JLL "again handily surpassed our estimates" by $0.36 per share in the third quarter, chiefly as a result of higher-than-expected revenues. "Given the growing demand for commercial real estate services and transactional increases, we expect the company to continue driving revenues at a healthy pace," the research firm said. ".... There has been a sector-wide sell-off over the past three months, and JLL is very attractively valued relative to its long-term growth prospects." The companies can be found online at http://www.zacks.com and http://www.joneslanglasalle.com.

While almost all the private mortgage insurance companies posted significant financial losses for the third quarter, the industry data provided by the Mortgage Insurance Companies of America for September provide a mixed bag of good and bad news.September was the third-best month of the year for primary new insurance written, with a total of $28.9 billion, up 6% from $27.3 billion in August. There was a slight slip in the amount of traditional mortgage insurance written, which decreased by $700 million to $23.1 billion. Bulk insurance written increased by $2.3 billion to $5.8 billion. On the negative side was a slip of almost 19% in the number of applications received, from a revised number of 206,457 for August to 168,073, the worst month in this category since February. For July and August, MICA made revisions to its cure/default data. The revisions resulted in boosting the cure-default ratio from 53.4% (as originally reported) for July to 60.9%. The August revision moved the cure/default ratio from 57.9% to 66.6%. The change means June was the only month with a cure/default ratio under 60%. For September, there were 33,706 cures and 54,699 defaults, for a ratio of 61.9%. MICA can be found online at http://www.micanews.com.

Increased exposure to the subprime mortgage market, specifically mortgage-backed securities, caused U.S. Central FCU to take losses of almost $17 million in the third quarter, according to the credit union.Losses and increasing troubles in its MBS portfolio prompted Standard & Poor's to downgrade U.S. Central's short-term outlook from stable to negative. "The outlook revision," the rating agency said, "reflects increased concerns about USC's exposure to subprime, home equity, and other MBS." USC has a federal credit union charter and is regulated by the National Credit Union Administration. It serves as a "central banker" for the nation's 40 regional corporate credit unions. Regionals, in turn, provide liquidity to the nation's 8,500 personal credit unions.

ResCap, the residential lending division of GMAC Financial Services, lost $2.3 billion in the third quarter as credit losses, writedowns, and a weakening secondary market continued to hamper the company.ResCap said weakness in the housing market was a big factor in the company's results. The company laid off some 3,000 employees during the quarter, accounting for about 25% of ResCap's staff. But Eric Feldstein, GMAC Financial's chief executive officer, said ResCap is eager to resume making "high-margin, nonconforming product as secondary-market distribution becomes available." He said ResCap "remains committed to offering a broad and competitive menu of high-quality products to its customers."

Meanwhile, Washington Mutual has announced the suspension of its relationship with eAppraiseIT until WaMu can investigate the allegations in the lawsuit filed by the New York attorney general.New York AG Andrew Cuomo sued First American Corp. and its eAppraiseIT unit for allegedly colluding with WaMu to use a list of preferred appraisers to inflate mortgage appraisals. The lawsuit said the state attorney general's investigation uncovered a series of e-mails between executives at eAppraiseIT, First American, and WaMu that allegedly show eAppraiseIT officials were willingly violating state and federal appraisal independence regulations to comply with WaMu demands to inflate appraisals. "We are surprised and disappointed by the allegations in the complaint related to eAppraiseIT," WaMu said in a news release. "We have absolutely no incentive to have appraisers inflate home values. In fact, inflated appraisals are contrary to our interests. We use third-party appraisal companies to make sure that appraisals are objective and accurate." WaMu can be found online at http://www.wamu.com.

The lawsuit by New York Attorney General Andrew Cuomo alleging collusion to inflate mortgage appraisals between First American Corp., its subsidiary eAppraiseIT, and Washington Mutual has no basis in fact or law, First American said in a statement issued Nov. 1."We are dismayed by any impact these specious allegations may have on our company, on our many employees, and on our valued customer, Washington Mutual," First American said. "The Attorney General's allegations, largely based on a handful of e-mails that have been taken out of context, or mischaracterized, and an incomplete review of the facts, belie our record of compliance with applicable law." The program challenged by the attorney general "has been vetted and approved by the federal regulator responsible for oversight of such programs," the company said. First American said it will demonstrate to the court "the appropriateness of our appraisal practices in the state of New York, and we will vigorously defend the reputation of Washington Mutual and the reputation we have labored more than 100 years to build." First American can be found online at http://www.firstam.com.

Fannie Mae and Freddie Mac have the existing capability to buy or securitize over $125 billion in subprime rescue mortgages without congressional legislation temporarily increasing the caps on their investment portfolios, according to the director of the Office of Federal Housing Enterprise Oversight."In my view, the legislation is unnecessary, unsafe and unsound, and could have the unfortunate effect to set a target for subprime purchases that the enterprises may not be able to meet safely," OFHEO Director James Lockhart says in a letter to Rep. Paul Kanjorski, D-Pa. Sen. Charles E. Schumer, D-N.Y., and Rep. Barney Frank, D-Mass., have introduced a bill to lift the cap for six months -- provided that 85% of the GSEs' purchases involve subprime loans that have been refinanced. OFHEO recently provided the two government-sponsored enterprises with additional cap flexibility. However, Fannie and Freddie responded by reducing the size of their portfolios in September. Rep. Kanjorski said he agrees with the OFHEO director's "informed assessment."

Saying that mortgage brokers are facing "extinction," the National Association of Mortgage Brokers is urging its members to learn about pending legislation that would "outlaw" yield-spread premiums and then call their members of Congress to complain.The trade group has set up two conference calls -- one scheduled Nov. 2 -- to inform its members about Rep. Barney Frank's Mortgage Reform and Anti-Predatory Lending Act of 2007, which, among other things, would require all brokers to have a minimum net worth or a bond requirement of $100,000. A Democrat from Massachusetts, Rep. Frank is chairman of the House Financial Services Committee. NAMB government affairs chair Denise Leonard sent an e-mail message to members saying that if the bill passes, "all subprime lending will cease to exist." The association can be found online at http://www.namb.org.

Employment in the mortgage industry plummeted by 25,100 full-time positions in September, following a 26,800 drop in August, as the mortgage shops of major lenders and securities firms continue to reduce their payrolls.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell from 428,700 in August to 403,600 in September. The latest numbers show that 100,000 jobs -- 20% of the mortgage industry work force -- have been lost since October 2006. At the same time, "construction employment has fallen by 124,000 since its peak in September 2006, driven by losses in residential construction," BLS acting Commissioner Philip Rones said. The BLS can be found online at http://stats.bls.gov.

The Eleventh Federal Home Loan District Cost of Funds Index increased for the second consecutive month in September, this time by more than 2 basis points.The new index stands at 4.383%, its second-highest point of the year, up from 4.359% in August. The only month with a higher index was January, at 4.392%. It was coincidental that the Federal Home Loan Bank of San Francisco, which calculates the index, released it at the close of business on the same day the Federal Reserve Board cut the target federal funds rate by 25 bps. COFI takes into account all sources of funds that thrift members use to originate mortgages, including deposits. Since many financial institutions reduced their prime rate as a result of the Fed's move, it could have an effect on COFI. But since COFI is a weighted average, it lags the overall market by three to six months.

Radian Group Inc., a Philadelphia-based mortgage insurer, has reported a net loss of $704 million ($8.78 per share) for the third quarter, compared with net profits of $112 million ($1.36 per share) a year earlier.Among the factors contributing to the loss were an impairment for C-BASS, which accounted for $3.78 per share; marking to market net-interest-margin securities on its balance sheet, $2.96 per share; marking to market its financial guaranty business, $2.06 per share; a second-lien premium deficiency, $1.26 per share; and a reserve for a collateralized debt obligation, $0.41 per share. These were partially offset by a gain on part of its stake in Sherman, which resulted in a $1.47-per-share benefit and an "all-other" benefit of $0.22 per share. S.A. Ibrahim, chief executive of Radian, said that while the poor results were not unexpected, the company has a "book value of $42.86 per share, and we are well positioned with our strong capital and liquidity position to weather the challenging credit cycle." Radian can be found online at http://www.radian.biz.

BB&T Corp., Winston-Salem, N.C., has completed its acquisition of Collateral Real Estate Capital, Birmingham, Ala., combined it with its commercial mortgage banking arm, Laureate Capital LLC, and renamed the combined company Grandbridge Real Estate Capital LLC.The terms of the acquisition were not disclosed. Thomas Dennard, president and chief executive officer of Laureate Capital, has been named CEO of the combined company. "We can now provide both third-party and on-book bridge financing through our subsidiary, Grandbridge Funding LLC, to facilitate and position long-term financing opportunities," Mr. Dennard said. BB&T can be found on the Web at http://www.bbt.com.

The average 30-year fixed mortgage rate fell from 6.33% to 6.26% for the seven-day period ended Nov. 1, its lowest level since the 6.21% recorded in the week ended May 17, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.99% to 5.91%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.03% to 5.98%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.66% to 5.57%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and hybrid ARMs and 0.6 of a point for one-year ARMs. "October's consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months," said Frank Nothaft, Freddie Mac's chief economist. "Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks." A year ago, the average 30-year and 15-year fixed rates were 6.31% and 6.02%, respectively, and the average hybrid and one-year ARM rates were 6.05% and 5.53%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

New York Attorney General Andrew Cuomo has announced that he is suing First American Corp. and its eAppraiseIT unit for allegedly colluding with Washington Mutual Inc. to use a list of preferred appraisers to inflate mortgage appraisals.According to the AG's office, eAppraiseIT -- in a scheme detailed in numerous e-mail messages -- caved in to pressure from WaMu to use a list of preferred "proven appraisers" who provided inflated appraisals on homes. The e-mail also shows that executives at eAppraiseIT knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market," Mr. Cuomo said. "By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion." Howard Glaser, a mortgage industry consultant based in Washington, says the Cuomo action marks the most significant legal action to date by the state or federal government in the wake of the mortgage meltdown. "The Cuomo suit sheds light on what has been an open secret in the mortgage industry, pressure by banks on appraisers to hit a particular target value in order to close a loan," he said.

Mortgage Assistance Center Corp., Dallas, has announced the signing of a $50 million funding agreement with an unnamed Dallas-based investment fund.The funding will be used to acquire pools of distressed residential real estate and residential mortgages through joint ventures formed with the investment fund, MACC said. The company said it has agreed to grant the investment fund a warrant to purchase up to one-third of MACC's common stock. MACC can be found online at http://www.mac-tx.com.

The senior debt ratings of The PMI Group Inc. have been downgraded by Fitch Ratings, though it has affirmed the insurer financial strength ratings of PMI Mortgage Insurance Co. and its affiliates.The outlook on the companies' ratings has been revised to negative. The debt ratings on several issues of PMI Group senior notes were downgraded from A-plus to A, and the trust preferred securities rating of PMI Capital I was downgraded from A to A-minus, Fitch reported. The IFS ratings of PMI Mortgage Insurance, PMI Guaranty, PMI Insurance Co., PMI Mortgage Insurance Co. Ltd. (PMI Europe), and PMI Mortgage Insurance Ltd. (PMI Australia) were affirmed at AA. Fitch noted that the actions followed PMI Group's announcement of a net loss of $86.8 million in the third quarter, stemming in part from a rise in mortgage insurance loss reserves. "The increase in reserves has been driven by rising delinquencies within [PMI Mortgage Insurance]'s insured portfolio, combined with larger-than-average claim sizes," Fitch said.

Equity Residential, a Chicago-based real estate investment trust, has reported earnings per share of $1.62 for the third quarter, compared with $0.19 per share for the third quarter of 2006.The company, the largest multifamily REIT by market capitalization, attributed the increase to higher gains on property sales. On a funds-from-operations basis, an alternative non-GAAP earnings measure commonly used in the REIT industry, Equity Residential's earnings totaled $0.58 per share, compared with $0.62 per share a year earlier. The REIT attributed the difference to lower gains on sales of condominium units, higher interest expenses, and some other adjustments. Market conditions were "moderating yet solid" in the third quarter, according to David Neithercut, Equity Residential's president and chief executive officer. For the full year, he said he expects same-store revenue growth of 4.25%, and expects similar results for 2008. The REIT can be found online at http://www.equityapartments.com.

Chase has announced that it originated $39.2 billion in mortgages in the third quarter, an increase of 35% from the level recorded a year earlier.The company reported that its originations totaled $119 billion for the first nine months, a 33.6% increase, despite pullbacks by competitors. "Chase is able to originate a wide range of mortgages and home equity products because it has the flexibility to fund the loans directly rather than relying solely on the secondary market," the company said. Chase, the U.S. consumer and commercial banking brand of JPMorgan Chase & Co., can be found on the Web at http://www.chase.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 656.5 to 681.7 on a seasonally adjusted basis during the week ended Oct. 26, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 3.6% on the week and were up 19.5% from the level recorded a year earlier. The Purchase Index fell from 415.9 to 412.9 on a seasonally adjusted basis, while the Refinance Index climbed from 2059.3 to 2249.0. Refinancings represented 49.6% of total applications, up from 47.0% the previous week, while adjustable-rate mortgages accounted for 14.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.21% to 6.15%, and points (including the origination fee) fell from 1.13 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.