Originations

House Financial Services Committee Chairman Barney Frank, D-Mass., wants to start the mark-up of his controversial predatory-lending bill on Nov. 6.The Mortgage Reform and Anti-Predatory Lending Act would establish a minimum federal lending standard (but not pre-empt state lending laws) along with a limited form of assignee liability for securitizers of subprime mortgages. The bill (H.R. 3915), co-sponsored by Reps. Brad Miller and Mel Watt, both North Carolina Democrats, also appears to ban the payment of yield-spread premiums to mortgage brokers. The National Association of Mortgage Brokers is seeking a clarification to this anti-steering provision.

The Federal Housing Administration has issued a "policy alert" to stop lenders from paying large fees to nonapproved FHA mortgage brokers for simply referring borrowers to their loan officers.The policy alert reminds FHA lenders that nonapproved brokers cannot perform loan origination services and that any fees paid by the lender or financed through the loan would be considered "duplicative" or "unearned" fees that violate the Real Estate Settlement Procedures Act. Department of Housing and Urban Development officials discovered in early September that some lenders were charging points and paying nonapproved brokers $3,000 to $5,000 in fees. HUD officials considered this to be excessive and began calling lenders about the practice. (FHA lenders can pay yield-spread premiums to brokers if they are approved by the FHA.)

Fitch Ratings issued a flurry of rating actions Oct. 29 that included downgrades of 51 classes of mortgage-backed securities.Fitch also placed seven classes of MBS on Rating Watch Negative and affirmed the ratings on 67 classes. Among the securities affected by the downgrades were: 26 classes from six issues of Structured Asset Investment Loan mortgage pass-through certificates and 14 classes from three issues of Amortizing Residential Collateral mortgage pass-throughs. The negative rating actions were attributed chiefly to a deterioration in the relationship between credit enhancement and loss expectations, although one was linked to changes in Fitch's subprime loss forecasting assumptions. The rating agency can be found online at http://www.fitchratings.com.

NexBank SSB, Dallas, has announced the introduction of a jumbo mortgage product for home loans in the $1.5 million to $10 million range, citing "the void recently created by the turmoil in the credit markets."The new product "offers less execution risk for mortgage brokers" and provides an attractive option for high-end borrowers in Dallas whose options have been limited by the national decline in mortgage lending, the bank said. "For the last few years, rates have spiraled out of control, to the point that making home loans didn't make good business sense," said David Deadman, chief executive officer and president of NexBank. The new jumbo product will help "fill the void" created by the credit turmoil, he said. The company can be found on the Web at http://www.nexbank.com.

Lender Lead Solutions, Melville, N.Y., has announced the introduction of Simple60, which it says is the first reverse mortgage product available to homeowners beginning at age 60.Simple60 is a nonrecourse loan that ensures that loan debt will never exceed the value of the home. The product also allows seniors over the age of 62 (the current age requirement for federally insured Home Equity Conversion Mortgages) to borrow a smaller amount of money with lower closing costs and reduced fees, the company said. "Census statistics tell us that the oldest of the baby boomers turned 60 last year, and more than 4.5 million seniors currently fall between the ages of 60 and 62," said David Peskin, chief executive officer of Lender Lead Solutions. "We feel this is the perfect time to introduce the Simple60 product." The company can be found online at http://www.lenderleadsolutions.com.

Bayview Financial LP, a privately held mortgage company based in Miami, has announced the spinoff of its real estate investment and development group to the newly formed Echo Partners LLC, a Bayview affiliate.Bayview said the new company gives it "greater flexibility for real estate development without specific consideration of Bayview Financial's core mortgage business." The managing principals of Echo Partners are Robbie Oppenheim, Joel Goldman, George Spillis, and Danny Warman.

Delinquencies on commercial mortgage-backed securities rose 13 basis points to 0.29% in the third quarter, led by loans from 2005 and 2006, according to Standard & Poor's.The total amount delinquent rose by 16.2%, after the second quarter's rise of 12.7%, S&P reported. At the end of the third quarter, $1.92 billion of CMBS loans were delinquent, compared with $1.65 billion at the end of the second quarter. Delinquencies on securities backed by loans made in 2005 and 2006 were up by 41% and 46%, respectively. Since the first quarter, 2005 and 2006 delinquencies have increased by 179% and 297%, respectively. In total, the two years accounted for 72% of the quarter's delinquency increase and now represent one-third of total delinquencies, the rating agency reported. S&P said it expects delinquency levels on these vintages to rise faster than those of other vintages, acting as a drag on CMBS performance for some time. By property type, delinquency rates for health care, retail, and office increased, while lodging, multifamily, and industrial delinquency rates declined. Delinquency rates for all property types have been below 1% in 2007 for the first time in this decade, S&P said. The rating agency can be found online at http://www.standardandpoors.com.

The PMI Group Inc., Walnut Creek, Calif., has reported a net loss of $86.8 million ($1.04 per share) in the third quarter, three quarters of which stemmed from its U.S. mortgage insurance operations.A year earlier, PMI reported net income of $104.2 million ($1.16 per share). The company said the net loss in its U.S. mortgage insurance operations totaled $65.2 million in the third quarter. PMI's U.S. MI operations added $253.6 million to the reserve for losses and loss adjustment expenses and paid $92.6 million in claims, the company reported. However, PMI Australia recorded net income of $19.7 million that stemmed from higher premiums earned and net investment income, the company said. PMI can be found online at http://www.pmigroup.com.

United Bank of Switzerland has reported a $623 million loss in the third quarter, citing the liquidity crisis and what it calls the "deterioration" in the subprime market.UBS said its fixed-income division -- which includes mortgage trading -- had negative revenues of $3.6 billion. "The deterioration in the U.S. subprime market, especially in August, was so severe and sudden that markets turned illiquid," it said in a statement. According to the Mortgage Industry Directory, UBS has been a major warehouse provider to nondepository subprime firms.

House prices declined at a 4.4% annual rate in August, according to the Standard & Poor's/Case-Shiller housing price index, which covers 20 metropolitan areas.The 20-city HPI declined at a 3.9% annual rate in July. "There is really no positive news in today's report, as most of the metro areas are showing declining or vanishing returns on both an annual and monthly basis," said Robert Shiller, chief economist at MacroMarkets LLC. The August report shows that Tampa now leads Detroit and the other 18 cities in terms of house price declines. Tampa has experienced a 10.1% annual decline, followed by Detroit with a 9.3% decline and San Diego with an 8.3% decline.

The default rate on subprime mortgage loans jumped nearly 150 basis points in August to a record high of 16.1%, and the foreclosure rate jumped 82 bps to 6.8%, as declining house prices began to take their toll on credit performance, according to a Friedman Billings Ramsey Investment Management report.Michael Youngblood, FBRIM's managing director of fixed-income research, notes that falling house prices are becoming a factor in the latest surge in subprime defaults. The researcher points out that 49 metropolitan statistical areas in six states, representing 46% of all subprime loans, have experienced a 200% or more increase in defaults since August 2006. "Furthermore, we count 43 housing price bubbles in these 49 MSAs, whereas we count only 69 house price bubbles in all 363 MSAs," Mr. Youngblood says in the report. The report also indicates that the default rate on alternative-A loans jumped 62 bps to 3.96% in August, and the foreclosure rate rose 41 bps to 1.96%. (The default rate includes loans 90 days or more past due, in foreclosure, and real estate owned.)

Office of Thrift Supervision economists see a "high" probability of continued housing market deterioration, along with rising foreclosures and house price declines, according to the premier issue of the agency's Monthly Market Monitor."The probability of further deterioration in housing conditions remains high, leaving asset prices vulnerable to more declines and credit spreads susceptible to greater widening," the OTS report says. The monthly report also seems to warn thrifts that they could be facing a "prolonged" correction in the housing market. "Contributing to the malaise is higher mortgage rates and tighter credit conditions as lenders, saddled with loans on balance sheets, have fewer funds to lend and less desire to extend credit to other-than-prime borrowers," the Oct. 26 monitor says.

Smarting from a $7.9 billion writedown related to subprime and collateralized debt obligation assets, Merrill Lynch & Co. on Tuesday announced the "immediate" retirement of chairman and chief executive Stanley O'Neal.Mortgage bankers that have done business with Merrill Lynch say Mr. O'Neal is being blamed, in part, for the Wall Street giant's foray into the subprime market. About a year ago, according to one banker, Merrill had about $10 billion in outstanding warehouse lines of credit or repos with subprime nondepositories. Merrill Lynch has elected director Alberto Cribiore as its interim nonexecutive chairman. He will spearhead Merrill's search for a new CEO.

The president-elect of the National Association of Mortgage Brokers says the Department of Housing and Urban Development does "not care about true simplification" of the Real Estate Settlement Procedures Act, and he vowed to vehemently oppose HUD's latest RESPA proposal.The proposal, which had not yet been released officially, includes a four-page good-faith estimate instead of a one-page GFE favored by the NAMB, Marc Savitt told attendees at the Southeast Mortgage Brokers Conference (sponsored by the Georgia Association of Mortgage Brokers) in Savannah, Ga. Mr. Savitt charged that HUD had bowed to pressure from other industry participants, contending that the RESPA proposal is about market share, not simplification. He said the new rule is similar to one HUD proposed back in 2004 but with the packaging provisions removed. Mr. Savitt vowed that the NAMB would "hit them with everything we have." In response to the 2004 rule, a grassroots campaign resulted in 45,000 letters of protest. "That is nothing compared with this time," he predicted. He called on mortgage brokers to contact their customers and have them write letters to HUD. Mr. Savitt told the conferees that the NAMB has attorneys in place ready to file a lawsuit against HUD as soon as the rule is formally published. The association can be found on the Web at http://www.namb.org.

Class O of Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1, has been downgraded from CCC/DR2 to C/DR6 by Fitch Ratings.Fitch has also upgraded one class and affirmed the ratings on 14 other classes in the deal. The rating agency said the downgrades are due to increased loss expectations on the four specially serviced loans, of which the two largest (representing 2.2% of the pool) are multifamily properties in Columbia, Mo., that are suffering cash flow problems and were transferred to special servicing due to imminent default. The third-largest specially serviced asset is a retail shopping center in Arabi, La., that suffered heavy damage due to Hurricane Katrina and is being marketed by the special servicer.

Two classes of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1999-LIFE 1, have been downgraded by Fitch Ratings.Class N was downgraded from CC/DR4 to C/DR6, and class M was downgraded from B to B-/DR2. Fitch also upgraded three classes from the transaction and affirmed the ratings on nine other classes. The downgrades were attributed to possible losses from the specially serviced loan, which is secured by a 55,000-square-foot office property in Charlotte, N.C. "The loan was transferred to the special servicer due to imminent default and is now 60+ days delinquent," Fitch reported.

Four classes of GMAC Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates, series 1998-C1, have been downgraded by Fitch Ratings.The downgrades were as follows: class H, from BB-plus to BB-minus; class J, from BB-minus to B; class K, from B-minus to CCC/DR3 (and removed from Rating Watch Evolving); and class L, from CCC/DR2 to C/DR6. The ratings on eight other classes in the deal were affirmed. The rating agency attributed the downgrades to expected losses from the deal's specially serviced Senior Living Properties loan, whose remaining collateral is 48 health care properties in Texas.

Ten classes from two Wells Fargo home equity asset-backed securities have been downgraded by Fitch Ratings as a result of changes in the rating agency's subprime loss forecasting assumptions.Fitch also affirmed the ratings on 19 other classes in three Wells Fargo deals. The revised assumptions in Fitch's subprime loss model "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness," the rating agency said.

Twenty classes from five small-balance commercial mortgage-backed securities deals issued by CBA Commercial and LaSalle Commercial Mortgage Securities have been downgraded by Fitch Ratings.Fitch also affirmed the ratings on 62 classes from eight small-balance CMBS deals by the same issuers. The downgrades were attributed to higher-than-expected delinquencies. The transactions are collateralized by small-balance commercial loans secured by multifamily, retail, office, and mixed-use properties. Fitch can be found online at http://www.fitchratings.com.

First American Title Insurance Co., Santa Ana, Calif., has announced that it will replace recorded mortgage and property-related documents at no charge for homeowners who lost their homes in the recent Southern California wildfires.The document replacement will include property tax information, recorded deeds, and tax assessor maps. In addition, First American said it is offering a 40% discount on title insurance for fire victims securing a new deed of trust or a construction loan on the lost properties. First American Title is the largest subsidiary of The First American Corp., which can be found on the Web at http://www.firstam.com.