Originations

The new chairman of the Mortgage Bankers Association has called for a "return to basics" as the housing finance sector enters uncharted territory.With home prices flagging in several markets and innovative loan products being tested for the first time in a negative environment, Kieran Quinn said what's important is not new government regulations or who gets bailed out and who doesn't. Rather, "it's what we do from today forward that counts," he said at the MBA's 94th annual convention in Boston. Mr. Quinn said the most important task lying before the industry is to "restore investor confidence, because right now they don't want to touch our paper." He said that if businesses and individuals "simply do what we've done for most of our careers, we'll have gone a long way" toward fixing the problems that confront the industry. The MBA can be found on the Web at http://www.mortgagebankers.org.

The increasing number of reverse mortgage originations make this product ripe for securitization, a panelist said at a session on Ginnie Mae Home Equity Conversion Mortgage mortgage-backed securities at the Mortgage Bankers Association annual convention in Boston.Arthur Axelson, a partner with Reed Smith LLP, added that the security will "revolutionize" the Federal Housing Administration's HECM loan. Craig Corn, president of BNY Mortgage Co., said the Ginnie Mae program would increase liquidity for the product as well as increase the number of secondary-market investors. "It is an incredible opportunity, but with that opportunity comes risks," he added. Theodore Foster, Ginnie Mae's senior vice president, said the agency is launching the new product because its charge is to support government-insured products. There is dramatic growth in the number of HECM originations, but no standardized secondary-market take-out for the product, he said. Among Ginnie Mae's goals is to increase availability of HECMs and to create a secondary market for them so lenders can offer more products.

Annaly Capital Management Inc., New York, has priced a public offering of 62 million shares of the company's common stock at $15.10 per share.The real estate investment trust said the estimated net proceeds of $893.8 million will be used to purchase mortgage-backed securities and for general corporate purposes. The sole book-running manager of the offering is Merrill Lynch & Co. Annaly can be found online at http://www.annaly.com.

Moody's Investors Service has announced the downgrading of $33.4 billion of securities issued in 2006 and backed by subprime first-lien mortgages, representing 7.8% of the original dollar volume of such securities rated by Moody's.Of the downgraded securities, $3.8 billion remain on review for further downgrade. In addition, another $23.8 billion of first-lien residential mortgage-backed securities were placed on review for downgrade. Moody's also affirmed the ratings on $258.6 billion of Aaa-rated securities and $21.3 billion of Aa-rated securities. "Today's rating actions incorporate Moody's long-range views regarding the performance of the deals in question," the rating agency said. "As a result, Moody's expects less future rating volatility for 2006 first-lien RMBS as long as home price depreciation remains less than 10% from peak to trough and the current economic environment remains stable." Among the factors underlying the Moody's analysis are the assumption that the severity of loss associated with loans that are now seriously delinquent will be 40%-50% on average, and that (based on a recent survey of subprime loan servicers) significant loan modifications that might mitigate future losses are unlikely in the near term.

The value of homes owned by Americans 62 years of age or older rose slightly in the second quarter, but senior home equity declined slightly, according to the NRMLA/Hollister Reverse Mortgage Market Index.The index, launched by the National Reverse Mortgage Lenders Association and The Hollister Group, showed a rise in senior home values from $5.07 trillion to $5.09 trillion in the second quarter and a decline in senior home equity from $4.29 trillion to $4.28 trillion. The RMMI declined overall from 205.3 to 205.1. "We fully expect the reverse mortgage products to continue to take hold as previously untapped home equity value intersects with the aging of the population over the next five to 10 years," said NRMLA president Peter Bell. The organizations can be found online at http://www.nrmlaonline.org and http://www.hollisterllc.com.

The previously bullish views of commercial real estate industry executives have turned bearish in the wake of the subprime mortgage shakeout and credit crunch, according to a survey by DLA Piper, an international law firm.The firm said only 31% of the 332 top commercial real estate executives who responded to the survey described their 12-month outlook for the U.S. CRE market as "bullish," down dramatically from 78% in April. "The spike in optimism we witnessed in April has certainly reversed course," said Jay Epstien, chair of DLA Piper's U.S. real estate practice. "The uncertainty created by the credit crunch has overshadowed otherwise strong fundamentals for the commercial real estate market and slowed the previous velocity of deals, though many transactions continue to move forward." DLA Piper can be found online at http://www.dlapiper.com.

An analyst for Zacks Equity Research, Chicago, says difficult times will continue for the private mortgage insurance industry until 2008.Neena Mishra said the current valuations on the publicly traded companies in the sector already price in to a great extent the bad news in the housing market and the companies' resulting higher losses. "Further, many of these companies have operations outside of the U.S.," Ms. Mishra said. "[Walnut Creek, Calif.-based] PMI Group, for example, derives 40% of its earnings from international operations and other diversified activities. However, we will continue to remain cautious on this segment till there is greater visibility on the U.S. mortgage default situation in the near to intermediate term." Zacks can be found online at http://www.zacks.com.

Lone Star Fund V (U.S.) LP, Dallas, has completed its acquisition of Accredited Home Lenders Holding Co., San Diego, at the revised price of $11.75 per share in cash.The deal takes Accredited private, and the company is requesting that its common stock be delisted from the NASDAQ Stock Market. However, the 9.75% series A perpetual cumulative preferred shares (par value $1.00) of Accredited Mortgage Loan REIT Trust will remain outstanding and trade on the New York Stock Exchange. Of the current members of Accredited's board, only James A. Konrath, chairman and chief executive, and Joseph J. Lydon, president and chief operating officer, remain. Lone Star appointed six representatives of its own as directors: Len Allen, Michael Thompson, Marc Lipshy, Catharon Miller, Leigh Rea, and Benjamin D. Velvin III. Accredited can be found online at http://www.accredhome.com.

While some in the industry are calling seller- and nonprofit-supported downpayment assistance "a lost battle," a new lawsuit has been filed against the Department of Housing and Urban Development by AmeriDream Inc., Gaithersburg, Md., to resist HUD's effort to eliminate private DPA.It is the second lawsuit filed this month by AmeriDream, an affordable housing nonprofit organization, as part of a wider effort to fight HUD's decision to eliminate privately sponsored DPA options for low-income borrowers. The new action seeks a temporary restraining order and preliminary injunction to stop HUD from enforcing its final rule on Oct. 31 that would eliminate DPA programs sponsored by nonprofit organizations, AmeriDream said. "HUD's actions reveal its rulemaking for what it really is: a desired result in search of a justification," AmeriDream president Ann Ashburn said in a company release. "We will continue to fight HUD's arbitrary and capricious decision to eliminate valuable assistance to individuals and families who deserve to become homeowners." On Oct. 1, both AmeriDream and DPA industry pioneer Nehemiah Corporation of America, Sacramento, Calif., filed lawsuits against HUD. AmeriDream can be found on the Web at http://www.ameridream.org.

House Financial Services Committee Chairman Barney Frank, D-Mass., has drafted a bill that temporarily increases the caps on Fannie Mae's and Freddie Mac's portfolios for six months so the two mortgage giants can purchase modified or refinanced subprime loans.The bill would increase the caps on the companies' $700 billion portfolios by 10%, but 85% of any mortgages purchased must benefit struggling subprime borrowers. Sen. Charles E. Schumer, D-N.Y., is expected to introduce a similar bill in the Senate. "The six month/85% bill that I am filing seems to me responsive to the immediate needs to help people avoid foreclosure," Rep. Frank said. The House committee chairman is also preparing to introduce a bill aimed at stopping abusive lending practices. And he is planning to hold hearings on and mark up the predatory lending bill this year. The committee can be found online at http://financialservices.house.gov.

National Retail Properties Inc., a real estate investment trust based in Orlando, Fla., has priced a public offering of 4 million shares of common stock at $25.94 per share.The underwriters were granted an option to buy up to 600,000 additional shares to cover any overallotments. Citigroup Global Markets Inc. and Wachovia Capital Markets LLC were the joint book-running managers for the offering. National Retail Properties, which focuses primarily on properties subject to long-term net leases, can be found online at http://www.nnnreit.com.

New York-based iStar Financial Inc. has priced $800 million of convertible senior floating-rate notes due 2012.The notes will bear interest at 0.50% above the three-month London interbank offered rate, iStar said. The joint book-running managers for the offering are Citi and JPMorgan. The commercial real estate finance company can be found online at http://www.istarfinancial.com.

Beazer Homes USA, Atlanta, has announced a determination by its Audit Committee that it will be necessary for the company to restate its financial results for fiscal years 2004-2006 and the interim periods of fiscal 2006 and fiscal 2007.The announcement represented the interim findings from the Audit Committee's previously announced independent internal investigation into Beazer's mortgage origination business and certain accounting and financial reporting matters. The homebuilder said it expects the cumulative effect of the restatements to be an overall increase in net income, but with a decrease in net income for fiscal 2006. The company can be found on the Web at http://www.beazer.com.

The average 30-year fixed mortgage rate rose from 6.37% to 6.40% for the seven-day period ended Oct. 11, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.03% to 6.06%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 6.11% to 6.12%, and the average rate for one-year Treasury-indexed ARMs increased from 5.58% to 5.73%, 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. "Mortgage rates edged up this week following the release of the September employment figures," said Frank Nothaft, Freddie Mac's chief economist. "The economy added 110,000 new jobs last month while July and August were revised upwards by a total of 188,000 jobs, reflecting greater strength in the economy during that time than initially indicated." A year ago, the average 30-year and 15-year fixed rates were 6.37% and 6.06%, respectively, and the average hybrid and one-year ARM rates were 6.10% and 5.56%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

SunTrust ranked highest in overall customer satisfaction among home equity servicers in the J.D. Power and Associates 2007 Home Equity Line/Loan Servicer Study, according to the marketing information firm.The company said the study measures customer satisfaction with home equity line/loan servicers among 4,964 consumers who had obtained a home equity loan or line of credit from October 2006 to June 2007. SunTrust scored 770 on a 1,000-point scale, performing especially well in the area of product features and functionality, J.D. Power reported. Bank of America ranked second, with a score of 755 and especially good marks on funds access, and Wachovia finished third, with a 747 and its best marks in billing and payment. "Servicing a home equity product involves considerable complexity, particularly when compared to the origination of home equity or primary mortgages," said Tim Ryan, senior director of the company's finance and insurance practice. "Customers can make multiple draws on their home equity line accounts, apply for increases to their credit limit, and have a wide array of lock features and access methods -- all of which can be confusing." J.D. Power, headquartered in Westlake Village, Calif., can be found online at http://www.jdpower.com.

The House has passed a bill by a 264-148 vote that would create a trust fund for the construction, rehabilitation, and preservation of 1.5 million affordable rental units over the next 10 years.The national housing trust fund would tap the government-sponsored enterprises -- Fannie Mae and Freddie Mac -- for the bulk of the trust funds. Surplus revenues from the Federal Housing Administration would also flow to the trust fund. House Financial Services Committee Chairman Barney Frank, D-Mass., estimates that the trust fund could distribute $800 million to $1 billion in affordable housing grants to states, local communities, and Indian reservations. "It has been 17 years since the federal government last enacted a major affordable housing production program, and I am pleased that this legislation will tackle the full range of housing crises, providing relief to overburdened renters and homeowners while targeting funds where the need is greatest," said Rep. Maxine Waters, D-Calif.

More than 223,000 foreclosure filings were reported nationwide in September, down 8% from the level recorded in August but up 99% from that of a year earlier, according to RealtyTrac, an online foreclosure marketplace based in Irvine, Calif.The nation's foreclosure rate stood at one foreclosure filing for every 557 households, the company said in its September 2007 U.S. Foreclosure Market Report. (Foreclosure filings include default notices, auction sale notices, and bank repossessions.) "U.S. foreclosure activity experienced a fairly broad-based retreat in September, with 39 states reporting decreasing activity and national numbers down in all foreclosure categories -- defaults, auctions, and bank repossessions," said James J. Saccacio, chief executive officer of RealtyTrac. "Nevertheless, it's important to note that September's total was still the second-highest monthly total we've seen since we began issuing our report in January of 2005." The company said Nevada, Florida, and California recorded the highest foreclosure rates in September. The company can be found online at http://www.realtytrac.com.

Neighborhood Assistance Corporation of America is calling for a nationwide boycott against Countrywide Financial Corp., contending that the nation's largest mortgage lender and servicer is refusing to restructure loans so that homeowners can afford the payments and avoid foreclosure."Countrywide is the number one example of the abuses in the subprime industry," NACA chief executive Bruce Marks said. NACA plans to conduct demonstrations at Countrywide offices and discourage people from getting mortgages or certificates of deposit from the Calabasas, Calif.-based company. Countrywide had not commented by deadline time. NACA launched a campaign against Countrywide in August to draw regulators' attention to the company's lending and servicing practices. The Boston-based activist group has waged campaigns about other subprime lenders and has a mortgage broker operation that provides low-cost, fixed-rate mortgages to low- and moderate-income people.

The North Carolina state treasurer has asked the Securities and Exchange Commission to investigate stock sales by Countrywide Financial Corp. founder, chairman, and chief executive Angelo Mozilo.The letter to SEC Chairman Christopher Cox from North Carolina Treasurer Richard H. Moore says, "I was shocked to learn that CEO Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." According to the letter, Mr. Mozilo accelerated his stock selling as the publicly traded lender's fortunes continued to wane. (Over the past few years, Mr. Mozilo has exercised options and sold more than $300 million worth of stock.) North Carolina pension funds own at least 500,000 shares of Countrywide stock. The request to investigate comes as Mr. Mozilo continues to exercise options and sell shares in the ailing lender. (On Oct. 10, Mr. Mozilo exercised options at $9.94 and sold $2.6 million worth of stock.) In about two weeks, Countrywide will release its third-quarter earnings. Morgan Stanley recently said Countrywide could lose at least $2.4 billion in the quarter. At deadline time, Countrywide's spokesman Rick Simon had not returned a telephone call about the North Carolina request.

Camden Property Trust, a Houston-based real estate investment trust, has closed a $500 million unsecured term loan facility with an interest rate of 50 basis points above the London interbank offered rate.The multifamily REIT said the three-year credit facility may be extended at the company's option for two one-year periods. Banc of America Securities LLC and J.P. Morgan Securities Inc. served as the joint lead arrangers and joint bookrunners for the offering. Camden said it also entered into an interest rate swap with JPMorgan Chase Bank NA and Bank of America NA under which the LIBOR interest rate of the credit agreement is fixed for five years at 4.74% per year. Camden can be found on the Web at http://www.camdenliving.com.