Originations

Existing-home sales are likely to decline by 8.5% this year and drop below the 6 million level for the first time since 2002, according to economists at the National Association of Realtors."There's been an unusual hit to home sales, starting in March when subprime problems emerged and more recently when problems spread to jumbo loans," NAR senior economist Lawrence Yun said. He noted, however, that the availability and pricing of jumbo loans is beginning to improve. The NAR's latest forecast indicates that sales of previously owned homes, including condominiums and cooperatives, will total 5.92 million by year's end and increase by 5.8% in 2008. "Existing home prices are likely to slip 1.7% to a median of $218,200," the NAR said. But the Realtors don't see a recovery in new-home sales. They expect new-homes sales to drop by 23.8% this year to 801,000, followed by a 7.4% decline in 2008. The NAR can be found online at http://www.realtor.org.

Fannie Mae is "not actively" seeking to buy a servicing platform, according to its chief executive officer, Daniel Mudd, but he says he is concerned about a shortage of servicing capacity due to a growing number of troubled loans and servicers that are going out of business.There have been reports that the mortgage giant has its eye on Litton Loan Servicing, but Fannie's president and CEO declined to comment specifically on the Houston servicer in taking questions from reporters. "Keeping that capability out there is much more important to us than that being a line of business per se," Mr. Mudd said after speaking to the National Association of Federal Credit Unions. Mr. Mudd stressed that Fannie's mission is to provide stability in the secondary mortgage market, and servicing capacity is important to the stability of the secondary market. Since April, Fannie's Home Stay program has helped 33,000 subprime borrowers refinance into safer loans totaling $6 billion, Mr. Mudd told the credit union executives. Fannie can be found online at http://www.fanniemae.com.

Bear Stearns & Co. has hit Impac Mortgage Holdings with new margin call requests, according to a source familiar with the situation.Under a margin call, a lender is asked to post additional capital because of concerns about loan buybacks. In Bear's case, the margin calls are not huge, the source said, but will put additional pressure on the nondepository lender/servicer. Officials at the Irvine-based Impac did not return telephone calls about the matter by deadline time. A Bear spokeswoman declined to comment.

Subprime wholesaler Option One Mortgage Corp., Irvine, Calif., says it will trim 575 additional jobs, incurring expense charges of $19 million.Back in May the H&R Block-owned Option One said it would close 12 mortgage processing offices and trim 615 workers by early September. The new job cuts are in addition to those revealed in May. Option One is slated for sale to Cerberus Capital, a hedge fund that also controls GMAC Mortgage, but there are doubts in the industry whether the deal will occur. Cerberus recently threw its subprime operation, Aegis Mortgage, into bankruptcy.

About 10 days after denying that any major job cuts were afoot, First Horizon National Corp., Memphis, has confirmed that it will eliminate 1,500 mortgage positions and shut 50 offices.The company did not issue a news release on PR Newswire, but the reductions were reported early Wednesday by American Banker, a sister publication to National Mortgage News. The job cuts were revealed by First Horizon chief executive Gerald Baker at a Lehman Brothers conference. On Aug. 31, John Daniels, the head of human resources for First Horizon, told NMN that there "are no massive layoffs" coming, adding that the mortgage lender was still hiring.

Countrywide Financial Corp. declined to comment late Tuesday on published reports that said it is working on a "strategic investment" with a possible suitor.The company said, "Regarding media reports today about Countrywide Financial Corp., it is the company's policy not to comment on market rumors." A few weeks ago, Bank of America invested $2 billion in CFC, bolstering its liquidity. Countrywide said it has already taken "decisive steps to address the challenges arising in this environment and thereby enable Countrywide to meet its funding needs and position the company for continued growth and success." Meanwhile, according to new filings with the Securities and Exchange Commission, three different financial institutions recently slashed their ownership stakes in Countrywide. The three include: AXA Financial, Barclays Global Investors NA, and Legg Mason Capital Management. Until recently, the three were the largest institutional investors in CFC. Countrywide can be found online at http://www.countrywide.com.

In addition to the more than 130 additional classes of subprime mortgage-backed securities downgraded because of revised subprime loss assumptions (see item above), Fitch Ratings has also downgraded 43 additional classes of B&C MBS that it did not link to the changed assumptions.Fitch also affirmed the ratings on 49 classes from the same transactions. Among the MBS affected by the downgrades were: 15 classes from seven Structured Asset Securities Corp. deals; 11 classes from four IndyMac SPMD deals; eight classes from five Meritage Mortgage Corp. deals; five classes from four Centex Home Equity Loan deals; and four classes from one Terwin Mortgage Trust deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Over 130 additional classes of subprime mortgage- and asset-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also affirmed the ratings on classes with outstanding balances of more than $12 billion. Among the mortgage pass-through certificates affected by the latest downgrades were: 58 classes from nine First Franklin issues; 19 classes from two C-BASS issues; 14 classes from one IndyMac ABS Inc. issue; 13 classes from two SACO issues; 13 classes from one Soundview Home Equity Loan Trust issue; 12 classes from one Merrill Lynch issue; and 11 classes from four Structured Asset Securities Corp. issues. 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."

Hunter Wise Financial Group LLC, Irvine, Calif., and Houston, has announced the placement of a $200 million senior line of credit for Commercial Capital Inc., a Denver-based company that specializes in short-term commercial real estate lending.Hunter Wise said the transaction more than doubled the lending capacity (to over $350 million) of Commercial Capital, a privately held commercial mortgage banking and capital partnering company. "Our strategic plan is to become the foremost short-term commercial real estate lender in the small to mid-tier development market," said Matthew Witt, president and chief executive officer of Commercial Capital. "With our new lending capacity, we are now one of the leading private lenders in the Rocky Mountain region."

The election of real estate investment trust status under the federal tax code is "generally a modest credit negative," but revoking REIT status may not be a credit positive, according to Fitch Ratings.In a new report titled "Credit Implications of Electing REIT Status," Fitch says REITs are typically rated one or two notches below similar non-REIT entities. One of the reasons for this is that REITs must pay at least 90% of their taxable income in the form of dividends to shareholders, limiting their ability to retain capital, the rating agency says. This imposes on REITs a "more onerous" necessity to access the capital markets regularly for growth capital, Fitch says. "While electing REIT status is typically a credit negative, revoking REIT status may not necessarily be a credit positive, since the revocation of REIT status is usually triggered by a company's inability to operate under REIT parameters," said Steven Marks, a Fitch managing director and head of its REIT group. However, other factors may offset the constraints of REIT status, he said, noting that companies may choose it "to meet investor demand for yield-oriented stocks." The rating agency can be found online at http://www.fitchratings.com.

KBW Inc., a New York-based investment bank that specializes in financial services, has announced an expansion into the equity REIT sector.KBW said it has already initiated coverage on 31 publicly traded real estate investment trusts and expects the number to increase to about 50 by the end of the year. KBW also announced that it has hired nine employees to staff the new REIT effort, including Sheila McGrath and Steve Swett as senior vice presidents of research and Andrew Crossfield as senior vice president of equity sales. According to KBW research, financial services companies now account for roughly 21% of the S&P 500 Index's total market capitalization, and 6% of those companies are categorized as REITs. The company can be found online at http://www.kbw.com.

Wachovia Securities, Charlotte, N.C., has announced the appointment of four managing directors to head up its newly integrated commercial real estate platform, which consists of two business lines: Real Estate Americas and Real Estate Asset Management.Lawrence Gray and Robert Verrone have been named co-heads of Real Estate Americas, Leslie Fairbanks has been named co-head of Real Estate Asset Management, and Dan Sullivan has been named interim co-head, effective Oct. 1, of Real Estate Asset Management. Real Estate Americas includes coverage teams for all domestic real estate clients, commercial mortgage-backed securities, structured finance, real estate corporate banking, tax credit and agency finance, real estate syndications, and sales and trading of real estate collateralized debt obligations, the company said. Real Estate Asset Management includes CMBS servicing, construction loan underwriting, and construction loan portfolio management. Wachovia Securities can be found on the Web at http://www.wachovia.com.

Federal Reserve officials are becoming more concerned that the turmoil in the credit and mortgage markets will prolong the downturn in the housing sector and lead to a pullback in consumer and business spending.Frederic Mishkin, a Fed governor, said in a speech to the Money Marketeers of New York that even creditworthy borrowers are finding it more difficult to qualify for a mortgage or are paying more for the loan. "At this point, housing demand seems likely to be crimped further by a marked reduction in the availability of mortgages, and consumer and business spending also could be damped as a consequence of the recent financial turmoil," the Fed governor said. Janet Yellen, president of the San Francisco Federal Reserve Bank, also warned in a speech that the financial market turmoil "seems likely to intensify the downturn in housing." She also opined that mortgage interest rates are likely to remain relatively high for some time and that "this could prolong the adjustment in the housing sector."

Sen. Charles E. Schumer, D-N.Y., has introduced a bill that would temporarily raise the caps on Fannie Mae's and Freddie Mac's portfolios as Democrats in Congress are becoming increasingly frustrated with federal regulators who insist on maintaining the caps at a time when the secondary market for many mortgage products has dried up.In a letter to the Federal Reserve Board, House Financial Services Committee Chairman Barney Frank, D-Mass., says it doesn't make sense to expect the two government-sponsored enterprises to help with the refinancing of subprime borrowers unless they have room in their portfolios to buy the loans. Forcing the GSEs to sell their best mortgage-backed securities and buy riskier assets will diminish the quality of their portfolios and raise safety-and-soundness concerns, Rep. Frank says in a letter to Fed Chairman Ben Bernanke. Separately, Office of Federal Housing Enterprise Oversight Director James Lockhart says the portfolio caps are not hindering the GSEs from helping subprime borrowers. "Most new refinance loans of such borrowers can be securitized," Mr. Lockhart says in a letter to Sen. Schumer. The New York senator's bill would raise the portfolio cap by 10% so the GSEs could purchase $145 billion in new mortgages and increase the GSE conforming loan limit from $417,000 to $625,000 in high-cost areas.

Warehouse lender First Collateral Loan Services, Concord, Calif. -- a Citigroup company -- is no longer accepting new mortgage banking customers, industry sources have confirmed to MortgageWire.At deadline time, First Collateral could not be reached for comment. According to the Mortgage Industry Directory, First Collateral is the fifth-largest warehouse lender in the United States, as measured by commitments. Sources say another large warehouse provider based on the West Coast is also contemplating exiting the market. "Warehousing isn't the best business to be in right now," said one warehouse veteran. Late last week, Dow Jones first reported that First Collateral would not take on new clients.

Three classes of notes in Ballantyne Re PLC have been downgraded by Fitch Ratings because certain reserve funds backing the transaction have "material exposure" to subprime residential asset- and mortgage-backed securities that have experienced significant market declines.The downgrades were as follows: class A-1 floating-rate notes, from AA to A-plus; class B-1 subordinated notes, from BBB-plus to BB-plus; and class B-2 subordinated floating-rate notes, from BBB-plus to BB-plus. The ratings remain on Rating Watch Negative. The rating agency said interest payments to classes B-1 and B-2 were suspended under the terms of the indenture on Sept. 4. "The class A-1 notes were downgraded because Fitch believes the risk profile of the notes is no longer consistent with the AA rating category," Fitch said. "Similarly, classes B-1 and B-2 were downgraded because Fitch does not consider the suspension of interest to be consistent with an investment-grade rating." Ballantyne Re is a special-purpose company incorporated in Ireland.

In addition to the more than 200 additional classes of subprime mortgage-backed securities downgraded because of revised subprime loss assumptions (see item above), Fitch Ratings has also downgraded more than 90 additional classes of B&C MBS that it did not link to the changed assumptions.Fitch also affirmed the ratings on more than 120 classes from the same transactions. Among the MBS affected by the downgrades were: 52 classes from 14 issues of Credit Suisse First Boston Home Equity Asset Trust deals; 12 classes from five Option One issues; eight classes from five Asset Backed Securities Corp. issues; and eight classes from two Countrywide Asset-Backed Securitization Trust issues. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

More than 200 additional classes of subprime mortgage- and asset-backed securities have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also affirmed the ratings on classes with outstanding balances of nearly $9 billion. Among the mortgage pass-through certificates affected by the latest downgrades were: 70 classes from nine Structured Asset Securities Corp. issues; 27 classes from two SACO issues; 23 classes from three Terwin issues; 21 classes from four Credit Suisse First Boston Home Equity Asset Trust issues; 19 classes from two Countrywide issues; 17 classes from one Fremont Home Loan Trust issue; and 15 classes from two GS Mortgage Securities Corp. issues. 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." Fitch can be found online at http://www.fitchratings.com.

MFA Mortgage Investments Inc., New York, has announced the pricing of 11 million shares of MFA stock at $7.25 per share.Net proceeds are expected to total approximately $75.5 million. The company said it has granted the underwriters an option to buy up to approximately 1.65 million additional shares to cover any overallotments. UBS Investment Bank, Deutsche Bank Securities, and JMP Securities are the joint book-running managers of the offering. MFA, a real estate investment trust that invests in adjustable-rate mortgage-backed securities, can be found online at http://www.mfa-reit.com.

Mortgage Network Inc., a mortgage company based in Danvers, Mass., has announced an alliance with Partners Group Unlimited, a mortgage lender and brokerage based in Waltham, Mass.Ronald Gardiner, former president of Partners Group, will assume the role of branch manager at the Waltham office of Mortgage Network, the latter company reported. Mortgage Network can be found online at http://www.mortgagenetwork.com.