Originations

Mortgage companies cut their payrolls by 2,100 full-time employees in July, according to a newly released government report that is generally slow to react to changing conditions in the mortgage industry.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell from 459,200 in June to 457,100 in July. BLS data indicate that 32,700 jobs have been lost in the mortgage industry since February. The credit crunch that has nearly halted subprime lending and severely restricted the availability of jumbo mortgages is forcing many lenders to cut their payrolls dramatically. Recently, Lehman Brothers said it would shut down its subprime mortgage unit in a move that affects 1,200 employees. Countrywide Financial Corp. is cutting its work force by 900 employees, and more layoffs are expected. The BLS can be found online at http://stats.bls.gov.

Four classes from two issues of UBS Mortgage Asset Securitization Transactions Asset Back Securities Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2003-WMC2, class M-5, from BBB to BB, and class M-6, from BB-plus to B-/DR1; and series 2004-OPT1, class M-6, from BBB-minus to BB, and class M-7, from BB-plus to CCC/DR2. In addition, Fitch affirmed the ratings on nine classes from the two deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral for the transactions consists of fixed- and adjustable-rate subprime mortgage loans secured by first and second liens on residential properties.

Eight classes from four issues of Morgan Stanley mortgage-backed securities have been downgraded by Fitch Ratings, and one class has been placed on Rating Watch Negative.The negative rating actions, involving classes in series 2002-AM2, series 2003-SD1, series 2004-NC3, series 2004-NC4, and series 2004-NC6, were attributed to a deterioration in the relationship between credit enhancement and expected losses. Fitch also affirmed the ratings on 35 Morgan Stanley classes. The collateral in the deals consists of fixed- and adjustable-rate subprime mortgage loans secured by first and second liens on residential properties.

Thirty-two classes from nine issues of Ameriquest Mortgage Securities Inc. mortgage pass-through certificates have been downgraded by Fitch Ratings.In addition, Fitch affirmed the ratings on 41 classes from 10 Ameriquest transactions. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses.

Thirty-seven more classes of 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. The latest downgrades affect the following securities: 29 classes from six issues of Ameriquest Mortgage Securities mortgage pass-through certificates; six classes from two issues of Morgan Stanley mortgage pass-through certificates; and two classes from one issue of SG Mortgage Securities asset-backed 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." Fitch can be found online at http://www.fitchratings.com.

The tightening in lending standards on residential mortgages has had a "noticeable" impact on home sales and construction activity in August, according to the Federal Reserve Board's Beige Book.Several Federal Reserve district banks "noted that the reduction in credit availability added to uncertainty about when the housing market might turn around," the Beige Book says. The Boston Federal Reserve Bank reported increases in sales and house prices in Massachusetts. But most district banks reported declining home sales and declining or stable prices along with "high" inventories of unsold homes. Commercial real estate activity was "generally stable or expanding," the Beige Book says. However, several Federal Reserve Banks reported tighter credit conditions on CRE loans.

The average 30-year fixed mortgage rate rose from 6.45% to 6.46% for the seven-day period ended Sept. 6, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.12% to 6.15%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.35% to 6.32%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.84% to 5.74%, Freddie Mac reported. Fees and points averaged 0.5 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "Over the past week, long-term mortgage rates were largely unchanged as the most recent economic news showed smaller increases than had been expected," said Frank Nothaft, Freddie Mac's chief economist. "For instance, the core personal consumption expenditure price index rose at an annualized rate of only 1.3% in the second quarter, and July's consumer spending data showed a 1.9% gain in the core price index for the 12 months ending in July." A year ago, the average 30-year and 15-year fixed rates were 6.47% and 6.16%, respectively, and the average hybrid and one-year ARM rates were 6.14% and 5.63%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Citing temporary rule changes by the Federal Housing Administration in response to the subprime mortgage crisis, Refinance.com has announced the creation of an online resource for borrowers seeking to refinance with an FHA loan.The company, a mortgage bank headquartered in New York, said assistance would be available online, or by phone at 1-888-FHA-1776. "A bad mortgage does not automatically make a bad borrower," said Nicholas Bratsafolis, chairman of Refinance.com. "It is unreasonable and unfair to blame the current subprime mortgage crisis solely on the borrowers. Good people may have been enticed into bad loans, and that appears to be the case quite often regarding the subprime market." The company can be found online at http://www.refinance.com, and the hotline can be found at http://www.fhahotline.com.

The Bush administration is pressuring the Department of Housing and Urban Development to speed up the issuance of a Real Estate Settlement Procedures Act proposal to improve good-faith estimate disclosures of mortgage broker fees and settlement costs.HUD officials were planning to issue the proposal in January after completing the required Office of Management and Budget review, which can take up to 90 days. But Treasury Under Secretary Robert Steel testified Wednesday on Capitol Hill that HUD will issue the RESPA proposal "later this fall." It appears that the administration wants HUD to send the proposal to the OMB by Oct. 1, according to one source. Meanwhile, HUD has published the results of the consumer testing conducted on a revamped GFE form the department was working on back in 2003 and 2004. "[T]he new GFE to be proposed will reflect improvements to the prior form," HUD said.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., has revealed that he is working on a comprehensive predatory-lending bill that would prohibit lenders from steering borrowers into subprime loans and impose a fiduciary duty on mortgage brokers.The bill also holds lenders who pay brokers a yield-spread premium responsible for the brokers' actions. "Predatory lending needs to be stopped, which is why I intend to introduce legislation that will put an end to the practices that have forced thousands of Americans into foreclosure," said Sen. Dodd, who is seeking the Democratic presidential nomination. The Dodd bill would include YSPs in the points-and-fees test for determining whether a loan is a "high-cost loan" under the Home Ownership and Equity Protection Act. It would also prohibit prepayment penalties on subprime loans and require escrow accounts. The senator's bill also addresses servicing abuses.

The delinquency rate for single-family home loans jumped by 28 basis points to 5.12% in the second quarter of this year, and the number of loans entering the foreclosure process reached a record high, according to the Mortgage Bankers Association.The rate of loans entering the foreclosure process reached a record level of 0.65%, up 7 basis points from that of the previous quarter. The percentage of loans at some stage of the foreclosure process, at 1.40%, also was up substantially, though the foreclosure inventory was not a record. MBA chief economist Doug Duncan told reporters that delinquency and foreclosure rates were up substantially for subprime adjustable-rate mortgages. He also said that seven states -- Arizona, California, Florida, Indiana, Michigan, Nevada, and Ohio -- accounted for most of the deterioration in loan performance. The MBA can be found online at http://www.mortgagebankers.org.

Countrywide Financial Corp., Calabasas, Calif., said late Wednesday that it had laid off 900 workers across the United States, most of whom worked in production-related jobs.Earlier this week MortgageWire reported that the company was contemplating layoffs of between 7,000 and 10,000. Last month Countrywide, the nation's largest lender, cut 500 workers in its subprime division. The company has exited that business for now, concentrating instead on government-sponsored enterprise mortgages and loans insured by Ginnie Mae. Meanwhile, the publicly traded lender has rescheduled its annual Investor Forum from Sept. 5 and 6 to Nov. 12.

Lehman Brothers on Thursday trimmed 850 mortgage jobs from its global operations as part of an overall restructuring of that business.Sources say most of the job cuts came in the United States and are production-related. Lehman is closing its Korean mortgage unit but will continue to provide mortgage capital in the United States, the United Kingdom, Japan, and the Netherlands. It will also change the name of its alternative-A unit, Aurora Loan Services of Colorado, to Lehman Mortgage Capital. Last month Lehman closed its California-based BNC Mortgage subprime division. Aurora is funding mostly alt-A loans but could re-enter the subprime market if conditions there improve, said an official close to the company. Ted Janulis, chief of global mortgage capital for Lehman said, "While these moves are extraordinarily difficult because of the impact they have on our people, we now have a business that is sized correctly for the current environment and positioned for long-term success."

Municipal Mortgage & Equity LLC, Baltimore, has received a six-month extension for continued listing and trading on the New York Stock Exchange, according to MuniMae.The extension gives the company until March 3, 2008, to file its 2006 Form 10-K annual report with the Securities and Exchange Commission. Trading of MuniMae's shares will be unaffected during the extension period, the company said. MuniMae can be found online at http://www.munimae.com.

Zacks Equity Research, Chicago, announced Sept. 5 that Post Properties, an Atlanta-based multifamily real estate investment trust, had been designated its "Bear of the Day."The Bear of the Day is a stock Zacks expects to underperform the markets over the next three to six months. Zacks said the REIT is "trying to push rents, which has resulted in lost occupancy. We expect this trend to continue, or the company will be forced to lower rents. Either way, it is very likely that Post will miss estimates for the remainder of the year." Zacks can be found online at http://www.zacks.com, and Post can be found at http://www.postproperties.com.

National Retail Properties Inc., a real estate investment trust based in Orlando, Fla., has priced a public offering of $250 million of senior unsecured notes due Oct. 15, 2017, at 99.649.The notes will yield 6.922%, the REIT said. Banc of America Securities LLC and Wachovia Securities are the joint book-running managers of the offering. National Retail Properties can be found online at http://www.nnnreit.com.

Digital Realty Trust Inc., San Francisco, has announced amendments to its credit facility that increase its total capacity from $500 million to $650 million.The three-year facility is expandable to $750 million and has two one-year extension options. The number of banks in the syndicate providing the facility was increased from 13 to 16, the company said. Digital Realty, a real estate investment trust that owns, acquires, and manages technology-related real estate, can be found online at http://www.digitalrealtytrust.com.

E-Loan, a Pleasanton, Calif.-based online lender offering mortgage, home equity, and other consumer loans, has announced a "substantial reduction" in the interest rate on its premium jumbo mortgage loans.The rate has been lowered to 7.5%, with no points and no lender fees, for qualified borrowers with a FICO score of at least 740 and a loan-to-value ratio of 75% or less, the company said. "While the mortgage market is forcing Wall Street and most other lenders to retreat from these premium jumbo loans, E-Loan is leveraging its financial strength to aggressively pursue this valuable group of borrowers with highly competitive mortgage rates," said E-Loan president Mark Lefanowicz. The company can be found online at http://www.eloan.com.

Home prices increased at an annualized rate of 0.4% nationwide in the second quarter, down from a revised rate of 2.0% in the first quarter, according to the Conventional Mortgage Home Price Index Classic Series released by Freddie Mac.The West South Central states of Arkansas, Louisiana, Oklahoma, and Texas recorded the biggest price increases, with a 5.1% annualized growth rate, Freddie Mac said. The East South Central states of Alabama, Kentucky, Mississippi, and Tennessee experienced the second-highest annualized gains, with a 4.9% rate, while the New England states declined the most, at 2.2%. "The CMHPI Classic Series [which includes home purchases and refinancings] recorded five regions with falling average home values in the second quarter," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "The East North Central states are still plagued by manufacturing employment losses, but the South Atlantic, Middle Atlantic, New England, and Pacific regions are all feeling the hit of the housing slump with otherwise fairly healthy economies. These are also the states with the highest housing costs and that had the largest gains in home values over the past five years." The index was jointly developed by Freddie Mac and Fannie Mae. Freddie Mac's website address is http://www.freddiemac.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 615.2 to 622.9 on a seasonally adjusted basis during the week ended Aug. 31, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 0.2% on the week but were up 10.0% from the level recorded a year earlier. The Purchase Index rose from 424.0 to 425.8 on a seasonally adjusted basis, while the Refinance Index climbed from 1729.6 to 1770.2. Refinancings represented 41.4% of total applications, up from 40.4% the previous week, while adjustable-rate mortgages accounted for 12.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages crept up from 6.41% to 6.42%, and points (including the origination fee) fell from 1.48 to 1.09 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.