Originations

Impac Mortgage Holdings, Irvine, Calif., a top-ranked nonprime lender, lost $153 million in the second quarter, citing higher delinquencies, deteriorating market conditions, and a large increase in its loan loss reserves.Last week the publicly traded real estate investment trust -- the subject of margin calls from its warehouse lenders -- suspended originations of alternative-A loans, which until recently accounted for most of its production. During the quarter Impac funded or bought $1.3 billion in mortgages, a 41% decline from the levels recorded in both the previous quarter and the second quarter of last year. Over the past two weeks its shares have traded as low as $0.95, compared with a 52-week high of almost $10. In the second quarter of 2006, it posted a $26 million profit. Impac, a mortgage REIT, can be found online at http://www.impaccompanies.com.

Super-jumbo lender Thornburg Mortgage of Santa Fe, N.M., saw its stock plunge 46% on Tuesday after research firms raised concerns about its liquidity.Credit Suisse analyst Moshe Orenbuch cited "heightened concerns surrounding liquidity at the company" in connection with his downgrade to "underperform." In a research note, the analyst wrote: "As a result of rising funding costs, margin calls on its short-term funding instruments and the deleveraging of its balance sheet, we expect TMA will have to cut its dividend significantly." (TMA is Thornburg's stock symbol.) According to the Quarterly Data Report, the publicly traded real estate investment trust ranks 38th among residential funders. Its stock closed at $7.58, down 46% on the day, reaching a new 52-week low. Its 52-week high is $28.40.

Deutsche Bank is closing one of its correspondent lending units, choosing to consolidate it into an existing division at its MortgageIT subsidiary, sources have confirmed to MortgageWire.Deutsche Bank declined to comment, but a source close to the situation called it a "streamlining measure" by the bank. As part of the move, Deutsche will close an office in Boca Raton, Fla. The bank operated two separate units involved in correspondent loan purchases. One unit focused on mortgage bankers with a net worth of $400,000 or greater, the other on firms with a net worth below that amount. Deutsche launched its correspondent business in 2004. Last year it bought MortgageIT, a fast-growing mortgage banking firm that funds through different production channels.

The number of loan brokerage firms operating in the United States is expected to fall by one-third, to 35,000, by the end of 2009, according to a report being readied by Wholesale Mortgage Research & Consulting, Columbia, Md.WMRC managing director Larry Pearl said if conditions in the mortgage market do not improve by early 2009, there may be just 30,000 brokerage firms left. WMRC says 53,000 firms were open and operating at the end of 2006. Those 53,000 firms averaged seven employees per shop.

Eleven certificates issued by Terwin Mortgage Trust have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are as follows: series 2004-1HE, class B-3; series 2004-3HE, classes M-2, M-2-X, M-3, M-3-X, B-1, B-2, and B-3; series 2004-5HE, classes B-2 and B-3; and series 2004-13ALT, class M-3. "The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses," Moody's said. Ten of the classes are backed by subprime fixed- and adjustable-rate mortgage loans. One class, from 2004-13ALT, is backed by alternative-A adjustable-rate mortgages.

The ratings on 12 tranches of mortgage-backed securities issued by Structured Asset Investment Loan Trust in 2004 have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are as follows: series 2004-1, classes M5 and M6; series 2004-3, class M5; series 2004-4, classes M7 and M8; series 2004-5, class B; series 2004-7, class M7; series 2004-8, class M9; and series 2004-BNC1, classes M5, M6, M7, and B1. "The tranches being reviewed have experienced a decrease in available credit enhancement, and the recent pace of losses in each deal has eroded overcollateralization below its targeted level," Moody's said. The collateral backing each deal consists primarily of first-lien, subprime fixed- and adjustable-rate mortgage loans. Moody's can be found online at http://www.moodys.com.

Fitch Ratings has lowered its issuer default rating on Beazer Homes USA from BB-plus to BB and placed all the Atlanta-based homebuilder's ratings on Rating Watch Negative.The rating agency said the actions reflect "challenging" housing conditions in most of Beazer's markets; credit tightening pressures, "which particularly affect entry-level buyers (a significant customer focus at Beazer)"; negative trends in operating margins; and the expectation of "further deterioration of its credit metrics" into fiscal year 2008. "Possible accounting restatements, an internal board of directors' investigation, and inquiries from the U.S. attorney's office and Securities and Exchange Commission provide added distraction amidst this difficult housing environment," the rating agency said. Fitch can be found online at http://www.fitchratings.com, and Beazer can be found at http://www.beazer.com.

Countrywide Home Loans, Calabasas, Calif., funded $39 billion in mortgages during July, a 6% gain from the level recorded a year earlier, but a 14% drop from that of the previous month.Figures released by the company also show that purchases by its capital markets group plummeted by 86% to just $508 million during the month. So far this year, Countrywide's capital markets group has bought $14.8 billion, compared with $44 billion for the same period last year, a 66% decline. Company president David Sambol said the lower volume "reflects our tighter lending guidelines that have significantly curtailed total production." Countrywide can be found on the Web at http://www.countrywide.com.

Delta Financial Corp., Woodbury, N.Y., says it has raised an additional $70 million in capital from two sources.Delta obtained a $60 million financing facility from Angelo, Gordon & Co., collateralized by all its securitization cash-flow certificates. Angelo, Gordon also received warrants to purchase 10 million shares of Delta common stock at an exercise price of $5 per share. Delta also issued $10 million in convertible notes to funds managed by Mohnish Pabrai, one of the company's largest stockholders. Those notes can convert into 2 million shares of Delta common stock at $5 per share. "Liquidity has become one of the most important issues facing lending institutions today as the credit disruption widens and rating agencies modify their reserve level requirements," explained Hugh Miller, Delta's president and chief executive. "This has created a capital-intensive environment in which it is increasingly more costly to operate. While our adherence to Delta's proven business model, with a focus on fixed-rate loans and a diversified wholesale/retail origination platform, provided some insulation and helped us generate positive earnings during the second quarter, it became apparent this current environment would unduly strain our liquidity." The announcement came in Delta's formal second-quarter earnings release, which confirmed results previously announced in a Securities and Exchange Commission filing on Aug. 9. The company can be found on the Web at http://www.deltafinancial.com.

A number of investors, including builder KB Home's founder Eli Broad, have put a total $3 billion cash infusion into a closely watched Goldman Sachs "quantitative strategy fund" that has been pressured by the credit crunch sparked by subprime mortgage woes."Many funds employing quantitative strategies are currently under pressure," Goldman said, noting that -- in addition to the Global Equity Opportunities Fund that received the multibillion-dollar investment -- it has a couple of other funds in this category that have suffered. In addition to Mr. Broad, others who have invested in GEO include C.V. Starr & Co. Inc., a global investment firm with ties to AIG, and Perry Capital LLC, a private investment management firm founded by former Goldman equity trading executive Richard C. Perry.

Regions Financial Corp., Birmingham, Ala., said Monday afternoon that it is not exiting the residential mortgage sector and will actually expand its presence in the home finance market. MortgageWire, quoting a source inside the company, reported earlier on Monday that Regions would drop the business line. The source, who was not identified, could not be reached for further comment. We regret the error.

Nonprime wholesaler Aegis Mortgage Corp., Houston, has filed for chapter 11 bankruptcy protection, listing 35 of its largest unsecured creditors who are owed about $90 million.About 10 days ago, Aegis -- which is owned by hedge fund giant Cerberus Capital -- stopped funding loans and laid off most of its production staff. According to its Delaware bankruptcy filing, the lender's top five creditors are: Morgan Stanley ($16 million); Countrywide Financial, Calabasas, Calif. ($14 million); EMC Mortgage, Lewisville, Texas ($11 million); Aurora Loan Services, Littleton, Colo. ($9 million); and Goldman Sachs ($8 million).

Class B-2 of GS Mortgage Securities Corp. residential mortgage pass-through certificates, series 2003-NC1, has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on four other classes in the GSAMP transaction. The negative ration action was attributed to a deterioration in the relationship between credit enhancement and expected loss. Losses have exceeded excess spread in the past six months and eroded the overcollateralization to a point below its target level, Fitch reported. The collateral backing the deal consists of closed-end subprime mortgage loans secured by first and second liens on residential properties.

Class B-5 of GE-WMC mortgage pass-through certificates, series 2005-2, has been downgraded from BB-plus to BB by Fitch Ratings.Fitch also affirmed the ratings on 23 classes from two GE-WMC transactions. The subprime transactions were among those placed Under Analysis on July 12. Fitch reported that at the end of the day on Aug. 10, it had downgraded 672 classes (with an outstanding balance of $13 billion) from those subprime RMBS deals and affirmed the ratings on 1,219 classes with an outstanding balance of $105 billion. Fitch can be found on the Web at http://www.fitchratings.com.

Lenders Insight, Cary, N.C., has announced an automatic extension of 30 days for members and "in demo" trials as a result of the disruption caused by mortgage banker closings."We have many American Home Mortgage and AB Conduit members," said Jim Enright, co-founder of Lenders Insight, which allows loan officers and call centers to connect with phone prospects "virtually" over the Internet. "We want to support them during the interim period as they resettle by 'stopping the clock' on their membership. We are adding 30 days to annual membership subscriptions and extending 30-day demos to 60 days. Monthly members' subscription will skip a payment." The company can be found online at http://www.lendersinsight.com.

Real estate investment trusts continued to produce negative returns on a year-to-date basis in July, according to the National Association of Real Estate Investment Trusts.The FTSE NAREIT All REIT index recorded a negative-15.14% return for the first seven months of the year, the trade group reported. Considering only mortgage REITs, the return was negative-37.67% for the period, and equity REITs alone returned a negative-13.23. This compares with a return over the same period of 3.64% on the S&P 500, 6.01% on the Dow Jones industrial average, and 5.42% on the NASDAQ Composite, according to NAREIT. The association can be found online at http://www.nareit.com.

Midsize and large homes are showing steeper declines in value over the past year than smaller single-family residences, according to Zillow.com, an online real estate community based in Seattle.Zillow's quarterly national home value report found that home values fell only 0.1% in the second quarter and were 2.8% lower than in the second quarter of 2006. But midsize and large homes lost value on a year-over-year basis at the rate of 3.1% and 2.8%, respectively, while small homes fell only 1.0%. "The U.S. real estate market still appears quite anemic, at best, with many markets still doing poorly, especially those in South Florida and Southern California," said Stan Humphries, Zillow's vice president of data and analytics. "The one ray of home this period is that we've not seen another quarter-over-quarter decline as we've experienced in the past two quarters. The significantly poorer performance of condos and larger single-family homes suggests that prices for these housing sectors are still not in accord with current demand." Zillow can be found online at http://www.zillow.com.

The vast majority of adjustable-rate mortgage borrowers chose fixed-rate loans when they refinanced in the second quarter, according to Freddie Mac.Of those borrowers who originally had a one-year ARM, 85% chose a fixed-rate mortgage in the second quarter, as did 86% of borrowers who originally had a hybrid ARM, Freddie Mac said in its Refinance Product Transition Report. "While most borrowers still prefer to refinance into fixed-rate mortgage products, the widening spread between fixed- and adjustable-rate mortgages in the second quarter made ARMs a bit more attractive than they had been," said Amy Crews Cutts, Freddie's deputy chief economist. "With the recent contractions in mortgage lending standards and increasing emphasis on underwriting borrowers to fully indexed rates on adjustable-rate mortgages, it is likely that we will see more demand for fixed-rate products for both new home purchases and refinances in the future." Freddie Mac can be found online at http://www.freddiemac.com.

Lexington Realty Trust, a New York real estate investment trust that invests in single-tenant office properties, has formed a joint venture to invest in such properties nationwide.Lexington reported that it will invest $22.5 million in the venture, and the co-investor, an unnamed real estate company, will invest $127.54 million. The joint venture is expected to acquire up to $1.4 billion of property, using mortgage financing for up to 70% of the acquisition cost. The joint venture is initially acquiring 53 single-tenant net-leased assets (with a total area of over eight million square feet) from Lexington and its affiliates for a total price of $940 million, including the assumption of debt. The REIT can be found online at http://www.lxp.com.

The Trump Organization and First Meridian Mortgage have announced an exclusive strategic alliance and the formation of a new entity to operate as Trump Financial.First Meridian is a mortgage banker/broker dealing mostly in prime and jumbo residential real estate as well as small-balance commercial loans up to $2 million. Trump Financial will offer prospective clients an array of financial products and services while at the same time remaining focused on First Meridian's expertise in the residential mortgage arena. (First Meridian is a licensed mortgage banker in 12 states -- California, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Minnesota, Virginia, and Washington, D.C.) "A lot of the guys they [Trump] were talking to dabbled in subprime business and things of that nature, which is stuff that we've always stayed away from," said David Brecher, founder and chief executive of First Meridian. "They wanted somebody who was going to be there for the long term."