Originations

New York Mortgage Trust Inc., a New York-based real estate investment trust, has reported a consolidated net loss of $4.7 million ($0.26 per share) for the first quarter, including a $3.8 million loss from its discontinued mortgage lending operations.The results compared with net losses of $9.5 million ($0.53 per share) in the fourth quarter and $1.8 million ($0.10 per share) a year earlier. The REIT completed the sale of its wholesale and retail lending platforms to Tribeca Lending Corp. and IndyMac Bank, respectively, in the first quarter. The sales resulted in gross proceeds of approximately $14 million and a net gain of approximately $5.2 million, the company said. The REIT can be found online at http://www.nymtrust.com.

More than 147,700 foreclosure filings were reported nationwide in April, down about 1% from the level recorded in March but up 62% 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 783 households, the company said in its April 2007 U.S. Foreclosure Market Report. (Foreclosure filings include default notices, auction sale notices, and bank repossessions.) "After hitting a two-year high in March, U.S. foreclosures activity slipped slightly lower in April," said James J. Saccacio, chief executive officer of RealtyTrac. "Last year foreclosure activity subsided somewhat during the spring and summer months, thanks in part to increased interest from buyers. Whether the decrease in April is the beginning of a similar trend this year remains to be seen, but we expect foreclosure activity to at least stay above last year's levels for the remainder of 2007, fueled by a combustible mix of risky loans taken out in the last few years -- many in the subprime market -- and slowing home price appreciation." The company can be found online at http://www.realtytrac.com.

Over 100 community and consumer groups led by the California Reinvestment Coalition have called upon six top mortgage lenders to declare a temporary moratorium on home foreclosures in the state.The San Francisco-based coalition said it sent letters to the chief executive officers of Bank of America, Citibank, Countrywide Home Loans, Merrill Lynch, Washington Mutual, and Wells Fargo. "Many California homeowners are facing foreclosure because they were misled by unscrupulous mortgage brokers and lenders," said Kevin Stein, associate director of the CRC. "We are asking the largest lenders in the state to take leadership so that families can keep their homes and California's economy won't suffer." The coalition pointed to record-high foreclosure figures indicating that California recorded over 31,000 foreclosures in March, nearly triple the number of a year earlier. The CRC can be found online at http://www.calreinvest.org.

Fairway Independent Mortgage Co., a mortgage banker based in Sun Prairie, Wis., with more than 100 branches nationwide, has announced a new policy that prohibits any loan officer from charging a prepayment penalty longer than one year on any payment-option adjustable-rate mortgage product."This new policy demonstrates Fairway Independent’s commitment to the borrower in times when mortgage companies have been accused of putting their interests before those of customers," the company said. The policy will not affect the range of products available to its clients, Fairway said. The company noted that prepayment penalties typically enable originators to earn higher fees on a per-loan basis. "Generally speaking, the longer the prepayment penalty for the borrower, the higher the fee paid by the lender to the originating party," Fairway said, adding that such policies offer "absolutely no benefit to the customer." The company can be found online at http://www.fairwayindependentmc.com.

IndyMac Bank FSB, Pasadena, Calif., has announced the introduction of GrupoMac, a Hispanic wholesale division that will serve mortgage brokers and emerging bankers in markets with significant Spanish-speaking populations.The new division will offer IndyMac's mortgage products, but they will be tailored to the growing U.S. Spanish-speaking population and supported by a staff of bilingual sales and operations specialists, the bank said. IndyMac said it plans to add employees throughout the year, including bilingual individuals involved in underwriting, sales, and various support positions in a number of its regional mortgage centers. The company can be found online at www.indymacbank.com.

Rating agency DBRS is warning that the bankruptcy of prominent subprime mortgage lenders could lead to a change in the servicing fee on loans serviced by those companies.DBRS senior vice president Kathleen Tillwitz, who authored a new report on subprime lending, noted that there is historical precedent for bankruptcy courts to impose a mandatory increase in the servicing fee, citing a case involving bankrupt manufactured housing lender Conseco several years ago. In that case, a bankruptcy court increased the servicing fee from 50 basis points to 125 bps to facilitate the sale and transfer of the servicing asset. While the increased fee is designed to entice servicers to take over a portfolio when there are "few interested parties or a large number of delinquent loans" in a portfolio, it has the effect of leaving less money for the investors who own bonds securitized by the loans.

Ohio Attorney General Marc Dann says he is ready to sue subprime mortgage lenders and their secondary-market investors on Wall Street on behalf of borrowers and the Ohio Public Employees Retirement System (which invested in subprime mortgage-backed securities).Ohio has the highest "serious" delinquency rate in the nation -- 3.4%, according to figures compiled by the Mortgage Bankers Association. The Ohio AG is expected to file at least one lawsuit in the next few weeks, alleging violations of the state's Consumer Sales Protection Act. The law prohibits unfair or deceptive practices in regard to consumer sales, which covers mortgages.

A significant number of federally insured depositories are tightening up their subprime and "nontraditional mortgage" guidelines, according to the Federal Reserve's just-released April survey of senior loan officers.Of 16 depositories engaged in subprime lending, more than half indicated that they had tightened standards on such loans. (The Fed survey does not name the institutions.) The survey also found that of 44 banks engaged in nontraditional mortgage lending, 45% "noted a tightening of standards on such loans." However, the regulator said conventional lending standards at banks it surveyed over the past three months had remained "basically unchanged."

Class M-3 of ACE Securities Corp. Home Equity Loan Trust series 2002-HE3 has been downgraded from Baa1 to B3 by Moody's Investors Service.Moody's said losses over the past year have eroded the overcollateralization and caused credit enhancement to fall to a level that seems "too low to support the existing rating." The collateral for the deal consists of fixed- and adjustable-rate subprime mortgage loans.

Republic Property Trust, Herndon, Va., has announced the formation of a special committee to evaluate strategic options, including a possible merger or sale of the company.The real estate investment trust said it recently received "an unsolicited indication of interest" from another public REIT, which will be referred to the special committee. The office REIT said it "will not publicly disclose further information regarding the status of its evaluation until the process has been completed or unless or until the company deems necessary or appropriate."

Fog Cutter Capital Group Inc., Portland, Ore., has reported a gain of $2.5 million for the first quarter from the sale of its commercial mortgage broker subsidiary, George Elkins Mortgage Banking Co.The sale to a division of MuniMae for $10.4 million took place at the end of February, and was driven by the decision of Fog Cutter's management to concentrate on its fast-food business, Fatburger. Fog Cutter held 51% of George Elkins, with the rest owned by management. For the quarter, Fog Cutter lost $3.7 million ($0.46 per share), up from a loss of $1.0 million ($0.12 per share) a year earlier. Fog Cutter can be found on the Internet at http://www.fccgi.com.

Marathon Real Estate Finance, a New York-based commercial real estate finance company, is planning an initial public offering of its common shares.The firm has filed a registration statement with the Securities and Exchange Commission relating to the proposal, in which it states that the IPO is likely to be finalized in the third quarter. The firm invests in whole commercial mortgage loans and loan participations. The co-founders of the company are Bruce Richards and Louis Hanover, both of whom were employed with Smith Barney prior to founding the company in 1998, Marathon reported. Marathon said it expects to finance its purchases with warehouse lines of credit, repurchase agreements, and bank credit for the short term, and collateralized debt obligation funding over the long term. After the IPO, Marathon said it expects to own a portfolio of about $1.3 billion of commercial real estate-related assets.

Bridger Commercial Funding, San Francisco, has implemented the Mortgage Industry Standards Maintenance Organization's Commercial Servicing Transfer Standard with Midland Loan Services Inc.The companies said this shows the business practicality of using XML to accelerate information exchange between commercial lenders and servicers and validates MISMO's approach for using a rational XML-based transaction for data standardization of commercial and multifamily mortgages. "This proof of concept was needed before other industry players would seriously join the efforts around these standards," said Dave Bodi, executive vice president for Midland. The MISMO model will now be used as "the basic foundation for all new standard transactions," he said. Bridger can be found online at http://www.bridgerfunding.com, and MISMO can be found at http://www.mismo.org.

Class Q of LB-UBS Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2005-C2, has been downgraded from B3 to Caa1 by Fitch Ratings.The ratings on 22 other classes in the deal were affirmed. The downgrade was attributed to expected losses from four specially serviced loans and to the dispersion of loan-to-value ratios.

Two classes of Ace Securities Corp. series 2005-HE2 mortgage-backed securities have been downgraded by Fitch Ratings and four classes have been placed on Rating Watch Negative.Class B-1 was downgraded from BB-plus to BB, and class B-2 was downgraded from BB to BB-minus. Class M-10 was placed on Rating Watch Negative, as were classes M-9 and M-10 of series 2006-HE1 and class M-11 of series 2006-HE2. In addition, Fitch affirmed the ratings on 30 classes from three Ace Securities deals. Fitch said the negative rating actions resulted from a deteriorating relationship between loss expectations and credit enhancement. The pool consists of adjustable- and fixed-rate, first- and second-lien residential subprime mortgage loans. Fitch can be found online at http://www.fitchratings.com.

Mid-America Apartment Communities, a Memphis, Tenn.-based multifamily real estate investment trust, has set up a joint venture fund to invest $500 million in multifamily properties over the next three years.The REIT reports that the joint venture is with "institutional capital." Investments will be targeted in Mid-America's Sunbelt markets, with the focus being on properties with "redevelopment upside offering value creation opportunity through capital improvements, operating enhancements and restructuring in-place financing." The REIT expects to put in about $60 million of equity into the investments.

Three savings-and-loan institutions engaged in mortgage lending ranked among the 20 top-performing thrifts in 2006, according to SNL Financial, a Charlottesville, Va.-based research firm.Downey Financial Corp., Newport Beach, Calif., ranked seventh in SNL's annual performance ranking of the 100 largest thrifts, with a score of 78.6. (FirstFed Financial Corp. ranked No. 1 with 90.9.) Tied for ninth was BankUnited Financial Corp., Miami Lakes, Fla., while IndyMac Bancorp, Pasadena, Calif., ranked 13th, SNL reported. "The rankings show how profitable it was to be in the mortgage business in 2006," said Maria Tor, a senior analyst at SNL. "However, many of the companies that did so well in 2006 are now being punished in the stock market for possibly underwriting risky loans." The company can be found online at http://www.snl.com.

In its first quarter earnings release, American International Group, New York, said its domestic consumer finance operations are in discussions with the Office of Thrift Supervision over non-prime mortgages originated by AIG Federal Savings Bank from July 2003 through May 2006.The company said "Management expects that the application of underwriting criteria developed in consideration of regulatory guidance issued by the banking agencies will result in significant costs to the domestic consumer finance operations. At this time, management's best estimate of these costs is $128 million pre-tax, and a charge for this amount has been included in consumer finance operating income for the three months ended March 31, 2007."

HomeBanc Corp., Atlanta, has reported a loss to common stockholders of $23.8 million ($0.42 per share) for the first quarter 2007, vs. profits of $986,000 ($0.01 per share) a year earlier.The company has been undergoing a restructuring of its operations, but market conditions, said president and chief executive Kevin Race, have made it difficult to make a profit. "The disruption of the subprime market has had an effect on all segments of the mortgage market, as is reflected in our significantly deteriorated gain on sale margins during the first quarter. Although we expect this pricing pressure to be temporary in nature and we have been encouraged by the recovery in gain on sale execution we have experienced to date in the second quarter, we believe that gain on sale margins may not completely recover to what we consider to be normal until 2008," he said. The company's origination volume was down by 13% when compared with the first quarter 2006, hurt by a 25% decline in loan production from Florida.

The General Electric-owned WMC Mortgage is trying to sell "hundreds of millions" of dollars in subprime scratch and dent loans, according to one market participant.A WMC spokeswoman confirmed that loans are being auctioned but said she could not provide a dollar amount or any details on the pools. "It's being done in the standard course of business," she said, adding that if the company does not like the bid it will keep the loans in portfolio. A subprime wholesaler based in Burbank, Calif., WMC ranks fourth nationwide in non-prime production, according to the Quarterly Data Report. (For more details see the May 14 edition of National Mortgage News.)