Originations

Lenders First Choice, Simi Valley, Calif., and Calyx Software, San Jose, Calif., have announced the integration of LFC's title insurance and settlement services application into Calyx Point, which connects loan officers and processors to lenders and service providers.LFC is using the Calyx WebConnect technology, which the companies said ensures compatibility with Point and Point Data Server. "WebConnect allows brokers to launch the LFC transactional website directly from inside Point, enabling users to send and receive loan data without leaving the application," the companies said. "When the LFC application returns data to Point, the loan file to which it pertains is automatically updated, and any supporting documentation is stored with the loan file." The companies can be found online at http://www.lendersfirstchoice.com and http://www.calyxsoftware.com.

The Shadow Financial Regulatory Committee has cautioned against federal intervention in the mortgage markets other than requiring "vastly simplified disclosures," arguing that market solutions to the subprime crisis are already under way.The committee, a panel sponsored by the Washington-based American Enterprise Institute, said subprime lenders with inadequate underwriting standards are already being forced to exit the industry. "If allowed to run their course, these market solutions will, on average, penalize unwise and careless lenders more severely than they will punish conscientious but delinquent borrowers," the committee says in its Statement No. 245, Subprime Mortgage Lending Remedies and Concerns. ".... Putting the mortgage-lending and mortgage-backed securities industries through these disciplines is the fairest and most efficient way to insure that subprime and other mortgage lenders upgrade and rationalize their underwriting activities in the future." Any assistance to borrowers in deteriorating local housing markets should be funded locally, and the "only reform that merits attention" is a regulatory requirement of "vastly simplified disclosures to borrowers on their applications," the panel says. It can be found online at http://www.aei.org/research/shadow.

The ranking Republican on the House Financial Services Committee says he does not believe secondary-market investors should be held liable for onerous subprime loans made to consumers.In a statement issued prior to a subcommittee hearing on Tuesday, Rep. Spencer Bachus, R-Ala., said assignee liability "should not be about going after those with deep pockets." He added that the assignee liability standard in current law (under the Home Ownership Equity Protection Act) "does not work." He said HOEPA loans are not being originated because of a lack of legal certainty for secondary-market players. "As we look for ways to address predatory-lending practices, any assignee liability standard must include safe-harbor" protections, he said. The Alabama congressman said "all participants" in the mortgage process need to share responsibility when it comes to predatory lending.

Opteum Inc., Vero Beach, Fla., has announced an agreement between its subsidiary Opteum Financial Services and Prospect Mortgage Co. to sell substantially all the assets of OFS's retail mortgage origination business for approximately $5 million plus the assumption of certain liabilities.The company said the sale will also involve certain other assets associated with OFS's corporate staff functions. "Given the reduced demand for mortgage products and services and the deterioration in the secondary market for closed mortgage loans, this transaction will enable us to refocus our energies on managing and growing our RMBS portfolio, while stemming OFS's losses associated with mortgage originations," said Jeffrey J. Zimmer, chairman, president, and chief executive of Opteum Inc. "Upon completion of this transaction and the wind-down of OFS's conduit and wholesale mortgage origination divisions, we will be out of the mortgage origination business entirely." The company recently announced that it would exit the conduit and wholesale origination businesses. The parent company, structured as a real estate investment trust, can be found on the Web at http://www.opteum.com.

Net branch operator Dana Capital Corp., Irvine, Calif., closed its doors last week after being hit with hefty licensing-related fines, according to past employees of the firm.At its peak, Dana Capital had 800 branches and was processing up to 2,400 loans per month. Myron Miller, a former vice president at the company, told MortgageWire that Dana Capital was facing hefty fines in a handful of states because some loan officers at its net branch affiliates were unlicensed, even though Dana held licenses in 23 states. He said company owner and founder Dana Smith paid some of the fines, but ultimately decided to close the firm's doors.

Two tranches from Aames Mortgage Trust 2003-1 have been downgraded by Moody's Investors Service.Class B was downgraded from Ba1 to Caa3, and class M-6 was downgraded from Baa3 to B2. The downgrades were attributed to credit enhancement levels that "may be low" given the projected losses on the underlying pool. "Although the deal is performing within Moody's original loss expectations, credit enhancement has declined due to stepped-down enhancement levels combined with high back-ended losses," the rating agency said. The transaction consists of first- and second-lien, adjustable- and fixed-rate subprime mortgage loans.

Four certificates from Ace Securities Home Equity Loan Trust series 2004-HE1 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-4, from Baa1 to Baa3; class M-5, from Baa3 to B1; class M-6, from Ba2 to Caa2; and class B, from Caa2 to C. The certificates were downgraded because "credit enhancement levels are low given the current projected losses on the underlying pools," Moody's said. As of the April 25 reporting date, the transaction had zero overcollateralization and the class B tranche had taken approximately $3.4 million in writedowns, the rating agency said. The transaction consists of subprime first-lien adjustable- and fixed-rate loans.

Six classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2005-LDP2, have been downgraded by Moody's Investors Service.The downgrades were as follows: class L, from Ba1 to Ba2; class M, from Ba2 to Ba3; class N, from Ba3 to B1; class O, from B1 to B2; class P, from B2 to B3; and class Q, from B3 to Caa2. In addition, Moody's affirmed the ratings on 21 classes in the deal. The downgrades were attributed to realized losses and loan-to-value dispersion. The rating agency said approximately 47.9% of the pool has a Moody's LTV in excess of 100%, compared with 38.5% at securitization. Moody's can be found online at http://www.moodys.com.

The residential mortgage market may be returning to more traditional products this year, according to a survey by the National Association of Mortgage Brokers and Wholesale Access.More than 60% of all loans originated by brokers in January involved prime borrowers with FICO scores of 650 or greater, according to the NAMB. Moreover, fixed-rate mortgages are gaining in popularity, representing nearly 54% of new loans in January compared with less than half in 2006. "This is a particularly timely reminder that, even with all the attention that nonprime loans receive in the media, most homebuyers have the proper credit for more traditional loan products," said Harry Dinham, president of the trade association. "The data also point out that brokers are the most popular originators in the market, accounting for more than 60% of all mortgages today." The survey, covering more than 200 brokers, was conducted by Wholesale Access. The NAMB can be found online at http://www.namb.org.

BrooksAmerica Mortgage Corp., a direct wholesale mortgage lender based in Irvine, Calif., has retracted a recent announcement on the introduction of a 60% debt-to-income ratio for alternative and niche loans."New information has been made available to the company, and they would like to retract this release," a spokeswoman said in an e-mail message on the retraction.

Entertainment Properties Trust, Kansas City, Mo., has priced a public offering of 4.0 million shares of 7.375% series D cumulative redeemable preferred shares at $25 per share.The real estate investment trust said the underwriters have been granted an option to buy up to 600,000 additional shares to cover any overallotments. Bear, Stearns & Co. and Morgan Stanley & Co. are the joint book-running managers of the offering. The REIT can be found online at http://www.eprkc.com.

Essex Property Trust, Palo Alto, Calif., has priced an offering of 1.5 million shares of common stock at $128.65 per share.The sole underwriter, UBS Investment Bank, has been granted an option to buy up to 225,000 additional shares of common stock to cover any overallotments. Essex is a real estate investment trust that buys, develops, redevelops, and manages West Coast multifamily residential properties. It can be found online at http://www.essexpropertytrust.com.

UBS has made plans to shut down its Stamford, Conn.-based Dillon Read Capital Management unit after noting that the division saw "negative trading revenues" of "approximately 150 million Swiss francs [about $123 million] in the context of difficult market conditions in U.S. mortgage securities."The Switzerland-based UBS plans to shut down DRCM's operations after a transition period that is expected to end in the third quarter of this year. "DRCM's principal finance, credit arbitrage, and commercial real estate businesses will be merged with relevant business lines within the Investment Bank," UBS said. "DRCM's third-party funds will be redeemed. UBS intends to work with DRCM investors to identify alternative investment opportunities for them."

Fitch Ratings has announced the launch of SMARTView for U.S. subprime residential mortgage-backed securities.Fitch also announced that 96 subprime RMBS transactions have been placed "under analysis" following a review of the rating agency's $454.1 billion rated subprime portfolio. Under the SMARTView system, introduced for certain structured finance asset classes in 2006, classifying a transaction as Under Analysis means that Fitch will issue a rating action within 30 days. SMART stands for surveillance, metrics, analytics, research, and tools.

Regulations governing real estate mortgage investment conduits are outdated and should be amended, according to the Mortgage Bankers Association and other trade groups in the commercial real estate arena.In a comment letter to the Internal Revenue Service, the groups argue that the current regulations were adopted 15 years ago and don't address situations that now arise in the market for securitized commercial mortgage loans. The groups are urging the IRS to "amend the REMIC regulations to include additional types of permitted loan modifications that are responsive to situations that now arise regularly in the context of commercial loans." Some of the changes the groups want include additional flexibility in making changes in loan collateral, in the time a loan can be prepaid, and in the recourse/nonrecourse nature of a loan. The other signatories to the letter include the American Securitization Forum, the Commercial Mortgage Securities Association, and the National Association of Real Estate Investment Trusts.

The House Financial Services Committee, in a 45-19 vote, has approved a Federal Housing Administration reform bill that would encourage more mortgage brokers to market FHA loans and raise the loan limits on these federally insured mortgages.To achieve wider distribution of FHA single-family loans, the reform bill (H.R. 1852) would allow mortgage brokers to forgo an annual audit and post a $75,000 surety bond. The National Association of Mortgage Brokers maintains that the audit is an unnecessary expense that prevents many brokers from offering FHA loans to their customers. "This is a great day for consumers, as there will be broad access throughout the country for FHA loan products," NAMB president Harry Dinham said. But the Mortgage Bankers Association said it is "foolhardy" to weaken the standards for brokers at a time when mortgage defaults are rising. "Replacing the audited financial statement with a surety bond would not only remove an additional layer of protection for consumers but could also threaten the safety and soundness of FHA," MBA president John Robbins said.

The residential mortgage industry employed 484,100 workers in March, a 3.8% decline from the level of a year earlier and an indication that the subprime crisis is starting to result in permanent job losses.According to the Bureau of Labor Statistics, the industry lost 5,700 jobs from February to March. (The BLS figures represent mortgage bankers, brokers, and related jobs in the industry.) Figures compiled by National Mortgage News show that about 45 mortgage banking firms have either closed their doors or shut part of their production platforms since mid-December. The BLS can be found online at http://stats.bls.gov.

Six classes of commercial mortgage pass-through certificates issued by LB-UBS Commercial Mortgage Trust 2002-C2 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M, from Ba2 to Ba3; class N, from Ba3 to B2; class P, from B1 to B3; class Q, from B2 to Caa1; class S, from B3 to Caa2; and class T, from Caa2 to Caa3. In addition, Moody's upgraded two classes and affirmed the ratings on 14 classes in the deal. The rating agency said the downgrades were due to six specially serviced loans for which it is projecting "significant" losses.

More than 80% of real estate executives in a recent survey said their company goes beyond legal requirements to address social or environmental issues, according to the Urban Land Institute.The ULI said this interest in "responsible property investing" indicates a willingness to adopt a "triple bottom-line" business approach that measures success in terms of social and environmental values as well as economic ones. More than 90% of the survey respondents agreed that pursuing social and environmental goals as a business strategy will be more important in the future. "We are seeing a definite shift in attitudes," said Stephen Blank, a ULI senior resident fellow. He said the survey shows that a growing number of real estate executives believe that "you can do well by doing good." The survey, cosponsored by the ULI, was conducted from November 2006 to January 2007 by Professor Gary Pivo of the University of Arizona. The ULI can be found online at http://www.uli.org.

The performance of commercial mortgage-backed securities may be peaking as a result of cyclical conditions in the real estate and capital markets, according to a report by Moody's Investors Service.The market cycles, combined with weaker loan underwriting, may indicate that the era of low delinquencies and strong upgrade/downgrade ratios is coming to an end, the rating agency said. Moody's said CMBS delinquency rates have an inverse relationship with property prices, falling when property values rise. A big increase in commercial property values since the first quarter of 2001 "suppressed delinquency levels and promoted high rates of defeasance," Moody's said. But Tad Philipp, a Moody's managing director who wrote the report, said capitalization rates are at all-time lows and rents are reaching cyclical highs in many markets, indicating that the property cycle may be reaching a turning point. If so, delinquencies may begin rising, he said.