Originations

A leading indicator of existing-home sales fell 4.9% in March, signaling that sales in April and possibly May will be "soft," according to the National Association of Realtors.The Realtors' Pending Home Sales Index, which is based on sales contracts signed in March, fell to 104.3 in March from 109.7 in February. On a year-over-year basis, the index is down 10.5% since March 2006. The NAR recently reported that sales of previously owned homes fell 8.5% in March. So the decline in the pending sales index does not bode well for the rest of the spring selling season. "Although the weather improved in March, we're starting to see the effects of a decline in subprime lending and tighter lending standards," NAR chief economist David Lereah said. The NAR can be found online at http://www.realtor.org.

Ten classes from six Renaissance Home Equity Loan Trust securitizations have been downgraded by Fitch Ratings.In addition, the ratings on 52 other classes from 11 transactions were affirmed. Fitch attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. The transactions are backed by fixed- and adjustable-rate subprime mortgage loans.

Twelve classes from 10 issues of Long Beach Mortgage Loan Trust residential mortgage-backed securities have been downgraded by Fitch Ratings, and nine classes have been placed on Rating Watch Negative.Fitch also affirmed the ratings on 95 other classes in the transactions. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement levels and loss expectations. The transactions are backed by fixed- and adjustable-rate subprime mortgage loans.

Fifteen classes from seven Delta Funding Corp. home equity issues have been downgraded by Fitch Ratings.In addition, Fitch upgraded four classes and affirmed the ratings on 27 classes from 11 Delta Funding transactions. The downgrades were attributed to high delinquencies and a deterioration of credit enhancement. The collateral in the deals consists of fixed- and adjustable-rate, first- and second-lien subprime residential mortgage loans.

Twenty-seven classes from seven transactions issued by Structured Asset Investment Loan Trust have been downgraded by Moody's Investors Service.In addition, Moody's placed eight classes from two SAIL transactions on review for possible downgrade and confirmed the ratings on three classes. The rating agency attributed the negative rating actions to credit enhancement levels that are seen as too low based on higher-than-expected rates of delinquency. "Moreover, recent losses have begun to erode overcollateralization on a number of the downgraded deals, leaving the rated bonds less protected against future losses," Moody's said. The collateral in the deals consists of fixed- and adjustable-rate, first- and second-lien subprime residential mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

AP AIMCAP, a joint venture of two private equity firms, is acquiring Eagle Hospitality Properties Trust for $13.35 per share in cash.The Covington, Ky.-based real estate investment trust reported that the purchase price was about 21% higher than its recent average stock price. The Eagle portfolio includes 13 hotel properties, with a total of 3,516 rooms, run under hotel brands including Hilton, Marriott, Embassy Suites, and Hyatt. The acquiring companies said they believe that the Eagle portfolio "consists of a diversified group of well-branded hotels with strong cash flow." The transaction is expected to close in the third quarter.

Economist David Lereah is leaving the National Association of Realtors in mid-May to take a top position at Move Inc., a provider of real estate information that operates the NAR's website and owns Realtor.com.After seven years at the NAR, Mr. Lereah will become an executive vice president at Move, which is based in Westlake Village, Calif. The NAR is a longtime stockholder in the company, which was formed in the mid 1990s and was formerly known as Homestore. The NAR has directors on Move's board. Mr. Lereah will also serve as chairman and partner of a new business entity that former Realtor.com president and chief executive Allan Dalton is planning to launch in the third quarter. "Having David partner with me on this new venture will ensure that consumers and the industry will benefit from his unparalleled knowledge of financial issues and the real estate marketplace," Mr. Dalton said. The NAR can be found online at http://www.realtor.com, and Move can be found at http://www.move.com.

The Federal Housing Administration may not be able to revive its single-family program unless the agency adopts private-sector policies and procedures in originating, insuring, and servicing mortgages, according to the Consumer Mortgage Coalition.So the trade group is working to add language to an FHA reform bill (H.R. 1852) that requires the FHA to swiftly align its processes and procedures with those of the conventional market. The CMC contends that the FHA's outdated underwriting processes and severe penalties for noncompliance force lenders to conduct their FHA business as separate operations. This is expensive and discourages lenders from participating in the FHA program, according to CMA executive director Anne Canfield. "It is really important for FHA to align their processes and procedures with the way the world works," she said. The House Financial Services Committee is scheduled to mark up H.R. 1852 on May 1.

Minority real estate groups are calling on House Financial Services Committee leaders to earmark a portion of a GSE affordable housing fund to support foreclosure prevention funds.Subprime loans are prevalent in minority and low-income neighborhoods, according to the Asian Real Estate Association of America, the National Association of Real Estate Brokers, and the National Association of Hispanic Real Estate Professionals. "The reality is that without real resources it will be extremely difficult to help many of these borrowers facing spikes in interest rates and increases in their monthly mortgage obligations," the three real estate groups say in a letter to the committee chairman, Rep. Barney Frank, D-Mass., and the ranking minority member, Rep. Spencer Bachus, R-Ala. The government-sponsored enterprise bill approved by the House committee on March 28 requires Fannie Mae and Freddie Mac to contribute annually an estimated $520 million to an affordable housing fund. During the first year, those AH funds are directed to the repair and rebuilding of affordable housing in Louisiana and Mississippi. The three groups want a portion of those contributions earmarked for loss mitigation, homeowner counseling, and foreclosure prevention.

Four classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings, and three classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2003-HE1, class B1, from B-plus to CCC; series 2003-HE3, class B-3, from BBB-minus to BB-minus (and removed from Rating Watch Negative); and series 2003-HE4, class B-2, from BBB to BB, and class B-3, from BBB-minus to BB-minus (and removed from Rating Watch Negative). The securities placed on Rating Watch Negative were as follows: class B3 of series 2004-HE1 and classes B3 and B4 of series 2004-HE2. In addition, Fitch upgraded two classes and affirmed the ratings on 32 classes from seven CDC deals. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses.

Seven certificates from four transactions issued in 2004 by First Franklin Mortgage Loan Trust have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2004-FFH1, class M-7, from Baa1 to Ba1, class M-8, from Baa2 to B2, and class M-9, from Baa3 to Caa1; series 2004-FFH2, class B-1, from Ba1 to B2, and class B-2, from Ba2 to Caa1; series 2004-FFH3, class B-2, from Ba1 to B3; and series 2004-FFH4, class B-2, from Ba3 to B1. The downgrades were based on an "analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses," Moody's said. The transactions are backed by first-lien, adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.

Eleven classes from four Terwin Mortgage Trust issues of mortgage pass-through certificates have been downgraded by Fitch Ratings, and one has been placed on Rating Watch Negative.Fitch also affirmed the ratings on 29 other classes in the four transactions. The downgrades were based on deterioration in the relationship between credit enhancement and expected losses, Fitch said. The collateral for the transaction is fixed-rate subprime loans secured by second-lien mortgages on residential properties. Fitch can be found on the Web at http://www.fitchratings.com.

Federal, state and private entities have entered into a unique $47 million partnership designed to provide needed capital to affordable and mixed-income housing developers operating in Louisiana's Gulf Opportunity Zone-designated parishes.The state of Louisiana raised an initial investment of $17 million in federal Community Development Block Grant funds, and private investors added another $30 million. The private investors include Capital One, JPMorgan Chase, Deutsche Bank, and some of the country's largest foundations, such as the Ford Foundation, the Rockefeller Foundation, and the Bill and Melinda Gates Foundation. Developers "with proven housing development experience" may borrow up to $200,000 for early pre-development expenses and up to $3 million per project for acquisition and loan carrying costs. "We are providing an extraordinary incentive for developers to provide affordable housing for residents who need it most," said Louisiana Gov. Kathleen Babineaux Blanco. The Louisiana Loan Fund is expected to build and rehabilitate about 4,500 affordable homes and apartments for households with 80% of the area median income.

Inland Western Retail Real Estate Trust, a real estate investment trust affiliated with Oak Brook, Ill-based Inland Real Estate Group of Cos., has formed a $1 billion joint venture to invest in U.S. retail properties with a state pension fund investor advised by Morgan Stanley.The venture will focus on major metropolitan areas, Inland Real Estate said. Inland Western is initially putting $500 million worth of properties from its portfolio into the venture, and another $500 million worth of properties are to be acquired. The state pension fund investor is putting up 80% of the equity for the venture, and Inland Western is putting up 20%.

IndyMac Bancorp Inc., Pasadena, Calif., has reported net earnings of $52.4 million ($0.70 per share) for the first quarter, down 34% from $79.8 million ($1.18 per share) a year earlier.However, IndyMac reported mortgage loan production of $26 billion, which was up 28% from that of a year earlier, and the company said it had attained a record market share of 3.92%. "This quarter was a serious test of our hybrid thrift/mortgage banking business model," said Michael W. Perry, IndyMac's chairman and chief executive officer, pointing to big earnings declines in its wholesale and conduit channels, which had been "two of our major profit contributors" in recent years. "However, Financial Freedom, our reverse mortgage subsidiary, posted a 50% increase over last quarter such that we were able to earn $44 million and [a return on equity] of 26% from mortgage production for the quarter." Combined with a 68% rise in earnings from mortgage servicing, IndyMac's total consumer mortgage banking business, "while down 22% from last quarter, was solidly profitable, earning $60 million and a 24% ROE," Mr. Perry said. IndyMac, the holding company for IndyMac Bank FSB, can be found online at http://www.indymacbank.com.

Wells Fargo Financial Inc., the consumer finance subsidiary of San Francisco-based Wells Fargo & Co., has announced the settlement of a class action lawsuit involving its nonprime mortgage lending practices in California.Under the proposed settlement with law firms Cotchett, Pitre & McCarthy, Burlingame, Calif., and Miner, Barnhill & Galland PC, Madison, Wis., the company said it pledges to continue for three years certain improvements it had already put into practice and to enact a default relief program for qualifying class members. The relief program earmarks $2.4 million to provide relief to qualifying class members whose loans have become more than 60 days delinquent, and up to $4.4 million for cash payments to class members who submit claims. Class members are certain California customers who entered into real-estate-secured loans with Wells Fargo Financial between Dec. 18, 1999, and Nov. 20, 2005. The Association of Community Organizations for Reform Now, a party to the suit, had alleged that the company failed to adequately disclose points and prepayment penalties and inaccurately reported the loan balances of some California customers to credit reporting agencies. The settlement is subject to approval by the San Francisco Superior Court. The company can be found online at http://www.wellsfargofinancial.com.

Millennium Funding Group, a nonprime wholesaler based in Indianapolis, laid off some of its staff the week of April 23 and has stopped accepting new loans, company officials have confirmed to MortgageWire.Joe Bell, the head of human resources for Millennium, would not say how many workers were cut, but said the company is "not doing any new deals." He added: "We're hoping for the market to correct so we can hire these people back." One former account executive for Millennium said the company funded $1 billion back in 2005. The AE said, "It's too bad. They employed a lot of good people." No production figures for Millennium were available for 2006 or 2007. Its product menu included alternative-A and subprime loans.

Associated Estates Realty Corp., Richmond Heights, Ohio, has announced the replacement of two smaller secured lines of credit with a $100 million senior unsecured revolving credit facility.The three-year facility's initial interest rate will be the London interbank offered rate plus 160 basis points, but the rate can be higher or lower depending on various financial ratios, the real estate investment trust said. National City Bank was the lead arranger and administrative agent for the facility. The multifamily REIT can be found online at http://www.aecrealty.com.

Friedman, Billings, Ramsey Group Inc., Arlington, Va., has reported a net loss of $185.9 million ($1.08 per share) for the first quarter, down from after-tax earnings of $26.6 million ($0.16 per share) a year earlier, citing its nonprime mortgage businesses as the reason for the loss.First NLC, its Deerfield Beach, Fla.-based mortgage origination subsidiary, posted a $124.2 million loss on an after-tax basis. That loss includes a $36.1 million writedown of goodwill and intangible assets and a $5.2 million writedown for restructuring costs. In March, FBR said it was examining "strategic alternatives" for FNLC, including a sale or third-party recapitalization. In its earnings statement, FBR said it intends to implement one of the alternatives during the current quarter. FNLC has taken steps to reduce its risk, including modifying its guidelines and cost restructuring. Volume at FNLC has declined from $8 billion on an annualized basis to less than $2 billion now. But the company said there has been an increase in the value of loans originated. FNLC also sold $712 million of warehouse loans in the quarter.

Countrywide Financial Corp., Calabasas, Calif., has reported net earnings of $434.0 million ($0.72 per share) for the first quarter, a 37% decline from $683.5 million ($1.10 per share) in the first quarter of 2006 that the company attributed largely to its subprime operations.Mortgage banking revenues from subprime operations plummeted approximately $400 million in the first quarter from those of the fourth quarter, $245 million of the total from production revenues and $155 million from investments, the company reported. Pretax earnings by the company's mortgage production sector overall were off by more than 50% from those of a year earlier, falling from $284 million to $139 million. The loan servicing sector recorded a pretax loss of $69 million, compared with net income of $249 million a year earlier, the company said. "Excluding the impact of subprime conditions and increased credit costs in the quarter, Countrywide's core operations made strong contributions to quarterly earnings," said Angelo R. Mozilo, the company's chairman and chief executive officer. "Our production sector delivered strong volume and margins for both prime first and home equity loans, which accounted for 93% of our total mortgage banking operations." Countrywide can be found online at http://www.countrywide.com.