Originations

Classes A-1 and A-2 of Diversified Asset Securitization Holdings I LP have been downgraded from BB to B/DR1 by Fitch Ratings.The downgrades stem from continued deterioration in the quality of DASH I's collateral portfolio, the rating agency said. DASH I is a collateralized debt obligation that was originated and managed by Asset Allocation & Management LLC, which closed Dec. 18, 1999, Fitch said. The portfolio backing the CDO consists of residential and commercial mortgage-backed securities, asset-backed securities, and other CDOs.

Mitch Heffernan, the former president and chief executive of the defunct Mortgage Lenders Network, recently sought an injunction in bankruptcy court to stop the Connecticut Department of Labor from pursuing criminal charges against him, according to an article published in the Hartford Courant.The office of a Connecticut state's attorney blocked the injunction and defended the department's right to seek the warrant. The department applied for an arrest warrant for Mr. Heffernan that would charge him with 61 counts of failing to pay wages to employees at MLN, which filed for bankruptcy in March. The arrest warrant for Mr. Heffernan is still pending at the state's attorney's office, said Nancy Stefans, a representative of the department. MLN was a top-20-ranked subprime lender.

Earnings at the nation's largest mortgage insurance company, MGIC Investment Corp., fell 43% in the first quarter from the level recorded in the same quarter last year.Revenues were flat at $369.6 million, as were net premiums written ($304 million). Against earnings MGIC booked $181 million in losses, a 58% spike from those of the first quarter of 2006. According to the Quarterly Data Report, MGIC is the nation's largest mortgage insurer in terms of "policies-in-force," with $176 billion at year-end. The Milwaukee-based company is in the process of merging with Radian Guaranty, the nation's third-largest MI. MGIC can be found on the Web at http://www.mgic.com.

Millennium Bankshares Corp., Reston, Va., has revised its results for the fourth quarter of 2006 and the full year due to a $4.5 million pretax increase in the amount of reserves recorded in those periods for the wind-down of its mortgage operating subsidiaries at the end of last year.The company now reports a net loss of $3.1 million ($0.35 per share) for the quarter and a net loss of $481,000 ($0.05 per share) for the year. Millennium had a 51% stake in three joint-venture mortgage banking firms: Millennium Sunbelt Mortgage LLC, a retail originator; Millennium Bank Mortgage LLC; and Millennium Hyland Mortgage LLC, which did both retail and wholesale. The shutdown of those ventures was due in part to credit quality problems that surfaced in the subprime sector of its held-for-sale loan portfolio. The additional reserves were based on an analysis of its portfolio and are associated with $16 million in loans held for sale and $10 million in estimated repurchase obligations. The company can be found online at http://www.millenniumbank.com.

Of the $43 billion in mortgage loans originated in March by Countrywide Financial Corp., Calabasas, Calif., $26 billion were for refinancings, a $3.4 billion increase from the refi level recorded the previous March, according to the company.This contributed to an overall increase of 5% in volume, Countrywide reported. Purchase loans fell from $19 billion in March 2006 to $17 billion last month. Home equity fundings were down 5%, nonprime fundings were down 29%, and originations of option adjustable-rate mortgages totaled $3.5 billion, down from $8.8 billion a year ago. Countrywide's pipeline at the end of March totaled $69 billion, up $5 billion from that of March 2006. The servicing portfolio totaled $1.4 trillion, compared with $1.2 trillion a year earlier, and delinquencies on the portfolio stood at 4.29% for March, compared with 5.02% for December 2006 and 3.68% for March 2006. "Historically, delinquencies have trended downward from the fourth quarter to the first quarter due to seasonality," said David Sambol, Countrywide's president and chief operating officer. "While current market conditions are creating short-term volatility in our residential mortgage business, management believes the company is well-positioned to capitalize upon the longer-term opportunities that are being created as the marketplace rationalizes." The company can be found online at http://www.countrywide.com.

Ventas, a Louisville, Ky.-based health care real estate investment trust, has agreed to pay $16.50 (Canadian) per unit for the acquisition of Toronto-based Sunrise Senior Living REIT, the companies have reported.The previously agreed-on price was $15.00 (Canadian) per Sunrise unit. This brings the total acquisition price, including the assumption of debt, up to $2.28 billion (Canadian), according to the companies. The revised price represents a premium of 57% for Sunrise units, compared to their price on the Toronto Stock Exchange prior to the merger announcement, according to Sunrise. Ventas stressed that this is its "best and final" price for Sunrise and that if the transaction does not go through at this price, the company will look for other acquisitions. There was also a counteroffer for Sunrise from Health Care Property Investors, Long Beach, Calif., which was withdrawn. Ventas can be found online at http://www.ventasreit.com, and Sunrise can be found at http://www.sunriseseniorliving.com.

The average 30-year fixed mortgage rate rose from 6.17% to 6.22% for the seven-day period ended April 12, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.87% to 5.90%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.92% to 5.93%, and the average rate for one-year Treasury-indexed ARMs increased from 5.44% to 5.47%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and 0.5 of a point for ARMs. "Interest rates in general ticked up following the release of the March employment data, which showed stronger job growth than what the market expected," said Frank Nothaft, Freddie Mac's chief economist. "This brought interest rates on 30-year fixed-rate mortgages back up this week to match the first-quarter average." A year ago, the average 30-year and 15-year fixed rates were 6.49% and 6.14%, respectively, and the average hybrid and one-year ARM rates were 6.13% and 5.61%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Consumer advocates are urging Congress to amend the bankruptcy code so that homeowners can restructure high-cost loans and avoid foreclosure.The current code protects mortgage lenders, according to the National Association of Consumer Bankruptcy Attorneys, and does not allow the bankruptcy judges to reduce the interest rate or principal amount so that homeowners can successfully emerge from bankruptcy with affordable payments. As a result, more homeowners with subprime loans are forced to walk away from the homes, according to NACBA president Henry Sommer. "Help is urgently needed for hundreds of thousands of American families at risk of losing their home due to abusive home loans," he said. An NACBA survey shows that bankruptcy attorneys are finding that more of their clients have problems involving subprime loans. Half of the respondents said 50% of their clients with homes have mortgage-related problems, while 20% of the attorneys said 75% of their clients with homes have mortgage-related problems. The Consumer Federation of America and the Center for Responsible Lending joined the NACBA in calling for bankruptcy reforms.

NovaStar Financial, the nation's 16th-largest subprime funder, has revealed that it may sell the company and has hired Deutsche Bank Securities as its adviser.The Kansas City, Mo.-based lender also said it has received a $100 million loan commitment from Wachovia Capital Markets LLC. About three weeks ago, the publicly traded real estate investment trust cut its work force by 17%, or 350 positions, citing the changing landscape of the mortgage industry. Last week it said it would close its warehouse lending division. The company is being sued by investors who have seen the value of their sales get hammered over the past few months.

The new home market may not return to normal until 2011, a top housing economist has told a meeting of multifamily builders and developers in Hollywood, Fla.David Seiders, chief economist of the National Association of Home Builders, said it will be three or four years before the oversupply of finished but unsold houses is worked off and housing starts move back up to the 1.8-1.9 million-units-a-year trend line. The unsold inventory will be a "pretty heavy drag" on production, he said at the NAHB's Multifamily Pillars of the Industry Conference. As a result, he added, prices will continue to fall. "There's no question there is an oversupply of housing and that homebuyers know it," Mr. Seiders said. "So they are just waiting, and builders have no choice but to cut prices on a cumulative basis." Mr. Seiders told the conference that while the most recent data indicate that the inventory of existing condominiums has fallen, the situation is going to get worse. That sentiment was also voiced by Ron Whitten of Whitten Advisors, Dallas, who predicted that because multifamily structures have a long construction cycle, the excess in the condo sector won't start to burn off until 2009 at the earliest. Mr. Whitten described the condo outlook as "painful." The NAHB can be found online at http://www.nahb.com.

New York-based IXIS Real Estate Capital Inc., the U.S. commercial real estate financing subsidiary of the recently formed Natixis, has changed its name to Natixis Real Estate Capital Inc.The parent company was formed last November when Groupe Caisse d'Epargne, the ultimate parent of IXIS, and Groupe Banque Populaire, the parent of Natexis Banques Populaires, combined their corporate and investment banking, asset management, and financial service businesses. Each of the parent companies owns 34.5% of the new entity, and the remaining 31% has been sold to the public, Natixis said.

Standard & Poor's Ratings Services has expressed concern about trends in the U.S. commercial mortgage-backed securities and collateralized debt obligation market that it says could result in higher risk to investors.Among the trends S&P warns about are: a downslide in underwriting and origination standards for commercial mortgage loans; lowering of requirements for capital expenditures, tenant improvement, and leasing commission reserves; more loans that have an interest-only component, either for their entire terms or for an initial period; loans with inadequate ability to service debt that also don't have enough initial interest reserves; and loans secured by "esoteric" collateral and construction loans. The rating agency also cites "a changing CMBS landscape" -- one characterized by "increased liquidity, fierce competition among loan originators, an influx of new buyers, and a CDO-focused short-term mindset" that has significantly altered the supply/demand dynamics in the marketplace -- that could make transactions more vulnerable to negative credit events. S&P said it expects U.S. CMBS issuance volume to remain stable this year, barring unexpected events or a rise in interest rates. The rating agency can be found online at http://www.standardandpoors.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 649.5 to 646.6 on a seasonally adjusted basis during the week ended April 6, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 0.1% on the week but were up 10.8% from the level recorded a year earlier. The Purchase Index rose from 402.9 to 413.8 on a seasonally adjusted basis, while the Refinance Index fell from 2098.3 to 2015.0. Refinancings represented 42.8% of total applications, down from 44.5% the previous week, while adjustable-rate mortgages accounted for 18.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.13% to 6.16%, and points (including the origination fee) rose from 1.25 to 1.39 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

National Association of Realtors economists are projecting that tighter subprime underwriting will dampen home sales and that existing-home prices will decline nationally by 0.7% this year.The updated forecast indicates that the median resale prices will slip to $220,300 in 2007, following a 1% rise last year. Back in December, NAR economists said they expected resale prices to increase by 1.4%. "As home sales moderate, overall home prices will be essentially flat this year," NAR chief economist David Lereah said. The NAR still projects that 2007 will be the fourth-highest year in terms of existing-home sales, which are forecast to total 6.34 million, down 2.2% from last year's level. The NAR can be found online at http://www.realtor.org.

The Neighborhood Assistance Corporation of America is planning to conduct protests and mock foreclosures at the homes of Wall Street and mortgage company executives -- demanding loan modifications for subprime borrowers who are facing foreclosure.Subprime adjustable-rate mortgages were "structured to fail," and "we are going to go into their neighborhoods" if they don't stop the foreclosures, NACA chief Bruce Marks said at a Washington news conference. The Boston-based community advocacy group wants the investment banking firms and subprime lenders to restructure the loans so that troubled borrowers get a fixed-rate mortgage at the initial qualifying rate (e.g., a 2/28 ARM with an initial interest rate of 6% would be restructured as a 6% fixed-rate mortgage). NACA plans to start the protest campaign on April 21 by inviting subprime borrowers to its offices in 33 cities to educate them about subprime "scams" that were used to exploit them with loans they could not afford, Mr. Marks said. The group is also pledging $1 billion to refinance victims of predatory lending into affordable mortgages through a commitment by Bank of America and Citigroup. NACA has run a mortgage lending operation for subprime homebuyers since the mid-1990s that offers no-downpayment fixed-rate mortgages at 1 percentage point below the market rate. Now it is refinancing mortgages to prevent foreclosures.

The top Republican on the House Financial Services Committee supports the concept of making secondary-market investors accountable for the performance of subprime loans through an assignee liability provision that is modeled after a New Jersey anti-predatory-lending law.Rep. Spencer Bachus, R-Ala., said the New Jersey statute has been "shown to be effective, and it could be the starting point for national legislation." Nearly a month ago, Financial Services Committee Chairman Barney Frank, D- Mass., said he wants to include an assignee liability provision in predatory-lending legislation. "It is the best enforcement mechanism we could have," Rep. Frank said. Rep. Bachus clarified, in response to a news story, that he has not reached an agreement with Chairman Frank on an assignee liability provision. The ranking committee Republican also stressed that the New Jersey law allows borrowers a private right of action to press claims rather than a class-action lawsuit. He said he also supports the New Jersey law because investors in subprime securities can protect themselves from liability through due diligence.

Fannie Mae and Freddie Mac have not adopted federal nontraditional mortgage guidance yet, but their regulator is trying to get them on the same page as other financial institutions.James Lockhart, director of the Office of Federal Housing Enterprise Oversight, told reporters that he expects Fannie and Freddie to comply with the nontraditional mortgage guidance that federal banking regulators finalized last September. The guidance requires lenders to underwrite interest-only and payment-option mortgages at the fully indexed rate. The two government-sponsored enterprises have already informed OFHEO about their plans, and Mr. Lockhart said OFHEO will be seeking "some changes." He indicated that those changes would be spelled out in a letter to the GSEs, possibly this week. "So we expect them to be compliant," Mr. Lockhart said. The OFHEO director also noted that there have been discussions with the GSEs about the proposed subprime guidance the banking regulators issued March 2 for public comment. "We are asking for their comments on that," he said.

Metrocities Mortgage of California -- one of the largest remaining privately held nondepositories in the United States -- is slated for sale to a hedge fund, industry sources have told MortgageWire.The sale would also include the lender's wholesale affiliate, No Red Tape Mortgage. At deadline time, Metrocities chief executive Paul Wylie could not be reached for comment. According to the Quarterly Data Report, Sherman Oaks, Calif.-based Metrocities ranks 53rd among all residential lenders. "There's a bid letter out on the company," said one adviser. (For complete details, see the April 16 edition of National Mortgage News.)

Fitch Ratings has affirmed its ratings on Beazer Homes USA but changed the Atlanta-based homebuilder's rating outlook from Stable to Negative.The rating agency said the outlook "reflects the more challenging outlook for homebuilders, the current and expected near-term deterioration in credit metrics for Beazer, and pressures from credit tightening, which particularly affect entry-level buyers (a significant customer focus at Beazer), and high cancellation rates, which add to speculative inventory totals." Fitch also noted the recent departure of James O'Leary as Beazer's chief financial officer to take a chief executive post elsewhere, which it said "depletes senior management ranks at an inopportune time." Fitch can be found online at http://www.fitchratings.com, and Beazer can be found at http://www.beazer.com.

Zacks Equity Research, Chicago, has declared Affordable Residential Communities Inc., Englewood, Colo., its "Bear of the Day" -- a stock expected to underperform the markets over the next three to six months -- for April 10.Zacks said ARC "is valued well above better-positioned peers," though its results improved "slightly" in the fourth quarter as a result of cost-cutting and the sale of underperforming assets. The company's portfolio occupancy "continues to drop, as it appears that ARC's cost-cutting efforts have negatively affected resident retention," the research firm said. Zacks added, however, that fallout from the turmoil in the subprime market "could help ARC and the entire manufactured housing industry in the next year." Zacks can be found online at http://www.zacks.com.