Originations

The troubled Mortgage Lenders Network made a huge mistake on a jumbo loan product that was priced 60 to 75 basis points under the going Fannie Mae rate, industry sources have told MortgageWire.At MW's deadline time, MLN would not comment on the matter. Meanwhile, according to news reports, the nondepository -- which shuttered 90% of its production in late December -- has worked out a deal whereby Lehman Brothers will take over about 900 MLN loans that closed but did not fund because of the lender's financial woes. (Lehman, though, declined to confirm this number.) One source familiar with MLN's "conventional" jumbo mortgage said the loan was introduced as a promotion last year. The loan amount was for a minimum of $500,000, requiring FICO scores of at least 690 and a three-year prepayment penalty. The source said there was "tremendous response" to the loan and that MLN had taken in applications of close to $1 billion -- though this was not the amount the company funded. The source said it was "crazy" that MLN would price the loan below the Fannie Mae rate. MLN chief executive Mitch Heffernan was also a top executive at ContiMortgage, a now-defunct subprime lender.

Subprime mortgage lenders are facing a "string of bad news," including the shutdown of companies that "could not operate in a slower origination environment," according to a Federal Reserve Board governor.Susan Bies told a credit union meeting that delinquency and foreclosure rates on subprime adjustable-rate products are rising, and many industry observers are blaming "looser" underwriting standards as well as "limited or no verification of borrower income and high loan-to-value transactions." Meanwhile, the regulators are "discussing what can be done to ensure that these types of loans are being originated in a safe and sound manner," she said. (The regulators are expected to propose new underwriting guidance within the next two months.) "It is not uncommon to find margins of 600 basis points or more on adjustable-rate subprime loans after the expiration of the teaser rate," the Fed governor said. She also noted that it would be prudent for lenders to require escrow accounts on subprime loans, or at least to tell borrowers how much they should set aside for taxes and insurance.

Two classes of Terwin RMBS Trust securities have been downgraded by Fitch Ratings.Class B-5 of series 2005-5SL has been downgraded from BB to CCC and removed from Rating Watch Negative, and class B-7PI of series 2005-7SL has been downgraded from BB to B. In addition, the downgraded B-5 class has been assigned a Distressed Recovery rating of DR2, and class B-6 of series 2005-7SL has been placed on Rating Watch Negative. Fitch also affirmed the ratings on 18 other classes in the two transactions. The negative rating actions were based on declines in overcollateralization stemming from losses and "a reduction in the dollar amount of excess spread due to much faster-than-expected prepayments and rising interest rates," Fitch said. The collateral for the transaction is fixed-rate subprime loans secured by second-lien mortgages on residential properties.

Seven classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-HE3, class M2, from A to BBB, and class B1, from B-plus to CC; series 2003-HE1, class M3, from A to BBB-plus, class B1, from BB-plus to B-plus, and class B2, from B-plus to C; and series 2003-HE2, class B2, from BB-plus to BB, and class B3, from BB-minus to B-plus. In addition, Fitch affirmed the ratings on seven classes from the three CDC deals and assigned Distressed Recovery ratings of DR3 to class B1 of series 2002-HE3 and DR6 to class B2 of series 2003-HE1. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. The pools consist of fixed- and adjustable-rate subprime mortgages on one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

Triad Guaranty, a Winston-Salem, N.C.-based mortgage insurer, will replace Veritas DGC Inc. in the Standard & Poor's SmallCap 600 Index.S&P said the move, scheduled to occur after the close of trading on Jan. 12, was prompted by the pending acquisition of Veritas by Compagnie Generale de Geophysique. Triad will be added to the index's Thrifts & Mortgage Finance Sub-industry index. The mortgage insurer can be found on the Web at http://www.triadguaranty.com.

BioMed Realty Trust Inc., San Diego, has priced a public offering of 8.0 million shares of 7.375% series A cumulative redeemable preferred stock at $25 per share.Wachovia Capital Markets LLC, Morgan Stanley & Co., and Raymond James & Associates are the joint book-runners for the offering. BioMed said it has granted the underwriters an option to buy up to 1.2 million additional shares to cover any overallotments. BioMed specializes in acquiring, developing, and managing laboratory and office space in the life science industry. It can be found online at http://www.biomedrealty.com.

Health care professionals and other key community workers are priced out of homeownership in most metropolitan areas nationwide, according to a joint study by the Center for Housing Policy and Homes for Working Families, both of Washington, D.C.It is clear from the study of over 200 U.S. cities that "housing affordability concerns stretch beyond the health care field to a spectrum of other occupations," said CHP chairman Kent Colton, president of K Colton LLC and senior scholar at the Joint Center for Housing Studies of Harvard University. Researchers maintain that the welfare of health care workers has socioeconomic implications important for the country at large. "With Americans living longer and the baby boomer generation aging, our communities will need more health care workers to meet the growing demand," Mr. Colton said. "However, if these workers cannot afford to become homeowners, as this study shows, it will likely become difficult to attract a sufficient workforce." The CHP, the research affiliate of the National Housing Conference, can be found online at http://www.nhc.org/housing/chp-index, and Homes for Working Families can be found at http://www.homesforworkingfamilies.org.

Radian Group Inc., a Philadelphia-based mortgage insurer, has announced a change in the leadership of its international mortgage business and an expansion into the Australian market.Radian said Roy Kasmar will step down as head of its international mortgage business on April 1, but will remain as an adviser through the end of the year. S.A. Ibrahim, Radian's chief executive officer, will assume primary responsibility for strengthening the company's international business, while Jeff Cashmer, senior vice president of the international mortgage business, will continue to direct day-to-day operations, Radian said. The company also reported that it had formed Radian Australia Ltd. late last year, and that managing director Andrew Morgan has relocated from London to Sydney and will be responsible for business development in Australia. Radian can be found online at http://www.radian.biz.

The average 30-year fixed mortgage rate rose from 6.18% to 6.21% over the seven-day period ended Jan. 11, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.94% to 5.96%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 6.02% to 6.03%, and the average rate for one-year Treasury-indexed ARMs increased from 5.42% to 5.44%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and 0.5 of a point for ARMs. "The December employment report came in higher than expected, providing a lift to interest rates," said Frank Nothaft, Freddie Mac's chief economist. "The gain in employment in December exceeded the consensus forecast, and helped ease fears about the state of the economy. But stronger employment and higher wages put upward pressure on inflation, which, in turn, translates into higher interest rates." A year ago, the average 30-year and 15-year fixed rates were 6.15% and 5.71%, respectively, and the average hybrid and one-year ARM rates were 5.76% and 5.15%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Lehman Brothers will fund some loans that were in the pipeline when Mortgage Lenders Network of Connecticut closed its wholesale operations late last month, sources have confirmed to MortgageWire.When MLN ceased table-funding loan brokers -- including some in the Northeast -- consumers that had loans in progress were caught off-guard. At deadline time, MLN's spokesman could not be reached for comment. Lehman declined to comment. An investment banking source said Lehman is engaged in talks with MLN about taking over some of its wholesale operations, but others note that MLN likely would not receive much in the way of hard cash. "I can't imagine that MLN is paying any [account executives] that worked in the wholesale group," said one adviser. "But they will need certain people to wind down the operation, so maybe some are still on payroll."

Four classes from two Ameriquest Mortgage Securities Inc. home equity issues have been downgraded by Fitch Ratings, and one class has been placed on Rating Watch Negative.The downgrades were as follows: series 2003-2, class M3, from BBB-minus to BB-minus, and class M4, from BB to CCC/DR5; and series 2004-R4, class M5, from BBB to BBB-minus, and class M6, from BBB-minus to BB-minus. Class M4 of series 2004-R4 was placed on Rating Watch Negative. In addition, Fitch affirmed the ratings on 17 classes from three Ameriquest transactions. The downgrades were attributed to monthly losses that have exceeded excess spread, causing a deterioration in the amount of overcollateralization. Fitch can be found online at http://www.fitchratings.com.

The Mills Corp., a real estate investment trust based in Chevy Chase, Md., has denied that it might be forced to seek bankruptcy protection if it is not able to repay a major loan.Responding to news reports about a possible bankruptcy filing by the retail REIT, Mills said it has negotiated an extension of its senior term loan with Goldman Sachs Mortgage Co. and expects to be in compliance with the terms of the loan. Mills also has the option to request a further extension on the loan, the REIT said. After a recent investigation of its accounting policies, Mills has also taken some action, including a restatement of its recent financial results. Meanwhile, the REIT said it is continuing to explore "strategic alternatives." The company can be found online at http://www.themills.com.

First American Title Insurance Co., Santa Ana, Calif., has announced the acquisition of Complete Title Services LLC, Brainerd, Minn., for an undisclosed amount.Complete Title, which has seven offices in north and central Minnesota, will continue to operate under its existing name and management structure, led by David M. Lauer as president and James M. Gammello as vice president. "Complete Title is a well-run, profitable business that gives First American a foothold in an 11-county region in North/Central Minnesota," said Steve Mustin, regional vice president for First American Title. "This is an area with significant second-home purchase activity and overall market growth." First American can be found online at http://www.firstam.com.

Residential and commercial hard equity wholesaler Allied Mortgage and Financial Corp., Sunrise, Fla., has opened a correspondent lending division.The company said it launched the unit as a new revenue stream for clients who are unable to sell their loans in bulk. Elliot Grub, senior vice president and chief credit officer of Allied Mortgage, will lead the new division.

Credit scores are used to deny African-Americans and other minorities access to credit and financial services, according to a study by the University of Denver Center for African American Policy."This study breaks new ground by using location mapping and statistical correlation techniques to examine the disparities in accessing mainstream financial services and credit products," said the National Black Caucus of State Legislators, which released the study. Mississippi State Rep. Mary H. Coleman, the immediate past president of the NBCSL, said credit scores "are used in a way that denies minority and underserved communities access to the financial services and products they need. This study demonstrates that credit scores -- more so than simply race or income or other variables -- are the key factor, and minority communities are disproportionately affected." The report, entitled "Financial Empowerment for the Unbanked and Underbanked Consumer: 'Crossing the Red Line'," was released at the Rainbow/PUSH Wall Street Project's 2007 Economic Summit. The NBCSL can be found online at http://www.nbcsl.com.

The Hispanic National Mortgage Association, San Diego, and Wells Fargo Home Mortgage, Des Moines, Iowa, have announced the formation of a joint venture that will offer traditional mortgage products and services as well as special assistance for Hispanic and nontraditional customers.The joint venture, Ilumina Mortgage LLC, will cater to Hispanic and other immigrant borrowers by providing a culturally sensitive environment, HNMA and Wells Fargo said. "At Ilumina, customers will deal with experienced bilingual mortgage counselors, who are trained to understand the nontraditional circumstances of these borrowers," said Leonardo Simpser, managing director of HNMA. "They will have access to flexible mortgage programs, at competitive rates, all offered by a trustworthy, world-class lender." The organizations can be found on the Web at http://www.hnma.com, http://www.wellsfargo.com/hipotecas, and http://www.iluminamortgage.com.

The Market Composite Index, an overall measure of mortgage applications, rose from a holiday-adjusted 575.6 to 671.1 on a seasonally adjusted basis during the week ended Jan. 5, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 33.2% on the week and were up 12.0% from the level recorded a year earlier. The Purchase Index rose from 406.9 to 472.8 on a seasonally adjusted basis, while the Refinance Index jumped from 1640.4 to 1923.8. Refinancings represented 48.4% of total applications, up from 48.1% the previous week, while adjustable-rate mortgages accounted for 20.1% (the lowest level since July 2003), the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.22% to 6.13%, and points (including the origination fee) rose from 0.92 to 0.94 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Sales of existing homes bottomed out in the fourth quarter, but house prices will continue to decline in the first quarter, according to the latest forecast by the National Association of Realtors.Sales of previously owned houses declined 8.2% in 2006 to 6.5 million, the third-highest level on record. NAR economists project that sales will rise gradually during 2007 but still show a 1.2% decline at year-end. "The good news is that the steady improvement in sales will support price appreciation moving forward," NAR chief economist David Lereah said. Median house prices fell from $225,000 in the third quarter to $216.5 in the fourth quarter, or 3.2%. NAR economists say they expect to see prices decline in January and February before turning up in the second quarter of 2007. "The national median existing-home price for all of 2006 is expected to rise 1.1% to $222,100 and then gain 1.5% this year to $225,300," the NAR said. The association can be found online at http://www.realtor.org.

Popular Inc., a depository based in Puerto Rico, said Jan. 9 that it will close its subprime wholesale business, booking a $39 million loss tied to the move and a larger restructuring effort.The wholesale operation was housed in the bank's affiliate, Popular Financial Holdings. Cameron E. Williams, who served as president of PFH, is retiring. PFH also houses online lender E-Loan Inc. The bank said as part of the restructuring, E-Loan and all U.S. mainland operations -- including Banco Popular North America -- will report to Roberto Herencia, who is president of BPNA. Popular's subprime unit was not considered to be a significant player in the market. "They haven't had much of a presence for two years," said one wholesale executive.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is also planning to hold hearings on subprime and predatory lending and the impact they have on minority and low-income borrowers."For these consumers, the American Dream can truly become a nightmare," Sen. Dodd said at an annual Rainbow PUSH/Wall Street Project summit hosted by the Rev. Jesse Jackson and business leaders. Sen. Dodd said too many subprime borrowers end up paying "unnecessarily high rates and fees and hidden back-end costs. In the worst instances, homebuyers are slowly robbed of their homes' equity until they, and their families, end up in default and foreclosure." The new chairman did not indicate a timetable for hearings. Besides mortgage lending practices, he also wants the committee to examine credit card practices, wage and salary stagnation among working families, affordable housing, and financial literacy.