Originations

Fair Isaac Corp., Minneapolis, has filed a lawsuit in the federal district court in Minneapolis against the three major credit repositories, as well as VantageScore Solutions LLC, alleging that they violated antitrust laws and engaged in unfair competitive practices.A statement from Fair Isaac contends that the three repositories could manipulate the credit score price, sales, and distribution process to promote the VantageScore product over the FICO score or any other credit scoring product. Tom Grudnowski, chief executive officer of Fair Isaac, said the three credit reporting agencies "have been our primary U.S. distribution partners for Fair Isaac's scores for more than 15 years. Now, the credit agencies are using their position to drive adoption of their own score to the detriment of our competing FICO score product and in conflict with their obligations to distribute our product." A statement from Equifax said the suit is without merit and that it plans to defend itself and VantageScore Solutions, which markets the VantageScore product founded by the three repositories. It said VantageScore increases competition and gives consumers more choice. Calls to Experian, TransUnion, and VantageScore had not been returned by MortgageWire's deadline.

Class M of Heller Financial Commercial Mortgage Asset Corp. mortgage pass-through certificates, series 1999 PH-1, has been downgraded from Caa1 to Caa2 by Moody's Investors Service.In addition, Moody's upgraded three classes and affirmed the ratings of six classes in the transaction. The downgrade was attributed to realized and expected losses from specially serviced loans and loan-to-value dispersion. Based on Moody's analysis, 20.5% of the conduit pool has an LTV greater than 100%, compared with 11.7% at last review and 1.2% at securitization, the rating agency said. The certificates are collateralized by 156 mortgage loans ranging in size from less than 1.0% of the pool to 7.7%.

National Health Investors Inc., a Murfreesboro, Tenn.-based provider of financing for health care real estate, has announced the formation of a special committee of independent directors to evaluate its strategic options, including a proposal by its chief executive officer to acquire the company.National Health Investors said its CEO and shareholder, Andrew Adams, has proposed to acquire the company for $30 per share in cash or equity in the new company. The special committee of National Health's board of directors has informed Mr. Adams that it considers his proposal "inadequate," but has asked for more details about the proposal, the company reported. The committee has retained The Blackstone Group LP as its financial adviser regarding the Adams proposal or any other proposed transactions. The company can be found online at http://www.nhinvestors.com.

A new National Housing Conference study on 28 major U.S. metropolitan areas found that, for many families who purchase affordable housing, the cost of living in the homes is increased considerably by additional transportation expenses.The study found that working families in these areas spend an average of about 57% of their income on the combined costs of housing and transportation, with about 28% of income spent on housing and 29% on transportation. An earlier NHC study found that nationally, for every dollar a working family saves on housing, it spends 77 cents more on transportation. The NHC said the study was motivated by data showing that "A growing number of communities are identifying the lack of affordable housing and the increase in commute times and traffic congestion as priority issues." The NHC said the first-of-its-kind study links these two sets of issues in the hope that "findings will be a catalyst for the development of more integrated policymaking at the local, regional, and national levels." The study, "A Heavy Load: The Combined Housing and Transportation Burdens of Working Families!," was published by the NHC's research affiliate, the Center for Housing Policy.

Homeowners have a strong interest in sophisticated loan products such as loan modification options and assumable and portable mortgages, according to a survey sponsored by Thornburg Mortgage Inc., a Santa Fe, N.M.-based residential lender.The nationwide survey revealed that when asked if they would "ever use a loan product that let them change the terms of their loan without refinancing" -- a loan modification option -- nearly three-quarters of homeowners participating in the survey (74%) indicated that they would. Nearly six in 10 homeowners (59%) said they would use a loan that let them "transfer their current mortgage to a new property" -- a portable mortgage -- and 56% said they would use a loan option that let them transfer their mortgage to a buyer -- an assumable mortgage, Thornburg reported. Thornburg, which focuses mainly on the jumbo segment of the adjustable-rate mortgage market, can be found online at http://www.thornburgmortgage.com.

Countrywide Home Loans, Calabasas, Calif., funded $38 billion in mortgages during September, a 22% decline from the volume recorded in the same month last year.Meanwhile, its production of payment-option adjustable-rate mortgages once again took a dramatic plunge, according to the company. During the month, the nation's largest mortgage banker originated $4.3 billion in option ARMs, a 57% decline from that of September of last year. (In August Countrywide originated $5.4 billion in option ARMs, a 48% decline from the level of a year earlier.) Average daily mortgage applications totaled $2.8 billion, compared with $3 billion in September 2005. Last month the lender confirmed that it is cutting up to 10% of its "general and administrative" staff. Countrywide can be found online at http://www.countrywide.com.

LeadPoint, an online leads exchange marketplace with offices in Los Angeles and London, has obtained $2 million in series C financing from the European Founders Fund, a venture investment company.LeadPoint said it will use the funding to drive growth in the United Kingdom and the rest of Europe. "We believe LeadPoint could be the next Ebay or Google in the B2B Internet space," said Oliver Samwer, principal of the European Founders Fund. "What is revolutionary about LeadPoint is that it brings an auction-style model to the lead generation business. Buyers can bid for the specific types of leads they are looking for and lead sellers can reach the broadest possible range of pre-screened buyers in one location, making the entire lead-gen value chain more efficient and profitable for all parties involved." Founded in 2004, LeadPoint is the world's largest online leads exchange marketplace, according to the company, and has traded over 900,000 leads in 2006. It be found online at http://www.leadpoint.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 633.9 to 599.1 on a seasonally adjusted basis during the week ended Oct. 6, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 5.3% on the week and were down 13.3% from the level recorded a year earlier. The Purchase Index fell from 404.6 to 383.3 on a seasonally adjusted basis, while the Refinance Index fell from 1970.8 to 1857.0. Refinancings represented 46.4% of total applications, down from 46.7% the previous week, while adjustable-rate mortgages accounted for 26.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.24% to 6.27%, and points (including the origination fee) fell from 1.03 to 1.08 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Investment banker Bear Stearns & Co. has agreed to purchase the subprime production arm of ECC Capital Corp., Irvine, Calif., for an undisclosed amount.Encore Credit Corp. -- the nation's 24th-largest subprime funder, according to the Quarterly Data Report -- will operate as a separate division of Bear Stearns Residential Capital Corp. Shabi Asghar, ECC's president and chief executive officer, will be president and CEO of the Bear division after the sale closes. The investment banker will also take control of Encore Credit's operating centers in Irvine; Downer's Grove, Ill.; and Glen Allen, Va. ECC lost $25 million during the first six months of the year. Most of Encore's production is sourced through loan brokers. A few months ago, National Mortgage News first reported that Encore was for sale. Bear's purchase of the subprime funder is just the latest in a string of nonconforming franchise purchases by traditional Wall Street firms.

The ratings on Health Care Property Investors, a real estate investment trust based in Newport Beach, Calif., have been downgraded by Fitch Ratings in the wake of the REIT's acquisition of CNL Retirement Properties Inc.The REIT's issuer default rating was lowered from BBB-plus to BBB, as were the ratings on its bank credit facility and senior unsecured notes, and its preferred stock was downgraded from BBB to BBB-minus. "While the CRP acquisition adds a large pool of high-quality senior housing and medical office assets to HCP's existing, diversified portfolio and increases the company's exposure to private-pay sources of revenue, Fitch is very concerned by the significant increase in leverage and related erosion in debt service coverage ratios resulting from the acquisition," Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.

Allied Mortgage and Financial Corp., Sunrise, Fla., has received a $100 million credit facility from CapitalSource Inc., Chevy Chase, Md.The terms of the credit line were not disclosed. Allied, a hard-money lender, is looking to expand its residential, commercial, and correspondent loan purchase programs to a national audience. "We believe it is prudent to have additional capacity for our future needs, and this new facility gives Allied financial flexibility for our aggressive expansion efforts," said Anthony Chao, chief operating officer of Allied. The company operates in five states, with plans to move into 10 more in the next 90 days. It also just opened a correspondent lending channel. CapitalSource is a commercial finance company using a real estate investment trust structure.

The loan buyback scourge that's been sweeping through the nonconforming mortgage sector is only about half over, according to one veteran subprime executive.Speaking on a recent conference call, Accredited Home Lenders executive vice president Stuart Marvin estimated that "we're probably in the middle of the repurchase activity lifecycle." He said there is now an increased focus and scrutiny on stated-income loans, credit scores, and mortgages with high loan-to-value ratios. A top-15-ranked subprime funder based in San Diego, Accredited saw its loan buybacks jump to $38.6 million in the second quarter, a 145% increase from the level recorded a year earlier. Mr. Marvin said the problem is "clearly manageable" for Accredited. "It's under focus and being dealt with on a daily basis," he said. The conference call he spoke on was hosted by investment banker Friedman, Billings, Ramsey. FBR recently closed its asset-backed securities underwriting unit.

NRT Inc., a residential real estate brokerage based in Parsippany, N.J., and the Washington-based National Community Reinvestment Coalition have announced the rollout of a nationwide training program to promote fair-housing practices.The educational effort will begin in New York City and the mid-Atlantic region and then spread to Chicago and Atlanta in the next few weeks, NRT reported. The company said its 64,000 sales associates will receive the training by the end of the year. "Together with NCRC, we are reviewing the fair-housing policies and practices of our local companies to ensure that out initiatives will make a significant difference in strengthening neighborhoods and families through homeownership." NRT can be found on the Web at http://www.nrtinc.com, and the NCRC can be found at http://www.ncrc.org.

Kara Homes Inc., a New Jersey-based homebuilder, filed for bankruptcy protection Oct. 6, owing 12 bank lenders at least $244 million.According to a just-released report issued by Sandler O'Neill, "the magnitude of the exposure that some banks had was not known (and was frankly a bit surprising to us)." Sandler added that, "At this juncture, it is difficult to ascertain how, or if, this debt is collateralized." Among the banks with the largest claims are ING Direct, which is owed $77 million, Amboy National Bank ($58 million), and National City Corp. ($48 million). ING and National City are also large mortgage lenders. The housing market has been weakening all year, and there is little chance of an upturn until late next year, economists believe. Kara filed for Chapter 11 bankruptcy protection in federal court in New Jersey.

Employment in the mortgage industry inched up in August as mortgage rates declined, home sales leveled off, and refinancing activity edged up to 40% of loan applications.The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector increased by 200 full-time positions to 502,000 in August, up from 501,800 in July. (The BLS revised the July employment number downward from 502,100.) Rates on fixed-rated 30-year mortgages steadily declined throughout August, from 6.63% to 6.44%, while existing- and new-home sales leveled off after multimonth declines. The Mortgage Bankers Association recently reported that the number of loans closed per loan officer dropped 9% in 2005 to 83 loans per year. MBA vice president Jay Brinkman said mortgage companies are facing lower sales productivity this year. The BLS can be found online at http://stats.bls.gov.

CBRE Realty Finance Inc., Hartford, Conn., has priced an initial public offering of approximately 11.01 million shares of common stock at $14.50 per share.The total includes the exercise in full of the underwriters' option to buy approximately 1.44 million additional shares. Of the total, approximately 8.51 million shares were sold by the company and approximately 1.07 million shares were sold by selling stockholders, the company reported. The shares of CBRE Realty Finance, a commercial real estate specialty finance company, began trading Sept. 28 on the New York Stock Exchange under the ticker symbol CBF. The company can be found online at http://www.cbrerealtyfinance.com.

America's Lending Partners Inc., a mortgage brokerage based in Sacramento, Calif., has formed a Mortgage Planning Division that offers professional guidance throughout the mortgage lending process for homeowners and homebuyers.ALP said its mortgage planners have to complete an extensive training program and make a commitment to continue their professional education. "Our mortgage planners are trained to analyze a customer's current mortgage and/or financial situation in conjunction with their short- and long-term financial goals," said Mauro Appezzato, ALP's president and chief executive officer. "They then guide the customer through the mortgage loan process and work with multiple lenders to negotiate the best deal possible." The company can be found on the Web at http://www.lendingpartners.com.

The average 30-year fixed mortgage rate fell slightly, from 6.31% to 6.30%, over the seven-day period ended Oct. 5, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate was unchanged at 5.98%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged at 6.00%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.47% to 5.46%, Freddie Mac reported. Fees and points averaged 0.3 of a point for 30-year fixed-rate mortgages, 0.4 of a point for 15-year fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "Mortgage rates fell to a six-month low this past week, and, not surprisingly, home refinancing rose 18% last week, accounting for almost half of all mortgage applications," said Frank Nothaft, Freddie Mac's chief economist. "This is due both to the recent decline in mortgage rates and to homeowners who are refinancing ARMs rather than waiting for them to reset in the future when rates may be higher." A year ago, the average 30-year and 15-year fixed rates were 5.98% and 5.54%, respectively, and the average hybrid and one-year ARM rates were 5.48% and 4.77%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The trend among regulators in states such as New York, New Jersey, Ohio, and others is to make the mortgage broker, in essence, have a fiduciary duty to the borrower, according to E. Robert Levy, executive director of the New Jersey Association of Mortgage Brokers.Speaking at the group's annual convention in Atlantic City, Mr. Levy said the burden would therefore rest with the mortgage broker to select the loan product for the consumer. As a result, the mortgage broker could be held liable for making the wrong choice. He said consumer advocates are in favor of this position. Mr. Levy, who is also chairman of the advisory council of the American Association of Residential Mortgage Regulators, said it became clear in a meeting of that council that regulators were enamored with the "suitability test." However, Mr. Levy reminded the audience of New Jersey's experience with the original version of its predatory lending law, which contained a "net tangible benefits" test. That test closed the secondary market for loans in the state, and was eventually removed from the law.

The profitability of mortgage bankers fell 61% on a per-loan basis in 2005 as origination costs increased by 38%, according to a Mortgage Bankers Association study, but loan servicing turned in a "stellar" performance.Profitability dropped from $657 per loan in 2004 to $258 in 2005, while origination costs increased from $1,485 per loan in 2004 to $2,049 last year, the MBA reported. "The year 2005 demonstrated the challenges that mortgage companies are still facing in 2006," said MBA vice president Jay Brinkman. "These challenges include narrowing warehouse interest spreads, lower sales productivity, and higher per-loan sales and fulfillment costs." However, servicing profits jumped from $21 per loan in 2004 to $104 last year. "The largest servicers outperformed their smaller peers both operationally and financially, with lowest cost to service and highest net servicing financial income," the MBA study says. The association can be found online at http://www.mortgagebankers.org.