Originations

Stewart Information Services Corp., Houston, has announced a reorganization of its real estate information operating subsidiaries into a new subsidiary, PropertyInfo Corp., with industry veteran Patrick Vaden at the helm.The move will affect REIData Inc., First Data Systems Inc., Ultima Corp., Stewart Re-Source Inc., and Information Services of Illinois LLC. "Stewart's vision is for PropertyInfo to be a leading online provider of integrated real estate information and technology to real estate professionals and title agencies," said Stewart Morris Jr., Stewart's president and co-chief executive officer. "Combining and coordinating several related [real estate information] efforts under one leadership umbrella better organizes Stewart to effectively deploy REI directly to real estate agents, brokers, and other customer segments." Mr. Vaden, a 30-year veteran of the title industry, was most recently a senior-level manager of Stewart-affiliated offices and independent agencies in Arkansas and Tennessee, a post he will retain. He will be president and CEO of PropertyInfo. Stewart can be found online at http://www.stewart.com.

Savings Institute Bank & Trust Co., Willimantic, Conn., has announced that it is buying Fairfield Financial Mortgage Group Inc., Danbury, Conn.The terms of the deal were not disclosed. Over the last 12 months, Fairfield has originated over $386.1 million. It has branches in Texas, Massachusetts, New Hampshire, New Jersey, New York, and Pennsylvania. The company is also licensed in South Carolina, Florida, Georgia, Michigan, Rhode Island, Maryland, Delaware, and California. Fairfield will change its name to SI Mortgage Group Inc., with its current president and chief executive officer, Charles L. Levesque, remaining as president. "While we expect this acquisition will add to our noninterest income and be accretive to our earnings, it will also bring much to [Fairfield]," SIBT president and CEO Rheo A. Brouillard said. SIBT is a subsidiary of SI Financial Group Inc., and this transaction is the second since the bank went public at the end of September 2004. It expected to close in the fourth quarter.

Two classes of GS Mortgage Securities Corp. residential mortgage pass-through certificates, series 2003-HE1, have been downgraded by Fitch Ratings.Class B-1 of the transaction was downgraded from BBB to BBB-minus, and class B-2 was downgraded from BBB-minus to BB-plus. Fitch also affirmed the ratings on three other classes in the transaction. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The deal consists of subprime mortgage loans separated into two groups, one with conforming loans and one with all other loans. Fitch can be found online at http://www.fitchratings.com.

In exchange for a $6 million termination fee from Capri Capital Advisors, CharterMac subsidiary CM Investor LLC is not going to act on its option to purchase a 49% interest in Capri Capital, according to New York-based CharterMac.Also related to this development, Capri Capital has repaid a $20 million loan that CharterMac originally made to it in July 2004 in connection with Capri Capital's recapitalization, CharterMac reported. In a related transaction, Capri Capital is transferring its interest in the investment fund Capri Urban Capital to CharterMac, and the fund will be renamed CharterMac Urban Capital. Capri Urban Capital, whose single investor is the California Public Employees Retirement System, makes investments in multifamily and commercial properties in major urban markets. "Given our recent acquisition of ARCap, a company that has strong relationships with major pension funds, we believe that CharterMac is well positioned to expand our pension fund advisory platform in the near term," said Marc D. Schnitzer, chief executive officer and president of CharterMac. He added that Daryl Carter, who is CEO of CharterMac Mortgage Capital and had been co-chairman and co-founder of Capri Capital, will oversee CharterMac Urban Capital. CharterMac can be found on the Web at http://www.chartermac.com.

July saw a slight decrease in the amount of traditional new primary mortgage insurance written, but there was a large falloff in the number of applications received, according to data gathered by the Mortgage Insurance Companies of America.The trade group's members wrote $17.4 billion of primary new insurance in July, a decline of 21.6% from $22.3 billion in June. However, much of the decline came in the bulk category, which fell from $8.2 billion to $4.7 billion. The traditional category fell by just $1.3 billion, from $14.1 billion in June to $12.8 billion in July. Application volume fell by 21.6% in July, from 148,332 in June to 116,906; application volume stood at 130,661 in July 2005. New pool risk written in July totaled $26.9 million, down from $70.7 million the previous month. The cure/default ratio reached its lowest level of the year, 69.8%, with 31,099 cures and 44,561 defaults. MICA can be found online at http://www.micanews.com.

Home prices rose 1.17% in the second quarter, the slowest growth rate since the end of 1999, according to figures released by the Office of Federal Housing Enterprise Oversight.Based on the second-quarter reading, house prices grew at an annualized rate of 4.68%. OFHEO Director James Lockhart said in a statement that the housing market "is cooling in a very significant way." Compared with those of a year earlier, home prices grew at a 10.06% rate. Greenwich Capital analyst Stephen Stanley said, "Looking ahead, home price appreciation will undoubtedly continue to slow, and we would not be shocked to see a quarter or two where the annualized growth rate is measly or even flattish."

National City Mortgage, Miamisburg, Ohio, has revised its residential production numbers upward for the first and second quarters, showing a less severe decline in originations than had previously been reported to National Mortgage News.The bank-owned mortgage lender said it funded $11.4 billion during the second quarter, a 26% decline from the level recorded a year earlier. In the first quarter it funded $9.9 billion, a 34% decline from that of a year earlier. Previously, it had reported to NMN and the Quarterly Data Report that production had fallen 77% ($3.5 billion in originations) in the second quarter, and 41% ($8.8 billion) in the first. When the figures were first reported to NMN, the newspaper called to verify them. At the time, the lender said the numbers were correct. NMN surveys more than 200 lenders each quarter, ranking the top 100 in the QDR, an affiliated publication. A spokesman for the mortgage company's parent, National City Corp., blamed the mistake on a reporting error. The mortgage lender can be found on the Web at http://www.nationalcitymortgage.com.

Merrill Lynch & Co. has agreed to buy subprime mortgage giant First Franklin Financial Corp., San Jose, Calif., and two affiliates for $1.3 billion.Meanwhile, sources have told MortgageWire that First Franklin's owner, Cleveland-based National City Corp., is now considering selling part of its 'A' paper mortgage business as well. When asked about a possible sale of National City Mortgage (see item below), a bank spokesman would only say that the unit "is not part of the strategic review" being conducted on the bank's subprime divisions. The bank announced Tuesday morning that it would sell First Franklin; National City Home Loan Services, Pittsburgh; and NationsPoint, Lake Forest, Calif., to Merrill, which already has a foot in the subprime industry through conduits and a specialty servicer called Wilshire Credit Corp., of Oregon. First Franklin ranks 10th among all subprime funders, according to the Quarterly Data Report, a MW affiliate. Subprime servicer NCHLS ranks 11th, with $44 billion in receivables. NCC said it would book a $1 billion pretax gain on the sale. First Franklin relies mostly on wholesale. NationsPoint is a direct-to-consumer lender. Merrill Lynch can be found online at http://www.merrilllynch.com, and First Franklin can be found at http://www.first-franklin.com.

Class B-5 of Terwin Mortgage Trust series 2004-EQR1 has been placed on Rating Watch Negative by Fitch Ratings.Fitch also affirmed the ratings on nine other classes in the transaction. The negative rating action was based on trends in overcollateralization stemming from "a reduction in the dollar amount of excess spread due to 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.

Class M1 of the DLJ ABS Trust series 2000-5 securitization of subprime mortgage loans has been downgraded from Aa2 to A3 by Moody's Investors Service.Moody's also confirmed the ratings of the A-1 and A-3 classes from the same transaction. The downgrade was based on the high proportion of delinquent loans relative to the available overcollateralization, the rating agency said. "Relatively high loss severities in recent months caused a significant deterioration of overcollateralization, which has since stabilized and begun to build back towards its target amount," the rating agency said. Moody's can be found online at http://www.moodys.com.

Countrywide Financial Corp., Calabasas, Calif., has donated over $513,000 to NeighborWorks America, Washington, to promote homeownership education, counselor training, downpayment assistance, and foreclosure intervention programs.In part, the fund will be used to support the various services and training that customers need to shop for, purchase, rehabilitate, insure, and maintain a home offered by a network of 92 NeighborWorks HomeOwnership Centers. The national NeighborWorks America organization will receive $250,000, and a $100,000 contribution will go to the NeighborWorks Center for Foreclosure Solutions, a new national initiative that kicked off earlier this year in Ohio (where foreclosures have more than doubled in the last five years). Countywide can be found online at http://www.countrywide.com, and NeighborWorks can be found on http://www.nw.org.

The Eleventh Federal Home Loan District Cost of Funds Index stood at 4.177 in July, an increase of nearly 9 basis points from 4.090 in June, according to the Federal Home Loan Bank of San Francisco.COFI is a weighted average of what it costs thrifts in California, Arizona, and Nevada to obtain money to originate mortgages, and changes in interest rates on adjustable-rate mortgage offered by many financial institutions are linked to the index. Although the Federal Reserve Board has at least temporarily stopped raising its target federal funds rate (the rate banks charge each other for overnight loans), COFI may continue to rise because it lags movements in other rates by three to six months. The FHLBank can be found online at http://www.fhlbsf.com.

Trump Mortgage LLC, founded recently by real estate mogul Donald J. Trump, has been accredited and has acquired mortgage licenses in 15 states, according to the New York-based mortgage company.The states in which the company is now registered as a mortgage broker are: Colorado, Rhode Island, Connecticut, New York, Arkansas, New Hampshire, Massachusetts, California, New Mexico, Minnesota, Oregon, Florida, Iowa, South Dakota, and Maine. Mr. Trump said the company is "expanding at a very rapid rate" and should receive many more state licenses soon. The company can be found on the Web at http://www.trumpmortgage.com.

Revenues at Option One Mortgage, Irvine, Calif., fell 44% for the three-month period ending July 31 as its parent company, H&R Block, booked a $102 million hit to cover loan buybacks.The subprime lender posted revenues of $169 million for the quarter and lost $4.9 million. In the same quarter a year earlier, Option One earned $130 million. (The information was contained in Block's fiscal first-quarter earnings release, which came out July 31.) The company's spokesman had not returned a telephone call about the buybacks by MortgageWire's deadline. In response to the buyback requests -- which came from unnamed investors in the secondary market -- Option One has tightened its underwriting guidelines and pricing criteria. The company funded $7.8 billion in the quarter, compared with $8.0 billion in the previous quarter. Block lost $134 million in its first fiscal quarter, blaming the performance, in part, on the loan buybacks. However, Block's tax services unit lost $153 million. In fact, the mortgage group was H&R Block's best performer during the quarter.

A leading indicator of existing-home sales published by the National Association of Realtors fell 7% in July, but NAR economists are still predicting that sales will level off in the months ahead.The pending sales index fell from 113.5 in June to 105.6 in July, which is 16% lower than the level recorded in July 2005. The June number was revised downward from 113.9. NAR chief economist David Lereah said a year-to-year comparison of the pending sales index looks favorable. "Based on recent changes from a year ago, the index shows existing-home sales should continue to ease after a stronger-than-expected decline in July, but are likely to flatten in the months ahead," he said. Mr. Lereah stated that psychological rather than economic factors, such as interest rates and jobs, are causing buyers to remain on the sidelines -- waiting for prices to stabilize. "Contributing to this hesitancy is a lot of negative news stories, but in the end we believe that underlying market fundamentals will prevail," he said. The NAR can be found online at http://www.realtor.org.

Mortgage companies cut their payrolls by 800 full-time positions in July, and it could be the beginning of further declines in industry employment.The U.S. Bureau of Labor Statistics reported Sept. 1 that employment in the mortgage banker/broker sector fell from 502,900 in June to 502,100 in July. The original estimate for June was revised downward from 503,100. Mortgage originations were unexpectedly strong in the second quarter. But loan applications declined dramatically in July, according to the Mortgage Bankers Association's weekly applications survey. Despite declining loan volume (particularly refinancings), employment has been surprisingly steady all year, according to the MBA's director of forecasting, Orawin Velz. Ms. Velz said she suspects that companies are laying off loan officers and hiring for their servicing shops. And these "substitutions" have keep employment at a high level so far. "We haven't seen the decline in industry employment yet, but that could be forthcoming," she said. The MBA economist sees a continuing decline in originations into next year as the housing market adjusts and normalizes, which would usually force mortgage companies to shed employees. The BLS can be found online at http://stats.bls.gov, and the MBA can be found at http://www.mortgagebankers.org.

Two classes of Salomon Brothers Mortgage Securities VII Inc. commercial mortgage pass-through certificates, series 2000-C2, have been downgraded by Fitch Ratings, and a Distressed Recovery rating was assigned to one of them.Class K was downgraded from BB-minus to B, and class L was downgraded from B-minus to CCC/DR3. (Distressed Recovery ratings estimate the recovery prospects for distressed and defaulted securities.) In addition, the Distressed Recovery rating of class M was lowered from DR6 to DR1, and the ratings on 10 other classes were affirmed. Fitch attributed the negative rating actions to increased loss projections on several loans in special servicing. The rating agency can be found online at http://www.fitchratings.com.

Classes M-I-1, M-I-2, and M-I-3 of Residential Asset Securities Corp. series 2002-KS2 have been placed under review for possible downgrade by Moody's Investors Service.Moody's said the reason for the rating actions was that credit enhancement levels may be low given the projected losses on the underlying pools. The pool has seen losses in recent months, and future losses "could cause a more significant erosion of the overcollateralization," the rating agency said. The transaction is backed by fixed- and adjustable-rate subprime mortgage loans originated by Residential Funding Corp., which is also the master servicer on the deal.

Six tranches from GSAMP Trust 2004-SEA2 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-2, from A2 to Baa2; class M-3, from A3 to Baa3; class M-4, from Baa1 to Ba2; class M-5, from Baa2 to B1; class B-1, from Ba3 to B3; and class B-2, from Caa3 to C. The downgrades were based on "rapid deterioration" of overcollateralization and subordination caused by "an accelerating pace of losses," the rating agency said. The losses were attributed to a high frequency of defaulted loans and "substantial severity" of loss on liquidated collateral. The transaction was issued with seasoned subprime mortgage loans, some of which had experienced delinquency prior to securitization.

The average 30-year fixed mortgage rate fell from 6.48% to 6.44% over the seven-day period ended Aug. 31, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 6.18% to 6.14%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.14% to 6.11%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.60% to 5.59%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "Mortgage rates continued to drift lower this week in large part because of the cooling in the housing market and in consumer confidence, thus giving financial markets reason to believe that economic growth will moderate and inflation will remain in check," said Frank Nothaft, Freddie Mac's chief economist. "As a matter of fact, the 30-year FRM is nearly 40 basis points lower than its peak of 6.8% in July of this year." A year ago, the average 30-year and 15-year fixed rates were 5.71% and 5.32%, respectively, and the average hybrid and one-year ARM rates were 5.30% and 4.48%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.