Originations

The NeighborWorks Campaign for Homeownership has announced that it helped 40,300 families achieve homeownership and generated more than $5.39 billion in new mortgage lending in the first quarter.More than 150 NeighborWorks organizations in 46 states plus the District of Columbia and Puerto Rico are participating in the campaign. The organization said 89% of recently assisted households were either low- or moderate-income homebuyers, and 91% were first-time homebuyers. "We are especially proud of the $153 million direct financial contribution of NeighborWorks network organizations in creating new homeowners," said Ken Wade, chief executive of NeighborWorks America. Approximately 22% of the campaign's recent homebuyers are African-American, whereas data provided by the Home Mortgage Disclosure Act indicate that only 6% of mortgage loans issued by the conventional market in 2003 (the most recent year for which data are available) served African-American buyers. Similarly, 24% of the campaign's recent borrowers were Hispanic, compared with 10% of loans in the conventional market in 2003. The organization can be found online at http://nw.org.

Fraud "comes in many forms and has been around for some time," National Association of Mortgage Brokers president Harry Dinham told attendees Aug. 3 at the California Association of Mortgage Brokers annual convention.In his speech in San Jose, Mr. Dinham referred to someone at the recent Florida Association of Mortgage Brokers convention who said it is a lot easier to commit mortgage fraud the second time than the first. "I agree. And his words have been replaying in my mind since then," Mr. Dinham said. "So how do we stop fraud from happening the first time? The only way to combat mortgage fraud is to strengthen and enforce existing laws and educate our broker members and consumers on the best ways to avoid this serious problem." The last thing the industry needs is more regulation, he said, given that enforcement of current laws is underfunded.

Despite tremendous growth in the number of real estate licensees in California, the staff for the state Department of Real Estate has dropped dramatically, according to Real Estate Commissioner Jeff Davi.Speaking at the California Association of Mortgage Brokers annual convention in San Jose, Mr. Davi said there are now 510,000 real estate licensees in the state. Under the current regulatory scheme, many mortgage brokers are licensed as real estate agents. With the turn in the real estate market, the department is expecting to deal with an increase in phone calls and complaints, Mr. Davi said. The department does not do random audits -- any audits it conducts are based on complaints from consumers or competitors. Right now the DRE has 303 employees, but the department has persuaded the legislature and the governor to allow it to hire 38 more, he said. All the new employees will be dedicated to enforcement.

Mortgage companies added 2,200 full-time employees to their payrolls in June, which could be an indication that mortgage originations are holding up better than expected.The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage banker/broker sector rose from 500,900 in May to 503,100 in June. (The May employment number was revised upward from 500,000.) Overall, mortgage industry employment is up 3% since the housing market peaked in June 2005. Four quarters later, existing-home sales are off 8.9% and new-home sales are off 11.1%. But refinancings have remained surprisingly strong and represented 42% of originations in the second quarter, according to Freddie Mac. Preliminary survey figures compiled by National Mortgage News show that second-quarter residential fundings are down about 2% from those of the second quarter of last year. The 2% decline is based on data from 30 companies, and the actual results could change dramatically as more lenders file survey figures. See the Aug. 7 issue of NMN for the full story.

The board of directors of Annaly Mortgage Management Inc., a New York-based real estate investment trust, has renamed the company Annaly Capital Management Inc.Annaly manages assets on behalf of institutional and individual investors worldwide through its own operations and via the funds managed by its wholly owned registered investment adviser, FIDAC. "We believe our new name better reflects our business," said Michael A.J. Farrell, chairman, chief executive officer, and president of Annaly. Annaly can be found online at http://www.annaly.com.

SL Green Realty Corp., a New York City office real estate investment trust, is acquiring Reckson Associates Realty Corp., another office REIT based in Melville, N.Y., for about $6 billion, including the assumption of about $2 billion of Reckson's debt.SL Green said it will acquire all of Reckson's common stock and operating partnership units for $31.68 per stock/OPU in cash and a fixed exchange ratio of 0.10387 shares of SL Green common stock per Reckson common share and OPU. The consideration values each Reckson common share at $43.31, based on SL Green's recent closing stock price of $112 per share. Upon the closing of the merger, Reckson stockholders are expected to own about 15.2% of SL Green. In related transactions, SL Green is selling some Reckson assets to a group consisting of Reckson executives and Marathon Asset Management for $2.1 billion. The merger will boost SL Green's portfolio to 28.1 million square feet, of which 23.0 million square feet will be in Manhattan, the REIT said. Marc Holliday, chief executive officer of SL Green, said he expects the portfolio to "benefit from escalating New York City rents and occupancy trends." The REITs can be found online at http://www.slgreen.com and http://www.reckson.com.

The average 30-year fixed mortgage rate fell from 6.72% to 6.63% over the seven-day period ended Aug. 3, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 6.34% to 6.27%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.35% to 6.27%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.78% to 5.69%, Freddie Mac reported. Fees and points averaged 0.3 of a point for fixed-rate mortgages, 0.4 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "Second-quarter gross domestic product came in weaker than the market had expected," said Frank Nothaft, Freddie Mac's chief economist. "This means inflation is less of a threat, and that translates into lower mortgage rates. Although lower rates are a welcome sight, we still feel that the 30-year fixed-rate mortgage rate will drift up and down somewhat over the next few months, but will average less than 7% for the year." A year ago, the average 30-year and 15-year fixed rates were 5.82% and 5.38%, respectively, and the average five-year and one-year ARM rates were 5.30% and 4.47%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Equity Residential, a Chicago-based real estate investment trust, has reported net income of about $150 million ($0.51 per share) for the second quarter, compared with about $128 million ($0.44 per share) in the second quarter of 2005.The company, the largest multifamily REIT by market capitalization, attributed the increase primarily to higher gains on property sales. "Our second-quarter performance reflects both the continuing strength of the multifamily business, as well as the progress we have made in transforming our portfolio," said David J. Neithercut, Equity Residential's president and chief executive officer. For the six months ended June 30, the REIT reported earnings of $1.76 per share, compared with $1.19 per share in the same period of 2005. Equity Residential can be found online at http://www.equityapartments.com.

A leading indicator of existing-home sales edged up 0.4% in June, and it could be a sign that sales are leveling off after a 10% decline since last summer, according to the National Association of Realtors.The NAR's pending sales index rose from 113.5 in May to 113.9 in June. It was the second consecutive monthly increase in the index, which is off 9.6% from the level recorded in June 2005. NAR chief economist David Lereah said the small rise in the index is "good news" and indicates that sales are "stabilizing" or leveling off. He also said the index and other indicators are showing that the housing market is still in transition and "striving for balance" -- which could take several months.

The Market Composite Index, an overall measure of mortgage applications, fell from 533.8 to 527.6 on a seasonally adjusted basis during the week ended July 28, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 1.4% on the week and were down 29.0% from the level recorded a year earlier. The Purchase Index fell from 389.0 to 376.2 on a seasonally adjusted basis, while the Refinance Index climbed from 1385.2 to 1417.2. Refinancings represented 37.0% of total applications, up from 35.6% the previous week, while adjustable-rate mortgages accounted for 27.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.69% to 6.62%, and points (including the origination fee) decreased from 1.07 to 1.00 for loans with 80% loan-to-value ratios, the association reported.

Federal Realty Investment Trust, Rockville, Md., has announced the closing of a new $300 million unsecured revolving credit facility to replace its existing $300 million facility, which was scheduled to mature in October.The equity real estate investment trust said the new facility is priced at 42.5 basis points over the London interbank offered rate. Wachovia acted as the sole lead arranger and administrative agent for the facility. The REIT can be found on the Web at http://www.federalrealty.com.

Equity Office Properties Trust, Chicago, has reported net income of $87.9 million ($0.24 per share) for the second quarter, compared with a net loss of $205.4 million ($0.50 per share) for the comparable period of 2005.For the first six months of the year, the real estate investment trust reported net income of $133.5 million ($0.36 per share), compared with a loss of $104.6 million ($0.26 per share) for the first six months of 2005. EOPT said it believes the results "reflect significant improvement in virtually every market," citing strong leasing activity and an increase in market rents as well as improved occupancy and office space absorption. The largest REIT by market capitalization, EOPT also reported that it is exploring the sale of as much as $2.0-2.5 billion of assets over the next year. Certain assets in the Chicago, Denver, and Northern California markets are being considered for sale, EOPT said. The REIT may also exit the Atlanta market over time. It can be found online at http://www.equityoffice.com.

Collateral Mortgage Capital LLC, Birmingham, Ala., has changed its name to Collateral Real Estate Capital LLC.The name change is aimed at reflecting "the range of services and expanded product line" now offered by Collateral, the company said. "In addition to conventional mortgage banking services, the company now provides advisory services on a variety of property types," said David A. Roberts, president and chief executive officer of Collateral. "Additionally, we plan to enhance our existing servicing and asset management platform over the next year to expand its business range." The company can be found on the Web at http://www.collateral.com.

Jim Judd, president and chief operating officer of World Savings, has been named to lead the combined mortgage operations of Wachovia Corp. and Golden West Financial Corp., which will be based in Charlotte, N.C., following the completion of Wachovia's acquisition of Golden West.Wachovia said the combined operations will be called the Retail Mortgage and Credit Group, and that all current mortgage and credit operations sites of both companies will remain in place. Wachovia said the pending merger with Golden West, the Oakland, Calif.-based parent company of World Savings, is expected to be completed in the fourth quarter. Wachovia can be found online at http://www.wachovia.com.

For the first time since August 2001, the Eleventh Federal Home Loan District Cost of Funds Index stands above 4%.According to the Federal Home Loan Bank of San Francisco, the index rose approximately 21 basis points in June, to 4.090%. The month-to-month change is one of the largest since COFI began its upward climb with the June 2004 report. In the past two years, COFI has increased 238 bps. The FHLBank-SF said COFI reporting members had $601.8 billion of total average funds and $2.05 billion of average interest expense. "Averages for a month consist of the simple average of the month-end balances for that month and the prior month for total funds, deposit accounts, advances, and other borrowings," says a note on the FHLBank's website. "The total interest expense is derived from interest expense reported on deposit accounts, Federal Home Loan Bank advances, and other borrowings, adjusted for the number of days in the month."

June was the best month of the year business-wise for the members of the Mortgage Insurance Companies of America.According to the trade group, $22.25 billion of primary new insurance was written in June, up 22% from $18.17 billion in May. It was also the best month of the year for the traditional primary new insurance component, at $14.08 billion. The previous top month in 2006 for total insurance had been $20.92 billion in March, while for traditional, May had been the best month, at $13.01 billion. Applications hit a yearly high, at 148,332; the previous high in 2006 had been in March, at 141,177. There is now $632.14 billion of primary insurance in force, and $143.33 billion of primary risk in force, MICA reported. In June, $70.7 million of new pool risk was written. Pool risk in force at the end of the second quarter totaled $8.47 billion. The cure/default ratio for June was 74.4%, a slight improvement over that of May, with 31,588 cures and 42,477 defaults reported for the month. MICA can be found online at http://www.micanews.com.

Origination services and default management services are the fastest-growing segment of mortgage processing services, according to NelsonHall, a Boston-based firm specializing in the analysis of business process outsourcing.In a research report titled "Mortgage BPO Industry Assessment and Forecast," the firm said customers want mortgage BPO vendors to help them convert fixed costs to variable costs in order to deal with fluctuating volumes. The research also found that mortgage BPO contracts are typically limited to one of four service areas (origination, servicing, default management, and securitization) in the United States, while such contracts usually cover multiple service areas outside the United States. "Vendors need to be able to manage rapid scaling of work force size and still maintain and increase worker knowledge of increasingly complex mortgage products," said NelsonHall research director Andy Efstathiou, citing another finding. The study also found that risk control and reduction are growing in importance, and mortgage BPO involves little offshoring of services, but offshoring is growing faster than the market as a whole. The company can be found online at http://www.nelson-hall.com.

Four classes from three subprime Renaissance Home Equity Loan Trust residential mortgage-backed securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-1, class B, from BBB to BBB-minus (and removed from Rating Watch Negative); series 2002-2, class B, from BBB to BBB-minus; and series 2002-3, class M2, from A to BBB-plus, and class B, from BBB to C (and removed from Rating Watch Negative). In addition, class B of series 2002-3 was assigned a Distressed Recovery rating of DR4, and the ratings on nine other classes from the three transactions were affirmed. Fitch attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. Fitch can be found online at http://www.fitchratings.com.

Building permits were pulled in June for 12,292 single-family homes in California, up 2.9% from the previous month, according to the Burbank-based Construction Industry Research Board.It was the fifth straight month-over-month gain in single-family production for the bellwether state. Multifamily starts (condominiums and rental apartments) totaled 6,883 in June, nearly a 100% jump from their level in May, but multifamily permitting tends to be much more volatile than single-family starts on a monthly basis. Overall, Golden State builders started 19,175 units in June, an increase of 24%. However, starts for the year to date are down 12%. At the current rate of production, some 175,000 units will be built in California this year, said Alan Nevin, chief economist at the California Building Industry Association. Mr. Nevin attributed the slowdown to a substantial unsold inventory of homes that builders are trying to work down by offering incentives rather than price concessions. With "developer fees" sometimes totaling $100,000 per unit and land costs running $150,000 per unit, California builders have little room to trim their prices, the CBIA says.

Genpact, a global provider of business services and technology, has announced plans to acquire MoneyLine Lending Services, a provider of mortgage origination and fulfillment services based in Irvine, Calif.The terms of the deal were not disclosed. Genpact said MoneyLine, which will become part of Genpact Mortgage Services, is the exclusive provider of outsourced mortgage services for more than 50 financial institutions. The companies can be found on the Web at http://www.genpact.com and http://www.moneylinelending.com.