Originations

The number of rating upgrades in the first quarter for U.S. structured finance transactions was nearly triple that of a year earlier, with commercial mortgage-backed securities leading the way, according to Fitch Ratings.Upgrades totaled 1,203 in the first quarter, compared with 421 in the first quarter of 2005, Fitch says in its latest global update report. The ratio of upgrades to downgrades also improved dramatically, rising from 1.1 to 1 in the first quarter of 2005 to 4.1 to 1. "By far the best-performing U.S. structured finance sector was CMBS, as evidenced by its 28.4:1 upgrade-to-downgrade ratio," the rating agency reported. "A sharp rise in defeasance was largely responsible for 483 upgrades, compared to just 17 downgrades." Residential MBS also turned in a strong rating performance, recording a 3.4 to 1 upgrade-to-downgrade ratio in the first quarter, far ahead of its 0.9 to 1 ratio a year earlier. "Longer term, however, the rate of RMBS upgrades will likely dwindle due to slowing prepayment speeds and subsequently slow build-up of credit enhancement," Fitch predicted. The rating agency can be found online at http://www.fitchratings.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 552.6 to 541.9 on a seasonally adjusted basis during the week ended May 26, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 2.6% on the week and were down 22.4% from the level recorded a year earlier. The Purchase Index fell from 396.4 to 395.5 on a seasonally adjusted basis, while the Refinance Index declined from 1480.5 to 1409.0. Refinancings represented 34.9% of total applications, down from 35.7% the previous week, while adjustable-rate mortgages accounted for 30.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.61% to 6.66%, and points (including the origination fee) decreased from 1.17 to 1.03 for loans with 80% loan-to-value ratios, the association reported.

The Australian mortgage insurance subsidiary of Genworth Financial, Richmond, Va., has agreed to acquire Vero Lenders Mortgage Insurance Ltd., Sydney, Australia, in a deal valued at US$165 million.There will be a "substantial post-closing dividend" paid pending regulatory approval that will affect the compensation. Vero's book of business has been in runoff status since April 2003. Genworth said it is in a strong position to manage the runoff portfolio because of its position in the mortgage insurance business both in Australia and globally. "The acquisition of Vero LMI is a natural addition to our existing portfolio in this region," said Brian Hurley, president of Genworth's international mortgage insurance. "We have ongoing business relationships with 11 of Vero's 12 former customers and a good knowledge of the market." Vero LMI is a subsidiary of Vero Insurance Ltd., which in turn is wholly owned by Promina Group Ltd., a general insurance and financial services provider in Australia and New Zealand.

Three classes of Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1997-D5, have been removed from Rating Watch Negative by Fitch Ratings.The affected classes were classes A-2, A-3, and A-4. In addition, the ratings on eight other classes of the same series were affirmed. Fitch attributed the removals from Rating Watch to increased credit enhancement to the classes as a result of paydowns and defeasances.

Class B of First Union Home Equity Loan mortgage pass-through certificates, series 1997-3, has been downgraded from B to CCC by Fitch Ratings and assigned a Distressed Recovery rating of DR2.Fitch said the downgrade reflects the deterioration of credit enhancement relative to expected losses, largely as a result of liquidations that have reduced the amount of overcollateralization supporting the transaction. The collateral consists of mixed fixed-rate and balloon mortgages extended to subprime borrowers.

Two classes from two Ameriquest Mortgage Securities Inc. home equity issues have been downgraded and removed from Rating Watch Negative by Fitch Ratings.Class M2 of series 2002-C and class M-4 of series 2002-3 were downgraded from BBB-minus to B. In addition, Fitch affirmed the ratings on four classes from the two Ameriquest transactions. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses.

Three classes of Argent Securities Inc.'s ARSI series 2004-PW1 home equity issue have been downgraded and removed from Rating Watch Negative by Fitch Ratings.The downgrades were as follows: class M9, from BBB-minus to BB; class M10, from BB-plus to B-plus; and class M11, from BB to B. Fitch also affirmed the ratings on nine other classes from the transaction. The downgrades were attributed to a deterioration in the relationship between credit enhancement and expected losses. The transaction consists of loans originated or acquired by Argent Mortgage Co. or Olympus Mortgage Co., Fitch said.

Six certificates from two ACE Securities Corp. Home Equity Loan Trust subprime mortgage deals have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2002-HE1, class M-2, from A2 to Baa1, class M-3, from Baa2 to B1, and class M-4, from Baa3 to B3; and series 2004-HE1, class M-5, from Baa2 to Baa3, class M-6, from Baa3 to Ba2, and class B, from Ba2 to Caa2. The downgrades were attributed to the weaker-than-expected performance of the mortgage collateral and the resulting erosion of credit support. "In both of the transactions, overcollateralization amounts are currently below their targets, and pipeline losses are likely to cause eventual depletion of the overcollateralization and losses on the most subordinate tranches," Moody's said. In addition, credit enhancement levels may be low given the projected losses on the underlying pools, according to the rating agency. Moody's can be found online at http://www.moodys.com.

Three states -- Florida, Texas, and California -- were responsible for nearly a third of all the new dwellings built in 2005, according to the California Building Industry Association.Builders in the Sunshine State produced 287,250 units, including 209,162 single-family houses. Texas builders put up 210,611 units, of which 166,178 were single-family. In California, builders started 208,804 units, including 154,961 one-family dwellings. But it wasn't enough to meet the state's needs, the CBIA said, which is why California's ownership rate is the second-lowest in the country. Production in the Golden State wasn't evenly distributed, either. Of the 535 cities and counties in California that issued building permits in 2005, 6% accounted for half the approvals. Sixteen jurisdictions issued no building permits at all in 2005 for homes, condominiums, or apartments, the builder group reported. Fifteen places issued just one permit, and a handful of others issued five or less.

Synergy Mortgage is discontinuing what is left of its net branch operation as of June 1, according to Joe L. Williams, chairman, chief executive, and president of the company's parent bank, Synergy Bank.While not disclosing the reasons behind the shutdown, he did say Synergy Mortgage has been gradually reducing the size of the net branch operation over the past three years. The company had just six net branches left, all outside Texas. Synergy Bank will continue to be in the mortgage lending business, Mr. Williams said, but doing retail from its two branches, one at its headquarters in Waco and the other in the Dallas suburb of Garland.

Resource Capital Corp., a Philadelphia-based real estate investment trust, has announced the issuance of $25 million of trust preferred securities through a wholly owned subsidiary.The 30-year securities were priced to bear interest at 3.95% above the three-month London interbank offered rate, the REIT said. The issuing subsidiary is Resource Capital Trust I. The company can be found online at http://www.resourcecapitalcorp.com.

Two classes of Commercial Mortgage Acceptance Corp. commercial mortgage pass-through certificates, series 1998-C1, have been downgraded by Moody's Investors Service.Class L was downgraded from Caa1 to Caa2, and class M was downgraded from Ca to C. In addition, Moody's upgraded three classes in the deal and affirmed the ratings on three others. The downgrades were due to realized losses from the specially serviced loans, dispersion in loan-to-value ratios, and concerns about the largest loan in the pool, the Two Chatham Center Loan. That $38 million loan, representing 5.8% of the pool, is secured by a leasehold mortgage on a 280,000-square-foot office building in downtown Pittsburgh. The property was 70.0% occupied as of September 2005, compared with 80.5% at last review and 99.0% at securitization, Moody's reported.

Three classes of Bear Stearns Commercial Mortgage Securities Inc., commercial mortgage pass-through certificates, series 1998-C1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class H, from Ba3 to B1; class I, from Caa1 to C; and class J, from Caa2 to C. Moody's also upgraded two classes and affirmed the ratings on six others. The downgrades were due to realized and expected losses from the specially serviced loans and dispersion in loan-to-value ratios, the rating agency said. Moody's said approximately 15.9% of the pool has an LTV in excess of 100%, compared with 8.7% at securitization. The certificates are collateralized by 138 mortgage loans on properties located in 24 states, with the top 10 loans representing 27% of the pool.

Three certificates from First Franklin Mortgage Loan Trust series 2002-FF2 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-1, from Aa2 to A2; class M-2, from A2 to Ba1; and class M-3, from Baa1 to Ba2. Moody's said it downgraded the certificates because credit enhancement levels are low in view of projected losses on the underlying pools, and loss severities on liquidated loans are on the rise. The transaction consists of subprime first-lien mortgage loans originated by First Franklin Financial Corp. Moody's can be found online at http://www.moodys.com.

PMI Mortgage Insurance Co., Walnut Creek, Calif., has filed an application with Canada's Office of the Superintendent of Financial Institutions to be allowed to sell mortgage insurance in that country.PMI already offers mortgage insurance products outside the United States in such places as Hong Kong, Australia, New Zealand, and Europe (through offices in Ireland and the United Kingdom). Genworth is a U.S.-based competitor that offers mortgage insurance in Canada. As in the United States, there is also a government product offered through Canada Mortgage and Housing Corp.

People's Mutual Holdings and its subsidiary People's Bank, both of Bridgeport, Conn., plan to switch from their respective state charters to become a federally chartered mutual holding company and a federal savings bank, respectively.The change stems partly from the thrift's expansion of its mortgage lending business into the neighboring states of New York and Massachusetts. People's said that when it entered those states last year, it had to conform to their laws as well as Connecticut's. "This was an expensive and lengthy process that negatively affected our speed to market," People's said. "It will not be the case under the FSB charter." People's Bank can be found on the Web at https://www.peoples.com.

American General Financial Services, Evansville, Ind., has reportedly closed its correspondent loan channel, according to an executive who has done business with the company.The executive, requesting anonymity, said his secondary-market chief was told the news on Thursday. Telephone calls to AGFS in Indiana, and its affiliate Wilmington Finance of Pennsylvania, had not been returned as of MortgageWire's deadline. AGFS is a subsidiary of insurance giant American International Group, New York. A few weeks ago, Wilmington Finance president Jerry Schiano left the company. He was replaced by George Roach. Mr. Roach could not be reached for comment.

AmeriVest Properties Inc., a Denver-based real estate investment trust, has announced stockholder approval of a plan of liquidation that had been approved on Feb. 9 by the company's board of directors.AmeriVest said holders of approximately 15.1 million of the outstanding shares, representing 62.6% of the votes outstanding and 86.9% of the votes cast, voted to approve the plan. Under the plan, the REIT's remaining 12 office properties will be sold and the proceeds will be distributed to the stockholders. The REIT can be found online at http://www.amvproperties.com.

The average 30-year fixed mortgage rate rose from 6.60% to 6.62% over the seven-day period ended May 25, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.20% to 6.23%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages fell from 6.23% to 6.21%, and the average rate for one-year Treasury-indexed ARMs declined from 5.62% to 5.61%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.6 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "Currently, mortgage rates are roughly a half a percentage point higher than they were at the start of the year, which has led to some moderation in the housing market," said Frank Nothaft, Freddie Mac's chief economist. "Indeed, in the first quarter of 2006, the housing industry directly accounted for only 7% of the real Gross Domestic Product, compared with 19% in the fourth quarter of 2005." A year ago, the average 30-year and 15-year fixed rates were 5.65% and 5.21%, respectively, and the average one-year ARM rate was 4.21%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Regions Financial Corp., Birmingham, Ala., the parent company of Regions Mortgage, and AmSouth Bancorporation, Birmingham, have announced a merger agreement that they said will create one of the top 10 bank holding companies in the United States.The Regions name will be retained for the combined entity. The agreement provides for a stock-for-stock merger in which 0.7974 shares of Regions will be exchanged for each share of AmSouth common stock. Based on closing stock prices of both companies on May 24, the pro forma combined market capitalization of the new entity would be approximately $26 billion, the companies said. Jackson W. Moore, chairman, president, and chief executive officer of Regions, will be chairman of the combined company. The companies can be found online at http://www.regions.com and http://www.amsouth.com.