Originations

IndyMac Bancorp, which acquired Freedom Financial from Lehman Brothers in 2004, may now spin off a stake in the nation's largest reverse mortgage lender through an initial public offering.In response to a question during IndyMac's quarterly earnings call, IndyMac chairman and chief executive Michael Perry said his company is "seriously considering" an IPO for its Financial Freedom subsidiary. He added that there is a "75% to 90% chance we'll do it." A spinoff of Financial Freedom would allow the company to recruit and maintain top management with stock options and let them run the company, Mr. Perry said. Financial Freedom, based in Irvine, Calif., closed $2.9 billion of reverse mortgage accounts last year. It is also the largest servicer of reverse home loans, managing a 77,000 loan portfolio.

Donald Trump is venturing into the Central American commercial real estate market with the launch of a hotel project in Panama City, Panama, in partnership with Roger Khafif, president of the K Group, a Panama-based resort developer.The 1.8 million-square-foot, $220 million beachfront project will have about 300 hotel condominium units, a 65-story condominium tower, and another 500 condo units, as well as other amenities, according to The Trump Organization. At a news briefing in New York to launch the project, Mr. Trump said he is investing in the project along with HSBC Bank. A "lot of banks" were interested in the project, he said, adding that he expects the project to attract interest from baby boomers who can "stretch their dollars" further in Panama to fund their retirements. The project is expected to be completed at the end of 2009.

In its latest effort to regain market share from piggyback mortgages, PMI Mortgage Insurance Co., Walnut Creek, Calif., has introduced a mortgage calculator that will take a first mortgage, along with some mortgage insurance options, and compare it with a first mortgage combined with a second.The new tool, the eCompare Calculator, is Web-based for use by mortgage brokers and Realtors. Piggyback mortgages, also known as 80-10-10 mortgages, have made inroads as an alternative to mortgage insurance. "The eCompare Calculator shows us that market economics are changing," said David Katkov, executive vice president of sales, field operations, and product development at PMI. "In 2004 and 2005, we were in a unique economic environment, with record low interest rates and very high home price appreciation. In that environment, a piggyback, interest-only loan or option ARM may have offered a lower payment than a fixed-rate loan with mortgage insurance. Today, with interest rates going up and home price appreciation slowing, mortgage insurance is almost always competitive and is often the better deal for the consumer." PMI can be found on the Web at http://www.pmigroup.com.

Wachovia Corp., Charlotte, N.C., has announced an agreement to acquire American Property Financing Inc., a New York-based multifamily lender and a subsidiary of Emigrant Bank, for an undisclosed amount.Wachovia said APF is the No. 1-ranked agency multifamily lender in the New York City area and one of the top lenders in the nation under Fannie Mae's Delegated Underwriting and Servicing program and Freddie Mac's Program Plus. Brett Smith, managing director and head of mortgage origination and placement in Wachovia's Real Estate Capital Markets Group, said the deal "enhances our financing and servicing capabilities and strengthens our presence in the attractive New York City multifamily lending market." Alan Wiener, APF's chief executive officer, will continue to run the company and will co-head Wachovia's multifamily lending group with Ed Hurley, a managing director. Wachovia can be found online at http://www.wachovia.com.

Some 75 metropolitan statistical areas are now facing home price "bubbles," up slightly from a previous reading, according to a new research report issued by Friedman Billings Ramsey, Arlington, Va.Using fourth-quarter data, FBR also says there are 28 "incipient" MSA bubbles in the United States, compared with 31 identified in the previous quarter. Even though FBR economist Michael D. Youngblood says he expects home price gains to slow, he is still quite bullish on California. Home values in California should rise on a "median year-over-year" basis by 26.3%, Mr. Youngblood writes in the report. FBR says that for the bubbles to actually pop in the 75 identified MSAs, values need to fall significantly. In Santa Barbara, Calif., for instance, home prices need to fall by almost 65%, according to FBR. The company identifies bubbles by comparing home prices with an MSA's per capita personal income.

Existing-home sales edged up 0.3% in March in the face of rising mortgage rates and slowing house price appreciation, which dropped into single digits for the first time in over two years.The National Association of Realtors reported that March sales of single-family homes, condominiums, and cooperatives rose from a seasonally adjusted annual rate of 6.90 million in February to 6.92 million in March. NAR chief economist David Lereah noted that sales of previously owned homes were down only 4% in the first quarter from last year's record pace and said sales may be "plateauing," with modest declines in coming months. His forecast calls for a 6% decline in home sales and price appreciation slowing to 6.4% this year. The median price increased at an annual rate of 7.6% in March, compared with 10.6% in February. Meanwhile, the single-family market is holding up fairly well in terms of properties up for sale. However, the inventory of unsold condo units has jumped by 85% in the past four quarters to a 6.9-month supply. There is a 5.3-month supply of single-family homes. NAR economists say they expect condo sales to drop 8% this year. The NAR can be found online at http://www.realtor.org.

The banking industry could be vulnerable to a downturn in commercial real estate markets, according to an A.M. Best report that shows banks generated 42% of their revenues from CRE lending.CRE lending has been growing at a 9%-10% annual rate for several years and CRE loans, including permanent and construction financing, constitute nearly 22% of total bank loans. In 2005, bank real estate income jumped 30.4% in dollar terms and accounted for a "staggering" 42.3% of total bank revenues, the insurance rating agency said. "With a plethora of anecdotal evidence pointing to a softening commercial real estate market, the potential adverse impact of increasing exposure by banks in this segment is not just on asset values, but also earnings and capital levels," the company said. "The concentration in the industry's real estate income is the most alarming element." Federal regulators have issued proposed guidance that would establish thresholds on CRE exposures that could trigger a higher level of risk management as well as higher capital requirements.

Washington Mutual Inc., Seattle, has agreed to acquire Irvine, Calif.-based Commercial Capital Bancorp Inc. for $983 million, or $16 per share, in cash.Kerry Killinger, WaMu's chairman and chief executive, said the deal "strengthens our already solid position in the attractive California multifamily and small commercial real estate lending markets. Commercial Capital is the third-largest multifamily lender in California and has had an eight-year record of strong growth and excellent credit performance." According to Commercial Capital's 10-K filing, Dataquick was the source for the company's ranking as the third-largest multifamily lender in California for 2005. Last year it did $1.3 billion in multifamily fundings and $313 million in commercial real estate loan fundings. According to its 10-K, WaMu's multifamily portfolio as of Dec. 31 was $25.6 billion.

The Federal Home Loan Bank of Cincinnati has suspended two voluntary affordable housing programs for Katrina victims and minority homebuyers due to proposed capital changes that could carry a $500 million price tag.A preliminary estimate by the Cincinnati bank shows that it would need to increase retained capital by $109 million and repurchase $421 million in excess stock if the Federal Housing Finance Board finalizes the proposed capital rule. The comment period on the proposal ends July 13. FHLBank Board Chairman Charles Koch said the board of directors is "deeply disappointed" about temporarily suspending the two AH programs. "Good corporate governance will not allow us to continue funding the multimillion-dollar voluntary housing programs until we are in a position to know the full extent of our retained earnings shortfall and the negative impact this proposed regulation would have on our business model," he said. Mr. Koch is chairman of Charter One Bank NA.

Foundation Capital Resources Inc., a real estate investment trust based in Jackson, Miss., has announced the completion of its first securitization, a $137 million transaction backed by church-related mortgage assets.The deal, FCR Mortgage Trust 2006-A, includes 177 mortgage assets related to churches in 32 states. The assets are chiefly adjustable- and fixed-rate commercial mortgage term loans to churches and other religious institutions, fixed-rate secured mortgage bonds issued by churches, and bond-collateralized loans made to churches, the REIT reported.

Fannie Mae is encouraging lenders and servicers to participate in a Mississippi housing assistance program, despite some legal concerns about the subordination agreements they have to sign to work with homeowners receiving the assistance grants."Servicers that opt-in have our consent to subordinate our lien to the required covenant and will have no liability to Fannie Mae for the consequences of such subordination," the government-sponsored enterprise says in a letter to lenders and servicers. The deadline for signing up for the state housing program is April 21. Homeowners can receive up to $150,000 in grants to rebuild homes that were destroyed or damaged by Hurricane Katrina. By participating, lenders and servicers will help homeowners with the execution of the closing documents for the grants. Lenders are assured that the loan will be made current and taxes will be paid. But after that point, the homeowner has complete control of the funds and there is no guarantee or requirement that the assistance be used to repair the property or pay down the mortgage.

Fannie Mae has established a points-and-fees test on subprime loans to provide lenders with clearer guidance on what high-cost loans the mortgage company will not purchase."Fannie Mae will not purchase or securitize a mortgage if the total points and fees charged to the borrower exceed the greater of 5% of the mortgage amount or a maximum dollar amount of $1,000," says an April 14 announcement that goes into effect June 1. Current guidance states that Fannie will not purchase high-cost loans as defined by state predatory-lending laws. The government-sponsored enterprise also has a long-standing policy against purchasing high-cost loans as defined by the federal Home Owners and Equity Protection Act. Fannie Mae can be found online at http://www.fanniemae.com.

Class M of Mortgage Capital Funding Inc.'s commercial mortgage pass-through certificates, series 1998-MC1, has been downgraded from CCC to B-minus by Fitch Ratings.Fitch also upgraded three classes in the deal and removed them from Rating Watch Positive, and affirmed the ratings on five other classes in the transaction. The downgrade was attributed to an increase in the number of specially serviced loans and in loss expectations.

Class L of Bear Stearns Commercial Mortgage Securities commercial mortgage pass-through certificates, series 1999-WF2, has been downgraded from CC to C by Fitch Ratings.Fitch also upgraded two classes from the deal and removed them from Rating Watch Positive, upgraded five other classes, and affirmed the ratings on six classes. The downgrade reflects Fitch's increased loss expectations on the specially serviced loans. Fitch can be found online at http://www.fitchratings.com.

Englewood, Colo.-based TeleTech Holdings Inc. and LenderLive, a Glendale, Colo.-based mortgage fulfillment provider, have entered into an exclusive partnership that brings a global delivery network to LenderLive's operations.LenderLive and TeleTech, a business process outsourcing provider of customer management and transaction-based processing systems, offer their combined services to retail and wholesale channels and mortgage conduits, allowing lenders to increase the speed and efficiency of their current processing services and converting lenders' fixed costs to variable costs. The multiyear partnership agreement includes mortgage origination, fulfillment, processing, and portfolio protection. LenderLive and TeleTech also generate integrated sales reports that span from original lead generation to close of sale. The companies can be found on the Web at http://www.teletech.com and http://www.lenderlive.com.

The net income of Washington Mutual Inc.'s mortgage segment plunged from $323 million in the first quarter of 2005 to $38 million in the first quarter of this year, although profits rose overall, the Seattle-based thrift has reported.WaMu attributed the nosedive in the Home Loans Group's profits to higher short-term interest rates and a flat yield curve, which produced a decline in net interest income and a significant increase in the cost of risk management for mortgage servicing rights. Originations of home loans were actually higher, at $44.998 billion, than they were in the first quarter of 2005, when they totaled $44.495 billion. Overall, WaMu reported net income of $985 million ($0.98 per share) for the first quarter, up from $902 million ($1.01 per share) a year earlier. WaMu can be found online at http://www.wamu.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 579.4 to 569.6 on a seasonally adjusted basis during the week ended April 14, 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 14.9% from the level recorded a year earlier. The Purchase Index fell from 417.7 to 407.4 on a seasonally adjusted basis, while the Refinance Index declined from 1532.4 to 1526.1. Refinancings represented 36.4% of total applications, up from 36.0% the previous week, while adjustable-rate mortgages accounted for 28.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.50% to 6.56%, and points (including the origination fee) fell from 1.20 to 1.10 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found on the Web at http://www.mortgagebankers.org.

Nearly 2,000 banks and thrifts -- 22% of all such institutions -- have construction loans on their books that exceed 100% of total capital, and 24 banks have concentrations that exceed 500% of capital, according to A.M. Best & Co.The insurance rating agency also reported that banks in the Southeast have the highest concentrations of construction loans. Over 50% of Georgia and Florida banks have construction loans that exceed total capital, while nine banks in Georgia and three in Florida have construction loans that exceed 500% of capital, the company said. "These two states, which had the highest numbers of banks exceeding the 100%, accounted for nearly 18% of the 1,956 banks with construction lending concentrations," the rating agency said. The A.M. Best report estimates how many banks might be affected by concentration thresholds that federal regulators have proposed for construction and commercial real estate loans. The comment period on the proposed CRE guidance ended April 13.

Wells Fargo & Co., San Francisco, has reported record net income of $2.02 billion ($1.19 per share) for the first quarter, up 9% from $1.86 billion ($1.08 per share) a year earlier, despite a revenue plunge at Wells Fargo Home Mortgage.Home Mortgage revenue totaled $853 million, down $665 million from $1.5 billion in the first quarter of 2005, Wells Fargo reported. Mortgage originations totaled $91 billion in the first quarter, up 40% from the first quarter of 2005. "While we have seen a slowdown in refinancing activity, the purchase market where we are the leading lender remained historically strong," said Mark Oman, senior executive vice president in the Wells Home and Consumer Finance Group. "We also saw double-digit growth in our trillion-dollar owned servicing portfolio." The portfolio stood at $1.04 trillion as of March 31, up 24% from that of a year earlier. The company can be found online at http://www.wellsfargo.com.

Metrocities Mortgage LLC, a residential mortgage lender based in Sherman Oaks, Calif., and Keller Williams Realty Leaders have announced the formation of Metro Home Mortgage, a joint venture that will serve Indiana's Lake and Porter counties.Loan consultant Nicole Crist has joined the venture, based in Crown Point, Ind., to provide purchasers with access to more than 7,000 loan programs and in-house, "one-stop" real estate services and lending capabilities, the companies said. Metro Home will offer traditional and innovative loan programs, including interest-only, stated income/stated asset, and vacation/investment home financing. Metrocities can be found online at www.metrocitiesmtg.com, and Austin, Texas-based Keller Williams Realty International, the franchise parent of Keller Williams Realty Leaders, can be found at http://www.kw.com.