Originations

First BanCorp, San Juan, P.R., is delaying the filing of its Form 10-Q or the second quarter after its audit committee determined it should review the background and accounting for certain mortgage loans purchased between 2000 and 2005.The transactions to be reviewed involve the purchase of mortgage loans originated at other institutions by First BanCorp, parent of FirstBank Puerto Rico. First BanCorp had recorded the outstanding balances of these loans as mortgage loans receivable and the variable interest collected as interest income. It did not record any derivatives or interest only strips from these transactions. The audit committee wants to review the terms and conditions of the purchase contracts. The company does not know when the review will be completed and thus cannot predict when it will file the 10-Q for the quarter ended June 30, 2005. First BanCorp's website is http://www.firstbankpr.com.

The average interest rate on the 30-year fixed rate mortgage for the week ending Aug. 11, 2005 was seven basis points higher than it was the previous week and four basis points higher than the same week in 2004, according to the Freddie Mac Primary Mortgage Market Survey.For the period, the 30-year FRM had an average rate of 5.89%, compared with 5.82% the week before and 5.85% the year before. The 15-year FRM was at 5.47%, up from 5.38% the previous week. The one-year Treasury-indexed adjustable rate mortgage averaged 4.57% this week, up from last week when it averaged 4.47%. At this time last year, the one-year ARM averaged 4.08%. Meanwhile, five-year Treasury-indexed ARMs averaged 5.40%, up slightly from the previous week when it averaged 5.30%. Average points for the 30-year FRM were 50 BPs, for the 15-year FRM and five-year hybrid ARM 60 BPs and for the one-year ARM 70 BPs.Freddie Mac can be found online at http://www.freddiemac.com.

New Mexico State attorney general Patricia Madrid has sent letters to more than 150 subprime lenders to see if they have adopted consumer protections spelled out in a 2002 settlement with Household Finance International.Acting on behalf of the National Association of Attorneys General, AG Madrid said the "historic" Household settlement established new consumer protections for the subprime lending industry. "The information I have requested will help us determine if these consumer protection standards are being followed by the other members of subprime lending industry," she said. Ms. Madrid is vice chair of NAAG's subprime lending working group. The state AG wants lenders to spell out their policies and procedures to prevent abusive lending, including their compliance and monitoring efforts to ensure borrowers are not being charged excessive fees and points. "I believe it is in the best interests of borrowers and lenders that we all work together to eliminate predatory practices in the subprime lending industry. Your written response by Aug. 22, 2005 will be greatly appreciated," Ms. Madrid said in the July 18 letter. In October 2002, Household entered into a $484 million settlement with state regulators for overcharging loan customers and agreed to restrictions on its business practices. Household was later acquired by HSBC Holdings.

The Mortgage Bankers Association, Washington, reported in its Weekly Mortgage Applications Survey for the week ending Aug. 5 that the Market Composite Index - a measure of mortgage loan application volume - was 745.0, a decrease of 0.9% on a seasonally adjusted basis from 752.1 one week earlier.On an unadjusted basis, the Index decreased 1.3% compared with the previous week but was up 20.8% compared with the same week one year earlier. The seasonally-adjusted Purchase Index increased by 0.9% to 498.8 from 494.5 the previous week whereas the Refinance Index decreased by 3.3% to 2176.5 from 2250.3 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which decreased 0.7% to 1122.2 from 1130.1 the previous week, and the Government Index, which decreased 4.9% to 115.3 from 121.3 the previous week. The four-week moving average for the seasonally adjusted Market Index is down 1.5% to 763.1 from 774.9. However, the four-week moving average is up 0.5% to 491.8 from 489.3 for the Purchase Index while this average is down 3.9% to 2341.3 from 2435.8 for the Refinance Index. The refinance share of mortgage activity decreased to 40.9% of total applications from 41.7% the previous week. The adjustable-rate mortgage share of activity increased to 29.7% of total applications from 28.5% the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 5.91% from 5.83%, with points increasing to 1.24 from 1.16 (including the origination fee) for 80% loan-to-value ratio loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 5.49% from 5.41% one week earlier, with points increasing to 1.29 from 1.13 (including the origination fee) for 80% LTV loans. The average contract interest rate for one-year ARMs increased to 4.88% from 4.78% one week earlier, with points decreasing to 0.99 from 1.00 (including the origination fee) for 80% LTV loans.

Delinquencies on commercial mortgage-backed securities continued to decline in July, according to Fitch Ratings.Based on an index maintained by the rating agency, delinquencies on the securities dropped down to 1.07% in July, from 1.10% in June. In January, the index was at 1.27%, Fitch said. The industrial sector has seen a 12% decline in delinquencies, thanks to a resolution on six assets. The credit quality of seasoned CMBS transactions continues to improve as delinquencies decline and distressed assets are resolved quickly,” said Adam Fox, a Fitch Ratings director.

In just one year-and-a-half, housing prices nationwide have risen by 20% while community workers' wages remain flat, according to a study on homeownership and renting affordability in nearly 200 metropolitan areas and over 60 occupations."Paycheck to Paycheck: Wages and the Cost of Housing in America," a study released by the Center for Housing Policy, a research affiliate of the National Housing Conference, found that from fourth quarter 2003 to first quarter 2005 the cost of a median priced home increased from $186,000 to $225,000, or 20%. At the same time the annual income needed to qualify to purchase a home grew from $54,855 to $71,354. Meanwhile the wages for key community workers such as elementary school teachers, police officers, licensed practical nurses, retail salespersons and janitors in the majority of cities nationwide remained flat and, in some metropolitan areas, significantly below the amount needed to purchase a home.

Fitch Ratings, Chicago, has removed Fidelity National Financial Inc., Jacksonville, Fla., from its Rating Watch Negative status, and placed the company and its subsidiaries on a Stable Rating Outlook.The reason for the change was based on the company's plans to capitalize the spin-off of its title insurance business. During the third quarter, FNF will spin-off Fidelity National Title Group, maintaining an 82.5% interest while distributing the rest to its stockholders. The plans include FNT's assumption of $150 million in bank debt and $500 million in intercompany debt. After the spin-off, FNF will effectively have no debt and approximately $600 million in cash. Fitch said, "Consequently, future rating actions could potentially be influenced by acquisitions at FNF and added leverage."

Equity One, a North Miami Beach, Fla.-based retail real estate investment trust is looking at the prospect of acquiring Cedar Shopping Centers, Port Washington, N.Y., another retail REIT.In this connection, Equity One made a proposal to acquire Cedar for $17 per share last Thursday, which Cedar was not prepared to respond to by today’s deadline. In response to the offer, Cedar said, “Our Board is considering your proposal and we expect to have a response as promptly as practicable.” Equity One said that it also has “received no indication” that Cedar intends to withdraw a nine million share common stock offering that Cedar commenced on Aug. 3, which is a part of Equity One’s proposal. According to Equity One, “The nine million share offering will be highly dilutive to Cedar’s existing shareholders and is an expensive way to finance Cedar’s growth.” The Equity One offer provides a 14% premium to Cedar’s price prior to the offer, according to Equity One.

Vornado Realty Trust, Paramus, N.J., has priced the sale of 9.0 million shares of common stock in a public offering at $86.75 per share.Vornado said it has granted Citigroup Global Markets Inc., the sole underwriter, an option to buy up to an additional 1.35 million common shares to cover any overallotments.

The credit performance of alternative-A and subprime loans has improved over the past year and concerns about an "erosion" of underwriting standards may be misplaced, according to researchers at the investment banking firm Friedman Billings Ramsey & Co.An FBR report shows that serious delinquency rates on alt-A and subprime loans declined significantly over the 12 months ending in May and in a big majority of metropolitan statistical areas (262 out of 331). Based on the performance of nonagency securitized loans, serious delinquency rates on alt-A loans declined from 1.76% in May 2004 to 0.89% as of May 31 and on subprime loans from 6.67% to 5.37%. Michael Youngblood, FBR managing director of asset-backed securities research, attributes the credit performance to improving labor markets across most of the United States. "This is direct testimony to a strong economy and indirect testimony that there is no widespread erosion in underwriting criteria," Mr. Youngblood said. The report also identifies 58 MSAs in 16 states with persistently high serious delinquency rates.

Of the 7,000 case files opened every year by California's Department of Real Estate, more than half are resolved without any disciplinary action -- but some of the others are eye-openers, according to Real Estate Commissioner Jeff Davi.Of the 3,000 that are subject to disciplinary action, only one in four result in criminal charges, Mr. Davi said at the California Association of Mortgage Brokers Annual Convention in San Diego. But some of those cases are doozies, he said. "We get some amazing cases," said Mr. Davi, a Monterey realty broker appointed by Gov. Arnold Schwarzenegger last October to oversee the state's 428,000 real estate and mortgage licensees. "It's amazing what people do in this business." He told of one case in which an agent transposed a house number and ended up selling the wrong house. Then, to cover up the fiasco, the agent's husband, a mortgage broker, falsified tax returns so the buyer could purchase another house. On top of that, the couple forgot to pay the mortgage on the first house, which ended up in foreclosure. The department yanked both their licenses.

Homeowners in high-cost areas would save up to $750 million a year in interest if Fannie Mae and Freddie Mac could purchase their loans, according to a new report by the California Association of Mortgage Brokers that calls for the "equitable distribution" of the interest-rate subsidy afforded conventional loans because of the government-sponsored enterprises' government connection."Our association is calling for an end to what we believe is a policy that discriminates against working families based on the community they live in," said CAMB president John Marcell. The group is supporting a section of the House Financial Services Committee-passed GSE reform bill that -- in areas where the median home price exceeds the current conforming loan limit of $359,600 -- would raise the loan limit to the median home price or to 150% of the current limit, whichever is less. There is no similar provision in the measure under consideration in the Senate. The report says nearly a quarter-million more borrowers nationwide could qualify for the median-priced home in their communities if the GSE ceiling were raised. It also says almost 400,000 current owners are paying from $57 to $171 a month more in interest because their jumbo mortgages are priced at 25 to 50 basis points more than conforming loans. "Every taxpayer should have equal access to the government subsidies through Fannie Mae and Freddie Mac," said Michael Faust, chair of the CAMB's Government Affairs Committee.

Mortgage lenders and brokers added 10,500 full-time employees to their payrolls in June, according to a U.S. Bureau of Labor Statistics report released Aug. 5.The surge in hiring came as single-family originations spiked in the second quarter and the rate on the 30-year fixed-rate mortgage dipped below 5.5% in late June. The hiring activity also may reflect an improving commercial real estate sector. The July employment report shows that jobs in the mortgage banking/broker sector rose from 505,200 in May to 510,700 in June. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The July data will be released Sept. 2.) Friday's employment report shows that the U.S. economy generated 207,000 jobs in July and the unemployment rate remained unchanged at 5.0%. The stronger-than-expected jobs report also included an upward revision of new hires in May from 146,000 to 166,000.

The vast majority -- 89% -- of commercial real estate professionals are confident that business in the next six months will be at least as good as it was over the past six months, the first hopeful outlook from the industry in five years, according to a national survey by Black's Guide.The survey drew responses from nearly 1,000 CRE professionals in the online registered-user database of Black's Guide, a set of directories that provide data to the CRE industry. "The results of our first CRE Trends Survey demonstrate that the commercial real estate industry is experiencing signs of consistent growth after a sluggish five years," said Ed Barnes, vice president and general manager of Black's Guide. "CRE professionals are back into problem-solving mode ... looking for the kind of creative solutions and high-quality information that gets deals done." The New York-based company can be found online at http://www.blacksguide.com.

The typical American family's ability to buy a median-priced home decreased in the second quarter largely as a result of higher home prices, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 120.8, down from 133.2 in the first quarter and from 132.3 a year earlier. The latest index number means that the typical household in the United States had 120.8% of the income needed to purchase a home at the second quarter's median existing-home price, which was $208,500. "The strong rate of home price appreciation caused some erosion in affordability conditions, yet it hasn't dampened the market because the second quarter was a record for existing-home sales," NAR chief economist David Lereah said. The NAR can be found online at http://realtor.org.

Criimi Mae, a commercial mortgage lender based in Rockville, Md., has reported net income of $1.0 million ($0.06 per share) for the second quarter, compared with $18.1 million ($1.15 per share) for the second quarter of 2004."By capitalizing on improving conditions in the hotel sector and overall economy, our asset management group has significantly reduced the balance of specially serviced hotel loans since the beginning of 2005," said Barry Blattman, Criimi Mae's chairman and chief executive officer. Criimi Mae, a mortgage real estate investment trust, can be found online at http://www.criimimaeinc.com.

Paul J. Abbamonto has been named executive vice president and chief production officer of ResMAE, a wholesale specialty residential mortgage lender and servicer based in Brea, Calif.Mr. Abbamonto joined ResMAE in 2002 as executive vice president of wholesale production. He will now be in charge of commercial and correspondent lending (as well as wholesale lending), portfolio management, and loan servicing, the company said. ResMAE, which stands for Residential Mortgage Assistance Enterprise, can be found online at http://www.resmae.com.

The average 30-year fixed mortgage rate rose from 5.77% to 5.82% over the seven-day period ended Aug. 4, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.34% to 5.38%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.27% to 5.30%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.46% to 4.47%. Fees and points averaged 0.6 of a point for fixed-rate mortgages and 0.7 of a point for ARMs. "Long-term mortgage rates will more than likely rise over the next few months, albeit modestly compared to shorter-term rates," said Frank Nothaft, Freddie Mac's chief economist. "As the Federal Reserve increases its targeted overnight lending rate, home equity loans will become more costly." A year ago, the average 30-year and 15-year fixed rates were 5.99% and 5.40%, respectively, and the average one-year ARM rate was 4.08%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The class C notes of Ingress I Ltd., a collateralized debt obligation supported in part by residential and commercial mortgage-backed securities, has been downgraded from B-minus to CC by Fitch Ratings.Fitch also affirmed the ratings on three other classes in the CDO. The downgrade was attributed to the fact that the overcollateralization ratio of class B failed its required level on each payment date after Sept. 30, 2003, "causing the class C notes to capitalize missed interest payments of over $3.2 million." The CDO is backed by a static pool of asset-backed securities, RMBS, CMBS, and real estate investment trusts.

Class E of GMAC Commercial Mortgage Securities Inc. mortgage pass-through certificates, series 2000-FL-A, has been downgraded from AAA to AA-plus by Fitch Ratings.The class E certificate is insured by American International Specialty Lines Insurance Co., an indirect wholly owned subsidiary of American International Group Inc. The downgrade stemmed from the fact that the rating is dependent on the credit rating of AISLI, which was recently downgraded from AAA to AA-plus by Fitch.