Originations

Fidelity National Financial Inc., Jacksonville, Fla., has announced the formation of a board of directors for Fidelity National Title Group that it says will allow FNF to "truly operate as a holding company."William P. Foley II, FNF's chairman and chief executive officer, will be chairman of the FNT board, and FNF board members Willie Davis, John Farrell, Phil Heasley, Bill Imparato, Don Koll, Gen. William Lyon, and Frank Willey will move from the FNF board to FNT's. FNF said it will initially have majority ownership stakes in FNT and Fidelity National Information Services and 100% ownership of its specialty insurance business. "As a holding company, FNF will have the flexibility to make investments in other lines of business that it feels will allow it to best achieve its ultimate goal of maximizing FNF shareholder value," Mr. Foley said. The company can be found online at http://www.fnf.com.

IndyMac Bancorp Inc., Pasadena, Calif., has reported record mortgage loan volume and record net earnings of $83.1 million ($1.26 per share) for the second quarter, compared with pro forma net earnings of $54.6 million ($0.90 per share) a year earlier.(IndyMac earned $23.0 million, or $0.38 per share, in the second quarter of 2004 under generally accepted accounting principles. The difference between pro forma and GAAP earnings in 2004 was related to a Securities and Exchange Commission staff accounting bulletin that took effect April 1, 2004, IndyMac said.) IndyMac's mortgage loan production totaled a record $14.2 billion in the second quarter, up 51% from that of a year earlier, the company said. Richard H. Wohl, IndyMac Bank's newly appointed president, said the bank boosted its mortgage market share to 1.82%, a 56% year-over-year increase. "A significant portion of this increase was driven by our re-entry into the correspondent and conduit channels, which contributed 35%, and our new reverse mortgage company, Financial Freedom, which contributed 13%," Mr. Wohl said.

The housing market remained strong in June and early July, but several Federal Reserve district banks reported that a few hot markets are cooling."Residential real estate activity remained robust overall but showed a few signs of cooling in some districts," the Federal Reserve's Beige Book says. Home price appreciation has moved from "hot" to "normal" in Massachusetts, and housing inventories in New England have become "somewhat less tight," according to the Boston Federal Reserve Bank. "In the Richmond, Atlanta and San Francisco districts housing activity remained strong but eased in a few markets that had been especially hot markets -- Washington, D.C., several Florida markets and parts of southern California," the Beige Book says. The New York district bank reported that the condominium market in Manhattan is "less frenzied" than in the spring and that "housing inflation" slowed in New Jersey.

Freddie Mac has added a 5/1 hybrid ARM to its line of low-downpayment mortgage products called "Home Possible" that are designed for low- and moderate-income borrowers.The secondary-market company also announced that it has lowered the mortgage insurance coverage levels on Home Possible loans to make them more affordable. Freddie rolled out the Home Possible initiative in March with 7/1 and 10/1 hybrid adjustable-rate mortgages. Now it is adding the 5/1 ARM. "We are already changing it in response to customer feedback," Freddie Mac spokesman Brad German said. The mortgage giant also adjusted its policy on credit scores. Starting Sept. 18, Loan Prospector will process loan applications where only one of the borrowers in the transaction has a "usable" credit score. "This new feature in Loan Prospector will assist sellers in meeting the needs of borrowers who have little or no credit established," Freddie says in a July 26 industry letter.

The average 30-year fixed mortgage rate rose from 5.73% to 5.77% over the seven-day period ended July 28, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.32% to 5.34%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.26% to 5.27%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.42% to 4.46%. (The last time the one-year ARM rate was higher was the week ended July 19, 2002, when it averaged 4.50%, according to Freddie Mac.) Fees and points averaged 0.5 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "Although inching upwards, the average 30-year fixed-rate mortgage rate for the month of July was lower than the annual averages since our survey began in 1971," said Frank Nothaft, Freddie Mac's chief economist. "And the most recent figures for housing sales are reflective of these low interest rates in the mortgage industry." A year ago, the average 30-year and 15-year fixed rates were 6.08% and 5.49%, respectively, and the average one-year ARM rate was 4.17%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Standard & Poor's has announced that Vornado Realty Trust, a New York-based real estate investment trust, will replace SunGard Data Systems Inc. in its benchmark S&P 500 Index after the close of trading on a date to be announced.The reason for the change is that SunGard is being bought out by a private equity consortium. Vornado owns a diverse group of properties, including retail properties in the Northeast and office buildings in New York City, as well as interests in Alexander's Inc. and a cold-storage company, S&P said. S&P can be found on the Web at http://www.standardandpoors.com.

AFL-CIO and the city of Chicago have launched a $750 million initiative designed to generate affordable housing and boost economic development in the area over the next five years.The new Chicago Community Investment Plan will be operated in conjunction with the AFL-CIO Investment Program, which consists of the Housing Investment Trust and Building Investment Trust initiatives. Jointly, the funding is expected to leverage over $1 billion in total investments in the Chicago projects. Chicago Mayor Richard Daley said the new investment plan is compatible with his $19 billion affordable housing agenda, which aims to create, preserve, and assist 48,000 housing units in Chicago by 2008. "Labor has stepped up to the plate in a big way for our wonderful city," he said.

The risk of price declines over the next two years has increased in 36 of the nation's 50 largest housing markets, according to the latest PMI U.S. Market Risk Index.PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index, said markets with a greater than 50% chance of such price declines are Boston-Quincy (Mass.), at 553; Nassau-Suffolk (N.Y.), at 540; San Diego-Carlsbad-San Marcos (Calif.), at 528; San Jose-Sunnyvale-Santa Clara (Calif.), at 513; Santa Ana-Anaheim-Irvine (Calif.), at 512; and Oakland-Fremont-Hayward (Calif.), at 509. The index values mean, for example, that Boston has a 55.3% probability of experiencing a home price decline in the next two years. "The latest PMI Market Risk Index numbers show that house price risk continues to be concentrated along the coasts, as it has been for some time," said Mark Milner, chief risk officer of PMI Mortgage Insurance. "But what we are seeing with these numbers is that risk has increased in many noncoastal markets as well." PMI can be found online at http://www.pmigroup.com.

Rejecting claims that strong state predatory-lending laws reduce the availability of credit, the Center for Responsible Lending in Washington, D.C., has estimated that the cost of complying with such laws is only about $1 per mortgage.In contrast, predatory mortgage lending costs homeowners $9.1 billion every year, the report says. Since 1999, about 24 states have enacted laws to prevent predatory lending. According to the report, states with predatory-lending laws have had stronger growth than states without them. Between 2000 and 2003, subprime mortgage lending grew by 293% in states that have passed predatory-lending laws, compared with 212% in states without them. The CRL report maintains that compliance programs and automated systems help lenders avoid foreclosure costs while boosting confidence among investors and customers. The CRL said predatory-lending laws boost profits because they prevent time-consuming, expensive foreclosures. Last year, foreclosed loans cost lenders an average of more than $20,000 per loan, the report says. "It is clear that strong state laws against predatory lending are working," said Debbie Goldstein, executive vice president of the CRL. "Subprime lenders continue to thrive in those states."

Twenty congressmen, including nine Republicans, are urging the Federal Reserve Board to collect more Home Mortgage Disclosure Act data, such as credit scores and loan-to-value ratios, to determine whether subprime lenders are treating borrowers fairly.In a letter to the Fed, the congressmen note that the Fed has improved its data collection and that the release of the aggregated 2004 HMDA data this September should provide a "better understanding" of whether unfair disparities exist in the subprime market. "At the same time, we are aware that the data provided under the HMDA, despite recent enhancements, may still be inadequate for analysis of how borrower risk and choice influence prices or whether low-income and minority borrowers are treated equitably," the letter says. Additional information, such as LTV and debt-to-income ratios, is "vital for understanding if there are elements of unlawful discrimination in the subprime market," it says.

The Market Composite Index, an overall measure of mortgage applications, fell from 801.1 to 754.3 on a seasonally adjusted basis during the week ended July 22, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 5.6% on the week but were up 20.7% from the level recorded a year earlier. The Purchase Index fell from 488.7 to 485.1 on a seasonally adjusted basis, while the Refinance Index declined from 2618.2 to 2320.3. The four-week moving average for the Purchase Index fell 0.4%, from 494.0 to 492.2, and the comparable average for the Refinance Index fell 2.3%, from 2622.5 to 2562.0. Refinancings represented 42.9% of total applications, down from 45.7% the previous week, while adjustable-rate mortgages accounted for 29.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages was unchanged, at 5.72%, and points (including the origination fee) increased from 1.14 to 1.31 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

New single-family home sales jumped 4% in June to set new monthly and quarterly sales records thanks to upward revisions in the April and May sales numbers.The U.S. Census Bureau reported that new-home sales rose from a seasonally adjusted annual rate of 1.32 million in May to 1.37 million in June. For the second quarter, sales of new homes hit a record seasonally adjusted annual rate of 1.33 million. June and second-quarter results are "way beyond expectations," said Michael Carliner, an economist at the National Association of Home Builders. NAHB economists were expecting sales to top last year's record by 3.5%. Now, they will have to revise that estimate upward, Mr. Carliner said.

Two classes of certificates issued by Delta Funding Home Equity Loan Trust have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are: series 1998-2, class B-1A; and series 2000-3, class B. Both transactions are primarily backed by first-lien adjustable- and fixed-rate subprime mortgage loans. The rating actions were attributed to diminishing credit enhancement levels relative to the projected losses on the underlying pools. "The 2000-3 transaction, in particular, has experienced rapid deterioration of overcollateralization in recent months," Moody's said. The rating agency can be found online at http://www.moodys.com.

IStar Financial, a New York-based commercial real estate financing company, has reported net income of $94.5 million ($0.83 per share) for the second quarter, compared with $97.3 million ($0.87 per share) for the second quarter of 2004.During the second quarter, iStar closed 23 new financing commitments totaling $1.0 billion, 64% of which represented first mortgages, first-mortgage participations, and corporate tenant lease transactions, the company said. "We continue to see high levels of liquidity in the commercial real estate market, as evidenced by the level of repayments we experienced during the second quarter and first quarter of this year," said Jay Sugarman, iStar's chairman and chief executive officer. He also sees additional growth opportunities for the company "from natural extensions of our loan and lease portfolio businesses." In the second quarter, iStar added additional funding capacity by increasing the limit on its universal shelf registration statement to $5.0 billion.

Fannie Mae has announced multifamily investments of $11.8 billion for the first half of 2005.Fannie Mae said more than 92% of the multifamily units it financed were affordable to families at or below the median income in their communities. More than 60% of the multifamily units were reserved for tenants who fall in the low- and very-low-income categories, Fannie Mae reported. The government-sponsored enterprise said it committed $564 million in multifamily equity investments that qualify for the federal Low Income Housing Tax Credit. The GSE can be found online at http://www.fanniemae.com.

GSC Partners, an investment adviser with offices in New York, London, Los Angeles, and Florham Park, N.J., has announced the formation of GSC Capital Corp., a real estate investment trust.The new REIT will invest in real-estate-related securities, whole-loan mortgages, bank loans, corporate loans, and other asset-backed securities, the company said, and will use structured financing techniques aimed at mitigating interest rate risks. Deutsche Bank Securities was the sole underwriter for the offering, which consisted of approximately $100 million of equity and $100 million of convertible debt. GSC Partners can be found online at http://www.gscpartners.com.

Radian Guaranty Inc, Philadelphia, has introduced SplitEdge, a product that lets homebuilders reduce a homebuyer's monthly mortgage insurance payment.Homebuyers with less than a 20% downpayment typically purchase mortgage insurance in monthly installments in order to secure a mortgage loan. With SplitEdge, homebuilders can offer a one-time, refundable upfront MI payment -- which can be 0.75%, 1.00%, or 1.25% of the mortgage loan -- that significantly lowers monthly MI installments, Radian said. "For homebuyers, this creative mortgage insurance product eliminates the potential risk of balloon payments associated with other mortgage loan options such as 80-10-10s and 80-20s, known as piggyback loans," said Doug Rossbach, Radian's senior vice president for strategic initiatives. "We're also helping borrowers save money on the interest paid over the life of a piggyback." SplitEdge is designed for homebuyers who are buying new construction, have a zero to low downpayment, have average or above-average credit, and are looking for ways to lower their monthly payments, the company said. Radian can be found online at http://www.radian.biz.

Countrywide Financial Corp., Calabasas, Calif., has reported consolidated net earnings of $566 million ($0.92 per share) for the second quarter, down 28% from $786 million ($1.29 per share) in the second quarter of last year.Pretax earnings by the company's mortgage banking operations totaled $526 million, down from $1.0 billion a year earlier. However, loan production in the mortgage banking segment increased to $101.15 billion, compared with $78.75 billion in the first quarter and $88.49 billion a year earlier, Countrywide reported. "Production sector margins decreased from 93 basis points for loans produced in the first quarter of 2005 to 40 basis points in the second quarter as a result of various factors," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. "These include lower pricing margins in prime and nonprime loans; a shift in channel mix toward the lower-margin correspondent channel; and ... the decision to increase loan retention during the second quarter." Countrywide's mortgage servicing portfolio stood at a record $964 billion as of June 30, a 33% increase from that of a year earlier. The company can be found online at http://www.countrywide.com.

The governor of Illinois has signed into law a House bill, strongly opposed by the mortgage industry, to establish a predatory-lending database pilot program in Cook County.The database will be designed to receive and store specific loan-related information gathered from brokers, originators, credit counselors, title insurance companies, and closing agents. Within 10 days of taking a mortgage application, the originator will have to provide certain information to the database. The Department of Financial and Professional Regulation will have seven days to determine whether the borrower will be required to undergo mandatory HUD-certified credit counseling, with costs paid by the originator. Before the mortgage is closed, the title company must enter further information into the database, which will then create a certificate of compliance. Although Gov. Rod Blagojevich says the legislation will "save neighborhoods" by enabling homebuyers to make informed decisions, professionals such as Terry Bivins, president of the Illinois Association of Mortgage Brokers, says the bill is onerous and will hurt statewide operations. "The Division of Banks and Real Estate is turning the government into an underwriter," said Mr. Bivins. "They don't have enough employees to process the loans in the system now. It's unprecedented that the government is trying to make counseling mandatory and have the private sector pay for it."

1st Metropolitan Mortgage, Charlotte, N.C., has announced the acquisition of 48 retail mortgage branches of Olympia Funding, Pleasanton, Calif., for an undisclosed amount.The acquired branches, which will become MetroBranches, will have access to 1st Metropolitan's back-office operations, including branch support and its preferred lender program, 1st Metro said. Olympia Funding, which specialized in servicing first-time homebuyers and borrowers with credit problems, will continue as a wholesale lender in 10 states and as a contract processing firm for other mortgage brokers, 1st Metro said. (According to a survey by Broker magazine, Origination News, and National Mortgage News, Olympia Funding was the second-largest mortgage brokerage firm in the country in 2004, and 1st Metro was the fourth-largest. The survey results will be published in the August issue of Broker.) 1st Metro, a division of Empire Equity Group, can be found on the Web at http://www.1stmetro.com.