Originations

Existing-home sales rose 2.7% in June to a monthly record pace of 7.3 million, while prices for single-family homes and condominiums rose nearly 15% from the levels of a year ago, according to the National Association of Realtors.The housing market is "hot," NAR chief economist David Lereah told reporters. "There is very strong demand for housing," he said, and the inventory of unsold homes remains tight. Sales of existing single-family homes rose 2.4% to a record seasonally adjusted annual rate of 6.37 million in June from 6.22 million in May, while resales of condos and cooperatives rose 4.5% to a record 960,000 pace. The NAR chief economist said he expects sales to slow in the coming months, which should take some pressure off prices. Prices jumped 14.7% over the past 12 months, nearly reaching the record of 15.6% set in Novembers 1980. "I just can't see us sustaining the levels I just announced today," Mr. Lereah said. "We are going to have to come off those somewhat." The NAR can be found online at http://www.realtor.org.

Digital Realty Trust Inc., San Francisco, has priced concurrent public offerings of approximately 5.1 million shares of common stock at $17.80 per share and of 2.2 million shares of preferred stock at $25 per share.The series B cumulative redeemable preferred stock bears an interest rate of 7.875%. Digital, which owns, acquires, and manages technology-related real estate, said it has granted the underwriters an option to buy up to 765,768 additional shares of common stock and up to 330,000 shares of the preferred stock to cover any overallotments. Citigroup and Merrill Lynch & Co. are the joint book-running managers for the common stock offering and, together with UBS Investment Bank, for the preferred stock offering. The company can be found online at http://www.digitalrealtytrust.com.

Freddie Mac has announced that its "Homeownership: Let the TRUTH Move You" campaign has been launched in Birmingham, Ala., to help debunk misconceptions that stop many African-Americans and Latinos from considering buying a house.The campaign, which was unveiled in April in Los Angeles, is being co-sponsored in Birmingham by the Birmingham Urban League and AmSouth, a regional bank holding company. "It's critically important for us to get the right information about homebuying into our communities," said Elaine S. Jackson, president and chief executive officer of the Birmingham Urban League. "Buying a home can be intimidating, and knowing what information to trust can be challenging." Freddie Mac said its research has found that it is widely believed among Latinos and African-Americans that they need a 20% downpayment to buy a home and nearly perfect credit to get a loan. The campaign will provide information about all aspects of homeownership through a series of one-hour educational sessions in English and Spanish. Freddie Mac can be found online at http://www.freddiemac.com, and AmSouth can be found at http://www.amsouth.com.

MEM Financial Solutions, a mortgage brokerage based in the Albany suburb of Halfmoon, N.Y., has announced the acquisition of Land Research Solutions Inc., a title company located in Clifton Park, N.Y.The terms of the transaction were not disclosed. MEM Financial said Land Research's Charlotte Freeman and Bonnie Van Alphen have 55 years of combined experience in the mortgage and title industries. Land Research's predecessor company, Integrity Title Co., recorded gross earnings of $801,000 last year, a 78% increase from its earnings in 2003, according to MEM Financial. The company can be found online at http://memfinancialsolutions.com.

The National Association of Mortgage Brokers would like to see outside testing applied to any final revision of the Real Estate Settlement and Procedures Act introduced by the Department of Housing and Urban Development, says the group's president, Jim Nabors.Speaking at the annual convention of the Florida Association of Mortgage Brokers in Kissimmee, Fla., Mr. Nabors said such testing should be done before the rule goes into effect and should be like the testing done by the Federal Trade Commission on the rule HUD ended up withdrawing last year. During his brief remarks, Mr. Nabors noted that the NAMB was one of three groups that HUD invited to all six roundtables (three in Washington and three small-business meetings being held across the nation), a fact he termed "pretty impressive." Nothing is close to being finalized, he said, adding that he believes HUD is "keeping an open mind." Regarding packaging of services, which the NAMB opposes, Mr. Nabors said it is too new a concept to be made law under RESPA reform.

Blue Financial, a mortgage banker based in Phoenix, is offering a free mortgage loan through August to any firefighter in Arizona as a way of saying "thank you" for their performance in a recent massive wildfire.Hal Jolley, president of Blue Financial, said the firefighters have done "an outstanding job" of containing the 248,000-acre Cave Creek Complex fire, which was ignited on June 21 by lightning. "As a salute to the good work, we are offering any firefighter throughout the entire state of Arizona a free 30-year conforming mortgage with absolutely no points, or lender fees whatsoever in the months of July and August," Mr. Jolley said. "Firefighters simply need to present their fire credentials at the time of application to receive this special thank-you."

Time Lending California Inc., Orange, Calif., has announced its intention to acquire 51% of Nationwide Security Mortgage Corp. for approximately $1 million in a stock-for-stock exchange transaction.Time Lending is a direct mail marketer for mortgage companies via its Signature Marketing division. Nationwide Security is a privately held California corporation. "Nationwide Security Mortgage is a natural fit, because Nationwide has been a mail client for three years and has a unique niche with high growth potential," said Michael F. Pope, president of Time Lending.

An Australian home loan program that combines a mortgage and a full-service checking account has been introduced in the United States by CMG Mortgage Inc., a wholesale mortgage bank based in San Ramon, Calif.The CMG Homeownership Accelerator is based on a fast-growing Australian model used by nearly a third of the homeowners in that country, the company said. "Homeowners deposit their paychecks directly into the new line of credit mortgage account, and they write all of their expenses out of the mortgage as well," CMG said. "While they are not using their money, it reduces their daily loan balance, on which interest is computed." The company said this can save tens of thousands of dollars in interest over the life of the loan, enabling borrowers to build equity faster and own their home sooner without changing their monthly budget. But the loan program is "not for everyone," CMG vice president of marketing Doug Nesbit cautioned. "You need to have positive cash flow and be disciplined about your use of equity," he said. The holding company for CMG, CMG Financial Services, can be found online at http://www.cmgfs.com.

Downgrades on commercial mortgage-backed securities deals in the second quarter hit the lowest quarterly level since the fourth quarter of 2001, according to Standard & Poor's.This has been aided by investor interest in CMBS securities that resulted in investors' "funneling capital into performing as well as underperforming and speculative properties," as well as "a historically low CMBS delinquency rate," according to S&P analysts Roy Chun and Larry Kay. Delinquencies on CMBS fell to 0.93% in the second quarter, a level last seen in 2000, S&P said. There were 22 downgrades on CMBS in the second quarter, down from 43 in the first quarter and an average of 41 per quarter last year, the rating agency said. There were also 153 CMBS upgrades last quarter, up from 99 in the last quarter of 2004. The rating agency said it expects the positive upgrade performance to continue.

The issuance volume of U.S. commercial mortgage-backed securities is likely to reach a new record this year, due to low interest rates, high liquidity, and strong underlying real estate fundamentals, according to a credit analyst with Standard & Poor's Ratings Services.Kim Diamond, a managing director in S&P's Structured Finance Ratings Group, said CMBS issuance in 2005 may exceed $100 billion "by a fairly significant amount." (U.S. CMBS issuance totaled more than $90 billion in 2004.) Ms. Diamond said U.S. CMBS has been one of the best-performing fixed-income sectors for the past two years. The performance of the CMBS market's underlying commercial mortgage collateral has improved due to the recent recovery of the U.S. economy, according to Ms. Diamond. Credit analyst Roy Chun, a managing director in S&P's Structured Finance Surveillance Group, said the rating performance of the CMBS sector "is expected to remain strong for the rest of the year as property markets continue to improve and real estate remains an attractive investment vehicle." S&P can be found online at http://www.standardandpoors.com.

Fidelity National Financial Inc., Jacksonville, Fla., has announced a $13.3 million settlement with the California Department of Insurance in connection with its inquiry into the company's captive reinsurance practices.Under the terms of the settlement, FNF will refund approximately $7.7 million to consumers whose California property was subject to a captive reinsurance arrangement, the company reported. FNF will also pay a $5.6 million penalty, although the settlement includes the company's denial of any wrongdoing. "We will work informally with the department on issues of mutual interest to minimize the possibility of future misunderstandings regarding acceptable market conduct," said Peter T. Sadowski, FNF's executive vice president and general counsel. The company can be found online at http://www.fnf.com.

Washington Mutual Inc., Seattle, has reported earnings of $844 million ($0.95 per share) for the second quarter, up 73% from $489 million ($0.55 per share) a year earlier.Net income for the home loans business segment (which excludes purchased specialty mortgage finance and Long Beach Mortgage Co.) totaled $209 million in the second quarter, compared with $242 million in the first quarter and a loss of $59 million in the second quarter of 2004, WaMu said. Originations of home loans totaled $44.86 billion for the quarter, up from $38.50 billion in the first quarter but down from $56.22 billion a year earlier. "A year ago we acknowledged our challenges in integrating our mortgage banking acquisitions effectively into our operations and enhancing the risk management of our mortgage servicing asset," said Kerry Killinger, WaMu's chairman and chief executive officer. "I said we would face those challenges head on and build a mortgage team that is one of the industry's best. I am proud to say that we have done exactly that, and after four consecutive quarters of solid performance, our Home Loans Group is now positioned for growth." WaMu can be found online at http://www.wamu.com.

The average 30-year fixed mortgage rate rose from 5.66% to 5.73% over the seven-day period ended July 21, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.25% to 5.32%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.15% to 5.26%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.39% to 4.42%. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.6 of a point for one-year ARMs. "As the one-year ARM reaches its highest interest rate level in almost three years, it comes as no surprise that the ARM share, based on number of applications for a mortgage, has fallen noticeably since the beginning of June," said Frank Nothaft, Freddie Mac's chief economist. "And even though long-term rates rose for the third consecutive week, they still remain below 6% -- still relatively close to the phenomenally low rates we experienced in June of 2003." A year ago, the average 30-year and 15-year fixed rates were 5.98% and 5.39%, respectively, and the average one-year ARM rate was 4.12%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

InterFirst Wholesale Mortgage Lending, Ann Arbor, Mich., has announced the introduction of DreamFirst, a product line aimed at low- to moderate-income borrowers and those in underserved markets, such as immigrants.The company touted the new line as making affordable mortgages available at conforming mortgage prices, thereby protecting borrowers from predatory lending practices. Features include a higher debt-to-income ratio allowance, manual underwriting on "cautioned" or "referred" loans, and the acceptance of cash for a downpayment. "DreamFirst offers mortgage brokers an opportunity to grow their business, especially with those customers that are first-time homebuyers and borrowers with limited credit and limited funds to close," said Fran Clemens, InterFirst's senior vice president of emerging markets. InterFirst, a division of ABN Amro Mortgage Group, can be found online at http://www.interfirst.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 791.9 to 801.1 on a seasonally adjusted basis during the week ended July 15, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 26.5% on the week and were up 28.6% from the level recorded a year earlier. The Purchase Index fell from 489.0 to 488.7 on a seasonally adjusted basis, while the Refinance Index climbed from 2554.3 to 2618.2. The four-week moving average for the Purchase Index rose 0.5%, from 491.7 to 494.0, and the four-week moving average for the Refinance Index rose 0.4%, from 2611.7 to 2622.5. (The moving averages are a recent addition to the MBA survey.) Refinancings represented 45.7% of total applications, up from 45.1% the previous week, while adjustable-rate mortgages accounted for 28.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.62% to 5.72%, and points (including the origination fee) decreased from 1.26 to 1.14 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

It is likely that the federal government will extend the Terrorism Risk Insurance Act for only one year, according to Lisa Pendergast, managing director for CMBS strategy at RBS Greenwich Capital, Greenwich, Conn.Speaking at a media gathering organized by the firm in New York City, Ms. Pendergast said the government expects the industry to figure out some kind of private insurance market, for which there are models in some countries such as the United Kingdom. She said she expects two major rating agencies, Moody's Investors Service and Fitch Ratings, to be slower to downgrade bonds this time around for a lack of terrorism insurance. "A one-year extension does not buy a lot of time," Ms. Pendergast noted. Another current issue she cited is "froth in underwriting" of commercial mortgage loans. This is seen in the form of highly leveraged loans, higher interest-only use, and fewer structural protections for commercial mortgage-backed securities deals.

Class E of GMAC Commercial Mortgage Securities Inc. variable-rate mortgage pass-through certificates, series 2000-FL-A, has been downgraded from Aa1 to Aa2 by Moody's Investors Service.Class E remains on review for further possible downgrade. It is insured by American International Specialty Lines Insurance Co., whose insurance financial strength rating was downgraded by Moody's from Aa1 to Aa2. AIS remains on review for possible downgrade pending the filing of amended financial statements with state regulatory authorities, the rating agency said. Moody's can be found on the Web at http://www.moodys.com.

Most consumers do not understand the importance of a credit score, how it is determined, or the steps one can take to improve it, according to the GMAC Mortgage Second Quarter Consumer Survey.The survey found that 62% of respondents didn't know that a score above 620 out of 850 is needed to obtain the most favorable mortgage rate, and only 42% knew that payment history is a critical element in arriving at a credit score. "Potential homebuyers should not view credit ratings as a last step in the home financing process," said Paul Fein, senior vice president and Southeast divisional manager at GMAC Mortgage. "Credit scores are essential to the mortgage lending process, and it's important that homebuyers start evaluating their credit scores early in the process so they can get above the 620 mark before their formal application is processed." The company can be found online at http://www.gmacmortgage.com.

Wells Fargo & Co., the nation's second-largest mortgage servicer, has reported record net income of $1.91 billion ($1.12 per share) for the second quarter, despite a significant revenue decline at Wells Fargo Home Mortgage related to the impairment of mortgage servicing rights.The profits were up 11% from $1.71 billion ($1.00 per share) a year earlier. Mortgage originations in the community banking segment totaled $85 billion in the second quarter, an increase of $20 billion from the level recorded in the first quarter, but down from $96 billion a year earlier, the company said. But Home Mortgage revenue declined $559 million, or 42%, from that of a year earlier due partly to a $304 million MSR impairment charge, Wells Fargo reported. The company's mortgage servicing portfolio totaled $874 billion of home loans as of June 30, up 17% from that of a year earlier. The MSR asset was valued at $8.5 billion, or $1.12% of loans serviced for others, compared with $8.5 billion and 1.37% as of June 30, 2004, according to Wells Fargo. The San Francisco-based company can be found online at http://www.wellsfargo.com.

Single-family housing starts fell slightly in June to a seasonally adjusted annual rate of just over 2 million units, according to government figures released Tuesday.However, compared with those of the same month a year ago, single-family starts rose 9.2%. Multifamily starts (five units or more) rose 16.2% in June from the previous month to 302,000 units annualized, compared with 275,000 units in June 2004. Greenwich Capital analyst Steve Stanley said the figures show that housing demand is "torrid rather than scalding," adding that "the bottom line is that the housing sector is still extremely strong and will presumably remain so as long as the demographic/fundamental demand forces are positive and mortgage rates are extremely low by historical standards."