Originations

John Taylor, president of the National Community Reinvestment Coalition, says it is "shameful" that the OCC is attempting to block the New York attorney general's civil rights investigation of discriminatory lending practices."This is a perverse use of federal regulatory authority," he said. The Office of the Comptroller of the Currency has filed suit against Attorney General Eliot Spitzer, seeking a declaratory judgment and preliminary injunction to prevent him from interfering in the OCC's fair-lending supervision at national banks. Mr. Spitzer said it is "unconscionable that the OCC would help the banks it regulates draft litigation to shield them from reasoned enforcement of consumer protection …" He said the evidence from leading banks has shown a significant racial disparity that could violate state civil rights law, which his office is responsible for enforcing. In a complaint filed in U.S. District Court for the Southern District of New York, the OCC is asking to permanently prohibit Spitzer from inspecting the records of any national bank or its operating subsidiaries. Last month, his civil rights bureau began a probe into the lending practices of at least four national banks to determine through Home Mortgage Disclosure Act data whether discriminatory lending practices have been used in the interest rates and fees charged on mortgage loans.

Three certificates from two asset-backed transactions issued by Long Beach Mortgage Co. in 2002 have been placed under review for possible downgrade by Moody's Investors Service.The affected Long Beach Mortgage Loan Trust asset-backed certificates are as follows: class M-3 of series 2002-1, and classes M4A and M4B of series 2002-2. The rating actions were attributed to credit enhancement levels that may be low given the projected losses on the underlying pools. "The transactions have taken significant losses, causing gradual erosion of the overcollateralization," Moody's said. "In addition, the severity of loss on the liquidated loans has begun to increase due to a higher concentration of manufactured housing loans." The transactions are backed primarily by first-lien adjustable- and fixed-rate subprime mortgage loans originated by Long Beach. Moody's can be found online at http://www.moodys.com.

Three classes of DLJ Commercial Mortgage Corp. commercial mortgage pass-through certificates, series 1999-CG3, have been downgraded by Fitch Ratings.The downgrades were as follows: class B-7, from B to B-minus; class B-8, from B-minus to CC; and class C, from CC to C. In addition, Fitch upgraded seven classes in the deal and affirmed the ratings on seven others. The rating agency attributed the downgrades to increased loss expectations for six specially serviced loans. "Losses are expected to completely deplete the class C and D certificates and significantly reduce the balance of the class B-8 certificates," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Lenders' ability to offer more-flexible loan products has made increased minority homeownership possible, and curbing such programs would be counterproductive, according to James Ballentine of the American Bankers Association.In a speech June 15 at the ABA Regulatory Compliance Conference, Mr. Ballentine cited reports based on Home Mortgage Disclosure Act data that show a connection between risk-based pricing and higher rates of minority homeownership. "Risk-based pricing and flexible loan contracts have created more access to credit, but limiting these programs would damage the very borrowers that fair-lending statutes were intended to help," said Mr. Ballentine, director of grassroots and community outreach for the ABA. He cited a recent white paper by Michael Staten, a Georgetown University professor, that found a link between the emergence of the subprime market in the 1990s and the rise in the homeownership rate. Mr. Ballentine said statistics from the Federal Financial Institutions Examination Council indicate that from 1993 to 2003, home mortgages rose 357% for Hispanics, 206% for African-Americans, and 192% for Asians. The ABA can be found online at http://www.aba.com.

Class E of LB Commercial Conduit Mortgage Trust II's commercial pass-through certificates, series 1996-C2, has been removed from Rating Watch Negative by Fitch Ratings.The class had been placed on Rating Watch Negative in December due to expected interest shortfalls from the recovery of servicer advances. "Since December 2004, four real-estate-owned assets have been liquidated from the transaction," Fitch reported. "Liquidation proceeds have been sufficient to repay servicing advances without the need for interest shortfalls."

Four classes of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2000-UP1, class B-5, from CCC to CC; and series 2001-UP2 group 2, class BV-3, from BBB to BBB-minus; class BV-4, from B-plus to CCC; and class BV-5, from CCC to CC. In addition, Fitch upgraded six classes and affirmed the ratings on 23 classes from three Salomon deals. Fitch attributed the downgrades to poor collateral performance and the deterioration of asset quality beyond original expectations. The rating agency can be found online at http://www.fitchratings.com.

New Century Financial Corp., a real estate investment trust based in Irvine, Calif., has priced a public offering of 4.2 million shares of 9.125% series A cumulative redeemable preferred stock at $25 per share.The sole book-running manager of the offering is Bear, Stearns & Co., and the co-managers are Deutsche Bank; Piper Jaffray; Stifel, Nicolaus & Co.; JMP Securities; and Roth Capital Partners. The underwriters have been granted an option to buy up to 630,000 additional shares of the stock to cover any overallotments. New Century, the parent company of New Century Mortgage Corp. and Home 123 Corp., can be found on the Web at http://www.ncen.com.

CB Richard Ellis, Los Angeles, has formed CBRE Realty Finance, a company that will invest in commercial real estate-related loans and securities.CBRE RF, in which CBRE has about a 5% stake, has raised $300 million through a private placement of 20 million shares of common stock with institutional and "accredited" investors, according to CBRE. The new company will focus on originating, acquiring, investing in, financing, and managing a diversified portfolio of commercial real estate loans and securities, and will "leverage" the investments to produce attractive risk-adjusted return, CBRE said. Keith Gollenberg, a managing director with L.J. Melody, will be chief executive officer and president of CBRE RF. The new company is expected to benefit from CBRE's "local market intelligence" and L.J. Melody's "access to origination channels."

Wells Real Estate Funds, Atlanta, has reported what it says it believes to be a record distribution of net proceeds from the sale of 27 office and industrial properties to more than 120,000 investors in Wells Real Estate Investment Trust Inc.The distribution, equal to $1.62 per share, represented Wells REIT's portion of the April sale. The company said it is believed to be the largest single distribution of capital to investors in the history of nontraded REITs. The portfolio, which included properties wholly or jointly owned by Wells REIT, was sold to Lexington Corporate Properties Trust, New York, for $786 million. Wells Real Estate Funds can be found online at http://www.wellsref.com.

Melville, N.Y.-based American Brokers Conduit has launched a website that offers mortgage brokers a new set of tools and resources that allow them to manage the loan process online from locking to pipeline status.In addition, marketing materials can be individually customized for brokers to use for customer retention purposes, the company said. ABC, the wholesale division of American Home Mortgage Investment Corp., a mortgage real estate investment trust, is the 13th-largest mortgage wholesaler lender in the nation. At the end of the first quarter, ABC had a network of over 8,000 wholesale brokers, an increase of over 40% since the end of the fourth quarter and up from 2,839 brokers at the beginning of 2004. The new website can be found at http://www.abconduit.com.

The average 30-year fixed mortgage rate rose from 5.56% to 5.63% over the seven-day period ending June 16, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.14% to 5.22%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.01% to 5.10%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.21% to 4.25%. Fees and points averaged 0.5 of a point for fixed-rate mortgages and five-year hybrid ARMs and 0.7 of a point for one-year ARMs. "Although the 30-year mortgage rate ticked up this week, which wasn't completely unexpected, it is still below last year's annual average and well below where it was at this time last year," said Frank Nothaft, Freddie Mac's chief economist. "Driven by low mortgage rates, recently released single-family housing starts for May continued to advance." A year ago, the average 30-year and 15-year fixed rates were 6.32% and 5.70%, respectively, and the average one-year ARM rate was 4.13%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Rep. Bob Ney, R-Ohio, wants to conduct a subcommittee mark-up of his bipartisan predatory-lending bill before the August recess, and he is working with some Democrats to broker a compromise.Congressman Ney is "looking to mark up the bill sometime in July," a congressional staffer told a reverse mortgage association. Other sources said Rep. Ney wants to mark up the bill that he drafted with Rep. Paul Kanjorski, D-Pa., before Congress leaves for the August recess, but it is not set in stone yet. The Ney-Kanjorski bill (H.R. 1295) has 37 co-sponsors, including 15 Democrats. However, more Democrats and consumer groups favor an alternative bill (H.R. 1182), co-sponsored by North Carolina Democrats Brad Miller and Mel Watt, that is modeled after a North Carolina predatory-lending law. Rep. Gregory Meeks, D-N.Y., recently told a Mortgage Bankers Association conference that Rep. Ney has approached him about brokering a compromise between the two bills. Rep. Meeks is a co-sponsor of the Ney-Kanjorski bill. However, Rep. Miller has not been part of this effort. "We'd better get cracking if we're going to work out a consensus bill in less than a month," Rep. Miller told MortgageWire.

Single-family housing starts rose 4.7% in May to a seasonally adjusted annual rate of 1.70 million from a downwardly revised April rate of 1.63 million.The U.S. Census Bureau also reported that single-family starts in May were up 3.3% from a seasonally adjusted annual rate of 1.65 million in May 2004. The National Association of Home Builders said its latest survey shows that homebuilders are more confident now than they've been all year. "In the past four weeks, the average rate on a 30-year mortgage declined 21 basis points, ending at 5.56% as of June 9," said NAHB chief economist David Seiders. "Combined with the very solid appreciation rates we've seen, and the widespread expectation that mortgage rates will begin creeping up soon, that's a powerful incentive to make a move." The Census Bureau also reported that multifamily starts dropped 19.1% in May, to 266,000 units.

Fannie Mae is not purchasing 40-year amortizing mortgages with 30-year terms, according to the company. MortgageWire incorrectly reported June 1 that Fannie-approved lenders can offer borrowers a 30-year term (balloon) loan with a 40-year amortization schedule.

Mortgage Benefits Corp., Redwood City, Calif., has announced an agreement with Work & Family Benefits Inc., Parsippany, N.J., to bundle MBC's MortgageChoice Plan on WFB's My Life Values platform.Under the My Money section of the WFB platform, members will be able to access the no-cost MortgageChoice Plan (a group mortgage benefit offered through employer benefit packages) to buy, sell, and finance homes through a members-only group plan that offers a choice of providers, loan products, and group discounted pricing. MBC can be found online at http://www.mortgageplans.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 755.5 to 887.0 on a seasonally adjusted basis during the week ended June 10, partly on the strength of a record high in the Purchase Index, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 29.2% on the week and were up 46.1% from the level recorded a year earlier. The Purchase Index rose from 479.3 to a record high of 529.3 on a seasonally adjusted basis, while the Refinance Index climbed from 2362.1 to 2967.4. "This week there was a combination of record-setting purchase activity as well as a substantial pickup in refinance applications, with the Refinance Index at its highest level since April 2004," said Michael Fratantoni, senior director of single-family research and economics. Refinancings represented 46.4% of total applications, up from 42.9% the previous week, while adjustable-rate mortgages accounted for 30.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.55% to 5.62%, and points (including the origination fee) increased from 1.12 to 1.25 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

The message from a panel on title insurance joint ventures was simple: Do not overlook Real Estate Settlement Procedures Act regulations and assume you will not get caught.The panel at the National Association of Mortgage Brokers annual convention in Minneapolis was put on by representatives of Title Alliance Ltd., which is part of First American Title Insurance Co. Patti DeGennaro, chief operating officer of Title Alliance, said the Department of Housing and Urban Development has 16 investigations going on right now regarding sham affiliated business arrangements. Recently, the agency entered into a settlement in Tulsa, Okla., over a joint venture that the regulator alleged was really a kickback scheme. Title Advantage's chief executive Bill Cotter said partner selection is the key to joint venture success. Look for "character, commitment, and capacity," he advised. In the area of commitment, the partner needs to be committed to the joint venture first, not his own operation, Mr. Cotter said. The partner has to have the capacity to provide such things as benefits and human resource services, as well as the capacity to provide business reports to the originator partner.

The Senate has confirmed Brian Montgomery to be an assistant secretary at the Department of Housing and Urban Development and the new housing commissioner.As the new Federal Housing Administration commissioner, Mr. Montgomery is expected to start a marketing campaign to boost homebuyer awareness of the FHA single-family program as an alternative to subprime loans. He previously served in the White House as a deputy assistant to the president. Former FHA Commissioner John Weicher left HUD at the end of April. In other personnel news, Armando Falcon, former director of the Office of Federal Housing Enterprise Oversight, has joined the Canonbury Group, a London-based financial consulting firm, as a principal. Mr. Falcon is establishing a Washington D.C. office for the firm, which advises professional investors and senior business managers on government policies and political risks.

The Department of Housing and Urban Development has set up a special unit to conduct large-scale investigations of discriminatory pricing practices by mortgage lenders.This unit is analyzing 2004 Home Mortgage Disclosure Act data of certain lenders, and it is using testers to see how borrowers are treated, according to Bryan Greene of HUD's fair housing office. Mr. Greene told a HMDA conference that HUD is working with the Department of Justice and the federal banking regulators. However, HUD is prepared to initiate its own investigations of bank and nonbank mortgage lenders. "We are ramping up," Mr. Greene told the HMDA conference, sponsored by the American Conference Institute.

SLS Investments, Beverly Hills, Calif., has announced the formation of a Real Estate Investment Banking Group and an International Real Estate Advisory and Consulting Group.Bryan Shaffer, president and managing partner of SLS Investments, said the new groups were formed in response to queries from several institutions and pension funds seeking more information about global real estate markets. "Our new groups will enable our clients to access very specialized equity and debt financing as well as having direct access to our international expertise and contacts," he said. The company can be found online at http://www.slsinvestments.com.