Originations

To expand its wholesale lending initiative and help its originators price loans more efficiently, Chicago-based Guaranteed Rate has picked MortgageHub's LoanFactory decisioning, product, and pricing engine and Wholesale Internet Lending applications.Conshohocken, Pa.-based MortgageHub offers a Web services platform to deliver Internet-based systems for wholesale, retail, and servicing functions. Guaranteed Rate will use the wholesale system to start serving 100 brokers immediately, with the intention of expanding to 500 by year-end, the company said. The MortgageHub wholesale system offers to eliminate costly paper, fax and phone communications between wholesaler and broker. Guaranteed Rate can be found online at http://www.guaranteedrate.com.

ERS Group, Knoxville, Tenn., has announced the release of software tools to help financial services firms determine their regulatory compliance guidelines under various pieces of mortgage-related federal legislation.The Web-based RiskExec is designed to help financial firms improve productivity by reducing their data management burdens and enhancing communication among their compliance team members, the company said. It consists of software tools "developed specifically for financial services firms and their management teams covering [Home Mortgage Disclosure Act, Community Reinvestment Act], and high-cost loan analyses," said Cary Collins, a principal at ERS Group. "We help clients better manage regulatory and compliance risks by monitoring their ongoing lending processes and by providing appropriate compliance and executive-level reporting on these processes." The company, a subsidiary of Dallas-based SourceCorp, can be found online at http://www.ersgroup.com.

An unsustainable "credit bubble" has developed in the United States and the United Kingdom in recent years that has left the housing markets in both nations vulnerable, according to new research from Research and Markets, Dublin, Ireland.The report contends that a "massive" build-up of debt in the United States and the United Kingdom has "badly corrupted" the economies of both countries and could have seriously destabilizing results. Among the findings of the report are that the Federal Reserve's "easy money" response to the technology bubble in 2000 has created a "global housing bubble" that has pushed mortgage debt to "dangerously high" levels. "Homeowners, consumers, and financial markets will all feel the consequences of the bubble bursting, though whether the outcome is renewed inflation or deflation cannot yet be foretold," Research and Markets said. Edward Chancellor is the author of the report, titled "Crunch Timer for Credit? An Inquiry into the State of the Credit System in the United States and Great Britain." The company can be found online at http://www.researchandmarkets.com.

While there is "some validity" to the notion that the country's Asian population resides in California, is wealthy, and mainly Chinese, Asian-Americans represent a "tremendous opportunity" for mortgage makers all across America, according to panelists at the National Association of Mortgage Brokers' annual convention in Minneapolis.Sandy Wood of Bank of America said Asians have an "ingrained aversion to debt," so they tend to make at least a 20% downpayment and pay off their mortgages as quickly as possible. But John Wong of the Asian Real Estate Association of America warned against labeling Asians as one uniform market, saying that "many different generational qualities" are at play. Whereas new immigrants shop for the lowest rate "because that's all they know," he explained, "they may be willing to pay a higher rate or mortgage insurance in order to own a home" if they knew they could. Craig Nickerson of Freddie Mac argued that Asians tend to have a view of ownership that is "fundamentally different" from that of most other nationalities. While many other ethnic groups use homeownership to build wealth and perhaps start a business, he said, new but unpublished Freddie Mac research has found that people of Vietnamese, Chinese, and Korean descent tend to start a business first so they can accumulate enough money to buy a house.

Originating a stated-income loan may hold greater liability for an originator than a no-documentation loan, an attorney indicated at the National Association of Mortgage Brokers' annual meeting.When asked whether this was the case, Bob Simpson, president and chief executive of mortgage fraud recovery firm Investors Mortgage Asset Recovery Co., said he believed that this perception was "right on the money." Mr. Simpson gave a presentation on mortgage fraud misrepresentations and liability in a session sponsored by IMARC equity shareholder AIG United Guaranty. Other market participants who spoke on, or were asked about, stated-income loans at separate sessions also indicated that there are greater concerns in the industry about the products than for others that might be presumed to have higher risk levels, such as no-doc and interest-only loans. But NAMB officials -- who voiced some of these concerns -- also noted that, while some such negatives exist when it comes to new products, they also have their merits. Every new loan product has helped some segment of the population, said Bob Armbruster, the departing NAMB president.

Mortgage brokers are growing increasingly concerned about state laws that give consumers the ability to place a freeze on their credit files.Allowing people to block creditors from viewing their credit histories is seen as a way to protect the privacy of consumers and guard against identity theft. But officials of the National Association of Mortgage Brokers warned at their annual convention in Minneapolis that legitimate lenders will be unable to generate credit scores for borrowers who freeze their files, and that could hinder their ability to buy their favorite house or obtain a preferential interest rate. "Most Realtors insist on formal credit approval with 10 days, but we don't have 10 days if we have to fiddle" with unfreezing a file, said Pleasanton, Calif., broker Ginny Ferguson, an expert on credit scoring. Assuming a borrower even remembers he froze his credit files or can find his PIN, it can take five days or more just to "thaw" a file, Ms. Ferguson said. And if the consumer can't find his ID number, the process can take much longer. Just two states -- California and Texas -- allow their citizens to block access to their credit files, but similar laws will soon become effective in Vermont, Louisiana, and Washington, and dozens of other states are considering legislation. But Ms. Ferguson said well-meaning lawmakers "don't understand the mechanics of what they are trying to do." Rather than protect consumers, she said, the laws will only serve to "gum up the works."

Ellie Mae Inc., Dublin, Calif., has announced that its insurance subsidiary, Ellie Mae Insurance Services LLC, will offer mortgage brokers an "innovative, transactional-based" errors-and-omissions policy.Under the agreement, Ellie Mae Insurance will provide new E&O coverage that is billed on a transactional, or loan-by-loan, basis. Unlike traditional coverage, which Ellie Mae said many brokers find too cumbersome and too costly, the new product will allow for an instant one-time online approval and "pay-as-you-go" pricing. It was developed in conjunction with the member companies of American International Group Inc., an insurance industry giant. "We are looking to protect originators and raise the level of compliance in our industry," said Sig Anderman, chief executive officer of Ellie Mae. "This new E&O product protects all of the stakeholders in the mortgage origination transaction. Furthermore, it offers convenient online underwriting and approval, and enables mortgage brokers to pay as they go." The product is scheduled to be released to mortgage brokers on Aug. 1. Ellie Mae, a provider of software and services for the mortgage industry, can be found online at http://www.elliemae.com.

The foreclosure of a single-family home, especially one that leaves the home vacant and unsecured, may generate municipal costs in excess of $30,000, according to a new study by the Joint Center for Housing Studies at Harvard University.In addition, area homeowners, business owners, and landlords stand to lose "if a rash of foreclosures brings down property prices, accelerating the decline of an entire neighborhood," the study says. Entitled "Collateral Damage: The Municipal Impact of Today's Mortgage Foreclosure Boom," the report was conducted by William Apgar, a senior scholar at the Joint Center, and Mark Duda, a research fellow there. It was funded by the Minneapolis-based Homeownership Preservation Foundation. "Foreclosures are on the rise across the country -- especially foreclosures of higher-risk nonprime mortgages," said Mr. Apgar, a former commissioner of the Federal Housing Administration. The report concludes that serious delinquencies and foreclosures for nonprime loans can be 10 times higher than for prime loans. The study urges that government, the mortgage industry, and community leaders work together to support grassroots efforts to help homeowners facing foreclosure; reduce the incidence of poorly underwritten or fraudulent loans; and encourage industry participants to "pay their fair share" of foreclosure-related costs.

In his final session as president of the National Association of Mortgage Brokers, Bob Armbruster said raising the visibility and stature of the organization and laying the foundation for self-management were among the few things he tried to accomplish in his short time as head of the group.Addressing the situation between Congress and the government-sponsored enterprises, Mr. Armbruster told attendees at the group's annual convention in Minneapolis that "there is nothing wrong with the mortgage delivery system." The NAMB continues to support the GSEs in their fight, he said because Fannie Mae and Freddie Mac play an integral role in the housing system. Mr. Armbruster wrapped up his speech by saying "the era of Bob is over and the era of Jim begins," referring to incoming NAMB president Jim Nabors. He added: "It has been a blast."

The newly elected president of the National Association of Mortgage Brokers, Ohio broker Jim Nabors, wants to add a little cultural diversity to the 27,000-member association. "We don't have enough minority or women members," he said at the NAMB's annual convention in Minneapolis. Mr. Nabors, who describes himself as a "blue-collar guy living a white-collar life," said he intends to reach out to the National Association of Hispanic Real Estate Professionals and the National Association of Professional Mortgage Women. "We've had very little contact" with the two groups, "but we have a lot in common with them," he said. "We need to take advantage of that." Mr. Nabors also wants to expand his group's educational programs, including classes aimed at Capitol Hill staffers and consumer advocates. "The more they understand what we do, the less problems we will run into," he told a press briefing at the convention. "'You know what you've heard, now here's what we really do'." Other objectives are to persuade the Federal Housing Administration to give loan brokers a direct interface with its automated underwriting software, and to allow originators to buy surety bonds rather than submit audited financial statements to demonstrate financial integrity.

Nearly year-old federal wage-and-hour regulations regarding overtime, an issue that wasn't even on the National Association of Mortgage Brokers' radar screen 12 months ago, have emerged as a top priority for the 27,000-member group.The rules, if violated, call for fines that association officials say could force small mom-and-pop loan originators to close their doors and leave borrowers hanging. "We'd like to see a total exemption if possible," outgoing NAMB president Bob Armbruster said at the group's annual convention in Minneapolis. Absent that, the NAMB is asking for guidance from the Labor Department about how to comply with the rules. "When the law was created, the mortgage broker business wasn't even in existence yet," Mr. Armbruster said during a press briefing. "The people who put mom-and-pop brokerages in business, the so-called attorneys and financial planners, never advised us that we had to comply with overtime rules." Noting that loan officers don't follow any particular work pattern -- some operate out of their homes and never come to the office, while others work the phones and never leave their offices -- the NAMB officer said his members need help in determining how to adhere to the wage-and-hour rules.

Losses are rising for U.S. commercial mortgage-backed securities, a trend that is likely to continue as a result of loan seasoning and growing CMBS volume, according to Fitch Ratings' latest CMBS Loss Study.However, Fitch also reported that delinquencies for CMBS declined from 1.20% in April to a new low of 1.13% in May, the sharpest drop in a year. Regarding CMBS losses, the rating agency said loss severities have remained stable, rising only slightly from 40.1% in 2003 to 40.8% in 2004. "Historically, severities have remained close to 40%, and Fitch does not expect this to change," said Britt Johnson, a Fitch director. Meanwhile, delinquencies declined among all properties in May. The largest decline of 9.77% occurred in hotels and was attributable to 11 trust liquidations of real estate owned, Fitch reported. Fitch can be found online at http://www.fitchratings.com.

In case the Terrorism Risk Insurance Act is not renewed this year, Fitch Ratings plans to look more closely at fusion deals, according to Fitch managing director Daniel Chambers, who was a panelist at the Commercial Mortgage Securities Association's annual convention in New York.Mr. Chambers said he believes there is less likelihood of force-placement of terrorism insurance coverage because some loan documents now have caps in place on the cost of insurance that has to be taken out. Stacey Berger, executive vice president of Midland Loan Services, is seeing more flexibility in loan documents. Although there will be "constraints on the availability of insurance," he said he expects the market to stabilize over time. "The question is, will the transition be relatively benign?" Mr. Berger noted. The litigation that servicers have been involved in since 9/11 relating to force-placement of terrorism insurance has clearly put them "in a better place," according to Mr. Berger. Tricia Hall, a senior vice president at Lehman Brothers, also agreed that loan documents are "dictating what to do" since 9/11.

Home price growth has "slowed considerably" in recent months, and this should allay fears of a widespread housing "bubble," according to New York-based Deloitte Research."There has been much discussion recently about a housing bubble, but the truth is that home price appreciation has slowed considerably in the past three months," said Carl Steidtmann, Deloitte Research's chief economist and the author of its monthly Leading Index of Consumer Spending. "The time to talk about a bubble was last December." The company said real median home prices rose only 1.8% during February, March, and April from their levels of a year earlier. Deloitte Research is a subsidiary of Deloitte Consulting LLP, an associated partnership of Deloitte & Touche USA LLP. Deloitte & Touche USA is a member firm of Deloitte Touche Tohmatsu, a Swiss association, which can be found online at http://www.deloitte.com.

Freddie Mac is extending to all its mortgage products the benefits of using employer financial assistance as a source of funds.Freddie Mac said its new Employer Assisted Homeownership Benefits policy is expected to make tens of millions of dollars in additional conventional mortgages available to working families across the country. Previously, these benefits could only be used with the company's affordable mortgage products, such as Freddie Mac's Home Possible mortgages. Freddie said the change is expected to help more borrowers take advantage of an array of financial benefits offered by employers, including grants, unsecured loans, and secured secondary financing that can supplement a downpayment, closing costs, financing costs, or pre-paids and escrows. The new policy was crafted so lenders and employers with housing benefit programs can help more working families achieve homeownership with Freddie Mac mortgage products regardless of borrower income or the location of the property, the government-sponsored enterprise said. Now, secured and unsecured loans from employers can be used as a source of funds for a part of the downpayments and for closing costs, escrows/prepaids, and financing costs. Freddie Mac can be found online at http://www.freddiemac.com.

Class F of LBCommercial Conduit Mortgage Trust's multiclass pass-through certificates, series 1995-C2, has been downgraded from B-plus to B-minus by Fitch Ratings.Fitch also affirmed the AA rating on class E of the transaction. The downgrade was attributed to expected losses on two of the three specially serviced loans in the pool, both of which are real estate owned. The REO assets (30% of the pool) are secured by full-service hotels in Fort Worth, Texas, and losses are expected on both of them, Fitch said. "The pool has become more concentrated by loan size and property type, with the top five loans representing 75% of the pool and hotels representing 98%," the rating agency said.

The Mortgage Bankers Association has announced the leadership of its 2006 Commercial Real Estate/Multifamily Finance Board of Governors, which focuses on commercial/multifamily real estate finance policy issues and initiatives.The COMBOG officers are: Kieran Quinn, president and chief executive officer of Atlanta-based Column Financial, chair; Ed Hurley, managing director of Charlotte, N.C.-based Wachovia Securities, vice chair; and Ed Padilla, CEO of Minnesota-based NorthMarq Capital Inc., vice chair. The MBA also announced the nomination of Mr. Quinn as its vice chair-elect. He will be elected by MBA members at the association's annual convention in October. The MBA can be found online at http://www.mortgagebankers.org.

The average 30-year fixed mortgage rate fell from 5.62% to 5.56% over the seven-day period ending June 9, its lowest point since April 1, 2004, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.20% to 5.14%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages fell from 5.07% to 5.01%, and the average rate for one-year Treasury-indexed ARMs declined from 4.26% to 4.21%. Fees and points averaged 0.5 of a point for 15-year fixed-rate mortgages and five-year hybrid ARMs, 0.6 of a point for 30-year FRMs, and 0.7 of a point for one-year ARMs. "The May employment report came in at less than half of what was expected last month, which pushed bond yields -- and mortgage rates -- down further," said Frank Nothaft, Freddie Mac's chief economist. "Consequently, markets are now speculating whether the [Federal Reserve Board] will continue raising rates at the same pace that it has been, or ... begin to moderate the frequency of its actions." A year ago, the average 30-year and 15-year fixed rates were 6.30% and 5.67%, respectively, and the average one-year ARM rate was 4.14%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Thornburg Mortgage Inc., Santa Fe, N.M., has priced a follow-on offering of 4.0 million shares of common stock at $30.80 per share.The offering raised net proceeds of $117.3 million, Thornburg reported. The book-running lead manager was Citigroup Global Markets Inc., and A.G. Edwards & Sons, Piper Jaffray & Co., RBC Capital Markets Corp., and Flagstone Securities LLC were the co-managers. Thornburg has granted the underwriters a 30-day option to purchase up to 600,000 additional shares to cover any overallotments. The company can be found online at http://www.thornburgmortgage.com.

The ratings on three classes of Bear Stearns Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates, series 2001-TOP2, have been lowered by Standard & Poor's Ratings Services.The downgrades were as follows: class G, from BB-plus to BB; class H, from BB-negative to B-plus; and class J, from B-plus to B. The certificates remain on CreditWatch with negative implications. S&P attributed the downgrades to "pending interest shortfalls due to approximately $565,000 of litigation expenses related to the 1601 McCarthy litigation that will be recovered from the trust beginning with the next payment date in June." Any additional shortfalls related to pending litigation may result in further rating actions, S&P said. The rating agency can be found online at http://www.standardandpoors.com.