Originations

Fitch Ratings has issued a correction regarding the downgrading of various class A insured notes in certain GMACCM transactions.The class A insured notes in GMACCM HealthFund I series 1999-1 and series 1999-2 have been downgraded from AAA to AA-plus. However, the class A insured notes of GMACCM Mortgage Trust I series 1999-A, 1999-B, 1999-C, 1999-D, 1999-E, 1999-F, and 1999-G have paid in full and their ratings have been withdrawn, Fitch said. The rating agency previously reported that these seven transactions had also been downgraded.

Two certificates from an Ameriquest asset-backed securitization deal issued in 2001 have been downgraded by Moody's Investors Service.Class M-2 of ABFC Mortgage Loan Asset-Backed Certificates, series 2001-AQ1, was downgraded from A2 to Baa3, and class B of the deal was downgraded from Ba2 to B2, Moody's reported. The classes were downgraded because credit enhancement levels are low given the projected losses on the underlying pools, the rating agency said. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," Moody's said. The deal consists of fixed-rate, first-lien subprime mortgage loans. The servicer and the originator on the transaction is Ameriquest Mortgage Co., and Litton Loan Servicing LP is the special servicer. Moody's can be found online at http://www.moodys.com.

Mercy Housing, a Denver-based not-for-profit affordable housing organization, has signed a letter of intent with Lakefront Supportive Housing, a Chicago-based nonprofit, to begin assessing the feasibility of acquiring Lakefront.The due diligence will be conducted on Lakefront's housing portfolio, its blended management model, and its corporate office, Mercy Housing said. "The opportunity of acquiring Lakefront, with its expertise in supportive housing, would strengthen our ability to provide a broader continuum of affordable housing products nationwide," said Chuck Wehrwein, regional president at Mercy Housing. The companies can be found online at http://www.mercyhousing.org and http://www.lakefront.org.

Originations of commercial and multifamily mortgage loans totaled $31.3 billion for the first quarter, up 39.6% compared with those of the first quarter of 2004, according to the Mortgage Bankers Association.The MBA said multifamily property loan originations jumped 62% compared with the volume in the first quarter of 2004; office property originations climbed 29% over the same period; industrial property originations saw a 31% gain; hotel and motel properties originations rose 96%; and retail property-backed originations were up 4%. However, originations of health care loans by mortgage bankers fell 4% from those of a year earlier, the mortgage bankers' trade association reported. "With these new record origination volumes, 2005 is setting a pace well above anything we've seen in the past," said MBA chief economist Doug Duncan. Multifamily properties remained the leading property type originated, at 37.5% of the total originations. The MBA can be found on the Web at http://www.mortgagebankers.org.

If enough people in the mortgage industry don't get behind the Ney-Kanjorski bill, it is unlikely to pass Congress this year despite its many positive aspects, according to Bob McKew, senior vice president and general counsel of the American Financial Services Association.Mortgage brokers, the secondary market, and the bond market and securities associations need to back the bill, which would establish national lending standards, Mr. McKew said at the Subprime Lending Symposium in Las Vegas. "I don't see the momentum that is needed by all sectors for it to push through," Mr. McKew said. "There is a long road to go before federal pre-emption happens in this area." Loretta Salzano, a partner with Franzen & Salzano PC, said her clients, many of which are national lenders, make sure to comply with different state predatory lending laws, even though they are pre-empted by the Office of the Comptroller of the Currency. "Wholesale lenders, brokers -- they follow these laws, too," she said. "Very few engage in high-cost lending. There is a stigma attached with that, and lenders understand the reputation risk associated with it." The bottom line, said Bill Smith, general counsel of Option One Mortgage Corp., a subprime lender, is that dealing with the patchwork of predatory lending laws in different states is costly and burdensome for lenders. "I'm going to say the Ney-Kanjorski bill will pass," he declared.

David H. Stevens, the man in charge of sales for Freddie Mac, has left the mortgage giant for one of its largest customers, Wells Fargo Home Mortgage, San Francisco, MortgageWire has learned.A spokesman for Freddie Mac confirmed that Mr. Stevens had left the government-sponsored enterprise. He said Mr. Stevens will head the correspondent division of Wells Fargo Home Mortgage. In May 2003 Freddie Mac named Mr. Stevens to lead its national lending division. At the time he was senior vice president and general manager of the company's community lending division.

The chief executive, the chief operating officer, and the head of human resources have left the Lehman Brothers-owned Finance America, a top-20-ranked subprime lender, MortgageWire has learned.Three sources close to the company confirmed the departures. Two wholesale account executives were also let go, a source confirmed. However, Lehman Brothers declined to comment on the record or to identify the fired executives. The Lehman unit, which table-funds most of its production through loan brokers, employs about 1,000 in 48 states. Besides FA, Lehman controls two other mortgage companies: Aurora Loan Services of Colorado, and BNC Mortgage, Irvine, Calif.

Equus Resources Inc., Atlanta, has announced the launch of the Genesis Program, under which the company will work with churches and community groups to educate their members about alternative mortgage and insurance programs that can help them restructure their finances.The goal is to reduce monthly mortgage payments to enable families to obtain additional services, such as health or disability insurance or a college savings plan, the company said. Genesis includes first-time homeowner mortgage programs and downpayment assistance, credit repair programs, interest-only mortgages, and other public and private financial programs, Equus said. The first Genesis Program is scheduled for June 13 at a church community near Atlanta.

Regulatory scrutiny is the No. 1 challenge when it comes to retail marketing in the subprime market, according to Shayne Cardwell, vice president of strategic solutions at DWC Solutions, Boca Raton, Fla.In California, where there is a huge subprime market, it can take more than two months to get a direct letter reviewed by regulators before it can be mailed to consumers, he said. "The time it takes to get out is getting longer and longer," Mr. Cardwell told the 2nd Annual Subprime Symposium in Las Vegas, sponsored by National Mortgage News and Origination News. "It's the guys in the middle, not the top or the bottom, who need to find their niche. Know your target audience." Forrest Young, vice president of marketing at Houston-based Aegis Lending, said lenders must mitigate the risk associated with the national do-not-call regulations. In five years, the do-not-call list is expected to include five million members, he said. "Build and maintain an in-house database," Mr. Young told the symposium. "Scrub your external and internal lists weekly and every 90 days. Evaluate your loan officers, and make sure they are licensed to do business in certain states."

In order to control profitability growth, it is important for lenders to manage expenses and product quality, according to panelists at the 2nd Annual Subprime Symposium in Las Vegas, sponsored by National Mortgage News and Origination News.Together, the companies on the panel -- Option One Mortgage, First Franklin Financial, Centex Home Equity, and Accredited Home Lenders -- reported a total of $18.2 billion in originations for the first quarter. Growth in origination volumes has caused dramatic margin compression in the past year, the speakers said. Given the growing appetite for products in the nonprime sector, the broker community is developing products that challenge risk portfolios. "You have to have enough data before you roll out new products," said John Vella, chief sales manager at Irvine, Calif.-based Option One. "Lenders in the subprime market will continue to do well if they stick with what's made them successful. Don't be over-conservative, but don't just grow for the sake of growing." Joe McKone, chief operations officer at San Jose, Calif.-based First Franklin, said his company is focusing on infrastructure and the back end of its operations plan. "We are focusing on less and getting more done," Mr. McKone said. "Think about how much you can realistically get done. Prioritize." Option One can be found online at http://www.oomc.com, and First Franklin can be found at http://www.ff.com.

DiamondRock Hospitality Co., Bethesda, Md., a company that invests in "upscale" hotel properties, is planning an initial public offering of 26.087 million shares of its common stock.In the prospectus on the offer, which has not yet been declared effective by the Securities and Exchange Commission, the company says it expects shares to be priced in the $10.50 to $12.50 range. DiamondRock, which has opted for real estate investment trust status, said it plans to get its shares listed on the New York Stock Exchange. About 1.3 million shares of the offering are to be sold directly to Marriott, the hotel company, with whom DiamondRock has an "investment sourcing relationship." DiamondRock commenced operations in July 2004, after making a private offering of common stock, the company said.

The average 30-year fixed mortgage rate fell from 5.77% to 5.71% over the seven-day period ending May 19, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.33% to 5.27%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.21% to 5.07%, while the average rate for one-year Treasury-indexed ARMs rose from 4.23% to 4.26%. Fees and points averaged 0.7 of a point for all four mortgage categories. "It is remarkable how mortgage rates have remained so low for so long," said Frank Nothaft, Freddie Mac's chief economist. "But as long as inflation is held in check, there is little or no pressure to push mortgage rates higher. And at the moment, despite high fuel prices, core inflation does indeed seem to be a nonevent." 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 3.99%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Federal Reserve Board governor Edward Gramlich has announced he is resigning effective Aug. 31 to pursue several teaching and research interests.Mr. Gramlich, 65, has served on the board since November 1997 and has played key roles in pushing through major changes to the Fed's Home Ownership and Equity Protection Act and Home Mortgage Disclosure Act regulations. His efforts increased the number of high-cost subprime loans subject to HOEPA restrictions and required lenders to provide pricing data on high-cost loans as part of their annual HMDA reports. Prior to joining the Fed, Mr. Gramlich was dean of Michigan University's School of Public Policy.

CitiFinancial has announced that it will eliminate mandatory arbitration provisions on real-estate-secured loans later this year and reduce its maximum prepayment penalty.The new mandatory arbitration policy will begin with loans originated after August 2005, the company said. The elimination of such provisions has been a goal of consumer groups. CitiFinancial said the new maximum prepayment penalty will be limited to 3% of the loan amount in the first year, 2% in the second year, and 1% in the third year. The new policies were highlighted by Citi along with Sen. Paul Sarbanes, D-Md., the Leadership Conference on Civil Rights, Self Help Credit Union, the Center for Responsible Lending, and the AARP. Sen. Sarbanes said the new steps "place CitiFinancial in a leadership position in raising lending standards in the consumer finance mortgage industry." Chris Hansen, associate executive director of the AARP, commended Citi and said eliminating mandatory arbitration provisions "will help restore fairness and balance to the lender/homebuyer relationship, and sets a good precedent for the industry."

Nearly a quarter of the website visitors responding to a poll by KB Home said they bought a home in the first six months of their marriage, according to the Los Angeles-based homebuilder.The company said its inaugural KB Poll drew more than 5,000 responses. Asked how long they were married before they bought a home, 24.2% of the respondents said it was less than six months, 13.1% said six months to a year, 22.7% said one to two years, 18.0% said three to five years, and 22.0% said more than five years, KB Home reported. The company can be found online at http://www.kbhome.com.

Three classes of Salomon Brothers Mortgage Securities VII Inc. asset-backed pass-through certificates have been downgraded by Fitch Ratings.The downgrades -- to classes from Salomon Home Equity Loan Trust transactions -- were as follows: series 2001-1 group 1, class MF-2, from BB-minus to B-minus; series 2001-1 group 2, class MV-4, from BBB to BBB-minus; and series 2002-CB3, class B-3, from BB to B. In addition, the ratings on 11 classes in the deal were affirmed. Fitch attributed the downgrades to concerns about the adequacy of credit enhancement for the remaining bonds.

The A-minus insurer financial-strength ratings of Fidelity National Financial Inc.'s title insurance underwriting subsidiaries have been placed on Rating Watch Negative by Fitch Ratings.FNF's BBB-minus long-term issuer rating has also been placed on Rating Watch Negative. The rating actions followed the announcement that FNF plans to partially spin off its title operations and that a new title insurance holding company will borrow $500 million from a new bank facility and pay a special dividend to FNF. Fitch said the watchlist placements reflect the increased financial leverage at the title insurance operations and FNF overall. The company's restructuring followed the recent recapitalization of FNF and Fidelity National Information Services, in which FNIS raised capital through a bank facility and paid a large dividend to FNF. Fitch said its primary concern is with the "increasing willingness" of the non-FNIS entities to leverage the consolidated balance sheet. The rating agency can be found online at http://www.fitchratings.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 781.0 to 699.2 on a seasonally adjusted basis during the week ended May 13, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 10.4% on the week but were up 6.7% from their level a year earlier. The Purchase Index fell from 526.2 to 469.3 on a seasonally adjusted basis, while the Refinance Index declined from 2263.3 to 2036.7. Refinancings represented 39.3% of total applications, up from 39.2% the previous week, while adjustable-rate mortgages accounted for 33.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.77% to 5.73%, and points (including the origination fee) decreased from 1.25 to 1.17 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Class BF of Bear Stearns Asset Backed Securities Inc., series 1999-2, has been placed under review for possible downgrade by Moody's Investors Service.Moody's attributed the watchlist placement to credit enhancement levels that "may be low given the current projected losses on the underlying pools." The transaction has suffered "significant" losses that have gradually eroded the overcollateralization, the rating agency said. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans that have multiple originators, including ContiMortgage Corp., Amresco Residential Mortgage Corp., and Provident Funding Associates LP.

Class M4 (the most subordinate class) of Ameriquest Mortgage Securities Inc., series 2002-3, has been placed under review for possible downgrade by Moody's Investors Service.The review was prompted by credit enhancement levels that were deemed low in view of projected losses on the underlying pool, Moody's said. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," the rating agency said. Moody's also placed under review for possible upgrade 27 certificates from 11 Ameriquest deals originated by backed by first lien adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.