Originations

Existing-home sales rose 1% in March to 6.89 million units on an annualized basis, matching the third-highest reading on record, according to figures compiled by the National Association of Realtors.The trade group said overall "economic improvements" are aiding the housing market. The NAR credited historically low mortgage rates and gains in employment for the strong performance. "There's no question there is a strong demand for housing from a growing population," said NAR chief economist David Lereah. Greenwich Capital analyst Steve Stanley noted that demand for homes "remains torrid." Greenwich said it believes Tuesday's new-home sales report for March may post a sharp decline, but only because poor weather conditions may have affected building. In March 2004 resales totaled 6.57 million units on an annualized basis. The NAR can be found online at http://www.realtor.org.

Stewart Title of California Inc., San Diego, has reported a $750,000 settlement with the California Department of Insurance related to DOI allegations that the company paid kickbacks to real estate agents in exchange for business referrals.The company said it also agreed to the entry of a cease-and-desist order, but that the settlement includes no admission of wrongdoing. The settlement includes a fine of $590,000, plus $160,000 to cover costs associated with the investigation of the allegedly unlawful activities in several Southern California counties from September 1999 through November 2001. "Stewart strives to follow all applicable federal and state laws regarding business practices on marketing activities," said Mike Skalka, general counsel of Stewart Title Guaranty Co., the title insurance underwriter for Stewart Title of California. "Unfortunately, the California Department of Insurance has not clearly defined what constitutes a violation." DOI Commissioner John Garamendi declared: "Let this latest fine be a warning: we will find these companies who continue to pay kickbacks, and I will do everything in my power to see that they are punished for their actions."

GMAC Residential Funding, Minneapolis, has announced that it will offer services by The Prieston Group designed to help its lenders significantly reduce mortgage fraud.The services, called TPG Mortgage Assurance Solutions, include insurance that helps mitigate losses in the event of a repurchase request for financial misrepresentations made to the lender, GMAC RFC said. "The primary focus of the TPG solution is on lenders' business practices," said Prieston Group chairman Arthur Prieston. "By providing the training, tools, resources, experience, and expertise to improve those practices, we believe our clients experience lower fraud incidence rates, improved quality production, and enhanced professional reputations and investor relationships." When a repurchase request does occur, the insurance component of the services kicks in. The repurchase remedy "can destroy a lender's business, and often doesn't achieve the result the aggregator or investor is seeking," Mr. Prieston said. "Our approach is to provide financial security to the investor, while protecting and improving the lender's business." The companies can be found online at http://www.gmacrfc.com and http://www.priestongroup.com.

Federal Housing Finance Board Chairman Ronald Rosenfeld has agreed with a key senator that the Federal Home Loan Banks should have standards that bar accepting collateral or purchasing mortgage loans with predatory terms and conditions."This is something the Federal Home Loan Banks could, should, and will do," Mr. Rosenfeld told Sen. Paul Sarbanes, D-Md., at a Senate Banking Committee hearing on government-sponsored enterprise legislation. The senator noted that Fannie Mae and Freddie Mac established anti-predatory-lending standards several years ago but that he has heard of only one FHLBank with a similar standard. Chairman Rosenfeld also told the Senate panel that the Finance Board will set a cap on the size of the FHLBank mortgage portfolios later this summer. "We are not going to let these portfolios get to a level or size that we believe will jeopardize safety and soundness," he testified. He is considering a cap based on a percentage of assets or setting an activity-based capital requirement.

The average 30-year fixed mortgage rate fell to 5.80% for the seven-day period ending April 21 from 5.91% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.46% to 5.36%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.31% to 5.22%, and the average rate for one-year Treasury-indexed ARMs fell from 4.30% to 4.26%. Fees and points averaged 0.5 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "Interest rates in general have been oscillating with every piece of economic news released lately," said Frank Nothaft, Freddie Mac's chief economist. "The market is switching its focus between the strength of the economy and the fear of inflation. Thus, although mortgage rates have dropped in the last two weeks, that doesn't necessarily indicate a trend." A year ago, the average 30-year and 15-year fixed rates were 5.94% and 5.25%, respectively, and the average one-year ARM rate was 3.69%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Classes K, L, and M of Morgan Stanley Dean Witter Capital I Inc. commercial mortgage pass-through certificates, series 2001-Top 1, have been placed on Rating Watch Negative by Fitch Ratings.The actions were attributed to the recent transfer of the third-largest loan into special servicing and an increase in Fitch's loss expectations for loans in special servicing. The third-largest loan (4.21%), on an office property in San Jose, Calif., transferred to the special servicer in February due to monetary default, the rating agency said. Two other delinquent loans are in special servicing and there are two real estate owned properties. "The classes will remain on Rating Watch Negative until the disposition plan of the third-largest loan is known or losses become imminent from the sale of the REO properties," Fitch said.

Washington Mutual Inc., Seattle, has reported net income of $902 million ($1.01 per share) for the first quarter, down from $1.05 billion ($1.18 per share) a year earlier, although earnings from its mortgage business rose.WaMu attributed the overall decline to discontinued operations from the sale of Washington Mutual Finance Corp. Net income for WaMu's mortgage banking segment totaled $243 million in the first quarter, up from $228 million a year earlier, the company said. Originations of home loans totaled $38.50 billion for the quarter, down from $43.72 billion a year earlier. The company attributed the increase in the mortgage segment's net income to higher gain from mortgage loans (net of risk management activities) and lower noninterest expense. WaMu can be found online at http://www.wamu.com.

Jennifer S. Creech has been named chief production officer of DeepGreen Financial, a Cleveland-based home equity lender.Ms. Creech was most recently manager of the Northeast region at RBC Mortgage, a subsidiary of Royal Bank of Canada. She was previously regional sales manager for both Washington Mutual and PNC Mortgage, DeepGreen said. Touting the prospects of her new employer, Ms. Creech said DeepGreen "got a jump start on home equity" while other financial services companies were focused on the refinance market. DeepGreen is owned by Lightyear Capital, a New York City-based private equity investment firm. The companies can be found on the Web at http://www.deepgreenfinancial.com and http://www.lycap.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 683.6 to 672.6 on a seasonally adjusted basis during the week ended April 15, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 1.3% on the week and were down 8.7% from their level a year earlier. The Purchase Index fell from 474.5 to 466.7 on a seasonally adjusted basis, while the Refinance Index declined from 1899.6 to 1870.0. Refinancings represented 38.0% of total applications, down from 38.1% the previous week, while adjustable-rate mortgages accounted for 35.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.95% to 5.83%, and points (including the origination fee) decreased from 1.36 to 1.28 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Wells Fargo & Co., San Francisco, has reported record net income of $1.86 billion ($1.08 per share) for the first quarter, up 5% from $1.77 billion ($1.03 per share) a year earlier.Mortgage originations totaled $65 billion. "Home Mortgage saw a strong pick-up in application activity in the quarter, as applications of $91 billion increased 14% over fourth-quarter 2004, and the March 31, 2005 pipeline of $59 billion was up 18% from year-end," said Mark Oman, group executive vice president for home and consumer finance. "The rise in interest rates during the quarter and the growth in the servicing portfolio resulted in an increase in the mortgage servicing rights asset to $9.0 billion, or 1.24% of loans serviced for others, up from 7.9 billion, or 1.15%, at year-end. Reflecting the increase in fair value of the servicing asset, a $271 million reversal of the valuation allowance was realized in the quarter." The company can be found online at http://www.wellsfargo.com.

HUD Secretary Alphonso Jackson says the new Federal Housing Administration commissioner will be charged with increasing the FHA's share of the mortgage market, which has declined over the years to 3.5% as of year-end 2004."I expect him to work with the mortgage bankers, homebuilders, homeowner associations" and others to develop a strategy to "get our share of the market back rather than abrogating it to subprime lenders," the secretary of the Department of Housing and Urban Development said in response to a question at an industry conference. President Bush has indicated that he intends to nominate Brian D. Montgomery, a White House political operative, to be the new FHA commissioner, replacing Commissioner John Weicher, who is expected to step down by the end of April. "I think you will be able to work with him," the secretary told the Mortgage Bankers Association Washington conference. "I think we can come up with very innovative ways to capture back the market."

Single-family housing starts plunged 14.4% in March, but the first three months of 2005 set a new record for starts and some housing economists are looking for a rebound in April.The U.S. Census Bureau reported that single-family starts fell from a seasonally adjusted annual rate of 1.80 million in February to a 1.54 million rate in March. National Association of Home Builders economist Michael Carliner said March starts were lower than expected. "But I feel very confident we will have a rebound," he said. Mr. Carliner said February set a record for single-family starts, and it was revised upward in the March report. In addition, the March report shows that single-family permits are higher than starts, which "almost always" signals that starts will be higher the next month, he said. Meanwhile, single-family starts for the first quarter are ahead of last year's record pace by 6.3%.

American Home Mortgage Investment Corp., Melville, N.Y., has reported adjusted net earnings of $54.0 million ($1.24 per share) for the fiscal first quarter, up 154.6% from $21.2 million ($0.70 per share) a year earlier.The adjusted net earnings do not include the effects of the company's previously announced restatement of its 2004 earnings and thus do not conform to generally accepted accounting principles. American Home had to restate its fourth-quarter 2004 net income because it should not have recognized $71.4 million in revenues from a securitization until the first quarter of this year, the company said. Therefore, its GAAP first-quarter earnings are $125.4 million ($2.99 per share). "Our company was highly successful at implementing our business plan during the first quarter as our adjusted net interest income, origination activity, and adjusted servicing revenue all reached new highs," said Michael Strauss, American Home's chairman and chief executive. "During the quarter, our servicing segment became profitable, as higher interest rates slowed amortization and resulted in an impairment recovery."

Office of Thrift Supervision Director James Gilleran said he will step down April 29 after leading the agency for nearly four years.The surprise announcement comes after Mr. Gilleran revamped the agency's Community Reinvestment Act regulations and forced the other banking regulators to relax their CRA regulations. His actions angered Democrats on Capitol Hill, and 39 congressmen signed an April 12 letter criticizing his unilateral actions to "weaken CRA." During his tenure, Mr. Gilleran pushed through a regulation that prevents state-chartered lenders from using OTS Parity Act regulations to avoid state restrictions on prepayment penalties and late fees. Subprime lenders challenged the OTS's interpretation of the Alternative Mortgage Transaction Parity Act, but the OTS prevailed in federal court. The former California banker and state banking supervisor also eliminated an operating deficit at the OTS by downsizing the agency. Mr. Gilleran has not revealed his plans. "The thrift industry is better for his leadership and service, and the thrift charter is as strong as it ever has been," said Diane Casey-Landry, president of America's Community Bankers. "We wish Jim well in his future endeavors."

Three classes of notes issued by HarbourView CDO III Ltd., a collateralized debt obligation that includes mortgage-backed securities, have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are classes A, B, and C. The rating agency said the deal has triggered an event of default, in response to which a majority of the controlling class of noteholders may accelerate the maturity of the transaction, a majority of all the noteholders may choose to liquidate the portfolio, or some other remedy may be chosen. Fitch said HarbourView III is composed of 34.2% residential MBS, 27.9% asset-backed securities, 15.3% commercial MBS, 8% real estate investment trusts, 7.3% CDOs, and 7.3% corporate debt. The rating agency can be found online at http://www.fitchratings.com.

NorthStar Realty Finance, a New York-based real estate investment trust, has reported the completion of a private placement of $40 million of trust preferred securities through its subsidiary NorthStar Realty Finance Trust.The net proceeds will be used to finance future investments in subordinate real estate debt, real estate securities, and net-lease properties, the commercial REIT said. The 30-year securities bear interest at 8.15% for the first 10 years, whereupon the rate floats at a rate of 3.25% above the three-month London interbank offered rate, the company reported.

Freddie Mac and Chase Home Finance have announced a new campaign in Los Angeles to debunk what they termed common misconceptions that stop minority families from even considering buying a home.Called "Homeownership: Let the TRUTH Move You" (or "Tu propia casa: Atrevete!"), the campaign is designed to address misconceptions identified by Freddie Mac research, such as notions widely held among Latinos and African-Americans that they need a 20% downpayment to buy a home and nearly perfect credit to get a loan. The new initiative will provide information about all aspects of homeownership through a series of one-hour educational sessions in English and Spanish. "We can't allow misinformation to be a barrier to the families who may want to buy a home," said Craig Nickerson, vice president of expanding markets at Freddie Mac. Also participating in the campaign are the Los Angeles Neighborhood Housing Service, ACORN Housing, Hyde Park Organizational Partnership for Empowerment, and the National Association of Hispanic Real Estate Professionals. Freddie Mac can be found online at http://www.freddiemac.com.

Nonprofit groups that promote homeownership might reach more underserved families by becoming mortgage brokers themselves, but the broker model used in the private sector would not be appropriate for most nonprofits, according to a study by the Local Initiatives Support Corp.The study, "Nonprofit Mortgage Brokers: Small Step or Large Leap?", identified 34 nonprofit mortgage brokers across the United States that have processed and delivered loans valued at more than $200 million, LISC said. It found that the average nonprofit broker allocated three employees to lending activity and spent approximately $150,000 per year on it. The study concluded that the private-sector broker model is not appropriate for "the vast majority" of nonprofits; that nonprofits should find new ways to retool their work to emphasize their value to mortgage market participants; and that nonprofits should develop hybrid business models that combine the strengths of traditional nonprofit counselors with "the entrepreneurial drive" of nonprofit mortgage brokers. LISC can be found online at http://www.lisc.org.

In order to round out its mortgage platform, Bear Stearns has started a wholesale division called Bear Stearns Residential Mortgage Corp. and on April 18 plans to roll out a technology interface called BearDirect.net that will provide an online underwriting decision engine for mortgage brokers.The move is part of a larger effort to expand the company's mortgage franchise by capturing origination volume, fixed-income president and co-chief executive officer Warren Spector said in a recent webcast investor presentation. Also adding to Bear's volumes recently has been an expansion of its product guidelines in the conduit area, according to people familiar with Bear's strategy. (For more information, see the April 18 issue of National Mortgage News.)

Laureate Capital, Charlotte, N.C., a subsidiary of Branch Banking and Trust Company, has acquired R.J. Twitty & Co., a Tampa, Fla.-based mortgage banker.The terms of the transaction were not disclosed. The acquisition adds R.J. Twitty's $275 million loan servicing volume to Laureate's $6.64 billion commercial and multifamily servicing portfolio and also gives the company another loan production office in Florida (in addition to its existing one in Naples). The company's new Tampa office will be led by Steven Marshall from R.J. Twitty & Co, Laureate said. R.J. Twitty's chief executive officer, Robert Twitty, plans to pursue other interests following the sale.