Originations

The Chicago Title Insurance Co. subsidiary of Fidelity National Financial Inc., Jacksonville, Fla., has entered into an agreement with the Department of Housing and Urban Development, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Texas Department of Insurance totaling $6.2 million.The regulators alleged that Chicago Title violated Section 4 of the Real Estate Settlement Procedures Act by providing inaccurate HUD-1 settlement statements. HUD also alleged that Chicago Title's conduct was part of an agreement for referrals in violation of Section 8 of RESPA. In addition, the Texas agency says Chicago Title-Houston was allegedly engaged in "land flip" transactions. The agreement requires Chicago Title to revamp the manner in which it conducts real estate settlements nationwide. HUD, the OTS, and the OCC said the company is cooperating with the regulators and has already begun addressing their concerns. A Fidelity spokesman echoed this point. Chicago Title will pay $5 million to the U.S. Treasury and $1.2 million to Texas.

Royal Bank of Canada, Toronto, is looking to exit the U.S. mortgage market and has hired an investment banking firm to advise it on its options, industry sources have told MortgageWire.A spokeswoman for RBC in Toronto declined to comment. In the fourth quarter, RBC Mortgage originated $3.9 billion in residential loans, ranking 27th nationwide. It services about $4 billion in product. (See the Feb. 28 issue of National Mortgage News for more details.)

New home sales fell 9.2% in January to a seasonally adjusted annual rate of 1.106 million units, according to new figures released by the Census Bureau and the Department of Housing and Urban Development.The decline is in comparison with December's revised sale number of 1.218 million units. Compared with the level recorded a year earlier, sales fell 4.2%. The government also reported a 4.7-month supply of new homes in January, the highest reading in well over a year. RBS Greenwich Capital Markets analyst Michelle Girard called January's sales figure "weaker than expected," but cautioned that harsh winter weather likely exacerbated the decline. She also noted that the government sometimes substantially revises its numbers, calling the data "volatile and unreliable."

Pacific Home Funding Corp., dba LoanFunders, has announced the launch of a 100% compensation plan for its account executives based on experience and proven results.Craig Anderson, Pacific Home's vice president of sales, said the new compensation plan "is based on our belief that our most valued customer is our sales force. We want our account executives to partner with LoanFunders and receive compensation for their efforts based on their track record of success." The company said it intends to structure the program based on prior earnings. LoanFunders is a mortgage banker and broker based in Corona, Calif. The company specializes in nonprime loans, but also maintains A-paper, government, and home equity divisions. Its new website can be found online at http://www.loanfunders.com.

Many servicers in the nonprime sector are taking a more active role in communicating with the borrower, according to Standard & Poor's Ratings Services.At a session on servicing nonprime loans during the MBA's recent National Mortgage Servicing Conference, panelists discussed the growing importance of making contact with borrowers, S&P reported. "We continue to take a close look at call center metrics, such as average speed to answer, abandonment, and hold and blockage rates, that measure the effectiveness of the customer service function," said S&P credit analyst Michael Gutierrez, head of the Servicer Evaluations group. New regulations have spurred some servicers to invest in call center technology as a way to monitor regulatory compliance, said credit analyst Richard Koch, a director in S&P's Servicer Evaluations group. "For instance, independent call monitoring groups, often physically situated away from the call center, vigorously monitor and grade employee performance," Mr. Koch said. Such practices can identify training issues as well as noncompliance with corporate policies and state and federal regulations, the rating agency said. S&P can be found online at http://www.standardandpoors.com.

The Federal Trade Commission has reached a $750,000 settlement with a former subprime lender, ending a seven-year legal stalemate over allegations of deceptive lending practices.The settlement permanently bars Capital City Mortgage Corp., Washington, from engaging in deceptive and fraudulent home equity lending and servicing practices. And it requires CCMC to pay up to $750,000 in consumer redress. The CCMC largely exited the residential market before the FTC filed its complaint in 1998, but it will have to stop doing "take-back" loans under the settlement, according to the company's outside attorney, Philip Musolino. Its main business today is commercial real estate lending. "We are pleased with the settlement on terms that do not disrupt Capital City's ongoing operations," the Washington attorney said. The settlement reflects the "FTC's acknowledgement that its $12 million claim was ill-advised," he added. Under the settlement, CCMC agrees not to misrepresent loan amounts and fees and to use standard industry forms in originating a loan. The settlement also places severe restrictions on its servicing practices. "The result of the settlement is they are no longer going to be able to defraud consumers," FTC attorney Alain Sheer said. CCMC did not admit to any wrongdoing as part of the settlement.

Existing-homes sales held steady in January under a new reporting series by the National Association of Realtors that combines single-family, condominium, and cooperative sales for the first time.The NAR reported that resales edged down slightly from a seasonally adjusted annual rate of 6.81 million in December to 6.80 million in January. The NAR still includes data on existing single-family sales, which fell 0.5% to a seasonally adjusted annual rate of 5.94 million in January. However, the Realtors have revised their monthly sales reports dating back to 1989 due to new census data, and changes in methodology and data collection. Single-family sales in 2004 were revised downward by 10.6%, to 5.96 million, but it is still a record year. Despite the revisions, the characteristics and trends in the resales series have "not changed at all," NAR chief economist David Lereah said. Mr. Lereah also explained that the NAR is including condominiums, which constitute 12% of the resales, in the report because it is finally comfortable with representing the data on a monthly basis. Condo sales were previously reported quarterly. Based on the revised data (including SF & condos), resales totaled 6.78 million in 2004 and set a new record. The NAR can be found online at http://www.realtor.org.

Acadia Realty Trust will replace Summit Properties Inc. in the S&P REIT Composite Index after the close of trading Feb. 28, Standard & Poor's has announced.S&P said the reason for the change is that Summit is being acquired by Camden Property Trust. Acadia is a White Plains, N.Y.-based real estate investment trust that owns and develops shopping centers in the East and the Midwest. S&P can be found online at http://www.standardandpoors.com.

Mezz Cap, Short Hills, N.J., a commercial real estate finance company, has received a $25 million infusion of capital from investors led by Conning Capital Partners, Hartford, Conn.Other investors providing the new capital include Hamilton Investment Partners, SS&C Technologies, Richard C. Trepp, and an affiliate of Loeb Partners Corp., according to Conning Capital. Mezz Cap provides mezzanine financing to its strategic lending partners, which allows the lenders to provide borrowers with additional leverage. In connection with this funding, Steven F. Piaker, a Conning Capital partner, and Richard C. Trepp have joined the Mezz Cap board of directors, Conning Capital said. "We believe Mezz Cap is the most innovative and well-positioned U.S.-based specialty finance company today," Mr. Piaker said.

ITLA Capital Corp., La Jolla, Calif., has announced that its wholly owned banking subsidiary, Imperial Capital Bank, has signed a loan purchase and servicing agreement with Fannie Mae.Under the agreement, the bank will originate small, fixed-rate multifamily loans with 5-, 7-, 10-, and 15-year terms for sale to Fannie Mae as a Fannie Mae-approved M-Flex Lender. ICB will originate these loans, along with its existing multifamily and commercial real estate loans, through its national network of loan production offices, ITLA said. "The small multifamily fixed-rate loans, to be originated by the bank and sold to Fannie Mae, will give the bank's customers a competitive financing alternative, in addition to our longstanding and successful adjustable-rate multifamily and commercial real estate loan products," said ITLA's president and chief executive officer, George W. Haligowski.

Citing excellent compliance with its high-cost loan criteria, Fitch Ratings has announced that it will no longer require third-party reports for rated transactions at the time of closing for loans originated in New Jersey, New Mexico, Kentucky, Massachusetts, and Indiana.The rating agency said compliance systems have become a critical component of the underwriting and quality control process, and the revisions to its residential mortgage-backed securities guidelines recognize the industry's progress in managing compliance with anti-predatory-lending laws and regulations. Kevin Cuff, president of the Massachusetts Mortgage Bankers Association, said the industry is still waiting to see how the new Massachusetts law will affect the market, since it has only been in place for two months. "Fitch is recognizing how we all feel in the state," Mr. Cuff said. "We're in a wait-and-see period to see how compliance will go -- to see if it's effective and to make sure there's consumer protection while continuing to provide adequate access to credit for consumers. No one is throwing their arms up and saying people are leaving the state." Fitch had previously said the laws in the five states might expose RMBS issuers to unlimited assignee liability for damages resulting from high-cost loans.

The risk of a general decline in home prices over the next two years has declined in recent months, according to the winter 2005 PMI Risk Index, which fell 25 points from its autumn 2004 level.The average value of the index for the 50 largest metropolitan statistical areas stood at 161 as of January, said PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index. The index value means that these cities have on average a 16.1% probability of experiencing a home price decline in the next two years. PMI said its analysts attribute the decline in the index to improving nationwide economic conditions indicated by generally lower regional unemployment rates. The MSAs topping the index were Boston-Cambridge-Quincy (Mass. and N.H.), at 533; San Jose-Sunnyvale-Santa Clara (Calif.), at 530; and San Francisco-Oakland-Fremont (Calif.), at 479.

First American Title Insurance Co., Santa Ana, Calif., has acquired United General Financial Services Inc., a privately held Denver-based title insurance underwriter.The purchase price was not disclosed. United General had been owned by its management, including president and chief executive John P. Dwyer since 1995. Gross revenues have increased from $38 million in 1995 to $208 million in 2004. It is licensed in 36 states and the District of Columbia. Based on 2003 market share data from the American Land Title Association, United General is the 6th-largest title insurer by geographic coverage, with a 1.64% national market share. FATIC president Gary L. Kermott said his company plans to expand United General into "a major national brand." Mr. Dwyer will continue as president of United General as well as take on the role of regional vice president with FATIC.

The average 30-year fixed mortgage rate rose to 5.69% for the week ending Feb. 25 from 5.62% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.14% to 5.22%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged at 5.05%, and the average rate for one-year Treasury-indexed ARMs rose from 4.15% to 4.16%. Fees and points averaged 0.7 of a point for fixed-rate mortgages and 0.8 of a point for ARMs. "Mortgage rates moved up for the second week in a row on concerns about a pick-up in inflation showing up in raw materials," said Frank Nothaft, Freddie Mac's chief economist. "However, a broader measure of inflation, the Consumer Price Index, posted a less-than-expected rise in inflation, causing bond yields to fall. This means that next week's survey results may retreat to prior levels of a week or two ago." A year ago, the average 30-year and 15-year fixed rates were 5.58% and 4.89%, respectively, and the average one-year ARM rate was 3.50%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The Internal Revenue Service says it initiated nearly 200 real estate fraud investigations in fiscal year 2004 and secured 89 convictions for tax fraud and money laundering."In recent years, the booming real estate has helped increase mortgage fraud and other phony real estate schemes," the IRS said. "The perpetrators of these schemes range from mortgage brokers looking to make a fast buck to drug dealers laundering their ill-gotten gains." The most common schemes involve property-flipping, straw buyers, and submission of false settlement statements to lenders. IRS criminal investigations involving mortgage fraud have doubled since fiscal year 2001. "FY 2004 statistics reflect a three-year high of the number of cases recommended for prosecution, as well as indicted, convicted, and incarcerated," the IRS said.

Homebuilder Lennar Corp. has placed the winning bid for $650 million to purchase Heritage Fields, a former Marine Corps base in Irvine, Calif., that includes approximately 3,400 homesites and commercial properties over 1,300 acres.Partners in the venture are LNR Property Corp., Rockpoint Real Estate Fund I LLC, Blackacre Institutional Capital Management LLC, and MSD Capital LP. "We believe this is an excellent opportunity to develop a premier community in one of the nation's most desirable and supply-constrained homebuilding markets," said Emile Haddad, California regional president of Lennar. The acquisition brings to seven the number of Lennar and LNR military reuse projects since 1998. The Irvine community plan includes multiple single-family residential products with prices ranging from $350,000 to over $2 million. Lennar said it expects to option a portion of the homesites and anticipates that new-home deliveries will begin in fiscal 2008.

Preliminary housing data are pointing toward a slowdown in home sales, while construction activity remains "surprisingly" strong, according to Fannie Mae chief economist David Berson."Recent trends in production versus sales are a bit disturbing, and may suggest the excess inventories of unsold homes may have increased in early 2005 from already relatively high levels," Mr. Berson says in his weekly commentary. The Fannie economist also notes that the Mortgage Bankers Association's weekly survey of purchase mortgage applications was running 7.5% below the fourth-quarter level as of Feb. 9. "The obvious implication, if these data are indicative of actual trends, is that housing production may be exceeding demand," Mr. Berson warns. A National Association of Home Builders economist acknowledged that builders are rebuilding their inventories so that buyers don't have to wait nine months to get into a new home. But he says he does not believe production is out of line with demand.

Servicers of subprime mortgage loans face a perplexing conundrum: only about a quarter of the loans include escrow accounts to ensure payment of insurance premiums and property taxes, yet subprime borrowers are the least likely to save money to make such payments.Speaking at a panel discussion at the MBA National Mortgage Servicing Conference in Orlando, Fla., several B&C servicers said they believe the escrow rate for insurance and tax payments should be higher. Nigel Brazier, senior vice president for business development and strategic initiatives at Select Portfolio Servicing, said only about 25% of the loans in his company's subprime portfolio have escrow accounts. He said that is typical for the subprime industry. Some in the industry believe that failing to escrow can lead to higher delinquency and default rates among subprime borrowers. Mr. Brazier said investors are "starting to realize" that they should perhaps be concerned about the low rate of escrowing in the nonprime sector. And Fabiola Camperi, a senior vice president at Option One Mortgage, said her company has been trying to promote escrowing in its portfolio. "We have seen our ratio of escrow loans increase significantly," to more than 50%, she said.

The Market Composite Index, an overall measure of mortgage applications, fell from 732.3 to 727.9 on a seasonally adjusted basis during the week ended Feb. 18, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 1.3% on the week but were down 5.5% from the level of a year earlier. The Purchase Index fell from 423.3 to 417.8 on a seasonally adjusted basis, while the Refinance Index inched up from 2530.1 to 2532.0. Refinancings represented 49.3% of total applications, down from 49.9% the previous week, while adjustable-rate mortgages accounted for 30.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.50% to 5.67%, and points (including the origination fee) increased from 1.27 to 1.29 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Criimi Mae, a real estate investment trust based in Rockville, Md., may be up for sale, and BREF One, the company's largest shareholder, is a potential buyer.Criimi Mae said it has hired Citigroup Global Markets as its financial adviser to assist in undertaking a review of its strategic alternatives, which it said may include a sale of the company. The commercial mortgage REIT reported that it has received some "nonbinding indications of interest from a number of potential counterparties," including an affiliate of BREF One. The independent members of Criimi Mae's board of directors will evaluate all proposals and make recommendations to the board. Criimi Mae can be found online at http://www.criimimaeinc.com.