Originations

The average 30-year fixed mortgage rate fell to 5.74% for the week ending Jan. 14 from 5.77% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.21% to 5.19%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.03% to 5.05%, and the average rate for one-year Treasury-indexed ARMs was unchanged at 4.10%. Fees and points averaged 0.6 of a point for fixed-rate mortgages and one-year ARMs, and 0.5 of a point for five-year hybrid ARMs. "The onset of 2005 bodes well for the housing industry," said Amy Crews Cutts, Freddie Mac's deputy chief economist. ".... Although we expect mortgage rates to end the year a bit higher, they still provide a historic value to borrowers, considering how over the past 30 years fixed-rate mortgages have averaged about 9.5%." A year ago, the average 30-year and 15-year fixed rates were 5.66% and 4.97%, respectively, and the average one-year ARM rate was 3.62%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Countrywide Home Loans, Calabasas, Calif., is once again raising the bar on its efforts to put more minorities and lower-income families into homes of their own.In 2003, the big lender said it would originate $600 billion in mortgages to underserved borrowers through 2010 under the "We House America" program that began as a $1.25 billion pledge in 1992. Now, at the National Association of Home Builders convention in Orlando, Fla., chairman Angelo Mozilo has bumped the commitment to $1 trillion. "These consumers have emerged," Mr. Mozilo said at a news conference. "It is now time for us to catch up. There is no room for reticence or timidity." As part of the initiative, Countrywide will soon announce a partnership with the U.S. Conference of Mayors to create a "major new financial literacy program." The company will give the mayors $200,000 a year for five years to develop their own individual programs targeted to their specific markets.

Freddie Mac and the Strategic Housing Finance Corp. of Travis County (Texas) have announced a new lease-to-own homeownership program offered by Freddie Mac.The Lease Purchase Plus Program of Travis County, through a $35 million revenue bond program, is aimed at those who cannot buy a home due to credit problems or lack cash for the downpayment and closing costs. To participate, qualified residents work with the SHFC -- a nonprofit organization that offers counseling, education, and downpayment and closing-cost assistance -- to select a home in Travis County. The SHFC buys the house and leases it to the purchaser for up to 39 months, then provides counseling to ensure that the buyer is ready to assume the loan at the end of the lease period. By making timely lease payments and resolving credit issues during the lease period, the family can exercise the purchase option when the lease expires.

American Home Bank, Lancaster, Pa., has announced an expansion of its home mortgage business with a new construction-to-permanent loan called Home One.The new loan permits homebuyers to lock in low construction and permanent mortgage rates upfront, with no long-term lock fees and no monthly payments required during construction, the bank said. The loan is being marketed to builders who build 20 to 250 units a year, with an initial rollout in the South and the Middle Atlantic states. "Builders will benefit from the Home One loan in several ways," the bank said. "AHB will use its Construction Mac construction loan servicing technology to ensure that the builder receives draw payments within three days according to a customized draw schedule that mirrors the builder's construction process."

New Century Financial Corp., Irvine, Calif., has announced the launch of Home123 as the new brand identity of its retail division.New Century Mortgage, which will continue to be the name of the company's wholesale division, last year acquired the rights to the name Home123 and related brand assets, including a loan origination center in Morris Plains, N.J., the Home123.com Web address, and the 1-800-HOME123 phone number, New Century said. The Home123 brand rollout began this month with online and direct mail advertising and television ads featuring Bob Vila that aired in nine U.S. markets. The company said its 74 retail branch offices will make the transition to the new brand beginning in the second quarter. The company can be found online at http://www.ncen.com and http://www.home123.com.

Global TransNet Corp., Severna Park, Md., has announced its 2005 financial services business plan, which includes a goal of acquiring businesses in three distinct segments, two of them involving mortgages.GTN says it plans to acquire a conventional mortgage company and a nonconventional lending company. The third business is barter exchanges. The company said conventional mortgages are expected to grow over the next 10 years as housing starts continue at the same rate as in the 1990s, or better. For the nonconventional lending business, GTN said only when there is ample collateral will the subsidiary make a loan. GTN is a holding company that is thinly traded over the pink sheets. (The last trade was on Dec. 16, 2004, according to Yahoo Finance.)

The Market Composite Index, an overall measure of mortgage applications, fell from 605.7 to 587.8 on a seasonally adjusted basis during the week ended Jan. 7, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 41.6% on the week but were down 17.4% from the level of a year earlier. The Purchase Index fell from 417.3 to 393.1 on a seasonally adjusted basis, while the Refinance Index climbed from 1701.3 to 1720.5. Refinancings represented 49.0% of total applications, up from 48.0% the previous week, while adjustable-rate mortgages accounted for 32.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.67% to 5.70%, and points (including the origination fee) fell from 1.35 to 1.32 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Accredited Home Lenders Holding Co., San Diego, has received a "#1 (Strong Buy)" ranking from Zacks.com, Chicago.The ranking is based on the expectation that its full-year 2005 earnings will be $6.90, according to Zacks. Accredited issued this guidance in November based on continued growth of its on-balance-sheet portfolio, combined with the strength and growth of its nonprime origination platform. Zacks noted that Accredited had earnings of $1.66 per share for the third quarter of 2004, exceeding analysts' consensus by approximately 3.75%.

The New York City Industrial Development Agency has authorized $475 million in Liberty Bond funding for reconstruction of 7 World Trade Center, the first Ground Zero building on which rebuilding activity has begun.Larry Silverstein, the developer of the property, had initially applied for up to $400 million in the tax-exempt Liberty Bond funding, the IDA said, and more money was required because of "lower-than-expected insurance proceeds and increased financing costs." The 52-story building will incorporate about 1.7 million square feet of commercial space. The funding is available under the Liberty Bond Program that was put in place in the aftermath of 9/11 to revitalize Lower Manhattan and New York City. Fitch Ratings sees this as a positive development for 7 WTC bondholders. "While a number of things still need to fall into place, including the approval of the increase by the governor and mayor and the actual sale of the bonds, Fitch sees today's recommendation as an important step toward the repayment of the existing bonds," said Karen Trebach, a director in Fitch's commercial mortgage-backed securities group.

Lime Financial, Lake Oswego, Ore., cracked the $1 billion market in residential fundings in 2004 -- a record for the fast-growing nonconforming lender.Lime chief executive officer Zan Hamilton noted that the $1 billion was "five times the volume of the previous year." A mostly wholesale funder that plays in the A-minus purchase-money market, Lime has 208 employees, compared with just 78 at the beginning of 2004. The company started last year funding in just five states. It now funds in 19 states, and has plans to enter 18 additional states in the next few months.

MEM Financial Solutions Inc., a mortgage broker based in Half Moon, N.Y., has announced the signing of a letter of intent to acquire Integrity Research Inc., a title agent based in Clifton Park, N.Y.MEM Financial said Integrity is an authorized title agent for Chicago Title Insurance Co. and also does settlement closings for about 35 lenders and other title agencies. Its principal, Charlotte L. Freeman, is a 35-year veteran of the title industry, where she has worked for underwriters, title agents, and attorneys, MEM Financial said.

Ashford Hospitality Trust, Dallas, is making a follow-on public offering of 7.5 million shares of common stock in the wake of its recent initial public offering.The real estate investment trust said the proceeds of the offering will be used mainly to defray some expenses related to its recent acquisition of a 21-hotel portfolio, for the repayment of some mortgage debt, and possibly to fund future hotel investments. Underwriters will have the option to buy an additional 1.125 million shares of common stock from the company to cover any overallotments, Ashford said. Wachovia Securities and Friedman Billings Ramsey are the joint managers of the offering, which is expected to be priced on Jan. 13.

Fitch Ratings has increased the credit enhancement levels required to obtain ratings on commercial mortgage-backed securities as a result of the declining quality of CMBS loans in recent months, according to the rating agency.Fitch said it expects to see subordination levels in CMBS deals increase further this year if current trends continue. "Over the past year, there has been a decline in structural features such as amortization, reserves, and cash management practices, more aggressive underwriting, and a diminishing quality of borrowers with lower levels of equity in their properties," said Dan Chamber, a Fitch managing director. The rating agency's views are outlined in a report titled "U.S. CMBS: Where Have All the Good Loans Gone?" Fitch can be found on the Web at http://www.fitchratings.com.

Friedman, Billings, Ramsey Group Inc., Arlington, Va., has agreed to acquire nonprime lender First NLC Financial Services, Deerfield Beach, Fla., in a deal valued at $88 million.FBR will pay for First NLC through both cash and stock. First NLC was reacquired by company management in 1999 in conjunction with Sun Capital Partners, Boca Raton, Fla., from IMC Mortgage Co., then of Tampa, Fla. First NLC will become part of FBR's principal investment group, but operate as a wholly owned subsidiary with its current management in charge. FBR is looking to expand the type of mortgage assets it holds in its real estate investment trust portfolio, and plans to portfolio a significant portion of First NLC's production. FBR says it expects average return on equity from nonprime mortgages of 25%-30% over the life of the asset, and thus it intends to allocate between one quarter and one half of its REIT portfolio to these loans in the short term.

The presence of super-senior bonds does not change the total amount of a commercial mortgage-backed securities deal that can be rated triple-A, according to Fitch Ratings.Super-senior bonds, a subset of the AAA class, are senior to all other classes with respect to both repayment and loss, including subordinate AAA classes, the rating agency said. Super-senior bonds are different from traditional AAA classes with respect to losses. "In the unlikely event that losses were to impact a security originally rated AAA, the time-tranched AAA classes would share losses on a pro-rata basis, and the super senior AAA classes would incur losses only after the subordinate AAA classes were extinguished," Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The Commercial Mortgage Securities Association has formed a federal political action committee to deal with issues affecting the commercial mortgage-backed securities industry on Capitol Hill."Since the inception of the CMBS market in the mid-1980's, the market has grown to over $540 billion in CMBS globally," said Dottie Cunningham, chief executive officer of the New York-based trade association. "Over the last several years there has been a steady increase in regulatory and legislative activity affecting the commercial real estate capital markets. The creation of a PAC will enhance CMSA's efforts to aggressively tackle these issues on Capitol Hill." Richard Jones, the CMSA's president, noted that the effort will enable the association "to be engaged at all levels on the issues of concern to the CMBS industry, such as the extension of the Terrorism Risk Insurance Act and the enactment of REMIC reforms." An advisory committee will direct the PAC's fundraising efforts and contributions to candidates for federal elected office, the CMSA said.

Growth in first-lien home equity loans and in borrowing by senior citizens were among the findings of the annual Consumer Bankers Association Home Equity Lending Study, according to BenchMark Consulting International.Among the study's 23 participants, 37% of originations were first-lien positions rather than the historically dominant second liens. "The growth of these first-lien positions in home equity portfolios indicates this is a good time to ensure specific risks have not been overlooked," said Jim Leath, manager of BenchMark's consumer lending and mortgage banking practice. The finding that seniors represent a growing segment of home equity borrowers, and at higher amounts, was "a bit of a surprise," Mr. Leath said. "Most people think of seniors as nonborrowers," he noted. "The pattern we found here was that rather than drawing on invested, fixed income for non-need spending, seniors are looking more to home equity for vacations, luxury items and other purchases." The survey also found an increase in 90-day-plus delinquencies, which "implies that we may be taking on some hard-core risk," Mr. Leath said. BenchMark, a division of Fidelity Information Services Inc., has dual headquarters in Atlanta and Munich, Germany. It can be found online at http://www.benchmarkinternational.com.

The mortgage refinancing boom has resulted in a fiscal crunch for many homeowners, and could spell disaster for millions if home prices plunge, according to Demos, a New York-based public policy organization.Many homeowners are following the dangerous strategy of "depleting their home's equity to pay off a growing mountain of unsecured debt," according to a Demos report titled "A House of Cards: Refinancing the American Dream." Javier Silva, the author of the report, noted that millions of homeowners have refinanced in the past three years to pay off credit card debt and cover living expenses, many of them with "risky" adjustable-rate mortgages tied to the prime interest rate. "Now, with stagnant wage growth and increasing expenses, families are feeling the pinch and spending their home's equity to make ends meet," he said. "If home values bust, many of these homeowners will be devastated." Demos can be found on the Web at http://www.demos-usa.org.

The PMI Group Inc. has reported that it will contribute a matching grant of $5 for every dollar donated by its employees for disaster relief to areas damaged by the Indian Ocean tsunami.PMI said it would administer the grant through its foundation and is allowing employees to make donations to up to nine relief organizations. The company can be found online at http://www.pmigroup.com.

Consumer Direct of America, a Las Vegas-based mortgage banker/broker, has announced an agreement to expand its mortgage banking warehouse lines of credit by $15 million.The new credit facility provides for an unrestricted $10 million credit line, primarily for home equity lines of credit and special-circumstance loans, and a $5 million credit line for "haircut" fees the company needs to pay for loans submitted on its other warehouse lines, CDA said. The new facility is provided by Vista Capital. CDA can be found on the Web at http://www.cdofamerica.com.