Originations

California households at the state median income of $52,940 fall more than $55,000 short of the qualifying income needed to buy a home at the state median price of $462,510, according to the California Association of Realtors.The association's Homebuyer Income Gap Index is a quarterly analysis of the difference between the median household income and the qualifying income needed to purchase a median-priced, single-family home for California and certain regions of the state. The qualifying income stood at $108,310 in the third quarter, according to the index. The latest income gap of $55,370 was 47.9% higher than the $37,440 recorded in the third quarter of 2003, CAR said. At that time, the median household income stood at $51,630, and the qualifying income needed to buy a median-priced home at $385,720 was $89,070, according to CAR. The Los Angeles-based association can be found online at http://www.car.org.

Weststar Financial Services Corp., Asheville, N.C., has announced the formation of the Bank of Asheville Mortgage Co. LLC.Rod Caldwell, formerly a vice president with Carolina First Bank, has been named president of the new company, which has offices in Asheville and South Asheville. A third office, in Hendersonville, will open soon, the company said. Mr. Caldwell is a 30-year veteran of the mortgage banking industry, Weststar Financial said. Weststar is the parent company of The Bank of Asheville, which can be found on the Web at http://www.bankofasheville.com.

Collateral Mortgage Capital, Birmingham, Ala., has announced that it is acquiring Florida-based CareyKramer Co. in a deal that will give Collateral a larger Florida presence and further its strategy of expanding the company.The terms of the deal, which will create a large privately held commercial mortgage lending/servicing firm, were not disclosed. CareyKramer said it expects to originate more than $700 million in loans for 2004, while Collateral said it expects a volume of over $2 billion. CareyKramer has a servicing portfolio of approximately $1 billion, while Collateral's is about $5.8 billion, the companies said. CareyKramer's customers will now have access to the agency products -- including Freddie Mac's Program Plus, Fannie Mae's DUS and the Federal Housing Administration's MAP-approved lending -- offered by Collateral. David A. Roberts, Collateral's president and chief executive officer, said Collateral's Florida offices will join with CareyKramer's Fort Lauderdale-based operations to become Collateral's "expanded Florida platform." He said Florida has been one of Collateral's best markets, and predicted that the acquisition will make it one of the leading commercial mortgage banking firms in the state. Collateral can be found online at http://www.collateral.com.

Freddie Mac's chief economist does not expect a big jump in mortgage rates next year, and he is forecasting that home sales and single-family starts will decline by only 3%-5% in 2005.Even though his forecast calls for the Federal Reserve Board to continue to push the federal funds rate up to 3% by midyear and 3.5% by year-end, chief economist Frank Nothaft said he expects the yield curve to flatten. He is forecasting that the rate on the 30-year fixed-rate mortgage will average 6 1/8% by midyear 2005 and 6.3%-6.5% by year-end. "I think there will be a slight narrowing in the spread between the 30-year mortgage and 10-year Treasury," he told MortgageWire. At a Consumer Federation of America conference, Mr. Nothaft said house price appreciation should moderate over the next couple of years, to 5%. The government just reported that house prices increased at an annual rate of 13% in the third quarter.

Employment in the mortgage industry reached all-time highs in October as lenders added 6,200 full-time employees to their payrolls, according to the U.S. Bureau of Labor Statistics.The BLS November employment report indicates that jobs in the mortgage banking/broker sector rose from 459,300 in September to 465,500 in October. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The November data will not be released until Jan. 7.) The additional hiring comes at a time when originations are falling. Loan volume dropped 19% from the second quarter to $663.0 billion in the third quarter, according to the Quarterly Data Report, which is published by National Mortgage News. Meanwhile, BLS economists said job growth "continued in the mortgage-related industries" in November.

Home prices rose 12.4% nationwide over the 12 months ended Sept. 30, up from 5.7% in the previous 12 months, according to Freddie Mac.In the third quarter, prices rose at an annualized rate of nearly 16%, Freddie Mac reported in releasing its quarterly Conventional Mortgage Home Price Index. The index showed that, for the sixth quarter in a row, the Pacific states recorded the largest gains in home prices, which rose 20.9% for the 12-month period. The Middle Atlantic states of New Jersey, New York, and Pennsylvania followed with a 16.5% growth rate, and the New England states finished third with a 16.2% rate. "The cumulative effect of two years in which 30-year fixed mortgage rates averaged just 5.8% and an improving employment picture this year ha[s] buoyed the housing market to new highs," said Frank Nothaft, Freddie Mac's chief economist. ".... We are expecting national home price growth to slow next year as a result of higher interest rates. However, there is no reason to expect a decline in house prices in any area as long as job growth continues." The index was jointly developed by Freddie Mac and Fannie Mae.

The average 30-year fixed mortgage rate rose to 5.81% for the week ending Dec. 3 from 5.72% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.15% to 5.23%, while the average rate for one-year Treasury-indexed ARMs was unchanged, at 4.19%. Fees and points averaged 0.6 of a point for all three mortgage categories. "Recent economic indicators came out better than had been anticipated, buoying financial markets this week and reinvigorating confidence in financial markets that the last three months of the year will post a very positive rate of economic growth," said Frank Nothaft, Freddie Mac's chief economist. "Of course, with the signs of strong growth come fears of inflation, and that tends to push up long-term mortgage rates." A year ago, the average 30-year and 15-year fixed rates were 5.89% and 5.22%, respectively, and the average one-year ARM rate was 3.77%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The Eleventh Federal Home Loan District Cost of Funds Index crept closer to the 2% mark in October, with a 4-basis-point rise.The new index reading stands at 1.960%, up from 1.931% in September, according to the Federal Home Loan Bank of San Francisco, which calculates the index based on a weighted average of the cost to its thrift members for the money used to originate mortgages. Since bottoming out in May, the index has risen at a rate of about 5 bps per month. Another increase at that rate will push the index back over 2%, a level it has not seen since July 2003, according to a chart on the FHLBank-SF website. The current index level is the highest it has been since August 2003.

The six member companies of the Mortgage Insurance Cos. of America had their third-worst month of the year in terms of primary new insurance written in October.Data collected by MICA shows that these companies (all the private mortgage insurers except Radian) wrote $17.6 billion in new insurance, down from $19.2 billion in September and $30.6 billion in October 2003. Application volume was also at its third-lowest level for the year, at 142,087. October 2003 was the last boom month for the MIs, with application volume of 233,393. New pool risk written in October totaled $21.6 million, down from $66.1 million in September and $636.2 million in October 2003. Defaults once again outnumbered cures, for the eighth time in the first 10 months of the year. The cure/default ratio was 73.9%, with 33,532 cures and 45,353 defaults. MICA can be found online at http://www.micanews.com.

First Franklin Financial Corp., San Jose, Calif., has announced that its wholesale division has been redefined from three to six regions and that it has named three new regional senior vice presidents to run the redefined territories.The new senior vice presidents are Bob Singer, for the Northwest region; Jim Deady, for the Midwest region; and Robert Gloer, for the Southeast region. The company said the three original regional SVPs will continue in their roles in their reshaped regions: Rod Carey, in the Northeast region; Paul Kiron, in the Southwest region; and Matt Shaw, in the Western region. "Ultimately, First Franklin's new regional sales structure will benefit our mortgage broker customers by giving them more support at the local level," said Andy Pollock, president and chief executive officer of First Franklin. The decision to redefine territories stemmed from the mortgage lender's "significant brick-and-mortar expansion" into its Western, Central, and Eastern territories in 2004, the company said. First Franklin is a subsidiary of National City Corp., a Cleveland-based financial holding company. First Franklin can be found online at http://www.ff.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 715.0 to 673.3 on a seasonally adjusted basis during the holiday-shortened Thanksgiving week ended Nov. 26, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 36% on the week and were down 1.9% from the level of a year earlier. The Purchase Index fell from 463.3 to 460.3 on a seasonally adjusted basis, while the Refinance Index declined from 2179.3 to 1912.3. Refinancings represented 46.4% of total applications, down from 48.4% the previous week, while adjustable-rate mortgages accounted for 32.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.64% to 5.78%, and points (including the origination fee) fell from 1.36 to 1.25 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Home prices increased by an annualized rate of 18.5% in the third quarter, the fastest appreciation recorded in 25 years, according to new figures released by the Office of Federal Housing Enterprise Oversight."The appreciation reflected in this quarter's report shows further acceleration from already rapid increases," said OFHEO Director Armando Falcon Jr. The agency added that the price increase is particularly steep when compared with the price of nonhousing goods and services. The states with the highest appreciation were: Nevada (36%), Hawaii (28%), California (27%), District of Columbia (24%), Rhode Island (23%), and Maryland (22%). Seventeen of the 20 metropolitan statistical areas with the largest price gains are in California. (See the Dec. 6 issue of National Mortgage News for more details.)

The National Organization of African Americans in Housing, the Colorado Housing and Finance Authority, and Mortgage Guaranty Insurance Corp. have launched an affordable housing program for first-time homebuyers that offers flexible underwriting criteria, low mortgage insurance premiums, and specialized counseling.The joint program was introduced at the annual National Association of State Housing Agencies conference in Chicago. "Our SmartPath program dovetails nicely with CHFA's mission, and we expect this initiative will help many Colorado families achieve long-term successful homeownership," said Rosa Dalia Hernandez, emerging markets manager for the Pacific region of the Milwaukee-based MGIC. Kevin Marchman, executive director of the Washington, D.C.-based NOAAH, said another program highlight is that it offers housing opportunities to low- and moderate-income families and underserved communities in Colorado by also targeting their counseling needs.

The New York City Industrial Development Agency has made available Liberty Bond funding of $650 million to finance the development of a Midtown office property that will serve as Bank of America's New York headquarters, according to Morrison & Foerster, a New York law firm.The firm, which represented BoA in the transaction, said this is the first issuance of the tax-exempt Liberty Bonds for a project outside Lower Manhattan's Ground Zero area. The $1.2 billion, 945-foot tower is being developed by BoA along with the Durst Organization, and is expected to be completed in 2007, the law firm said. Future financings of up to $250 million (which are not tax-exempt) secured by the same property will be permitted under the terms of the financing, according to Morrison & Foerster. The bonds were also enhanced by an "accreting" letter of credit. "It will be interesting to see if the novel features of this financing will trickle into other bond deals, in particular on the residential side," said Mark Edelstein, chair of the law firm's real estate practice.

MortgageTree Lending, Modesto, Calif., has introduced a program designed to give independent mortgage brokerage companies greater control of the loan process.Under the Premier Broker program, brokers can underwrite loans, draw documents, sign off on loan stipulations, and offer MortgageTree's loan products from one central location, the company said. "Now, in addition to our successful net branching strategy, we're offering the Premier Broker option for highly motivated mortgage professionals who want to continue as independent brokers, yet who want greater control over the lending process as well as the growth and success of their businesses," said Diana Grossmann, executive vice president of MortgageTree. The company can be found online at http://www.mortgagetreelending.com.

Moody's Investors Service has announced that it will continue rating residential mortgage-backed securities backed by Massachusetts home loans originated after Nov. 7, when the state's anti-predatory-lending law went into effect.But because of the subjective nature of the law's "borrower's interest" standard, Moody's said it is concerned that nonexempt home loans may increase risk to RMBS investors. The RMBS issuer must represent and warrant that the loans were originated in compliance with the act (the Massachusetts Act Prohibiting Certain Practices in Home Mortgage Lending) and agree to repurchase any loans made in violation of the law. To achieve a high level of protection for a securitization, the issuer should have a low exposure to loans in Massachusetts and other jurisdictions with high-cost loan restrictions, Moody's said. The legislation also expands existing anti-predatory-lending regulations, which may also pose an additional risk to RMBS structures. The new law prohibits practices in connection with high-cost loans originated in Massachusetts, including charging certain fees and providing for balloon payments or negative amortization. It also requires the lender to reasonably believe that the borrower will be able to make the loan payments. Moody's can be found online at http://www.moodys.com.

The "rapidly cooling" Las Vegas housing market could lead to a surge in foreclosures next year, according to Foreclosures.com.The Las Vegas market has been distorted by out-of-state speculators who bought new homes to "flip for fast profits," with some homes selling two or three times in a matter of months, said Alexis McGee, president of Foreclosures.com. "When you see year-over-year price appreciation of over 52%, you know that rate is unsustainable," she said. ".... The hotter the market, the steeper the price correction will be in order to get back to normal. It looks like the speculators have left town, and the housing supply has jumped from one month's inventory to five." When interest rates rise, increasing downward pressure on prices, homeowners who bought at the height of the boom with adjustable-rate mortgages will find themselves "upside down" in their property -- that is, owing more than the house is worth, Foreclosures.com said.

Rising mortgage rates are likely to trigger a jump in mortgage defaults in California by the second quarter of 2005, according to Foreclosures.com, a Sacramento-based investment advisory firm.Alexis McGee, president of Foreclosures.com, said unemployment is no longer the main cause of foreclosures. "The problem now is that too many households are overloaded with debt," Ms. McGee said, noting that many consumers have continued spending by using adjustable-rate home equity credit lines. "You could say that homeowners got addicted to a combination of low interest rates and double-digit price appreciation every year. Now that combination has reversed itself." The housing market had begun softening in California but is now undergoing a year-end surge because "fence-sitters" want to lock in lower rates before mortgage rates rise further, she said. Ms. McGee predicted that California housing markets will slump in the first quarter, causing defaults to climb. The company can be found online at http://www.foreclosures.com.

The senior unsecured ratings of The Rouse Co. and Price Development Co. LP have been lowered from Baa3 to Ba1 by Moody's Investors Service, and the unsecured debt shelf rating of General Growth Properties has been lowered from (P)Ba1 to (P)Ba2.The rating outlooks are stable. The downgrades followed the announcement that the Chicago-based GGP had completed its acquisition of Rouse. Moody's attributed the downgrades to "aggressive financing of the Rouse acquisition by General Growth." The rating agency said the one-notch rating differential between the senior debt ratings of Rouse and Price Development, and those of GGP, reflect "differential financial leverage, and structural protections."

The Market Composite Index, an overall measure of mortgage applications, fell from 758.3 to 715.0 on a seasonally adjusted basis during the week ended Nov. 19, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 2.5% on the week but were down 8.0% from the level of a year earlier. The Purchase Index fell from 480.3 to 463.3 on a seasonally adjusted basis, while the Refinance Index declined from 2375.4 to 2179.3. Refinancings represented 48.4% of total applications, down from 48.6% the previous week, while adjustable-rate mortgages accounted for 34.0%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.70% to 5.64%, and points (including the origination fee) rose from 1.27 to 1.36 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.