Originations

The Performance Group, a mortgage consulting firm based in Concord, N.H., and Equinox Corp., a provider of business process outsourcing for the mortgage industry based in Irvine, Calif., have formed an alliance to offer both outsourcing and consulting services.TPG assists clients through each phase of the outsourcing process, and helps them establish the metrics and controls necessary to monitor and manage the outsourcing relationship, the company said. "With the end of the refinance boom, many of our clients are seeking ways to gain better control over their variable costs, while improving service to customers," said Larry Bonifant, founder and president of TPG. "Outsourcing ... offers a viable alternative for originators and servicers to effectively resolve the issues of escalating salaries, employee training, workload leveling and, in many situations, quality improvement." The companies can be found online at http://www.tpgltd.com and http://www.equinoxco.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 643.9 to 617.9 on a seasonally adjusted basis during the week ended July 16, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 19.9% on the week but were down 50.5% from the level of a year earlier. The Purchase Index fell from 468.8 to 440.3 on a seasonally adjusted basis, while the Refinance Index declined from 1662.4 to 1651.1. Refinancings represented 37.1% of total applications, up from 35.8% the previous week, while adjustable-rate mortgages accounted for 31.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages crept up from 5.95% to 5.96%, 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.

Wells Fargo & Co., the nation's second-largest mortgage servicer, reported net income of $1.71 billion ($1.00 per share) in the second quarter, up 12% from $1.53 billion ($0.90 per share) a year earlier.Mortgage originations in its community banking segment totaled $96 billion in the second quarter, an increase of $31 billion from the level recorded in the first quarter, the company said. "With higher interest rates during the quarter, application activity dropped to $100 billion," said Mark Oman, group executive vice president for home and consumer finance. "Reflecting the decline in applications, the mortgage application pipeline ended the quarter at $57 billion, down $15 billion from March 31, 2004, although purchase-mortgage volume remained at or above expectations." The company owned a portfolio of mortgage servicing rights on $749 billion of home loans as of June 30, up 18% from that of a year earlier. Wells Fargo valued its MSR portfolio at $8.5 billion, up from $6.9 billion at the end of 2003. The San Francisco-based company can be found online at http://www.wellsfargo.com.

Cendant Corp., New York, has announced that it is in discussions with an unnamed potential purchaser of its mortgage banking business.The July 19 issue of National Mortgage News speculated that possible buyers for the business are GE Consumer Finance, Stamford, Conn., and Citigroup, New York. The deal with the unnamed potential buyer would also result in "the creation of an ongoing relationship between the parties providing for Cendant's continued participation in the mortgage business through its residential real estate, relocation, and settlement services businesses," the company said. Century 21, Coldwell Banker, and ERA are all brands that are part of the Cendant family. Cendant said it expects to receive net proceeds at the time of sale of between $750 million and $1 billion, after repayment of approximately $5 billion to $6 billion of associated indebtedness.

Through an affiliate, CharterMac has entered into a preliminary alliance with Chicago-based Capri Capital LP that could lead to CharterMac's acquisition of CCLP's mortgage banking affiliate, Capri Capital Finance, and a strategic alliance with Capri Capital Advisors, CCLP's pension fund advisory affiliate.As an initial step, New York-based CharterMac said it has made a $72 million loan to CCLP and committed to making an additional $12 million advance. The acquisition of CCF and the alliance with CCA are subject to required regulatory and agency approval, completion of due diligence, and the negotiation and execution of additional documents and agreements with CCLP, the multifamily lender said. If these conditions are met, the CharterMac affiliate, CM Investor, will then make two new loans totaling $90 million, which would give CMI the right to acquire CCF and also acquire a 49% interest in CCA.

Commonwealth Bankshares Inc., Norfolk, Va., has reported the acquisition of Community Home Mortgage of Virginia Inc., Richmond, Va., for an undisclosed amount.Community Home, which is now a wholly owned subsidiary of the Bank of the Commonwealth, is a mortgage brokerage firm that originates, processes, and sells residential mortgages on a servicing-released basis throughout Virginia and Maryland, Commonwealth Bankshares said. Commonwealth Bankshares, the holding company for Bank of the Commonwealth, can be found on the Web at http://www.bankofthecommonwealth.com.

The Mortgage Bankers Association has reported appointments to its 2005 Commercial Real Estate/Multifamily Finance Board of Governors, which focuses on commercial/multifamily real estate finance policy issues and initiatives.The COMBOG officers are: Dan Phelan, president and chief executive officer of San Diego-based Pacific Southwest Realty Services, chair; Ed Hurley, managing director of Charlotte, N.C.-based Wachovia Securities, vice chair; and Kieran Quinn, president and CEO of Atlanta-based Column Financial, who remains vice chair. The trade association also announced six new members of the 30-member COMBOG: Sally Gordon, Moody's Investors Service, New York; Steven K. Graves, Principal Global Investors, Des Moines, Iowa; Thomas C. Jensen, Allstate Investments, Northbrook, Ill.; Henry J. Schwendiman, Q10 Bonneville Mortgage, Salt Lake City; Brian F. Stoffers, L.J. Melody & Co., Houston; and Deborah C. Towner, Genworth Financial, Seattle. The MBA can be found online at http://www.mortgagebankers.org.

Fitch Ratings has started a new rating category, CMBS primary servicer for small loans, for servicers of small loans in the commercial mortgage-backed securities sector."Servicing small-balance commercial mortgages typically requires greater customer service interaction with borrowers than is necessary with conduit loan servicing," the rating agency said. "Therefore, asset administration of small loans often requires a more personal touch. Because many of the properties securing these loans are owner-occupied businesses, analyzing physical property inspection reports, monitoring payment histories, and evaluating the credit scores of borrowers is often as, if not more, important than analyzing property operating statements." Fitch said that it issued its first such rating to Imperial Capital Bank in May. Fitch can be found online at http://www.fitchratings.com.

The average 30-year fixed mortgage rate fell to 6.00% for the week ending July 16 from 6.01% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.42% to 5.40%, while the average rate for one-year Treasury-indexed ARMs declined from 4.05% to 4.02%. Fees and points averaged 0.6 of a point for all three mortgage categories. "Taken as a whole, there are few compelling reasons why mortgage rates should dramatically increase right now," said Frank Nothaft, Freddie Mac's chief economist. "In terms of the economy, retail sales, industrial production, and producer prices were all lower than expected in June. Additionally, the Federal Reserve Board appears to be on target in quelling any future surges in inflation." A year ago, the average 30-year and 15-year fixed rates were 5.52% and 4.85%, respectively, and the average one-year ARM rate was 3.55%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

HomeBanc Corp., Atlanta, has announced the pricing of an initial public offering of 30 million shares of common stock at $7.50 per share, and the pricing of the sale of 4.25 million shares of common stock to GTCR Fund VII/A LP at $7.02 per share.In addition, HomeBanc Corp. has granted the underwriters a 30-day option to buy up to 4.5 million additional shares to cover any overallotments. J.P. Morgan Securities Inc. is the sole book-running manager and joint lead manager. The other joint lead manager is Friedman, Billings, Ramsey & Co. The stock has been authorized for listing on the New York Stock Exchange under the symbol HMB. HomeBanc Corp. is the parent company of HomeBanc Mortgage Corp., a mortgage banking company that focuses on originating purchase-money residential mortgage loans in the Southeast. HomeBanc Corp. said it plans to make an election to be taxed as a real estate investment trust.

The Market Composite Index, an overall measure of mortgage applications, fell from 687.0 to 643.9 on a seasonally adjusted basis during the holiday-shortened week ended July 9, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 25.0% on the week and were down 60.9% from the level of a year earlier. The Purchase Index fell from 500.9 to 468.8 on a seasonally adjusted basis, while the Refinance Index declined from 1769.7 to 1662.4. Refinancings represented 35.8% of total applications, unchanged from the previous week, while adjustable-rate mortgages accounted for 31.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages drifted down from 5.96% to 5.95%, and points (including the origination fee) fell from 1.37 to 1.35 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

The PMI Group Inc., Walnut Creek, Calif., has reduced its estimate of total incurred losses for the current calendar year for its U.S. mortgage insurance operations.Previous guidance had projected total incurred losses of $260 million to $280 million, but the company now estimates the figure at $220 million to $240 million. This is because PMI is seeing lower-than-expected new delinquency notices and stronger-than-expected employment growth, and it has strengthened its loss mitigation activities. Reduced opportunities for bulk insurance writings is one of the reasons cited for a revised guidance of a 2%-7% increase in U.S. primary insurance in force, down from 5%-15%. Finally, net income from international mortgage insurance operations should increase $16 million to $20 million from last year's results, compared with previous guidance of an increase of $8 million to $9 million, the company said.

MassHousing, a quasi-public Massachusetts agency that makes and insures affordable home mortgage loans, has announced the launching of MI Plus, a no-cost program that makes principal and interest payments on a mortgage for up to six months in case of unemployment.MassHousing noted that borrowers who put less than 20% down on a home are required to pay mortgage insurance, which protects the lender in the event of foreclosure, but provides no tangible benefit for the borrower. "We believe this will change the way consumers see mortgage insurance, and provide an additional incentive for first-time buyers to make the leap to homeownership," said MassHousing Executive Director Thomas R. Gleason. MassHousing is the first housing finance agency in the country to offer such a product, and only two private mortgage insurers offer similar products, the agency said. If a borrower is eligible, MI Plus will cover the principal and interest payments, up to a maximum of $2,000, for up to six months during the first 10 years of the mortgage. MassHousing will make the payments directly to the loan servicer. The agency can be found online at http://www.masshousing.com.

American Financial Realty Trust, Jenkintown, Pa., has completed the sale of $300 million in 4.375% convertible senior notes due 2024.The real estate investment trust said the net proceeds will be used chiefly to acquire properties. One of the initial purchasers has been granted a 45-day option to buy an additional $85 million of the senior notes, the REIT said. American Financial Realty Trust can be found online at http://www.afrt.com.

Merrill Lynch has announced a limited-time offer under which clients can earn rewards points and closing cost credits when they finance or refinance their home through Merrill Lynch Credit Corp. and hold a Merrill+ or Visa Signature card.The company said Merrill+ cardholders are eligible to earn up to 45,000 rewards points and a $250 or $500 credit toward closing costs when they obtain a Merrill Lynch mortgage. Visa Signature cardholders are eligible to earn up to 15,000 points. The offer is valid on applications received by Dec. 31, 2004, in which financing closes after July 1, 2004, and before March 1, 2005, the company said. Reward points can be redeemed for a variety of travel options and merchandise. Merrill Lynch Credit can be found online at http://www.mlcc.com.

Prudential Real Estate Investors, Parsippany, N.J., has announced the formation of a joint venture with Madison Capital Management LLC to sponsor and manage a group of hedge or private equity funds focused on fractionalized real-estate-related investment interests.The venture, Madison/Prudential Realty Partners LLC, is managed by Madison and by PREI's Global Real Estate Private Equity Group (on behalf of Prudential Investment Management, the asset management business of PREI's parent company, Prudential Financial Inc.). PREI said the venture will also work with PREI's Munich-based operation, TMW Immobilien GmbH, and Madison's European business development office in Paris. The joint venture partners will initially provide $31 million to fund the program. The companies can be found online at http://www.prei.com and http://www.madisoncap.com.

Federal Realty Investment Trust, Rockville, Md., has formed a joint venture with Clarion Lion Properties Fund to invest in up to $350 million in retail properties.The fund is looking for stabilized, supermarket-anchored shopping centers in East Coast and California markets, FRIT said. The real estate investment trust and Clarion Lion Properties Fund -- a fund managed by ING Clarion Partners, a New York-based real estate affiliate of the ING Group -- have committed to contributing up to $42 million and $98 million of equity capital, respectively, to acquire properties over the next 24 months, according to FRIT. The REIT has contributed a Montgomery County, Md., property valued at $20.5 million to the venture. FRIT will manage the properties on behalf of the venture and will receive fees in return. "This partnership gives Federal Realty the ability to acquire high-quality, stabilized shopping centers that may not otherwise meet the trust's property operating income growth targets," said Donald Wood, president and chief executive officer of FRIT.

Lenders are increasingly willing to fight back against fraud, whether committed by consumers, loan officers, or other parties to a mortgage transaction, according to a moderator at the Western Secondary Market Conference in San Francisco."I think that the perception [of fraud] is changing," said Lawrence C. Ward of CMG Mortgage in San Ramon, Calif., who moderated a July 9 panel on dealing with fraud. "Lenders are getting tired of just accepting fraud as being part of their business. Companies are getting tired of that -- there is too much money involved." Mr. Ward said there are now "all these wonderful systems" to discover fraud and identify the perpetrators, and he predicted that companies will put such systems in place. "Lenders are tired of saying fraud is part of the cost of doing business because, no, it is not," he said. "The same way bank robberies are considered criminal acts, lenders will not accept fraud, either." The 32nd Annual Western Secondary Market & Mortgage Banker Conference was sponsored by the California Mortgage Bankers Association.

New York Life Investment Management LLC has announced the financing of two mortgage loans and a mezzanine loan totaling $81.1 million in connection with office buildings in Dallas and industrial properties in Dallas and metropolitan Cincinnati.The financing for the office properties totaled $40.6 million and involved a mortgage loan secured by two office buildings and a mezzanine loan secured by a pledge of ownership interests in a third, the company reported. The borrower was Transwestern Investment Co., Chicago, through its Asian Realty Partners II fund. The other financing totaled $40.5 million and involved a mortgage loan on six industrial properties, three in Dallas and three in Hebron, Ky., outside Cincinnati. The borrowers are DCT Park West LLC, DCT Pinnacle LP, and DCT DFW LP. In both financings, New York Life Investment acted as investment manager for New York Life Insurance Co. The companies can be found on the Web at http://www.nylim.com and http://www.newyorklife.com.

Predatory lending, foreclosures, and housing subsidies appear to be the top housing concerns for legislators and the mortgage industry, according to Robert M. Couch, chairman of the Mortgage Bankers Association.Speaking at the opening session of the Western Secondary Market Conference organized by the California MBA, Mr. Couch said predatory lenders are "an abomination ... but they are a very small minority." Moreover, he said, anti-predatory-lending laws have produced unintended consequences. "The people who need credit the most are denied access to credit," Mr. Couch declared. "New Jersey had to recently change its law to make it more reasonable." Regarding foreclosures, they are "running amok," he said, and thousands of people are losing their homes. At year-end, the foreclosure inventory stood at 1.29%. As for subsidies, Mr. Couch said there is a growing view that homeownership rates have gotten too high because subsidies are too pervasive. "You hear it in a lot of different ways," he said, noting that Federal Reserve Board Chairman Alan Greenspan has testified before Congress that Fannie and Freddie are getting too much "implicit" subsidy and should be privatized. Meanwhile, some consumer advocacy groups have said that "we make credit too readily available," he said. The MBA can be found online at http://www.mortgagebankers.org.