Originations

Sales of newly constructed single-family homes fell 3% in August following a huge rebound in July.The U.S. Commerce Department reported that new home sales fell from a seasonallyadjusted annual rate of 921,000 in July to 893,000 in August. Sales had jumped 11.7% from July to July. The NationalAssociation of Home Builders said it had expected a little more of a decline in August. But NAHB economist MichaelCarliner noted that the August number accurately reflects the strength of the new home sales market, which is onlydown 2% from last year's record pace. The NAHB expects that sales will soften in the months ahead, and Mr. Carlinerpointed out that there has been a slowdown in some markets in the Midwest and the deep South. Overall, the homebuildersare pleased with the economy and Federal Reserve Board policy. "We believe the soft landing has happened,"Mr. Carliner said.

Standard & Poor's has lowered the senior debt and long-term counterparty and credit ratings of Delta Financial Corp. to single-'B'-minus from single-'B'. The short-term counterparty credit rating of the Woodbury, N.Y.-based subprime mortgage lender is affirmed at single-'B'. The outlook remains negative. S&P reported that the ratings actions reflect the company's difficulty in sustaining a positive operating cash flow and establishing sufficient liquidity to meet longer-term obligations. A $150 million senior debt issue rated by S&P matures in 2004. "While Delta Financial has sufficient short-term liquidity to service this debt, its ability to repay or refinance the note at maturity is uncertain, given the company's current performance and the public debt market's lack of receptiveness to subprime specialty mortgage companies. Although these conditions may improve or the company may find private sources for refinancing the debt, either scenario is highly speculative and such uncertainty is not consistent with the single-'B' rating," Standard & Poor's said. On the positive side, S&P noted that the company has a final settlement in place with the New York Office of the Attorney General and the New York State Banking Department and as such has eliminated the uncertainty associated with the regulators' investigations. Standard & Poor's website is http://www.standardandpoors.com/ratings.

Thirteen leading commercial property companies have signed an agreement to establish Office Technology Consortium "to improve business processes, drive tenant values, and strive to improve industry service standards." The founding members of the consortium are: Boston Properties, Brookfield Properties Corp., CarrAmerica Realty Corp., Crescent Real Estate Equities Co., Duke-Weeks Realty Corp., Highwoods Realty LP, Hines, Mack-Cali Realty Corp., Oxford Properties Group, Prentiss Properties Trust, Shorenstein Co., TrizecHahn Office Properties, and Vornado Realty Trust. These companies own or manage over 400 million square feet of office space in North America on a combined basis. Initially, the consortium will concentrate on two key initiatives: the first will be an online "Landlord Procurement Exchange" aimed at lowering landlord and tenant operating costs and increasing rental value; the second will be an online "Leasing Exchange" that will enable customers to make informed leasing decisions.

Approved Financial Corp., Virginia Beach, Va., has reported a net loss of $60,000 ($0.01 per share) for the first quarter, compared with a net loss of $1.2 million ($0.23 per share) a year earlier. The company attributed the reduction in net loss to its expense-reduction efforts and a whole loan sale of approximately $18.5 million that was deferred to January at the request of the investor as a result of year-2000 considerations. If the sale had occurred in December 1999, the net loss for the first quarter would have been $650,000 ($0.12 per share), the company said. Loan volume totaled $82.6 million for the quarter, down 15% from $97.2 million a year earlier.

JDN Realty Corporation, an Atlanta-based REIT specializing in the development and management of retail shopping centers, announced that its interim funding agreement with its revolving bank group and a similar agreement with its term bank group expired on April 14, and the banks can consider all debt due and payable as a result. While JDN said it will continue to seek an extension of the funding agreements, the failure to consummate a deal could affect the company's performance in an "adverse manner," JDN said. JDN said it is in the process of engaging a financial advisor to seek "alternative means for financing its business."

Bob Luckiewicz has joined First NLC, a subprime lender that recently purchased certain assets from National Lending Center Inc., Deerfield Beach, Fla., as vice president and Midwest regional sales manager. Mr. Luckiewicz will be responsible for all production, strategy, and sales initiatives in Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin. He was most recently vice president of sales and operations for the Midwest at Family Credit Connection.

The Federal Housing Administration is warning appraisers not to increase their fees significantly as a result of a newly revised valuation sheet and other Homebuyer Protection Plan reforms. In a mortgagee letter, FHA Commissioner William Apgar contends that the FHA has not increased appraisers' liability and that the agency will even refrain from stepping up enforcement actions until March 1, 2000. "Consequently, there is no reasonable explanation for a significant increase in fees," Mortgagee Letter 99-32 says. While the FHA does not regulate appraisal fees, Mr. Apgar points out that FHA lenders should use appraisers that charge reasonable and customary fees. "Any amount above what is reasonable and customary cannot be paid by the mortgagee," Mr. Apgar says in the mortgagee letter.

The Federal Agricultural Mortgage Corp., Washington, D.C., has reported net income of $5.7 million for 1998, compared with $4.6 million in 1997.Earnings per share totaled $0.52 for class A and B common stock and $1.55 for class C common stock. Farmer Mac said that before the third quarter of 1998, its net income included provisions for income taxes based on an effective tax rate "significantly lower" than its statutory tax rate, due to the recognition of previously deferred tax benefits. If its effective tax rate had equaled its statutory tax rate in those periods, Farmer Mac would have reported net income (on a fully taxable equivalent basis) of $4.2 million for 1998 and $3.0 million for 1997. "Although continued low agricultural commodity prices during 1999 may, as some economists predict, result in increased delinquencies on agricultural mortgages, we believe Farmer Mac's reserves are adequate to cover fully any losses that may arise from those increased delinquencies," said Farmer Mac president and CEO Henry D. Edelman. Farmer Mac's website address is http://www.farmermac.com.

America's Senior Financial Services, Miami Lakes, Fla., has executed a letter of intent to acquire the Chicago-based Senior Income Reverse Mortgage Corp. The terms of the transaction, which will include cash and stock, were not disclosed.The companies said the merger would create the nation's third largest reverse mortgage lender. Nelson Locke, president of America's Senior Financial, and Steven Baer, president of Senior Income, are directors of the National Reverse Mortgage Lenders Association. Mr. Baer will continue in his current role at Senior Income and will join the board of America's Senior Financial. America's Senior Financial recently announced its intent to acquire Capital Funding of South Florida.

Criimi Mae and certain of its officers and directors have been named as defendants in a lawsuit filed in U.S. District Court for the Eastern District of New York on behalf of purchasers of the company's common stock between February 20, 1998 and October 5, 1998.The complaint charges the defendants with concealing the company's true financial health in order to inflate the price of the company's stock, and with misrepresenting the company's impaired assets, earnings and capital position during the Class Period. Attorneys for the plaintiffs are contending that shareholders were led to believe, among other things, that Criimi Mae was insulated from market fluctuations.

Donaldson, Lufkin & Jenrette has confirmed market rumors that it has laid off 23 staffers "from all levels" of its residential and commercial mortgage departments in conjunction with consolidation at the firm.A spokesman said the firm cut overlapping positions in the two departments, which were consolidated in August and re-named "real estate finance," a department within the firm now headed by Steve Kantor, who was formerly with the firm's commercial real estate department.

HomeSide Lending Inc., Jacksonville, Fla., has expressed interest in bidding on the servicing portfolio of Capstead Inc., Dallas, sources have told MortgageWire.The publicly-traded Capstead services $55.7 billion in residential loans. HomeSide services $115.8 billion in product, ranking sixth nationwide. The other known bidder is GMAC Mortgage, Horsham, Pa., which has a servicing portfolio of $92.9 billion and ranks ninth. Both HomeSide and GMAC have been actively buying portfolios the past year or so. Capstead, a non-depository, has yet to comment about the situation. Norwest Mortgage, Des Moines, has been mentioned as a possible bidder but the company recently said it had no interest in Capstead's servicing.

Publicly-traded subprime lender New Century Financial Corp., Irvine, Calif., has entered into a strategic alliance with U.S. Bancorp, Minneapolis.As part of the deal U.S. Bancorp will: purchase $20 million in New Century convertible preferred stock; purchase a significant portion of the B&C lender's production (whole loans for cash); and create a cross-selling relationship between the two companies. Several publicly-traded non-depository subprime lenders are looking to strike strategic alliances or sell out entirely. Firms actively looking for partners include Aames Financial, Los Angeles; IMC Mortgage, Tampa; and United Companies, Baton Rogue, La., to name but a few. According to The 1999 Home Equity Lending Directory, New Century is the 17th largest subprime originator in the nation. Over the past year or so U.S. Bancorp has shown increased interest in the subprime sector and even the high LTV sector, investment bankers have said. In trading this morning New Century (symbol: NCEN) was up 50 cents to $8.

The Federal Housing Administration, Department of Veterans Affairs mortgage guarantee program, and the Government National Mortgage Association all racked up impressive numbers for the fiscal year that just ended September 30, attendees at the Mortgage Bankers Association annual convention in Chicago heard.William Apgar, President Clinton's nominee to be FHA commissioner, said the agency had made 1.1 million endorsements in its single-family program, up significantly from the year before. Mr. Apgar didn't have numbers for multi-family volume. R. Keith Pedigo, director of the DVA Loan Guaranty Service, said Veterans Affairs guaranteed 350,000 loans for a volume of $39 billion, 90,000 loans more than the year before. And George Anderson, evp of Ginnie Mae, said it had originated $138 billion in mortgage-backed securities, its second-best year ever.

Home buyers and their lenders were told during the MBA's annual convention that more interest rate swings like the recent 100-basis-point jump that occurred over a short 48-hour period are now a normal part of the mortgage market."We have to get used to it," said Donald Lange, the new president of the Mortgage Bankers Association. HUD Secretary Andrew Cuomo agreed, saying in his keynote convention address that "turbulence is going to be a key feature" of the mortgage market. The "two-day meltdown," as Mr. Lange called it, resulted from the global financial crisis. And the new MBA leader predicted that the erratic money markets will "settle down and go forward. Volatility is with us, but it's not a sea-change," he said. Still, he suggested that "part of responding to volatility is learning to live with it and work with it. So take two aspirin and go to bed, then get up the next morning and go again. Anticipating volatility is becoming the norm." Sec. Cuomo had similar advice for the 6,000 mortgage bankers attending the three-day conference. "Assume change will be constant," he said. The events of the last weeks are a signal of the kinds of change we can no longer be surprised by."

Thanks to the recent jump in refinancing activity, the Mortgage Bankers Association is now predicting a record $1.4 trillion in loan originations this year.The previous record was $1.02 trillion set in 1993, another strong year for refinancing. But David Lereah, the MBA chief economist, told attendees of the MBA Convention in Chicago that "this will be a lot bigger year than that. It will probably be closer to $1.5 trillion when all is said and done." Donald Lange, the new MBA president, was a little more restrained than that. Talking with reporters at a briefing at the MBA's annual convention here, he said forecasting has been made difficult by all the economic uncertainty. "But at the moment," he added, "all the elements are in place" for at least $1.4 billion in originations. Mr. Lange, who heads Weyerhaeuser Financial Investments, Inc., Torrance, Calif., said technological advances are enabling lenders to handle the increased volumes. "We're finally starting to get a lift from all the technological advances," he said. "We're now able to run a larger rabbit through the snake a lot more seemlessly." The industry leader also suggested that higher loan volumes have become the norm. "We seem to have reached the point where $800-$900 billion volumes are the new mean level," he said. The second largest year for originations was in 1992, when $890 billion in new loans was written.

HUD Sec.Andrew Cuomo told attendees of the 85th Annual Mortgage Bankers Association of America that he would put the new FHA loan limits into place as soon as President Clinton signs the 1999 HUD/VA appropriations bill passed by Congress last week. Sec. Cuomo told the Mortgage Bankers Convention here that the President will sign the measure this week, and that the "moment after" the legislation is signed, he will "put the new limits into effect immediately." The new ceilings already are posted on HUD's website (http://www.hud.gov), and in an effort to get the word out, the department said it is willing to fax reporters the limits for their area upon request. The new limits range from $109,032 in low-cost areas to $191,621 in high-cost areas, a substantial increase from the current $86,317 ceiling in inexpensive counties to $170,362 in more expensive places. The legislation not only enables more families to obtain larger FHA mortgages, it also consolidates what has been an unwieldy system in which the agency had more than 2,000 different ceilings nationwide. Under the new system, Sec. Cuomo said, there will be "just under 200." Also, for the first time, all counties within a metropolitan area will have the same ceiling. The vast majority will see their limits go higher when the new ceilings are put in place.

The average 30-year fixed mortgage rate set another record for the week ending Oct. 9, falling to 6.49% from 6.60% the week before, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell to 6.15% from 6.27%, the lowest level since Freddie Mac began tracking it in September 1991. The average rate for one-year Treasury-indexed adjustable-rate mortgages dipped to 5.36% from 5.39%, its lowest level since the 5.40% recorded for the week ended March 1, 1996. Fees and points averaged 1.0 for all categories. "Treasury rates are abnormally low and they have pulled mortgage rates down with them, although by less than point for point," said Robert Van Order, Freddie Mac's chief economist. "Even though Treasury rates might rise, we don't think mortgage rates will increase much above their current levels, at least not in the near future." A year ago, the average 30-year and 15-year fixed rates were 7.26% and 6.82%, respectively, and the average one-year ARM rate was 5.49%. Freddie Mac's website address is http://www.freddiemac.com.

First Mortgage Network, Plantation, Florida, has enhanced the design of its loanshop.com website (http://www.loanshop.com) by implementing customer care tools and adding educational content.The site is designed to control the entire mortgage transaction, from making the credit decision to funding the loan. New features include real-time access to status updates and loans in process, ability for consumers to receive credit approval within an hour, an automated loan search and quote program, a refinance registry, and an expanded lending library designed to educate and empower the borrower. Founded in 1992, loanshop.com (formerly American Finance & Investment) funded its first Internet loan in 1994. Since then, the company has processed over 7,500 online loans, funding close to $1 billion in loans over the Internet annually. The company was acquired by First Mortgage Network in March 1998.

BankAtlantic Bancorp, Fort Lauderdale, Florida, has announced that its third quarter and fourth quarter results will be significantly less than the $6.4 million and $8.2 million, respectively, reported for the comparable periods in 1997.The expected decrease is primarily attributable to writedowns in BankAtlantic's mortgage servicing rights portfolio due to accelerated prepayments as a result of the declining interest rate environment; losses tied to the record downturn in the securities market at the Company's wholly-owned subsidiary, Ryan, Beck and Co. and BankAtlantic's trading securities portfolio; and expenses associated with a number of new business initiatives undertaken by BankAtlantic. The institution, along with outside consulting firm Alex Sheshunoff & Co., has recently completed a review of its operations that identified opportunities to streamline operations and increase non-interest income. Expectations are that implementation of changes as a result of this review will produce meaningful results in 1999.