Originations

Commonwealth Mortgage Assurance Co., Philadelphia, has introduced an online service that enables lenders to obtain mortgage insurance in seconds, according to CMAC.MI Online, a feature of CMAC's customer information and access system ServiceLink, will be available nationwide this fall, the company said. "With ServiceLink, [lenders] can access their account 24 hours a day to perform servicing transfers, cancel mortgage insurance coverage, print certificates, and more," said Lora L. Wasson, CMAC's director of product marketing. "Now, using the new MI Online feature, our customers can obtain mortgage insurance on demand." CMAC is the operating subsidiary of CMAC Investment Corp. CMAC's website address is http://www.cmacmi.com.

Standard & Poor's has placed its ratings on the Southern Pacific CMN Trust Series 1998-H1 home loan asset-backed notes on CreditWatch with negative implications.S&P said the action was based on the financial difficulties of Southern Pacific Funding Corp., which recently announced that it will take a one-time charge of $60-70 million in the third quarter as a result of changes in residual asset valuations and increased credit loss expectations. Following that announcement, S&P lowered SPFC's long- and short-term counterparty credit and senior unsecured debt ratings. SPFC, the servicer for the Southern Pacific CMN Trust transaction, has been removed from S&P's list of approved servicers. S&P's website address is http://www.ratings.standardpoor.com.

GE Capital Mortgage Insurance Co., Raleigh, N.C., is introducing an "A-Minus" program so that it can provide mortgage insurance for homebuyers with less than perfect credit profiles."We know that many borrowers who just miss traditional underwriting guidelines still represent a good credit risk," said GECMIC senior vice president Warren Raybould. Starting Oct. 1, Excel-delegated lenders can start to deliver A-Minus loans through standard delivery, Mr. Raybould said. GE is joining several other private mortgage insurance firms that are offering MI on A-Minus loans. MGIC of Milwaukee and United Guaranty of Greensboro, S.C., announced similar programs this summer.

Federally insured banks and thrifts achieved record earnings in the second quarter but economic turmoil in Russia and Asia is expected to dampen future growth, FDIC Chairman Donna Tanoue said Tuesday.Ms. Tanoue said international activities have, on average, contributed roughly 12% to bank earnings since 1994. How the economic slump in overseas markets affects bank and thrift earnings will not be fully known until December, the FDIC chairman said. "But at this point, we are not forecasting another earnings record for the third quarter," Ms. Tanoue added. Ms. Tanoue's comments come as bank earnings reached a record high for the sixth consecutive quarter. Bank profits totaled $16.1 billion in the second quarter -- an increase of $1.5 billion year over year -- while thrifts posted record earnings of $2.8 billion. It is not yet clear what type of impact overseas investments will have on banks' mortgage lending activities. However, a further examination of FDIC data shows that banks held a record $741 billion in single-family, residential mortgages on their balance sheets at the conclusion of the second quarter.

High-LTV lenders would be required to disclose that the interest on the loan is not necessarily tax deductible under an amendment by Sen. Jack Reed, D, R.I., that has been added to the consumer bankruptcy bill (S. 1301).The Reed amendment is designed to stop misleading advertising of the tax advantages of 125% loans and to stop the Internal Revenue Service from requiring lenders to flag high-LTV loans. "Objectively, the Reed amendment eliminates the need for any IRS action," said Jim O'Connor, tax counsel for America's Community Bankers. The IRS has been considering changes to the "Mortgage Interest Statement" information form (Form 1098) to alert IRS that a borrower has a high-LTV loan. The Senate was expected to pass S. 1301 Tuesday if an amendment by Sen. Edward Kennedy, D, Mass., to increase the minimum wage is defeated. The House has already passed a bankruptcy bill (H.R. 3150), and the chief sponsor, Rep. George Gekas, R, Pa., expressed confidence Tuesday morning that a consumer bankruptcy bill can be passed in the next few weeks before Congress adjourns. In addition, the Clinton administration says it can support the Senate version of the bankruptcy bill, which has a more flexible standard for determining which debtors can have access to Chapter 7 bankruptcy.

The AFS Title Search Index climbed 13.3% to 230.1 for the week ended Sept. 18, signaling a coming spike in prepayments, according to Bridge/Telerate Advance Factor Service.The index averaged 230.1 over the previous four weeks, up 14.1 points from the prior week's four-week moving average. A year ago, the index stood at 157.4, 60.0% of the current level. "This week's surge in the AFSTSX signifies the imminent acceleration in prepayment speeds from their currently rapid pace," said AFS manager Paul Descloux. "This is the highest number of title searches received in any one week this year. The initial impact of the current increase in title activity will be felt in the upcoming October prepayment period, with some spillage into the subsequent reporting months." Citing the current interest rate environment, Mr. Descloux predicted that "the 1998 prepayment plateau will extend robustly through the end of the year." Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com.

Norwest Asset Securities Corp., Frederick, Md., has announced the offering of approximately $500 million of securities backed by fixed 20- and 30-year non-relocation mortgage loans.Credit enhancement for NASCOR Mortgage Pass-Through Certificates, Series 1998-26 will be provided through the use of a senior/subordinated structure. The underwriter is Lehman Brothers, and the transaction is scheduled to settle on Oct. 29. Issuance and post-issuance information will be available after settlement from the SecuritiesLink Advanced Information Services website (http://www.securitieslink.net).

First American Title Insurance Co., a subsidiary of First American Financial Corp., Santa Ana, Calif., has acquired the assets of American Title Corp., La Crosse, Wis. The acquisition will become a division of First American Title and will keep the American Title name.It will retain its staff of 11 employees, and former owners Jerry and Elizabeth Ostreng will continue as managers for six months before retiring, First American Financial said. First American Financial's website address is http://www.firstam.com.

Senior unsecured notes of Southern Pacific Funding Corp., Lake Oswego, Ore., have been downgraded by Fitch IBCA Inc. The rating on $100 million of 11.5% senior unsecured notes due 2004 was lowered from B-plus to B-minus, the rating agency said.The action followed SPFC's announcement that it will take a one-time charge of $60-70 million in the third quarter as a result of changes in the valuation of its residual assets, increased credit loss expectations, and current conditions in the asset-backed, debt, and equity markets. "The rating action reflects SPFC's constrained liquidity over the long term, the ability to execute a committed whole loan sale strategy to improve cash flow, and an overall decline in capitalization, which will be exacerbated by the expected revaluation of the company's interest-only strip for the quarter ended Sept. 30, 1998," Fitch IBCA said. As previously reported, Standard and Poor's has lowered SPFC's long-term and short-term counterparty credit ratings and its senior unsecured debt rating. Fitch IBCA's website address is http://www.fitchibca.com.

The National Association of Home Builders' Housing Market Index declined from 71 to 70 in September, but remained only two points from the 18-year high of 72 recorded in July, the NAHB has reported."Low interest rates continue to drive home sales nationwide, although builders in some markets have begun noticing a slight slowdown," said NAHB executive vice president Kent Colton. "Also, there were scattered concerns about the stock market's recent volatility. In general, however, September's HMI indicates builders see market activity settling to a healthy level." The monthly survey of home builders asks respondents to rate current and expected sales of single-family homes as "good," "fair," or "poor" and traffic from prospective buyers as "high to very high," "average," or "low to very low." Any number over 50 indicates more builders see sales conditions as good than poor. The scores for current and expected sales each fell two points in September, to 75 and 78 respectively, but the traffic score rose two points to 56, the NAHB said. The NAHB's website address is http://www.nahb.com.

Single-family starts dropped 4% in August after hitting an all-time high the previous month, according to data released Friday by the U.S. Commerce Department.Government data show that single-family starts were at a rate of 1.245 million in August, down from a record 1.299 million in July. Year-over-year, single-family starts have increased 15.7%. "After single-family starts hit an all-time high in July we were expecting a drop-off in activity, but it doesn't really mean anything -- lenders are still very busy," said David Lereah, chief economist with the Mortgage Bankers Association of America. Meanwhile, total starts, including multifamily, fell 5% in August to a rate of 1.613 million.

Robert M. Stata has been named president of Citizens Mortgage Service Co., a wholly owned subsidiary of IMN Financial Corp., Melville, N.Y. IMN said Mr. Stata's mission is to turn Citizens, which was acquired on Sept. 5, into a competing retail subprime lender.IMN, through its subsidiary Island Mortgage Network Inc., is a full-service mortgage banking firm with 49 branches.

Duff & Phelps Credit Rating Co., Chicago, has initiated debt ratings for FirstPlus Financial Group Inc. with a senior debt rating of BB and a subordinated debt rating of BB-minus.The Dallas-based FirstPlus, the nation's largest originator and servicer of high-LTV loans, recently put itself on the auction block. Duff & Phelps said its ratings reflect the company's "improving cash-oriented earnings," its securitization management, and its "dominant" market share in the high-LTV sector. Offsetting factors include the "still unseasoned performance record" for high-LTV loans, exposure to short-term interest rate volatility, and "a high reliance on securitization, including the continued, though more conservative, use of gain-on-sale accounting and the de facto subordination of cash flows relative to securitization lenders." The rating agency cited favorably FirstPlus's use of "significantly more efficient securitization structures over the past year which provide for an up to 2% upfront cash gain from a combination of initial undercollateralization and the sale of senior interest-only securities." Duff & Phelps's website address is http://www.dcrco.com.

Southern Pacific Funding Corp., Lake Oswego, Ore., has announced that it will take a one-time charge of $60-70 million in the third quarter as a result of changes in the valuation of its residual assets, increased credit loss expectations, and current conditions in the asset-backed, debt, and equity markets.Standard and Poor's responded to the announcement by lowering the company's long-term counterparty credit rating and senior unsecured debt rating from B-minus to CCC-plus and its short-term counterparty credit rating from B to C. Southern Pacific is the latest subprime mortgage lender to take a writedown in response to a prepayment-related decline in the value of its servicing portfolio, but the company said it was increasing credit loss assumptions as well. The company said it believes its adjustments for future period credit losses and prepayments will improve the company's performance if higher prepayment levels persist. In addition, the company said it will sell whole loans rather than securitize its product "for the foreseeable future" due to limited access to capital in today's market. "Although the company continues to pursue strategic alternatives with capital partners, the initiatives announced today will position Southern Pacific to be cash neutral and eliminate its reliance on the volatile capital markets," said Robert W. Howard, Southern Pacific's CEO and vice chairman.

The average 30-year fixed mortgage rate hit a record low during the week ending Sept. 18, falling from 6.77% to 6.66% (with fees and points averaging 0.9), according to Freddie Mac's Primary Mortgage Market Survey.The previous low for the 30-year rate in the 27-year history of the survey was 6.74% (with fees and points averaging 1.5), during the week of Oct. 22, 1993, Freddie Mac said. The average 15-year fixed mortgage rate fell to 6.35% from 6.43% (with fees and points averaging 0.9), its lowest level since the 6.31% (with fees and points averaging 1.5) recorded the week ended Oct. 22, 1993. The average rate for one-year Treasury-indexed adjustable-rate mortgages declined to 5.43% from 5.50%, with fees and points averaging 1.1. "Mortgage rates fell to record-breaking low levels this week," said Robert Van Order, Freddie Mac's chief economist. "With interest rates so affordable, we have entered another refi boom. Many homeowners with mortgages that were just recently considered too low to refinance now have the opportunity to move into even lower rate loans, and we fully expect the refi market to continue to flourish." A year ago, the average 30-year and 15-year fixed rates were 7.38% and 6.94%, respectively, and the average one-year ARM rate was 5.53%. Freddie Mac's website address is http://www.freddiemac.com.

Mortgage Guaranty Insurance Corp., Milwaukee, has been selected by the Wisconsin Housing and Economic Development Authority to provide pool mortgage insurance for all single-family bonds the agency issues over the next five years.WHEDA has projected that the five-year volume of mortgages to be covered by MGIC will reach $1 billion. Curt S. Culver, president and chief operating officer of MGIC, said that in addition to the pool coverage the company will provide technical support and share its underwriting and risk management expertise with WHEDA. One highlight of the agreement is that WHEDA will finance at least 100 new modular homes in Milwaukee in a planned pilot program. MGIC will provide primary as well as pool insurance for the modular home loans. MGIC's website address is http://www.mgic.com.

American Business Financial Services Inc., Bala Cynwyd, Pa., has priced a $200 million securitization of business-purpose and consumer home equity loans through three subsidiaries.ABFS Mortgage Loan Trust 1998-3, a real estate mortgage investment conduit with four classes of certificates, was underwritten by Prudential Securities Inc. The ABFS subsidiaries involved in the transaction were American Business Credit Inc., Upland Mortgage, and New Jersey Mortgage and Investment Corp. The Class A-1 certificates were priced at 100, with a spread of 90 basis points over the 6% June 1999 Treasury note to yield 5.926%. Class A-2 was priced at 100, with a 100-bp spread over the 5 1/2% May 2000 Treasury to yield 5.83%. Class A-3 was priced at 100, with a 147-bp spread over the 5 3/4% August 2003 five-year Treasury note to yield 6.271%. Class A-4 was priced at 30 bp over the one-month London Interbank Offered Rate, with an average life of 3.19 years to the call. Financial Security Assurance Inc. will insure the deal, which is scheduled to settle Sept. 29.

Freddie Mac has made a $100,000 commitment to the Mortgage Bankers Association's Year 2000 testing plan, the MBA has announced.The MBA Year 2000 Inter-System Readiness Test Plan is a multimillion-dollar voluntary program under which firms will test their systems with those of trading partners in a Year 2000 business environment. "At Freddie Mac, we've made Year 2000 readiness our top corporate priority," said James Cotton, Freddie Mac's vice president of Year 2000 Primary Markets. "We believe that the MBA Inter-System Readiness Test is an important and necessary step toward ensuring readiness for us and the mortgage finance industry." The plan, developed by the MBA Year 2000 Inter-Industry Test Subgroup, has also received $100,000 commitments from Alltel, Fannie Mae, and First American Real Estate Services. It will include test transactions relating to 15 critical business functions in origination, secondary marketing, and servicing, the MBA said. The test is scheduled to begin early next year.

Mortgage applications declined 16.2% for the week ended Sept. 11, although the overall Market Index was up on a seasonally adjusted basis, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index dropped 22.0%, the Refinancing Index fell 10.9%, the Conventional Index decreased 15.9%, and the Government Index was down 17.4%, the survey indicated. On a seasonally adjusted basis, the Market Index rose from 542.6 the previous week to 572.3; the Purchase Index decreased from 305.1 to 302.5; the Refinancing Index rose from 1924.0 to 2141.9; the Conventional Index climbed from 701.8 to 742.6; and the Government Index rose from 276.9 to 288.2. Refinancings represented 55.4% of total applications, up from 52.1% the previous week, while adjustable-rate mortgages accounted for 7.7%, down from 8.6% the week before. Overall, applications were 80.2% higher than in the same week last year. The address of the MBA's website is http://www.mbaa.org.

G.E. Capital Corp., Stamford, Conn., and BancOne, Indianapolis, are talking to Dallas-based FirstPlus Financial Corp. about a deal, MortgageWire has learned.Sources say that GECC is conducting due diligence on the company and BancOne is scheduled to make a presentation either Thursday or Friday. At deadline time, FirstPlus's shares were trading up $2 or so at $18. FirstPlus, the nation's largest originator and servicer of high-LTV loans, hopes to get $22 a share for the company, said one source familiar with the situation. FirstPlus could not be reached for comment. BancOne is a warehouse lender to FirstPlus. Another large warehouse lender to FirstPlus, Residential Funding Corp., Bloomington, Minn., also has expressed interest in the company. In the first half of 1998, FirstPlus was the high-LTV volume leader with $2.46 billion in production. FirstPlus is being represented by Bear Stearns & Co. Its 52-week trading high was $61 a share.