Originations

FirstCity Capital Corp., Valhalla, N.Y., has announced the completion of its first securitization.FirstCity Capital Home Equity Loan Trust 1998-1 is a $122.7 million private issue of asset-backed securities collateralized by home equity loans. James H. Aronoff, FirstCity Capital's chief executive officer, said he viewed the deal as "the start of long-term, productive relationships with our correspondents and with asset-backed investors." The company was founded last year by Mr. Aronoff; Christopher J. Morrissey, FirstCity Capital's president and chief operating officer; and David R. Keeney, senior vice president. They "specialize in forming long-lasting partnerships with primary lenders and acquiring and servicing home equity loans from various originators," the company said. The securitization was underwritten by Lehman Brothers and Nomura Securities International Inc. and insured by Financial Security Assurance.

Chatfield Dean & Co. Inc., Greenwood Village, Colo., has initiated coverage on the Dallas-based FirstPlus Financial Group Inc. with a "strong buy" recommendation.The firm recommended buying FirstPlus stock until it reaches $28, assuming the company has not been bought, and said the stock could trade at $41.50 within a year. Chatfield Dean cited various factors contributing to its recommendation, including FirstPlus's market leadership in retail debt consolidation lending, delinquencies and defaults that are "consistent with expectations," and the company's search for a buyer. The firm noted that FirstPlus has alleged market manipulation of its stock by short sellers. "We speculate [that] institutional investors have reached their limit in the stock and are therefore unable to stem short selling activity," Chatfield Dean said. "This represents an excellent opportunity for the individual investor to capitalize on the undervalued shares." Risk factors cited by Chatfield Dean include the facts that: there are no assurances that FirstPlus will be bought or that there will be a loan securitization in the current quarter; default and delinquency rates may exceed expectations; and demand for retail loan originations could be adversely affected by interest rate fluctuations. Chatfield Dean's website address is http://www.chatfield.com.

United National Inc., New Windsor, N.Y., a mortgage company that specializes in net branching, has acquired 2.26 million shares (48.57%) of Premier Mortgage Resources Inc. United National will operate as a subsidiary of the publicly traded Premier.Its president and chief executive, Donald Wilen, will be president and chairman of Premier. Rudy Scott, vice president and national sales manager for United National Mortgage LLC, said the net brancher "will be part of a publicly held company that will provide the necessary resources for growth nationwide."

Chase Manhattan Mortgage Corp., Edison, N.J., has agreed to acquire 26 branches that make up the Western retail origination network of Mellon Mortgage Co., Houston.Terms were not disclosed. Thomas M. Garvey, Chase's retail channel executive, said the deal will add $750 million to the company's retail volume and nearly double its production in Washington and Oregon. Chase will acquire offices in Washington, Oregon, Idaho, Nevada, Arizona, and New Mexico, as well as Mellon's regional operations center in Portland, Ore.

Even if high-LTV loan delinquencies increased as a result of an economic downturn, the resulting losses would pose little risk to the thrift and bank insurance funds, according to a General Accounting Office report released Tuesday.The GAO report says only one federally insured depository institution, Life Savings Bank, Riverside, Calif., is heavily involved in the high-LTV market. Last year, the California thrift originated and securitized $400 million in high-LTV product. The GAO cautioned that losses to the Bank Insurance Fund and Savings Association Insurance Fund could increase if the high-LTV market expands and depository institutions started originating more loans. Concerned that just such a scenario will occur, the Office of Thrift Supervision recently implemented measures aimed at curbing thrift holdings of high-LTV loans. In the first comprehensive study of its kind, the GAO said "hundreds" of lenders originate high-LTV loans each year but only 10 institutions, including Life Savings, are heavily involved in the market. Most lenders, including banks, thrifts, and non-depository mortgage companies, originate the loans but then sell the mortgages on a servicing-released basis to firms like Life Savings and FirstPlus Financial, Dallas. High-LTV lending continues to be one of the hottest products in the mortgage industry. Lenders are expected to originate $12 billion worth of high-LTV loans in 1998, according to the GAO. The GAO's website address is http://www.gao.gov.

The AFS Title Search Index rose 6.3% to a holiday-adjusted 231.5 for the week ended Sept. 11, its highest level since March 20, according to Bridge/Telerate Advance Factor Service.The index averaged 216.0 over the previous four weeks, up 5.2 points from the prior week's four-week moving average. A year ago, the index stood at 158.5, 68.4% of the current level. "With mortgage rates establishing new lows for 1998, look for the index to continue at this current level for next week and perhaps beyond," said AFS manager Paul Descloux. "With the fundamentals and technicals in the bond market supporting a continuation of recent declining rate trends, look for 1998's prepayment plateau to continue through the end of the year, with the 'holiday effect' the only apparent speed bump on the horizon." The holiday effect is the slowdown in mortgage activity between Thanksgiving and New Year's. Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com.

Bear, Stearns & Co. inc., New York, and Greystone Community Reinvestment Associates, Hartford, Connecticut, have jointly announced that they have partnered to purchase packages of Community Reinvestment Act residential mortgage loans.The two firms will initially target small- to medium-sized banks with CRA loan portfolios as small as $25 million.

FirstPlus Financial, Dallas, Texas, has announced that it has identified an individual it believes has been systematically disseminating false and misleading information about the company over the Internet.The unnamed individual is connected with an investment fund and, along with its affiliates, is a trader of FirstPlus stock. The company is reviewing its legal remedies and is forwarding this information to the SEC's Office of Internet Enforcement for investigation.

ContiFinancial Corporation, New York, has announced that its wholly-owned subsidiary, ContiMortgage Corporation, has established ContiDirect, a new retail division which will originate subprime home equity loans on a direct-to-consumer basis.One of ContiMortgage's strategic objectives is to have at least 50% of loan originations generated from direct retail and small broker sources. ContiMortgage's retail subsidiaries and small broker sources currently account for one-third of total loan production. To date, retail expansion has been accomplished mainly through acquisitions. ContiDirect is expected to get the company closer to this goal.

First American Corp., Nashville, Tenn., as part of its efforts to concentrate its mortgage operations on its primary market, has announced it sold McAfee Mortgage on Aug. 16.to an undisclosed buyer. Terms were not released, but First American said it expected to recognize "an immaterial gain" on the deal. The sale of McAfee represents $6 million in annualized expenses savings. Previously, the company sold First Mortgage of Nebraska as part of its mortgage banking reduction.

Fannie Mae's business activity continued at a strong pace in August with $16.8 billion of commitments, $14.3 billion of mortgage purchases, and $27.1 billion of MBS issues.Net commitments to purchase mortgages grew over 75% from the previous month when Fannie committed to buy $12.8 billion. Fannie's net mortgage portfolio grew by $7.2 billion in August to $367.2 billion, an annualized growth rate of 23.9% compared with 36.9% in July. The year-to-date annualized net mortgage portfolio growth rate was 24.1%. Purchases of $14.3 billion were down slightly in August over July when the GSE bought $17.3 billion. Portfolio liquidations were $6.6 billion in August compared to $6.7 billion in July. Total MBS outstanding increased by $10.5 billion in August to reach $784.4 billion, a 16.3% annualized growth rate compared with 19.7% in July. MBS issues were $27.1 billion in August compared with $28.8 billion in July. MBS liquidations were $16.5 billion in August compared with $16.3 billion in July. Fannie Mae's net interest margin decreased by 3 basis points to 104 basis points in August. The conventional single-family at-risk serious delinquency rate declined for the fifth consecutive month to 0.56% in July, down from 0.54% in June and 0.64% in February. The conventional multi-family at-risk serious delinquency rate was 0.38% in July compared with 0.36 percent in June. Fannie's website is at http://www.fanniemae.com.

Yet another yield spread premium law suit has been certified as a class action, this time from Minnesota.The court's action in this case, Brancheau vs. Residential Mortgage and Mercantile Bank, is disturbing because Minnesota is in a circuit that had previously denied class certification of another case, said National Association of Mortgage Brokers executive vice president Brian J. Kinsella at the recent New York Association of Mortgage Brokers convention in Saratoga Springs, N.Y. At the same meeting, Robert M. Jaworski of the law firm of Reed Smith Shaw & McClay added this is a very troublesome case that is made more so by being the second in a row to receive class certification. E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey/League of Mortgage Lenders, said what makes this different from the Culpepper and Mulligan cases is that it has been established that this payment was for services rendered.

Consolidation will continue in the home equity industry as companies have trouble accessing the capital markets and low price/earnings ratios for small companies make them tempting acquisition targets, according to David Olson Research, Columbia, Md. "Many economists are projecting falling interest rates, which in turn will cause prepayments to remain high and make it increasingly difficult for home equity lenders to meet earnings targets," the company said.In the latest edition of its Home Equity Industry Quarterly Report, the company found that the 10 largest public home equity firms have an average trailing P/E ratio of 14.8, nearly double that of all 35 home equity companies analyzed. Despite the industry problems, David Olson Research estimated that home equity asset-backed security volume grew to $23.3 billion in the second quarter from $18.6 billion in the first quarter. It said it stands by its earlier estimate that $80 billion of new home equity ABS will be issued this year. The company's website address is http://www.wholesaleaccess.com.

Life company mortgage investment delinquencies are at their lowest levels in over 28 years, a survey by the American Council of Life Insurance has found.The rate as of the end of the second quarter was 0.88%, down 6 basis points from the first quarter's 0.94%. Delinquencies on commercial mortgages, which make up 92% of life company mortgage investments, fell 5 bp from the first to the second quarter to 0.80%. This happened in spite of increases in delinquencies in five of the seven types of commercial investments. The delinquency rate improvement can be in part attributed to the foreclosure on $152 million of retail loans previously classified as delinquent, ACLI said.

Argent Capital Corp., Huntington Beach, Calif., has announced the acquisition of the Sullivan and Mock Corp., a Las Vegas mortgage company.Argent was created in February, then merged with Sunport Medical Corp. and acquired Clearview Capital Corp., a California mortgage banking company. Christopher A. Millar, Argent's president and chief executive officer, said the company expects to expand the services that were provided by Sullivan and Mock, including subprime residential lending.

The Senate Banking Committee voted 16-2 Friday morning to pass a comprehensive financial services modernization bill that stops commercial firms from acquiring unitary thrifts and provides small banks with easier access to the Federal Home Loan Bank advance window.H.R. 10 would allow affiliations of banks, securities firms, and insurance companies for the first time, and clear the way for a proposed mega-merger of two New York financial services -- Citicorp and Travelers Group. But to get the American Bankers Association and Independent Bankers Association to support the bill, the committee approved provisions that prohibit the sale of unitary thrifts to commercial firms after Sept. 3. However, existing unitaries can engage in new commercial activities under a compromise brokered by Sen. Robert Bennett, R, Utah. "In the interest of moving the total legislation package, we have come to this compromise," said Senate Banking Committee Chairman Alfonse D'Amato, R, N.Y. The Senate version of H.R. 10 also includes several FHLB reforms proposed by Sen. Chuck Hagel, R, Neb. These reforms provide for voluntary membership for thrifts, converts the annual $300 million Resolution Funding Corp. obligation to 20.75% of FHLB earnings, and makes access to FHLB advances easier for small banks with less than $500 million in assets. H.R. 10 goes to the Senate floor next and, if it is approved, to a House-Senate conference. Chances of passage have improved, but there is little time left in this legislative session and the Clinton administration has not voiced support for the bill.

Norwest Asset Securities Corp., Frederick, Md., has announced the offering of approximately $400 million of securities backed by fixed 20- and 30-year non-relocation mortgage loans.Credit enhancement for NASCOR Mortgage Pass-Through Certificates, Series 1998-25 will be provided through the use of a senior/subordinated structure. The underwriter is Bear Stearns, and the transaction is scheduled to settle on Oct. 28. Issuance and post-issuance information will be available after settlement from the SecuritiesLink Advanced Information Services website (http://www.securitieslink.net).

Freddie Mac has named two new senior vice presidents, one of them to the newly created position of senior vice president-finance.Vaughn A. Clarke was appointed to the finance post, and Gregory E. Reynolds was named senior vice president and corporate controller. Both will report to John P. Gibbons, Freddie Mac's executive vice president and chief financial officer. Mr. Clarke will oversee the development and implementation of long-term financial and operating plans and budgets as well as shareholder strategy, and will manage Freddie Mac's capital structure. He was previously senior vice president and treasurer at Viacom Inc. Mr. Reynolds will be responsible for Freddie Mac's financial performance management and internal control systems, as well as financial and regulatory reporting, tax compliance, and administrative activities. He has held the post on an interim basis since February, and was previously vice president of Freddie Mac's corporate accounting department.

The average 30-year fixed mortgage rate neared its all-time low during the week ending Sept. 11, falling from 6.82% to 6.77% (with fees and points averaging 1.0), according to Freddie Mac's Primary Mortgage Market Survey.The lowest 30-year rate in the 28-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 6.43% from 6.51% (with fees and points averaging 1.0), its lowest level since the 6.40% (with fees and points averaging 1.5) recorded the week ended Oct. 29, 1993. The average rate for one-year Treasury-indexed adjustable-rate mortgages decreased to 5.50% from 5.51%, with fees and points averaging 1.1. "Not only have mortgage rates fallen to historical lows, they have remained at such levels for a record-breaking 13 weeks," said Robert Van Order, Freddie Mac's chief economist. "The real news, however, is that they may very well average out even lower next week. Because of the continued low rates, the Mortgage Bankers Association reports 50% of applications for mortgages are refinancings, prolonging the refi boom far longer than was ever expected." A year ago, the average 30-year and 15-year fixed rates were 7.53% and 7.07%, respectively, and the average one-year ARM rate was 5.59%. Freddie Mac's website address is http://www.freddiemac.com.

Online mortgage broker E-Loan, Palo Alto, Calif., has been selected by Bank Rate Monitor to provide additional mortgage qualification services to its website.The co-branded mortgage center will offer consumers access to a larger number of national and regional lenders, E-Loan said. By linking to the center from Bank Rate Monitor's home page (http://www.bankrate.com), consumers can access E-Loan's personalized features to help them decide on the best mortgage financing option and then complete the entire loan transaction online, E-Loan said. E-Loan's website address is http://www.eloan.com.