Originations

BNC Mortgage Inc., Irvine, Calif., has entered into a $280 million forward commitment with an unnamed New York-based investment bank.BNC will sell subprime mortgages originated between August and November. The pricing structure includes buy-ups and buy-downs for the actual weighted average coupons, margins, and prepayment penalties delivered. BNC in the past has sold $740 million of subprime loans to this buyer. BNC president Kelly W. Monahan said the company entered into this agreement in order to lock in cash premiums on loan sales through the end of this year.

Westmark Group Holdings Inc. has established new corporate headquarters in Boca Raton, Fla. The subprime lender said it will coordinate all nationwide mortgage operations, sales, underwriting, and closing from the new 27,000-foot facility, as well as its corporate finance, accounting, and administrative functions.Westmark was originally based in California, but began consolidating its subprime mortgage operations in Delray Beach, Fla. in 1995. "After extensive cost-benefit analysis, we determined that to sustain the record level of growth which we have demonstrated over the past few years, a move into a larger and more efficiently laid out physical facility would be required," said Mark D. Schaftlein, Westmark's president and CEO. Westmark employs about 70 professionals in its home office, supporting 28 account executives and approximately 400 independent mortgage brokers who operate mainly in the Southeast, the Midwest, and on the West Coast.

The AFS Title Search Index rose 4.3% to 217.7 for the week ended Sept. 4 from 208.9 the previous week, according to Bridge/Telerate Advance Factor Service.The index averaged 210.8 over the previous four weeks, up 1.9 points from the prior week's four-week moving average. A year ago, the index stood at 156.0, 71.6% of the current level. "With residential mortgage rates moving further into sub-7.0% territory, the refinance incentive is progressively becoming more alluring for potential re-mortgagors," said AFS manager Paul Descloux. "The current absolute value and recent trend for the 10-year U.S. Treasury portend the continuation of the 1998 prepayment plateau well into autumn." Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com.

The delinquency rate for Federal Housing Administration-insured adjustable-rate mortgages hit an all-time high in the second quarter, according to statistics released Wednesday by the Mortgage Bankers Association.The seasonally adjusted delinquency rate for FHA ARMs was 9.35% at June 30 -- a 204-basis-point increase over the past 12 months and a 63-bp rise from the first quarter. The Department of Housing and Urban Development is already working to reduce delinquencies by placing restrictions on "teaser" rates and buydowns that lenders offer borrowers on FHA-insured ARMs. "But it is going to take awhile before those controls start to take hold," said MBA executive vice president Paul Reid. HUD is expected to endorse up to 237,107 ARMs in fiscal 1998. Government-backed ARMs are popular because they generate higher fees compared to a conventional 'A' paper loan. In addition, FHA ARMs are used to qualify low-income borrowers who otherwise would not be able to obtain a mortgage. However, the vast majority of FHA mortgages are fixed-rate. Data show that the total number of FHA FRMs past due has risen 35 bp year-over-year to 6.80%. The MBA said the overall residential delinquency rate, which includes both conventional and government product, was 4.33% in the second quarter -- an increase of 8 bp over the past year.

The Refinancing Index surged 44.5% for the week ended Sept. 4 to its highest level since late February, as mortgage applications rose 26.3% overall, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index rose 11.1%, the Conventional Index increased 28.5%, and the Government Index was up 17.9%, the survey indicated. On a seasonally adjusted basis, the Market Index rose from 425.2 the previous week to 542.6; the Purchase Index increased from 269.4 to 305.1; the Refinancing Index soared from 1331.5 to 1924.0; the Conventional Index jumped from 540.9 to 701.8; and the Government Index rose from 232.1 to 276.9. Refinancings represented 52.1% of total applications, up from 45.5% the previous week, while adjustable-rate mortgages accounted for 8.6%, up from 7.7% the week before. The Refi Index level of 1924.0 was its highest since the week ended Feb. 20, when it stood at 2005.6. Overall, applications were 162.3% higher than in the same week last year. The address of the MBA's website is http://www.mbaa.org.

Starwood Financial Trust has acquired the commercial mortgage origination and servicing business of Phoenix Home Life Mutual Insurance Co. for an undisclosed amount.The acquired businesses and assets include: Phoenix's commercial mortgage origination, underwriting, and servicing group; the servicing/asset management rights to three commercial mortgage loan portfolios with an outstanding principal balance of $1.3 billion; and the refinancing rights to Phoenix's $950 million mortgage loan portfolio. Jay Sugarman, president and CEO of Starwood Financial, said the acquisition allows the company to expand its proprietary origination and servicing platform and generate a pipeline of financing opportunities. "We hope to replicate this transaction with other owners of real estate-related financial assets and businesses as we seek to further consolidate the sector," Mr. Sugarman said. Philip R. McLoughlin, Phoenix's executive vice president-investments, said the transaction is "also a strategic move for Phoenix, which is shifting the focus of its mortgage investment program to securitized assets." As part of the transaction, Starwood Financial will eventually centralize its loan servicing and related administrative functions in a new office in Hartford, Conn., under the supervision of Barbara Rubin, the former head of Phoenix's mortgage business.

Resource Bancshares Mortgage, Columbia, S.C., the nation's 18th largest residential lender, is entertaining offers for the company, sources have told MortgageWire.A Resource spokesman declined to comment on the matter. While most mortgage stocks have been correcting in the past few months, Resource (symbol: RBMG) has been holding up quite well. In late morning trading Tuesday its share price was up $1 to $18.50, way above its 52-week low of $11 and $4.75 under the high of $23.25. A non-depository, Resource is one of the few publicly traded conventional lenders left of any size. Last year it dodged a bullet when its purchase of Walsh Securities, Parsippany, N.J., a subprime lender, fell apart. Walsh ran into difficulties when it was discovered that it had funded at least $24 million worth of land flips. Many investment bankers said Resource was overpaying for Walsh, a belief that later proved true. Besides its bread and butter conventional business, Resource is now funding subprime loans.

Despite the turmoil in the financial markets, housing is still a solid investment, according to the National Association of Realtors.Citing falling Treasury yields, NAR president R. Layne Morrill said 30-year mortgage rates should also decline further and make financing a home even more affordable. "Consumers looking to buy homes are definitely coming out ahead," Mr. Morrill said. Stocks have outperformed housing in average annual growth over the past 20 years, but housing prices have shown consistent appreciation, while stocks have experienced wide swings in value, he said. Moreover, Mr. Morrill pointed to the leveraging that results from the fact that most homebuyers use their own money to cover only 10%-20% of the purchase price. "This leveraging of borrowed funds gives housing a return far in excess of the market's appreciation," he said. The NAR's website address is http://www.realtor.com.

Island Mortgage Network Inc., Melville, N.Y., has entered into a gestation warehouse agreement (formally known as a mortgage loan purchase and sale agreement) with Prudential Securities Credit Corp., New York.The amount of the facility is $25 million. This is a new relationship for the company, and it is the first gestation line it has received, said Edward R. Capuano, president and chairman of IMN Financial Corp., the parent of Island Mortgage.

The Department of Housing and Urban Development should act immediately to improve procedures for monitoring and disseminating market-sensitive data on FHA and Ginnie Mae loan and securitization programs, The Bond Market Association has urged.In a letter to HUD Secretary Andrew Cuomo, the trade group said "widespread and timely access" to information on the statutory commitment authority of the agencies is "essential to maintaining the liquidity of an active future delivery market into which mortgage originators may sell current mortgage production." The lack of such information has caused several disruptions in the market, the association said, and it offered to help the agencies develop and carry out better monitoring procedures and to disseminate data via its own website and mailing lists. As examples of such market dislocations earlier this year, the group cited the delayed and uneven distribution of information on the possible exhaustion of the Federal Housing Administration's guarantee authority for adjustable-rate mortgages and of Ginnie Mae's loan commitment authority. "These two incidents point out the need to be cognizant of the interaction between the primary and secondary mortgage markets," said George Miller, the association's vice president and deputy general counsel. "...If the secondary market is inefficient, or if market participants don't receive adequate or sufficiently timely information, the primary market could ultimately see a decrease in capital and an increase in costs." The group's website address is http://www.bondmarkets.com.

Mortgage employment posted still another record in August as the industry added 4,800 full-time jobs to the previous month's total.According to figures compiled by the Bureau of Labor Statistics, the mortgage banking/brokerage sectors employed 297,000 full-timers in August compared with 292,200 in July. A year ago the industry employed 253,900. The BLS website address is http://stats.bls.gov.

Home values in major metropolitan areas rose in the second quarter to a level 9.5% higher than it was a year earlier, reaching their highest level of the decade, according to First American Real Estate Solutions.First American RES, a nationwide real estate information company based in Anaheim, Calif., said it found "steep home value appreciation rates in the major metropolitan areas of California and New York" and moderate increases elsewhere. Orange County, Calif., experienced the largest increase in home values -- 17.9% -- among the 36 metropolitan areas analyzed. "In fact, California's major urban centers have emerged as among the nation's hottest housing markets," the company said. "However, the state's housing recovery is patchy, and home values in some areas have not elevated to a point to compensate homeowners that have incurred equity losses since the early 1990s. In Los Angeles County, home values are still 20% below their level in 1990." After Orange County, the areas with the biggest home value increases were: Oakland, San Diego, San Francisco, and San Jose, all in California; New York; Seattle-Bellevue-Everett; Los Angeles-Long Beach; Boston; and Denver. The figures are based on a repeat-sales model that tracks the resale value of homes that have sold at least twice, the company said.

The Huntington Mortgage Co., Columbus, Ohio, has promoted Thomas J. Finnegan III to president and chief executive, replacing R. Frederick Taylor, who has left the company.Mr. Finnegan joined the company in 1996 as senior vice president of residential loan production. Prior to that he was executive vice president of Integra Mortgage Co., Pittsburgh, where he was responsible for all retail, wholesale, and correspondent production functions. Huntington Mortgage, a unit of Huntington Bancshares Inc., has a servicing portfolio of over $8 billion and has closed more than $1.65 million in mortgages so far this year. In the second quarter, Huntington Mortgage ranked 49th in the nation in retail mortgage originations with $513 million, according to the Database Products Group, a MortgageWire affiliate.

The Senate Banking Committee has postponed a mark-up of a comprehensive financial services modernization bill (H.R. 10) due to unresolved issues, including Federal Home Loan Bank reforms and the treatment of unitary thrifts.Senate Banking Committee Chairman Alfonse D'Amato, R, N.Y., issued a statement that members have made progress on many issues and he intends to reschedule the mark-up and vote on H.R. 10 sometime during the next two weeks. However, any delay is seen as proof that the full Senate will not have time to consider or pass H.R. 10 before Congress adjourns Oct. 9 for the year and for the November elections. Just prior to the 10 a.m. mark-up Thursday, Sen. Chuck Hagel, R, Neb., was expected to offer a stripped-down version of his FHLB reform bill. The Hagel amendment would provide for voluntary membership for thrifts, change the annual $300 million Resolution Funding Corp. obligation to 20.75% of FHLB System earnings, and make access to FHLB advances easier for small banks with less than $500 million in assets. However, the final form of the FHLB provisions were still being negotiated behind closed doors when Sen. D'Amato announced the postponement. An amendment by Sen. Paul Sarbanes, D, Md., that would stop commercial firms from acquiring or chartering unitary thrifts was also subject to intense backroom negotiations. Commercial bank lobbyists now are concerned that the Sarbanes amendment may fail and they will not be able to support H.R. 10.

The average 30-year fixed mortgage rate dropped from 6.92% to 6.82% (with fees and points averaging 1.0) for the week ending Sept. 4, the lowest rate in nearly five years, according to Freddie Mac's Primary Mortgage Market Survey.The last time the average 30-year rate was this low was during the week ended Oct. 22, 1993, when it averaged 6.74%, with fees and points averaging 1.5, Freddie Mac said. The average 15-year fixed mortgage rate fell to 6.51% from 6.61% (with fees and points averaging 1.0) the previous week, its lowest level since the 6.44% (with fees and points averaging 1.7) recorded the week ended Feb. 16, 1996. The average rate for one-year Treasury-indexed adjustable-rate mortgages decreased to 5.51% from 5.58%, with fees and points averaging 1.1. "Mortgage rates followed the market down this week, to exceptionally low levels," said Robert Van Order, Freddie Mac's chief economist. "This has served to prolong an already incredibly lengthy housing boom and, although we saw new home sales decline recently, the level of sales is still very high. There will be a gradual slowdown toward the end of the year, but the housing market will remain robust for some time to come." A year ago, the average 30-year and 15-year fixed rates were 7.53% and 7.08%, respectively, and the average one-year ARM rate was 5.58%. Freddie Mac's website address is http://www.freddiemac.com.

Norwest Integrated Structured Assets Inc., Frederick, Md., has sold approximately $285 million of securities backed by 10- to 30-year fixed-rate alternative-A mortgage loans, NISTAR has announced.NISTAR 1998-02, which is scheduled to settle Sept. 29, was underwritten by Donaldson, Lufkin & Jenrette. Credit enhancement will be provided via a senior/subordinated structure. NISTAR -- an affiliate of Norwest Mortgage Inc., Des Moines, Iowa -- said it will securitize chiefly residential first-lien mortgage loans originated under the Norwest Alternative Financing Program, which is targeted at borrowers who would not qualify under Norwest's standard jumbo or agency underwriting guidelines. Norwest's website address is http://www.securitieslink.net.

Comerica Bank, Detroit, has introduced a home equity account that combines the convenience of a line of credit with the security of a fixed-term, fixed-rate loan.The Home Equity Flexline -- which has no application fee, no closing costs, and no annual fee -- can be used for debt consolidation, college expenses, home improvements, and other needs, the bank said. "We believe this is the first home equity account in Michigan to combine a line of credit with up to two fixed-rate, fixed-term payment options, giving consumers greater control over their borrowing," said James L. Allen, Comerica's first vice president for consumer finance. "The consumer decides when to borrow, whether to use the fixed-rate installment loan or the variable-rate line of credit, and how to access the account." The new product allows consumers to borrow up to 100% of their home's value, and borrowing can be done over the phone, via convenience checks, or with Visa Gold Access cards, Comerica said. Rates vary based on factors such as credit line amount, loan-to-value ratio, and credit history. The website address of Comerica's mortgage page is http://www.comerica.com/mortgage/index.html.

Private mortgage insurers had their second best month of the year in July in terms of net primary new insurance written, according to data collected by the Mortgage Insurance Companies of America.The $16.7 billion written in July represented a decline of 2.5% from the industry's record month of $17.1 billion in June. In terms of net applications, July's 174,325 was the third best month of 1998. Still, this was down 2.1% from June's 178,095. Net volume does not include loans that are being insured that have more than 12 months of seasoning. At the end of the first seven months of 1998, there had been $98.2 billion of net new primary insurance written, up 51% from the same period last year, and there had been 1,113,477 net applications, up 57%.

Thrift originations of one- to four-family loans hit a record $67.7 billion in the second quarter, according to the Office of Thrift Supervision, as thrifts took advantage of the summer refinancing activity and strong sales of new and existing homes."Thrift institutions fully participated in this vibrant housing market," OTS Director Ellen Seidman said Wednesday morning. The previous record of $57 billion in originations was set in the fourth quarter of the 1993 refinancing boom. In 1993, thrifts originated a total of $189 billion in single-family loans for the entire year. In the first half of this year, 1,181 thrifts have originated $127 billion in product. The OTS also noted that thrifts have essentially turned into mortgage banks because of the high demand for fixed-rate loans. And thrifts sold $66.3 billion of their production into the secondary market during the second quarter. Thrift servicing portfolios increased in the second quarter by $19.7 billion to $517 billion as a result of this mortgage banking activity.

Mego Mortgage Corp., Atlanta, has named William Paul Ralser as president and chief operating officer of the company, replacing Jeffrey S. Moore, who has resigned.Mr. Ralser has been a director of Mego since July. Since July 1996 he had been chairman and president of First Fidelity Bancorp Inc., a California-based thrift and loan company. Prior to that, Mr. Ralser was executive vice president of Countrywide Funding Corp., Calabasas, Calif. Mr. Moore was a founder of Mego, and until the company's recent recapitalization, he served as chairman. When Champ Meyercord was named as Mego's new chairman and chief executive, Mr. Moore became the company's president.