Originations

Mortgage applications declined 6.3% for the week ended Aug. 21, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index fell 5.3%, the Refinancing Index slid 7.5%, the Conventional Index decreased 8.7%, and the Government Index was up 3.9%, the survey indicated. On a seasonally adjusted basis, the Market Index fell from 406.7 the previous week to 385.2; the Purchase Index decreased from 251.4 to 243.1; the Refinancing Index dropped from 1310.5 to 1211.9; the Conventional Index was down from 527.4 to 486.4; and the Government Index rose from 205.4 to 216.4. Refinancings represented 45.2% of total applications, down from 45.8% the previous week, while adjustable-rate mortgages accounted for 8.7%, down from 9.3% the week before. Overall, applications were 42.1% higher than in the same week last year. The address of the MBA's website is http://www.mbaa.org.

Ginnie Mae expects to make it through September without having to shut down its securitization program."Based on current market conditions, it is anticipated that we will be able to make it through the end of September," a Ginnie Mae official said Wednesday. Ginnie Mae started rationing commitments in July because of concerns it could run out of commitment authority before the end of the fiscal year, which ends Sept. 30. Some Ginnie Mae issuers have had their commitment requests pared down, but now it looks as if the rationing program will be successful and the Ginnie Mae securitization program will not be disrupted. Congress is expected to renew Ginnie Mae's commitment authority by Oct. 1.

Freddie Mac has reorganized its Single-Family Securitization Group into five divisions to provide "greater integration" of its single-family operations, the government-sponsored enterprise has announced.The group will now consist of the following divisions: Marketing, Sales and Production; Risk Assessment and Model Development; Customer Services and Control; Investor and Dealer Services; and Portfolio Management. The Marketing, Sales and Production division will integrate functions previously performed in the Loan Prospector and Seller divisions. Executive vice president John Fisk, who heads the Single-Family Securitization Group, will manage the marketing division until a senior vice president is recruited. The risk assessment division will be headed by Don Bisenius, a senior vice president who was formerly vice president of mortgage credit policy. Michael C. May, a senior vice president who previously headed the Loan Prospector division, will lead the customer services division. Investor and Dealer Services, Freddie Mac's securitization arm, will continue to be led by senior vice president Patricia Dodson. The new Portfolio Management division, which will focus on "rebalancing Freddie Mac's portfolio of credit risk," will be headed by senior vice president Henry Cassidy, formerly vice president of Single-Family Risk Management. Freddie Mac also announced that David Andrukonis, formerly senior vice president of the Seller division, will assume the new post of chief credit officer, and that Steve Hopkins, the GSE's senior vice president and national sales director, plans to resign to pursue other interests. Freddie Mac's website address is http://www.freddiemac.com.

Procrastination by the White House in naming a director to run HUD's multifamily restructuring program is raising concerns on Capitol Hill that the whole restructuring effort could be in jeopardy."We are extremely irritated. And this concern is going to be expressed to HUD," said an aide to Sen. Connie Mack, R, Fla., who chairs the Senate banking subcommittee on housing. By statute, the restructuring program cannot start on Oct. 1 unless the president has nominated a director to run the Office of Multifamily Housing Assistance Restructuring, which will manage and oversee the restructuring of thousands of FHA-insured multifamily projects with Section 8 rent subsidies. President Clinton's nomination of Larry Simons, a former FHA commissioner, has been expected for several months. But the delay is getting serious now. HUD intends to issue interim rules for the restructuring program in the next week or two. And the Internal Revenue Service recently issued a favorable ruling that removes the tax consequences of restructuring the FHA mortgages. The restructuring program is "presumably ready to go," Sen. Mack's aide said. "So this is extremely disturbing. And it is kind of mystifying, because Simons' name has been at the White House for months."

ContiFinancial Corp., New York, has increased its commercial paper program from $275 million to as much as $325 million.A letter of credit and reimbursement agreement was co-arranged by Credit Suisse First Boston and Dresdner Kleinwort Benson, with the participation of 13 other major U.S. and foreign banks, ContiFinancial said. Current commitments will allow the company to issue up to $317.5 million of commercial paper. This is in addition to ContiFinancial's $200 million unsecured three-year revolving bank credit facility and its $2.8 billion of committed warehouse facilities, the company said.

VIE LLC, a subsidiary of Norwest Mortgage, Des Moines, Iowa, has signed an agreement with the Pennsylvania Department of Labor and Industry under which the wage history files maintained by the state agency will be made available to credit-granting subscribers of the online income and employment verification system operated by VIE.This arrangement could result in a reduction in the time and costs of processing consumer credit applications, VIE officials said. Available information will include up to four years of wage data on each individual, including the names of past and current employers, and salary history. The data will be available only for those residents who are employed by a company or organization in Pennsylvania. VIE said the system will become operational in a few months.

The AFS Title Search Index fell 2.3% to 206.1 for the week ended Aug. 21 from 210.9 the previous week, according to Advance Factor Service.The index averaged 209.1 over the previous four weeks, down 2.4 points from the prior week's four-week moving average. A year ago, the index stood at 155.0, 75.2% of the current level. "Despite the near riot on Friday to purchase U.S. Treasuries, mortgage rates were little affected," said AFS manager Paul Descloux. "...Absent an increase in the refinance incentive, look for the AFSTSX to remain near current levels over the next few weeks as the equilibrium between available mortgage rates and title searches remains." Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com.

CFI Mortgage Inc., West Palm Beach, Fla., has agreed to sell its conforming retail originations subsidiary, Bankers Direct Mortgage Corp., to Inverrary Trace Inc. for book value plus a premium of $1 million.Inverrary Trace will pay $1.5 million in cash and the rest in a note. It has already made a good faith cash deposit of $150,000. CFI will now focus strictly on the subprime business through its Direct Mortgage Partners subsidiary. DMP is developing a subprime servicing platform and an Internet loan application delivery system.

Sales of existing single-family homes reached yet another record high for the year in July, according to data released today by the National Association of Realtors.Resales rose 4% in July to a seasonally adjusted annual rate of 4.93 million units, up from 4.74 million in June. Year-over-year, existing single-family home sales are up almost 18% nationwide, while in selected markets, like Denver and Springfield, Mass., resales have jumped 50%. Meanwhile, the previous record high for resales was set in March when they ended the month at 4.89 million units. "The marketplace is characterized by virtually zero inflation, while unemployment and economic growth are good," said NAR president R. Layne Morrill. "Mortgage rates are low and consumer confidence is at an all-time high. This adds up to excellent home buying conditions." Currently, the NAR is forecasting 4.7 million existing home sales for 1998, which would be an 11.5% increase over last year's record of 4.22 million. Mr. Morrill said this year's heavy activity is being fueled, in part, by increasing numbers of "nontraditional" households entering the housing market, including immigrants, singles, and older people trading down, reflecting a shift that will continue in years to come. Regionally, resales were up 13.1% in the West during July, 3.3% in the Midwest, and 1.5% in the Northeast. The market remained unchanged in the South. The NAR's website address is http://www.realtor.com.

GetSmart, Burlingame, Calif., has announced the addition of three mortgage lenders to its online borrower's marketplace.Through GetSmart's MortgageFinder, consumers can now apply for loans from Bank One, Crestar, and Norwest Mortgage. The company said it offers one-stop shopping for home and debt consolidation loans, as well as credit card, auto, student, and small business loans. "GetSmart is an easy way for consumers and business owners to shop and compare financing products," said GetSmart CEO Bill Fisher. GetSmart's website address is http://www.getsmart.com.

New Century Financial Corp., Irvine, Calif., has promoted Shabi Asghar to the newly created position of president-wholesale division.Mr. Asghar joined New Century in December 1995 as vice president in charge of mortgage banking operations. He became senior vice president-wholesale lending in January 1997 and a director of the company in May 1997.

Federal bank examiners continue to view the current residential real estate market in a positive light, according to data released Monday by the Federal Deposit Insurance Corp. In the FDIC's quarterly Survey of Real Estate Trends, 61% of 299 senior examiners and asset managers polled by the agency viewed their local housing markets favorably, down slightly from 63% when the last poll was conducted in April -- but up from 51% a year ago.The survey shows that 68% perceived existing home sales as "above average" in their local market, compared with 63% in April and 49% in July 1997. Roughly 74% of those polled in the survey noted increasing prices for existing homes, up from 73% in April and 56% a year ago. Despite the favorable assessments on the residential side, reaction to commercial RE market conditions was not as positive, the survey adds. Fifty-two percent of the examiners and asset managers polled saw improvements in their local commercial market, down from 56% in April.

Bingham Financial Services Corp., Farmington Hills, Mich., has terminated negotiations with two companies that had been potential acquisition targets, Bingham has announced.On July 8, Bingham announced it had entered into nonbinding letters of intent to acquire an originator and servicer of commercial loans and to purchase an unnamed Midwest-based conventional and subprime residential mortgage lender. The two deals had a combined $71 million purchase price. Jeffrey Jorrisen, chief executive of Bingham, said in a statement that "we continue to review a number of excellent acquisition opportunities." Bingham's primary businesses are the origination of installment contracts to manufactured home purchasers and the origination and servicing of commercial real estate loans.

Long Beach Financial Corp., Orange, Calif., has made a $1 billion forward sale of its mortgage production for the rest of this year and into the first quarter of 1999 to an unnamed Wall Street investment banking firm.The company is making the sale on a servicing-retained basis. By keeping the servicing rights, Long Beach said it is looking to "significantly enhance and jump-start the development of the company's new servicing platform." This is the first sale between Long Beach and the investment bank involved, said M. Jack Mayesh, chairman and chief executive of the subprime originator. "We are doubly pleased that our strategy of forward sales for cash minimizes our need for dilutive capital-raising, and delivers what we believe are superior returns to our shareholders," he added.

A new 3%-downpayment jumbo mortgage has been introduced by Commonwealth Bank, Norristown, Pa., through its mortgage division, ComNet Mortgage Services.The 97% Loan-to-Value Jumbo Residential Mortgage is patterned after Fannie Mae's Flex 97 program, but will be offered for mortgages up to $400,000. The Fannie Mae product's loan limit is $227,150. A computerized underwriting system is used to evaluate credit risk and determine documentation requirements, Commonwealth said. "We are comfortable with the predictive nature of credit scoring models and wanted to expand the availability of a 3% downpayment mortgage beyond Fannie Mae/Freddie Mac loan limits," said ComNet president Peter A. Kehoe. "We have been successful originating the Flex 97 program for conforming loan sizes, and we wanted to take the program to a higher level. I am not aware of another lender in the country offering this product." ComNet ranked 89th in the nation in retail originations in the first quarter with $192 million, according to the Database Products Group, a MortgageWire affiliate.

Richard Gillen, president and CEO of one of the nation's largest residential mortgage originators, FirstCity Financial Mortgage Corp., has resigned.No reason was given for Mr. Gillen's sudden departure. However, he will continue to serve on the company's board of directors. Rick Hagelstein, currently executive vice president and director of subsidiary operations, has been named as Mr. Gillen's replacement. Previously, Mr. Gillen served as president and CEO of Harbor Financial, Houston, which he helped found in 1983. Harbor merged with FCFM in July 1997. Shortly after the merger, Mr. Gillen rose to the position of president and CEO of FirstCity and held the position until his recent retirement announcement. Data compiled in the 1999 Mortgage Industry Directory show that FirstCity Financial originated $3.5 billion in single-family, residential product last year, ranking 50th overall in the nation. The Houston-based lender was servicing $4.3 billion in residential mortgages at year-end 1997, according to the MID. FirstCity is also one of the nation's top subservicers. The company's subservicing volume totaled $707 million as of Dec. 31. In addition, FirstCity owns Hamilton Carter, Beverly Hills, Calif., a servicing brokerage firm.

H&R Block Inc., Kansas City, Mo., has reported that its mortgage operations contributed to a doubling of earnings to $78.9 million in the fiscal first quarter ended July 31 from $39.2 million a year ago.The company reduced its net loss from continuing operations by 20.4% to $27.7 million. "Our mortgage operations, particularly Option One Mortgage Corporation, and an increase in our investment income take credit for the dramatic improvement in our first quarter results," said Frank L. Salizzoni, H&R Block's president and chief executive officer. Mortgage operations, which also include H&R Block Mortgage Co., reported revenues of $52.7 million for the first quarter, up from $14.2 million a year ago, and pretax earnings totaled $13.8 million, compared with a pretax loss of $491,000 a year ago. Option One, which was acquired June 17, 1997, reported revenues of $44.3 million for the quarter, compared with $9.1 million for only half of the previous year's quarter. H&R Block's website address is http://www.hrblock.com.

LandAmerica Financial Group Inc., Richmond, Va., has named Jeffrey D. Vaughan as its executive vice president-real estate services and as president of its OneStop subsidiary.OneStop specializes in providing coordinated real estate services to lenders, such as title, appraisal, document preparation, flood certification, home inspection and warranty, and other services. Until now, Mr. Vaughan was executive vice president of LandAmerica's national commercial services. He joined one of the forerunners of LandAmerica, Lawyers Title, in 1981 as a sales representative.

The counterparty credit and senior debt ratings of Fund American Enterprises Holdings Inc., the parent of Source One Mortgage Services Corp., have been lowered from BBB-plus to BBB by Standard & Poor's.The rating agency attributed the downgrade to the company's "nearly completed transformation" into an insurance holding company with reduced non-strategic investments. "The original triple-B-plus senior debt rating depended significantly on the liquidity that was afforded by the passive investment portfolio," S&P said. S&P's website address is http://www.ratings.standardpoor.com.

The average 30-year fixed mortgage rate inched up to 6.92% for the week ending Aug. 21 from 6.91% the week before, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate crept up to 6.61% from 6.60% the previous week, and the average rate for one-year Treasury-indexed adjustable-rate mortgages dipped to 5.58% from 5.60%. Fees and points averaged 1.1 for all three categories. "Housing continues to be strong, as seen in the high number of housing starts last month," said Robert Van Order, Freddie Mac's chief economist. "A lot of this has to do with Asia's troubles. While the problems in the Asian markets will hurt some areas of our economy, it has helped to keep the housing sector alive. And although housing will slow down in the near future, there is every reason to believe it will remain in good health." A year ago, the average 30-year and 15-year fixed rates were 7.46% and 6.99%, respectively, and the average one-year ARM rate was 5.56%. Freddie Mac's website address is http://www.freddiemac.com.