Originations

Colonial BancGroup, Montgomery, Ala., and TB&T Inc., Dallas, have entered into a definitive agreement to merge TB&T into Colonial.The companies said Colonial will exchange 0.3203 shares of common stock for each outstanding share of TB&T, the holding company of Texas Bank and Trust. (The Colonial stock will amount to 0.6406 shares after a two-for-one stock split scheduled for Aug. 14.) TB&T chairman Jack D. Sweet noted Colonial's focus on community and mortgage banking in touting the transaction. Colonial has assets of $8.8 billion and operates 231 offices in Alabama, Florida, Georgia, Tennessee, and Nevada, and Texas Bank and Trust has assets of $100 million and operates two offices in Dallas, the companies said.

HomeGold Financial Inc., Greenville, S.C., has announced an agreement in principle to sell the majority of its small business loan division's assets and a retail mortgage unit in Louisiana in order to focus on the company's nonconforming mortgage business.HomeGold, formerly Emergent Group Inc., also reported a pro forma net loss from continuing operations of $4.4 million ($0.45 per share) for the second quarter. The company said the buyer of the business loan division, which it did not identify, is a major financial services company and that the sale price is expected to be approximately $85 million in cash. The transaction includes all the operations of the small business loan division, Emergent Business Capital Inc., except its asset-based lending unit. The planned sale also includes Emergent Commercial Mortgage Inc., Emergent Business Capital Equity Group Inc., and Reedy River Ventures LP. The retail mortgage unit in Baton Rouge, La. -- Sterling Lending Corp. -- will be sold for $1.5 million to First National Security Corp., Beaumont, Texas. Kevin J. Mast, HomeGold's chief financial officer, said the sales will complete the company's plans to focus on the nonconforming mortgage market. "The sale of the commercial unit provides HomeGold with over $58 million net proceeds, which can be used as operating capital in building its core mortgage business," Mr. Mast said. "This divestiture provides HomeGold with the opportunity to focus our management and capital resources on our mortgage business."

Regions Financial Corp., Birmingham, Ala., and Arkansas Banking Co., Jonesboro, Ark., have announced an agreement in principle to merge.Under the agreement, Regions would exchange 2.85 shares of its common stock for each share of Arkansas's common stock, and Arkansas would be merged into Regions. The merger is expected to be completed in the fourth quarter, pending approval by Arkansas's stockholders and regulatory authorities, and to be accounted for as a pooling of interests. Regions is a bank holding company with operations in nine states. It is the parent of Regions Mortgage Co., Montgomery, Ala., which ranked 38th in the nation in retail mortgage originations in the first quarter, according to the Database Products Group, a MortgageWire affiliate.

Democratic congressmen are calling on federal regulators to toughen their enforcement of fair lending laws in light of a new Home Mortgage Disclosure Act report that shows little or no growth in purchase money lending to racial and ethnic groups in 1997."When it comes to enforcing fair lending, our regulators are paper tigers," Rep. Joseph Kennedy, D, Mass., said at a press conference Thursday. Rep. Kennedy sent a letter, signed by 10 other congressmen, that calls on the regulators to beef up enforcement of fair lending laws and the Community Reinvestment Act. Meanwhile, Housing Secretary Andrew Cuomo said that mortgage denial rates in the HMDA report confirm the need for a mortgage lending discrimination study that he ordered from the Urban Institute in March. The comprehensive study, which should be completed by year end, "will help HUD intensify its crackdown on mortgage lending discrimination and increase the minority homeownership rate," Secretary Cuomo said. The HMDA report released Thursday shows that the denial rate for blacks seeking conventional loans is still over 50%.

Mortgage employment broke yet another record in July as the industry added 3,800 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 292,100 full-timers in July compared with 288,300 in June. A year ago the industry employed 252,400. Over the past 12 months industry employment has increased by a startling 15.7%. Mortgage lenders are beginning to have trouble finding enough qualified loan processors and underwriters. Residential lenders are on track to produce a record-breaking $1.2 trillion in loans this year. Some lenders expect demand to decline in the fall and winter months when homebuying traffic typically slows. The BLS website address is http://stats.bls.gov.

BNC Mortgage Inc., Irvine, Calif., has reported earnings of $2.2 million ($0.36 per share) for its fiscal fourth quarter ended June 30, down from $2.5 million ($0.60 per share) a year ago.The company originated a record $252.3 million in mortgage loans during the quarter. "More than 80% of originations were in our three highest credit grades and our weighted average loan-to-value [ratio] continues to be low, with a 75.96% rate for the quarter," said BNC president Kelly W. Monahan. "Further, we have been successful in increasing our prepayment penalty periods and seek to continue to sell our loan production on a forward basis to lock in cash gain on sale of mortgage loans."

PMCC Financial Corp., Roslyn Heights, N.Y., has reported pro forma net income of approximately $673,000 ($0.18 per share) for the second quarter, up 57% from $428,000 ($0.17 per share) a year ago.Ron Friedman, PMCC's president and CEO, said revenues from mortgage banking operations totaled $3.7 million for the quarter, up 42% from a year earlier. Mr. Friedman noted the company's recent announcement that its warehouse lines of credit have been increased from $95 million to $140 million. The new lines, provided by PNC Bank and Chase Bank of Texas, will enable the company to increase its residential rehabilitation division's financing capacity from $8 million to $21 million, PMCC said.

Wilshire Financial Services Group Inc., Portland, Ore., has reported record earnings of $11.8 million ($1.01 per share) for the second quarter, compared with $5.1 million ($0.66 per share) a year ago.Loan originations for the first six months of 1998 totaled $234.1 million, an increase of more than $200 million from $29.7 million in the comparable period of 1997, the company said. A $184 million initial public offering of Wilshire Real Estate Investment Trust was completed during the second quarter.

Home sales remain robust and low mortgage interest rates continue to attract first-time buyers into the market, says the Federal Reserve Board Beige Book, which was released Thursday afternoon."Home sales were characterized as strong to booming in Dallas, Kansas City, Minneapolis, Richmond and St. Louis, and above year-earlier levels in Atlanta, Chicago, Cleveland and San Francisco," the Beige Book says. The Fed's snapshot of current economic activity also found that robust real estate sales continues to fuel construction activity in most of the nation. Only the Richmond Federal Reserve Bank reported that there may be an excess supply of homes on the market and only Dallas expressed concern about over-building in the commercial sector. The Fed's website address is http://www.bog.frb.fed.us.

The average 30-year fixed mortgage rate fell to 6.94% for the week ending Aug. 7 from 6.97% the week before, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate drifted down to 6.63% from 6.64% the previous week, and the average rate for one-year Treasury-indexed adjustable-rate mortgages dipped to 5.61% from 5.62%. Fees and points averaged 1.1 for all three categories. "Mortgage rates have not changed much these last few months, remaining at very affordable levels," said Robert Van Order, Freddie Mac's chief economist. "This has contributed to keeping the housing industry strong, even while the overall economy slows. However, although housing will remain healthy, we will see a slowdown later in the year." A year ago, the average 30-year and 15-year fixed rates were 7.46% and 7.00%, respectively, and the average one-year ARM rate was 5.53%. Freddie Mac's website address is http://www.freddiemac.com.

Legislation that would expand the availability of government-insured adjustable-rate mortgages was unanimously passed by the Housing subcommittee Thursday.The American Homeownership Act (H.R. 3899) -- sponsored by Rep. Rick Lazio, R, N.Y. -- must now be approved by the full Banking Committee before it reaches the House floor. The Banking Committee has not yet scheduled a date for a mark-up, but nothing will occur until after Congress returns from its August recess in early September. The Lazio bill would raise to 40% from 30% the annual cap on ARMs insured through the Department of Housing and Urban Development, with fixed-rate mortgages accounting for the balance. Currently, ARM commitments cannot exceed 30% of HUD's total insurance volume from the previous year. HUD stopped insuring ARMs in April after reaching the cap. The limit increase can only be implemented at the discretion of the HUD secretary, who must first submit a written request to Congress. HUD must increase the insurance premium on ARMs issued over the 30% limit. The bill also mandates inspections on FHA home purchases and places a $12 billion cap on the amount of reverse mortgages that the government can insure.

Headlands Mortgage Co., Larkspur, Calif., has reported pro forma net income of $7.1 million ($0.35 per share) for the second quarter, up from $3.3 million ($0.22 per share) a year ago.The results were reported on a pro forma basis, "assuming the conversion from an S corporation and as if the company had been fully subject to federal and state taxes as a C corporation" for the reported periods, Headlands said. (The company's S corporation status ended in the first quarter with an initial public offering of 9.2 million shares.) Total loan production in the second quarter was nearly $2.1 billion, compared with $825 million a year earlier. Of that total, $1.3 billion were non-agency loans (including $1.0 billion of alternative-A loans), $499.7 million were agency loans, and $234.8 million were home equity loans, the company said. Headlands' servicing portfolio totaled $4.8 billion with a weighted average coupon of 8.31% as of June 30, compared with $3.9 billion and a weighted average coupon of 8.39% a year earlier, the company said.

Robert E. Woods, managing director and head of loan syndications for the Americas at Societe Generale, has been named to the board of directors of Criimi Mae Inc., Rockville, Md. He replaces Larry H. Dale, who is stepping down because his company, Newman & Associates, has been acquired by a Criimi Mae competitor.Before joining Societe Generale, Mr. Woods was managing director and head of real estate capital markets and mortgage-backed securities at Citicorp. He is considered a pioneer in the modern loan syndication business.

Mortgage applications dipped 0.6% for the week ended July 31, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index rose 1.8%, the Refinancing Index fell 3.1%, the Conventional Index decreased 1.5%, and the Government Index was up 3.5%, the survey indicated. On a seasonally adjusted basis, the Market Index fell slightly from 409.0 the previous week to 407.0; the Purchase Index increased from 252.4 to 257.2; the Refinancing Index declined from 1320.2 to 1278.8; the Conventional Index was down from 519.7 to 512.1; and the Government Index rose from 224.4 to 231.6. Refinancings represented 44.1% of total applications, down from 45.3% the previous week, while adjustable-rate mortgages accounted for 8.4%, up from 8.1% the week before. Overall, applications were up 43.3% compared with those for the same week last year. The address of the MBA's website is http://www.mbaa.org.

First Mortgage Corp., Diamond Bar, Calif., has reported net income of $1.16 million ($0.20 per share) for its fiscal first quarter ended June 30, up 338% from $264,000 ($0.05 per share) a year earlier.Loan originations totaled $223.1 million for the quarter, up 157% from $86.8 million a year earlier, the company said. Loan servicing income rose 3.7% to $1.92 million. As of June 30, First Mortgage serviced $1.66 billion in loans, down from $1.70 billion a year earlier. The company attributed the decline to increased prepayments.

Norwest Asset Securities Corp., Frederick, Md., has announced an approximately $250 million securitization of fixed-rate 20- and 30-year relocation mortgage loans.Credit enhancement for NASCOR Mortgage Pass-Through Certificates, Series 1998-22 will be provided through the use of a senior/subordinated structure. The underwriter is Lehman Brothers, and the transaction is scheduled to settle on Aug. 27. Issuance and post-issuance information will be available after settlement from the SecuritiesLink Advanced Information Services website (http://www.securitieslink.net).

The AFS Title Search Index fell 3.0% to 209.2 for the week ended July 31 from 215.8 the previous week, according to Advance Factor Service.The index averaged 215.7 over the previous four weeks, up 2.4 points from the prior week's four-week moving average. A year ago, the index stood at 165.3, 79.0% of the current level. "Attractive mortgage rates continue to bolster the AFSTSX at levels twice what would be expected if no refinance incentive were present," said AFS manager Paul Descloux. "Expect little deviation in the current momentum given the present interest rate structure. A new trigger in the form of lower rates will be necessary to have the pace of title searches jump significantly from current levels. Given the depths of the Asian crisis and resultant global economic deceleration, that trigger may be here sooner rather than later." Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com.

The Eleventh Federal Home Loan Bank Cost of Funds Index was 4.881% in June, unchanged from where it was in May. This ends the downward trend of the index since the start of the year.The index reflects the interest paid by savings institutions in California, Arizona, and Nevada on their sources of mortgage money. Lenders use COFI to index adjustable-rate mortgage products, and they promote it as a less volatile index. However, the Freddie Mac Primary Mortgage Market Survey found the monthly average commitment rate for the one-year ARM for June to be 5.69% for the second straight month. In fact, in the four months since March, the PMMS has found the one-year ARM commitment rate to be very stable (5.69%, 5.67%, 5.69%, and 5.69%). Unlike COFI, the average rate tracked by the PMMS is higher than it was at the beginning of 1998, when it stood at 5.54%.

Housing affordability fell in the second quarter of 1998, but remained near the highest level since the early 1970s, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 131.1 for the second quarter, 3.8 points off the 134.9 recorded in the first quarter but 6.1 points higher than its 125.0 level a year earlier. The index indicates that half of the nation's households had at least 131.1% of the income needed to buy a median-priced resale home. Under these conditions, a family earning the median income of $44,828 could afford a home costing $171,900, the NAR said. Fred Flick, the NAR's vice president of economic research, said the slip in affordability stemmed from a seasonal increase in home prices. "With more people trading up to more expensive homes, an increase in the median existing-home price offset a modest increase in family income and a slight decline in mortgage interest rates," he said. The NAR said the last time housing affordability was sustained at a higher level was in 1973, when the index reached 147.9. The trade association said it expects affordability to improve in the third and fourth quarters as a result of lower interest rates, rising income, and stable prices. The NAR's website address is http://www.realtor.com.

The mortgage insurance industry in June obliterated the previous record for net primary new insurance written, according to data provided by the Mortgage Insurance Cos.of America. The nine reporting companies wrote $17.14 billion of new insurance, topping May's $14.5 billion by over 18%. MICA's old record was set in April, at $14.8 billion. June also saw a new record set for net applications, at 178,095, up 10% from May's 160,904. March had been the best month for applications, at 177,389. Gross figures for applications in June are higher at 187,048, but net figures are more indicative of current happenings because it excludes loans that are insured with more than 12 months expired from their term. For the first half of 1998, there have been 939,152 net applications and $81.4 billion in new insurance written. If this pace is maintained, mortgage insurers will have their best year ever.