Originations

Every barrier to homeownership measured by Fannie Mae's National Housing Survey has "collapsed to the lowest levels recorded" in the survey's seven-year history, Fannie Mae has reported.Barriers such as insufficient downpayment funds, inadequate information, job concerns, and discrimination all hit record lows in the latest survey, Fannie Mae said. Moreover, 60% of renters surveyed said buying a home is a very important or top priority. Fannie Mae concluded that Baby Boomers' transition from being parents with children at home to "empty nesters" will have "profound effects on the real estate finance and home remodeling industries," especially for originators of reverse mortgages. According to the survey, not having enough money for a downpayment and closing costs is "still the greatest perceived obstacle to homeownership," but only 29% of adults cited it as a major obstacle, compared with 52% as recently as 1996. Lack of confidence in job security ranked as a major obstacle for only 13% in the latest survey, compared with the high of 48% in 1996. Those citing "discrimination or social barriers" as a major obstacle totaled 6% in the survey, down from the high of 18% in 1996. Fannie Mae's website address is http://www.fanniemae.com.

FirstPlus Financial Group Inc., Dallas, has completed a $591 million securitization of high loan-to-value home loans.The securities, issued by FirstPlus Home Loan Owner Trust 1998-4, consisted of 11 classes of publicly offered notes. The yield spread for the $174 million of Class A-1 notes was 4 basis points over the one-month London Interbank Offered Rate, and spreads for the other classes ranged from 0.58% to 2.70% over the related U.S. Treasury bonds, the company said.

PMI Mortgage Insurance Co., San Francisco, wrote $6.9 billion of new insurance in the second quarter, up 92% from $3.6 billion a year ago, according to the company's parent, The PMI Group Inc. Net income for the second quarter was $46.8 million ($1.46 per share), compared with $42.3 million ($1.25 per share) a year ago.Operating earnings per share grew to $1.41 in the second quarter, up 14% from the year before. "Despite the high level of mortgage refinances, we're particularly pleased to see PMI's insurance in force grow in the second quarter," said W. Roger Haughton, chairman and chief executive officer of PMI Group. Risk in force increased to $18.3 billion as of June 30, up from $18.1 billion at March 31 and $17.7 billion at June 30, 1997. PMI Group's website address is http://www.pmigroup.com.

Mortgage applications rose 13.3% for the week ended July 10, but seasonally adjusted indexes fell, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index rose 15.2%, the Refinancing Index climbed 11.0%, the Conventional Index increased 11.6%, and the Government Index jumped 20.4%, the survey indicated. On a seasonally adjusted basis, the Market Index fell from 460.1 the previous week to 415.5; the Purchase Index decreased from 286.4 to 262.5; the Refinancing Index dropped from 1470.6 to 1305.5; the Conventional Index was down from 594.9 to 529.3; and the Government Index slipped from 235.2 to 225.7. Refinancings represented 44.3% of total applications, down from 45.2% the previous week, while adjustable-rate mortgages accounted for 8.3%, up from 8.1% the week before. Overall, applications were up 61.1% compared with those for the same week last year. The address of the MBA's website is http://www.mbaa.org.

BankAmerica Mortgage, San Francisco, has launched a flexible credit home mortgage product aimed at expanding homeownership opportunities for low-income households.Called Neighborhood Advantage Credit Flex, the 30-year fixed-rate product is being offered in conjunction with PMI Mortgage Insurance Co. "One of the most innovative features of this new product is that it uses a streamlined approach to measure creditworthiness," said Arthur Ringwald, group executive vice president of BankAmerica Mortgage. "For example, borrowers without a credit history may simply document that they have paid their rent on time during the past 12 months." In addition, borrowers can have a higher debt-to-income ratio (up to 45%) than is allowed under existing community lending mortgage products. Credit Flex will be available in 24 states and Washington, D.C. The website address of BankAmerica Corp., the parent corporation, is http://www.bankamerica.com.

Freddie Mac has reported second-quarter net income of $414 million, up from $340 million a year ago and $393 million in the first quarter.Diluted earnings per common share were a record $0.56, up 24% from $0.45 a year ago. Total revenues rose from $872 million in the first quarter to $881 million. David W. Glenn, president and chief operating officer of Freddie Mac, attributed the results to both the mortgage investment and the securitization businesses. "Our retained portfolio grew by $11 billion, despite substantial liquidation pressure," Mr. Glenn said. "Credit losses continued to decline, allowing us to surpass our goal of reducing credit losses to 5 basis points of the total portfolio significantly ahead of plan." Credit-related expenses totaled $90 million in the second quarter, down $14 million from the first quarter and $47 million from a year ago. In addition, chargeoffs fell to $35 million, down $14 million from the first quarter and $44 million from a year ago. Net interest income on earning assets totaled $535 million, compared with $460 million a year ago and $514 million in the first quarter. Freddie Mac's website address is http://www.freddiemac.com.

When acting Comptroller of the Currency Julie Williams criticized national banks July 13 for letting their underwriting standards slip on commercial loans, she was also pointing to deteriorating standards for commercial real estate loans, an OCC official has told MortgageWire.OCC examiners are seeing higher loan-to-value ratios, longer maturities, and less guarantor support. At the same time, more CRE loans are underwritten based on projected cash flows and expectations that the economy will remain strong, the OCC official said. The OCC is expected to release the results of its recent survey of bank underwriting standards later this summer. However, Comptroller Williams gave a preview of the findings in her July 13 speech. Banks are "accepting greater risk of loss" at a time when the "downside risk in the commercial loan market seems to be increasing," Comptroller Williams said.

Associates First Capital Corp., Irving, Texas, has reported record second-quarter earnings of $292.9 million ($0.84 per share), a 19% increase from a year ago.At June 30, total managed receivables were $64.3 billion, also up 19% from a year earlier. A highlight of the company's consumer operations was "success in the newly opened Texas home equity market," where Associates made 5,700 new home equity loans in the second quarter, the company said. The company's website address is http://www.theassociates.com.

Fannie Mae's earnings for the second quarter of 1998 were a record $848.0 million ($0.80 per common share), up from $824.2 million ($0.77 per share) in the first quarter of 1998, Fannie Mae has reported.Earnings for the second quarter of 1997 were $752.7 million ($0.69 per share). James A. Johnson, Fannie Mae's chairman and chief executive officer, attributed the results to record business volume, "strong growth" in fee income, and declines in credit losses. He said the results came "in spite of the expected decline in our net interest margin," which averaged 107 basis points in the second quarter, down from 114 bp in the first quarter. Net interest income was $1,031.5 million, compared with $1.035.9 million in the first quarter and $970.4 million in the second quarter of last year. The net mortgage portfolio totaled $349 billion at the end of the second quarter, compared with $327 billion at the end of the first quarter and $297 billion at the end of the second quarter of 1997. Fannie Mae president and chief operating officer Lawrence M. Small said Fannie Mae's fee and other income rose by $24.0 million between the first and second quarters as a result of increased multifamily and technology services fees and decreased operating losses from tax-advantaged investments. Fannie Mae's website address is http://www.fanniemae.com.

The Comptroller of the Currency is raising concerns that national banks engaged in high loan-to-value and subprime lending may fall into the same unscrupulous and risky underwriting practices as their unregulated competitors."Some believe that the entry of regulated commercial banks into the subprime markets and high-LTV market will curb lending practices by supplanting certain unscrupulous lenders who prey on the poor and unsophisticated," Acting Comptroller Julie Williams said. "But competitive pressures must not lead commercial banks to cutthroat, lowest-common-denominator lending," she told a risk management conference sponsored by Robert Morris Associates Monday in Chicago. "If bankers are to be successful in these markets, they must be attentive to the peculiar challenges -- both social and financial -- that they pose," Ms. Williams said.

The AFS Title Search Index jumped 10.5% to 220.5 for the week ended July 10 from a holiday-adjusted 199.6 for the previous week, according to Advance Factor Service.The index averaged 208.4 over the previous four weeks, up 0.2 points from the prior week's four-week moving average. A year ago, the index stood at 151.6, 68.7% of the current level. "This past week's surge in the AFSTSX may be the first tangible sign that consumers are being moved by the recent lows in mortgage rates," said AFS manager Paul Descloux. "However, some of the increase in activity could be attributable to the shift in title applications from the holiday-shortened week ending July 3 to this past week with its regular five business days. The bottom line on recent title activity is that prepayments will remain elevated for the balance of the summer." Mr. Descloux's e-mail address is paul.descloux@cor.dowjones.com

An electronic link that will enable lenders to bid on loans posted by mortgage brokers will be established by Freddie Mac and IMX, Freddie Mac has announced.Through Freddie Mac's GoldWorks network, lenders will be able to query, select, and bid on loans posted by brokers using IMX's MatchMaker software. "With more than 1,000 lenders on GoldWorks, brokers using MatchMaker will be able to receive real-time bids from the most expansive pool of lenders possible," said Bob Ryan, Freddie Mac's vice president of marketing and pricing. When a lender places a bid, the broker will be notified by MatchMaker as well as via e-mail or alphanumeric pager. Once a bid is accepted, the identities of the lender and the broker are revealed. The lock-in will be binding for both, and loan file delivery will proceed as it would in a traditional transaction, Freddie Mac said. IMX president Mark Korell said loans will be placed "not in hours or days, but in a matter of minutes." Freddie Mac's website address is http://www.freddiemac.com.

PMCC Financial Corp., Roslyn Heights, N.Y., has announced the appointments of three new vice presidents.Perry J. Reeps joins PMCC as senior vice president for national wholesale lending, moving over from Pacific Thrift and Loan, where he was a vice president for the past two years. Cecile Cole was appointed vice president for subprime lending, joining PMCC from Cityscape Financial Corp., the subprime lender now in Chapter 11 bankruptcy proceedings, where she was assistant vice president for operations since 1994. Jerry Weingarten, a 26-year veteran of mortgage banking, was named vice president for secondary marketing. Since 1995, he was vice president for secondary marketing for Residential First Inc.

Westmark Group Holdings Inc., Delray Beach, Fla., has reported record monthly loan production in June and projects that it will double last year's production total in 1998.June production of subprime mortgage loans totaled $27.6 million, topping the previous record of $23.2 million set in April. Projections now call for $280 million in loan production by year end, more than double 1997's $128 million, the company said. Payton Story III, Westmark's president and chief operating officer, cited the company's expansion in the Southeast, the Midwest, and the West as the source of the rising production.

MGIC Investment Corp., Milwaukee, has reported earnings of $95.2 million ($0.82 per share) for the second quarter, up 18% from the $80.6 million ($0.67 per share) recorded in the second quarter of 1997.The earnings per share for the latest quarter include $0.01 of realized gains, the company said. Total revenues for the second quarter were $238.0 million, up from $210.9 million in the second quarter of 1997. MGIC attributed the revenue increase to a 9% rise (to $189.2 million) in net premiums earned and a 16% increase (to $35.3 million) in investment income. Net premiums written totaled $186.7 million for the second quarter, up 9% from $170.9 million for the second quarter of 1997. MGIC's website address is http://www.mgic.com.

Frontier Insurance Group Inc., Rock Hill, N.Y., has announced the acquisition of 85% of the capital stock of London & European Title Insurance Services Ltd., the leading provider of title insurance to mortgage lenders in the United Kingdom.London & European is the exclusive managing general agent for title insurance underwritten by participating syndicates at Lloyd's of London. Frederick M. Kerr will continue as its chairman. Harry Rhulen, Frontier's president and chief executive officer, and Peter Foley, Frontier's executive vice president, will serve on London and European's board of directors.

A mortgage subsidiary of a bank or thrift must now obtain a license to set up shop in the District of Columbia.Historically, mortgage banking and brokerage subsidiaries were exempt from D.C. licensing laws. Only independent mortgage companies had to register with the Office of Banking and Financial Institutions, which regulates financial activities in the city. Lenders and loan brokers now must fill out an application to OBFI, along with a check for $1,100, to obtain a license. Each license is good for one year and is renewable for $800. The parent bank or thrift is exempted from the new licensing law, as are lenders and brokers that originate three or fewer loans per year in the city.

GreenPoint Financial Corp., New York, has reported net income of $39.4 million ($0.54 per share) for the second quarter.The earnings per share, a record, were up 20% over core net income per share for the second quarter of 1997 and 4% over that of the first quarter of 1998, GreenPoint said. Core cash earnings per share were $0.78 in the second quarter, up 20% from the second quarter of 1997 and 3% from the first quarter of 1998. Mortgage originations totaled $700 million, down 2% from the second quarter of 1997 but up 21% from the first quarter of 1998. Net loan portfolio growth was $101 million. Non-performing loans as a percentage of total loans declined to 3.39% at June 30 from 4.35% at June 30, 1997 and from 3.77% at March 31, 1998, the company said. GreenPoint's website address is http://www.greenpoint.com.

The average 30-year fixed mortgage rate fell from 6.98% to 6.91% for the week ending July 10, its lowest level since the 6.89% recorded for the week ended Jan. 16, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate declined to 6.60% from 6.65%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages dipped to 5.60% from 5.66%, the lowest levels for those two rates since the week ended Feb. 20. Fees and points averaged 1.1 for each category. Frank Nothaft, Freddie Mac's deputy chief economist, said Freddie Mac expects low rates to continue through the summer, adding that "it looks as though 1998 will register the lowest annual mortgage rate in 30 years." A year ago, the average 30-year and 15-year fixed rates were 7.47% and 7.01%, respectively, and the average one-year ARM rate was 5.53%. Freddie Mac's website address is http://www.freddiemac.com.

Index changes involving a mortgage lender and a home equity lender have been announced by Standard & Poor's Financial Information Services.Sovereign Bancorp, Wyomissing, Pa., has moved from the S&P SmallCap 600 Index to the S&P MidCap 400 Index, replacing Fred Meyer, which moved to the S&P 500 Index. AmeriCredit Corp., Fort Worth, Texas -- a finance company that originates and sells home equity loans as well as buying, securitizing, and servicing auto loans -- has replaced Sovereign in the SmallCap 600 index.