Originations

Mortgage applications crept up 0.3% for the week ended June 12, but the Refinancing Index rose nearly 8% on a seasonally adjusted basis, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index declined 4.7%, the Refinancing Index climbed 7.9%, the Conventional Index inched up 1.1%, and the Government Index fell 3.0%, the survey indicated. On a seasonally adjusted basis, the Market Index rose from 396.6 the previous week to 401.1; the Purchase Index decreased from 272.1 to 262.1; the Refinancing Index rose from 1120.7 to 1209.6; the Conventional Index climbed from 508.3 to 517.6; and the Government Index declined from 210.0 to 206.8. Refinancings represented 42.4% of total applications, up from 39.4% the previous week, while adjustable-rate mortgages accounted for 10.2%, up from 9.3% the week before. Overall, applications were up 68.9% compared with those for the same week last year. The address of the MBA's website is www.mbaa.org.

Desai Capital Management Inc., New York, has announced a $78 million recapitalization of Lenders Service Inc., a residential real estate services company, under which DCMI and its affiliates will control a majority of LSI stock.LSI, an indirect, wholly owned subsidiary of Merrill Lynch & Co. Inc., provides appraisal, title, and closing services through a network of independent appraisers, title abstractors, and closing agents. Merrill Lynch will retain a significant minority interest in LSI, which is based in Coraopolis, Pa. The transaction is expected to close in the third quarter.

Principal Residential Mortgage Inc., Des Moines, Iowa, has agreed to buy ReliaStar Mortgage Corp., also of Des Moines, for an undisclosed price.ReliaStar currently is a subsidiary of ReliaStar Financial Corp., Minneapolis. The deal will give Principal a servicing portfolio of nearly $40 billion; ReliaStar currently services $7 billion. On a pro forma basis, Principal will become one of the top 20 servicers in the country, according to a list compiled by the Database Products Group of Faulkner & Gray. ReliaStar is a wholesaler with an 800-broker network nationwide. Principal is retail and correspondent lender, purchasing more than $6.1 billion from other lenders last year. Its retail network had production of $950 million.

Maud Mater has been promoted to executive vice president of Freddie Mac, the government-sponsored enterprise has announced.Ms. Mater became Freddie Mac's general counsel in 1982 and acquired the additional title of senior vice president in 1984. She has served on Freddie Mac's board of directors since 1996. "A highly valued advisor at Freddie Mac, Maud also played an instrumental role in the development of standardized loan documents in the 1970s, the mortgage-backed securities market in the '80s, and Freddie Mac's new regulatory structure in the '90s," said Leland Brendsel, Freddie Mac's chairman and chief executive officer. Ms. Mater joined Freddie Mac in 1976 as an assistant general counsel. She previously held a staff attorney position at the former Federal Home Loan Bank Board.

United Companies Financial Corp., Baton Rouge, La., has announced the pricing of a $375 million home equity loan securitization and a $110 million manufactured housing contract deal.UCFC Acceptance Corp., a UCFC subsidiary, will act as depositor of the trust that will issue the HEL securities, which are expected to be insured by Financial Guaranty Insurance Co. A percentage of the proceeds will be held in a prefunding account pending delivery of additional HELs to the trustee, UCFC said. Prudential Securities Inc. will be the lead underwriter for the sale, with Bear, Stearns & Co. Inc. and First Union Capital Markets serving as co-managers. In the MH deal, UCFC Funding Corp. will act as depositor of the issuing trust. The contracts backing the deal were originated mainly by United Companies Funding Inc., the parent of UCFC Funding and a subsidiary of UCFC. Credit Suisse First Boston will act as the lead underwriter, and First Chicago will be the co-manager.

WMC Mortgage Corp., Woodland Hills, Calif., has issued a $796 million securitization of mortgage pass-through certificates through WMC Secured Assets Corp., a wholly owned subsidiary.WMC Mortgage Loan Trust 1998-A, consisting of four classes of certificates with credit enhancement based on overcollateralization and a senior/subordinated structure, are backed by adjustable-rate, closed-end, subprime mortgage loans originated by WMC Mortgage. The securities were underwritten by a syndicate co-led by Nationsbanc Montgomery Securities LLC and Bear, Stearns & Co. Inc. Co-managers include Credit Suisse First Boston, Lehman Brothers, and First Union Capital Markets.

The AFS Title Search Index rose 3.9% to 219.4 for the week ended June 12 from 211.2 for the week ended June 5, according to Advance Factor Service.The index averaged 207.4 over the previous four weeks, up 2.5 points from the prior week's four-week moving average. A year ago, the index stood at 154.7, 70.5% of the current level. "Title search activity is again on the rise as mortgage rates approach their January 1998 lows," said AFS manager Paul Descloux. "The full effect of this past week's drop in mortgage rates is still to be felt in aggregate title search applications." The index may return to its early 1998 highs if rates continue tumbling, and the current index level "implies that 1998's elevated prepayment speeds will continue well into the summer," Mr. Descloux said. [AMIEE: HERE'S WHERE THE URL LINK TO THE AFS TITLE SEARCH INDEX CHART SHOULD BE INSERTED. SHOULD SAY SOMETHING LIKE "Click here to see chart"

Single-family housing starts fell for the third consecutive month in May despite reports indicating strong demand for housing across the nation.According to Census Bureau data, single-family starts fell less than 1% in May to a seasonally adjusted annual rate of 1.228 million. "Single-family starts remained virtually unchanged in May, although they did fall slightly, but what's more important is that activity is up 12% from last May," said Mike Karliner, an economist at the National Association of Home Builders. Moreover, the NAHB's housing market index rose to an all-time high of 71 in June -- a further indication that housing activity remains strong in many sections of the country. Any score above 50 indicates that more builders thought conditions were good than thought they were poor in their local market. "The demand for housing is actually exceeding the supply in many areas," Mr. Karliner added. Meanwhile, total starts, including multifamily, fell 1% in May to 1.530 million -- a slight drop from April's revised rate of 1.541 million -- but 9% above the May 1997 rate of 1.404 million.

Municipal Mortgage and Equity LLC, Baltimore, has announced the origination of a $10.2 million tax-exempt mortgage revenue bond collateralized by a planned 156-unit garden-style multifamily complex in San Antonio.The bond, issued by the Bexar County Housing Finance Corp., bears a construction interest rate of 8.25% and a permanent interest rate of 7.00%. MuniMae said it will earn 2.0% of the bond amount as construction administration and financing fees. The complex, The Villas at Sonterra, will be located in San Antonio's Stone Oak community.

First American Financial Corp., Santa Ana, Calif., will acquire a 50% interest in three subsidiaries currently owned by Norwest Mortgage Inc., Des Moines, Iowa, as part of a joint venture the two firms are forming.The three subsidiaries involved are: ATI Title Co., including Spring Mountain Escrow Services Corp.; Value IT, which provides appraisal services; and VIE, which provides income and employment verification reports. All three will continue to operate under their current names. First American will manage the joint venture, which will result in two new holding companies: RELStar LLC and RELStar Title Services LLC.

Charter One Financial Inc., a Cleveland-based thrift holding company, is expanding its franchise in New York State through the acquisition of Albank Financial Corp., Albany, N.Y., in a deal valued at $1 billion.Charter One first entered New York through the acquisition of Rochester Community Savings Bank in October 1997. There is no overlap between the two branch networks. In the first five months of 1998, Charter One has originated $150 million of mortgages in New York, up from $44 million (by RSCB) for the same period in 1997. Charles John Koch, chairman and chief executive of Charter One, said the two institutions have complementary asset-generation capabilities, with Charter One strong in residential and consumer lending, while Albank is expanding its commercial loan assets and business checking products.

Southern Pacific Funding Corp., Lake Oswego, Ore., has received a $300 million warehouse line from First Union National Bank, Charlotte, N.C. SPFC will use the line to fund first- and second-lien nonconforming loans."Southern Pacific's total global warehouse financing facilities currently exceed $1.3 billion, and we expect to develop additional warehouse financing alternatives to strengthen our balance sheet and to continue to fund expanding loan origination growth," said Robert W. Howard, vice chairman and chief executive of Southern Pacific.

The average 30-year fixed mortgage rate for the week ending June 12 dipped to 7.04% from 7.05% for the week ended June 5, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate crept up to 6.71% from 6.70%, while the average rate for one-year Treasury-indexed adjustable-rate mortgages rose to 5.71% from 5.68%. Fees and points averaged 1.0 for the fixed-rate mortgages and 1.1 for the ARMs. A year ago, the average 30-year and 15-year fixed rates were 7.72% and 7.27%, respectively, and the average one-year ARM rate was 5.67%. Frank Nothaft, Freddie Mac's deputy chief economist, predicted "a continuance of low, affordable rates" in light of recent remarks by Federal Reserve Board chairman Alan Greenspan that the Fed is unlikely to raise interest rates in the near future.

The Senate Appropriations Committee has unanimously approved a new Federal Housing Administration loan limit of $197,620 for high-cost areas.Passed as part of an appropriations bill, the legislation also establishes a floor of $109,032 and simplifies the downpayment formula for obtaining an FHA-insured loan. Current FHA loan limits range from $86,317 to $170,362. The committee action fell short of the Clinton administration's budget proposal to create a single, nationwide loan limit of $227,150 -- the same as the limit on loans purchased by Fannie Mae and Freddie Mac. However, debate over this issue is far from over, since the House must approve its own VA-HUD spending bill. "Expanding the FHA loan ceiling to $197,620 will go a long way toward reestablishing housing as a national priority," said Donald Martin, president of the National Association of Home Builders. The FHA loan limit increase was approved as part of a $24 billion HUD appropriations bill. The legislation now moves to the full Senate, where debate over increasing the loan limit is expected to be contentious. Meanwhile, the Clinton administration says it "appreciates" the committee's action to increase the FHA loan limit. "The administration urges the Congress to provide even greater homeownership opportunities by increasing FHA's loan limit to the 'conforming' limit ($227,150)," according to Jacob Lew, acting director of the Office of Management and Budget.

The first mortgage-backed securities deal by Bayview Financial Trading Group, Miami, has been rated by Moody's Investors Service.Bayview Financial Acquisition Trust Mortgage Pass-Through Certificates, Series 1998-1 is backed by performing loans, many of which have had payment problems in the past, Moody's said. All the loans in the portfolio, acquired by Bayview from a variety of originators, were less than 60 days delinquent as of the cutoff date and less than 10% have been delinquent for 90 days or more in the past year, the rating agency said. The senior certificates were rated Aaa and the mezzanine certificates were rated Aa2, A2, and Baa2. Moody's said the rating actions were based mainly on the 15.5% credit support provided to the senior certificates by the subordinate classes.

ContiMortgage Corp., New York, has priced a $1.75 billion securitization of home equity loans featuring a senior/subordinated structure as well as a surety wrap.The asset-backed deal, ContiMortgage Home Equity Loan Trust 1998-2, consists of 12 classes with yields ranging from 5.64875% to 7.798% and from 3 basis points over the London Interbank Offered Rate to 25 bp over LIBOR. Merrill Lynch & Co. was the lead manager for the offering. The co-managers were: Bear, Stearns & Co. Inc.; ContiFinancial Services Corp.; Credit Suisse First Boston; Greenwich Capital Markets Inc.; Morgan Stanley & Co. Inc.; and Nomura Securities Corp.

United Guaranty Corp., Greensboro, N.C., has introduced a reinsurance structure that allows multiple lenders to benefit from the risk- and revenue-sharing opportunities of a captive.The company said its group captive structure -- with United Guaranty Partners Insurance Co. as the "co-captive" -- is designed to enable mortgage lenders to participate immediately in a reinsurance arrangement without incurring the costs of setting up their own captive or funding the minimum statutory capital. It also allows each lender to segregate the performance of its loans from that of the other co-captive participants, United Guaranty said. United Guaranty Corp. is the holding company for United Guaranty Residential Insurance Co....Meanwhile, Amerin Corp., Chicago, has announced a similar risk- and revenue-sharing structure, the Partnership Profit Plan, under which a wider variety of lenders can participate in revenues from their insured mortgage originations without setting up their own captive reinsurance companies.

The Ohio Supreme Court has ruled that a class-action lawsuit against Cleveland-based Ohio Savings Bank can proceed.The decision reverses a lower appellate court decision that narrowed the size of the class. The suit, filed by Frances Hamilton and Barbara A. and George Seidel, alleges that Ohio Savings Bank charged "hidden interest" to borrowers on loans originated from 1970 through at least late 1997. Robert Sweeney, one of the attorneys who argued the case for the plaintiffs before the Ohio Supreme Court, estimated that the class includes upwards of 50,000 loans. He further calculated that a homeowner who took out a $40,000, 30-year mortgage with Ohio Savings has paid over $5,000 in excess interest to the lender. An attorney for Ohio Savings said the thrift will "vigorously defend its position." The case now returns to the Cuyahoga County Pleas Court.

Atlanta-based Mego Mortgage Corp. has found three angels that will invest a total of $30 million in the troubled company.City Holding Co., a bank holding company in Charleston, W.Va., Sovereign Bancorp., a thrift holding company based in Wyomissing, Pa., and an unnamed private investor will each contribute $10 million of capital for convertible preferred stock. If these shares becomes common stock, each will own a 9% share of Mego. City Holding also has the option of purchasing an additional $10 million in Mego common stock over the next two years. As part of the deal, Mego will sell $604 million of mortgage servicing rights to City Mortgage Services for an undisclosed price. All of Mego's future originations will be serviced by City Mortgage. When Mego has provided $1 billion in servicing rights to City Mortgage, it will receive an option from City Holding to purchase 20% of the servicing operation if it should ever be spun off.

Norwest Asset Securities Corp., Frederick, Md., has announced an offering of approximately $650 million of securities backed by fixed-rate, 20- and 30-year non-relocation mortgage loans.Credit enhancement will be provided via a senior/subordinated, shifting-interest structure. The offering is being made through Greenwich Capital, with a scheduled settlement date of July 28. Issuance and post-issuance data on NASCOR Mortgage Pass-Through Certificates, Series 1998-17 will be available after settlement from the SecuritiesLink Advanced Information Services website (www.securitieslink.net). NASCOR is a wholly owned subsidiary of Norwest Mortgage Inc., Des Moines, Iowa.