Bank Sued Over Failed Firm
A mortgage banking joint venture between a Colorado firm and a Kansas bank appeared to be weathering the financial markets storm until March, when the bank pulled the plug on the operation. Now the bank is being sued for millions of dollars by its former partners.

The lawsuit was filed by Sofco LLC, R. Scott Christian and Robert R. Jones against National Bank of Kansas City in U.S. District Court for the District of Kansas at Kansas City, Kan., on Aug. 8.

The case involves First Fractional Funding, a joint venture between the plaintiffs and defendants that was launched in May 2006, according to court documents. The business involved the financing of fractional ownership interests in vacation properties, resort properties and second residences.
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Positive IndyMac Update
IndyMac Federal Bank FSB, which still employs many of the people who worked there before it was taken over by government regulators, is operating under the Federal Deposit Insurance Corporation with fewer capital restraints in an environment with higher morale than in its final days as an independent company. Fewer layoffs are currently planned as the FDIC is apparently managing the company under a strategy that seeks to preserve value in the company's business units as ongoing entities.

NovaStar Finds New Niche
NovaStar Financial Inc., which exited its mortgage production business in January, has invested in an appraisal business.

ResCap Closing Offices
Residential Capital LLC is closing two offices and eliminating more wholesale and retail positions.

Federal Regulators Busy
As reports of massive mortgage-related losses continue to pour in, federal regulators are busy investigating and issuing orders against financial firms. One thrift reported that a recent increase in withdrawals has subsided -- though a resumption could have a negative impact on capital.

ResCap Taps Former Exec of Bear Unit
Residential Capital LLC has hired a former executive of a Bear Stearns & Co. Inc. unit to head its high-risk mortgage servicing unit. He follows the company's chairman and chief executive officer, who also came from a Bear unit.

Wachovia Laying Off Originators
Wachovia Corp. is changing its retail lending model in several states in a move that will shift retail mortgage originations from the field to centralized origination centers. As a result, originators in those states are being eliminated.

Massive Losses, Legal Actions & 1 Done
Around $8.8 billion in mortgage-related losses were reported by U.S. firms this week. Other recent corporate activity included the issuing of several orders against banks, the disclosure of a major securities investigation, the filing of another investor class action and a warning about liquidity from Residential Capital LLC.

Florida Wholesaler Finished
A Florida-based lender is shuttering its broker channel.

Mixed Results at PHH
PHH Corp. saw an improvement in servicing income and an increase residential originations, making it a top-10 lender during the latest quarter. Production earnings, delinquency and its servicing portfolio, however, deteriorated.