Origination

Fannie Mae and Freddie Mac are projected to force mortgage originators to buy back over $1 billion in whole loans in 2009 because of misrepresentations or fraud, according to their regulator. "In 2006 and 2007, the underwriting was so poor and there was a lot of mortgage fraud," Federal Housing Finance Agency director James Lockhart told reporters. "They have the right under their agreements to require the originator to repurchase the loan," he added. The government sponsored enterprise regulator indicated the buybacks could range from $1 billion to $1.5 billion. Buybacks can put "some real discipline into the origination system," the GSE regulator told a Women in Housing and Finance luncheon. "If you know you are going to get the mortgage back, you may be a little more careful in the future," he said.

Green Courte Partners LLC, Chicago, will purchase American Land Lease Inc., a Clearwater, Fla., real estate investment trust for $14.20 per share in cash, giving the deal a value of $438 million. The deal is structured in two steps, with Green Courte first making a tender offer for all of American Land Lease's common stock. Under the second step, any shares not acquired in the tender offer will be converted into the right to receive the same cash price per share. The limited partners of Asset Investors Operating Partnership LP, the operating partnership of American Land Lease, will receive $14.20 per share for each of their limited partnership units. Four directors of American Land Lease, who collectively own 12% of the company's common stock, have committed to tender their shares and sell their OP units to Green Courte. American Land Lease's series A cumulative redeemable preferred stock will remain outstanding after the transaction is completed. Wachovia Capital Markets LLC was the financial advisor while Skadden, Arps, Slate, Meagher & Flom LLP and Hill Ward Henderson served as legal counsel for American Land Lease. The legal counsel for Green Courte was DLP Piper LLP (U.S.). GCP is a private equity investment firm focused primarily on the ownership and operation of manufactured housing communities, retail and mixed-use properties, and parking assets. American Lend Lease specializes in retirement homes for "active adults."

Genworth Financial, Richmond, Va., now has a definitive agreement to purchase InterBank FSB, Maple Grove, Minn. The transaction was first announced on Nov. 16. Among the conditions for the transaction continues to be the approval of Genworth to participate in the Troubled Asset Relief Program. InterBank is a subsidiary of Aurora Services Corp. Aurora was represented by Sandler O'Neill & Partners LP and the law firm of Patton Boggs LLP. Terms of the deal were not disclosed.

The Market Composite Index, an overall measure of mortgage applications, decreased 7.1% on a seasonally adjusted basis from 857.7 to 796.8 during the week ended Dec. 5, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. The Purchase Index decreased 17.4% to 298.1 on a seasonally adjusted basis, while the Refinance Index decreased 0.9% to 3767.3. The application indexes both shot up during the week ended Nov. 28 as interest rates plummeted. Refinancings continued to boom, representing 73.7% of total applications, up from 69.1% the previous week, while adjustable-rate mortgages accounted for 1.1%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased 2 basis points from 5.47% to 5.45%, and points (including the origination fee) increased from 1.16 to 1.23 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Pending home sales, a forward-looking indicator of housing market activity, slipped by 0.7% to 88.9 in October, down from a reading of 89.5 in September, according to the National Association of Realtors. The level of pending sales is one percentage point lower than a year ago. Lawrence Yun, chief economist at the NAR, said pending home sales have been "remarkably stable" over the past year given the environment of economic turmoil. "We did see a spike in August when mortgage conditions temporarily improved, which underscores two things - there is pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market." Pending home sales improved from year-earlier levels in both California and Florida, markets that have been hard-hit by the housing downturn.

For the second consecutive month, mortgage-backed securities issuance by Ginnie Mae surpassed government-sponsored enterprises Fannie Mae and Freddie Mac, the Department of Housing and Urban Development said. The $27.1 billion issued in November brings the total for the calendar year to date to $246 billion. In the first 11 months of 2007, Ginnie Mae MBS issuance totaled $81.6 billion. By region, $6.7 billion from the West, $4.6 billion from the Midwest, $5.7 billion from the Mid-Atlantic, $8.7 billion from the South and $1.4 billion from the Southwest. "Ginnie Mae has consistently provided liquidity to the market and it is no surprise that our November MBS issuances were strong," said Joseph J. Murin, president of Ginnie Mae. "It is further proof that Ginnie Mae is continuing to thrive and provide stability."

Congress will try to restore the $729,750 loan limit for government-guaranteed single-family loans early next year as part of the newly elected president's economic recovery/stimulus bill, according to Rep. Barney Frank, D-Mass. The maximum loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration loans is slated to adjust downward to $625,000 after Dec. 31. And the Bush administration in its waning days is resisting any attempt to keep the $729,750 limit in place. "There is a chance to get them back up again," the powerful chairman of the House Financial Services Committee said. "And I believe that will be in the economic recovery plan," he told attendees at an Office of Thrift Supervision housing forum. But even a restoration after four or five weeks will cause disruption in the jumbo mortgage market. Some industry groups are hoping Sen. Mel Martinez, R-Fla., will be successful in attaching an amendment to the $15 billion auto industry rescue bill that extends the $729,750 loan limit for one year.

Mortgage bankers will foreclose on 8.1 million homes over the next four years, representing 16% of all outstanding residential loans in the U.S., according to a new report issued by Credit Suisse. Back in April CS forecast 6.5 million foreclosures, or 13% of outstanding mortgages. The Wall Street firm says it favors a plan by Treasury to create a 4.5% mortgage using mortgage-backed security issuance but believes the agency "should target an even lower rate in foreclosure hot zones where entire neighborhoods are at risk." CS analyst/managing director Rod Dubitsky estimates that within two years 72% of consumers with a subprime loan - and 83% of payment-option ARM borrowers - will be in a negative equity position if home prices fall 15%. Mr. Dubitsky spoke at the annual housing forum sponsored by the Office of Thrift Supervision on Monday afternoon.

American Spectrum Realty Inc., Houston, has been granted an extension by the NYSE Alternext US to regain compliance with the exchange's listing standards. Back on Sept. 17, 2008, American Spectrum Realty received a notice stating that it had fallen below the continued listing criteria due to not maintaining stockholders' equity requirements and was subject to delisting. On Oct. 16, 2008 the company submitted a plan of compliance to the exchange. That plan has been accepted by NYSE Alternext US as a reasonable demonstration of American Spectrum Realty's ability to regain compliance by Feb. 17, 2010 and so its listing would be continued. The exchange staff periodically will review the company's implementation of the strategies described in the plan. Failure by American Spectrum Realty to make progress consistent with the plan or to regain compliance with the exchange's continued listing standards by Feb. 17, 2010 could result in company's common stock being delisted.

Centerline Holding Co., New York, started trading over-the-counter market on the Pink Quotes (formerly the Pink Sheets) on Dec. 8, 2008. Its new ticker symbol is CLNH. On Dec. 1, 2008, the New York Stock Exchange delivered a written notice to Centerline saying its common shares would be suspended prior to the market opening on Dec. 8, 2008, because the company did not maintain a market capitalization of at least $25 million over a consecutive 30 trading day period. Centerline said it decided not to appeal the decision. Its subsidiary, Centerline Capital Group is an alternative asset manager focused on real estate funds and financing.