Originations

First Industrial Realty Trust Inc., Chicago, has announced the renewal of its $500 million senior unsecured revolving credit facility.The credit facility matures in September 2012 and contains an option to increase the amount to $700 million. The pricing on the facility has been reduced to 47.5 basis points above the London interbank offered rate, a 15-bps reduction. JPMorgan Chase Bank NA was the administrative agent for the facility and Wachovia Bank NA was the syndication agent. The real estate investment trust can be found on the Web at http://www.firstindustrial.com.

Vornado Realty LP, the operating partnership of Vornado Realty Trust, Paramus, N.J., has entered into a $1.5 billion unsecured revolving credit facility, according to the real estate investment trust.The three-year facility, which has two one-year extension options, bears interest at 55 basis points above the London interbank offered rate (based on the company's current credit ratings), Vornado said. The co-lead arrangers and joint book-runners for the offering are JP Morgan Securities Inc. and Bank of America Securities LLC. The REIT can be found on the Web at http://www.vno.com.

An index that tracks pending home sales posted a 6.5% decline in August and stood 21.5% below the level recorded a year earlier, according to the National Association of Realtors.The Pending Home Sales Index is based on sale contracts signed each month. The August reading was 85.5, down from 108.9 a year earlier. "Fewer contracts were being written because of mortgage availability issues, and a separate Internet survey of our members shows [that] more than 10% of contracts fell through at the last moment in August, primarily the result of canceled loan commitments," said NAR senior economist Lawrence Yun. "The volume of activity we're seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes, but can't because of the credit crunch." The NAR can be found online at http://www.realtor.org.

Baker, Donelson, Bearman, Caldwell & Berkowitz, a law firm based in Memphis, has announced the creation of a Subprime Mortgage Task Force, a multidisciplinary practice group of attorneys from across Baker Donelson's five-state footprint in the Southeast and Washington, D.C.Linda S. Finley, a shareholder in the Atlanta office, and Hank Arnold, a shareholder in the New Orleans office, are leading the firm-wide effort. "We've assembled a team of attorneys who can assist clients with the wide spectrum of matters [relating to the subprime mortgage crisis], whether involving complex litigation defense in class-action suits, providing advice on regulatory compliance, or tracking and advancing financial institution client interests before local, state, and federal legislative bodies," said Ben Adams, Baker Donelson's chairman and chief executive officer. The firm said task force members are experienced in areas such as representing lenders, servicers, and investors in state, federal, and bankruptcy courts; default representation; quality control/quality assurance review of suspect loans; loss mitigation; state and federal regulatory compliance; and capital market activities. The firm can be found online at http://www.bakerdonelson.com.

The Federal Housing Administration's push to implement a risk-based premium system by Jan. 2 is not going to be easy for lenders or vendors, according to a regulatory compliance and software design consultant.FHA mortgage insurance premiums would be based on the downpayment, the credit score, and the source of the downpayment, which is a "very complicated change," Lance Richmond told MortgageWire. "On the software side, it definitely is a lot of work" and "vendors just can't respond that quickly to a major change like this," Mr. Richmond said. The mortgage consultant for Bellevue, Wash.-based Netupdate also pointed out that risk-based premiums are going to make it more difficult for subprime borrowers to qualify for FHA loans. "We need to get the word to HUD that this isn't the time to do it," Mr. Richmond said. The public comment period on the Department of Housing and Urban Development's FHA risk-based premium proposal ends Oct. 22. Mr. Richmond is a member of the Mortgage Bankers Association's compliance and legal issues committee. Netupdate can be found online at http://www.netupdate.com.

Morgan Stanley plans to close offices and cut several hundred staff members in its residential mortgage area but says it remains committed to the business.The company said it plans, on a net basis, to reduce U.S. positions by 500 and European posts by 100, including 90 in its U.K. mortgage subsidiary, Advantage. In addition, the Wall Street firm's three stand-alone businesses are slated to be combined into one integrated mortgage company with four centrally managed business channels: servicing, conduit, wholesale, and retail. The company can be found on the Web at http://www.morganstanley.com.

Net branch operator Aapex Mortgage of Florida -- once 4,000 locations strong -- shut its doors over the weekend after allegations began to mount that it had not paid some of its managers for 30 days, industry officials have confirmed to MortgageWire.Moreover, an official from the Florida Office of Financial Regulation told MW that there is now an "open investigation" of the Brandon-based company. She declined to elaborate. One net branch manager, whose territory includes the Midwest, said he has not been paid for 30 days. "They used to pay me in two to three days," he said. He has been a net branch franchisee for Aapex for three years. "You would send them a check, they'd take $600 out for the file, and they'd send you a check back," he said. "Not anymore. They owe me $5,700." Aapex officials, including president Roy Williams, could not be reached for comment. (For the full story, see the Oct. 8 issue of National Mortgage News.)

The upward movement in the Eleventh Federal Home Loan District Cost of Funds Index for August covers a period that ended before the Federal Reserve Board lowered the target federal funds rate by 50 basis points on Sept. 18.And where the Fed action might have an impact, on the cost of funding mortgage originations by thrift members of the Federal Home Loan Bank of San Francisco, that impact might not be reflected for several months. COFI rose over 8 basis points in August, to 4.359%. The increase ended two consecutive months of decline in the index. COFI is a lagging indicator because of the way it is compiled. It is a weighted average that takes into account what it cost thrifts in California, Arizona, and Nevada to fund mortgages over a period of several months. These sources include deposits and borrowings.

Under new government changes about to be formally rolled out, Lender Lead Solutions, Melville, N.Y., is making plans to introduce a Home Equity Conversion Mortgage based on the London interbank offered rate index rather than the constant maturity Treasury index."The LIBOR-based HECM provides brokers added margin while giving them flexibility to structure rates and loan closing costs to meet the individual needs of borrowers," said LLS chief executive David Peskin. "The migration to the LIBOR index will be the next big trend in the reverse mortgage industry. Its attractive pricing is better for our brokers and creates less interest rate risk for lenders like us."

KPMG Corporate Finance LLC, Baltimore, has announced the acquisition of "substantially all" the assets of Keen Realty LLC and Keen Consultants LLC, both based in Long Island, N.Y.Keen principal and president Harold Bordwin and Keen principal and executive vice president Matthew Bordwin will lead the group and assume managing director titles with KPMG Corporate Finance. Keen will operate as the real estate division of KPMG Corporate Finance, handling the disposition of owned property, leased property, lease renegotiation, and real estate financing and sale-leaseback services, KPMG said.

If the mortgage market is slowing down, it can't be seen from the monthly data provided by the Mortgage Insurance Companies of America.In August, the member companies of MICA (every private mortgage insurance company except Radian) had their best month of the year in terms of traditional primary new insurance written and the third-best month in terms of new applications received. And while the cure/default ratio was very low, it was the first time it has improved since February. In August, mortgage insurers wrote $27.3 billion of total primary new insurance, up 2.6% from July's $26.6 billion. Of that total, $23.8 billion was in the traditional category. For the third time in the past four months, applications received topped 200,000. In August, there were 206,445 new applications, up 14.3% over the total in July. New pool risk written fell from $239.6 million to just $29.5 million. The cure default ratio was 57.9%, up from 53.4%, with 33,811 cures and 58,441 defaults.

The Mortgage Bankers Association has released a policy paper that distinguishes the issue of mortgage fraud from predatory lending and discourages adding to or modifying the "already comprehensive" list of federal fraud statutes.The MBA's policy paper, Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts, recommends that Congress increase the resources available to law enforcement and help facilitate the coordination of federal and state law enforcement of financial crimes. "We do not need more federal laws to combat fraud," said Jonathan L. Kempner, president and chief executive officer of the MBA. "Instead, we need a more coordinated effort and more resources to investigate and prosecute. In addition to being illegal and costly, we know that fraud has also contributed to the recent rise in delinquencies and foreclosures, and the industry and government must step up our anti-fraud efforts to help curtail these related problems." The FBI has estimated that fraud cost mortgage lenders as much as $4.2 billion in 2006. The MBA can be found online at http://www.mortgagebankers.org.

SCME Mortgage Bankers, San Diego, pulled the plug Friday on its wholesale lending operation, according to mortgage sources that have done business with the company.At deadline time, SCME officials had not returned telephone calls about the matter. An e-mail message forwarded to MortgageWire that supposedly came from SCME states: "Effective the close of business today, September 28th, 2007, SCME will no longer accept wholesale business." According to the Mortgage Industry Directory, a SourceMedia publication, SCME ranked 83rd among residential funders last year, with roughly 96% of its $5 billion production coming from the wholesale channel. The company can be found online at http://www.scmeonline.com.

The Zurich, Switzerland-based corporate parent of Wall Street firm UBS has warned that it likely will take several hundreds of millions of dollars in pretax losses and has senior management changes and severe staff cuts in the works, primarily due to U.S. subprime mortgage market woes.The firm estimated that its writedowns for the quarter ending Sept. 30 will total between 600 million Swiss francs (about $513 million) and 800 million Swiss francs (about $685 million). The reorganization, which centers on the investment bank unit, includes cost reductions estimated to cut staff by 1,500 by the end of the year. Senior management changes include group chief executive officer Marcel Rohner's assumption ("for the foreseeable future") of the position of investment bank chairman and chief executive Huw Jenkins.

Citigroup said Monday that it would take a $1.3 billion pretax charge on the value of subprime mortgage securities that are part of current collateralized debt obligations or that are warehoused for inclusion in future CDOs.The subprime-related charges also cover collateralized loan obligations, or CLOs. Additionally, Citi will take a $1.4 billion charge on what it calls "unfunded highly leveraged finance commitments." These writedowns -- and others -- will be taken when Citigroup reports third-quarter results. The banking giant blamed the writedowns on "dislocations" in the mortgage-backed security and credit markets. It estimates that its third-quarter earnings might fall by as much as 60% because of these and other charges. The company can be found online at http://www.citigroup.com.

The Office of Thrift Supervision has closed NetBank in Alpharetta, Ga., after the $2.5 billion thrift sustained "significant losses" in its mortgage banking business and was unsuccessful in completing a private sale.NetBank, which opened as an Internet bank in 1997, is still solvent, but the OTS said the depository had no remaining prospects for raising capital or achieving profitability. "While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institution's viability," the regulator said. As the receiver, the Federal Deposit Insurance Corp. has arranged for ING Bank, Wilmington, Del., to assume the insured deposits. The Internet bank had $109 million in uninsured deposits, and those depositors will become creditors of the receivership. Meanwhile, EverBank, Jacksonville, Fla., has agreed to purchase $700 million in mortgages and the FDIC will retain $1.1 billion in assets. The FDIC says it expects the bank failure to cost the Deposit Insurance Fund $110 million.

XShares Advisors LLC, New York, has announced the launch of its newest family of funds, Adelante Shares Real Estate Exchange-Traded Funds, which offer a new approach to investing in real estate investment trusts.The seven Adelante real estate ETFs include a composite fund plus funds that focus on: U.S. nonresidential, nonlodging property; the residential sector; REITs with conservative dividends; inflation-protected RE exposure; REITs with fast-growing funds from operations; and undervalued REITs. Jeffrey L. Feldman, founder and chairman of XShares Group LLC, said the funds are "completely different from the other real estate-focused investment products already available." XShares can be found online at http://www.xsharesadvisors.com, and Adelante Shares LLC can be found at http://www.adelanteshares.com.

The Department of Housing and Urban Development is sticking to its guns regarding downpayment assistance on Federal Housing Administration-insured mortgages.Despite some congressional opposition, not to mention cries of foul from DPA providers, the agency will publish a controversial final rule Oct. 1 that will bar anyone who has a financial stake in the transaction from providing buyers with cash for a downpayment, even if they give the money to third-party nonprofit organizations that funnel it to buyers. The House recently passed an FHA reform bill that would set new standards for DPA, including a requirement that nonprofits have a net worth of at least $4 million. But the Senate Finance Committee's version of the reform package prohibits DPA. Sources at HUD, who used the term "collusion" and maintained that the funds are not really a gift because sellers tack on the amount to their asking price, said "we are putting out a final rule that would no longer permit seller-financed downpayment assistance for FHA loans." The agency says the default rate of these loans is almost three times that of other FHA loans. Last year, the Internal Revenue Service ruled that the "self-serving, circular financing arrangements" HUD is trying to stop are not charitable operations.

Democrats on the House Financial Services Committee have drafted a predatory-lending bill that would sweep more loans into the "high-cost" category and make it very difficult for lenders to provide traditional subprime loans to borrowers facing "life events" such as bankruptcy, job loss, or foreclosure.The draft bill would lower the points-and-fees trigger of the Home Ownership and Equity Protection Act to 5% and include yield-spread premiums in the calculation. It also appears that financing points and fees would be prohibited. If so, it would make it impossible for lenders to help most borrowers facing significant problems, according to attorney Wright Andrews. "Hopefully, this is an issue the committee will address and allow such loans to continue to be made, subject to appropriate safeguards," he said. Mr. Andrews is with the law firm of Butera & Andrews.

Five classes of notes issued by Delphinus CDO 2007-1 Ltd., a collateralized debt obligation consisting largely of residential mortgage-backed securities, have been placed on Rating Watch Negative by Fitch Ratings.The affected securities are classes C, D-1, D-2, D-3, and E. Fitch also affirmed the ratings on eight other classes in the transaction. The negative rating actions were attributed to deterioration in collateral credit quality. The deal has a revolving portfolio, of which RMBS constitute 88.9%, commercial MBS constitute 0.6%, and structured finance CDOs constitute 6.75%, Fitch reported. It consists primarily of 2006 and 2007 vintage subprime collateral. The rating agency can be found online at http://www.fitchratings.com.