Originations

The low interest rates of recent years cannot go on indefinitely, according to Alan Greenspan, former chairman of the Federal Reserve Board."Enjoy while you can -- it's been terrific," he told attendees at the annual convention of the Commercial Mortgage Securities Association in New York, about the large amounts of money that have been flowing into the commercial real estate sector. He said he expects that "we are somewhere in the range of the turning point" for interest rates, which would also cause capitalization rates to go up and property valuations to suffer. As for whether this is the beginning of a sustained rise in the 10-year Treasury note yield, Mr. Greenspan said a good part of the rise stems from an awareness that productivity is getting squeezed and that, at a minimum, it is a cyclical upturn in yield. However, "it is perfectly conceivable that it goes down again," he added. The low-interest-rate environment that has characterized the last few years came about as a result of a high level of savings in the developing world after the end of the Cold War, according to Mr. Greenspan. The level of savings in developing countries rose with productivity gains, obtained with the help of technology developed in the West, and he does not see this going on indefinitely.

Rising long-term interest rates could slow the recovery in the housing market, according to bank economists, who already expect to see rising subprime mortgage foreclosures over the next six months.The nine members of the American Bankers Association Economic Advisory Committee project that home sales will flatten out in the third quarter and gradually improve next year. However, "residential home price declines could deepen, especially if mortgage rates continue to climb," said Scott Brown, chief economist for Raymond James & Associates. Eight of the AEC economists say they expect consumer credit quality to deteriorate over the next six months, and five committee members expect the tightening in subprime lending to continue. "There is broad agreement among committee members that we will see an increase in foreclosures and an increase in delinquencies rates, especially in the subprime area," Mr. Brown said. The ABA can be found on the Web at http://www.aba.com.

JER Partners, the McLean, Va.-based global real estate investment arm of the J.E. Robert Cos., has announced the final closing of JER Europe Fund III, which raised €809 million ($1.1 billion).The fund will focus on property investment opportunities in all sectors throughout Europe, and the company said it is expected to have total buying power (taking leverage into account) of up to €4 billion ($5.4 billion). "Our intention is to be at the forefront of real estate investing, and we will continue to expand our initiatives and activities into new territories and new product classes," said Joseph E. Robert, chairman and chief executive officer of J.E. Robert. "With real estate investment platforms in North America, Europe, Russia, and soon also in Latin America, I believe JER is well positioned to capitalize on real estate opportunities wherever they present themselves." JER Partners can be found online at http://www.jer.com.

Fundings of payment-option loans continue to run at a much slower pace at Countrywide Financial Corp., totaling $2.3 billion in May, down from $6.6 billion in May 2006, although overall mortgage fundings rose.Nonprime fundings totaled $2.2 billion in May, down from $3.8 billion a year earlier, and home equity loan fundings stood at $3.4 billion, off from $4.4 billion in May 2006. Overall, Countrywide produced $44.4 billion in mortgage fundings for the month, up from $38.7 billion in May 2006. David Sambol, Countrywide's president and chief executive officer, said home purchase activity rose 17% from that of the previous month, and fixed-rate mortgages accounted for 76% of monthly production, their highest percentage since August 2003. In addition, the company's mortgage pipeline ended the months at $70 billion, its highest level since October 2005, Mr. Sambol said. Countrywide, based in Calabasas, Calif., can be found online at http://www.countrywide.com.

Thornburg Mortgage Inc., a lender based in Santa Fe, N.M., has priced 2.0 million shares of series E cumulative convertible redeemable preferred stock at $25 per share.The real estate investment trust said the dividend and the conversion rate will be fixed at the time of sale. The joint book-running managers of the offering are Stifel, Nicolaus & Co. and A.G. Edwards & Sons. The underwriters have been given an option to buy up to 300,000 additional shares to cover any overallotments. The REIT can be found online at http://www.thornburgmortgage.com.

T REIT Inc., Santa Ana, Calif., has announced the approval by its board of a special liquidating distribution of approximately $2.6 million, or $3.56 per share of common stock, to its stockholders.T REIT said the special distribution will be paid on or about July 6, contingent on completing the sale of the company's interest in the 1401 Enclave Parkway office building in Houston. As of June 8, the REIT had sold nine of its 11 properties and expects to complete its liquidation plan by Dec. 31. T REIT's adviser and operational manager is Triple Net Properties LLC, Santa Ana, which can be found on the Web at http://www.1031nnn.com.

As rating agencies tighten up ratings for commercial mortgage-backed securitizations, some deals relying on such funding may not be closed.Risk associated with real estate investment is being underpriced, according to John Kriz, managing director with a Moody's Investors Service group that rates unsecured REIT debt. Speaking at the National Association of Real Estate Investment Trusts' annual convention in New York, he noted, "The glass is less than half empty and draining," adding that it is "worrisome" to see prices in "secondary and tertiary markets being bid up." Mr. Kriz expects some CMBS deals to be repriced and some deals to be scuttled, as part of the signals of caution. There has been a historic move in spreads in the CMBX market, according to Jay Sugarman, chairman & CEO, iStar. He has heard anecdotally about some high profile transactions being impacted. On some transitional multifamily properties proceeds are down 20% as rational underwriters are saying no more, Mr. Sugarman noted.

Originator Metrocities Mortgage LLC has completed a strategic investment from private equity fund group Sterling Partners and become part of the newly formed Prospect Mortgage Co. LLC as a result.Terms of the transaction were not disclosed. Metrocities will continue to operate under its own name and Paul Wylie, Metrocities founder and chief executive officer, will be an equity participant in Prospect Mortgage.

Three of American International Group Inc.'s subsidiaries plan to take steps to provide payment assistance to certain nonprime borrowers as part of an agreement with the Office of Thrift Supervision. Among the types of assistance that is slated to be provided by the three subsidiaries - AIG Federal Savings Bank, American General Finance Inc. and Wilmington Finance Inc. - is the provision of more affordable loans to certain borrowers with a high risk of foreclosure. Certain borrowers may receive a partial refund of loan fees instead. The agreement pertains to mortgages originated in the name of AIG FSB by Wilmington between July 2003 and May 2006. Separately, AIG plans to donate $15 million over a three-year period to certain nonprofits to support financial literacy and credit counseling. The company previously set aside a reserve of $128 million pre-tax for the expected cost of implementing such programs and has since estimated that it will need an additional reserve of up to $50 million, inclusive of the $15 million donation.

Subprime mortgage concerns that have tightened underwriting standards and diminished secondary market appetite in the neighboring "near prime" market have forced originator GreenPoint here to cut 440 staff positions and close 12 of its 41 operational centers, according to a company spokesperson."It was not a decision that the company takes lightly," said the spokesperson. "Given the situation it was something that we needed to do." Most of the jobs cut affected loan processor and underwriting positions but some account executives and staff at GreenPoint's Novato, Calif. headquarters also were affected. GreenPoint is a subsidiary of Capital One.

As the hurricane season begins in Florida, the pre-foreclosure storm is continuing to swirl, according to Default Research, Inc. in Mt. Pleasant, Pa."Even though foreclosures rates in Orange County had remained relatively stable, May showed an increase of approximately 27 percent," said Serdar Bankaci, president and CEO. "With an active hurricane season predicted, many homeowners are already at the brink of foreclosure and may not be able to weather the financial storm." Combine the rising energy costs with the subprime lending crisis and adjusting ARM loans and Mr. Bankaci said he is certain foreclosures are going to continue in the Sunshine State.

Lisa Duehring has been named president and chief executive officer of Brisbane, Calif.-base dalliance Bancorp, a national conduit, wholesale lender and securitizer of residential mortgage products.Ms. Duehring has been president of Alliance Bancorp since January 1, 2006 and has more than 20 years of experience in the mortgage industry. She succeeds Mehrdad Elie who retired as CEO on June 1. Mr. Elie, who co-founded Alliance Bancorp in the 1980s, has served as the company's CEO for the past eighteen years. "Mehrdad Elie is an extraordinary leader. His vision, boldness and tireless commitment has helped transform the mortgage industry and has made Alliance Bancorp what it is today -- a strong, stable provider of Alt A products, featuring a variety of guidelines to meet today's market needs," said Ms. Duehring. Mr. Elie will continue in his role as a member of the Alliance Bancorp Board of Directors. "I have great confidence in handing over the reins to Lisa," he said. "Her talent, character and dedication will allow for a seamless transition and her vision will set the stage for a strong and exciting future for the company."

First of its kind, a Seattle, WA coalition dedicated to integrating customer advocacy with education for mortgage professionals, reported its "unprecedented agenda" includes campaigns to influence legislative changes, homeownership seminars, advanced training for brokers and cooperation with a television network to expose predatory lenders.American Mortgage Educators Inc. was created by four women: a customer advocate from Washington state, Dr. Lisa Rosenberger, president and CEO; From California, Tawney Warren and mortgage lending veteran Tracey Allen; and from the New York area, Colleen Dwyer. The coalition will organize free seminars for homeowners across the country. Ms. Allen said she will utilize her experience to develop an extensive training program that focuses on all the key elements that contribute to the loan process, to benefit brokers and loan officers. Ms. Warren said she will focus on setting up media alliances and projects, writing new legislation to demand that brokers be educated and licensed in every state, to help make critical changes that will protect customers.

Both long- and short-term mortgage rates rose to 10-month highs in Freddie Mac's latest weekly survey and the long-term, rate-indicative 10-year Treasury yield has hit a high above 5% not seen since last year, according to Yahoo! Finance.The benchmark yield was trading at 5.10% midday Thursday and the average 30-year fixed-rate mortgage rate was pegged at 6.53%. Other average rates were as follows: 15-year FRM, 6.22%; five-year hybrid adjustable-rate mortgage rate , 6.24%; and one-year Treasury-indexed ARMs, 5.65%. The rise reflected "market concerns of a tight labor force and wage growth," according to Freddie Mac vice president and chief economist Frank Nothaft.

Senate Banking Committee chairman Chris Dodd, D-Conn., said he will try to pass a Federal Housing Administration reform bill before Congress breaks for its August recess.Sen. Dodd told reporters that he would try to get FHA reform done in the "next month or so." Congress has been looking for ways to address rising delinquencies and foreclosures on subprime loans and FHA reform would give many distressed borrowers an option to refinance into safer and more affordable government-insured mortgages. The House Financial Services Committee has passed an FHA reform bill and some observers expect the House of Representatives will pass it later this month.

Florida-based national homebuilder WCI Communities Inc. has selected LivePerson's Timpani Voice platform to offer live, click-to-talk functionality to its online customers.Visitors to the WCI website are now able to initiate a live voice conversation by clicking on dynamic buttons placed throughout the site. After prompting the user to enter a phone number, the system brokers an immediate connection with a WCI representative, bypassing conventional voice recognition and automated phone menu options. During each live voice engagement, WCI agents have full visibility to the visitor's web page and are able to "co-browse" and guide them to additional pages, as well as assist with online forms. The addition of Timpani Voice is an expansion of WCI's existing relationship to provide live chat to its online customers. "More and more homebuyers are making the Internet an integral part of their research and purchasing process," said LivePerson CEO Robert LoCascio. For more on WCI and its residential communities, visit www.wcicommunities.com.

Commercial and multifamily mortgage bankers' loan originations were strong in the first quarter, according to the Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.While down from the fourth quarter of last year, first-quarter originations were up 37% compared to the same period last year. "Increases in total commercial/multifamily mortgage originations were led by increases in commercial mortgage-backed securities conduit loans and loans financing office properties," said Jamie Woodwell, MBA's senior director of commercial/multifamily research. The increase in lending activity was driven by increases in originations for all property types. When compared to the first quarter of 2006, the overall increase included a 64% increase in loans for health care properties, a 62% increase in loans for office properties, a 37% increase in loans for hotel properties, 26% increase in loans for multifamily, 25% increase in loans for retail properties and a 14% increase in loans for industrial properties. First-quarter 2007 mortgage bankers' originations were 15% lower than originations in the fourth quarter of 2006, reflecting the industry's usual push to finalize deals before the end of the year, and the traditional and subsequent drop-offs in first quarter numbers. First quarter numbers show decreases in all property types except hotel.

The spring selling season is not boosting existing homes sales and the National Association of Realtors expects sales to decline 6.1% in the second quarter, compared to the previous quarter.The Realtors' latest forecast shows existing home sales are estimated to fall from a seasonally adjusted annual rate of 6.42 million in the first quarter to a 6.03 million rate in second quarter, which is 9% below the rate in the second quarter of 2006. NAR senior economist Lawrence Yun said the market is "relatively soft" and sales remain sluggish compared to the recent boom. "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year," he said. NAR is forecasting that sales of previously owned homes will rise to a 6.2 million rate in the fourth quarter. For the year, sales will total 6.18 million, down 4.6% from 2006. At the same time, the median price of an existing home is expected to decline by 1.3% in 2007.

The Market Composite Index, an overall measure of mortgage applications, fell from 636.4 to 625.3 on a seasonally adjusted basis during the week ended May 25, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.The week's results include an adjustment to account for the Memorial Day holiday. On an unadjusted basis, applications decreased 12% on the week but were up 16.5% from the level recorded a year earlier. The Purchase Index rose from 427.0 to 433.6 on a seasonally adjusted basis, while the Refinance Index fell from 1874.6 to 1757.1. Refinancings represented 38% of total applications, down from 39.7% the previous week, while adjustable-rate mortgages accounted for 17.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.32% to 6.35%, and points (including the origination fee) increased from 1.41 to 1.5 for loans with 80% loan-to-value ratios, the association reported.

The National Association of Mortgage Brokers wants the federal government to establish a national registry for all mortgage originators that could also provide a funding source for financial literacy programs and state enforcement of mortgage laws.NAMB opposes a registry that the Conference of State Bank Supervisors and American Association of Residential Mortgage Regulators is slated to launch in January because it only covers state-licensed mortgage lenders and brokers. NAMB executive vice president Roy DeLoach said a registry needs to cover all originators, including loan officers at federally chartered or insured banks and thrifts. The CSBS/AARMR registry does not prevent a bad actor from going from bank to bank, he said. "If you don't plug all the holes up it is really a waste of money. And it gives all the people who use it a false of security," noted Mr. DeLoach. The federal agency running the national registry could also serve as a clearinghouse for consumer complaints and direct them to the appropriate regulator. "We took the CSBS model and improved upon it," Mr. DeLoach said.