Originations

Wells Real Estate Investment Trust Inc., Norcross, Ga., has announced the acquisition of its adviser companies for an undisclosed amount, making itself a self-advised REIT.Wells REIT, which specializes in owning class A office properties, was previously advised by entities affiliated with Wells Real Estate Funds. Under its charter, the REIT is required to list its shares on a national stock exchange or begin to liquidate its assets by Jan. 30, 2008. "Internalizing should mean benefits for the financial operations of the REIT over time, and it's generally considered to be advantageous for listing on a national stock exchange," said Donald A. Miller, president and chief executive officer of Wells REIT. The company can be found on the Web at http://www.wellsreit.com.

Affordable Residential Communities, Englewood, Colo., is selling its manufactured home community business to an affiliate of Farallon Capital Management for a total of $1.794 billion, including cash and assumption of debt.On a net basis, the sale is expected to yield about $540 million, or about $9.35 per common share, ARC reported. The company said it is looking to make "opportunistic acquisitions" from the sale proceeds. ARC's portfolio consists of 57,264 homesites in 275 communities across 23 states. Farallon, a San Francisco-based investment management company, is retaining ARC employees in the business. The transaction is expected to close by the end of 2007. The companies can be found online at http://www.aboutarc.com and http://www.faralloncapital.com.

Freddie Mac is speeding up the delivery of new subprime products that might offer more stable refinancing alternatives to subprime borrowers by midsummer."These products will include 30-year and possibly 40-year fixed-rate mortgages and adjustable-rate mortgages with reduced margins and longer fixed-rate periods," Freddie Mac chairman and chief executive Richard Syron told a House Financial Services subcommittee. "We expect to offer ARMs of five years or more with margins at adjustment that are as much as 200 basis points below the current step-up." Originally, Freddie Mac was not expected to introduce the subprime products until September. Mr. Syron also said modifications to Freddie's "Home Possible" products are in the works to provide subprime borrowers with additional refinancing options. Some underwriting characteristics of the HomePossible products overlap with those in the subprime market, "providing viable upstreaming opportunities for some segment of subprime borrowers," he said.

Fannie Mae is relaxing its underwriting standards to help refinance homeowners who are facing imminent payment shock due to adjustable-rate subprime mortgages.For borrowers current on their existing ARM, Fannie will overlook unpaid bills on their credit reports to get them into a safer and more affordable mortgage with a 40-year amortization period, if necessary. In congressional testimony, Fannie president and chief executive Daniel Mudd says 1.5 million borrowers could potentially be eligible for this refinancing option over the next two years. Fannie Mae calls this its "HomeStay" initiative. "Our message to lenders with borrowers facing resetting ARMs is this: If your homeowner has managed his credit over the past 12 months, there's a chance Fannie Mae can help," Mr. Mudd told a House Financial Services subcommittee that is looking for possible solutions to rising foreclosures. Fannie Mae can be found online at http://www.fanniemae.com.

Single-family housing starts inched up 2% in March from the total recorded in February to a seasonally adjusted annual rate of 1.218 million units, but they were down 24.6% compared with the level of a year ago, according to government figures released April 17.The Northeast suffered the most, falling 35.2%. Total housing starts -- which include multifamily -- were up a scant 0.8% from February to March, the Census Bureau and Department of Housing and Urban Development reported. "Given the issues stemming from the fallout in the subprime sector, builders could turn even more cautious, cutting back further on supply," RBS Greenwich Capital said in a research note. "While we anticipate the correction in groundbreaking activity to continue for at least a few more months, we still look for housing starts to flatten out in the second half of the year."

Class K of Banc of America Large Loans Inc.'s commercial mortgage pass-through certificates, series 2004-BBA4, has been downgraded from BBB-minus to BB-plus by Fitch Ratings.In addition, class K was removed from Rating Watch Negative, and the ratings on 13 other classes in the deal were affirmed. The downgrade was attributed to the continuing poor performance of the Arapaho Business Park loan, representing 8.4% of the collateral.

LaSalle Hotel Properties, Bethesda, Md., has announced an amendment to its $300 million senior unsecured bank facility.The amendment to the line of credit reduces the pricing and extends the maturity date to April 13, 2011 (with a one-year extension option), according to LaSalle. "The interest rate ... is based on a pricing grid with a range of 70 to 150 basis points over [the London interbank offered rate] and a flat unused fee of 12.5 basis points," the company reported. The co-lead arrangers of the facility were Bank of Montreal and Bank of America. LaSalle, a real estate investment trust, can be found online at http://www.lasallehotels.com.

The issuance of subprime mortgage-backed securities rose in February and March, but was off 15.8% for the whole quarter compared with that of the first quarter of last year, according to a Friedman Billings Ramsey report.The Arlington, Va.-based investment banking firm reported that the issuance of non-agency subprime MBS fell to $122.5 billion in the first quarter, compared with $145.5 billion in the same period in 2006. However, monthly issuance increased from $37.2 billion in January to $41.9 billion in February and $43.5 billion in March. The monthly issuance of subprime MBS averaged $43.1 billion in 2006, according to the April 13 FBR Investment Management report. FBR can be found on the Web at http://www.fbr.com.

Innkeepers USA Trust, a Palm Beach, Fla.-based hotel real estate investment trust, is being acquired by an associate of New York-based Apollo Investment Corp. for $1.5 billion.The purchase price includes $17.75 per Innkeepers share in cash and the assumption of the REIT's debt, the companies said. James Zelter, Apollo's president and chief executive officer, said he sees Innkeepers as providing "stable, long-term cash flow." Innkeepers owns 74 hotels with a total of 9,808 rooms, according to the REIT. Its properties include hotels branded as Residence Inns, Summerfield Suites, and Hampton Inns. The transaction is expected to close in the second quarter. The REIT be found on the Web at http://www.innkeepersusa.com.

Countrywide Home Loans Inc., Calabasas, Calif., has entered into a $500,000 settlement with a Connecticut regulator for charging excessive financing fees on 473 borrowers and for failing to register 147 originators with the state banking department.Countrywide paid a $401,750 civil money penalty for the violations and contributed $100,000 to NeighborWorks to provide homeownership assistance for state residents. State examiners found that Countrywide imposed prepaid finance charges that exceeded (in the aggregate) the legal limit, which is 5% of the loan amount or $2,000, whichever is greater. The limit on prepaid finance charges, which includes points and application and administrative costs, was enacted four years ago as part of the state's anti-predatory-lending law. Countrywide has refunded all the 473 overcharged borrowers and has agreed to take corrective actions with respect to prepaid finance charges and registering originators that work directly for the company. Countrywide said the settlement arose from a "misinterpretation and misapplication" of certain Connecticut requirements and that the company undertakes extensive efforts to comply with national and state laws governing its lending operations. The company can be found online at http://www.countrywide.com.

Fremont General Corp., Santa Monica, Calif., will sell $2.9 billion in subprime loans to an unidentified buyer, booking a $100 million pretax loss on the deal.According to a new public filing, the same buyer is in "exclusive" talks to buy Fremont's $27 billion subprime servicing portfolio as well as the platform. The buyer will also buy a "portion" of Fremont's subprime production operation even though the unit stopped funding loans several weeks ago. News of the sale and talks sent Fremont's shares soaring 26% to $8.85 in the early afternoon of April 16. Fremont, the holding company for a federally insured depository, can be found online at http://www.fremontgeneral.com.

Ameritrust Mortgage, Charlotte, N.C., has stopped funding subprime loans through its wholesale network.At deadline time, the company could not be reached for comment. An e-mail message sent to MortgageWire from an Ameritrust mortgage consultant says the company is "no longer" a wholesale lender. No other information was available at deadline time.

Net branch operator All Fund Mortgage of Tacoma, Wash., is late on paying some of its branch managers, with one senior officer blaming the problem on "accounting issues."Two California branch managers complained to National Mortgage News that they have not been paid in more than two weeks even though they are typically paid within 48 hours. "It was 15 days last Thursday they haven't paid me," said Los Angeles branch manager Len Richard. Bryan Hart, national branch director for All Fund, confirmed to NMN that "we've had delays" in payroll, but could not offer any details. He blamed the delay on accounting issues, adding that branch managers had been informed of the situation "way in advance." He would not elaborate on what those accounting issues are. Mr. Hart also said the company recently went through a change of control, and confirmed that executive vice president Perry Stiles has left the firm. According to an e-mail message provided to NMN, Mr. Stiles worked for All Fund for eight years and left on good terms.

Health Care REIT, Toledo, Ohio, has priced an offering of 5.5 million shares of common stock at $44.01 per share.The underwriters have been granted a 30-day option to buy up to 825,000 additional shares to cover any overallotments. The estimated $230.8 million in net proceeds (or approximately $265.4 million if the overallotment option is fully exercised) will be used to invest in additional health care and senior-housing properties, the real estate investment trust said. The joint book-running managers for the offering are UBS Investment Bank and Deutsche Bank Securities. The REIT can be found online at http://www.hcreit.com.

RAIT Financial Trust, Philadelphia, has priced an offering of $350 million in aggregate principal amount of 6.875% convertible senior notes due 2027.The real estate investment trust said it plans to use the net proceeds of the offering to repurchase $74.3 million of its common shares at a price of $27.34 per share. RAIT Financial granted the initial purchaser an option to buy up to $75 million in additional notes to cover any overallotments. The REIT can be found on the Web at http://www.raitft.com.

Democrats and Republicans on the House Financial Services Committee will get a chance to debate the merits of their respective Federal Housing Administration reform bills April 19 at a housing subcommittee hearing.The competing bills are aimed at re-energizing the FHA single-family program so it can serve more subprime borrowers by charging risk-based premiums. The Republicans' bill (H.R. 1752), introduced by Judy Biggert, R-Ill., would allow the FHA to charge a maximum upfront mortgage insurance premium of 3% and an annual premium of 2%. The Democrats' bill (H.R. 1852), introduced by Rep. Maxine Waters, D-Calif., would cap the upfront premium at 2.25% and the annual premium at 55 basis points for borrowers who make a downpayment, even if their credit score is below 560. For those risky borrowers, the FHA can require homeownership counseling and take other consumer protection measures. Democrats contend that the Republicans are charging too much for borrowers who make a downpayment.

Homefield Financial, Irvine, Calif., has shut its wholesale lending division, according to a posting on its website.At deadline time, company officials could not be reached for comment. The company was founded in 1998, with offices in Irvine and Rancho Cucamonga, Calif. Homefield can be found on the Web at http://www.homefield.com, and the notification about the wholesale unit can be found at http://www.homefieldwholesale.com.

First Horizon Home Loans, Irving, Texas, has decided to exit the subprime wholesale channel, citing razor-thin profit margins and low bids on loan pools."There's no money to be made from it," said Terry Renoux, president of consumer lending for the bank-owned company. About 60 to 65 workers are affected by the closure, which came on April 11. In 2006 First Horizon funded about $1.5 billion in subprime loans through wholesale and retail means. (For full details, see the April 16 issue of National Mortgage News.) The company is a subsidiary of First Tennessee National Corp., which can be found online at http://www.firsttennessee.com.

The crisis in the subprime mortgage sector is shaking the very foundation of the housing market, according to one of the nation's largest homebuilders.Ara Hovnanian of Hovnanian Enterprises said the subprime debacle is causing problems up and down the housing food chain. For one thing, fewer people can qualify for starter homes, Mr. Hovnanian said at the National Association of Home Builders' Multifamily Pillars of the Industry conference in Hollywood, Fla. For another, repeat buyers are finding fewer prospects for their houses, which they must sell before they can move, he said. But perhaps most important, the situation is having a dampening effect on the market in general. "The biggest impact is psychological," Mr. Hovnanian told the meeting. "Homebuyers were just beginning to feel good about getting back into the market" when the subprime meltdown became fodder for the media, he said. "Now they have lost their confidence." Hovnanian Enterprises is the parent company of K. Hovnanian Homes, the nation's sixth-largest builder based upon revenues and deliveries. Mr. Hovnanian said 15% of his buyers had to use subprime financing last year in order to qualify. But he said he expects that percentage to dwindle to 9% at most because of tightening loan standards.

Class M of JP Morgan Commercial Mortgage Finance Corp.'s commercial mortgage pass-through certificates, series 2000-C10, has been downgraded from CC/DR4 to C/DR5 by Fitch Ratings.Fitch also upgraded three classes and affirmed the ratings on nine other classes in the deal. The rating agency attributed the downgrade to actual and expected losses from a specially serviced loan collateralized by a 162-unit manufactured housing community in Yuma, Ariz.