Originations

Bay Capital, a Maryland-based mortgage banking firm, has closed its doors after its parent company declared itself insolvent.At deadline time, no details were available on Bay's production. The parent firm, Clear Choice Financial, Tempe, Ariz., was traded on the "pink sheets." CCF said in a statement that it had closed two offices belonging to Bay, one in Owings Mills, Md., and another in Irvine, Calif. Roughly 120 out of 150 workers lost their jobs. The statement says Bay was "forced" to shut down its warehouse lines. David Birdsell was recently named chief restructuring officer to the company, and the law firm of Keller Rohrback was hired as bankruptcy counsel. (For more details, see the Jan. 22 issue of National Mortgage News.)

Investment banker Credit Suisse is in talks to buy subprime wholesaler ResMae Mortgage of Brea, Calif., investment banking sources have confirmed to MortgageWire.At deadline time, ResMae had not returned telephone calls. A source at Credit Suisse confirmed the talks but said a purchase agreement has not been signed. According to the Quarterly Data Report, ResMae is a top-20-ranked subprime funder. (For more details, see the Jan. 22 issue of National Mortgage News.) ResMae can be found on the Web at https://www.resmae.com.

Single-family housing starts fell 4.1% in December to end the year on a down note, but experts believe home construction is very close to flattening out after a 15% decline in 2006.The U.S. Census Bureau reported that single-family starts declined from a seasonally adjusted annual rate of 1.28 million in November to 1.23 million in December. Single-family permits increased by 1.2% in December, the first increase in 11 months. In 2006, builders started 1.46 million single-family homes, down from 1.72 million in the previous year. Economists at the National Association of Home Builders are forecasting that single-family starts will bottom out in the first quarter and steadily increase over the next three quarters. However, NAHB chief economist David Seiders says he still expects a 15% decline in single-family starts this year. Celia Chen, director of housing economics for Moody's Economy.com, says she believes that single-family housing starts bottomed out in the fourth quarter and that starts will be flat all year, resulting in a 12% decline from last year's total. The Census Bureau also reported a 30% jump in multifamily starts, to 350,000, in December. For the year, multifamily starts totaled 293,000 units, down 5.9% from the level recorded in 2005.

Two classes of First Franklin Financial Corp. residential mortgage-backed certificates have been downgraded by Fitch Ratings, and three classes have been placed on Rating Watch Negative.Class M-8 of series 2004-FFH1 was downgraded from BBB to BB, and class M-9 was downgraded from BBB-minus to BB-minus. Class M-7 of the series and classes B-1 and B-2 of series 2004-FFH2 were placed on Rating Watch Negative. In addition, Fitch affirmed the ratings on 16 classes from the two transactions. The negative rating actions were attributed to a deteriorating relationship between credit enhancement and expected losses. The collateral for the transactions consists of first-lien subprime loans. Fitch can be found online at http://www.fitchratings.com.

Nicholas A.C. Mumford has been named chief executive officer of Centerbrook Financial LLC, a New York-based provider of credit intermediation products for the affordable housing industry.Mr. Mumford succeeds Robert Maum, who left Centerbrook in December "to pursue other opportunities," the company said. Mr. Mumford was previously a managing director at Ixis Capital Markets, and has held posts at Lehman Brothers and Citibank, Centerbrook said. The company, which is 90% owned by a subsidiary of CharterMac, can be found online at http://www.centerbrookfinancial.com, and CharterMac can be found at http://www.chartermac.com.

The mortgage banking operations of JPMorgan Chase & Co., New York, recorded net income of $34 million in the fourth quarter, down from $63 million a year earlier, while profits rose for the company as a whole, JPMorgan has reported.Mortgage production revenue totaled $215 million, up $81 million from that of a year earlier and reflecting increased loan sales and wider gain-on-sale margins that "benefited from a shift in the sales mix," the company said. Mortgage originations totaled $31.0 billion, which was off 3% from the level recorded in the fourth quarter of 2005. Net mortgage servicing revenue totaled $195 million, which was down significantly from $290 million a year earlier. The entire company reported net income of $4.5 billion ($1.26 per share) for the fourth quarter, up from $2.7 billion ($0.76 per share) a year earlier The company can be found online at http://www.jpmorganchase.com.

The Mills Corp., a real estate investment trust based in Chevy Chase, Md., is being acquired by Brookfield Asset Management for a total price of about $7.5 billion.The price includes a cash payment of $21 per Mills common share and limited partnership unit, for a total value of $1.35 billion, and the assumption of The Mills debt and preferred stock, the companies reported. The Mills, a shopping center REIT, will merge into a newly formed subsidiary of Brookfield. Brookfield has also agreed to provide The Mills with debt financing until the completion of the merger by assuming The Mills' approximately US$1 billion senior term loan from Goldman Sachs Mortgage Co. and subsequently revising the terms of such loans and providing a US$500 million revolving line of credit. "This merger will provide the resources to upgrade our properties, reinforce our organization, and continue to attract premium tenants to The Mills concept," said Mark Ordan, chief executive officer and president of The Mills. The companies can be found online at http://www.millscorp.com and http://www.brookfield.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 671.1 to 667.2 on a seasonally adjusted basis during the week ended Jan. 12, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 28.9% on the week and were up 9.8% from the level recorded a year earlier. The Purchase Index fell from 472.8 to 439.7 on a seasonally adjusted basis, while the Refinance Index rose from 1923.8 to 2045.8. Refinancings represented 49.9% of total applications, up from 48.4% the previous week, while adjustable-rate mortgages accounted for 21.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.13% to 6.19%, and points (including the origination fee) rose from 0.94 to 0.98 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

A "couple of hundred" mortgage banking firms could fail in the next year or so as the industry works out its excess capacity, according to the chief economist for the Mortgage Bankers Association."It could be a significant" number of firms, said the MBA's Doug Duncan at a forecast conference hosted for the media. "There's a lot of capacity in the industry," he said. The trade group, though, does not think residential production will fall off the cliff this year. The MBA is forecasting that home lenders of all stripes will fund $2.4 trillion in loans this year -- 45% of it refinancings -- compared with $2.5 trillion in 2006. (The MBA's volume number for 2006 differs from that of the Quarterly Data Report, which found lenders funded about $3 trillion in 2006.) Over the past three months several mortgage firms have exited the business, either through merger or failure. (For a partial listing, see the Jan. 15 issue of National Mortgage News.) The MBA can be found online at http://www.mortgagebankers.org.

Citing a declining origination market and deterioration in the subprime sector, the parent of GMAC Residential, Horsham, Pa., plans to cut 1,000 positions in its mortgage affiliates over the next nine months, according to a new public filing.As part of the cutback, ResCap will close three of its six servicing locations, leading to job losses in Blue Bell, Pa., San Diego, and Shelton, Conn. The company said severance and related expenses will cost it $10 million, but eventually will save $65 million a year. "ResCap's decision to reduce its work force and accelerate its integration process is being driven by a number of factors, including slower originations, shifts in home prices and appreciation rates, a challenging interest rate environment," and the ailing B&C sector, the company says in a new filing with the Securities and Exchange Commission. GMAC Residential and its two primary affiliates, when counted as one, rank third nationwide in production, according to the Quarterly Data Report. ResCap can be found on the Web at https://www.rescapholdings.com.

Three classes of Salomon Brothers Mortgage Securities VII Inc. series 2000-C2 have been downgraded by Fitch Ratings.The downgrades were as follows: class J, from BB to BB-minus; class K, from B to B-minus/DR1; and class L, from CCC/DR3 to C/DR5. In addition, three classes were upgraded and the ratings on six other classes in the deal were affirmed. Fitch attributed the downgrades to an increase in projected losses on several specially serviced loans. (Distressed Recovery ratings range from DR1, the highest, to DR6 to designate a transaction's recovery prospects.) The rating agency can be found online at http://www.fitchratings.com.

The Alliant Co., a Woodland Hills, Calif.-based sponsor of affordable housing tax credit partnerships, has announced the acquisition of EF&A Funding LLC for an undisclosed amount.EF&A provides debt financing to owners and operators of multifamily properties. Its origination, underwriting, and servicing business will operate as part of Alliant's multifamily finance platform. EF&A's platform has originated over $5.9 billion of multifamily mortgages since its founding in 1992 and now services a portfolio in excess of $2.8 billion, Alliant said. Alliant, the parent company of Alliant Capital, can be found online at http://www.alliantcapital.com, and EF&A can be found at http://www.efafunding.com.

Ventas, a Louisville, Ky.-based health care real estate investment trust, is acquiring Sunrise Senior Living REIT, a Toronto-based investor in senior living properties, for a total of $1.8 billion (Canadian $2.1 billion).The Sunrise portfolio being acquired consists of 74 assisted-living communities in Canada and the United States, Ventas reported. The REIT also has the right of first offer on some other Sunrise assets. Of the properties being acquired, 63 are located in metropolitan areas in the United States. "The acquired assets are all new assisted-living communities located in large metropolitan areas, with high barriers to entry, and extraordinary growth prospects," said Debra A. Cafaro, chairman and chief executive officer of Ventas. "This transaction will broaden our footprint in North America with entry into the Canadian seniors housing market."

The mortgage originations of Wells Fargo Home Mortgage, Des Moines, Iowa, totaled $398 billion in 2006, up 9% from the level recorded in 2005, according to Wells Fargo & Co., San Francisco.In addition, the owned mortgage servicing portfolio stood at a record $1.37 trillion as of Dec. 31, 2006, up 38% from that of a year earlier, Wells Fargo reported. (Wells Fargo Home Mortgage is part of Wells Fargo's community banking segment.) "The past year has been a very challenging year for the mortgage industry with the flat to inverted yield curve and a slowdown in the housing sector," said Mark Oman, senior executive vice president in the Wells Home and Consumer Finance Group. "Despite this environment, we continued our long track record of growing our mortgage servicing businesses at double-digit rates, which provides opportunities to cross-sell and retain these customers." Wells Fargo & Co. reported record net income of $8.48 billion ($2.49 per share) for 2006, up 11% from that of a year earlier. The company can be found online at http://www.wellsfargo.com.

Mortgage Lenders Network USA of Connecticut is working on a plan to re-start its wholesale network and hopes to recall some furloughed workers, according to a company e-mail message obtained by MortgageWire.At deadline time, details about the plan were sketchy, but the e-mail message -- co-authored by company chief executive Mitch Heffernan -- says MLN is working on a "multi-party" arrangement for the nonprime lender "to continue to operate all of its divisions, including wholesale." MW broke the news Jan. 12, before the holiday weekend. A source familiar with the matter said more announcements could come on Wednesday or Thursday. In late December, hurt by loan buybacks and related developments, MLN closed its wholesale unit, which accounted for 90% of its residential fundings. In the third quarter, the privately held nondepository ranked 15th nationwide among all nonprime lenders, according to the Quarterly Data Report. MLN recently finalized a deal to have Lehman Brothers fund a little less than 900 loans that closed but did not fund when it shuttered its wholesale arm in late December. MLN, based in Middletown, Conn., can be found on the Web at http://www.mlnapproves.com.

Class B-8 of DLJ Commercial Mortgage Corp. commercial mortgage pass-through certificates, series 1999-CG3, has been downgraded from CC to C by Fitch Ratings.The class has a Distressed Recovery rating of DR5. In addition, Fitch upgraded one class in the deal, and the ratings on 14 other classes were affirmed. Fitch said the downgrade was the result of an increase in loss expectations on specially serviced loans. The rating agency can be found on the Web at http://www.fitchratings.com.

AvalonBay Communities Inc., Alexandria, Va., has priced a public offering of 4.0 million shares of common stock that was timed to coincide with AvalonBay's inclusion in the S&P 500.The real estate investment trust said the net proceeds of approximately $594 million will be used for general corporate purposes. The underwriters have been granted an option to buy up to an additional 600,000 shares to cover any overallotments. The multifamily REIT can be found online at http://www.avalonbay.com.

Acting Pennsylvania Banking Secretary Victoria A. Reider has sent a letter alerting the commonwealth's mortgage companies about new guidelines outlining acceptable conduct for the state's 3,000 lenders and brokers.The new guidelines are part of an effort to protect consumers looking for home loans, the department said. They offer examples and definitions of practices considered dishonest, fraudulent, illegal, unfair, unethical, negligent, or incompetent. Companies that fail to conform to the new guidelines could face suspension, revocation, or nonrenewal of their licenses. The Department of Banking said it is also crafting regulations and seeking legislative reforms to better protect consumers. The changes mirror recommendations outlined in a 2005 report to the General Assembly, "Losing the American Dream: A Report on Residential Mortgage Foreclosures and Abusive Lending Practices in Pennsylvania."

The correspondent lending division of American Home Mortgage Investment Corp., Melville, N.Y., has announced the introduction of two new loan acquisition strategies.The Live Mandatory program, targeted at agency business, offers an alternative to selling loans to Fannie Mae or Freddie Mac and having to retain servicing rights. The Mini Bulk and Bulk program offers "fast and timely" competitive bids for a wide range of products, with a minimum pool size of $3 million. "Today's secondary market underscores the need for resources that are both comprehensive and easy to use," said Rick Pishalski, executive vice president of the division. Both programs are now available on the division's website, at http://www.ahmcd.com.

A competing offer to the Blackstone Real Estate Partners proposal to acquire Equity Office Properties Trust may be emerging, according to published reports from various sources.A Reuters report indicates that Cerberus Capital Management is preparing a bid. Barry Sternlight of Starwood Capital Group has also been mentioned as a possible bidder. The Blackstone buyout for $36 billion values Equity Office stock at $48.50 per share. After the reports surfaced, Equity Office stock was trading over $49 on Jan. 11. Some bondholders had previously indicated resistance to the terms of the Blackstone buyout, contending that the terms of the offer are such that the bondholders "will not receive their full contractual entitlements." Chicago-based Equity Office, the largest real estate investment trust by market capitalization in the United States, can be found online at http://www.equityoffice.com.