Originations

Ramco-Gershenson Properties Trust, Farmington Hills, Mich., has announced a favorable conclusion to a long-standing tax dispute with the Internal Revenue Service.The real estate investment trust said the IRS has allowed the statute of limitations (as previously extended) to expire for the taxable years 1996-2000. "No tax deficiencies were assessed, nor did the Internal Revenue Service choose to pursue its proposed disqualification of the company as a REIT with respect to any such taxable year," Ramco said. The shopping center REIT can be found on the Web at http://www.ramcogershenson.com.

Citizens Home Loan, a national mortgage lender based in Charlotte, N.C., has announced a marketing agreement with the Municipal Credit Union Employees Financial Plan.Under the agreement, customers of the credit union plan will have access to CHL's various mortgage products. CHL said its expertise in nontraditional mortgages, such as subprime and alternative-A loans, will give the plan's customers new options "without needing to take on additional risk." The company can be found on the Web at http://www.citizenshomeloan.com.

Houston-based Stewart Title has announced the acquisition of Border Title Group of Laredo, Texas, for an undisclosed amount.Evan Quiros, the former owner and chief executive officer, has been named president of the renamed company, Stewart Border Title LLC, which will continue to do business as Border Title Group. Stewart Title said the acquisition "strategically positions Stewart to better serve South Texas multicultural communities where job growth is exploding at a rate far greater than in other U.S. markets." Stewart, a wholly owned subsidiary of Stewart Information Services Corp., can be found online at http://www.stewart.com.

The average 30-year fixed mortgage rate was unchanged, at 6.18%, over the seven-day period ended Jan. 4, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate crept up from 5.93% to 5.94%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.98% to 6.02%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.47% to 5.42%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and hybrid ARMs and 0.6 of a point for one-year ARMs. "Interest rates were flat this past week, reflecting the mixed messages from recent economic indicators," said Frank Nothaft, Freddie Mac's chief economist. "The recently released manufacturing report showed an improvement, and while construction spending for November was down, it was still better than expected. On the other hand, a private-sector employment report suggested that the labor market was weaker than anticipated." A year ago, the average 30-year and 15-year fixed rates were 6.21% and 5.76%, respectively, and the average hybrid and one-year ARM rates were 5.78% and 5.16%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Harbourton Mortgage Investment Corp., Santa Rosa, Calif., closed its doors in late December, the apparent victim of loan buyback requests that it could not handle.According to one correspondent buyer, Harbourton was producing about $80 million a month. Harbourton's failure is just the latest in a wave of collapses that is reshaping the struggling subprime sector. In December, OwnIt Mortgage of Woodland Hills, Calif., went bust, as did Sebring Capital of Texas. As of MortgageWire's deadline, telephone calls to Harbourton's operations center in Virginia had not been returned. The company was founded in 2001 and is a subsidiary of Harbourton Capital Group of McLean, Va., according to its website. Kevin J. Ryan is listed as its chief executive officer. (For full details, see the Jan. 8 issue of National Mortgage News.)

Bayview Financial, a real estate lending and investment finance company based in Miami, has changed the name of its seller finance subsidiary, InterBay Funding LLC, to Bayview First Funding LLC.The name change (which does not apply to Bayview's small commercial loan subsidiary, InterBay Funding) is designed to enable the seller finance division "to better communicate and leverage its affiliation" with the parent company, Bayview said. The parent company can be found on the Web at http://www.bayviewfinancial.com, and the seller finance unit can be found at http://www.bayviewfirst.com.

The real estate investment trust sector recorded a total return of 34.35% for 2006, according to the National Association of Real Estate Investment Trusts.The return, based on the FTSE NAREIT index, puts REITs ahead of all other major U.S. equity market benchmarks for the seventh year in a row, the Washington-based REIT trade association said. NAREIT attributed the robust showing to strong fundamentals across the U.S. commercial real estate sector; increasing portfolio allocations to commercial real estate, especially among large institutional investors; strong mergers-and-acquisitions activity; and steady economic growth. Office properties had the best showing in 2006, with a total return of 45.22%. Health care came in next, at 44.55%, followed by self-storage, at 40.95%, and apartments, at 39.95%. NAREIT can be found online at http://www.nareit.com.

Family Federal Savings of Illinois, a federally chartered thrift based in Westmont, Ill., has obtained regulatory approval to form a first-tier subsidiary dedicated solely to reverse mortgage lending.The new entity, called 1st Reverse Financial Services LLC, will offer multiple levels of correspondent lending opportunities to mortgage lenders throughout the country. 1st Reverse will be headed up by longtime industry professionals Ralph Rosynek, Terry Bivins, David Cesario, and Larry Ferries. "As the reverse mortgage market continues its growth, it has become clear that smaller to midsize producers of reverse mortgages are not being provided the access and service that the larger lenders enjoy," said Mr. Rosynek, president of 1st Reverse. "Our goal is to change that by providing our business partners with a concierge level of service and access to the growing number of secondary-market lenders." The company can be found online at http://www.1streverse.com.

M&T Mortgage Corp. has been merged into M&T Bank as of Jan. 1, the company has announced.The statement came at the bottom of a news release whose primary function was to announce the opening of the bank's first retail banking office in New Jersey. The statement said, "The move allows M&T to serve customers more effectively, creates marketing synergies, and improves operating efficiency. The merger does not affect terms and conditions or account numbers on customer mortgages." M&T Bank is a subsidiary of M&T Bank Corp., Buffalo, N.Y.

The Market Composite Index, an overall measure of mortgage applications, rose from 555.8 to a holiday-adjusted 575.6 on a seasonally adjusted basis during the week ended Dec. 29, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 27.4% on the week but were up 6.9% from the level recorded a year earlier. The Purchase Index rose from 390.2 to 406.9 on a seasonally adjusted basis, while the Refinance Index rose from 1604.6 to 1640.4. Refinancings represented 48.1% of total applications, down from 48.8% the previous week, while adjustable-rate mortgages accounted for 20.4% (the lowest level since July 2003), the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 6.12% to 6.22%, and points (including the origination fee) fell from 0.96 to 0.92 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Lenders that specialize in adjustable-rate mortgage products could face a tough time this year as ARM volume drops to 16% of originations, according to the chief economist at Freddie Mac.ARM production (based on number of loans) accounted for 21% of originations in 2006 and 31% in 2005. However, chief economic Frank Nothaft said he believes that a flat or inverted yield curve will make ARMs less attractive to borrowers. In addition, the recently-issued regulatory guidance on nontraditional mortgages "may have some effect as well," he told MortgageWire. Freddie's chief economist is forecasting that single-family originations will total $2.50 trillion this year, down from $2.65 trillion in 2006. He projects that refinancings will remain relatively high at 38% of originations, compared with 44% last year. "Some people are facing a payment shock, and some people want to tap into the huge amount of home equity they have accumulated," Mr. Nothaft said. Nevertheless, it looks like total originations and ARM production will be the lowest since 2001, he said. Freddie Mac can be found online at http://www.freddiemac.com.

Subprime lender Mortgage Lenders Network, Middletown, Conn., says it is involved in "strategic negotiations" with several Wall Street firms concerning the sale of its wholesale operation.Wholesale production accounts for 75% of the company's originations, according to National Mortgage News. The announcement concerning its wholesale network came on Tuesday, after the firm failed to return telephone calls placed to it by several media outlets, including MortgageWire. The tight-lipped MLN would only say -- via a news release -- that it has "temporarily" discontinued funding loans through the wholesale channel. For now, it remains a retail lender only. It also has a $17.8 billion nonconforming servicing portfolio, ranking 18th nationwide. Sources said the company has been hit hard by buyback requests. Its warehouse providers, sources said, include Merrill Lynch and GMAC-RFC.

Two classes of Homestar Mortgage Acceptance Corp. asset-backed pass-through certificates, series 2004-2, have been downgraded by Moody's Investors Service, and one class from series 2004-3 has been placed on watch for possible downgrade.Class M-4 of series 2004-2 was downgraded from Baa1 to Baa3, and class M-5 was downgraded from Baa2 to B1. Class M-5 of series 2004-3 was placed on watch for possible downgrade. The rating actions were based on deteriorating credit enhancement, Moody's said. "While the collateral is performing better than expected, the overcollateralization has been falling significantly below its target as a result of lower-than-expected excess spread levels," the rating agency said. The deals are backed by Homestar-originated collateral consisting primarily of alternative-A loans, with a small percentage of subprime loans. Moody's can be found online at http://www.moodys.com.

California Statewide Communities Development Authority's multifamily housing revenue refunding bonds (Quail Ridge Apartments Project), series 2002 E-1 and E-3, have been downgraded from A to BBB-plus and BBB to BBB-minus, respectively, by Standard & Poor's Ratings Services.The outlook is stable. S&P credit analyst Karen Fitzgerald said the Quail Ridge project had debt service coverage ratios that were "still well below" pro forma debt service coverage levels and a "moderately high" overall rated loan-to-value ratio of 94%. In addition, the project has incurred "a significant increase" in annual expenses, she said. The weaknesses are "somewhat offset" by affordable rents and favorable location in a strong real estate submarket, S&P said. Quail Ridge is a 360-unit garden-style multifamily apartment complex located in Rialto, east of the Los Angeles metropolitan area. The rating agency can be found online at http://www.standardandpoors.com.

Hopes that the Eleventh Federal Home Loan District Cost of Funds Index would start a prolonged decline have been put on hold for at least one month.The index, as calculated by the Federal Home Loan Bank of San Francisco, rose slightly over 1 basis point, from 4.346% in October to 4.358% in November. A decline in October ended a period of increases that began in May 2004. This newest increase is still below the peak set in September of 4.382%. What makes COFI a "lagging index" is that it is a weighted average calculation of the cost of mortgage lending money for member thrifts of the FHLBank-SF and therefore includes rate scenarios across a period of several months. Given that other rates have stabilized over the last half of 2006, it is possible that this rise in COFI is just a blip. The FHLBank can be found online at http://www.fhlbsf.com.

The amount of private mortgage insurance written by the members of the Mortgage Insurance Companies of America totaled $17.8 billion in November, down 5% from $18.8 billion in October.The total decline represents less activity in both the traditional category and the bulk category. The member companies wrote $13.0 billion of traditional insurance in November, down from $13.5 billion the previous month. For the same time periods, they wrote $4.8 billion of bulk, down from $5.2 billion. Applications fell over 15%, from 129,612 in October to 109,590 in November. But November was the best month of the year by far in terms of new pool risk written, at $253.7 million. The next-best month of the year in this category was March, at $76.7 million. The cure/default ratio improved from 71.8% in October to 75.7% in November, with 34,509 cures and 45,325 defaults. The ratio is at its highest level since April, when it stood at 98.0%. MICA can be found online at http://www.micanews.com.

The performance of adjustable-rate subprime mortgages originated in 2006 is rapidly deteriorating and "higher default and loss rates may ensue," according to researchers at Friedman, Billings, Ramsey & Co.The default rate on 2006 subprime ARMs jumped 27% in November to 3.21% while the default rate on loans originated in 2005 hit 6.49%. The FBR researchers noted that the 2006 vintage has a higher interest rate (8.20%) than 2005 loans (7.36%), which implies that 2006 borrowers have higher debt service burdens. "It appears that subprime lenders may have mended their tattered profitability in 2006 by originating loans with higher mortgage rates, perhaps to riskier borrowers," the FBR report says. Based on preliminary volume data, the Arlington, Va.-based investment banking firm is reporting that issuance of non-agency subprime MBS fell 12.3% in 2006 to $521.3 billion, down from $594.4 billion in the previous year. However, alternative-A MBS issuance jumped 12.5% to $299.9 billion.

Grubb & Ellis, a Chicago-based real estate services company, is projecting an economic "soft landing" for 2007 that will keep the commercial real estate investment market healthy.While G&E said it expects the volume of investment activity to stabilize this year, following five years of gains, it also expects that it will stabilize at a high level. As office markets continue to tighten in 2007, landlords are expected to have more negotiating power in more markets. Five downtown markets -- San Francisco, Seattle, Miami, Midtown New York, and San Jose, Calif. -- are expected to see double-digit increases in rents for class A properties. Given this favorable outlook, office assets are at the top of investors' shopping lists, G&E said. The firm said it expects that the housing market slowdown will have "major implications" for the retail sector because homeowners will have less home equity to tap into. In addition, retail developments targeting new residential neighborhoods will be delayed until construction picks up.

Subprime wholesaler Mortgage Lenders Network, Middletown, Conn., has stopped funding loans, and is talking to investors about a possible sale of its assets, industry sources have told MortgageWire.For the past month, rumors have circulated that the company has been hit with huge buyback requests. The fact that the lender has stopped funding was first reported by the Associated Press on Tuesday morning. In mid-December, National Mortgage News broke the news that MLN senior vice president Paul C. Impagliazzo, a top wholesale executive, had left the company. Around the same time, the nondepository -- without explanation -- issued a statement saying it is "actively" accepting submissions and funding loans. According to the Quarterly Data Report, MLN is the nation's 15th-largest subprime funder. As of MW's deadline, no one at MLN's headquarters was answering its main switchboard.

Public Storage, a real estate investment trust based in Glendale, Calif., has announced that it will redeem all outstanding depositary shares representing interests in its 7.625% series U cumulative preferred stock on Feb. 25 at $25 per share plus accrued dividends.Accrued dividends will include those accrued from Jan. 1, 2007 through the redemption date. The aggregate redemption amount (before payment of accrued dividends) will be $150 million, the company said. The storage REIT can be found online at http://www.publicstorage.com.