Originations

Single-family housing starts rebounded 8.1% in November after a 15% drop in October, mainly due to a surge in construction activity in the South.The U.S. Census Bureau reported that single-family construction jumped from a seasonally adjusted annual rate of 1.185 million in October to 1.281 million in November. Despite the rebound, starts are still off 28.6% from the level recorded in November 2005. Single-family permits fell 3.1% in November, the 10th consecutive monthly decline. Permits were off 31.3% since November of last year. Construction activity in the South surged 14.1% in November, followed by a 5.6% increase in the Northeast, the Census Bureau reported. Single-family starts rose 1.4% in the West and 1.5% in the Midwest. Meanwhile, multifamily starts rose 4.1% in November to 277,000. For the previous 12 months, multifamily starts are off 7%. The Census Bureau's construction statistics can be found online at http://www.census.gov/const/www/index.html.

CBRE Realty Finance Inc., a Hartford, Conn.-based real estate investment trust specializing in commercial real estate, has been added to the Russell 3000, Russell 2000, and Russell Microcap indices.The Russell 3000 index consists of the 3,000 largest U.S. stocks, ranked by total market capitalization, and the Russell 2000 Index is composed of the 2,000 smallest companies in the Russell 3000 Index. The Russell Microcap Index consists of the smallest 1,000 securities in the Russell 2000 plus the next 1,000 securities, CBRE Realty said. The REIT can be found online at http://www.cbrerealtyfinance.com.

Cedar Shopping Centers Inc., a real estate investment trust based in Port Washington, N.Y., has priced 7.5 million shares of common stock at $16 per share.The estimated net proceeds of $113.9 million are expected to be used to repay amounts outstanding under Cedar's secured revolving credit facility, the REIT said. The underwriters have been granted an option to buy up to 1.125 million additional shares to cover any overallotments. Citigroup and Banc of America Securities LLC are the joint book-running managers for the offering, and Raymond James is the lead manager.

Nationwide Health Properties Inc., Newport Beach, Calif., has closed an amended $700 million senior unsecured credit facility.The real estate investment trust said the four-year facility includes an option to extend for a fifth year. The credit facility, which replaces an existing $700 million senior unsecured facility, was jointly arranged and syndicated by J.P. Morgan Securities Inc. and Banc of America Securities LLC. The REIT can be found on the Web at http://www.nhp-reit.com.

GMH Communities Trust, a real estate investment trust based in Newtown Square, Pa., has announced the dissolution of a special committee of its board that was reviewing a possible sale of the company and other strategic options.The board has decided to "fully commit" the company to the operation of its student and military housing segments, GMH reported. The company said it plans to reposition itself, citing initiatives to de-emphasize student housing acquisition in the short term and look for opportunities to sell, refinance, or incorporate student housing into joint ventures. An investigation by its Audit Committee earlier this year found evidence of material weaknesses in the company's internal controls and evidence that "key executives" placed pressure on the Accounting Department, GMH reported in July, adding that the probe found no evidence of pressure to falsify financial information. The REIT can be found online at http://www.gmhcommunities.com.

The U.S. commercial real estate market will have another good year in 2007, and the adoption of "green" and "sustainable" practices will emerge as a key trend, according to Colliers International, a Boston-based global real estate services firm.Colliers predicted that the "vast majority" of office developments will be certified by the Leadership in Energy & Environmental Design program. In addition, developers will move increasingly to mixed-use development that blends office, retail, residential, and hotel use, the company said. The industrial sector will be mixed as a result of a weak housing market and a production cutback by automakers, but rents are forecast to rise by 10% and construction by 15%. "Absorption, however, is not expected to keep pace," said Ross Moore, the organization's senior vice president and director of market and economic research. "This will leave the year-end 2007 vacancy rate up just a quarter of a percent -- coming in at approximately 8.5%. This will be the first increase since 2003." Colliers can be found online at http://www.colliers.com.

American Spectrum Realty, a Houston-based real estate investment and management company, has announced an offer to buy up to 485,000 common shares (approximately 4.9%) of Hartman Commercial Properties REIT for $10 per share.American Spectrum said the offer is being made directly to Hartman shareholders and is not conditioned on financing, the tendering of a minimum number of shares, or any approval by Hartman. The offer expires on Feb. 28, 2007, unless extended, the company said.

U-Store-It Trust, a Cleveland-based real estate investment trust, will replace Windrose Medical Properties Trust, Indianapolis, in the S&P REIT Composite Index after the close of trading on Dec. 19, Standard & Poor's has announced.S&P said the reason for the change is that Windrose is being acquired by Health Care REIT Inc. (another constituent of the REIT Composite Index) in a deal that is expected to close on or about that date. S&P can be found online at http://www.standardandpoors.com.

Accredited Home Lenders Co., San Diego, is one of the featured stocks on Zacks.com's Sell List for Dec. 15.The online unit of Chicago-based Zacks Investment Research has given Accredited its lowest rating, #5--Stocks to Sell Now. Zacks said Accredited's 2006 earnings estimates have dropped $0.74 per share over the past 60 days. Its third-quarter earnings fell by 55% as it booked a lower premium on loans sold and added higher provisions for repurchases. Accredited's net income for the quarter ended Sept. 30 totaled $18.4 million, down from $41.3 million for the comparable period in 2005. In its earnings release on Nov. 6, chairman and chief executive James Konrath said the company's recent performance had been hurt "by fierce pricing competition, ongoing product contraction, anticipated higher delinquencies and losses, and activities associated with the acquisition of Aames Investment Corp. that was effective on Oct. 1. Despite these headwinds, Accredited originated loans at a profit, maintained our low cost structure, and closed the acquisition of Aames on schedule." The Zacks decision runs counter to one made by Roth Capital. According to Yahoo Finance, on Nov. 16 Roth upgraded Accredited from "hold" to "buy."

The commercial real estate markets are setting another record for investment this year, although performance varies among the CRE sectors, according to the National Association of Realtors.More than $236 billion in CRE transaction volume (outside the hotel sector, and excluding properties valued at less than $5 million) was reported in the first 10 months of 2006, up from $231.9 billion in the same period of last year, the NAR reported in its latest Commercial Real Estate Outlook. "The office and industrial markets continue to shine, supported by job growth and trade, while the rental apartment sector is seeing healthy rent increases," said NAR chief economist David Lereah. "The retail sector is essentially flat, but the hotel industry is doing better than at any time since 2001." The association can be found on the Web at http://www.realtor.org.

Six members of the Senate Banking Committee are urging state and federal banking regulators to clarify the recently issued nontraditional mortgage guidance so it applies to subprime "2/28" adjustable-rate mortgages."It is our view that these mortgages have a number of the same risky attributes as the interest-only and payment-option ARMs and, therefore, should be covered by the new guidance," the senators say in a letter to regulators. "We would respectfully request that you issue a timely clarification to that effect." (The 2/28 ARM is a 30-year mortgage that has a fixed rate for the first two years.) The letter explains that subprime borrowers can see their interest rate jump from 8% to 12% when the initial fixed-rate period expires after two years, which is similar to the payment shock faced by IO and option ARM borrowers. Regulators issued the guidance to ensure that the nontraditional mortgage are underwritten at the fully indexed rate so borrowers are not forced to refinance or sell their home when the loan resets. The nontraditional mortgage guidance also addresses risk layering and other practices that "should apply" to subprime 2/28 mortgages, the senators say. Sens. Paul S. Sarbanes (D-Md.), Wayne Allard (R-Colo.), Christopher J. Dodd (D-Conn.), Jim Bunning (R-Ky.), Jack Reed (D-R.I.), and Charles E. Schumer (D-N.Y.) signed the letter.

Class L of GMAC Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates, series 2000-C1, has been downgraded from B-minus to CCC by Fitch Ratings and its Distressed Recovery rating has been lowered from DR2 to DR3.The rating agency also upgraded one class in the deal and affirmed the ratings on 11 other classes. Fitch attributed the downgrade to higher-than-expected losses on two real-estate-owned assets that have been disposed of.

Classes K through O of GMAC Commercial Mortgage Securities Inc. commercial mortgage pass-through certificates, series 2004-C3, have been downgraded and removed from Rating Watch Negative by Fitch Ratings.Three of the downgraded classes have been assigned Distressed Recovery ratings. The downgrades were as follows: class K from BB to B; class L, from BB-minus to B-minus; class M, from B-plus to CCC/DR1; class N, from B to C/DR3; and class O, from B-minus to C/DR6. In addition, Fitch affirmed the ratings on 18 other classes in the deal. The downgrades were attributed to expected losses on the specially serviced loans in the Nashville Multifamily Portfolio, which is collateralized by four cross-defaulted and cross-collateralized multifamily properties in Nashville, Tenn., Fitch reported. The rating agency can be found online at http://www.fitchratings.com.

The average 30-year fixed mortgage rate rose from 6.11% to 6.12% over the seven-day period ended Dec. 14, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.84% to 5.86%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged at 5.92%, and the average rate for one-year Treasury-indexed ARMs increased from 5.43% to 5.45%, Freddie Mac reported. Fees and points averaged 0.4 of a point for 30-year fixed-rate mortgages, 0.5 of a point for 15-year fixed-rate mortgages, 0.6 of a point for hybrid ARMs, and 0.8 of a point for one-year ARMs. "Mixed economic reports have kept mortgage rates from making any drastic changes this week," said Frank Nothaft, Freddie Mac's chief economist. "On the upside, there was stronger job growth and greater-than-expected retail sales in November. Offsetting that news was weaker wage growth in that same time frame and lower indications of consumer sentiment in December." A year ago, the average 30-year and 15-year fixed rates were 6.30% and 5.85%, respectively, and the average hybrid and one-year ARM rates were 5.77% and 5.15%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The J.D. Power and Associates 2006 Primary Mortgage Origination Study has found that SunTrust ranks highest in overall customer satisfaction among primary mortgage lenders, with a score of 782 on a 1,000-point scale.Bank of America (781), Wachovia (774), Wells Fargo (766), and Chase (762) are the others in the top five. At the other end of the scale are five companies that deal in the nonconforming business. At the bottom is Homecomings Financial (648), followed by Option One (666), New Century (681), Ameriquest (684), and First Franklin (690). The industry average score was 750. The study found that 28% of respondents said they had a problem during the origination process, such as errors in closing documents, miscommunication of loan terms, and unavailable or unresponsive loan consultants or mortgage brokers. On average, 40% of those who had a problem said it caused their loan to close late. "One of the biggest drivers of dissatisfaction in mortgage origination is not keeping commitments," said Rocky Clancy, executive director of the banking and mortgage practice at J.D. Power. "Top-performing lenders differentiate themselves first and foremost by framing expectations and executing well within the boundaries they establish. The bottom line for many customers in terms of how well their lender satisfies them is whether the loan closes on schedule and includes accurate closing costs, payments, and payoffs."

The Office of Federal Housing Enterprise Oversight has directed Fannie Mae and Freddie Mac to comply with the federal banking regulators' nontraditional mortgage guidance when purchasing and securitizing interest-only and payment-option mortgages.The two housing government-sponsored enterprises are expected to take immediate action and develop policies that are consistent with the bank regulators' underwriting guidance on nontraditional mortgages and report back to OFHEO by Feb. 28. "Adoption of this guidance by the two housing GSEs should serve to enhance the overall level of underwriting standards, risk management practices and consumer protection throughout the mortgage market," OFHEO Director James Lockhart says in separate letters to the top executives of Fannie Mae and Freddie Mac. It is understood that the guidance also extends to the GSEs' purchases of private-label securitizations that contain IO and option adjustable-rate mortgages. A company spokesman said Freddie Mac is reviewing OFHEO's letter and had no further comment. Fannie said it supports prudent lending practices and will be talking to its customers to help understand the impact of the guidance. "We believe we will be able to respond fully to OFHEO by Feb. 28, 2007," a spokesman said.

Aegis Mortgage Corp., Houston, which said goodbye to its longtime chief executive last month, has closed two subprime operation centers, laying off an undisclosed number of workers.The move comes one month after it also combined two operating units -- Aegis Funding Corp. and Aegis Wholesale Corp. -- and parted ways with its longtime chief Rick Thompson. AFC was a subprime wholesaler. AWC (the surviving name) is a prime and alternative-A funder. A spokeswoman for Aegis, which is owned by Cerberus Capital, said she did not know how many workers lost their jobs with the closure of the two op centers. She stressed that no account executives have been let go, and would not comment on Mr. Thompson's departure. (Sources told MortgageWire that he was forced out.) She also would not comment on Aegis' production volumes, but said that business, in general, is good. (For full details, see the Dec. 18 issue of National Mortgage News.)

Commercial and multifamily mortgage debt outstanding reached $2.845 trillion in the third quarter, an increase of 2.9% from the second quarter, the Mortgage Bankers Association reports, based on an analysis of the Federal Reserve's flow of funds data.Multifamily mortgage debt outstanding alone grew to $714 billion at the end of the third quarter, an increase of $10.8 billion or 1.5% from the second quarter, the MBA said. "Nearly every investor group increased their stake in commercial/multifamily mortgages in the third quarter," said Jamie Woodwell, MBA's senior director of commercial/multifamily research. Commercial banks hold the largest share of commercial and multifamily mortgages, with more than $1.2 trillion, or 44% of the total (this includes "commercial and industrial" loans as well as loans on income-producing commercial real estate). Commercial mortgage-backed securities issuers, collateralized debt obligations issuers and other asset-backed securities pools are the second largest holders of commercial and multifamily mortgages, at $583 billion, or 21% of the total.

The Market Composite Index, an overall measure of mortgage applications, rose from 647.6 to 721.2 on a seasonally adjusted basis during the week ended Dec. 8 as refinancing jumped to a high not seen since September of last year, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey."The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. Additionally, we are seeing a steady increase in purchase applications," said Mike Fratantoni, senior economist at the Mortgage Bankers Association. The market index was at a high not seen since October 2005 and the purchase index was at a level not seen since January of this year, according to the MBA. On an unadjusted basis, applications increased 10.2% compared with the previous week and were up 22.2% compared with the same week one year earlier. Refinancings represented 52.6% of applications, remaining at a high not seen since April 2004. This represented an increase from 50.1% the previous week. Adjustable-rate mortgages accounted for 24.9% of apps, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased to 6.02% from 5.98% and points (including the origination fee) rose to 1 from 0.91 for loans with 80% loan-to-value ratios, the association reported.

The delinquency rate for single-family mortgage loans rose to 4.67% in the third quarter, up 28 basis points from the second quarter and 23 basis points from one year earlier, according to the Mortgage Bankers Association.The increase was spread across all major loan types, most notably for subprime credit quality and Federal Housing Administration loans, the MBA said. The percentage of loans in foreclosure and entering the foreclosure process also rose. The MBA said 1.05 of all loans outstanding were in foreclosure at the end of the third quarter, six basis points higher than at the end of the second quarter. MBA chief economist Doug Duncan said the increase was anticipated, given the slowdown in home price appreciation. "It is important to remember that delinquency and foreclosure rates have been quite low the last two years," he said.