Originations

Realty Income Corp., Escondido, Calif., has priced an offering of 8.8 million shares of Monthly Income Class E Cumulative Redeemable Preferred Stock at $25 per share.Realty Income said the shares of preferred stock have no stated maturity, sinking fund, or mandatory redemption provisions. Realty Income said the net proceeds of the offering will be used to repay borrowings under the company's $300 million unsecured acquisition credit facility and for general corporate purposes. The co-book-running managers of the offering are Citigroup Corporate and Investment Banking, Merrill Lynch & Co., and Wachovia Securities. The company can be found on the Web at http://www.realtyincome.com.

Zacks Equity Research, Chicago, announced Dec. 1 that Liberty Property Trust, Malvern, Pa., had been designated its "Bear of the Day," a stock expected to underperform the markets over the next three to six months.Zacks said the commercial real estate investment trust had a disappointing third quarter, reporting funds from operations that were $0.04 per share lower than Zacks' expectations. "Liberty is focusing on development which could prove beneficial down the road, although most projects will not add to earnings in the near term," Zacks said. "We rate the company a sell due to our expectation of little to zero FFO growth in 2007." Zacks can be found online at http://www.zacks.com, and Liberty Property Trust can be found at http://www.libertyproperty.com.

Option One Mortgage Corp., Irvine, Calif. -- which is on the auction block -- lost $40 million for the three-month period ended Oct. 31, compared with a $48 million profit in the same period last year.The subprime lender's parent company, H&R Block, blamed the losses on continued weakness in the mortgage industry, noting that lenders are facing "reduced originations, reduced gain-on-sale margins, and increased provisions for loan losses." (Option One is part of Block's mortgage services group, which does not include H&R Block Mortgage Corp.) Option One, a wholesaler, funded $6.6 billion in the quarter (the company's second fiscal quarter), a 46% decline from the level of the same period last year. In November Block said it might sell Option One. Potential bidders include two broker-dealers, investment banking sources have told MortgageWire.

NovaStar Mortgage Inc., Kansas City, Mo., has reported the acquisition of 19 retail lending locations and certain other assets of Oak Street Mortgage LLC.The terms of the transaction were not disclosed. "Adding an experienced team of mortgage professionals serving consumers coast to coast gives us a strategic opportunity for growth," said Lance Anderson, chairman of NovaStar Mortgage and chief operating officer of NovaStar Financial Inc., the parent company. "In addition, this cost-effective operation should help further reduce our costs of loan origination." NovaStar can be found online at http://www.novastarhome.com.

RBS Greenwich Capital analyst Peter DiMartino says in a new research report that Ameriquest's being on the auction block is a "non-event.""These announcements happen often in the industry, and often no sale transpires (and that may be the truth this time as well)," he writes. This past week three different news organizations -- including MortgageWire, American Banker, and Dow Jones -- reported that ACC Capital Holdings is considering selling Ameriquest. (MW, quoting investment banking sources, reported that ACC's Argent Mortgage, a top-ranked subprime wholesaler, is also for sale.) ACC declined to comment on the news reports. Mr. DiMartino notes that, "Whether a sale of [Ameriquest] is a good thing or a bad thing for ABS investors is hard to tell at this point without knowing the acquirer. Odds are it will have little impact on ABS either way."

The anti-predatory lending ordinance of Montgomery County, Md., has been declared unconstitutional by a state court and permanently enjoined from enforcement.In American Financial Services Ass'n v. Montgomery County, Circuit Court Judge Michael Mason said the Maryland Constitution vests the power to enact laws principally in the state legislature. "No matter how noble the purpose, a 'general' law is beyond the authority of the county to enact and is unconstitutional," the judge wrote. The ruling is good news for current and prospective homeowners, the AFSA said in response to the judge's decision. "It resolves uncertainty that has surrounded Montgomery County's mortgage market since last year and preserves borrowers' access to mortgage credit." The AFSA, along with a group of lenders, filed suit in February seeking injunctive relief. The plaintiffs argued that the bill was beyond the county's authority to enact and said the state has pre-empted the authority of the county to enact legislation that affects lending. They said the bill was vague and violated the lenders' rights to due process. According to the AFSA, courts have consistently ruled that regulatory authority for mortgage lending lies at the state level.

Cleveland-based KeyCorp has announced the sale of a $2.5 billion nonprime mortgage loan portfolio of its Champion Mortgage division to a subsidiary of HSBC Finance Corp., as well as a separate agreement to sell Champion's origination platform to an affiliate of Fortress Investment Group LLC.The terms of the two transactions were not disclosed. Key said it expects the transactions to result in a net after-tax charge of approximately $164 million ($0.40 per share) in the fourth quarter due to a $170 million writeoff of goodwill associated with its 1997 acquisition of Champion, which is based in Parsippany, N.J. Key said it also expects to record additional pretax charges of approximately $25 million and $30 million related to the sale of the platform. The company said Champion "no longer fits strategically" with its longer-term business goals, which focus on community banking and relationship-oriented business. Key can be found online at http://www.key.com, and HSBC can be found at http://www.hsbcusa.com.

Two certificates from Structured Asset Securities Corp.'s series 2002-BC1 securitization have been downgraded by Moody's Investors Service.Class M3 was downgraded from Ba1 to B2, and class B was downgraded from B1 to Ca. Moody's attributed the downgrades to credit enhancement levels that are deemed to be low given the projected losses on the underlying pools. The transaction is backed primarily by first-lien subprime mortgage loans. The rating agency can be found online at http://www.moodys.com.

SL Green Realty Corp., New York, has priced a public offering of 3.7 million shares of common stock, resulting in gross proceeds of $497.65 million.The company said it plans to contribute the proceeds to its operating partnership, which will use them to fund acquisitions. Lehman Brothers, the sole underwriter of the offering, has been granted an option to buy up to 555,000 additional shares of the stock to cover any overallotments. SL Green, a real estate investment trust, can be found online at http://www.slgreen.com.

Stewart Title of Colorado, a subsidiary of Houston-based Stewart Information Services Corp., has acquired Telluride Mountain Title Co., Telluride, Colo., for an undisclosed amount.Telluride Mountain Title will retain its existing management and staff, and its co-founder and former chief executive officer, Marty Bregman, has been named president of the company, which will be known as Stewart Title of Colorado -- Telluride Division. "This longtime Telluride title agency provides coverage in another resort/destination community, which we are pleased to add to our lineup of offices in Winter Park, Aspen, Vail, Steamboat, and Dillon," said Rand Zimmerman, group president of Stewart Title. The parent company can be found online at http://www.stewart.com.

Umbrella Bancorp Inc., Chicago, has announced that Umbrella Mortgage Inc., a wholly owned subsidiary primarily focused on the origination of reverse mortgages, has opened its doors.The company is a full-service mortgage brokerage operation that will initially originate mortgage loans in Illinois and Colorado, the parent company reported. It will offer reverse mortgage products offered by the Federal Housing Administration, Fannie Mae, and other third-party investors, as well as a full range of traditional mortgage products, Umbrella Bancorp said. Many of its employees are former members of the retail and wholesale lending departments of Flower Bank FSB, which Umbrella Bancorp sold to American Home Mortgage Investment Corp. earlier this year. Umbrella Mortgage can be found on the Web at http://www.umbrellareverse.com.

The housing slowdown may affect economic growth not only by curtailing construction, but also by slowing the home price appreciation that has helped fuel consumer spending, according to a publication of the Federal Reserve Bank of Dallas.Writing in the November issue of the bank's Economic Letter, John V. Duca, vice president and senior economist at the Dallas Fed, cites "limited" evidence that the strong pace of mortgage equity withdrawals in recent years may have boosted consumption levels by 1%-3%. "A slowing of home price appreciation into the low single digits might shave 1 to 2 percentage points off consumption growth and 0.75 to 1.5 percentage points from GDP growth for a few years," Mr. Duca says. He stressed that the effect of home prices on consumption is uncertain because it is unclear how much price appreciation will slow; to what extent the slowing would reduce mortgage equity withdrawals; and how much such a reduction would affect consumer spending. The bank can be found online at http://www.dallasfed.org.

The average 30-year fixed mortgage rate fell from 6.18% to 6.14% over the seven-day period ended Nov. 30, its lowest level since the 6.12% recorded during the week ended Jan. 26, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.91% to 5.87%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.99% to 5.95%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.49% to 5.46%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages and 0.5 of a point for ARMs. "Mortgage rates drifted lower this week, bringing long-term rates to levels below those of this time last year," said Frank Nothaft, Freddie Mac's chief economist. He said mortgage applications for home purchases "remained healthy" in November, due largely to a drop in mortgage rates and "a softening in home prices in some areas." A year ago, the average 30-year and 15-year fixed rates were 6.26% and 5.81%, respectively, and the average hybrid and one-year ARM rates were 5.76% and 5.16%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The next chairman of the House Financial Services Committee wants to restructure a Federal Housing Administration reform bill so that riskier borrowers don't have to pay higher mortgage insurance payments.Rep. Barney Frank, D-Mass, who is virtually certain to be the next chairman of the panel, said he is working on a bill that raises the FHA loan limit to the median house price in high-cost areas and allows the FHA to serve riskier subprime borrowers. Rep. Frank estimated that the FHA, by serving richer communities, will generate more revenues that can be recycled to cover the higher loan-loss rates associated with subprime lending. As a result, the FHA borrowers won't have to pay risk-based premiums. It would make money for the FHA or be a "wash," Rep. Frank told a Women in Housing and Finance symposium. He also told reporters that the FHA loan limit would be similar to a proposal in a House-passed government-sponsored enterprise reform bill that raises the Fannie Mae and Freddie Mac loan limit to the median house price in high-cost areas. The GSE bill caps this increase at 150% of the current conforming loan limit.

ACC Capital Holdings, Orange, Calif., is actively entertaining offers for its entire mortgage franchise, which includes Ameriquest Mortgage and its wholesale arm, Argent, investment bankers and other officials have confirmed to MortgageWire.As of MW's deadline, an ACC spokesman had declined to comment. Matthew Howlett, an analyst with Fox-Pitt Kelton, said he has been hearing reports that Ameriquest, Argent, and the servicing operation are all up for grabs. According to the Quarterly Data Report, Ameriquest services $113 billion in loans, ranking second among all subprime firms. ACC is a privately held company controlled by California businessman Roland Arnall, who is now serving as U.S. ambassador to the Netherlands. Estimates vary, but bankers say the entire mortgage operation could fetch close to $2 billion. (For the full story, see the Dec. 4 issue of National Mortgage News.)

Sovran Self Storage Inc., a real estate investment trust based in Buffalo, N.Y., has announced the pricing of 2 million shares of common stock at $56.25 per share.The REIT said the underwriters have been granted an option to buy up to 300,000 additional shares of stock to cover any overallotments. The sole book-running manager of the offering was Banc of America Securities LLC. The REIT can be found online at http://www.sovranss.com.

Sales of existing single-family homes in Florida totaled 12,773 in October, a decrease of 22% from the level recorded a year earlier, according to the Florida Association of Realtors.The median sales price of homes sold in October held steady at $242,500, down from $243,400 in October 2005, FAR reported. Among the state's larger markets, resales decreased 29% in the Orlando metropolitan statistical area, but they rose 6% in the Miami MSA.

The sales of existing homes in California were down 28.7% in October from the level recorded a year earlier, according to the California Association of Realtors.The seasonally adjusted annualized rate of closed escrow sales of existing single-family detached homes totaled 443,320, down from the 621,530-unit rate recorded in October 2005, CAR said. The median price of an existing single-family detached home in California totaled $548,680 in October, up 2% from $537,930 a year earlier, according to CAR. "While it appears that home sales have stabilized over the past three months, it's too soon to say whether or not the market has bottomed out," said CAR president Colleen Badagliacco. CAR can be found online at http://www.car.org.

The D.C. Housing Finance Agency has announced the issuance of $50 million in bonds earmarked for low-interest mortgage loans to the city's low- and moderate-income borrowers.The current applicable interest rate is 5.6% on 30-year fixed-rate mortgage loans to first-time buyers, who are allowed to buy property anywhere in the Washington, D.C. area, as well as non-first-timers who agree to purchase property in designated neighborhoods. To streamline the issuance, the HFA said, the D.C. bond program partnered with Countrywide Home Loans for the approval process and compliance review of all loans, which is required from all participating lenders. (Loans were previously processed in-house by the HFA staff.) In addition, homebuyers are allowed to refinance their loans and separate loan funds for renovations.

The Market Composite Index, an overall measure of mortgage applications, fell from 623.6 to 599.0 on a seasonally adjusted basis during the holiday-shortened week ended Nov. 24, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 34.4% on the week and were down 1.6% from the level recorded a year earlier. The Purchase Index rose from 401.4 to 406.7 on a seasonally adjusted basis, while the Refinance Index fell from 1935.3 to 1749.6. Refinancings represented 46.9% of total applications, down from 48.6% the previous week, while adjustable-rate mortgages accounted for 24.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages was unchanged, at 6.13%, and points (including the origination fee) rose from 0.95 to 0.97 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.