Originations

The Mortgage Bankers Association is predicting that $600 billion to $700 billion worth of adjustable-rate mortgages will refinance in 2007 before the loan resets and the borrower gets hit with a higher rate.Those borrowers could end up with 7.5% interest if the loan resets, but now they can refinance into a 6.13% fixed-rate mortgage, which would be "pretty enticing," MBA economist Mike Fratantoni said. The MBA estimates that $1.1 trillion to $1.5 trillion in ARMs could reset in 2007, and $600 to $700 billion of those loans "will actually refi before they face any higher payment," the MBA economist told the Women in Housing and Finance symposium. "So you have $300 to $400 billion worth of mortgages where the borrowers will face a higher payment for the first time," Mr. Fratantoni said. "We don't think that will be a macroeconomic event."

In yet another ominous sign for the housing industry, new-home sales plunged 25% in October from the level of a year earlier to a seasonally adjusted annual rate of just over 1 million units.Meanwhile, there is now a seven-month supply of new homes for sale, a 55% increase from that of a year ago. It was the third-worst reading for new-home sales this year, according to sales figures compiled by the Census Bureau and the Department of Housing and Urban Development. Compared with those of the previous month, new-home sales fell 3%. On Tuesday, the National Association of Realtors released figures showing that existing-home sales in October fell 11.5% from the level recorded in October 2005. The NAR also reported that resale prices fell a record 3.5% year-over-year. Two weeks ago, the National Association of Home Builders reported that builder confidence was still low, but improving. "More and more builders are seeing the light at the end of the tunnel," said NAHB president David Pressly.

Arbor Realty Trust Inc., New York, has priced a collateralized debt obligation to be issued by two newly formed subsidiaries of the company.Arbor Realty, a real estate investment trust that invests in bridge and mezzanine loans and other real-estate-related assets, said the facility is expected to issue approximately $547.5 million of investment-grade debt. The debt will be issued on a floating-rate basis at an initial weighted average spread of about 44 basis points over the three-month London interbank offered rate, the REIT said. The face value of the collateral in the initial portfolio, consisting primarily of bridge and mezzanine loans and B notes, is expected to be about $600 million. The company can be found online at http://www.arborrealtytrust.com.

The percentage of first-time buyers able to afford a median-priced home in California stood at 24% in the third quarter, down from 28% a year earlier, according to the California Association of Realtors.CAR’s First-time Buyer Housing Affordability Index also indicates that the minimum household income needed by first-time buyers to purchase a home at $478,010 stood at $98,890 in the third quarter, based on an adjustable interest rate of 6.58% and assuming a 10% downpayment. First-time buyers typically purchase a home equal to 85% of the prevailing median price, CAR said. The monthly payment, including taxes and insurance, totaled $3,300 in the third quarter. At 39%, the High Desert region was the most affordable region in the state, followed by the Sacramento region, at 38%. Santa Barbara was the least affordable region, at 14%, followed by Monterey, at 17%. CAR can be found on the Web at http://www.car.org.

Meridian Capital Group, a New York City-based commercial mortgage broker firm, has opened a Dallas office to cater to business from the Lone Star State region.The office will be led by Alex J. Katz, as managing director, Meridian said. Mr. Katz was previously with the real estate department of Kramer Levin Naftalis & Frankel, a New York-based law firm. Meridian has closed over $500 million in Texas transactions this year, according to the company.

The 13 fastest-growing states over the next two decades -- which do not include Florida or Arizona -- will attract baby boomer whites and blacks to suburban communities that are part of expansive metropolitan areas, according to a new demographic study sponsored by the Mortgage Bankers Association."What is unique about these states is their attraction of whites and, in Southern States, African Americans," as well as recent Hispanic and Asian immigrants, according to the study, which looks at the impact of immigration and aging baby boomers on population trends. The study, conducted by Brookings Institution scholar William Frey, predicts that New Hampshire, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, Tennessee, Colorado, Utah, Idaho, Oregon, and Washington will have the fastest overall population growth. These 13 states have large baby boomer populations who are expected to age in place and attract new retirees to move into their communities. "This group of states will have the highest rate of growth for the 55 and over population," the study says. One of the major conclusions of the study is that the "suburbs will be the fastest graying part of our national landscape." The MBA can be found online at http://www.mortgagebankers.org.

Existing-home sales rose a meager 0.5% in October from those of the previous month, with prices remaining flat, but resales fell 11.5% from the level recorded a year earlier, according to figures released by the National Association of Realtors.Resales stood at a seasonally adjusted annual rate of 6.24 million units in October, with median prices skidding 3.5% to $221,000. The figures represent resales of single-family units as well as condominiums and cooperatives. The condo/co-op market performed worse than the single-family market, with sales falling 14.5% year-over-year and prices dropping 5.3%. Single-family sales fell 11.0% year-over-year, with prices dropping 3.4%. In a research note, Greenwich Capital analyst Omar Sharif wrote that, "It is obviously far too early to suggest that resales have found a bottom." NAR president Pat Vredevoogd Combs said, "With the exception of parts of the West, sellers are cutting their price enough to encourage sales." The NAR can be found online at http://www.realtor.org.

Monmouth Real Estate Investment Corp., Freehold, N.J., has announced the commencement of a public offering of 1 million shares of the company's series A cumulative redeemable preferred stock.Monmouth, a real estate investment trust that specializes in net-leased industrial properties, said the underwriter is expected to be granted an option to buy up to 150,000 additional shares to cover any overallotments. The sole book-running manager of the offering is Stifel, Nicolaus & Co.

Retirement decisions by aging baby boomers and choices by young immigrants on where to settle will be the most important factors affecting housing in the coming years, according to a study commissioned by an affiliate of the Mortgage Bankers Association.Different regions of the United States will experience different housing demand based on the relative effects of aging in place versus migration within the country and on settlement by immigrants, the MBA said. "For example, suburban areas will gray faster than urban areas due to the boomers aging in place," the association said. The study, "America's Regional Demographics in the '00s Decade: The Role of Seniors, Boomers and New Minorities," was conducted by William H. Frey of the Brookings Institution. It was sponsored by the MBA's Research Institute for Housing America. RIHA can be found online at http://www.housingamerica.org.

Experian Group Ltd., Costa Mesa, Calif., and New York-based First Manhattan Consulting Group have launched what they are calling the industry's "first comprehensive segmentation and scoring system" for specific financial services, including home equity and mortgage services.The Financial Personalities system enables marketers to target prospects using scores that predict a consumer's attitudes toward specific financial products, the companies said. Along with a Financial Personality score for each consumer, the system reveals aspects of each personality, such as the importance people with a certain personality attach to rates and fees and their discipline with finances, the companies said. Financial Personality scores are based on consumers' needs, attitudes, and behavior, combined with credit and demographic data. The companies can be found online at http://www.experiangroup.com and http://www.fmcg.com.

Flagstar Bancorp Inc., Troy, Mich., has had its lawsuit seeking recovering on a fidelity bond issued by the Chubb Group of Insurance Cos. dismissed by a federal judge, in a case involving mortgage warehouse lending fraud.The incident at the heart of the matter was discovered in March 2004. Flagstar discovered that a lender named Amerifunding fraudulently obtained a series of warehouse loans totaling $22.4 million. Flagstar was able to make a recovery of $13.4 billion by a seizure of cash and real property and received additional money through civil litigation. Flagstar filed suit against Chubb to cover its remaining loss after the insurer denied the fidelity bond claim under the forgery provision. "We carefully considered our position in this matter and we strongly disagree with the result in this case," said Mark T. Hammond, vice chairman and chief executive of Flagstar. "We believe that the court overlooked the inherent value in the promissory notes, which in this case were forged, and therefore our fidelity bond claim should have been paid regardless of the validity of the underlying collateral." A spokesman for Chubb said the company has a policy of not commenting on matters under litigation. Flagstar also has a suit against First Collateral Services, a previous warehouse lender to Amerifunding, alleging it misrepresented the fraud situation when providing a reference to Flagstar.

Even as the overall CMBS delinquency rate falls, deals issued in 2004 have experienced rising overdue rates, according to Fitch Ratings.The 2004 CMBS vintage delinquency rate climbed 34 basis points to 0.39% in 2006, even as the overall CMBS delinquency rate has improved by 28 basis points to 0.51%, Fitch said. The 2004 delinquency rate is higher than that for the more seasoned 2002 and 2003 vintages, Fitch noted, adding that vintage delinquency rates typically rise for the first eight years of seasoning. Fitch attributed the vintage 2004 problems to several large loans in Tennessee and Texas that have had an impact on the entire vintage year. Fitch Ratings can be found on the Web at www.fitchratings.com

A leading indicator for commercial real estate market activity rose 0.4% in the third quarter to a 120.1 reading, the highest level since 1990, the National Association of Realtors reports.The Washington-based trade association said this means that the sector is poised for continued growth, with net absorption of industrial and office space improving in the next six to nine months. Also, completions of overall retail, office, warehouse and lodging structures are expected to rise. The NAR expects leasing and sales activity in the first quarter of 2007 to be 2.9% higher than in the first quarter of 2006. David Lereah, NAR's chief economist, noted, "Although we have a strong uptrend in the commercial sectors, the rise in the index over the last two quarters shows a lower rate of expansion in comparison with late 2005 and early 2006. This means that commercial sectors will continue to grow, but at a more modest pace." The NAR index incorporates 13 variables that are seen as reflecting future commercial real estate market activity, with each given a suitable weighing in the index.

The average 30-year fixed mortgage rate fell to 6.18% in the week of Nov. 22 from 6.24% the week before, according to Freddie Mac's Primary Mortgage Market Survey.A year earlier, the 30-year average was 6.28%. The average 15-year fixed mortgage rate fell three basis points to 5.91% and the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.99%, down five basis points from the week before. Freddie Mac noted that the 30-year average rate is at its lowest level since January 26, 2006. Freddie Mac chief economist Frank Nothaft, noting that housing starts fell sharply in October. "Slower growth usually means less inflation and less inflation means lower interest rates," he noted.

Mortgage-related securities issuance between Jan. 1 and Sept. 30 outpaced levels seen a year ago but volume was slower in the last three months of that period, according to the Securities Industry and Financial Markets Association.Mortgage-related issuance for the entire three quarter period rose almost 3% to $1.48 trillion, but third quarter volume was $484.9 billion, down 16.4% from a year ago and down 3.4% from the second quarter. The association can be found on the Web at http://www.sifma.org.

AvalonBay Communities Inc., an apartment development and management company based in Alexandria, Va., has entered into a new revolving variable-rate unsecured credit facility totaling $650 million.The credit facility, which replaces a $500 million facility, initially bears interest at 40 basis points above the London interbank offered rate, but the rate can be higher or lower based on credit conditions, AvalonBay said. The syndication agents were JPMorgan Chase Bank NA and Wachovia Bank NA. AvalonBay can be found online at http://www.avalonbay.com.

The rating outlook for First Horizon National Corp., Memphis, has been revised from stable to negative by Fitch Ratings because of mortgage-related circumstances.Fitch also affirmed the ratings on First Horizon and its rated subsidiaries: First Tennessee Bank, First Tennessee Capital I, and First Tennessee Capital II. The rating agency said the outlook revision stemmed from "increased pressure in the mortgage banking segment, which has significantly reduced operating profitability overall." Profitability has declined to a level that is below average for the company's A rated peers, Fitch said, adding that sustained underperformance or significant erosion in capital ratios or liquidity measures could put downward pressure on First Horizon's ratings. Fitch also Fitch can be found online at http://www.fitchratings.com.

U.S. industrial real estate markets experienced steady demand in the third quarter despite a slowing economy, according to Colliers International, a Boston-based global partnership of commercial real estate firms.The markets absorbed 48.4 million square feet of industrial space in the quarter, compared with 50.3 million square feet in the second quarter and 61.3 million square feet a year earlier, Colliers said. "The third quarter held few surprises for the industrial market," said Ross Moore, the organization's senior vice president and director of market and economic research. "We anticipated an increase in completions and felt demand would stay strong, despite a slowdown in manufacturing and the overall economy. Rents did increase slightly more than anticipated, but our full-year forecast of a 10% increase is now squarely within grasp." Colliers can be found online at http://www.colliers.com.

Conditions improved for homebuyers in the third quarter as the resale prices of single-family homes experienced corrections in many metropolitan statistical areas, according to the National Association of Realtors.The NAR's quarterly metro area home price report indicates that 102 of 148 MSAs had increases in median existing-home prices, including 21 with double-digit annual increases, while 45 MSAs experienced price declines. The NAR also reported that the national median resale price stood at $224,900 in the third quarter, down 1.2% from $227,600 a year earlier. "Last year we had a record sales market and historically tight supplies of homes, with buyers bidding over the asking price," NAR chief economist David Lereah said. "With the market in full transition, buyers now have choices and sellers are more willing to negotiate. Under these circumstances, it's no surprise that overall home prices are slightly below [those of] a year ago." The NAR can be found on the Web at http:/www./realtor.org.

NorthStar Realty Finance Corp., a New York-based real estate investment trust, has announced the pricing and upsizing of a public offering of approximately 12.4 million shares of common stock at $14.95 per share.The original size of the offering was approximately 11.4 million shares. Northstar said a selling stockholder will also sell approximately 3.6 million shares in the offering. In addition, the underwriters have been granted an option to buy up to 2.4 million additional shares to cover any overallotments. The joint book-running managers of the offering are Citigroup Corporate and Investment Banking, Wachovia Securities, and Banc of America Securities LLC.