Originations

A report from Friedman, Billings, Ramsey & Co., Arlington, Va., says the company continues to recommend that investors purchase the stocks of PMI Group, Walnut Creek, Calif., Radian Group, Milwaukee, and MGIC Investment Corp., Milwaukee.FBR cited data from the September 2006 Mortgage Insurance Companies of America report [see previous item] that show a 1.0% gain in primary insurance in force, making it 11 straight months of growth. The MICA data do not include information from Radian, which is not a member of the trade group. "Year to date, insurance in force has increased an impressive 5%," FBR said. "Persistency also improved from 68.7% to 69.8%. Despite the continue growth in the top-line revenue drivers, investors' concerns remain focused on the credit side of the story, and 3Q06 earnings results did not provide much comfort." Another positive factor, FBR said, was the 72.3% cure/default ratio for September, down slightly from what it termed a "surprisingly strong" 74.4% in August and slightly higher than the 72.1% recorded in September 2005. The MIs have also been regaining market share from piggyback loan products. FBR noted that investors have shunned the stocks. But trading at 1.1 times tangible book value, "we believe that the stocks offer an attractive opportunity," the company said.

Helped by a nearly 75% gain in the amount of bulk mortgage insurance written, total primary new mortgage insurance increased by over 12% in September, according to the Mortgage Insurance Companies of America.In September, $22.6 billion of primary insurance was written, compared with $19.3 billion the previous month. By type, traditional MI decreased during the period from $14.3 billion to $13.1 billion, while bulk increased from $4.9 billion to $8.5 billion. September was the second-best month of the year for total primary new insurance written, the third best for traditional MI, and the second best for bulk MI. New pool insurance written for the month totaled $43.4 million, with pool risk in force at the end of the quarter of $8.2 billion. The cure/default ratio for September was 72.3%, with 32,395 cures and 44,791 defaults. MICA can be found online at http://www.micanews.com.

CB Richard Ellis Group Inc., Los Angeles, has announced an agreement to acquire Trammell Crow Co., a Dallas-based commercial real estate services company, in a transaction valued at approximately $2.2 billion.CBRE said it will purchase Trammell Crow for $49.51 per share of common stock in cash and will assume the company's corporate debt as well as the transaction and integration costs. Upon completion of the transaction, CBRE will have combined pro-forma 2006 revenues of approximately $4.4 billion and about 21,000 employees, the company said. "With the acquisition of Insignia in 2003, we achieved pre-eminence in our transaction business," said Brett White, CBRE's president and chief executive officer. "Now the acquisition of Trammell Crow Co. creates the best-in-class corporate outsourcing and institutional property management business, and further augments our transaction business." Trammell Crow's development and investment business will be run as a wholly owned but independently operated subsidiary of CBRE and will retain the Trammell Crow name, CBRE said. The companies can be found online at http://www.cbre.com and http://www.trammellcrow.com.

The global market capitalization of real estate investment trusts has surpassed $600 billion, according to a report by Ernst & Young.The Global REIT Report 2006, prepared by Ernst & Young Australia, finds that "opportunities are surfacing all over the world" for investors seeking alternative real estate investments now that the housing market has cooled, the company said. Some lesser-known REIT markets, such as South Africa, have produced average returns of 34.2% over the past three years, E&Y said. "What we learned is that the REIT sector is well established in most major regions of the world and is fast becoming a significant factor in molding world economies and investment choices," said Ed Psaltis, an author of the report and a partner in E&Y Australia's real estate practice. Much of the growth is bring driven by rapidly expanding markets in Australia, France, Japan, Canada, the Netherlands, Singapore, and Hong Kong, E&Y reported. The company can be found online at http://www.ey.com.

A survey of homeowners conducted for Wells Fargo & Co., San Francisco, found that while nearly eight in 10 of those with adjustable-rate mortgages are worried about their interest rate rising, only 56% said they would refinance when the rate changes.The Wells Fargo Third Annual Survey of U.S. Homeowners found that only 14% of respondents had an ARM. Out of those borrowers, 21% said they would take no action when their interest rate adjusts. "It's important that homeowners who have an ARM be aware of when the rate on their mortgage is scheduled to adjust, review their options, and develop a plan of action, even if it means taking no action at all," said Doreen Woo Ho, president of Wells Fargo's consumer credit group. ICR of Media, Pa., conducted the survey by polling 1,361 homeowners, who were selected to mirror the U.S. homeowner population by gender, age, region, race, and education.

GE Capital Solutions, a Danbury, Conn.-based asset management division of General Electric, is acquiring Trustreet Properties, an Orlando, Fla.-based restaurant real estate investment trust, for about $3 billion.The acquisition price includes a payment of $17.05 per common share of Trustreet, as well as the assumption or refinancing of Trustreet debt outstanding, according to the REIT. Trustreet, with a portfolio of over 2,000 properties, provides triple-net-lease financing to operators of restaurant chains. "Trustreet's leading sale leaseback capabilities, combined with GE Capital Solutions' mortgage products, create an expanded suite of products for restaurant operators that reinforce both companies' reputations as trusted business partners for the industry," said Curtis McWilliams, president and chief executive officer of Trustreet Properties. The companies can be found online at http://www.ge.com/capitalsolutions and http://www.trustreet.com.

Federal research has overstated the problems of Federal Housing Administration loans with nonprofit downpayment assistance, according to a study commissioned by AmeriDream, an NDPA provider based in Gaithersburg, Md.The analysis, conducted by the George Mason University School of Public Policy, raises questions about the data and methodology of the government studies, AmeriDream said. It concluded that two key factors in defaults were absent in the federal studies: the financial situation of the borrower and the economic conditions of the area where the home is located. "This analysis raises concerns regarding the validity of research conclusions of three widely quoted reference documents on the performance of home loans of buyers receiving downpayment assistance from nonprofit DPA programs," said Stephen Fuller, professor of public policy and director of George Mason University's Center for Regional Analysis. "The limited loan performance measures, unrepresentative samples, inconclusive statistical tests, and aggregated demographic profile of homeowners reduce these studies' value in providing factual evidence regarding NDPA programs' performance." AmeriDream can be found online at http://www.ameridream.org.

The Washington, D.C., office of Houston-based CBRE/Melody has been approved as a member of Freddie Mac's multifamily Program Plus network, making it eligible to sell loans secured by multifamily properties in Maryland, Virginia, and the District of Columbia.CBRE/Melody has been a national member of the program since the early 1990s, the firm said. "We are very active in the mid-Atlantic region, having arranged over $2 billion in multifamily financings over the past two years," said Joe Donato, a CBRE/Melody senior director for the region. "This approval will provide us with another valuable tool to meet the financing needs of our clients." Program Plus lenders must meet Freddie Mac's standards for both origination and servicing of multifamily loans.

Federally insured reverse mortgages grew by 77% in fiscal year 2006, according to the National Reverse Mortgage Lenders Association.The Federal Housing Administration insured 76,351 Home Equity Conversion Mortgages in fiscal 2006 (ended Sept. 30), compared with 43,131 the year before. NRMLA attributed the dramatic growth to several factors, including high home appreciation rates that allow senior citizens to access greater amounts of equity; a growing number of lenders offering the product; and greater acceptance of reverse mortgages as a wealth management tool. "More seniors are recognizing that traditional retirements tools, such as IRAs, pensions, and 401(k)s, are not providing sufficient income to help fund everyday living expenses and health care," said Peter Bell, president of NRMLA. The Santa Ana, Calif., metropolitan area displaced Los Angeles as the top reverse mortgage market in the country, with 5,825 loans funded versus 3,067 in 2005, NRMLA reported. A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home without having to sell it or give up title. NRMLA can be found online at http://www.nrmlaonline.org.

The California Association of Mortgage Brokers is promoting what it terms "a comprehensive solution to curbing abusive lending practices."The trade group has issued a "best-practices guide" and conducted a conference call on the subject. "Mortgage brokers are the bridge for consumers in the loan process because they provide loan options that meet the exact needs of the borrower," said CAMB president Jack Williams. "Like a fine tailor, quality mortgage brokers go the extra mile to find a loan that fits the borrower's financial needs or objectives." The guide calls for: uniform licensing standards with mandatory pre-education, continuing education, and criminal background checks for all loan originators; updated information booklets and key disclosures to address nontraditional mortgages; the enforcement of existing abusive lending laws; workplace efforts on integrity and consumer education; and expanded financial literacy programs. Michael Faust, the CAMB's government affairs chairman, said the guide grew out of the recent dialogue over nontraditional products and abusive lending practices. But that dialogue, he said, "has broken down, with everyone taking their sides and screaming their interest points as loud as they can," affecting the ability to reach a compromise.

The homeownership rate inched back up to 69% in the third quarter due mainly to a sizable increase in black homeowners, according to the U.S. Census Bureau.The Census Bureau reported that the nation's homeownership rate rose from 68.7% in the second quarter to 69.0% in the third quarter. The last time the homeownership rate hit 69% was in 2005. The homeownership rate for blacks jumped to 48.6% in the third quarter from 47.2% in the second -- the highest rate for blacks since the first quarter of 2005. Meanwhile, the homeownership rate for Hispanics drifted down to 49.7% during the third quarter from 50.0% in the previous quarter.

Five classes of Asset Backed Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings, and two have been assigned Distressed Recovery ratings.The downgrades were as follows: series 2001-HE1, class M-2, from BBB-plus to BBB-minus, and class B, from BB to B-plus; series 2002-HE2, class B, from BB-minus to CCC; and series 2003-HE1, class M-3, from BB to BB-minus, and class M-4, from BB-minus to C. Class B of series 2002-HE2 was assigned a Distressed Recovery rating of DR2, and class M-4 of series 2003-HE1 was assigned a rating of DR5. (The ratings range from DR1, the highest, to DR6 to designate a transaction's recovery prospects.) In addition, Fitch upgraded two classes and affirmed the ratings on four classes in four ABSC deals. The rating agency attributed the downgrades to a deterioration in the relationship between loss expectations and credit enhancement. The transactions consist of fixed- and adjustable-rate subprime mortgage loans on one- to four-family properties. Fitch can be found online at http://www.fitchratings.com.

Twenty-two classes from 12 Morgan Stanley mortgage-backed security transactions have been downgraded by Fitch Ratings.In addition, Fitch upgraded three classes and affirmed the ratings on 59 other classes in 19 deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations. The loans consist of fixed-rate and adjustable-rate mortgages extended to subprime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Sales of existing single-family homes in Florida totaled 13,485 in September, an decrease of 34% from the level recorded a year earlier, according to the Florida Association of Realtors.The median sales price of homes sold in September declined to $243,900, down 1% from $246,100 in September 2005, FAR reported. Among the state's larger markets, resales decreased 12% in the Miami metropolitan statistical area, while the Miami market's median resale price held steady at $371,700.

Jerry Quill, a former GE Real Estate managing director, has formed Charles Street Capital, a Southborough, Mass.-based commercial real estate investment company."Strong real estate fundamentals in many North American markets together with low financing costs continue to create attractive investments," said Mr. Quill. "We see a major opportunity in the U.S. debt market, specifically purchasing assets from lenders that have grown their portfolios rapidly over the past few years and have a need to reduce or rebalance real estate exposure." The firm will initially target the acquisition of loans from lenders -- such as banks, insurance companies, and government agencies -- in the secondary market. "We believe purchasing loans generates superior risk-adjusted returns for our investors compared with buying properties in some of today's high priced markets," Mr. Quill noted. The firm is interested in fixed and floating-rate loans, including nonperforming loans, on various property types. The firm expects the loan sale market to grow significantly in the coming years as a result of the recent "expansion in commercial real estate credit" by all sorts of lenders.

The average 30-year fixed mortgage rate rose from 6.36% to 6.40% over the seven-day period ended Oct. 26, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.06% to 6.10%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 6.11% to 6.14%, and the average rate for one-year Treasury-indexed ARMs increased from 5.57% to 5.60%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.6 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "At its most recent meeting, the Federal Reserve again declined to raise rates..., citing a slowdown in the housing market," said Frank Nothaft, Freddie Mac's chief economist. "For instance, the median price of both new and existing homes in September posted significant decreases." A year ago, the average 30-year and 15-year fixed rates were 6.15% and 5.69%, respectively, and the average hybrid and one-year ARM rates were 5.63% and 4.91%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Chinatrust Bank USA, New York, has decided to quit the business of extending warehouse lines of credit to mortgage banking firms, MortgageWire has learned.Stephanie Kopf, first vice president of Chinatrust, confirmed the news. At midyear, Chinatrust had warehouse commitments of $107 million, a 23% decline from the level recorded a year earlier. In an interview this summer, Ms. Kopf said that line usage "is low right now," adding that "we're getting a lot of requests for [home equity lines of credit], but we don't do those."

Countrywide Home Loans chief Angelo Mozilo on Wednesday defended payment-option adjustable-rate mortgages, saying the product is performing well but that he fears new regulatory guidance on the loans will create an "unlevel" playing field that favors lenders owned by Wall Street.Speaking before the National Association of Home Builders, Mr. Mozilo said regulatory guidance that requires lenders to consider potential negative amortization when qualifying option ARM borrowers, favors unregulated mortgage bankers owned by investment bankers such as Bear Stearns and Lehman Brothers. "It has created a terribly unlevel playing field," Mr. Mozilo said, adding that unregulated institutions are not putting the product on the balance sheets of their depositories, which are regulated. (For the full story, see the Oct. 30 issue of National Mortgage News.)

New-home sales jumped 5.3% in September, following a 3.6% increase in August, but downward revisions in the government's sales tallies raise questions about the strength of the rebound.The U.S. Census Bureau reported that sales of new single-family homes rose from a seasonally adjusted annual rate of 1.02 million in August to 1.08 million in September. However, large downward revisions for the previous three months erased 67,000 previously reported sales, more than offsetting the 54,000 sales jump in September. Wachovia economic analyst Phillip Neuhart said the revisions "show how accelerated the decline in sales has been." He believes the downward trend is beginning to flatten out. However, he said he would not be surprised to see more downward revisions in the sales data due to cancellations of sales contracts. The "good news" is that inventories declined, Mr. Neuhart said, from a 6.8-month supply to a 6.4-month supply. "Builders are heavily incentivizing their sales, which is one reason they are able to clear inventories," he said. A National Association of Home Builders survey shows that 75% of builders are offering concessions to entice buyers, and these offers of upgraded kitchens or free closing costs average about 5% of the house price.

Class B1-A of Cityscape Home Equity Loan Trust home equity loan pass-through certificates, series 1997-C group 2, has been downgraded from BBB to BB by Fitch Ratings.Fitch also affirmed the ratings on 12 classes in two Cityscape subprime securitizations. The downgrade was attributed to a deterioration in the relationship between credit enhancement and loss expectations due to higher-than-expected delinquencies, the rating agency said. The rating agency can be found online at http://www.fitchratings.com.