Originations

National banks are continuing to ease their underwriting standards on home loans when they should be tightening, according to Comptroller of the Currency John Dugan.With the red-hot housing market cooling, "we would normally expect" lenders to tighten their underwriting standards and require borrowers to provide more equity, Mr. Dugan told the American Bankers Association annual convention. However, examiners from the Office of the Comptroller of the Currency are finding that bankers, giving in to competitive pressures, are easing underwriting standards. The comptroller reported that the OCC's 2006 underwriting survey, which is due to be released soon, shows a significant easing in residential mortgage standards. "We saw more of what we observed the previous year: longer interest-only periods, more piggybank loans to avoid mortgage insurance requirements, higher allowable debt-to-income and loan-to-value ratios, and greater volumes of loans with reduced documentation requirements," he said. The OCC can be found on the Web at http://www.occ.treas.gov.

Class N of Salomon Brothers Commercial Mortgage Trust 2000-C3 commercial mortgage pass-through certificates, series 2000-C3, has been downgraded from Caa2 to Caa3 by Moody's Investors Service.Moody's also upgraded five classes in the deal and affirmed the ratings of eight other classes. The downgrade was due to realized losses (approximately $13.6 million), expected losses from four specially serviced loans, and loan-to-value dispersion, the rating agency said. Moody's estimated aggregate losses of approximately $2.5 million for the specially serviced loans, which represent 4.1% of the pool. The certificates are collateralized by 161 mortgage loans secured by commercial and multifamily properties.

Two classes of Banc of America Commercial Mortgage Inc. commercial mortgage pass-through certificates, series 2001-1, have been downgraded by Moody's Investors Service.Class N was downgraded from Caa2 to Caa3, and class O was downgraded from Ca to C. In addition, Moody's upgraded two classes in the transaction and affirmed the ratings of 12 other classes. The downgrades were attributed to realized and expected losses from the three specially serviced loans and loan-to-value dispersion. Moody's said its analysis found that 28.8% of the conduit pool has an LTV greater than 100%, compared with 25.5% at the last review and 4.1% at securitization. Sixteen loans have been liquidated from the pool, resulting in aggregate losses of approximately $18.2 million. Moody's has estimated aggregate losses of approximately $5.3 million for the specially serviced loans. Moody's can be found online at http://www.moodys.com.

Delinquencies on commercial mortgage-backed securities have declined across the board this year as a result of improved commercial real estate market performance, according to Fitch Ratings.CMBS delinquencies have declined 0.28% to 0.52% at the end of the third quarter. Looking at the decline by property sector, hotel properties head up the list with a 61% decline by dollar amount, followed by multifamily (24%), retail (15%), and office (12%), the rating agency reported based on its U.S. CMBS loan delinquency index. Hotel properties dropped to 9% of all CMBS delinquencies at the end of the third quarter from 16% at year-end 2005. "Hotel performance improved significantly in 2005, and the improvement continued through third-quarter 2006, albeit at a slower pace," said Fitch senior director Patty Bach. The largest concentrations of CMBS delinquencies consist of multifamily (36%), office (23%), and retail (20%). The rating agency's seasoned delinquency index fell 0.44% over the first three quarters of 2006.

Subprime lender Accredited Home Loans of California was downgraded Monday by Stifel Nicolaus to "hold" from "buy," sending its share price down by 4% at one point.In August, Roth Capital also downgraded Accredited, the nation's 13th-largest subprime lender. Accredited recently bought Aames Financial of Los Angeles, another subprime lender. Accredited has disclosed that it bought back $38.6 million in mortgages in the second quarter, a 145% increase from the level in the same period a year earlier. Stifel Nicolaus is a regional brokerage firm based in St. Louis.

The correspondent originations division of GMAC-RFC, Minneapolis, has begun selectively offering to clients a cobranding program under which they can sell loans servicing-released while retaining some servicing-related marketing contact with borrowers."It offers our lenders the ability to maintain a market in front of the homeowner [potentially] throughout the life of [their] loans without the investment in servicing rights or a servicing platform," said Robert Meachum, a managing director in GMAC-RFC's correspondent division. Specifically, GMAC-RFC seeks to offer some loan sellers the ability to place their companies' names and concise marketing messages on billing statements sent to borrowers by the GMAC servicing division, he said.

Wholesale mortgage lender Pinnacle Direct Funding Corp., Orlando, Fla., has announced a merger with sister company Tri-Star Lending Group.The combined company will service customers under the Tri-Star name from operations facilities in Orlando and Phoenix and sales coverage in 48 states, Pinnacle said. Both companies are part of The Pinnacle Cos., a diversified financial services corporation. Pinnacle said the merger is designed to better position TSL for growth by combining three sales strategies under one operations umbrella: PDFC's "inside sales" model, which is unique to the wholesale industry; TSL's more traditional "outside sales" model; and correspondent lending with mortgage bankers. "The merger of these two companies is about economies of scale and leveraging a three-tiered sales and support system that will be best in class," said Doug Long, co-chairman of Pinnacle Cos. PDFC and TSL have established "significant footholds" across the country with a residential alternative-A mortgage lending product, Pinnacle said.

More lenders are paying attention to Fannie Mae's messages about inflated appraisals because the warnings are right about two-thirds of the time, a company official has told a symposium on appraisal fraud.Lenders processing loans through Fannie's Desktop Underwriter receive messages if the appraisal "materially exceeds our value for the property," Fannie director Mark Simpson told the Appraisal Foundation symposium. Fannie's automated valuation model will issue a warning if the value is excessively high based on local market data. DU also issues messages if it catches certain loan characters or patterns associated with inflated appraisals. Through experience and testing, "we find that we are right about two-thirds to three-quarters of the time," Mr. Simpson said. "We are seeing more of our customers paying more attention to this information." Fannie Mae can be found on the Web at http://www.fanniemae.com.

Class F of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2002-FL-1, has been downgraded from BB to B-minus by Fitch Ratings.In addition, Fitch assigned a Distressed Recovery rating of DR1 to the class. The rating on one other Fitch-rated class in the deal was affirmed. The downgrade was attributed to the pending sale of the Stevens-Arnold Building note, the only remaining loan in the pool, which Fitch said it expects to result in a loss to the trust.

Nearly half of Americans believe housing prices in their regions will rise over the next two years, according to a national AP/AOL Real Estate poll.The survey, described as a "snapshot of future homebuyers' perceptions of the residential real estate market," also found that 50% of Americans think that housing in their area is not overpriced, but that 53% of suburbanites see prices as inflated, compared with 39% of city dwellers. "Considering recent reports about housing prices going down, I was amazed to discover that so many Americans believe that prices will increase over the next two years," said Samara Jaffe, head of AOL Real Estate. "These survey results really point to how divided homebuyers are about the state of the marketplace -- and housing costs are influenced by perception of value, in addition to other economic factors." AOL Real Estate can be found online at http://www.aol.com/realestate, and the Associated Press can be found at http://www.ap.org.

Phoenix-based Meridian Bank has launched operations in Texas by establishing Meridian Bank Texas and opening a loan production office in Fort Worth that will focus initially on commercial, construction, and commercial real estate lending.The subsidiary is expected to become a state-chartered commercial bank by early 2007, with an emphasis on business lending and commercial deposit gathering. Meridian Bank Texas is led by chief executive officer Glenn Monroe, formerly head of commercial banking for First State Bank of Texas in Denton. His executive team includes John Van Son, former senior vice president at First State Bank of Texas in Denton; Greg Stuteville, past senior real estate lender for TexasBank in Fort Worth; and John Spencer, a real estate lender. "We have the intimate knowledge of this community and are supported by the capital strength of Meridian Bank," Mr. Monroe said. "This gives us the flexibility to be responsive and customer-focused in the dynamic Texas business environment." Meridian Bank can be found online at http://www.meridianbank.com.

As demand for residential mortgages continues to slow, most Federal Reserve district banks are noticing a pick-up in commercial real estate construction and lending."Commercial construction gained strength in most of the country" during September, according to the Federal Reserve Board's Beige Book. "Reports on residential real estate indicated, however, widespread cooling with the majority of districts citing lower asking prices, rising inventories of homes on the market and softening sales." Several Federal Reserve banks reported that homebuilders and home sellers are offering incentives to attract buyers. "Softer home demand in San Francisco led to layoffs for mortgage brokers and real estate agents," the Fed report said. The Beige Book said the "weakness" in residential lending is being offset by increases in CRE and business lending.

New Century Financial Corp., Irvine, Calif., has announced the adoption of new disclosure and underwriting best practices, among others, by its operating subsidiaries, New Century Mortgage Corp. and Home123 Corp.The changes also consist of enhancements to controls and product design, New Century said. Among the newly adopted practices are the tightening of underwriting guidelines for adjustable-rate mortgage programs for at-risk borrowers and the use of plain-language disclosures that go beyond legal requirements, the company said. It is also offering qualified existing customers with ARMs or interest-only mortgages the option of refinancing into a low-fee 30- or 40-year fixed-rate mortgage. "In light of recent regulatory guidance and the changing interest rate environment, we have re-evaluated our programs and practices and developed enhanced policies and techniques to reinforce our goal of providing fair and informed access to credit," said Brad Morrice, president and chief executive officer of New Century. The company can be found online at http://www.ncen.com.

A negative rating outlook has been assigned to Realogy Corp. by Moody's Investors Service because of "continued weakness in the residential real estate market."Moody's also affirmed Realogy's Baa2 long-term ratings and assigned a Baa2 rating to its proposed $800 million offering of senior notes. In explaining the negative outlook, the rating agency cited expectations of double-digit volume declines in home sales and modest price declines in the second half of 2006, as well as mid-single-digit volume declines and modest price declines in 2007. The ratings could be downgraded if profitability continues to decline sharply in 2007 because of falling home sales or prices, or a "material increase" in leverage caused by a large acquisition, Moody's said. Realogy is one of the largest real estate service companies in the world, Moody's said. The rating agency can be found online at http://www.moodys.com.

Standard & Poor's has announced that CB Richard Ellis Group Inc., El Segundo, Calif., will replace BellSouth Corp. in the S&P 500 Index.CBRE, a commercial real estate services firm, will be added to the Real Estate Management and Development Sub-Industry Index of the S&P 500 following the close of trading Oct. 12, S&P said. BellSouth is being removed because it is being acquired by AT&T, a constituent of the S&P 500.

The Canyon-Johnson Urban Fund, a joint venture between Canyon Capital Realty Advisors and basketball legend Earvin "Magic" Johnson, has announced an investment in Miami's Little Havana neighborhood aimed at providing retail stores and affordable housing for middle-income individuals and families.The Los Angeles-based fund said the investment is being made through a partnership with mFm Construction Corp., a local developer. The Morrison mixed-use development, the largest in Little Havana's history, will provide public employees such as firefighters, police officers, nurses, and teachers a chance to buy an affordable downtown residence, the fund said. Mr. Johnson said Miami Mayor Manny Diaz and the city "stepped up big-time to help bring workforce housing to city workers and others who love Miami but couldn't afford to live there." The fund can be found online at http://www.cjuf.com.

Belveron Real Estate Partners LLC, San Francisco, has announced its formation as a firm that buys secondary real estate investments from institutional investors, individuals, and financial institutions.The firm said it will focus on buying limited partnership interests in single and portfolio partnerships as well as interests in all types of real estate private equity investment funds. "There are plenty of opportunities for owners that have a whole or controlling interest in a real estate asset," said Paul Odland, a principal at Belveron. "It is a very different story to sell a noncontrolling interest or limited partnership interest. Belveron Real Estate Partners was founded to provide this liquidity so sellers can efficiently remove themselves from their real estate partnerships or interests." The company can be found online at http://www.belveronpartners.com.

Wellsford Real Properties Inc., New York, has announced an agreement to acquire Reis Inc., a privately owned real estate information company, for approximately $34.6 million in cash and 4.2 million shares of newly issued Wellsford common stock.If the transaction is completed, Wellsford said it would abandon its previously adopted plan of liquidation but would continue to dispose of its remaining real estate assets through development or sale. Wellsford said it has been an investor in Reis since 1998 and currently holds an approximately 23% stake in the company. The cash portion of the purchase price would be funded by a loan from BMO Capital Markets to Reis and by Wellsford's cash on hand. Wellsford would change its accounting from a liquidation basis to a going-concern basis and change its corporate name to Reis Inc. The company can be found online at http://www.wellsford.com.

The average 30-year fixed mortgage rate rose from 6.30% to 6.37% over the seven-day period ended Oct. 12, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.98% to 6.06%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 6.00% to 6.10%, and the average rate for one-year Treasury-indexed ARMs increased from 5.46% to 5.56%, Freddie Mac reported. Fees and points averaged 0.5 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. "Renewed concern that inflation is still an issue put some upward pressure on bond yields, which generally translates into higher interest and mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. "ARM rates especially felt the weight of increased inflation fears, narrowing the gap between ARMs and fixed-rate mortgage rates." A year ago, the average 30-year and 15-year fixed rates were 6.03% and 5.62%, respectively, and the average hybrid and one-year ARM rates were 5.57% and 4.85%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

A nationwide class-action lawsuit has been filed against LendingTree LLC and its wholly owned subsidiary, Home Loan Center Inc., alleging that they have engaged in unfair business practices and false advertising.The suit, filed by the law firm of Teuton, Loewy & Parker LLP in Orange County Superior Court, notes that LendingTree's slogan is: "When banks compete, you win." With this slogan, LendingTree styles itself as an online lending exchange that connects borrowers to a network of lenders that allegedly "compete" for the borrowers' business, the suit says. However, the suit alleges that in thousands of cases there is no such competition and that LendingTree uses its website and false advertising to generate leads for its wholly owned direct-lending division. The lawsuit further alleges that LendingTree secretly diverts many LendingTree.com leads to its subsidiary, where unsuspecting borrowers are sold loans at inflated prices based on the materially false representation that "competition" has occurred among lenders. Rebecca Anderson, a spokeswoman for Lending Tree, said the suit arose out of the termination of a "disgruntled LendingTree employee who was let go after working with the company for nine months."