Originations

Weingarten Realty Investors, a Houston-based real estate investment trust, and Mercantile Real Estate Advisors Inc. have announced the formation of a joint venture to acquire and operate industrial properties in target markets across the United States.Weingarten said it will oversee the acquisitions and the management and leasing of the properties. "The partners plan to invest $500 million in total capital over the next two years, including leverage targeted at approximately 50% of total capital," Weingarten reported. Acquisitions will be focused on bulk warehouse and business distribution properties in targeted U.S. markets. Weingarten can be found online at http://www.weingarten.com, and Mercantile can be found at http://www.aflcio-bit.com.

Strongtower Financial, a Fresno, Calif.-based church and faith-based lender, has securitized a church mortgage bond portfolio, issuing approximately $56.3 million in notes backed by mortgage assets.The offering, Strongtower's first such securitization, includes a pool of 846 mortgage bonds backed by 28 churches in 15 states. "This securitization is a milestone for Strongtower Financial and the church finance marketplace, as it brings institutional focus to this robust and growing market," said Chester Reid, Strongtower's president and chief executive officer. Strongtower reported that it is now working on a second church mortgage bond securitization, which is likely to close in the first quarter of 2007. Strongtower has provided nearly $1.5 billion in church bond originations to date, according to the company. Moody's Investors Service has given the bonds an investment-grade rating of Baa2, Strongtower reported.

The Market Composite Index, an overall measure of mortgage applications, rose from 566.5 to 633.9 on a seasonally adjusted basis during the week ended Sept. 29, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 11.5% on the week but were down 10.9% from the level recorded a year earlier. The Purchase Index rose from 375.9 to 404.6 on a seasonally adjusted basis, while the Refinance Index surged from 1677.5 to 1970.8. Refinancings represented 46.7% of total applications, up from 44.3% the previous week, while adjustable-rate mortgages accounted for 27.0%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.18% to 6.24%, and points (including the origination fee) fell from 1.06 to 1.03 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

The commissioner of the New Jersey Department of Banking and Insurance is urging mortgage brokers to use "prudence" when recommending certain loan products to their clients.Steven M. Goldman told attendees at the New Jersey Association of Mortgage Brokers annual convention in Atlantic City that mortgage brokers are "very large and important players" in the housing cycle. It is no secret that the real estate market has softened in recent months, and brokers need to adjust to those conditions, he said. From his perspective as a regulator, Mr. Goldman said he wanted to caution that putting marginal borrowers into certain products is not a good practice. Mr. Goldman said he is not suggesting a suitability test, but that a mortgage broker can tell if an applicant would have to stretch to get into a home. "It is a benefit to your industry, a benefit to the department," and it avoids lawsuits, Mr. Goldman said.

The president-elect of the National Association of Mortgage Brokers has updated attendees at the New Jersey Association of Mortgage Brokers convention in Atlantic City on several national issues, including making it easier for mortgage brokers to originate Federal Housing Administration loans.George Hanzimanolis said the group has met with Department of Housing and Urban Development Secretary Alphonso Jackson and FHA Commissioner Brian Montgomery regarding the replacement of the audit requirement for mortgage brokers with a surety bond. An audit, Mr. Hanzimanolis said, is just a snapshot that a bad actor could manipulate. An option being discussed with HUD is to allow lenders to choose which brokers they want to work with, and not have a bond or audit requirement at all. Another issue he addressed is fiduciary duty or suitability requirements. Suitability is subjective, Mr. Hanzimanolis said, maintaining that there are too many unknown factors. The best way to protect consumers is by educating them, and the industry should have education and background checks, Mr. Hanzimanolis said.

Moody's Economy.com is forecasting that nearly 20 metropolitan areas will experience a "crash" in house prices over the next 24 months, with double-digit price declines, and another 80 metro areas will experience measurable declines."Indeed, odds are high that national house prices will decline in 2007 -- the first decline in nominal house prices since the Great Depression," says the Moody's residential real estate market outlook report. The biggest price declines will occur along the southwest coast of Florida, metro areas in Arizona and Nevada, nine California markets, throughout the broad Washington, D.C. area, and in and around Detroit, according to Economy.com. Housing prices in Cape Coral, Fla., are projected to take the biggest hit -- off 18.6% from their peak in the fourth quarter of 2005 till they bottom out in the second quarter of 2007. The Washington market won't reach its trough until the second quarter of 2008 after a 12% decline in house prices, the report forecasts. Most California markets will bottom out in 2008, but the drop in prices in the Las Vegas market won't stop until mid-2009 after backtracking 12.9%. The Moody's affiliate can be found online at http://www.economy.com.

G REIT Inc., Santa Ana, Calif., has announced the approval by its board of a special liquidating distribution of approximately $171.29 million, or $3.90 per share of common stock, to its stockholders.G REIT said the special liquidating distribution, its first, will be paid on or about Oct. 11 to stockholders of record as of Sept. 30. The real estate investment trust said its board will continue to evaluate the payment of regular monthly liquidating distributions as more properties are sold and additional special distributions are paid. G REIT's adviser and operational manager is Triple Net Properties LLC, Santa Ana, which can be found on the Web at http://www.1031nnn.com.

CharterMac Capital, a subsidiary of New York-based CharterMac, closed three low-income housing tax credit funds totaling nearly $386 million in the third quarter, according to CharterMac.Two of the three funds, representing over $175 million of equity, were credit-intermediated funds in which the investor receives a guaranteed rate of return, CharterMac reported. The credit intermediation was provided by IXIS Financial Products Inc. The third fund, CharterMac Corporate Partners XXXIII LP is expected to consist of LIHTC investments in approximately 25 properties around the country, Charter Mac said. The fund was sold to six institutional investors. So far this year, CharterMac Capital has raised over $800 million of equity for investments in LIHTC funds, according to the company. CharterMac can be found online at http://www.chartermac.com.

The American Mortgage Law Group, a national law firm focused exclusively on the mortgage banking industry, has been formed in Novato, Calif., according to Arthur Prieston, founder of The Prieston Group, a mortgage fraud insurance provider that will work closely with the new firm.American MLG will be headed by partners James Brody and Ryan Thomas, who have moved to the new firm from the mortgage banking group of Lanahan & Reilley, Santa Rosa, Calif., which has worked with TPG on loss mitigation. "There is clearly a need for an experienced national law firm dedicated solely to serving the unique needs of all within the mortgage banking industry, from lenders to investors to servicers to other entities," Mr. Prieston said. "The marketplace has changed, not only leaving lenders more vulnerable to fraud, but also squeezing profits for all. It is vital that the industry have access to a law firm that can effectively address all their concerns, regardless of location." TPG can be found online at http://www.priestongroup.com.

Investment banker Friedman, Billings, Ramsey has closed its mortgage-related asset-backed securities group.A spokeswoman for the Arlington, Va.-based company said mortgage ABS "is a small part of our overall business. It represents less than 2% of our total revenue." As of MortgageWire's deadline, she could not provide a number for its ABS issuance volume for the year. FBR also owns subprime lender First NLC Financial Services, Deerfield Beach, Fla., which ranks 21st among subprime lenders, according to the Quarterly Data Report.

A study by the President's Working Group says the availability of terrorism insurance has improved under a government program that provides a federal backstop for private insurers."While there are inherent difficulties in evaluating the long-term nature of the terrorism risk insurance market, with the government program in place, a number of positive developments have occurred" since the September 2001 terrorist attacks, the PWG report says. The Terrorist Risk Insurance Act is due to expire Dec. 31, 2007, and the Coalition to Insure Against Terrorism will be urging Congress to make the federal program permanent next year. "Today, even with the TRIA backstop, reinsurers are not meeting the capacity demand of primary insurers for their deductible and co-insurance layers," coalition chairman Martin DePoy said. This fact "refutes" the notion that the federal backstop is negatively affecting the emergence of private reinsurance capacity, he said. The PWG report does not include a recommendation to extend TRIA.

Freddie Mac has reported that its estimated net income for the first half of 2006 totaled $2.7 billion, with increases in the "fair value" of the guarantee fee and derivative instruments boosting results.Higher interest rates helped generate mark-to-market gains, and Freddie Mac acknowledged that with rates dipping in the third quarter, some of those mark-to-market gains could be lost. On a fair-value basis, a measure Freddie Mac prefers to GAAP (generally accepted accounting principles) results, Freddie said its return was $2.3 billion in the first half, for an annualized rate of return of 17%. Freddie Mac executives said on a conference call with investors that the average fair-value return exceeded management's goal of percentage earnings growth in the low to mid-teens. The company said it still hopes to return to regular financial reporting by the end of next year, though executives were hesitant to give a firm timetable.

Richard Syron, chairman and chief executive of Freddie Mac, has advised investors that the housing markets may be poised for "a relatively bumpy landing."Speaking on a conference call to update investors on Freddie Mac's first-half performance, Mr. Syron said weaker housing conditions will affect more than just credit performance, putting negative pressure on consumer spending and the economy as a whole. "In our minds it will have a substantial negative effect on GDP," he said. He also noted that there has been a shift away from "traditional mortgage products" into more esoteric loans, but he said Freddie Mac is "very comfortable with what we have in those markets." Through July of this year, interest-only loans constituted 14% of year-to-date loan purchases, but they only accounted for 3% of the total credit guarantee portfolio, the company said. Freddie Mac can be found online at http://www.freddiemac.com.

Classes M3 and B of Structured Asset Securities Corp. series 2002-BC1 have been placed under review for possible downgrade by Moody's Investors Service.The rating actions were attributed to credit enhancement levels that are deemed low given the projected losses on the underlying pools. The transaction is backed primarily by first-lien subprime mortgage loans.

Moody's Investors Service has downgraded one class and placed five classes on review for possible downgrade from two Residential Asset Mortgage Products Inc. Trust asset-backed securitization deals issued in 2002.Moody's also downgraded one class from a Residential Asset Securities Corp. subprime deal issued in 2001. The downgrades were as follows: RAMP series 2002-RS3, class M-I-2, from Aa2 to A2, and RASC series 2001-KS2, class M-II-1, from Aa2 to A1. The RAMP classes placed on review were as follows: series 2002-RS1, classes M-I-1, M-I-2, and M-II-2; and series 2002-RS3, classes M-II-1 and M-II-3. In addition, Moody's confirmed the rating on one class from one of the RAMP deals and one class from the RASC deal. The negative rating actions were attributed to the weaker-than-expected performance of the mortgage pools and the resulting erosion of credit support. Specifically, the overcollateralization in the 2002-RS1 adjustable-rate pool has been fully exhausted, and the class M-I-3 and M-II-3 certificates have both realized losses, the rating agency said. In addition, the overcollateralization amounts in the 2002-RS3 adjustable-rate pool and the 2001-KS2 fixed-rate pool are "significantly below their targets, and pipeline losses could put pressure on the most subordinate tranches from these pools," Moody's said.

The Eleventh Federal Home Loan District Cost of Funds Index rose 10 basis points in August to 4.277%, according to the Federal Home Loan Bank of San Francisco.The index stood at 4.177% in July. COFI consists of the weighted average of the cost of funds to originate mortgage loans among the FHLBank's savings institution members in Arizona, California, and Nevada. The index lags the current interest rate environment by as much as six months. The bank can be found online at http://www.fhlbsf.com.

Boosted by the highest volume of 2006 for traditional primary new mortgage insurance written, August ranked as the third-best month of the year for the private mortgage insurers.According to the Mortgage Insurance Companies of America, the member companies of the trade group wrote $19.3 billion of primary new insurance during the month, up from $17.4 billion in July. In August 2005, the total stood at $22.2 billion. In August, the firms wrote $14.3 billion in traditional MI, surpassing the $14.1 billion recorded in June, while bulk insurance increased from $4.7 billion to $4.9 billion. Application volume increased from 116,906 in July to 135,689 in August, and new pool risk written rose from $26.9 million to $40.7 million. The cure/default ratio improved from 69.8% to 74.4%. MICA can be found online at http://www.micanews.com.

The National Association of Realtors has reported that existing-home sales may have hit bottom in August based on the latest reading of its pending home sales index.A leading indicator of home sales, the PHSI jumped 4.3% in August, from 105.6 in July to 110.1. The index is down 14.1% since August 2005. NAR chief economist David Lereah said the index indicates that existing-home sales reports for September and October should show "fairly stable" sales, "although a slight decline is possible." If sales level out, "we should be able to draw down on the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms," Mr. Lereah said.

Classes M and N of Credit Suisse First Boston’s commercial mortgage pass-through certificates series 2005-CND2 have been placed on Rating Watch Negative by Fitch Ratings.The rating actions were taken due to concerns about a lack of sales as a result of market conditions at the properties securing the Prestige Portfolio (representing 9.81% of the pool), Monterra at Bonita Springs (1.96%), and Mizner Court (3.51%) loans. All the properties experiencing deteriorating market conditions are located in Florida, where there is an oversupply of condominiums, Fitch said. The rating agency can be found on the Web at http://www.fitchratings.com.

Digital Realty Trust Inc., a San Francisco-based real estate investment trust, has priced a public offering of 8.0 million shares of common stock at $30.50 per share.The company said it plans to use the net proceeds from half the shares to pay the redemption price on an equal number of limited partner units delivered by Global Innovation Partners for redemption. Digital Realty has granted the underwriters an option to buy up to 1.2 million additional shares of common stock to cover any overallotments. Merrill Lynch & Co. and Citigroup Corporate and Investment Banking served as the joint book-running managers for the offering. Digital Realty, which focuses on the ownership of technology real estate, can be found online at http://www.digitalrealtytrust.com.