Originations

Fitch Ratings is viewing LandAmerica Financial Group's acquisition of Capital Title Group in a negative light.The rating agency has downgraded the issuer default rating and senior debt rating of Richmond, Va.-based LandAmerica by one notch. The insurer financial strength ratings of several LandAmerica subsidiaries were downgraded one notch as well. "The downgrade reflects Fitch's ongoing concerns about LandAmerica's ability to profitably execute its acquisition strategy and the size of the purchase price premium relative to earnings and reported book value," Fitch said. "Further, the timing of the acquisition comes as the title insurance industry enters a downturn, and would weaken LandAmerica's balance sheet by adding to financial leverage and significantly increasing intangibles, which lowers the quality of capital. The $251 million purchase price appears high relative to Capital Title Group's annualized 2006 net earnings of $6.4 million and tangible stockholders' equity of $70 million. It should be noted, however, that Capital Title Group's earnings over the most recent four quarters was better, at $15 million." Fitch said the rating outlook for LandAmerica is stable.

The first enforcement actions relating to investigations into the pricing of 2004 subprime loans could be announced in the next three to six months, according to industry attorney Andrew Sandler."I would expect over the course of the next three to six months there will be at least several consent decrees or lawsuits by federal enforcement agencies and/or state attorneys general involving mortgage loan pricing that reflect the conclusion of investigations related to 2004 HMDA data," Mr. Sandler told MortgageWire. The release of 2004 Home Mortgage Disclosure Act loan pricing data last year initiated investigations and special exams of nearly 200 banks and mortgage companies for possible discriminatory pricing practices. Investigations by the Department of Justice, the Federal Trade Commission, the Department of Housing and Urban Development, federal banking regulators, and state AGs can take up to two years. Mr. Sandler, a partner in the Washington office of Skadden Arps, indicated that additional enforcement actions are possible. Based on the newly released 2005 HMDA data, the Federal Reserve Board referred 270 lenders to their primary regulators for further fair-lending reviews. A Fed spokeswoman said there is a lot of overlap between lenders on the 2004 list and the 270 lenders on the 2005 list.

Classes B-1 and B-2 of CDC Mortgage Capital Trust 2002-HE3 have been placed under review for possible downgrade by Moody's Investors Service.The actions were attributed to the weaker-than-expected performance of the mortgage pool and the resulting erosion of credit support. "The deal lost over $1 million of overcollateralization from July 2006 to August 2006, and future losses could cause further erosion of the overcollateralization and put pressure on the most subordinate tranches," Moody's said. The transaction consists primarily of first-lien subprime mortgage loans. The rating agency can be found on the Web at http://www.moodys.com.

EastGroup Properties, a real estate investment trust based in Jackson, Miss., has reported the sale of 1.25 million shares of common stock to Citigroup Global Markets Inc. for approximately $60 million.The REIT said it plans to use the net proceeds to repay borrowings under its credit facility. EastGroup has granted the underwriter an option to buy up to 187,500 additional shares to cover any overallotments. The REIT can be found online at http://www.eastgroup.net.

National Retail Properties Inc., a real estate investment trust based in Orlando, Fla., has priced a public offering of $150 million of convertible senior notes due 2026 at par.The notes have a coupon of 3.95%. They are convertible, subject to various conditions, into cash, common stock, or a combination thereof (at the company's option) at an initial conversion price of $24.449 per share. National Retail Properties can be found online at http://www.nnnreit.com.

Ventas, a Louisville, Ky.-based health care real estate investment trust, is acquiring a portfolio of 67 health care and seniors housing properties from affiliates of Canada's Reichmann family for about $649 million.The facilities are located in 16 states, and the portfolio includes four main assets with 5,855 beds/units, Ventas reported. "In one step, we are adding an important new tenant relationship, acquiring a diverse portfolio of assets with a large component of private-pay revenues, and continuing our commitment to strong internal growth from rental escalations," said Debra A. Cafaro, president and chief executive officer of Ventas. Ventas said it plans to lease the properties to subsidiaries of Senior Care on a 15-year triple-net basis, with two five-year extensions. The transaction is expected to initially add about $50 million in annual rent to Ventas's rental revenue. Ventas can be found online at http://www.ventasreit.com.

Old Republic Title Insurance Group, Minneapolis, has announced the acquisition of Troon Management Corp. and Sentry Abstract Co. by Old Republic National Title Holding Co.The terms of the transactions were not disclosed. Troon, based in Hatboro, Pa., advises title agents, lenders, builders, and Realtors on developing affiliated business arrangements that are compliant with applicable government regulations. "The purchase of Troon will provide our agents access to recognized experts with a number of years of experience in the formation of affiliated business arrangements, which will assist agents in the development of strategies to expand business," said Steve Wilson, executive vice president of Old Republic National Title Insurance Co. Anne Anastasi will remain as president of Troon. Chip Lutz will remain as vice president and counsel of Troon, and as president of Sentry Abstract, a title agency based in Reading, Pa. Old Republic Title Insurance can be found on the Web at http://www.oldrepublictitle.com.

The National Association of Realtors is projecting that housing prices will dip below last year's levels for a few months due to slower-than-expected sales and rising inventories."This year, sales are slowing, homes are plentiful, and sellers are negotiating," NAR chief economist David Lereah said. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build-up in housing inventory." The NAR's revised forecast calls for the national median existing-home price to increase 2.8% this year, compared with 12.7% in 2005. In June, the NAR forecast that home prices would increase by 5.3% this year. The June forecast also called for existing-home sales to total 6.60 million in 2006, down 6.8% from last year's total. Now, the NAR says it expects sales of single-family homes, condominiums, and cooperatives to drop by 7.6%, to 5.54 million.

Newly released Home Mortgage Disclosure Act data show a big increase in subprime lending in 2005, and regulators are pointing to a jump in piggyback loans as one reason.More than one-half of all African-American borrowers purchasing a home in 2005 paid subprime interest rates, compared with 17.2% of whites, according to HMDA. It shows that 54.7% of blacks and 46.1% of Hispanics received subprime loans to buy a home -- a dramatic jump from 2004 results, when 32.4% of blacks and 20.3% of Hispanics received subprime purchase loans. Earlier this year, Federal Reserve Board officials warned that the flattening of the yield curve would increase the number of HMDA-reported loans with subprime rates, defined as 300 basis points or more above the rates of comparable Treasury securities. However, Fed researchers concluded that the yield-curve effect was not that large. A bigger factor was the 57% increase in piggyback loans from 2004 to 2005. "[T]he increase in the number of high-priced piggy-back loans in 2005 accounted for more than half of the increase in the number of all higher-priced loans," the Fed says in its analysis of the HMDA data.

Countrywide Financial Corp. president and chief operating officer Stanford L. Kurland -- once considered a possible heir to chief executive officer Angelo Mozilo -- resigned from the company Thursday evening.Mr. Kurland was immediately replaced by David Sambol, a 21-year veteran of Countrywide who served as executive managing director of business segment operations. A source familiar with the situation told MortgageWire Mr. Sambol "is now in the path of succession" to succeed Mr. Mozilo, whose contract with the company expires at year-end. Who will succeed Mr. Mozilo as CEO, and when, "is now in the hands of the board," said the source. Mr. Mozilo also holds the title of chairman, which he has said he intends to keep after stepping down as CEO. Mr. Kurland worked at Countrywide, the nation's largest lender and servicer, for 28 years. In a statement, Mr. Mozilo said Mr. Kurland "has made significant contributions to Countrywide's success." The company can be found online at http://www.countrywide.com.

Two classes of Criimi Mae Trust I's commercial mortgage bonds, series 1996-C1, have been downgraded by Fitch Ratings.Class E was downgraded from B to B-minus, and class F was downgraded from B-minus to C and assigned a Distressed Recovery rating of DR5. The downgrades were attributed to expected losses and the increasing concentrations of the deal. The certificates are collateralized by all or part of eight classes in six separate underlying fixed-rate commercial mortgage-backed securities transactions. Fitch can be found on the Web at http://www.fitchratings.com.

Washington Real Estate Investment Trust, Rockville, Md., has priced $100 million of 20-year convertible senior unsecured notes.The notes will be convertible at the holder's option at an initial rate of 20.09 common shares per $1,000 principal amount of notes, or $49.78 per share. The REIT said the proceeds will be used to repay borrowings under its lines of credit. Credit Suisse Securities, the sole underwriter of the offering, has been granted an option to buy up to $10 million worth of additional notes to cover any overallotments. The REIT can be found online at http://www.writ.com.

Zacks Equity Research, Chicago, in its analyst blog for Sept. 7, maintains its bearish outlook on the stock of H&R Block, Kansas City, Mo., the parent company of nonprime lender Option One Mortgage Corp., Irvine, Calif.The research company said it is maintaining its sell rating on Block. "Until we see evidence that the mortgage business has stabilized, we expect limited upside movement in the share price," Zacks said. It said it expects Block's stock to trade at the low end of a 10 times/20 times forward 12-month earnings range. Right now its six-month target price of $18 is based on 11 times its 2007 earnings estimate, Zacks reported. According to Yahoo! Finance, Block's 52-week range is $19.80 to $26.96 per share. As of 11:30 a.m. on Sept. 7, Block was trading at $21.08 per share. Zacks can be found online at http://www.zacks.com.

Housing sales and construction activity declined in July and August while demand for mortgage loans weakened, according to the Federal Reserve Board's newly released Beige Book."In general, residential real estate contacts expected the housing markets would remain weak, if not weaken further, in the months ahead," the Beige Book says. In the June Beige Book, the Federal Reserve district banks noted that housing markets continued to "cool." But the references to cooling have been replaced by reports of "substantial increases" in unsold homes. The Kansas City bank attributed some of the increase in inventories to a "sizable number of foreclosures." The Atlanta bank reported that the property insurance premiums in some parts of Florida have nearly quadrupled in the past year, and this is "adversely impacting housing and commercial real estate demand in the coastal markets." Meanwhile, commercial real estate markets remained strong in many parts of the United States, and many Federal Reserve banks reported increases in CRE development and construction.

The First American Corp., Santa Ana, Calif., has announced the acquisition of KTR Newmark Real Estate Services LLC and KTR Newmark Consultants LLC, privately held firms that offer appraisal, environmental, and engineering advisory services related to commercial real estate investment.The terms of the transaction were not disclosed. The combined businesses will operate under the name KTR Valuation & Consulting Services LLC and will be headquartered in New York City, with regional offices in Chicago, Dallas, Los Angeles, and Woodbridge, N.J. "KTR employs many of the most sought-after commercial real estate service specialists in the nation," said James M. Orphanides, a regional vice president of First American Title Insurance Co. and now chairman and president of KTR Valuation. Terence Tener, an 18-year veteran of KTR Newmark, will be the new company's chief executive officer. First American can be found online at http://www.firstam.com.

The average 30-year fixed mortgage rate rose from 6.44% to 6.47% over the seven-day period ended Sept. 7, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.14% to 6.16%, 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 5.59% to 5.63%, Freddie Mac reported. Fees and points averaged 0.4 of a point for fixed-rate mortgages, 0.5 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "We expect that mortgage rates will continue to fluctuate as new economic data are released, but still remain in the 6.5% to 7.0% range for the rest of the year," said Frank Nothaft, Freddie Mac's chief economist. "Slowly rising mortgage rates are offset in part by a slowdown in house price appreciation." A year ago, the average 30-year and 15-year fixed rates were 5.71% and 5.30%, respectively, and the average hybrid and one-year ARM rates were 5.24% and 4.45%, respectively, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Home prices increased at an annualized rate of 4.9% nationwide in the second quarter, down from a revised rate of 9.1% in the first quarter, according to the Conventional Mortgage Home Price Index released by Freddie Mac.The East South Central states of Alabama, Kentucky, Mississippi, and Tennessee recorded the biggest price increases, with an 8.3% annualized growth rate, Freddie Mac said. The West South Central states of Arkansas, Louisiana, Oklahoma, and Texas experienced the second-highest annualized gains in the second quarter, with a 7.8% growth rate, and the Mountain states came in third, at 6.4%. "Although the slowdown in house price appreciation has been quite sudden, going from an annualized 13% in the fourth quarter of 2005 to less than half of that rate just six months later, there is still strength in the housing market," said Frank Nothaft, Freddie Mac's chief economist. "Single-family house sales through the first half of the year averaged 7.03 million units at an annual rate, on track to make 2006 the third-best year for home sales." The index was jointly developed by Freddie Mac and Fannie Mae. Freddie Mac's website address is http://www.freddiemac.com.

More than one-half of all African-American borrowers received conventional subprime mortgages in 2005, according to a Consumer Federation of America study, which analyzed a sample of the 2005 Home Mortgage Disclosure Act data.The Federal Reserve Board is expected to issue its annual report and analysis of the 2005 HMDA data soon. The CFA study found that 53.0% of African-American borrowers and 37.8% of Latino borrowers received conventional subprime loans, which (according to the HMDA data) have an interest rate of more than 300 basis points above comparable Treasury securities. Looking solely at refinancings, the CFA found that subprime refis increased from 14.7% of all HMDA-reported loans in 2004 to 26.5% in 2005. Over the same period, refinanced loans priced at more than 500 bps above Treasury securities doubled from 4.2% to 8.8%. Earlier this year, regulators at the Fed cautioned industry and consumer groups to expect a substantial jump in the number of HMDA-classified subprime loans because of the flattening of the yield curve during 2005.

The Market Composite Index, an overall measure of mortgage applications, rose from to 556.5 to 566.3 on a seasonally adjusted basis during the week ended Sept. 1, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 0.4% on the week but were down 26.1% from the level recorded a year earlier. The Purchase Index rose from 375.9 to 389.7 on a seasonally adjusted basis, while the Refinance Index fell from 1609.2 to 1594.7. Refinancings represented 41.0% of total applications, down from 41.5% the previous week, while adjustable-rate mortgages accounted for 26.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.39% to 6.31%, and points (including the origination fee) rose from 1.03 to 1.10 for loans with 80% loan-to-value ratios, the association reported.

The Chicago Mercantile Exchange is teaming up with San Francisco-based Global Real Analytics, a provider of real estate analytic products, to launch U.S. commercial real estate futures and options contracts.These financial derivative instruments are expected to begin trading in the first quarter of 2007, the CME said, and are the first that allow investors and speculators to protect their investments or gain exposure to the U.S. commercial real estate market. "Commercial real estate represents a significant asset for many institutions, and these products will create a liquid and transparent market that can be used by these market participants to help reduce risks associated with holding real estate assets," said Rick Redding, the CME's managing director for products and services. Ten quarterly cash-settled contracts based on property type and geography will be available. More information on the CRE futures can be found online at http://www.cme.com/commercialrealestate.