Originations

Seven certificates from two CIT Home Equity Loan Trust subprime mortgage deals have been downgraded by Moody's Investors Service.The downgrades in series 2002-1 were as follows: class MF-1, from Aa2 to Aa3; class MF-2, from A2 to Baa3; class BF, from Baa2 to B2; and class BV, from Baa2 to Ba1. The downgrades in series 2002-2 were: class MF-2, from A2 to A3; class BF, from Baa2 to Ba1; and class BV, from Baa2 to Ba2. Moody's also confirmed the ratings on three classes from CIT transactions. The downgrades were attributed to a weaker-than-expected performance by the mortgage collateral and the resulting erosion of credit support. The overcollateralization in the fixed-rate pools of both deals and the adjustable-rate pool of the 2002-1 deal are below their targets, and pipeline losses for both deals could deplete the overcollateralization and result in losses on the most subordinate tranches, Moody's said.

Capital Alliance Income Trust Ltd., a real estate investment trust based in San Francisco, has reported receiving notification from the American Stock Exchange that it is not in compliance with requirements regarding the composition of its board of directors.The warning letter from Amex gives the REIT until Sept. 11 to comply with the requirement that its board have a majority of independent directors, the company said. CAIT said it went out of compliance with the requirement when one of its independent directors resigned on June 21. The REIT said it expects to announce the appointment of another independent director by the deadline. The company can be found on the Web at http://www.calliance.com.

GMH Communities Trust, a real estate investment trust based in Newtown Square, Pa., has announced that a special committee of its board is preparing to solicit indications of interest in acquiring the company.The company added, however, that the panel may decide not to pursue any such indications. The REIT delayed the release of its earnings in March after a letter from its chief financial officer prompted an investigation by its Audit Committee. The investigation found evidence of material weaknesses in the company's internal controls and evidence that "key executives" placed "significant pressure" on the Accounting Department, GMH said. (It added, however, that the probe found no evidence that the department was pressured to falsify financial information or violate generally accepted accounting principles.) Shortly after the March announcement, GMH fired its CFO, Bradley W. Harris, and said it expected to restate certain previously reported financial results. The REIT, which provides housing to college students and members of the U.S. military services, can be found online at http://www.gmhcommunities.com.

Washington Mutual, which slashed its mortgage work force by 19% in February, has cut another 900 jobs overall.About 350 of the new layoffs are mortgage-related, a company spokeswoman told MortgageWire. Most of the mortgage cuts are tied to the lender's appraisal order and review process. "We're now going to use vendors for that," she said. Roughly 550 of the jobs come in WaMu's retail banking group. Employees were informed of the news on July 12. The Seattle-based Washington Mutual is the third-largest residential lender in the United States. In May, WaMu shuttered its traditional correspondent purchase channel. Over the past year or so, the thrift has been mentioned as a takeover target. WaMu can be found online at http://www.wamu.com.

Class K-PR of GS Mortgage Securities Corp. II commercial mortgage pass-through certificates, series 2005-VII, has been downgraded from Ba1 to B1 by Moody's Investors Service.Class K-PR is supported solely by the Pittsburgh Renaissance Hotel Loan, which is secured by a 300-room full-service hotel in downtown Pittsburgh. "Based on operating results for calendar year 2005 and the borrower's budget for 2006, the hotel is performing below Moody's expectations," the rating agency said. Although revenue per available room has not declined significantly since securitization, food and beverage revenue is less than projected and expenses are higher, Moody's said.

Powell Goldstein LLP, an Atlanta-based law firm, has announced the acquisition of a 13-member capital markets group from Akin Gump Strauss Hauer & Feld LLP that will enhance its depth, especially in the area of commercial mortgage-backed securities.Powell Goldstein said the new team -- two partners, eight other attorneys, and three paralegals -- will join its offices in Atlanta and Washington and anchor the opening of a new office in Dallas. Heading that office will be Robin R. Green, who was a partner at Akin Gump in that firm's real estate and finance practice in Dallas. James J. McAlpin Jr., chairman of Powell Goldstein, said the acquisition and expansion "gives us an entree into a new geographic market, one that we have been looking at for some time." The firm said Ms. Green's practice focuses primarily on real estate finance and CMBS, as does that of the other new partner, Keith A. Dunsmore, who worked at Powell Goldstein from 1984 to 1999. The firm can be found online at http://www.pogolaw.com.

Equity Office Properties Trust, a Chicago-based real estate investment trust, has acquired office space in the former Bertelsmann Building in Midtown Manhattan for about $525 million.The office REIT reported that the office space in the building consists of 906,287 square feet, accounting for 83% of the building's space. The building, at 1540 Broadway, is "a signature asset, located in the heart of Times Square," said Richard Kincaid, president and chief executive officer of EOPT. "By focusing our acquisition solely on the office portion of the property, we were able to acquire our interest at well below replacement cost." The REIT said it expects that a "large pending vacancy" at the building will enable it to release the vacant space at better rates. With this acquisition, EOPT's New York City portfolio now includes nine buildings totaling over seven million square feet of office space in Midtown Manhattan, the company said. The REIT can be found online at http://www.equityoffice.com.

Centex Home Equity, Dallas, has been renamed Nationstar Mortgage LLC to mark the completion of the unit's sale to Fortress Investment Group by Centex Corp.Nationstar said it ranks eighth nationally among retail nonprime lenders and is licensed to do business in 47 states. Retail loans are originated through 70 branches and three centralized call centers in Dallas, Phoenix, and Denver, the company said. Nationstar also sources loans indirectly through mortgage brokers served by four wholesale service centers. The company's new website can be found at http://www.nationstarmtg.com.

The warehouse lending unit of NovaStar Financial Inc., Kansas City, Mo., until now known as NovaStar Capital Inc., has been renamed WarehouseUSA Capital Corp.Back in May, NovaStar Capital, headquartered in Roswell, Ga., acquired the warehouse lending business of nBank NA, Commerce, Ga. As a result, it has expanded its client base, and now approximately 110 lenders have active lines with WarehouseUSA, the company said. Prior to the acquisition, nBank had 40 relationships. The company said it has created a new website to provide clients a user-friendly online environment for transactions and management of their warehouse lines. The site also offers resources for lenders and investors on the economics of the mortgage process and warehouse lending. The new site can be found at http://www.warehouseusa.com.

Federal Housing Administration reform legislation is being criticized in the Senate for raising mortgage insurance premiums on the "backs of poor people" even though the increase would only amount to $12 a month, according to FHA Commissioner Brian Montgomery.The legislation would give the FHA the flexibility to charge risk-based premiums and reach more subprime borrowers with lower-cost and safer loans, the commissioner told a Women in Housing and Finance luncheon. "The family we can't reach today is paying $255 more a month," Mr. Montgomery said. "Where is the outrage on that? They are being taken to the cleaners today." (The $255 a month is based on a 9.5% subprime loan.) On paper, it looks as if the FHA would double the upfront premium from 1.5% to 3.0% for certain borrowers. However, it would increase the monthly cost of a $200,000 loan with a 6% interest rate by $12. "It is a far better deal," Mr. Montgomery said. The House has already approved an appropriations bill that includes risk-based premiums and other FHA reforms. Senate appropriators are mulling FHA reforms as they prepare for a subcommittee mark-up of the Department of Housing and Urban Development appropriations bill.

The average 30-year fixed mortgage rate fell from 6.79% to 6.74% over the seven-day period ended July 13, the first time in five weeks the rate has declined, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 6.44% to 6.37%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.39% to 6.33%, and the average rate for one-year Treasury-indexed ARMs decreased from 5.82% to 5.75%, Freddie Mac reported. Fees and points averaged 0.6 of a point for 30-year fixed-rate mortgages and one-year ARMs, 0.4 of a point for 15-year fixed-rate mortgages, and 0.5 of a point for hybrid ARMs. "June's employment report caught financial markets off guard," said Frank Nothaft, Freddie Mac's chief economist. "In response, long-term bond yields eased a bit this week." A year ago, the average 30-year and 15-year fixed rates were 5.66% and 5.25%, respectively, and the average one-year ARM rate was 4.39%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

EverBank, Jacksonville, Fla., has announced the introduction of the Approved Buyers Network, a program that can contribute up to 1% toward client closing costs for mortgage brokers without affecting the broker's commission.The program, available exclusively through EverBank's Wholesale Lending Division, offers a pricing advantage not available from any other lender, the company said. "With the Approved Buyer's Network, the homebuyer and broker both benefit," said Buddy McCombs, senior vice president of EverBank's wholesale unit. "Mortgage brokers using ABN can offer homebuyers reduced closing costs by pre-approving them for a mortgage before they work with a real estate agent. This gives the broker a competitive pricing advantage and allows buyers to avoid the last-minute hassles of trying to obtain financing." Once the pre-approval is completed, ABN initiates a referral to an agent in the area where the buyer wishes to purchase a property. The bank's wholesale unit can be found online at http://www.everbankwholesale.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 561.0 to 566.8 on a seasonally adjusted basis during the week ended July 7, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 29.1% on the week and were down 36.3% from the level recorded a year earlier. The Purchase Index rose from 414.2 to 425.0 on a seasonally adjusted basis, while the Refinance Index declined from 1423.9 to 1400.5. Refinancings represented 34.0% of total applications, down from 35.0% the previous week, while adjustable-rate mortgages accounted for 28.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.80% to 6.81%, and points (including the origination fee) decreased from 1.13 to 1.06 for loans with 80% loan-to-value ratios, the association reported.

Deutsche Bank has agreed to purchase MortgageIT Holdings Inc., New York, the nation's 21st-largest lender, for $429 million, or $14.75 a share.The purchase is Deutsche Bank's second mortgage-related acquisition in eight weeks. A real estate investment trust, MortgageIT Holdings owns MortgageIT Inc., a residential mortgage lender that employs 2,100 full-timers in 50 branches and is licensed to originate mortgages in all 50 states. The operating company will become a part of Deutsche Bank's residential mortgage-backed securities business in New York. Phil Weingord, Deutsche Bank's head of global markets for the Americas, said the company continues to expand its RMBS business and believes "the vertical integration of a leading mortgage originator like MortgageIT will provide significant competitive advantages, such as access to a steady source of product for distribution into the mortgage capital markets." Doug Naidus, chairman and chief executive officer of MortgageIT, said the transaction "will enable us to accomplish our mutual goal of becoming a top player in the U.S. residential lending and securitization markets in short order." The companies can be found online at http://www.db.com and http://www.mortgageitholdings.com.

The ratings of Heritage Property Investment Trust Inc. have been placed under review for possible downgrade by Moody's Investors Service and Fitch Ratings following Heritage's announced sale to affiliates of Centro Properties Group.The affected Moody's ratings are as follows: senior unsecured notes, now at Baa3; senior unsecured shelf, at (P)Baa3; subordinated shelf, at (P)Ba1; preferred stock shelf, at (P)Ba1; and Bradley Operating LP, senior unsecured debt, at Baa3. Moody's said that, although the precise capital structure of Heritage after the transaction is not clear, leverage (especially secured leverage) may increase and other credit metrics may deteriorate as well. The affected Fitch ratings, all now at BBB-minus and on Rating Watch Negative, are: senior unsecured debt; senior unsecured line of credit and bridge loan; long-term issuer rating; Bradley Operating LP senior notes; and Bradley Operating long-term issuer rating. Fitch said the factors involved in its review are: the change in access to capital (since the acquiring venture will not have access to the U.S. public markets); an expected increase in leverage; and the venture's plans to fund the transaction with secured financing. The rating agencies can be found online at http://www.moodys.com and http://www.fitchratings.com.

Refinancing activity has been stronger than anticipated, but it will slow in the second half of this year to around 35% of originations, according to Freddie Mac chief economic Frank Nothaft."I do expect the refi share to slip lower in the second half of the year, partially because mortgage rates are going higher," Mr. Nothaft said. In the first quarter, refinancings were running at 49% of total originations. In May, the refi share dropped to 41%. Freddie's chief economist said he expects the refi share to drop to 34% in the third quarter. But he just increased his forecast of fourth-quarter refinancing activity to 35% from 30%. Borrowers are still refinancing to extract cash, he said. And borrowers who took out adjustable-rate mortgages in the past two years are refinancing to avoid a significant jump in their monthly payments. Mr. Nothaft's forecast calls for single-family originations to fall 12% to $2.5 trillion in 2006, largely due to a 22% decline in refinance loans. Freddie Mac can be found online at http://www.freddiemac.com.

National City Corp., Cleveland, is throwing in the towel on its subprime division, placing First Franklin Financial Corp. on the auction block.The bank said it is weighing "strategic alternatives" for the San Jose, Calif.-based unit, including a sale. It also may unload its subprime servicing division, National City Home Loan Services, Pittsburgh, and NationsPoint, Lake Forest, Calif., a direct-to-consumer lender. A bank spokesman told MortgageWire that National City is not committed to a sale and ultimately could wind up keeping the units if it doesn't like the bids. He added that National City has no plans, at this time, to sell its prime mortgage division, National City Mortgage, which is based in Miamisburg, Ohio. Nat City Mortgage is the nation's 18th-largest funder, but its production declined dramatically in the first quarter, according to the Quarterly Data Report, an MW affiliate. First Franklin is the nation's 12th-largest subprime funder, according to QDR. NCHLS is the nation's 12th-largest subprime servicer. Nat City and First Franklin can be found on the Web at http://www.nationalcity.com and http://www.first-franklin.com.

Centro Watt, a joint venture of Centro Properties Group, Melbourne, Australia, and Los Angeles-based Watt Commercial Properties, has announced an agreement to acquire Heritage Property Investment Trust, a Boston-based real estate investment trust, for $36.15 per share.The total transaction is valued at approximately $3.2 billion, including debt to be assumed or repaid. The Heritage Trust portfolio consists of 157 neighborhood and community shopping centers in 27 states. "This is a significant transaction for Centro Watt and will make us the ninth-largest owner/manager of retail properties in the U.S.," said Mark Wilson, chief operating officer of Centro Watt. The companies can be found on the Web at http://www.centrowatt.com and http://www.heritagerealty.com.

Kimco Realty Corp., New Hyde Park, N.Y., is acquiring San Diego-based Pan Pacific Retail Properties, another retail real estate investment trust, for a total price of about $4 billion.The consideration includes the assumption of about $1.1 billion in Pan Pacific's outstanding debt, Kimco reported. Kimco will acquire all the outstanding shares of Pan Pacific for $70 per share in cash. The REIT may also choose to issue up to $10 per share of the merger consideration in the form of Kimco common stock. Kimco said it has received financing commitments totaling up to $3 billion, which it may use to fund all or part of the total merger consideration. Pan Pacific's portfolio totals 138 properties, encompassing about 22.6 million square feet, according to Kimco. The REIT said it expects to target a substantial number of the properties for its "strategic co-investment" programs. "We feel very good about the quality and long-term prospects for the neighborhood shopping centers in Pan Pacific's portfolio," said Kimco's chairman and chief executive, Milton Cooper. The merger has been approved by both companies' boards of directors. The companies can be found online at http://www.kimcorealty.com and http://www.pprp.com.

American Home Mortgage, Melville, N.Y., has hired six high-level account executives away from Washington Mutual, Seattle, for its fast-growing correspondent division.A spokesman for American Home said the six were heavily courted by the nation's top mortgage banking firms but went with American Home because of its growth prospects. A few months back, National Mortgage News broke the story that WaMu was closing its traditional correspondent channel. The spokesman said he did not know for certain whether the six were slated to lose their jobs at WaMu but that he assumed as much. The new account executives and their respective regional offices include: Steven Campbell (Columbia, S.C.); Molly Gross (Grosse Pointe, Mich.); Mary Niederhaus (Sacramento, Calif.); Mary O’Connell (Nashville, Tenn.); Ed Robinson (Philadelphia); and J. Gordon Terry (Jacksonville, Fla.). American Home's correspondent division was launched a year ago and racked up $1 billion in production after seven months. The six joined American Home on July 3, bringing their AE total to 16. American Home can be found online at http://www.americanhm.com.