Originations

The average 30-year fixed mortgage rate rose from 6.58% to 6.59% over the seven-day period ended May 4, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.21% to 6.22%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged at 6.21%, and the average rate for one-year Treasury-indexed ARMs declined from 5.68% to 5.67%, Freddie Mac reported. Fees and points averaged 0.6 of a point for fixed-rate mortgages, 0.7 of a point for hybrid ARMs, and 0.8 of a point for one-year ARMs. "Mortgage rates have drifted upward for the sixth week running, which is consistent with Freddie Mac's economic forecast," said Frank Nothaft, Freddie Mac's chief economist. "We expect that mortgage rates will continue to trend upward over the coming year, but that upward trend will be modest at best." A year ago, the average 30-year and 15-year fixed rates were 5.75% and 5.31%, respectively, and the average one-year ARM rate was 4.22%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Republic Property Trust, a Washington, D.C.-based real estate investment trust, has announced the closing of a $150 million secured revolving credit facility by its operating partnership, Republic Property LP.The company said the principal amount may be increased by as much as $100 million under certain conditions. Borrowings will bear an interest rate of either 155-190 basis points above the London interbank offered rate or 0-50 bps above a base rate equal to the prime rate or the federal funds rate (whichever is greater). KeyBank NA was the administrative agent for the facility, and KeyBanc Capital Markets acted as the sole lead arranger.

Class B2 of Morgan Stanley Dean Witter Capital I Inc. Trust, series 2002-OP1, has been placed under review for possible downgrade by Moody's Investors Service.The rating action was attributed to a low credit enhancement level given the projected losses on the underlying pool. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," Moody's said. The transaction is backed primarily by first-lien, fixed- and adjustable-rate subprime mortgage loans originated and serviced by Option One Mortgage Corp. Moody's can be found online at http://www.moodys.com.

Moody's Investors Service has lowered its senior unsecured debt ratings on the notes of MeriStar Hospitality Operating Partnership LP from B2 to B3.The rating agency also confirmed the ratings of MeriStar Hospitality Corp.'s senior subordinate debt at Caa1. The outlook is stable. MeriStar Hospitality Corp., a hotel real estate investment trust based in Bethesda, Md., has been acquired by affiliates of The Blackstone Group, an investment and advisory firm. Moody's said the lower ratings reflect "significant use of secured debt and the considerably diminished claim of the unsecured debt holders in the new capital structure. In addition, unencumbered assets are practically nonexistent." Moody's said that, as a result of a tender and consent offer, most restrictive covenants pertaining to the notes have been removed. Moreover, Moody's said it expects "considerably less transparency" with respect to the firm's finances and operations given that it has been acquired by, and merged into entities controlled by, Blackstone, a private entity.

Equity Office Properties Trust, Chicago, has reported net income of $45.6 million ($0.12 per share) for the first quarter, down from $100.9 million ($0.25 per share) in the first quarter of 2005.The real estate investment trust said net income for the first quarter of 2005 included $51.5 million from early lease terminations, compared with only $6.5 million from this source in the first quarter of 2006. The first-quarter 2005 results also reflect the impact of $2.7 billion of dispositions, EOPT said. "We continue to see office market fundamentals improve across virtually all of our markets," said Richard D. Kincaid, EOPT's president and chief executive officer. "This is leading to occupancy gains, rent increases, and a reduction in concessions in most of our portfolio." Funds from operations, a non-GAAP measure commonly used in the REIT sector, totaled $226.4 million ($0.55 per share) for the first quarter, EOPT said, down from $302 million ($0.66 per share) for the comparable period of last year. The REIT can be found online at http://www.equityoffice.com.

Fitch Ratings has announced the formation of a new rating group for U.S. commercial real estate CDOs, which it termed an increasingly popular asset class.The group will be led by managing director Jenny Story. Jill Zelter, managing director of collateralized debt obligations at Fitch, said CRE CDO issuance rose over 100% in the first quarter and average deal size more than doubled. The market includes CDOs backed by commercial mortgage-backed security collateral, commercial real estate loans, and CMBS Re-REMICs, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Wachovia ranked highest in overall customer satisfaction among home equity lenders in the J.D. Power and Associates 2006 Home Equity Line/Loan Origination Study, according to the marketing information firm.The company said the inaugural study measures customer satisfaction with home equity line/loan lenders among 3,764 consumers who had obtained a home equity loan or line of credit in the previous nine months. Wachovia scored 768 on a 1,000-point scale, performing especially well in the areas of loan officers/representatives and the closing process, J.D. Power reported. Washington Mutual ranked second, with a score of 758 (and especially good marks on the application/approval process), and USAA finished third, at 755. "The effect a good representative can have on a customer's loan experience speaks volumes when it comes to satisfaction," said Jeremy Bowler, senior director of the company's finance and insurance research. J.D. Power, headquartered in Westlake Village, Calif., can be found online at http://www.jdpower.com,

The Market Composite Index, an overall measure of mortgage applications, rose from 548.6 to 596.8 on a seasonally adjusted basis during the week ended April 28, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 9.6% on the week but were down 15.6% from the level recorded a year earlier. The Purchase Index rose from 389.4 to 433.3 on a seasonally adjusted basis, while the Refinance Index climbed from 1489.4 to 1565.6. Refinancings represented 35.2% of total applications, down from 36.7% the previous week, while adjustable-rate mortgages accounted for 28.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.53% to 6.57%, and points (including the origination fee) increased from 1.10 to 1.18 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found on the Web at http://www.mortgagebankers.org.

Health Care Property Investors, a Long Beach, Calif.-based real estate investment trust, is acquiring CNL Retirement Properties, an Orlando, Fla.-based health care REIT, for about $5.2 billion.This includes a payment of $13.50 per CNL common share, in the form of both cash and HCPI stock, and the assumption (or refinancing) of about $1.6 billion of CNL's debt, HCPI reported. CNL shareholders will receive $11.13 in cash and 0.0865 of an HCPI common share (valued at $2.27, based on HCPI's recent average stock price). The deal will create the nation's largest portfolio of independent- and assisted-living communities, health care facilities, and medical office buildings, comprising about 800 properties in 44 states, according to HCPI. "This transaction takes HCP to the next level and dramatically alters the health care real estate industry landscape," said James F. Flaherty III, chairman and chief executive of HCPI. "CNL Retirement Properties has the newest and most upscale portfolio in the industry, and it integrates well with our existing portfolio." The transaction is expected to close in the third quarter.

Washington Mutual, Seattle, has shuttered its traditional correspondent purchase channel, shifting that business over to its capital markets group, MortgageWire has learned.Layoffs are involved in the restructuring, but at deadline time a company spokeswoman could offer no guidance on job cuts. The spokeswoman confirmed the change, noting that the thrift's conduit (capital markets group) in New York will continue to buy A-paper conventional loans. She added: "[H]owever, we are shifting our model from a low-margin business to focus on higher-margin A-paper products such as option ARMs and hybrid ARMs." Last week MW broke the news that WaMu production chief Tony Meola had resigned, accepting a position with a competitor. Industry sources say his departure was directly tied to the correspondent reorganization. One production executive at an Iowa lender e-mailed MW, saying, "We just got a call from our correspondent rep from WaMu. They are exiting the business." According to the Quarterly Data Report, WaMu ranks fifth among correspondent buyers.

Faced with declining production and a changing retail landscape, Ameriquest Mortgage -- once the nation's largest subprime lender -- has closed its entire retail branch network, slashing 3,800 jobs in the process.News of the branch closings was first reported by MortgageWire on Tuesday afternoon. In total, 229 offices were shut. The company said four "regional production centers" will replace the branches. At deadline time, the privately held Ameriquest had not yet assigned a cost to the closings and job cuts. The spokesman declined to answer questions about the lender's production volumes and profitability. Ameriquest is a subsidiary of ACC Capital Holdings, which is controlled by businessman Roland Arnal. Mr. Arnal is currently serving as ambassador to the Netherlands. ACC also controls Argent Mortgage, a top-ranked subprime wholesaler. Ameriquest's spokesman said Argent is unaffected by the branch closings. ACC chief executive Aseem Mital said in a statement, "We are moving strategically and decisively to remain a leader in an industry that is undergoing fundamental changes." In January Ameriquest agreed to pay $325 million to settle claims with 49 states that the company engaged in abusive lending practices. ACC, the parent, promised to change some of its business practices, but without acknowledging any wrongdoing.

Three subordinate classes from three Saxon Asset Securities Trust transactions have been placed under review for possible downgrade by Moody's Investors Service.The affected classes are: class MF-2 of series 2001-1; class B-1 of series 2001-2; and class B of series 2001-3. The rating actions were based on the weaker-than-expected performance of the mortgage pools and the resulting erosion of credit support, Moody's said. In series 2001-1, the overcollateralization has been fully depleted and the BF-1 tranche is realizing losses, the rating agency said. In series 2001-2 and 2001-3, "pipeline losses could cause eventual depletion of the overcollateralization and possible losses on the most subordinate tranches," Moody's said. The certificates are secured by fixed- and adjustable-rate subprime home equity loans.

A leading indicator of existing-home sales edged down 1.2% in March, signaling that home sales may slow in the months ahead, according to the National Association of Realtors."[T]he pending sales data is showing a dampening effect from rising mortgage rates that have been trending up since January," said NAR chief economist David Lereah. "This means a modest slowing can be expected in the sales pace in the months ahead, although the market will hold at historically strong levels." The NAR reported that its index of pending homes sales edged down from a seasonally adjusted annual rate of 117.6 in February to 116.2% in March. The NAR can be found online at http://www.realtor.org.

A retired mortgage broker from New Jersey recently pleaded guilty to taking $2.5 million in illegal kickbacks from securities law firm Milberg Weiss and lying about it, according to Reuters.Howard Vogel was charged and entered his plea to one count of making a false declaration before a court in documents filed April 28 by the U.S. attorney in Los Angeles. In the agreement, Reuters said Mr. Vogel admitted to falsely denying having a secret deal to take a portion of legal fees earned by the firm in exchange for serving, or inducing family members to serve, as plaintiffs in about 40 suits between 1991 and 2005. The firm, which split in two in 2004, said it continues to cooperate fully with the investigation. According to Reuters, Mr. Vogel, who signed the plea deal, is the third person to be charged in connection with a five-year-old investigation of Milberg Weiss, a prominent securities law firm. He is the first to plead guilty, and has agreed to cooperate with federal investigators as part of a plea agreement. The investigation centers on whether the law firm made illegal payments to clients who agreed to act as plaintiffs in the firm's prolific lawsuits against publicly traded companies. Mr. Vogel faces up to five years in prison and agreed to pay $2 million in fines.

Following its February release of e-Point 3.2, GreenPoint Mortgage, Novato, Calif., is poised to launch a commercial lending version that will enable brokers to originate small commercial loans in the $500,000 to $5 million range.Originally built using Dorado's Wholesale ChannelMaster and PriceMaster products, e-Point will be slimmed down to offer a smaller set of commercial loan options. Beginning in July, GreenPoint's approved brokers will be able to go to GreenPoint's wholesale site and be guided through the commercial loan application from point of sale to close, the company said. GreenPoint can be found on the Internet at http://www.greenpointmortgage.com.

Harbourton Capital Group Inc., McLean, Va., has reported a net loss of approximately $2.8 million ($0.55 per share) for the fourth quarter of 2005, in part as a result of "turmoil in the secondary market" affecting its wholesale mortgage subsidiary.The subsidiary, Harbourton Mortgage Investment Corp., originated $189.2 million in loans in the fourth quarter, down 33% from $280.6 million in the previous quarter, the parent company said. HMIC's fourth-quarter loan sales totaled $202.7 million, with an average gain on sale of 2.07%, compared with $250.5 million and an average gain on sale of 2.53% in the third quarter, Harbourton reported.

After a huge, nearly 26-basis-point increase in the Eleventh Federal Home Loan District Cost of Funds Index in February, the index rose a mere 2 bps in March.According to the Federal Home Loan Bank of San Francisco, the index for March stood at 3.624%, compared with 3.604% the month before. The index consists of the weighted average of the cost of funds to originate mortgage loans among FHLBank's savings institution members in Arizona, California, and Nevada. On April 27, Federal Reserve Board Chairman Ben Bernanke testified before Congress's Joint Economic Committee. In the remarks, he noted that the Federal Open Market Committee had raised the federal funds rate by 25 bps at each of its last 15 meetings, for a total of 375 bps. He went on to say that "at some point in the future the committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook." In the same period, starting around May 2004, COFI has increased 192 bps.

Even though private mortgage insurers wrote over $1 billion less of traditional primary new insurance in March than they did a year earlier, total primary new insurance written increased by nearly $3.8 billion in the same period.According to the Mortgage Insurance Companies of America, its members did $20.98 billion of primary new insurance in March, compared with $15.28 billion in February and $17.18 billion in March 2005. March's volume was split between $11.95 billion of traditional insurance and $8.97 billion of bulk. Application volume increased almost 30% from February to March, from 108,788 to 141,117. New pool risk written totaled $76.7 million, up from $31.4 million in February and $30.3 million in March 2005. Primary risk in force stood at $141.6 billion at the end of the first quarter, up from $140.3 billion a year earlier, while pool risk in force at the end of the period was down to $8.5 billion, from $10.3 billion at the end of the first quarter of 2005. The cure/default ratio was 106.3% for March, with 40,299 cures and 37,928 defaults.

The delinquency rate on U.S. commercial mortgage-backed securities fell to a seven-year low of 0.58% in the first quarter, its lowest level since 1999, according to Standard & Poor's.The delinquency rate also dropped from 0.84% at the end of 2005, according to the rating agency. "Since its peak of 1.96% in December 2003, the delinquency rate has declined 70%, partly due to record volume issuance," said Eric Thompson, a credit analyst/director in S&P's CMBS surveillance group. What he sees as "more telling" is that the actual amount delinquent fell by a substantial 38%. At the end of the first quarter, delinquencies totaled $2.48 billion on a base of $445.7 billion of S&P-rated CMBS, the rating agency reported. "Although it may be too early to call this reversal the start of a longer-term trend, current economic conditions may be starting to shape individual property segment performance," said Larry Kay, a credit analyst/director in S&P's structured finance ratings group. S&P can be found online at http://www.standardandpoors.com.

At least one major lender, Bank of America, has a totally no-cost loan on its drawing board, a BoA executive told a gathering of the country's real estate writers in Charlotte, N.C., over the weekend."I know it's a revolutionary change, but I truly believe that's where the market's going," Floyd Robinson said at the National Association of Real Estate Editors' annual conference. Mr. Robinson, who is president of consumer real estate and insurance services at BoA, said the myriad of closing costs and fees now attached to home loans only serve to confuse borrowers, and promised that the bank's no-fee loans would have the same annual percentage rates at those with fees so borrowers could readily see there would be no hidden charges. He also said the big Charlotte-based bank is considering offering to refinance its customers' mortgages without charge. "All they'll have to do is call the servicing department and it's done," he said. BoA thinks it has enough economies of scale and clout with service providers to offer no-cost loans, an executive with the bank said. But even if the bank has to take a loss to originate such a mortgage, he explained, it will be worth it to get customers in the door so it can start building banking relationships with them. NAREE can be found online at http://www.naree.org.