Originations

Quentin Caruana has announced the formation of Sage Credit Co., an Irvine, Calif.-based mortgage brokerage firm that he says will fund its own loans and employ only "elite industry performers with proven track records for success."Sage currently has branches in Orange County, San Diego, and Sacramento, Calif., Las Vegas, and New Jersey, but 40 branch locations are planned across the country, the company said. "The vision for Sage is to set a new standard in the industry by bringing together first-class professionals with direct and immediate access to funds and the technological tools that allow for the delivery of a superior product to the consumer looking for a mortgage," said Mr. Caruana, who is Sage's president. Mr. Caruana, 30, is also president of Quantum Escrow Inc. and previously headed an unnamed mortgage company with a sales volume of $3 billion, Sage said. The company can be found on the Web at http://www.sagecreditcorp.com.

Single-family housing starts plummeted 11.2% in March from record levels in January and February as builders got overextended.The U.S. Census Bureau reported that single-family starts fell from a seasonally adjusted annual rate of 1.81 million in February to 1.59 million in March. Starts are currently ahead of last year's record pace by 2.6%. Builders got ahead of themselves due to the unusually warm winter, according to Celia Chen, director of housing economics at Moody's Economy.com. "Seasonal factors are distorting the data," she said, but a downward trend in housing starts is "pretty clear." Moody's Economy.com is forecasting that single-family starts will slow by only 5.9% this year even though its economists expect the 30-year mortgage rate to hit 6.9% in the fourth quarter. "Rebuilding in the Gulf Coast will help to keep things stronger than they otherwise would be," Ms. Chen said. "Next year, things will really slow down." The Census Bureau, an agency of the Commerce Department, can be found online at http://www.doc.gov, and Moody's Economy.com can be found at http://www.economy.com.

Six classes of Bear Stearns Commercial Mortgage Securities Inc. series 2001-Top 2 Trust Fund have been removed from Rating Watch Negative by Fitch Ratings.The affected securities are classes G, H, J, K, L, and M. Fitch also upgraded five classes in the deal and affirmed the ratings on four others. The watchlist removals were attributed to the resolution of the 1601 McCarthy loan. "Pursuant to the settlement terms, the trust will incur a 100% loss on the loan, which is expected to deplete the balance of the nonrated class N," the rating agency said. "Litigation expenses, which had caused interest shortfalls to the below-investment-grade classes, will no longer be passed through the trust." Fitch said it expects classes G through M to begin recovering interest immediately. It also reported that all litigation between the trust and the 1601 McCarthy borrower has been settled, and that "the trust is no longer exposed to a $33 million punitive damage claim." Fitch can be found online at http://www.fitchratings.com.

Four classes of Bear Stearns Asset Backed Securities Inc., series 1999-1, have been downgraded by Fitch Ratings.The downgrades were as follows: class MF-1, from AA-plus to AA-minus; class MF-2, from A-plus to BBB-plus; class BF, from BB-minus to CCC; and class BV, from BB to B-plus. Fitch attributed the downgrades to high delinquencies and deteriorating credit support. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans.

Two Michigan developers, Grand Sakwa Properties and Lormax Stern Development, have teamed up to invest up to $1 billion in U.S. retail properties over the next three to five years.They have set up a $250 million private equity fund and say they expect to tap into other sources of "conventional financing" to reach their targeted investment level. The developers reported that they have entered into a program with KeyBank Real Estate Capital's Private Equity Group to evaluate the financing of the properties. The two developers have completed over $1 billion in financing and construction with Cleveland-based KeyBank over the past decade, according to Daniel Stern, a partner in the venture. Dan Walsh, managing director of KeyBank REC, said the developers "have repeatedly demonstrated an ability to take properties and rebuild and remarket them for increased efficiency and community satisfaction."

Reliant Home Warranty Corp., Toronto, has announced underwriting approval to offer what it calls North America's first 50-year amortization program for nonprime high-ratio mortgages.Boyd Sousanna, president and chief executive officer of Reliant, said the new product "allows clients to choose a 50-year amortization schedule in five-year increments downward to tailor a mortgage to their needs." Reliant said it will sell its mortgages to institutional investors and securitize others through standard securitization conduits. The Canadian company can be found on the Web at http://www.relianthwc.com.

Acoustic Home Loans, a nonprime wholesale lender based in Orange, Calif., has gone out of business.Acoustic, founded in 2002, said in a statement posted on its website that it was "no longer in business" as of April 14, but would "continue to process loans that are in approved status or better" until April 30. "Applications received after 4/13/2006 and loans that are not in approved status or better will be returned to the broker," Acoustic said. The company's website says Acoustic was the 27th-largest nonprime wholesale originator in the nation. Acoustic can be found on the Web at http://www.acoustichomeloans.com.

Fannie Mae has loosened its mortgage approval standards for lower-income borrowers as it strives to meet its government-mandated affordable housing goals.Starting April 23, Fannie's automated underwriting system will approve more home purchase loans for borrowers with incomes of 100% (or less) of the area median income. This enhancement to Desktop Underwriter applies to most single-family loans, including Fannie's expanded approval loans. "It is important to note that DU will apply the same risk assessment as it does today (we are not changing the way DU analyzes risk for these loans); instead, we are changing (improving) the underwriting recommendation when the loan is identified by DU as meeting criteria for our regulatory housing goals to serve low- and moderate-income borrowers," Fannie says in a note to lenders. Fannie and Freddie Mac face incrementally higher affordable housing goals through 2008, and the Department Housing and Urban Development has made the goals more challenging by creating home purchase subgoals. Fannie has disclosed that it fell short in meeting two of the three subgoals in 2005.

Acoustic Home Loans, a nonprime wholesale lender based in Orange, Calif., has gone out of business.Acoustic, founded in 2002, said in a statement posted on its website that it was "no longer in business" as of April 14, but would "continue to process loans that are in approved status or better" until April 30. "Applications received after 4/13/2006 and loans that are not in approved status or better will be returned to the broker," Acoustic said. The company's website says Acoustic was the 27th-largest nonprime wholesale originator in the nation. A company spokesman could not be reached for further comment. Acoustic can be found on the Web at http://www.acoustichomeloans.com.

More than a third of all residential real estate transactions were found to have title problems in 2005, up from a quarter of such transactions in 2000, according to a survey by the American Land Title Association.The precise figures were 36% last year and 25% in 2000. The Abstracter and Title Agent Operations Survey tracks changes in the title industry, including the number of orders received and the percentage of title issues discovered and repaired prior to closing or escrow, ALTA said. ALTA president Rande Yeager said the most common curative action taken last year was obtaining releases or payoffs for discovered liens, such as prior or existing first or second mortgages, unpaid child and spousal support, outstanding taxes, and other judgments against the property. The next most common actions were obtaining releases for assignments on deeds of trust or mortgages and recording errors of names, addresses, or legal property descriptions, he said. "The booming real estate market over the last several years has increased the number of transactions significantly, which means more title problems are found," Mr. Yeager said. The association can be found online at http://www.alta.org.

RE/Max Coastal Properties, Mission Beach, Calif., and Metrocities Mortgage, Sherman Oaks, Calif., have announced the formation of San Diego Coast Mortgage.RE/Max said the new company will serve the Mission Beach, Pacific Beach, Ocean Beach, and Point Loma communities. The new relationship will offer homebuyers the convenience of in-house, "one-stop" real estate services and lending capabilities, including traditional and innovative loan programs, the franchise realty firm said. RE/Max Coastal Properties is a member of RE/Max of California and Hawaii Inc.'s network of more than 400 offices and more than 11,000 associates. The companies can be found online at http://www.remax-cahi.com and http://www.metrocitiesmtg.com.

USA Commercial Mortgage Co., Las Vegas, and certain affiliates have announced a filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code and the naming of a new chief executive officer.The company also announced that it is in discussions with leading financial institutions to provide debtor-in-possession financing and is seeking a $100 million credit facility to fund operations and new loan-funding capacity. The new CEO, Thomas J. Allison, is executive vice president of Mesirow Financial Interim Management, which the company has retained to assist in reorganizing its operations and obtaining the DIP financing. The affiliates involved in the Chapter 11 filing are USA Capital Realty Advisors LLC, USA Securities LLC, USA Capital First Trust Deed Fund LLC, and USA Capital Diversified Trust Deed Fund. USA Commercial Mortgage Co., d/b/a USA Capital, can be found online at http://www.usacapitalcorp.com.

Home sales will decline by about 8% this year and housing starts will drop more than 10%, according to Diane Swonk, chief economist of Chicago-based Mesirow Financial.In the April issue of Themes on the Economy, Ms. Swonk also forecasts that home price appreciation will slow to 7% this year, down sharply from "the almost unbelievable and unsustainable" 12.8% pace of 2005. "Speculation played a much larger role than we would like [in 2005], with mortgages used for investment purposes rising to a record-breaking 12.1% of the market in the fourth quarter," Ms. Swonk said. "This leaves us worrying about the magnitude of a market correction, now that cancellations for new homes -- largely condos -- are on the rise and speculative investment appears to be cooling." Mesirow can be found on the Web at http://www.mesirowfinancial.com.

The average 30-year fixed mortgage rate rose from 6.43% to 6.49% over the seven-day period ended April 13, representing its highest level since July 2002, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.10% to 6.14%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages increased from 6.11% to 6.13%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.57% to 5.61%, Freddie Mac reported. Fees and points averaged 0.5 of a point for 15-year fixed-rate mortgages, 0.6 of a point for 30-year fixed-rate mortgages, 0.7 of a point for hybrid ARMs, and 0.8 of a point for one-year ARMs. "Mortgage rates continued to creep up following the unexpected drop in March's unemployment rate," said Frank Nothaft, Freddie Mac's chief economist. "That drop indicates there may be some upward pressure on wages in the near future, which could lead to a rise in inflation." A year ago, the average 30-year and 15-year fixed rates were 5.91% and 5.46%, respectively, and the average one-year ARM rate was 4.30%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Windrose Medical Properties Trust, Indianapolis, has priced a public offering of 2.3 million common shares at $14.80 per share.Windrose, a real estate investment trust, said it plans to use the net proceeds of approximately $32.3 million to pay down debt and for general corporate purposes, including the possible acquisition of specialty medical properties. Robert W. Baird & Co. is the sole bookrunner for the offering. The underwriters have been granted an option to buy up to 345,000 additional shares to cover any overallotments. The REIT can be found online at http://www.windrosempt.com.

Zacks.com, the online unit of Zacks Investment Research Inc., Chicago, has reported a recent posting on its Analyst Blog noting that the company is maintaining its Hold recommendation on Saxon Capital but cautioning about its risks.In the Zacks weblog commentary on Saxon, the analyst said the company had a weak fourth quarter and noted that competition is driving down margins. "We feel that the company will have a difficult time making money in 2006; margins will remain low and production volumes will be stagnant," the analyst said. "On the other hand, the dividend yield is extremely attractive and the company now trades at a significant discount to book value. However, this is a risky stock, and large dividend cuts could come if the mortgage business does not improve in the next year." Saxon, a residential mortgage lender and servicer based in Glen Allen, Va., is a real estate investment trust. Zacks can be found online at http://www.zacks.com.

Existing-home sales will be off 6% this year from last year's record pace and new-home sales will fall by 10.9%, according to the National Association of Realtors.Strong economic growth and hiring are having an offsetting effect on rising mortgage rates, and home sales should "stay at a high plateau" for the remainder of the year, said NAR chief economist David Lereah. The NAR economist said he expects the 30-year mortgage rate to end the year at 6.9%. Meanwhile, Freddie Mac economists are projecting that a flat or inverted yield curve will keep the 30-year mortgage rate at 6.5% by year's end, with new- and existing-home sales declining by 7% from last year's record high. Single-family mortgage originations are forecast to decline by 13% to $2.45 trillion, as the share of refinancings and adjustable-rate mortgages remain at high levels. Demand for interest-only and payment-option mortgages will keep the ARM share at 27% of originations in 2006, down from 31% in 2005, according to Freddie's updated forecast. The refinancing share will drop to 36%, compared with 44% of originations in 2005. The NAR can be found online at http://www.realtor.org, and Freddie Mac can be found at http://www.freddiemac.com.

Minneapolis-based U.S. Bank Home Mortgage has announced the acquisition of family-owned AssuraFirst Financial, Southfield, Mich., formerly known as Homestead Mortgage USA.The terms of the agreement were not disclosed. AssuraFirst has 140 employees and 15 retail branch offices in Michigan, Indiana, Ohio, Wisconsin, Texas, and Arizona, U.S. Bank Home Mortgage said. AssuraFirst also operates a wholesale division out of Southfield. U.S. Bank Home Mortgage has retail, wholesale, and specialized mortgage lending in all 50 states, with "heavy emphasis" on the 24 states in which U.S. Bank has a retail banking presence, the company said. As a result of the acquisition, U.S. Bank said it expects to see an immediate 8% increase in volume and number of loan officers, and will enter new markets in Michigan, Texas, and Indiana. Dan Arrigoni, president of U.S. Bank Home Mortgage, said AssuraFirst's culture and philosophy are "very similar to ours, and there is very little overlap in our respective territories, which is why we are confident that this is a perfect fit." U.S. Bank Home Mortgage is part of U.S. Bancorp, which can be found on the Web at http://www.usbank.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 612.8 to 579.4 on a seasonally adjusted basis during the week ended April 7, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 5.1% on the week and were down 14.7% from the level recorded a year earlier. The Purchase Index fell from 438.2 to 417.7 on a seasonally adjusted basis, while the Refinance Index declined from 1640.8 to 1532.4. The four-week moving average for the Purchase Index rose from 409.7 to 413.4, and the comparable average for the Refinance Index fell from 1589.3 to 1576.5. Refinancings represented 36.0% of total applications, down from 36.6% the previous week, while adjustable-rate mortgages accounted for 28.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.49% to 6.50%, and points (including the origination fee) rose from 1.13 to 1.20 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found on the Web at http://www.mortgagebankers.org.

Standard & Poor's and Morgan Stanley Capital International have announced forthcoming revisions to their Global Industry Classification Standard that will result in major classification changes in the S&P REIT Composite Index.Effective after the close of business on April 28, the GICS structure will discontinue the Real Estate Industry and replace it with two industries formerly classified as subindustries: the Real Estate Investment Trust Industry and the Real Estate Management & Development Industry. S&P said the elevation of REITs to industry status will bring with it the creation of seven new subindustries: Diversified, Industrial, Mortgage, Office, Residential, Retail, and Specialized REITs. The REIT subindustries will be reflected in the S&P REIT Composite Index. Further information on the standard can be found online at http://www.standardandpoors.com/gics.