Originations

The Town and Country Trust, Baltimore, will be replaced in the S&P REIT Composite Index and the S&P SmallCap 600 Index after the close of trading March 31 because it is being acquired by a joint venture, Standard & Poor's has announced.S&P said the real estate investment trust is being acquired by an investment vehicle formed by affiliates of Morgan Stanley Real Estate, Onex Real Estate, and Sawyer Realty Holdings LLC. Replacing Town and Country in the REIT index will be Potlatch Corp., a Spokane, Wash.-based producer of logs and wood products, which will become a constituent of the REIT index's specialty property category. First Commonwealth Financial Corp., a state-chartered bank based in Indiana, Pa., will replace Town & Country in the SmallCap 600. S&P can be found online at http://www.standardandpoors.com.

Two classes of Solstice ABS CDO Ltd., a collateralized debt obligation that includes residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.The class B notes were downgraded from BB-plus to B, and the class C notes were downgraded from CC to C. Fitch said the downgrades stemmed from reduced collateral coverage levels. Solstice consists of 42% residential mortgage-backed securities, 37.6% CDOs, 10.1% asset-backed securities, 5.2% corporate debt securities, 3.5% CMBS, and 1.6% real estate investment trust securities.

The American Land Title Association has appointed the Minneapolis-based National Arbitration Forum as its new administrator for title insurance arbitrations.The decision comes in the wake of a comprehensive review of ALTA's Title Insurance Arbitration Rules, the organization said. "At the time of our system review, we found the title insurance industry in need of a more fair and economical process for resolving disputes," said ALTA president Rande Yeager. The National Arbitration Forum was chosen "because of its reputation and its experience in developing specialized programs" and its willingness to commit resources to developing the system, he said. ALTA said its updated arbitration rules now incorporate the forum's code of procedure and fee schedule. The organizations can be found online at http://www.alta.org and http://www.arbitration-forum.com.

Brandywine Realty Trust, Plymouth Meeting, Pa., has announced an agreement by its operating partnership, Brandywine Operating Partnership LP, to sell $850 million of unsecured notes.The real estate investment trust said the offering will consist of $300 million of floating-rate notes due April 1, 2009, $300 million of 5.75% notes due April 1, 2012, and $250 million of 6.0% notes due April 1, 2016. The proceeds are expected to be used to repay in full the borrowings under the company's $750 million term loan agreement and a portion of borrowings under its revolving credit facility. The joint book-running managers of the offering are J.P. Morgan, Wachovia Securities, and Merrill Lynch & Co. The REIT can be found online at http://www.brandywinerealty.com.

Former Mississippi Attorney General Michael Moore has been picked to monitor the lending practices of Ameriquest Mortgage as part of that firm's $325 million legal settlement with the states.Iowa AG Tom Miller, who headed the Ameriquest investigation, confirmed to MortgageWire that Mr. Moore had been approved by Ameriquest a few weeks ago. The review period lasts for five years. Mr. Moore was the lead negotiator for the states in their settlement with the tobacco industry. Ameriquest, which admitted no guilt, was accused of "up-selling" mortgages and other allegations. Based in Orange, Calif., Ameriquest ranked first among all subprime lenders in 2005, according to the new Annual Data Report. (For the full story, see the March 27 issue of National Mortgage News.)

New-home sales dropped 10.5% in February to the lowest level in nearly three years, adding further evidence that the housing market is cooling.The U.S. Census Bureau reported new single-family home sales fell from a seasonally adjusted annual rate of 1.21 million in January to a 1.08 million rate in February -- the lowest level since May 2003. National Association of Home Builders economist Michael Carliner said the February data are consistent with reports from homebuilders that sales are softening. He said there might be an uptick in sales in March, but that the "trend is greater weakness." A Mortgage Bankers Association index shows that applications for purchase-mortgage loans declined by 10% in February from the level of the previous month. And such applications are down another 2% in the first three weeks of March.

Eleven classes from seven Morgan Stanley mortgage-backed security transactions have been downgraded by Fitch Ratings and one class has been placed on Rating Watch Negative.The downgrades were as follows: series 2001-AM1, class M-2, from A-plus to A-minus, and class B-1, from BB-minus to B; series 2001-NC3, class M-2, from A-plus to A-minus, and class B-1, from BBB-minus to BB; series 2002-AM1, class B-1, from BB to B-plus; series 2002-AM2, class B-1, from BB-plus to B-plus, and class B-2, from BB-plus to B-plus; series 2002-HE1, class B-2, from BBB-minus to BB-plus; series 2002-NC4, class B-2, from BBB-minus to BB-plus; and series 2002-OP1, class B-1, from BBB to BB-plus, and class B-2, from BBB-minus to BB. The rating on class B-2 of series 2002-HE2 was placed on Rating Watch Negative. In addition, Fitch affirmed the ratings on 308 classes in 54 Morgan Stanley deals. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and loss expectations. The loans consist of fixed- and adjustable-rate mortgages extended to subprime borrowers, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The average 30-year fixed mortgage rate fell from 6.34% to 6.32% over the seven-day period ended March 23, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.98% to 5.97%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages increased from 5.93% to 5.96%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.37% to 5.41%, Freddie Mac reported. Fees and points averaged 0.6 of a point for fixed-rate mortgages, and 0.7 of a point for ARMs. "The most recent economic indicators released this week showed that inflation is indeed being held in check," said Frank Nothaft, Freddie Mac's chief economist. "That news allowed the longer-term mortgage rates to drift a little lower for the second week in a row. Shorter-term rates, however, rose in reaction to a recent speech by Chairman [Ben] Bernanke of the Federal Reserve Board that hinted at even further rate hikes this year." A year ago, the average 30-year and 15-year fixed rates were 6.01% and 5.56%, respectively, and the average one-year ARM rate was 4.24%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

After a year of negotiations, an investor group that includes Kohlberg Kravis & Roberts and mortgage-backed security inventor Lewis Ranieri has finally closed on its purchase of GMAC Commercial Holding Co., paying almost $9 billion for the unit.The sale was unveiled Thursday morning. The investor group -- KKR, Mr. Ranieri's Five Mile Capital Partners, and Goldman Sachs -- paid $1.5 billion in cash, while agreeing to repay $7.3 billion in intercompany loans to GMAC. Upon closing, GMACCH, the parent of GMAC Commercial, Horsham, Pa., changed its name to Capmark Financial Group. According to figures compiled by the Mortgage Industry Directory, GMAC Commercial is the nation's largest commercial mortgage banker, with $247 billion in receivables at year-end. The financially ailing General Motors will retain 22% of Capmark. GM also is weighing bids for its residential mortgage business. Cerberus Capital Management, New York, which owns Houston-based Aegis Mortgage, is believed to be the leading bidder at this point, but a final sale could be months away. (See the March 27 issue of National Mortgage News for more details.)

Existing-home sales jumped 5.2% in February after a five-month decline, but economists contend that this spike will not reverse the downward trend in home sales.The National Association of Realtors reported that February sales of single-family homes, condominiums, and cooperatives increased from a seasonally adjusted annual rate of 6.57 million in January to 6.91 million in February. Fannie Mae chief economist David Berson noted that unusually warm weather in January led to a pick-up in home sales in February. But he said he expects home sales to decline in March and April. "The trend is clearly downward," and the pace of home price gains will continue to slow, he said. The NAR report shows that existing single-family home sales increased by 4.7% in February and the median single-family price was up 11.6% from that of a year ago. Single-family price appreciation peaked at a 16.4% annual rate last September. Meanwhile, existing condo and co-op sales jumped 8.8% in February as prices rose at a 3.5% annual rate.

Standard & Poor's has announced that it is joining forces with MacroMarkets and Fiserv to publish the S&P/Case-Shiller Metro Area Home Price Indices.The indices, scheduled to launch in the second quarter, will include 10 individual metropolitan area indices and a weighted composite index of home prices, S&P said. The Chicago Mercantile Exchange will list futures and options contracts on the indices. The foundation of the new, tradable indices are the Fiserv Case-Shiller Indexes produced commercially by Case Shiller Weiss Inc. since 1991. (Fiserv bought CSW in 2002 to form Fiserv CSW.) "For the vast majority of Americans, their home is their largest and most valuable asset, and in a period of rising housing prices and increased concerns about a possible housing bubble, reliable information on their biggest asset is extremely important," said David Blitzer, managing director and chairman of S&P's Index Committee. The companies can be found online at http://www.standardandpoors.com, http://www.macromarkets.com, http://www.fiserv.com, and http://www.cme.com.

It's a buyer's market, according to the National Association of Exclusive Buyer Agents, but sellers who have used their homes like ATM machines are going to be tough to negotiate with, particularly on price.Sellers who are overextended need to sell their properties at the highest possible price to pay off their bills, said NAEBA president Tom Early. "Buyers need to make sure they are just buying the seller's house, not the seller's debts too," he warned. Mr. Early noted that buyers' agents are obligated to negotiate the price down to a realistic level, whereas a seller's agent is obligated to get the seller's price even if it is too high.

Metrocities Mortgage LLC, a residential mortgage lender based in Walnut Creek, Calif., and Keller Williams Realty International, Austin, Texas, have announced the formation of Western Security Mortgage, a joint venture that will serve Contra Costa, Alameda, Solano, and neighboring California counties.Western Security Mortgage's services will be offered at Keller Williams Realty's three partnering offices of Walnut Creek, Danville, and Castro Valley, the companies said. Beverly Steiner, operating partner at the three offices and Keller Williams Realty's regional director in Northern California and Hawaii, said the venture will offer a wide selection of traditional and innovative loan programs, including interest-only, stated income/stated asset, and vacation/ investment home financing. The companies can be found online at www.metrocitiesmtg.com, http://www.kw.com, and http://www.westernsecuritymtg.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 574.4 to 565.0 on a seasonally adjusted basis during the week ended March 17, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 1.6% on the week and were down 13.8% from the level recorded a year earlier. The Purchase Index fell from 403.0 to 393.6 on a seasonally adjusted basis, while the Refinance Index declined from 1583.6 to 1574.5. The four-week moving average for the Purchase Index fell from 401.9 to 401.5, and the comparable average for the Refinance Index fell from 1593.4 to 1588.8. Refinancings represented 38.1% of total applications, up from 37.7% 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 decreased from 6.42% to 6.31%, and points (including the origination fee) fell from 1.14 to 1.13 for loans with 80% loan-to-value ratios, the association reported.

The Federal Reserve Bank of Boston is forecasting a modest decline in housing construction and a flattening of house prices in New England, but "we could be wrong," the bank's president says.The residential housing sector is one of the "greatest areas of uncertainty" in forecasting economic activity, president Cathy Minehan told a Realtors conference. The Fed bank president warned that house prices could actually decline and rising interest rates could impede consumer spending more than expected. "Thus, changes in the residential real estate present a source of downside risk to growth," she said. "I should also note that in recent times residential real estate markets have often outperformed expectations." The Boston Fed can be found online at http://www.bos.frb.org.

TRAC Financial Group, Huntington Beach, Calif., has announced a joint venture marketing agreement between its subsidiary Segway Financial Inc. and TRAC Mortgage Inc., a previously unaffiliated mortgage broker based in La Verne, Calif.Alex Baiseri, president of TRAC Mortgage, said the company has been targeting the Hispanic community in La Verne and nearby cities. The marketing pact will enable it to expand its services to other communities in California, while still emphasizing the Hispanic population, he said. "Our goal is to expand our business to include not only residential mortgage loans, but also commercial, construction, and business loans to the community at large," Mr. Baiseri said. TRAC Financial said it "intends to actively pursue acquisition and merger candidates, consisting of mortgage brokers/bankers that are structured and operated to perform satisfactorily in any mortgage climate."

MortgageBrokers.com Inc., Toronto, has announced the signing of a letter of intent to acquire a privately held, New Jersey-based mortgage broker and banker.The terms of the proposed transaction were not disclosed. The unnamed company holds licenses in seven states, MortgageBrokers.com said. "This proposed acquisition will provide MortgageBrokers.com with a crucial point of entry in the lucrative $3.8 trillion U.S. mortgage market," said Alex Haditaghi, the company's chief executive officer. "With an established footprint on the East Coast, this acquisition, once completed, could potentially bring $400 million in mortgage origination volume and $6.2 million in gross revenues to MortgageBrokers.com." The company can be found on the Web at http://www.mortgagebrokers.com.

Rep. Spencer Bachus, R-Ala., says he is trying to find a consensus on predatory-lending legislation by using a North Carolina law as a model, and sources indicate that the high-ranking House Financial Services Committee member wants to hold a mark-up this spring."A bipartisan group of congressional members are working with consumer and industry groups in an attempt to fashion legislation patterned after North Carolina's law," Rep. Bachus said. "If a consensus can be reached, a mark-up will be held." As chairman of the House Financial Services financial institutions subcommittee, Rep. Bachus will have to overcome a strong divide between industry and consumer groups. Consumer groups and Democrats generally support the North Carolina predatory-lending law, which was the first of its kind in 1998 when it was passed by the state legislature. Lenders support a comprehensive predatory-lending bill, sponsored by Reps. Bob Ney, R-Ohio, and Paul Kanjorski, D-Pa., which would create a national subprime lending standard and pre-empt state and local predatory-lending laws. But their support for this bill has not resulted in any legislative action.

Eighteen classes from four Long Beach Mortgage Loan Trust transactions and one Long Beach Home Equity Loan Trust deal have been downgraded by Fitch Ratings and seven classes from four other deals have been placed on Rating Watch Negative.Fitch also affirmed the rating on 112 classes from 21 Long Beach transactions. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement levels and loss expectations. All the mortgages in the various transactions -- consisting of fixed- and adjustable-rate subprime loans -- were either originated or acquired by Long Beach Mortgage Co. Fitch can be found online at http://www.fitchratings.com.

CorpHQ Inc., Redondo Beach, Calif., has announced the acquisition by mortgage industry veteran Jeff Hoagland of a 50% ownership interest in CorpHQ's portfolio company, South Bay Financial Solutions.Mr. Hoagland, who has experience in both retail and wholesale lending, will also serve on the South Bay board of directors. CorpHQ said South Bay provides pre-foreclosure programs as well as traditional mortgages to homeowners in Southern California. CorpHQ can be found on the Web at http://www.corphq.com.