Originations

General Electric Co., Fairfield, Conn., has announced that it will complete its total divestiture of Richmond, Va.-based Genworth Financial, the holding company it spun off to own its former life and mortgage insurance operations.In a secondary public offering, GE will sell 71 million shares of Genworth class A common stock in the offering. In addition, Genworth will repurchase 15 million shares of class B common stock from GE at the net price per share of the secondary offering. Afterward, GE will no longer own any shares of Genworth. Genworth will not receive any of the proceeds of the secondary offering. The repurchase will close simultaneously with and be contingent upon the completion of the secondary offering. The global coordinator and bookrunner for the offering is Merrill Lynch & Co. Other bookrunners are Citigroup, Goldman Sachs & Co., J.P. Morgan, and Morgan Stanley.

Sales of new single-family homes fell 5% in January despite unusually warm weather and favorable mortgages rates.The U.S. Census Bureau reported that new-home sales fell from a seasonally adjusted annual rate of 1.30 million in December to a 1.23 million rate in January. The December number was revised upward from 1.27 million. "We are down 5% from a really high level of home sales," said Freddie Mac chief economist Frank Nothaft, who predicts that strong economic growth in the first half will keep home sales at a high level. He is forecasting that sales of new and existing home will decline by only 4% from last year's record pace. Global Insight economist Patrick Newport said a drop in sales was a "bit of a surprise," since January was the warmest in 100 years. Looking at a three-month moving average, "demand for new homes is down and falling, though sales remain at historically high levels," Mr. Newport said. Global Insight is forecasting that the housing slowdown will be gradual and will take place over the next three to four years.

The refinancing share of loan applications fell to 38.2% for the week ending February 17, according to the Mortgage Bankers Association of America.Adjustable-rate mortgages also dipped as a percentage of all applications, to 29.1% from 29.6%. Overall, loan applications increased slightly for the week due to an increase in applications for home loan purchases. However, total home loan applications were down 20% compared to the same week a year earlier.

The average rate on 30-year, fixed rate mortgages was 6.26% for the week ending February 23, down two basis points from the previous week, according to Freddie Mac.Freddie Mac's weekly primary mortgage market survey also found that the average rate for 15-year FRMs was 5.89% with an average of 0.6 points, down from 5.91% a week earlier. The average for five-year, Treasury indexed hybrid adjustable-rate mortgages was 5.96%. One year Treasury-indexed ARMs averaged 5.32%, down four basis points from the previous week, with 0.7 points paid upfront. For the other loan types, average points were 0.6. "Tame core inflation figures and market confidence that the Fed will continue to keep inflation low kept mortgage rates in check this week," said Frank Nothaft, Freddie Mac's chief economist.

A.M. Best Co. said that net interest margins remained stable for the banking industry in the third quarter of last year.A.M. Best initiated analysis of the U.S. banking industry this year and now plans to issue a series of special reports and highlights regarding trends in the industry. A.M. Best said that the banking industry's net interest margin, at 3.50% in the third quarter of 2005, was down only one basis point from the second quarter. Banks have tried to offset higher funding costs from rises in short term rates by shifting to higher yielding assets, especially commercial real estate and construction loans, A.M. Best said.

The Mills Corporation, an Arlington, Va., retail real estate investment trust, is looking at a possible sale of the company as it contemplates some strategic alternatives.The REIT also is working on a restatement of its financial statements for the period 2000 through 2004 and reports that it does not expect to make a March 16 deadline for the filing of its annual report for the year ended December 31, 2005. The company expects to complete its restatement by April 1, 2006 and Mills is seeking an extension on that deadline from the lenders on its revolving credit facility. The REIT has also named Mark S. Ordan, who is on the board of Federal Realty Investment Trust, chief operating officer of Mills. The REIT also is looking at additional sources of finance to fund a development and expansion program. Mills has hired Goldman, Sachs & Co., and J.P. Morgan Securities to provide financial advice relating to its exploration of strategic alternatives.

MeriStar Hospitality, Bethesda, Md., is being acquired by an affiliate of The Blackstone Group in an approximately $2.6 billion transaction.The merger consideration includes $10.45 per common share of the hotel real estate investment trust and the same amount per operating partnership unit of MeriStar's operating partnership, the REIT reports. This represents a 20% premium over MeriStar's closing stock price on November 10, 2005, according to MeriStar. The transaction, which has been approved by the MeriStar board and is expected to close in the second quarter, means that yet another REIT will be moving away from the publicly traded arena to the private equity space. Paul Whetsell, MeriStar's chairman and CEO, said that the deal "represents attractive value" to MeriStar shareholders. A proposal for MeriStar to merge with Felcor Lodging a few years ago fell through. On Feb. 21, MeriStar common shares closed at $10.28.

The National Association of Hispanic Real Estate Professionals and the National Association of Mortgage Brokers have announced an alliance to promote the exchange of information, training, and services between their combined 41,000 members.The goal of the partnership is to give mortgage professionals the information and tools they need to better serve Hispanic homebuyers, the trade groups said. The organizations noted that the rapidly growing Hispanic consumer segment is becoming a "formidable force" in the housing market. They said they will share professional and consumer education programs that help members meet the needs of Hispanic homebuyers; work cooperatively to attract new members; seek to create a unified voice on legislative issues; and cross-promote events and services that expand the understanding of the Hispanic market. The organizations can be found online at http://www.nahrep.org and http://www.namb.org.

Class B of Soundview Home Equity Loan Trust series 2000-1 has been downgraded from BBB to BB-plus by Fitch Ratings.Fitch also affirmed the ratings on nine classes in two Soundview transactions. The downgrade was attributed to a deterioration in the relationship between credit enhancement and expected losses. The mortgage loans backing the deals consist of fixed- and adjustable-rate loans to subprime borrowers. The rating agency can be found online at http://www.fitchratings.com.

The Mortgage Industry Standards Maintenance Organization, a not-for-profit subsidiary of the Mortgage Bankers Association, has released its first data standard for the commercial/multifamily mortgage industry.The release of version 1.0 of the Commercial Servicing Transfer Standard is the first of many planned for the industry, MISMO said. It was chosen to be MISMO's first commercial standard "because it answers the industry's need for a standardized way to move large amounts of data and improve what is currently a labor-intensive process," the organization said. MISMO said its data standards will ultimately "reduce costs, streamline processes, improve accuracy, increase data transparency, and boost investor confidence in mortgages as an asset class." MISMO can be found online at http://www.mismo.org.

Magazine Acquisition has won a bidding war against Oriole Partnership for The Town and Country Trust, Baltimore, with an offer of $40.20 per common share and operating partnership unit of TCT, plus a payment of prorata dividends on TCT's shares/OPUs.Magazine Acquisition -- a joint venture between affiliates of Morgan Stanley RE, Onex RE, and Sawyer Realty Holdings -- was forced to hike its bid from its initial offer of $33.90 per TCT share/OPU, plus a prorata payment of dividends, after Oriole emerged as a rival. (Oriole is a joint venture between Essex Property Trust, UBS Wealth Management, North American Property Fund, and AEW Oriole Co-Investment.) TCT, a multifamily real estate investment trust, says it has entered into an amended merger agreement with Magazine Acquisition that has been approved by the TCT board of trustees. The board is recommending that shareholders vote in favor of the merger at a March 9 meeting. TCT can be found online at http://www.tctrust.com.

In the wake of the prime lending sector's refinance contraction, the nonprime sector has picked up and become more mainstream, accounting for 28% of total loan originations, according to a panel member at the Mortgage Bankers Association's National Mortgage Servicing Conference and Expo in Phoenix.Rick Glass, managing partner with R.T. Glass & Associates, made the comments at a panel called "Repositioning Non-Prime Servicing," where he and other sector executives shared their thoughts on key challenges and competitive strategies in this market. Michael Drawdy, senior vice president at Countrywide Financial Corp., said half of subprime ARMs will be due in the summer and over the next 14 months. "There will be some people who can't pay for an ARM change," Mr. Drawdy said. "That is why you must make sure there is a system in place for collections -- to make sure borrowers know their options." Panelists talked about repayment plans and ARM modifications aimed at helping borrowers stay in their homes. Over the next 12-24 months, there is a potential for severe delinquencies, they said.

Fannie Mae is working with lenders to develop a streamlined refinancing process for borrowers who want to bail out of adjustable-rate mortgages.Rising short-term interest rates and borrower awareness of the risks associated with interest-only and option-payment ARMs is creating the potential for a major shift to fixed-rate loans or safer hybrid ARMs, according to Fannie Mae executive vice president Tom Lund. "A lot of our largest partners are talking about trying to create a streamlined capability to take some of these ARM borrowers back into a fixed-rate or longer-term hybrids, maybe with an IO feature," Mr. Lund told a Morgan Stanley housing conference. "They see that as the next big trend." He noted that Fannie Mae might not be able to purchase some of the newly refinanced loans. But the secondary-market agency is working with its customers to try to make such refinancings easier for lenders and consumers. Fannie Mae can be found online at http://www.fanniemae.com.

New York-based iStar Financial Inc. has priced $1.0 billion of senior unsecured debt in two series of fixed-rate notes.The first series of notes, $500 million of 5.65% senior notes due 2011, was priced at 99.956 to yield 5.658%, iStar reported. The second, $500 million of 5.875% senior notes due 2016, was priced at 99.896 to yield 5.888%. J.P. Morgan, Lehman Brothers, and Wachovia Securities are the joint book-running managers of the offering. The commercial real estate finance company can be found online at http://www.istarfinancial.com.

In a bid to make investment in real estate investment trusts more attractive, especially to institutional capital, the National Association of Real Estate Investment Trusts has joined forced with index provider FTSE Group.The Washington-based trade group is transferring the management of its REIT-related indices to FTSE, which manages a number of global indices. At a news briefing in New York, Mark Makepeace, chief executive officer of the FTSE Group, said he expects the FTSE NAREIT US Real Estate Index Series to "provide unparalleled benchmarks spanning all sectors of the REIT industry" and to "foster the growth of tailored investment products" related to REITs. FTSE said it plans to maintain the continuity of the indices while "modernizing and providing additional facilities." Of 18 REIT indices that FTSE will maintain, 14 will be real-time, a feature that is expected to appeal to exchange-traded funds. Steven Wechsler, president and CEO of NAREIT, said he expects interest in the U.S.-style REIT model to grow as people worldwide look to invest in real estate on a liquid, securitized basis.

The average 30-year fixed mortgage rate rose from 6.24% to 6.28% over the seven-day period ended Feb. 16, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.83% to 5.91%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages increased from 5.89% to 5.95%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.34% to 5.36%. Fees and points averaged 0.5 of a point for fixed-rate mortgages and hybrid ARMs and 0.7 of a point for one-year ARMs. "So far this year, fixed-rate mortgages have risen only slightly," said Frank Nothaft, Freddie Mac's chief economist. "Long-term mortgage rates are only marginally higher than they were two months ago. Housing start figures in January came in at the highest level in over three decades, due in part to the combination of low rates and a warmer climate across the country." A year ago, the average 30-year and 15-year fixed rates were 5.62% and 5.14%, respectively, and the average one-year ARM rate was 4.15%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Single-family housing starts jumped 12.8% in January as warm weather sent the pace of construction up to a record level.The U.S. Census Bureau reported that single-family starts rebounded to a record seasonally adjusted annual rate of 1.82 million in January, up from a 1.61 million rate in December. December starts were revised upward by 36,000 units. "Once again it seems the death of the housing market has been greatly exaggerated," RBS Greenwich Capital chief economist Stephen Stanley said. However, he said he believes the housing market is "cooling" and housing activity will "slowly moderate, not collapse." Mr. Stanley said he expects home sales to slow more than starts because builders have such a tremendous backlog of orders. "Some of the big builders have begun to report higher cancellation rates and a slower pace of new orders, so the froth seems to be evaporating," he said. The Census Bureau's construction statistics can be found online at http://www.census.gov/const/www/index.html.

Total existing-home sales -- including condominiums and co-operatives -- set the third-highest pace on record in the fourth quarter, rising in 24 states from the levels recorded a year earlier, according to the National Association of Realtors.The seasonally adjusted annual resales rate was 6.90 million units in the fourth quarter, up 0.3% from 6.88 million in the fourth quarter of 2004. (The record high of 7.24 million units was set in the third quarter of 2005, the NAR reported.) The biggest year-over-year gains were recorded in Arkansas, where the resale rate was up 29.8%; Alaska, up 28.4%; and Louisiana, up 28.1%.

House prices posted double-digit gains in half of the covered metropolitan statistical areas in 2005, but "the overall pace of growth has cooled slightly," according to the National Association of Realtors.The NAR's fourth-quarter metro area home price report shows that 72 of 145 MSAs had double-digit annual increases in median existing-home prices, setting a new record. The previous record was 69 MSAs in the third quarter of 2004. The NAR also reported that the national median resale price stood at $213,000 in the fourth quarter, up 13.6% from $187,500 a year earlier. "Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers," NAR chief economist David Lereah said. "The good news is that the supply of homes on the market has been trending up, and we are entering a period of a more normal balance in supply and demand." The NAR can be found on the Web at http:/www./realtor.org.

The Market Composite Index, an overall measure of mortgage applications, fell from 619.3 to 574.1 on a seasonally adjusted basis during the week ended Feb. 10, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 4.4% on the week and were down 21.7% from the level recorded a year earlier. The Purchase Index fell from 425.1 to 391.7 on a seasonally adjusted basis, while the Refinance Index declined from 1751.0 to 1636.7. The four-week moving average for the Purchase Index fell from 444.6 to 431.6, and the comparable average for the Refinance Index fell from 1729.3 to 1727.2. Refinancings represented 41.2% of total applications, down from 42.1% the previous week, while adjustable-rate mortgages accounted for 29.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages remained at 6.25%, and points (including the origination fee) rose from 1.23 to 1.34 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.