Originations

After months of negotiation, subprime giant Ameriquest Mortgage has agreed to pay $325 million to settle claims with 49 states that the company engaged in abusive lending practices.On Monday Ameriquest's parent company, ACC Capital Holdings of Orange, Calif., promised to change some of its business practices, but without acknowledging any wrongdoing. The settlement covers every state but Virginia because, as one company spokesman put it, "Ameriquest doesn't lend in that state." (Its wholesale affiliate, Argent Mortgage, is not a party to the settlement.) Roughly $295 million of the money will be used to compensate borrowers who feel they were wronged by Ameriquest, with the balance going to repay the states for their legal costs. Attorney Kelly Dermody, who represents Ameriquest borrowers, said the size of the settlement "reflects the enormous scope of wrongdoing underlying Ameriquest's lending practices." Borrowers who lodged complaints against the company and its other retail brands must now decide whether to accept the settlement money or pursue claims through civil court. According to the Quarterly Data Report, Ameriquest and Argent funded about $70 billion in subprime loans combined last year, ranking first among all players in that niche. The privately held ACC took a $325 million hit to earnings last year to cover the settlement. The lender disclosed in a public filing that state attorneys general were concerned about these issues: the "appropriateness" of discount points charged prior to February 2003; the accuracy of appraisal valuations; stated income loans; "oral" statements made to borrowers regarding loan terms; and its policies on funding Native American reservation properties.

Ashford Hospitality Trust, a real estate investment trust based in Dallas, has priced a follow-on public offering of 10.6 million shares of common stock at $11.15 per share.Merrill Lynch & Co. and Morgan Stanley & Co. acted as the book-running managers of the offering. The underwriters were granted an option to buy up to approximately 1.51 million additional shares to cover any overallotments. The REIT can be found online at http://www.ahtreit.com.

Zacks.com, the online unit of Zacks Investment Research Inc., Chicago, has identified four stocks, including Wells Fargo & Co., on its Brokerage Buy List portfolio.The portfolio consists of stocks that currently appear on the core recommended lists of at least three of the top 14 brokerage firms, Zacks said. The company noted that Wells Fargo's mortgage earnings were lower in the fourth quarter than they were a year earlier, but that most of its other businesses recorded double-digit earnings growth. "The company is a large-cap stock to own for the long term, according to three of the top brokerages," Zacks said. The other three stocks cited by Zacks from its Brokerage Buy List are Apache Corp., CVS Corp., and PepsiCo. The company can be found online at http://www.zacks.com.

The national office market posted a strong fourth quarter as absorption totaled 25.7 million square feet, up from 19.4 million square feet a year earlier, according to Colliers International, a Boston-based commercial real estate manager.For all of last year, absorption totaled 97.5 million square feet. Office vacancies totaled 13.8% in the fourth quarter, down from 14.1% in the third quarter and 15.5% in the fourth quarter of 2004, Colliers reported. "The latest office market indicators show the pendulum continues to swing away from tenants and toward landlords as we enter 2006," said Ross Moore, vice president and director of market and economic research at Colliers. "Tenants have increasingly fewer choices, and the supply pipeline continues to be largely muted -- foreshadowing a further tightening in the marketplace during the coming quarters." The company can be found online at http://www.colliers.com.

Nonconforming loan giant Aegis Mortgage Corp., Houston, has closed its correspondent lending division, industry officials have told MortgageWire.Although the company's spokesperson did not return telephone calls, an official at the lender's headquarters confirmed that the division bought its last loan in December. "It's been shut down," the official said. Aegis, which also funds mortgages through retail and wholesale means, ranks 18th nationwide among subprime funders, according to the Quarterly Data Report, an affiliate of MW. (For the full story, see the Jan. 23 issue of National Mortgage News.)

Gladstone Commercial Corp., a real estate investment trust based in McLean, Va., has announced the pricing of 1.0 million shares of 7.75% cumulative redeemable preferred stock at a $25 liquidation preference per share.The industrial and commercial REIT said the underwriters of the series A preferred stock have been granted an option to buy up to 150,000 additional shares to cover any overallotments. Ferris, Baker Watts Inc. was the lead underwriter of the offering. The REIT can be found on the Web at http://www.gladstonecommercial.com.

Mack-Cali Realty LP, Cranford, N.J., has completed the sale of $200 million of senior unsecured notes in two series, according to Mack-Cali Realty Corp.The first, $100 million of six-year notes bearing 5.25% interest and due Jan. 15, 2012, were priced to yield 5.48%. The second, $100 million of 10-year notes bearing 5.80% interest, are a reopening of a previous issue. They were priced to yield 5.65%. J.P. Morgan served as the underwriter of both series. Mack-Cali can be found online at http://www.mack-cali.com.

Metrocities Mortgage LLC, Sherman Oaks, Calif., and Keller Williams Realty Tri-Valley have announced the formation of Metro East Bay Mortgage, a joint venture based in Pleasanton, Calif., that will serve Contra Costa and Alameda counties.The affiliated business arrangement will offer one-stop shopping for real estate services and mortgage financing, including interest-only, stated-income, and vacation/investment loans, the companies said. Keller Williams Realty Tri-Valley is a franchise operation of Keller Williams Realty International, Austin, Texas. Metrocities can be found online at http://www.metrocitiesmtg.com, and Keller Williams can be found at http://www.kw.com.

The average 30-year fixed mortgage rate fell from 6.15% to 6.10% over the seven-day period ended Jan. 19, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.71% to 5.67%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages decreased from 5.76% to 5.75%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.15% to 5.18%. Fees and points averaged 0.5 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "Over the last six weeks, long-term mortgage rates have dropped nearly a quarter of a percent in the face of little or no inflationary pressures," said Frank Nothaft, Freddie Mac's chief economist. "Our outlook for the housing industry continues to be that mortgage rates will remain affordable for the rest of the year at least, keeping the industry alive and well into the foreseeable future." A year ago, the average 30-year and 15-year fixed rates were 5.67% and 5.15%, respectively, and the average one-year ARM rate was 4.11%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Washington Mutual, Seattle, has reported that it earned just $47 million off its residential lending business in the fourth quarter, a 71% decline from the level of a year earlier.Compared with those of the third quarter, home lending profits fell by 75%. WaMu chairman and chief executive Kerry Killinger attributed the earnings dropoff to a "challenging environment" in residential finance, including increased hedging costs and a flat yield curve. The thrift reports its subprime profits separately from home lending through its "commercial group." That division, which includes nonconforming lender Long Beach Mortgage, earned $164 million in the fourth quarter, a 21% gain from that of a year earlier, but a 24% decline from earnings in the third quarter. Even though its mortgage business suffered, overall earnings at the nation's largest thrift -- and third-largest mortgage lender -- rose 12% to $865 million. WaMu funded $50.4 billion in home mortgages during the quarter, including $11.7 billion in payment-option adjustable-rate mortgages. Its production volume was just about flat compared with that of the same quarter a year ago. In an analyst note, Sandler O'Neill -- which has a "hold" rating on the company -- described the mortgage business as "increasingly competitive in both the prime and subprime segments."

In yet another sign that the residential market could be cooling, single-family housing starts fell 12% in December to their lowest level since March.According to government figures, single-family starts totaled 1.577 million units during the month, compared with 1.798 million units in November. Compared with the level of a year earlier, starts fell 8%. National Association of Home Builders president David Pressly said "housing markets across the country have cooled, as predicted, and builders are aware that some slowing in demand is inevitable following the record-breaking sales for the past three years." Overall housing starts (which include multifamily) fell by 9% during the month. Greenwich Capital analyst Steve Stanley said "it is a little early to eulogize the housing sector," blaming some of the falloff in activity on bad weather conditions in the Northeast and the Midwest.

Equity One Inc., a real estate investment trust based in North Miami Beach, Fla., has announced the closing of a $275 million, three-year, unsecured revolving credit facility.The new facility replaces the shopping center REIT's $340 million unsecured revolving facility and has an initial outstanding balance of $137.5 million, Equity One said. The initial price of borrowings is set at 80 basis points above the London interbank offered rate. Wells Fargo Bank was the administrative agent and sole lead arranger of the facility. The REIT can be found online at http://www.equityone.net.

HSBC Bank USA NA, New York, has been approved by Fannie Mae as a Delegated Underwriting and Servicing lender, according to the bank.HSBC Bank USA, the chief subsidiary of the HSBC USA Inc. bank holding company, said the approval will enable it to expand its offering of multifamily financing programs. The bank's involvement in the DUS program will be overseen by Glenn Grimaldi, senior vice president and national production manager of the bank's commercial real estate division. The bank can be found on the Web at http://us.hsbc.com.

Oklahoma City-based a la mode has announced the formation of the Appraisal Advocacy Coalition, a nonprofit group dedicated to protecting and supporting residential appraisers.The announcement came at a la mode's Winter Convention in Las Vegas, and the company's founder and chairman, Dave Biggers, is donating "significant money and manpower to jump-start the new effort," the company said. However, the Washington, D.C.-based coalition will be separate from a la mode, a developer of software and online services for the real estate and mortgage industries. Ben Harris, a la mode's director of public affairs, said the coalition has been formed "to ensure that the single most important facet of the American economy doesn't fall prey to predatory lenders and shady 'appraisal alternatives'." The coalition can be found online at http://www.appraisaladvocacy.org, and a la mode can be found at http://www.alamode.com.

The risk of price declines over the next two years has risen in the nation's 50 largest housing markets, but a "soft landing" is likely, according to PMI Mortgage Insurance Co., Walnut Creek, Calif.The median risk index value in the PMI U.S. Market Risk Index rose 25% in the fourth quarter, increasing from 134 to 168, the company reported. This means the probability of experiencing a home price decline in the next two years has risen from 13.4% to 16.8% in the 50 largest housing markets. "We expected what we are seeing in the third-quarter data, which is a moderating of appreciation that, over time, is likely to bring prices back into line with the economic fundamentals that support them, particularly incomes," said Mark Milner, chief risk officer of PMI Mortgage Insurance. Mr. Milner said he believes that a gradual slowing of appreciation will contribute to a soft landing as long as the U.S. and regional economies stay robust. According to the index, there are now 11 markets with a greater than 50% chance of price declines over two years, up from five in the third quarter. PMI can be found online at http://www.pmigroup.com.

Over 40% of first-time homebuyers used no-downpayment loans in 2005, compared with 18% for repeat buyers, according to an annual survey of buyers and sellers by the National Association of Realtors.The 2005 survey found that 43% of first-time buyers received 100% financing, up from 39% in 2004 and 28% in 2003, when the NAR first asked a question about no-downpayment loans. Over the past three years, the NAR survey found that the percentage of first-time homebuyers remained constant at 40%. Of the first-timers that made downpayments, 23% received a gift from a friend or a relative. The NAR also reported that the median age of entry-level buyers is 32 years and their median income is $57,200. The NAR can be found online at http://www.realtor.org.

The Market Composite Index, an overall measure of mortgage applications, rose from 600.1 to 613.3 on a seasonally adjusted basis during the week ended Jan. 13, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 31.4% on the week but were down 10.9% from the level recorded a year earlier. The Purchase Index fell from 457.4 to 443.9 on a seasonally adjusted basis, while the Refinance Index climbed from 1497.5 to 1645.2. The four-week moving average for the Purchase Index fell from 440.4 to 438.1, and the comparable average for the Refinance Index rose from 1384.5 to 1441.3. Refinancings represented 44.0% of total applications, up from 42.2% the previous week, while adjustable-rate mortgages accounted for 30.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.08% to 6.07%, and points (including the origination fee) remained at 1.23 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Originations of VA-guaranteed loans declined by 44% in fiscal year 2005 to the lowest level in 20 years, according to the Department of Veterans Affairs.Lenders made only 165,854 single-family VA loans in fiscal 2005, compared with 335,788 loans in fiscal 2004. In dollar terms, loan volume fell from $44.1 billion in fiscal 2004 to $24.9 billion. "It was a bad year in terms of volume," Keith Pedigo, director of the VA loan guarantee program, told MortgageWire. The VA director attributed the dropoff to a dramatic reduction in refinancings, which also affected the rest of the mortgage industry. But he also noted that veterans are turning to subprime loan programs and nontraditional products such as interest-only and payment-option adjustable-rate mortgages. The VA has been waiting for Congress to pass legislation that would make improvements to its 5/1 hybrid ARM program. "If we had a more marketable hybrid ARM, we probably would have made more loans," Mr. Pedigo said.

CDS IndexCo LLC and Markit Group Ltd., both based in New York, have announced the launch of ABX.HE, a synthetic ABS index of U.S. home equity asset-backed securities.The index is a family of five subindices, each consisting of 20 credit default swaps related to U.S. subprime home equity securities. To qualify for inclusion in the index, an issuer must have rated bonds for each of the AAA, AA, A, BBB, and BBB-minus categories, the companies said. CDS IndexCo is a consortium of 16 investment banks licensed as market makers in the Dow Jones CDX indices, and Markit Group is a provider of independent mark-to-market pricing and valuations. The consortium consists of ABN Amro, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia. Markit Group can be found online at http://www.markit.com.

National Real Estate Information Services, Pittsburgh, has expanded its commercial services team and begun marketing its commercial services nationwide.The company provides title services, collateral valuation, and settlement services for both the commercial mortgage and the residential mortgage areas. "While we have always offered real estate information products to the commercial sector, it hasn't been a concentration," said Michael Forgas, president and chief operating officer of NREIS. "We've made a concerted effort to target the commercial lending community to bring to light the process efficiencies that true centralization brings." NREIS said it believes the move provides an avenue for growth and will help the company better respond to customer needs. The company can be found online at http://www.nreis.com.