Originations

Roark Capital Group, an Atlanta-based private equity firm, has announced the acquisition of a majority stake in Ace Mortgage Funding, an Indianapolis-based retail mortgage broker, for an undisclosed amount.Richard Hall and Robert Gregory will continue to head the management team at Ace, which offers primarily debt consolidation loans. Ace is Roark's second investment in a financial services firm, and the third acquisition for its $413 million fund raised in March, Roark reported. The companies can be found on the Web at http://www.roarkcapital.com and http://www.acerefi.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 656.7 to 619.3 on a seasonally adjusted basis during the week ended Dec. 9, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 8.1% on the week and were down 11.0% from the level recorded a year earlier. The Purchase Index fell from 495.1 to 477.9 on a seasonally adjusted basis, while the Refinance Index declined from 1596.4 to 1441.8. The four-week moving average for the Purchase Index was unchanged, at 480.4, and the comparable average for the Refinance Index fell from 1591.8 to 1526.7. Refinancings represented 40.2% of total applications, down from 41.0% the previous week, while adjustable-rate mortgages accounted for 33.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.32% to 6.28%, and points (including the origination fee) decreased from 1.30 to 1.24 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Class M-3 of NovaStar Mortgage Funding Trust series 2001-1 has been placed under review for possible downgrade by Moody's Investors Service.Moody's also placed six classes from three NovaStar deals under review for possible upgrade. The negative watchlist placement was attributed to low credit enhancement levels given the projected losses on the underlying pools. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," the rating agency said. The transactions consist of subprime first-lien adjustable- and fixed-rate loans originated and serviced by NovaStar Mortgage Inc.

Delinquencies on commercial mortgage-backed securities went down 0.05% in November, according to a Fitch Ratings loan delinquency index that registered a reading of 0.88% for the month."While cured loans, liquidated loans, and the addition of new deals contributed 18 basis points to the overall decline in CMBS loan delinquencies this month, offsetting the decline is the addition of newly delinquent loans totaling 13 bps, almost half attributable to Katrina," said Patty Bach, a Fitch senior director. "Therefore, the net impact on the index attributable to changes in delinquent loan status (cured and new delinquent loans) is a net increase of 2 bps." A total of $180.5 million in Katrina-affected loans were 60 days delinquent in November, 70.2% of which were on multifamily properties. Retail properties represented 16.6% of the Katrina-affected delinquencies, followed by lodging at 7.4%, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

The challenge to affordable housing today is long-term affordability and the connection of housing with financial education and community development, according to a speaker at the 32nd New York Housing Conference and National Housing Conference annual awards luncheon.Event honoree Denise Notice-Scott, managing director of LISC New York City and vice president of New York Equity Fund, made the comments to over 1,500 representatives of the affordable housing industry. Organized to pay tribute to women in housing development, the conference focused on, among other issues, the importance of preserving an ever shrinking affordable housing stock and the availability of AH investment funds due to ever-increasing costs. Especially in expensive markets like New York, the problem is not just a matter of money, Ms. Notice-Scott said. "It's a matter of what policies will help to sort of shift the movement away from this whole cost factor," she said. "If we cannot contain the cost -- the cost of building houses, the cost of land, and the cost of living in the city -- many of the people we have built housing for won't be able to stay here."

Wall Street economists are forecasting a 15.3% drop in new-home sales in 2006 and a 5.6% decline in existing-home sales, according to a survey by The Bond Market Association."The housing sector is expected to cool from its blockbuster pace but still register solid gains in a higher interest rate environment," the TBMA survey says. Members of TBMA's economic advisory committee expect new single-family sales to drop from a record 1.3 million this year to 1.1 million in 2006. They see resales declining from a record 7.1 million to 6.7 million next year. On the other hand, the National Association of Realtors is forecasting a 4.8% drop in new-home sales and a 3.7% drop in resales in 2006. "The slowdown amounts to a tapping of the brakes on a hot market," NAR chief economist David Lereah said. TBMA and NAR forecasts have the 30-year mortgage rate reaching 6.6% in the second half of 2006. However, the NAR projects that gross domestic product will grow by 4.1% in 2006, while the TBMA economists are predicting 3.6% GDP growth.

First American Title Insurance Co., Santa Ana, Calif., has announced an agreement to acquire the privately held TransContinental Title Co., Clearwater, Fla., for an undisclosed amount.TransContinental, a licensed title insurer in 36 states, is headed by chief executive officer William Baumgart, the sole shareholder in the company. It will continue to operate under its current name and management structure. "This acquisition will increase First American's exposure among mortgage originators through a well-recognized and highly respected brand," said James J. Dufficy, executive director of First American Title's National Lenders Advantage Division. "TransContinental has a strong management team and a progressive approach to title and settlement services that parallels First American's philosophy." The companies can be found online at http://www.firstam.com and http://www.tctitle.com.

Two certificates previously issued by Chase Funding Loan Acquisition Trust, series 2001-C1, have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are classes IM-1 and IM-2. The rating actions were taken because credit enhancement levels may be low given the projected losses on the underlying pools, Moody's said. The collateral has taken losses that have caused a gradual erosion of the overcollateralization. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans that have multiple originators.

Eight classes of certificates issued by GE Capital Mortgage Services Inc. have been placed under review for possible downgrade by Moody's Investors Service.The affected securities are: series 1997-HE3, classes B-1 and B-2; series 1997-HE4, classes B-1 and B-2; series 1998-HE1, classes B-1 and B-2; and series 1998-HE2, classes B-2 and B-3. The watchlist placement was attributed to recent losses and diminishing credit enhancement levels relative to projected losses on the underlying pools, Moody's said. The deals are backed primarily by fixed-rate, first- and second-lien subprime residential mortgage loans. The rating agency can be found online at http://www.moodys.com.

Three classes of DLJ Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2000-CKP1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class B-5, from B3 to Caa2; class B-6, from Caa1 to Caa3; and class B-7, from Caa3 to C. In addition, Moody's upgraded four classes and affirmed the ratings on six other classes in the deal. The downgrades were attributed to realized and expected losses from five specially serviced loans. The certificates are collateralized by 211 mortgage loans ranging in size from less than 1.0% to 7.6% of the pool, which consists of three shadow-rated loans representing 13.9% of the pool and a conduit component representing 86.1%, the rating agency reported. The pool collateral is a mix of retail (28.2%), office (28.0%), multifamily (19.2%), U.S. Government securities (14.9%), and other property types located in 40 states and Washington, D.C.

Three classes of An Affiliate of Entertainment Properties Trust commercial mortgage pass-through certificates, series 2003-EPR, have been downgraded by Moody's Investors Service.The downgrades were as follows: class D, from A1 to A2; class E, from A3 to Baa2; and class F, from Baa1 to Baa3. Moody's also affirmed the ratings of four classes in the transaction. The downgrades were attributed chiefly to uncertainty surrounding "the pace and sustainability of recovery" to pre-Hurricane Katrina levels of the Louisiana movie theaters that partially collateralize the deal, and secondarily to poor box-office performance for AMC and Loews, which operate 12 of the 15 theaters. The principal asset of the trust is a mortgage loan secured by the 15 standalone theaters in 10 states. AMC's and Loews' outlooks were changed from stable to negative by Moody's on Sept. 21 due to poor theater attendance for 2005. The rating agency can be found online at http://www.moodys.com.

SouthStar Funding, an Atlanta-based wholesale lender, has introduced a feature that simplifies its payment-option adjustable-rate mortgage by offering fixed minimum monthly payments for up to five years.The 5 Year Fixed Choice Option ARM offers the fixed payment based on an introductory rate as low as 2.99%, nearly eliminating required payment increases typical of option ARMs, SouthStar said. "Due to the potential minimum payment increases, most option ARM products can be confusing to borrowers and difficult for brokers to fully explain," said Mike Fierman, SouthStar's executive vice president and national production manager. "Providing a fixed minimum payment for the first five years simplifies the product for brokers and borrowers, and decreasing the negative amortization cap greatly reduces the risks associated with negative amortization and minimum payments." The company can be found online at http://www.southstar.com.

Housing affordability in California was unchanged in October from 15% in September, although it was four percentage points lower than the 19% level recorded a year earlier, according to the California Association of Realtors.The Housing Affordability Index indicates the percentage of households that can afford to buy a median-priced home in California, which cost $538,770 in October. The minimum household income needed to buy a median-priced home was $128,480, up from $106,490 a year earlier, CAR reported. (The figures are based on an average effective mortgage rate of 6.03%, assuming a 20% downpayment.) CAR can be found on the Web at http://www.car.org.

A coalition of some of the country's largest financial institutions have joined Los Angeles-based affordable housing lender Century Housing to provide up to $100 million of affordable construction and permanent financing through The Century Community Lending Co.The partners -- Bank of America, EastWest Bank, JP Morgan Chase, Merrill Lynch CDC, and Washington Mutual -- have pledged an initial $50 million fund. Earmarked for the Los Angeles neighborhoods, the initial investment is expected to generate more than 1,000 homes that are affordable to working families, "as it is recycled during the next few years," said G. Allan Kingston, Century's president and chief executive officer. The program is modeled on the success of a New York City affordable housing lender, The Community Preservation Corp. "We are offering smaller developers and property owners an opportunity to reverse neighborhood blight, rehabilitate existing buildings, or acquire new properties by providing the financing that is not usually available to these particular borrowers, while preserving neighborhood character and allowing smaller developers to fund rehabilitation projects," Mr. Kingston said.

CalEast Industrial Investors is acquiring Chicago-based CenterPoint Properties Trust, an industrial real estate investment trust, for a total consideration of about $3.4 billion.CalEast is a Columbus, Ohio-based investor in warehouse and logistics properties backed by the California Public Employees' Retirement System and LaSalle Investment Management. CalEast is paying $50 in cash for each CenterPoint share, which CenterPoint said represents a 13.1% premium over its closing share price over the past three months. The acquisition price also includes the assumption of CenterPoint debt and preferred stock. CalEast and CenterPoint have engaged in an industrial joint venture since 1999. "We believe that CenterPoint is very well positioned to capitalize on the continuing modernization of the global supply chain," said Mike McCook, senior investment officer for real estate at CalPERS. The companies can be found online at http://www.caleast.com and http://www.centerpoint-prop.com.

Sixty-five metropolitan areas representing 38% of the U.S. housing market are "extremely overvalued" and at risk for price declines, according to an analysis by National City Corp., Cleveland, and Global Insight Inc., Waltham, Mass.The quarterly Housing Valuation Analysis, which looked at the top 299 U.S. real estate markets, found that the number of overvalued markets actually declined from 67 in the second quarter, although the market percentage rose. "While the incidence of overvaluation clearly increased, we are beginning to see more diversity among metro areas," said National City chief economist Richard DeKaser. "Not all are moving toward loftier valuations, as was the case during the 2003-2004 period. Whether the most extremely overvalued markets will have an orderly price correction to more normal, historic levels remains to be seen." More information on the analysis can be found online at http://www.globalinsight.com/housingindex or http://www.nationalcity.com/economics.

New York-based iStar Financial Inc. has announced that it will sell $250 million of fixed-rate notes and $225 million of floating-rate notes in an underwritten public offering of unsecured senior notes.The 5.80% fixed-rate notes, due 2011, will be sold at 99.900% of their principal amount to yield 5.824%. The floating-rate notes, due 2009, will bear interest at 0.55% above the three-month London interbank offered rate. The joint book-running managers for the offering are Merrill Lynch & Co. and UBS Investment Bank. The commercial real estate finance company can be found online at http://www.istarfinancial.com.

Two classes of COMM 2003-FL9 commercial mortgage pass-through certificates have been downgraded by Moody's Investors Service.Class J was downgraded from Baa2 to Ba1, and class K was downgraded from Baa to Ba2. Moody's also upgraded two classes in the transaction and affirmed the ratings of five other classes. The certificates are collateralized by one whole loan and one senior participation interest. The downgrades were attributed to the poorer performance of the Avenue at Tower City Loan, which is secured by a three-level urban retail center in Cleveland's Union Terminal Station. Occupancy as of September 2005 was approximately 72.5%, compared with 82.2% at the last Moody's review in May and 81.7% at securitization. The rating agency can be found online at http://www.moodys.com.

New Century Financial Corp., Irvine, Calif., a real estate investment trust, is providing additional relief to borrowers affected by the recent hurricanes, due to the inaccessibility of some affected areas and a delay in the assessment and recovery process.The company has offered an additional 90-day payment deferral period, which follows the initial 90-day period immediately following Hurricane Katrina, for borrowers New Century has been unable to contact or who are in need of additional time to get themselves re-established. The company has also offered no late fees, no adverse credit reporting, suspension of legal actions (including cessation of foreclosure actions), and absorption of property inspection fees and costs. "It is encouraging that the vast majority of New Century borrowers have been able to keep current on their payments, and have maintained their payment schedule even though we offered them the opportunity to defer," said Kevin Cloyd, executive vice president, secondary marketing and servicing of New Century. The company can be found online at http://www.ncen.com.

HomeBanc Mortgage Corp., Atlanta, will introduce a base-salary-plus-commission compensation plan next year that is rare in the mortgage industry, the company has announced.Most companies pay mortgage bankers on a 100% commission plan based on monthly loan volume, but HomeBanc's chairman and chief executive says the new plan should increase the pool of candidates, especially new college graduates, who would consider making a career at the company. "HomeBanc is known as one of the best places to work in America, but right now there is a large pool of very talented people who for one reason or another will not consider a 100% commission job," said Patrick S. Flood. "We believe this new plan should change that and should increase our opportunities to recruit top people into our field who can help us build HomeBanc and become our next generation of leaders. The company can be found online at http://www.homebanc.com.