Originations

Kimco Realty Corp., a New Hyde Park, N.Y.-based retail real estate investment trust, is acquiring Atlantic Realty Trust, a Maryland retail REIT that owns a single retail property.The merger consideration is $82.5 million in Kimco shares as well as the amount of Atlantic Realty's cash available on hand at the time of closing, Kimco said. The consideration is to be paid in Kimco common shares at their value on the day prior to the closing of the acquisition. Atlantic Realty was formed for the purpose of liquidating some assets and liabilities of Ramco-Gershenson Properties Trust, a Farmington Hills, Mich., retail REIT. Kimco can be found on the Web at http://www.kimcorealty.com.

Mortgage lenders and brokers added 8,000 full-time employees to their payrolls in October after completing a robust third quarter in which originations hit levels not seen in two years.The U.S. Bureau of Labor Statistics reported Friday that employment in the mortgage industry rose from 527,400 in September to 535,400 in October. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The November data will be released Jan. 6.) The number of people working in the mortgage industry has increased by more than 100,000 since January 2004. But it appears that the housing boom has reached a turning point, and additional hiring may end soon. The Mortgage Bankers Association's mortgage application index dropped from 713.5 in the last week of September to 635.5 for the week ended Nov. 18. Friday's employment report indicates that the U.S. economy generated 215,000 new jobs in November and the unemployment rate remained unchanged at 5.0%. The BLS can be found online at http://stats.bls.gov.

Countrywide Home Loans, Calabasas, Calif., the nation's largest mortgage banking firm, plans to close two "central processing units," cutting about 300 jobs in the process. The company labeled the moves as "strategic" but also cited a downturn in loan applications and what a spokesman called a "seasonal" decline in production. The CPUs that will be shuttered Jan. 3 are in Westlake Village, Calif. (200 jobs), and Sunrise, Fla. (100 jobs). The company said it will rely more on its 39 regional operations centers. Come January it will have just two CPUs, which are more national in scope. Lenders are starting to experience a decline in loan production, but executives say their biggest concern isn't volume but profit margins. They cite a flat yield curve as a key factor and the reluctance of some originators to raise their rates.

Three subordinate tranches from two subprime mortgage transactions issued by Metropolitan Asset Funding Inc. in 1999 and 2000 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 1999-B, class B-2, from Ba2 to B2, and class B-3, from B2 to Caa2; and series 2000-A, class M-2, from B3 to Caa2. The downgrades were attributed to the weaker-than-expected performance of the mortgage pools and the resulting erosion of credit support. "Specifically, the overcollateralization in the 1999-B deal is almost completely depleted and the class B-3 certificates are likely to experience losses in the near future," Moody's said. "In addition, the overcollateralization in the 2000-A deal has been fully exhausted, the class B-1 certificates have been fully written down, and the class M-2 certificates have realized losses." The pools are backed by first-lien fixed-rate subprime mortgage loans, and they include "a significant amount" of seller-financed loans and loans with small average balances, the rating agency reported. Moody's can be found online at http://www.moodys.com.

First Union Real Estate Equity and Mortgage Investments, Boston, has changed its name to Winthrop Realty Trust, and its operating partnership, First Union REIT LP, has changed its name to WRT Realty LP.Michael L. Ashner, Winthrop's chairman and chief executive officer, said the name change "enables us to more closely identify with our management team and the investment philosophy we have developed at Winthrop over the past nine years and eliminate the continuing confusion engendered by the similarity between the trust's former name and that of the former First Union bank." Winthrop, a real estate investment trust, will continue to trade on the New York Stock Exchange under the ticker symbol FUR.

First Lenders Data Inc., a provider of bundled mortgage settlement services based in Austin, Texas, has announced an alliance with Houston-based Stewart Mortgage Information.Under the alliance, lenders will have access to SMI's flood, title, closing, recording, and satisfaction services through FLDI's FirstClose vendor management platform. "This alliance offers lenders an expanded number of financial services that can help them stay competitive in the wake of the refinance boom," said Dennis Conway, SMI's national account manager. "Through cost savings and comprehensive vendor management, our participating lenders can use the services provided by FLDI to improve the way they do business and gain a competitive edge." The companies can be found online at http://www.fldi.com and http://www.smi.stewart.com.

Construction loans could be making it to the capital markets as early as next year, according to participants at a Realshare structured finance conference in New York.Lisa Pendergast, managing director of CMBS Research at RBS Greenwich Capital, said she knows of at least three Wall Street firms that are "setting up for construction loans." However, "it will be a long time before a traditional conduit lender" gets into this sort of securitization, probably after a market is established, she said. Kim Diamond, a Standard & Poor's managing director, said that "the thought of securitizing construction loans gives me heartburn," considering that it goes against the concept of an asset's being backed by an income-producing property. She believes that there might be interest in this sort of securitization from generalist investors in asset-backed securities who are not aware of the associated risks. Margie Custis, managing director of capital markets at Principal Global Investors, sees securitization of construction loans as a concept that works. All it needs is time for people to figure it out, she said.

The Eleventh Federal Home Loan District Cost of Funds Index has broken the 3% barrier, reaching a four-year high.According to the Federal Home Loan Bank of San Francisco, the index for October stood at 3.074%, up 10 basis points from 2.972% in September. It was the first time COFI has exceeded 3% since December 2001, when it also stood at 3.074%. COFI is a weighted average of the cost of the money that thrifts in California, Arizona, and Nevada use to originate mortgage loans. The FHLBank of San Francisco can be found on the Web at http://www.fhlbsf.com.

House price appreciation slowed in the third quarter to an 11.4% annual rate, down from a 14.2% annual rate in the second quarter, according to the Office of Federal Housing Enterprise Oversight.OFHEO chief economist Patrick Lawler pointed out that a number of the hottest housing markets experienced a deceleration in prices in the third quarter, when the 30-year mortgage rate was below 6%. In October, the 30-year rate moved above 6%, which could be a drag on prices. "To the extent that those increases may have affected prices, those effects will be evident in future quarters," Mr. Lawler said. Average price appreciation was 2.86% in the third quarter, compared with 3.50% in the second quarter.

The average 30-year fixed mortgage rate fell from 6.28% to 6.26% over the seven-day period ended Dec. 1, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate was unchanged at 5.81%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.75% to 5.76%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.14% to 5.16%. Fees and points averaged 0.5 of a point for fixed-rate mortgages, 0.6 of a point for hybrid ARMs, and 0.8 of a point for one-year ARMs. "Mortgage rates are in a holding pattern at the moment as financial markets try to discern where inflation and growth in the economy are headed," said Frank Nothaft, Freddie Mac's chief economist. "Until the market decides these issues, mortgage rates should stay within a relatively narrow band." A year ago, the average 30-year and 15-year fixed rates were 5.81% and 5.23%, respectively, and the average one-year ARM rate was 4.19%, Freddie Mac said.

Fannie Mae reported late Wednesday that it had misclassified $10.3 billion in loan purchases over the past two years, counting single-family acquisitions as multifamily and vice versa.The company, which is working its way through an $11 billion accounting scandal, said the misclassification will not affect earnings. A company spokeswoman told MortgageWire that the problem was caused by a "coding" mistake. She also said the government-sponsored enterprise will no longer specify its loan purchases as single-family or multifamily on a monthly basis, offering that information only quarterly. It will continue to publicize its total purchases each month under the data point called "business volume."

Genworth Financial Inc., the Richmond, Va.-based insurance company whose units include the former GE Capital Mortgage Insurance Corp., Raleigh, N.C., will be added to the S&P 500 at the close of trading on Dec. 1, according to Standard & Poor's.It will be replacing the 500th-largest company in the index, Calpine Corp., whose sub-industry is listed as independent power producers and energy traders. In a related announcement, GE, which spun off Genworth in May 2004 and still holds a substantial amount of its shares, will be selling 38 million shares of Genworth common stock in a secondary offering that will price after the close of trading Dec. 1. GE said the timing of the offering "will allow shares to be sold to meet anticipated investor demand for Genworth shares" when it becomes part of the S&P 500. GE added that it will not sell any more Genworth shares this year, but reiterated that it will totally divest itself of Genworth by the end of 2006. Morgan Stanley & Co. is the sole bookrunner and manager for the offering. Genworth closed on Nov. 29 at $34.00 per share, opened the following day (after the S&P announcement) at $34.99 per share, and as of midday Nov. 30 had settled back to $34.35 per share.

Gateway Funding Diversified Mortgage Services, Horsham, Pa., and The Prieston Group, San Rafael, Calif., have announced that Gateway will adopt a group of TPG services to protect itself against mortgage fraud.The services, TPG Mortgage Assurance Solutions, are designed to help lenders "significantly reduce the incidence of mortgage fraud" through the adoption of various processes and procedures, TPG said. They also include an insurance component that helps mitigate losses in case of a repurchase request stemming from financial misrepresentations made to the lender. Gateway president Regina Lowrie, who is chairman of the Mortgage Bankers Association, said the "top-notch" training and education provided by TPG is "one of the main reasons we decided to do business with them." TPG can be found online at http://www.priestongroup.com.

As housing prices appreciate (or even stagnate), there is greater concern over exposure in the subprime market, according to panelists at the Standard & Poor's North American Financial Institutions Conference."Alt-A and subprime, good and bad growth, is where the mortgage market is moving," said Victoria Wagner, an S&P director. "A majority of the housing bubbles are in the coastal areas where there is the greatest demand for housing." Lenders have spread risk for option adustable-rate mortgages and interest-only loans through securitization, Ms. Wagner said. Richard Brown, chief economist at the Federal Deposit Insurance Corp., said a 30% or more increase in real home prices constitutes a boom. "The housing bubble is localized ... New England, Florida, California," he said. "A bust doesn't necessarily follow a boom. Before 1998, all busts involved shocks to the local economy."

Freddie Mac is issuing new and expanded guidance for servicers that extends additional forbearance for victims of hurricanes Katrina and Rita.The new guidance, which is expected to be issued Dec. 1, will extend forbearance on mortgage payments for an additional 12 months on a case-by-case basis. Servicers will also have the latitude to extend forbearance by block, ZIP code, and even whole counties, according to Freddie vice president Ingrid Beckles. Freddie Mac is also considering extending its 90-day moratorium on foreclosures, she told a Women in Housing and Finance Symposium in Washington. WHF panelists said the industry still does not have a handle on the extent of the damages to properties in the Gulf Coast states, whether the properties can be repaired and inhabited again, or even whether borrowers intend to live in the properties again, in order to make loan modification or foreclosure decisions. However, many borrowers in the hurricane disaster areas are making payments. Fannie Mae has already issued guidance on extending its forbearance in the affected Gulf Coast areas.

The Market Composite Index, an overall measure of mortgage applications, fell from 635.4 to 624.1 on a seasonally adjusted basis during the holiday-shortened week ended Nov. 25, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 33.2% on the week and were down 8.0% from the level recorded a year earlier. The Purchase Index rose from 472.3 to 476.2 on a seasonally adjusted basis, while the Refinance Index declined from 1584.1 to 1484.3. The four-week moving average for the Purchase Index rose from 463.4 to 473.0, and the comparable average for the Refinance Index fell from 1737.0 to 1642.4. Refinancings represented 39.1% of total applications, down from 39.9% the previous week, while adjustable-rate mortgages accounted for 33.0%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.26% to 6.20%, and points (including the origination fee) increased from 1.11 to 1.17 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

A Philadelphia law firm says the Department of Justice has sent letters to "numerous" lenders whose 2004 Home Mortgage Disclosure Act data showed wide disparities between the pricing of subprime loans to minorities and the pricing of such loans to whites.The Justice Department's Civil Rights Division is asking lenders to "voluntarily" provide additional loan-level data, according to Leonard Bernstein, a partner at Reed Smith. The Nov. 22 letters also signal that the DOJ has initiated preliminary investigations for possible violations of the Equal Credit Opportunity Act and the Fair Housing Act. Attorney Andrew Sandler said he is aware of several DOJ letters sent to lenders but that he would be "surprised if there were more than 10." The partner with Skadden Arps also reported that federal banking regulators have been very active, sending requests for additional loan data to more than 10 banks. An analysis of the HMDA data conducted by the Federal Reserve Board flagged 200 lenders for possible fair-lending violations. The Fed shared the secret list with the institutions' primary regulators and the Justice Department.

A year after shedding its nonbank retail branches, Guaranty Residential Lending, Austin, Texas, is now lopping off its wholesale network as well.The company, owned by Temple-Inland, announced late Tuesday that it would sell its wholesale operation and offer mortgages only through its bank affiliate and what it calls its "restructured correspondent networks." A Temple-Inland spokesman could not be reached for comment by MortgageWire's deadline. GRL and its affiliate depository, Guaranty Bank, no longer report production numbers to National Mortgage News. At one time, about 45% of its total production was sourced through loan brokers. In 2004 GRL ranked 69th among all residential funders, according to the Mortgage Industry Directory. (See the Dec. 5 issue of NMN for the full story.)

Mothers Work Inc., a New York-based designer and retailer of maternity apparel, has announced a partnership with Awards for Mortgage and Real Estate that enables families to save for college through the Futuretrust real estate program.Under the arrangement, members can earn thousands of Futuretrust points when buying, selling, financing, or refinancing a home. Points can also be earned from van line services and home warranty transactions, the company said. Participating mortgage lenders are CitiMortgage, Chase Home Finance, Washington Mutual Home Loans, and the Corporate Mortgage Services Division of Wachovia Mortgage Corp. Further information is available at http://www.motherswork.com and http://www.awardsformortgageandrealestate.com/futuretrust.

Shurgard Storage Centers Inc., Seattle, has announced the signing of confidentiality agreements with several parties in connection with its exploration of strategic options, including Public Storage Inc., which previously made an unsolicited bid for Shurgard.Shurgard, a real estate investment trust, said Public Storage has agreed not to take certain actions regarding an acquisition of Shurgard before April 27, 2006, without Shurgard's approval. The agreement does not limit Public Storage's ability to nominate directors of Shurgard. Citigroup Global Markets Inc. and Banc of America Securities LLC are acting as financial advisers to Shurgard, and Goldman, Sachs & Co. is acting as financial adviser to Public Storage, a REIT based in Glendale, Calif. The companies can be found online at http://www.shurgard.com and http://www.publicstorage.com.