Originations

Alaska has launched a statewide version of Freddie Mac's "Don't Borrow Trouble" education campaign aimed at preventing predatory lending practices.The campaign, headed by a coalition of 31 public and private organizations, has established a toll-free consumer help line, at 888-925-2521, that will be staffed by trained professionals. They will provide free assistance on buying or refinancing a home, consolidating debt, taking out a home equity loan, and preventing mortgage foreclosure, as well as referrals to appropriate legal and financial experts, Freddie Mac said. Members of the coalition include the U.S. Department of Housing and Urban Development, AARP Alaska, Anchorage Neighborhood Housing Services, and Fairbanks Neighborhood Housing Services. Freddie Mac began launching local "Don't Borrow Trouble" efforts in 2000.

BenchMark Consulting International, Atlanta, has reported that 88% of the participants in the 19th annual Consumer Bankers Association Home Equity Lending Study originated subprime credits in the 12 months ended June 30.The subprime credits -- those rated C or D (defined as having a FICO score less than 630) -- represented an average of 11% of new home equity loan accounts and 6% of new home equity line of credit accounts, BenchMark said. "While not as brisk as in the previous two years, overall home equity portfolio growth continues on a double-digit pace, according to the data, and home equity line growth is 25%," said Brian King, manager of BenchMark's consumer lending and mortgage banking practice. The study includes findings on pricing, marketing activities, sourcing channels, underwriting attributes, and delinquencies/chargeoffs, among other factors. Conducted by the CBA in conjunction with BenchMark, the report included 39 participating home equity lenders, an increase of more than 50% from the total in last year's study, BenchMark said.

Commercial and multifamily mortgage loan originations surged to a record $58.3 billion in the third quarter, 31.2% higher than in the second quarter and 64% higher than in the third quarter of 2004, according to the Mortgage Bankers Association.In addition, year-to-date originations are 43.6% higher than they were last year at this time, the trade association said. "Capital continues to flow into the commercial and multifamily real estate markets on both the debt and equity sides," said Doug Duncan, the MBA's chief economist. The $22.8 billion increase in lending over that of last year's third quarter was led by a 531% increase in loans on hotel properties. Lending volume on other property types also increased, with office-backed loans up 55%, multifamily lending up 45%, lending on retail properties up 33%, and lending on industrial space up 80%. Originations for commercial mortgage-backed securities conduits were up 144% from those of the third quarter of 2004, followed by originations for commercial banks, which were up 33%.

Cleveland-based KeyCorp has announced an agreement to acquire the commercial mortgage-backed securities servicing business of Orix Capital Markets LLC, Dallas, for an undisclosed amount.Key said the transaction would expand its CMBS servicing portfolio from $45 billion to more than $70 billion. Under the agreement, the company would acquire the master, primary, and special servicing rights to a limited number of securitizations on which Orix is the special servicer. Key said it expects to retain all Orix employees associated with the servicing operation. The company said the acquisition would position KeyBank Real Estate Capital as one of the top five commercial loan servicers in the United States. KeyCorp can be found on the Web at http://www.key.com.

The average 30-year fixed mortgage rate rose from 6.36% to 6.37% over the seven-day period ended Nov. 17, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.89% to 5.90%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.81% to 5.86%, and the average rate for one-year Treasury-indexed ARMs climbed from 5.12% to 5.20%. Fees and points averaged 0.6 of a point for all four mortgage categories. "Recently released inflation indicators -- the Consumer Price Index and Producer Price Index -- brought down long-term bond yields, flattening out the yield curve," said Frank Nothaft, Freddie Mac's chief economist. "Consequently, the difference between the 30-year fixed-rate mortgage and the one-year ARM rate is the narrowest it has been since November of 2001. This will make the one-year ARM product much less attractive to borrowers." A year ago, the average 30-year and 15-year fixed rates were 5.74% and 5.15%, respectively, and the average one-year ARM rate was 4.17%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Although nonprime lending is enjoying an unprecedented run, forces are converging that could bring the sector to its knees, according to speakers at SourceMedia's Subprime Lending Symposium in Miami Beach.Keynote speaker William Kile, executive vice president of mortgage banking at CitiFinancial Mortgage, said nonprime production could reach $700 billion next year. But Rod Alba, vice president for federal and regulatory affairs at ACC Capital Holdings, the parent of Ameriquest and Argent, among others, said subprime lenders are facing a "storm" of criticism from all levels of federal and state government, "all at once and each affecting the other." Critics "will be coming at us from all three sides -- judicially, regulatorily, and legislatively," Mr. Alba said. "But most of the activity will be at the state level." Jeff Naimon of the Washington law firm of Buckley Kolar agreed, saying the "regulatory environment for subprime is worsening" as states continue to pass new legislation or tighten old laws, and federal bank regulators become increasingly skeptical. In his keynote talk, Mr. Kile also said that, according to his company's preliminary estimates, interest-only loans will account for a third of all production this year. In the second quarter alone, he reported, more newly issued mortgage securities were backed by IO loans than by fixed-rate loans.

Single-family housing starts fell 3.7% in October, but construction activity remained slightly above the 1.7 million mark for the sixth consecutive month.The U.S. Census Bureau reported that single-family starts declined from a seasonally adjusted annual rate of 1.77 million in September to 1.70 million in October, but the October starts were 2.3% above the level recorded a year earlier. Single-family starts were flat in the South, where the Gulf Coast states were battered by hurricanes in September and October. Meanwhile, homebuilders registered a sharp decline in future sales expectations in a National Association of Home Builders/Wells Fargo survey. The survey index of sales expectations for the next six months dropped 9 points to 64. Any reading above 50 indicates that more builders view sales conditions as good than poor. NAHB chief economist David Seiders said the sharp decline in the index "probably overstates the actual degree of deterioration in the single-family market." He said he expects the market to cool, with slightly lower sales and production next year. "We' re looking for a 5% or 6% decline in home sales next year," Mr. Seiders said.

Simon Property Group LP, Indianapolis, has sold $1.1 billion of senior notes in a private offering.The offering consisted of $500 million of 5.375% notes due in 2011 and $600 million of 5.750% notes due in 2015, according to the parent company, Simon Property Group Inc., a real estate investment trust. The REIT said it had concurrently settled certain forward-hedging instruments, and that if the proceeds of the settlement were applied to the notes, the effective yields would be reduced to 5.37% for the 2011 notes and 5.65% for the 2015 notes, for a blended yield of 5.52%. The REIT can be found online at http://www.simon.com.

Delinquencies on commercial mortgage-backed securities declined 0.02% in October to 0.93%, down from 1.27% in January, according to Fitch Ratings.The rating agency said it believes that next month's delinquency levels will reflect the effects of the recent hurricanes. "Servicer advances on hurricane-affected properties have been on the rise since September, so the repercussions of hurricanes Katrina, Rita, and Wilma are likely to be reflected in Fitch's November data," said Fitch senior director Patty Bach. A delinquency index maintained by the rating agency includes loans 60 or more days delinquent. By property type, multifamily properties represent 31.3% (by balance) of Fitch's delinquency index, followed by office properties at 18.9%, retail properties at 15.5%, and hotel properties at 14.7%. While multifamily and office delinquencies rose dramatically over the first half of the year, the third quarter showed some improvement. Retail and hotel property delinquencies have declined for most of 2005, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Total existing-home sales set another record in the third quarter, rising in 44 states and the District of Columbia from the levels recorded a year earlier, according to the National Association of Realtors.The seasonally adjusted annual resales rate was 7.24 million units in the third quarter, up 6.5% from 6.80 million in the third quarter of 2004. "We're fairly confident that third-quarter home sales will prove to be the high point of the five-year housing boom," said NAR chief economist David Lereah. The biggest year-over-year gains were recorded in Arkansas, where the resale rate was up 32.1%; Utah, up 26.6%; and Washington state, up 20.0%. The NAR can be found online at http://realtor.org.

Eighty-five percent of borrowers in Southern California have taken out adjustable-rate mortgages to have lower mortgage payments now and spend money on dining out and shopping, but the boom can't last, according to a roundtable participant at the Western Regional Mortgage Brokers Conference in Las Vegas.Americans are spending like never before and not saving, said Peter Schiff, president of Euro Pacific Capital, a global investment strategies company, during a broker roundtable on surviving the real estate bust. "People are borrowing to take vacations and remodel their kitchens," said Mr. Schiff. "Borrowers don't have to prove income any more or have a job to qualify for a loan. All the risk belongs to lenders. And we are on the way to a collapse if the federal government creates higher inflation." Mr. Schiff said the longer it takes for the bubble to burst, the worse the recovery will be. "The boom is like a heroin high -- it feels great," he said. "But in order to get healthy, there is withdrawal, and that is not pleasant. The body has to purge itself of the artificial credit-induced boom similar to the '90s."

The Market Composite Index, an overall measure of mortgage applications, fell from 661.3 to 657.6 on a seasonally adjusted basis during the week ended Nov. 11, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 12.1% on the week and were down 13.7% from the level recorded a year earlier. The Purchase Index rose from 465.7 to 477.9 on a seasonally adjusted basis, while the Refinance Index declined from 1798.8 to 1702.4. The four-week moving average for the Purchase Index fell from 468.4 to 461.9, and the comparable average for the Refinance Index fell from 1918.5 to 1820.2. Refinancings represented 40.4% of total applications, down from 41.7% the previous week, while adjustable-rate mortgages accounted for 32.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages increased from 6.31% to 6.33%, and points (including the origination fee) decreased from 1.37 to 1.26 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

An analyst that closely covers Countrywide Financial Corp. says in a new report that it is "highly unlikely" that Lehman Brothers will buy the Calabasas, Calif.-based company.In a research note, Sandler O'Neill analyst Mike McMahon says that, "Unless CFC's management has undergone a dramatic change in thinking," a sale to Lehman is not in the works. Countrywide, the nation's largest mortgage banker, was the subject of takeover rumors on Tuesday, sending its stock up about 1% in a down market. (The takeover talk was sparked by heavy buying in call options.) Over the years Countrywide has sporadically been the subject of takeover rumors. The suitors have usually been large depositories. A few years back, Countrywide obtained a bank charter and now boasts $34 billion in federally insured deposits.

The Homeownership Preservation Foundation, Minneapolis, has announced a partnership with USA Cares under which HPF will contribute up to $800,000 over two years and USA Cares will offer emergency relief grants to help military personnel avoid foreclosures.USA Cares will provide grants of up to $7,500 to military families, based on need, to help them avoid home foreclosures due to financial problems arising from military service. "There are more than 140,000 [servicemembers] serving in Iraq and Afghanistan alone, as well as 40,000 soldiers mobilized to assist with hurricanes Katrina and Rita," said Roger Stradley, director of operations at USA Cares. "We can assist them in doing their jobs by reducing the financial stress that they and their families may be experiencing due to a loss of regular income." HPF, which has already contributed $400,000 to USA Cares, has dedicated $7 million over the next three years to provide free foreclosure prevention counseling. That counseling will be provided free to military families assisted by USA Cares in addition to any grants. The organizations can be found online at http://www.hpfonline.org and http://www.usacares.us.

Capital Title Group Inc., Scottsdale, Ariz., has announced a public offering of 6.85 million shares of common stock at $6 per share.Capital Title said 5.0 million shares are being sold by the company and the remainder are being sold by selling stockholders. The underwriters have been given a 45-day option to buy up to approximately 1.03 million additional shares to cover any overallotments. Ryan Beck & Co. is the lead manager of the offering, and Sanders Morris Harris Inc. is the co-manager.

House prices posted strong gains in most metropolitan statistical areas in the third quarter, according to the National Association of Realtors.The NAR's metro area home price report indicates that 69 of the 147 surveyed MSAs had double-digit 12-month increases in median existing-home prices. The NAR also reported that the national median single-family resale price rose to $215,900 in the third quarter, up 14.7% from $188,200 a year earlier. "These historically high home price gains are the simple result of more buyers than sellers in the market," said NAR chief economist David Lereah. "The good news is that inventory levels are improving, and housing supply will come close to buyer demand in 2006. In other words, we expect a healthy and more balanced market next year." The NAR can be found online at http://www.realtor.org.

NetBank Inc., an Atlanta-based online bank, has reported a mortgage-related net loss of $1.4 million ($0.03 per share) for the third quarter, compared with net income of $4.0 million ($0.09 per share) a year earlier.NetBank said the results include a pretax provision of $3.5 million related to a group of conforming mortgages with an outstanding balance of $13 million. "The company believes certain misrepresentations may have been made by one or more of the parties involved during the loan application process," NetBank said. Mortgage production totaled $3.8 billion in the third quarter, a rise of 9.0% from that of the second quarter, the company reported. The performance of servicing assets went from a loss of $2.3 million in the second quarter to pretax income of $130,000 in the third quarter "as higher rates and improving valuations for mortgage servicing rights led to prior impairment expense recovery," NetBank said. The company can be found online at http://www.netbank.com.

Preferred Financial Group Inc., a nationwide direct lender with a wholesale channel based in Burlingame, Calif., and Shearson Home Loans, a retail mortgage brokerage based in Las Vegas, have announced a partnership aimed at expanding their loan volume and offering a broader range of services.Shearson said finding a partner that could manage the banking side of the business was a key factor in its decision, while PFG said it was looking for a strong player in the residential mortgage market. "PFG Inc. is committed to technology, with a solid infrastructure that is capable of handling a loan volume of increasing capacity," said Michael Barron, Shearson's chairman and chief executive officer. "As Shearson continues to expand and open new branches, the business partnership with PFG Inc. enables us to grow faster and stronger, while exceeding the expectations of our clients." PFG offers Web-based technology, in-house underwriting, document preparation, funding, and closing processes. Its wholesale channel, WLO, can be found online at http://www.wloconnect.com, and Shearson can be found at http://www.shearsonhomeloans.com.

Two classes of Wachovia Bank Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2004-WHALE 4, have been downgraded by Moody's Investors Service.Class K was downgraded from Baa3 to Ba2, and class RC was downgraded from Baa3 to Ba3. Moody's also affirmed or confirmed the ratings of 20 Wachovia CMBS classes. The downgrades were attributed to a lowered shadow rating of a loan on the Ritz-Carlton-New Orleans Hotel. The loan is secured by a mixed-use complex consisting of a 527-room Ritz-Carlton Hotel, an Iberville Suites Hotel, a spa, a 23,000-square-foot retail area, and a parking garage. The property is closed due to substantial damage from Hurricane Katrina and is not expected to reopen before late 2006, Moody's said. "Due to the uncertainty of projecting the overall hotel market performance for New Orleans as well as the expected performance for the Ritz-Carlton property, Moody's current analysis reflects a higher risk profile for this loan than at securitization," the rating agency said. Moody's can be found online at http://www.moodys.com.

For many Americans, their "dream home" is a new, suburban, single-family house in the southern part of the country, according to the inaugural Century 21 First-Time Homebuyer Index.Century 21 said 46% of the survey respondents preferred suburban areas as the location of their dream home, 39% preferred rural areas, and 15% preferred urban areas. Respondents favored the Southeast as the geographic locale of such a home, compared with 23% for the Southwest, 19% for the Northeast, 17% for the Midwest, and 14% for the Northwest, the company said. An overwhelming majority, 78%, said the dream home should be newly constructed. The study also found that Hispanic first-time homebuyers are typically four to five years younger than their non-Hispanic counterparts, Century 21 reported. The index was based on a survey of 1,214 U.S. first-time homebuyers conducted for Century 21 by International Communications Research. Century 21 can be found online at http://www.century21.com.