Originations

Shurgard Storage Centers Inc., Seattle, has announced that its board of directors has authorized management and the company's financial advisers to explore strategic options that include the sale of all or part of the company's assets and operations.Other options include, but are not limited to, the formation of asset joint ventures and the continued implementation of Shurgard's business plan. Citigroup Global Markets Inc. and Banc of America Securities LLC are acting as financial advisers in connection with these matters, Shurgard said, and Willkie Farr & Gallagher LLP and Perkins Coie LLP are acting as legal counsel. Shurgard, a real estate investment trust, can be found on the Web at http://www.shurgard.com.

American Financial Realty Trust, a real estate investment trust based in Jenkintown, Pa., has signed a letter of intent to form a real estate joint venture with Och-Ziff Real Estate Acquisitions.The joint venture would be aimed chiefly at acquiring from AFRT noncore assets with significant development, redevelopment, or repositioning potential, the REIT said. AFRT said Och-Ziff has expressed its intention to commit 85% of the total equity to the joint venture, with AFRT contributing the remainder. The REIT, which acquires properties from and leases properties to regulated financial institutions, projected that the venture could acquire more than $1 billion worth of assets over three to five years. The REIT can be found online at http://www.afrt.com.

Prime Property Fund, a real estate fund managed by Morgan Stanley Real Estate, New York, is acquiring AMLI Residential Properties Trust for about $2.1 billion in an all-cash transaction that will take the REIT out of the publicly traded real estate arena.The management of the Chicago-based real estate investment trust will continue in their roles after the acquisition closes, Prime reported. Prime will acquire all of AMLI's common shares and operating partnership units for $37.75 per share/unit in cash. This represents a 20.7% premium over AMLI's closing price of $31.27 on Oct. 21. The total merger consideration also includes AMLI's debt and preferred securities. "Multifamily is attractive because of its volatility and higher risk-adjusted returns relative to other property types," said Dave Hardman, Morgan Stanley's head of U.S. real estate investing. "AMLI represents an opportunity to acquire a large portfolio of high-quality multifamily assets, an outstanding multifamily management team and organization, strong development capabilities, and a recognized brand name in the sector."

The average 30-year fixed mortgage rate rose from 6.10% to 6.15% over the seven-day period ended Oct. 27, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.65% to 5.69%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.59% to 5.63%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.89% to 4.91%. Fees and points averaged 0.5 of a point for fixed-rate mortgages, 0.6 of a point for hybrid ARMs, and 0.7 of a point for one-year ARMs. "Although home sales were still impressive in September, mortgage applications in October seem to be tapering off a bit, due in large part to slowly rising interest rates," said Frank Nothaft, Freddie Mac's chief economist. "Obviously, refinancing is going to take the biggest hit as mortgage rates tick up." A year ago, the average 30-year and 15-year fixed rates were 5.64% and 5.01%, respectively, and the average one-year ARM rate was 3.96%, Freddie Mac said.

Origen Financial Inc., a manufactured housing lender based in Southfield, Mich., has reported that its provisions for loan losses related to hurricanes Katrina and Rita are expected to range from $5 million to $7 million.The anticipated losses represent less than 1% of the company's total loan portfolio, Origen said. Additionally, preliminary indications suggest that the loss exposure for Hurricane Wilma, which cut through South Florida earlier this week, will be substantially less than for Katrina and Rita. "Unfortunately, the reality of the situation is that many homes have been destroyed, and numerous jobs lost due to the unprecedented economic dislocation caused by these storms, and Origen will suffer losses as a result," said Ronald A. Klein, Origen's chief executive. "Nevertheless, our business continues to move forward. Despite the lack of any volume contribution from the hurricane-affected regions, September was our best production month of 2005, approximately 7.5% better than September 2004, and October is on pace to exceed September's volume." Meanwhile, Sun Communities Inc., also of Southfield, a real estate investment trust that owns and operates manufactured housing communities, said its third-quarter results were hurt by Origen's hurricane loan losses, which reduced Origen's contribution to Sun's earnings by $0.08 per share. Sun at one point owned Origen's predecessor firm and still has a stake in the company.

Countrywide Financial Corp., Calabasas, Calif., has reported consolidated net earnings of $634 million ($1.03 per share) for the third quarter, a 27% increase from $498 million ($0.81 per share) in the third quarter of last year that was attributed mainly to the company's mortgage segment.Pretax earnings by the mortgage banking operations totaled $703 million in the third quarter, up 42% from $496 million a year earlier. "This increase resulted primarily from a $280 million improvement in servicing sector earnings, partially offset by an $83 million decrease in production sector earnings," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. Loan production in the mortgage segment totaled $131 billion, up sharply from $77 billion in the third quarter of 2004. "The increase in loan volume resulted in a $37 billion increase in loans sold," Mr. Mozilo said. "The benefit of the increase in sales, however, was more than offset by the decline in margins." Countrywide said its servicing portfolio rose to a record $1.05 trillion as of Sept. 30, up $262 billion from the level of a year earlier.

While the Mortgage Bankers Association expects mortgage origination activity to total about $2.8 trillion this year, the chief executive officer of the country's largest mortgage banking company believes the tally may exceed $3 trillion.In a conference call to discuss Countrywide Financial Corp.'s third-quarter results (see item below), Angelo Mozilo said Countrywide's internal projection of loan origination activity industrywide calls for the 2005 origination tally to range from $3.0 trillion to $3.2 trillion this year. Based on its own estimate of mortgage origination activity this year, Countrywide believes that it has achieved a 15.6% loan production market share, Mr. Mozilo said. The company can be found online at http://www.countrywide.com.

New-home sales rose 2% in September (from their August level) to a seasonally adjusted annual rate of 1.22 million units, a sign that the red-hot housing market still has some steam left.However, compared with sales in the same month last year, new-home sales were essentially flat. September's reading was the third-weakest of the year, according to figures released Thursday by the Census Bureau and the Department of Housing and Urban Development. In addition, home sales fell in the Northeast and the West, two of the hottest markets, but rose in the Midwest and the South. Sales in the South likely were aided somewhat by consumers looking for new housing in the hurricane-ravaged states of Alabama, Louisiana, and Mississippi.

Maguire Properties, a Los Angeles-based office real estate investment trust, has formed a joint venture with Macquarie Office Trust, an Australia-based REIT, to invest primarily in Southern California office properties.The venture initially has six assets worth $1.195 billion and totaling 4 million square feet, Maguire reported. Of these, five were contributed by Maguire and one by Macquarie. According to Maguire, the joint venture will help it remove debt from its balance sheet and raise proceeds for future acquisitions. Maguire will have a 20% ownership interest in the venture and manage the properties, for a fee, on a day-to-day basis. Maguire can be found online at http://www.maguireproperties.com.

In a class action lawsuit against Radian Guaranty Inc., a federal district court has affirmed its position regarding the commercial nature of mortgage insurance transactions.The ruling, in U.S. District Court for the Eastern District of Pennsylvania, found that mortgage insurance transactions between mortgage lenders and mortgage insurers are not consumer credit actions and are not subject to the notice requirements of the Fair Credit Reporting Act. "This court order is a big win for consumers," said Roy J. Kasmar, president and chief operating officer of Radian. ".... Requiring mortgage insurers to issue adverse action notices to borrowers would not only be inconsistent with the FCRA, it would also disrupt the critical lender-borrower relationship, making the mortgage process unnecessarily complex and confusing for consumers." The class action had claimed Radian failed to issue an adverse action notice to a customer of one of its mortgage lending clients when the customer's credit history disqualified the customer from receiving a lower mortgage insurance rate. Radian successfully argued that it does not take adverse action under the FCRA when it sells mortgage insurance to its clients, and that it does not enter into credit transactions with individual borrowers.

The Market Composite Index, an overall measure of mortgage applications, fell from 737.5 to 679.1 on a seasonally adjusted basis during the week ended Oct. 21, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications increased 2.2% on the week but were down 3.7% from the level recorded a year earlier. The Purchase Index fell from 503.9 to 466.4 on a seasonally adjusted basis, while the Refinance Index declined from 2095.7 to 1916.8. The four-week moving average for the Purchase Index fell 0.9%, from 482.6 to 478.4, and the comparable average for the Refinance Index fell 2.3%, from 2078.7 to 2031.2. Refinancings represented 42.5% of total applications, down from 42.8% the previous week, while adjustable-rate mortgages accounted for 29.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages decreased from 6.09% to 6.06%, and points (including the origination fee) decreased from 1.29 to 1.21 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Chase Home Finance, Iselin, N.J., says it plans to hire 800 new loan officers by the end of next year, more than half of which will reside in bank branches.If Chase follows through, its LO staff will increase by 30% from current levels. National Mortgage News reported in September that Chase was planning a major LO expansion, quoting co-chief executive officer Tom Wind. Chase Home Finance is owned by JPMorgan Chase & Co. Last year JPM bought Bank One, Chicago, giving the combined institution 2,500 bank branches. The new LOs that are not assigned to a bank branch will work out of some 225 Chase Home Finance offices. JPMorgan Chase can be found online at http://www.jpmorganchase.com.

The big year to watch for refinancings of interest-only mortgage loans will be 2007, according to Doug Duncan, chief economist of the Mortgage Bankers Association.Speaking at a news briefing at the group's annual convention in Orlando, he said 2007 is when $15 billion of 3/1 IO loans will reset. Consumers have become good at optimizing the benefits and the timing when they switch mortgage products, he said. In the past, 15% was the traditional baseline for the ratio of refinancings to total production, but now it is around 20%-25% because the cost to restructure a mortgage is much lower, he said. Jay Brinkmann, the MBA's vice president of research and economics, said he has heard of loan officers who go back to their IO clients and solicit them to refinance, but he said consumers are more likely not to act until the trigger date.

The Mortgage Bankers Association's forecast for production in 2005 now stands at $2.78 trillion, which would make it the third-best year ever for mortgage volume.At a news briefing before his formal presentation to the group's annual convention in Orlando, MBA chief economist Doug Duncan said home sales will reach record levels once again this year, but will decline moderately in 2006. An indicator to watch is the condominium market, he said. The inventory of condos is 37% higher now than it was at this time last year, while the market time has grown from 3.5 months to 5.3 months. In the fourth quarter, the MBA is predicting that the 30-year fixed mortgage rate will rise to 6.2%, adjustable-rate mortgages will fall to a 26% share of the market, and refinancings will make up 43%. The MBA predicts that production will fall from $775 billion in the third quarter to $612 billion in the fourth. The MBA can be found online at http://www.mortgagebankers.org.

American Capital Strategies Ltd., a buyout and mezzanine fund based in Bethesda, Md., has announced the formation of a Commercial Mortgage Asset Management Group, to be headed by Douglas Cooper as managing director.The move leverages the company's franchise in the asset-backed securities market, where it has "pioneered the issuance of middle-market collateralized loan obligations," said Malon Wilkus, American Capital's president and chief executive officer. Mr. Cooper joins American Capital from CWCapital LLC, where he was managing director in charge of its Washington office, American Capital said. He was previously managing director at Allied Capital Corp., where he was involved in all aspects of the company's commercial mortgage-backed securities investment program. Mr. Cooper will be responsible for developing a team to manage and invest in CMBS, American Capital said. The company can be found online at http://www.americancapital.com.

Principal Real Estate Investors, Des Moines, Iowa, and U.S. Bank NA, Minneapolis, have announced the formation of Principal Commercial Funding II to serve as their commercial mortgage-backed securities platform.The new company will focus on securitizing commercial mortgages originated by the two companies on its behalf, the companies said. "This is a landmark agreement that sets a new precedent in the CMBS world," said Pat Halter, chief executive officer of Principal Real Estate Investors, the real estate investment arm of Principal Global Investors. "This arrangement will allow Principal Real Estate Investors and U.S. Bank to leverage their independent and complementary strengths to create a nationwide platform unparalleled in the industry."

GMAC Residential Funding has announced an expansion of its mortgage loan guidelines that will allow lenders and correspondents to offer more real estate financing options.The new guidelines include increased loan amounts for home equity loans and the "alignment of our Goal Line and Goal Loan second-mortgage products with our prime first-mortgage products, making it easier to originate and sell simultaneous transactions," the Minneapolis-based company said. The guidelines also allow additional options and higher loan amounts in various documentation, occupancy, and property types under the company's AlterNet nonprime program, and expanded criteria under its Payment Option program to increase affordability, GMAC Residential said. The company can be found online at http://www.gmacrfc.com.

GMAC Residential Funding, Minneapolis, has entered into an agreement with ComplianceEase that will integrate GMAC Residential Funding's Assetwise Compliance Engine with ComplianceEase's ComplianceAnalyzer.The companies said the integration will create "one of the most comprehensive" compliance systems available. "In addition to auditing loans addressing certain federal, state, and local mortgage loan laws, mortgage lending partners will be able to evaluate their loans against GMAC Residential Funding's specific guidelines regarding 'high-cost' or similarly designated mortgage loans prior to closing the loan," GMAC Residential said. GMAC Residential is a unit of Residential Capital Corp. ResCap and Compliance Ease can be found online at http://www.rescapholdings.com and http://www.complianceease.com.

Housing interests represented at the Mortgage Bankers Association's annual convention have continued to line up against the possibility that the president's tax reform panel will propose whittling away at the tax deduction for mortgage interest and other cherished writeoffs that support homeownership.Freddie Mac president Eugene McQuade told the Orlando, Fla., convention that any big change in the tax benefits would "profoundly affect" the value of the properties that stand behind trillions of dollars worth of mortgages. "Before we say we are going to change" the deductibility of mortgage interest, "we better understand the broad implications that it will have [for] society," he told the meeting. Calling the writeoff "fundamental to housing values" and "arguably the most successful social program of the last 50-75 years," the Freddie Mac officer said the deduction "is part of the statement made over the years as to where we place our priorities, and with a relatively low cost to the government." Mr. McQuade is also worried that rising interest rates will exacerbate the nation's affordable housing woes. Housing prices are already "at shock levels for most people," he explained, and higher rates will only serve to drive monthly payments even higher. Rates have been so low for so long, he said, that an entire generation of potential buyers have never seen mortgage rates above 6%.

Existing-home sales surged in the Gulf Coast states after Hurricane Katrina and national sales held steady at a near-record pace in September, according to the National Association of Realtors."We are now getting some hard data from this region, with spot checks showing sharply higher sales to residents who were displaced by the hurricane," NAR chief economist David Lereah said. "The sales surge is more than offsetting declines in the disaster zone." The NAR reported that September sales of single-family homes, condominiums, and coops remained unchanged from their August level at a seasonally adjusted annual rate of 7.28 million -- the second-highest pace on record. Single-family home sales rose 0.6% in September to a record 6.38 million seasonally adjusted annual rate. The NAR also reported that the rate of annual house price appreciation fell from 15.8% in August to 13.4% in September. Mr. Lereah said the housing market is starting to make the transition from a boom to an expansion. He said he is expecting a "soft landing." The NAR can be found online at http://www.realtor.org.