Originations

Single-family housing starts held steady in August even though builders are becoming more cautious about the outlook for sales over the next six months.The U.S. Census Bureau reported that single-family starts remained largely unchanged, at a seasonally adjusted annual rate of 1.71 million, from July to August. The August rate is 1.2% above the rate in August 2004. A National Association of Home Builders monthly survey shows that builder expectations of home sales dropped eight points, to 69, in September. NAHB chief economist David Seiders noted that the survey reveals builder concerns about the impact of Hurricane Katrina and higher interest rates, as well as buyer resistance to housing prices, which have been rising at double-digit rates. Even though builder confidence remains relatively high, the "results show that builders are cognizant of the anticipated signs of slowing housing activity in certain areas," Mr. Seiders said.

The rating on class F of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2002-FL-1, has been affirmed at BB and removed from Rating Watch Negative by Fitch Ratings.In addition, Fitch upgraded three other classes in the deal and affirmed the rating on one. The rating agency noted that class F was originally placed on Rating Watch Negative due to concerns about the Infomart loan, which now represents about 85% of the pool and is secured by a class A office building in Dallas with approximately 1.2 million square feet of space. "In May 2005, the loan was transferred to the special servicer, which has indicated an October 2005 resolution with no loss to the trust debt," Fitch said.

Class B of First Union Home Equity Loan Trust, series 1997-2, has been downgraded from CCC to C by Fitch Ratings.The downgrade was attributed to the poor performance of the collateral, which consists of subprime fixed-rate and balloon mortgages. Insufficient credit enhancement on the certificates has resulted in principal reductions of the bond balance, the rating agency said. The deal has approximately $1.86 million in foreclosures and real estate owned and may sustain future losses, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The price boom in the Las Vegas metropolitan area could be coming to an end in view of the flattening of the price appreciation curve and a decline in existing-home sales, according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm.The median list price in Clark County, Nev., was $349,000 in August, the same as in July, but the actual median sales price was $309,000, said Alexis McGee, president of ForeclosureS.com. "The situation in Las Vegas is exacerbated by the high percentage of home purchases by speculators," Ms. McGee said. "Normally, foreclosure is a lagging indicator of financial distress in a household, but speculators often have negative cash flows in their properties. When price appreciation slows or stops they must run for cover, and now may have more difficulty selling quickly to cut their losses." The company can be found online at http://www.foreclosures.com.

CapitalSource Inc., Chevy Chase, Md., has announced that it will elect to be taxed as a real estate investment trust for the year beginning Jan. 1, 2006.The company also reported a modification of its reserve policy that increases its allowance for loan losses to 1.42% in the third quarter. "To our minds, this is the most efficient corporate structure in which to operate our business because it allows us to hold a significant portion of our assets in a more tax-efficient manner," said John Delaney, CapitalSource's chairman and chief executive officer. The company can be found online at http://www.capitalsource.com.

Potlatch Corp., a forest products company based in Spokane, Wash., has announced the approval by its board of directors of a restructuring to convert the company into a real estate investment trust.Under the conversion plan, income from the company's 1.5 million acres of timberland assets will qualify for REIT tax treatment, and all its nonqualifying operations will be transferred into a wholly-owned taxable REIT subsidiary. "Converting to a REIT structure will increase our cash flow, facilitating a much larger annual distribution to stockholders," said L. Pendleton Siegel, Potlatch's chairman and chief executive officer. "It will also provide a lower cost of capital for future forestland acquisitions, while continuing to allow us to maintain the competitiveness of our TRS operations." The company can be found online at http://www.potlatchcorp.com.

Public Storage Inc., Glendale, Calif., has priced an additional 2 million depositary shares, expected to be sold to institutional investors, at $25 per share.Each depositary share represents one-thousandth of a share of 6.45% cumulative preferred stock, series F. Combined with an earlier sale of series F shares announced in August, the real estate investment trust said it expects to sell a total of 10 million depositary shares for gross proceeds of $250 million. The sole underwriter for the public offering is Merrill Lynch & Co. The REIT can be found on the Web at http://www.publicstorage.com.

RAIT Investment Trust, Philadelphia, has priced 1.985 million shares of common stock in an offering expected to raise net proceeds of $53.9 million for the company.The offering was priced at $28.50 per share. Friedman, Billings, Ramsey & Co. was the sole underwriter. RAIT Investment Trust is a real estate investment trust that provides structured financing to private and corporate owners of real estate nationwide. The commercial REIT can be found online at http://www.raitinvestmenttrust.com.

Colonial Properties Trust, Birmingham, Ala., has priced a public offering of 4.5 million shares of common stock at $43.75 per share.The net proceeds are expected to be approximately $187.3 million, Colonial Properties said. The offering was led by Merrill Lynch & Co. and Wachovia Securities. The company has granted the underwriters an option to buy up to 675,000 additional shares to cover any overallotments. Colonial Properties, a real estate investment trust that owns multifamily, office, and retail properties, can be found on the Web at http://www.colonialprop.com.

MeriStar Hospitality Corp., Arlington, Va., has completed the refinancing of a 19-property, $300 million CMBS loan that it says will lower its interest rate by more than 300 basis points and result in various debt-related charges in the third quarter.The refinancing includes a defeasance of the existing loan and borrowings under two new facilities, using 18 properties that were included in the original collateral package, MeriStar said. The new borrowings consist of a $312 million, 17-property commercial mortgage-backed security loan at a rate of 135 bps above the London interbank offered rate (309 bps below the effective rate of the original loan) and a $15 million term loan covering one property at a rate of 350 bps over LIBOR, the company reported. MeriStar said it expects to record a $45.9 million loss on early extinguishment of debt related to the defeasance cost; an $8.7 million charge related to the termination of the interest rate swap on the original CMBS loan; and a noncash impairment charge of approximately $36 million related to four assets in the collateral package that the company expects to sell. MeriStar, a real estate investment trust, can be found online at http://www.meristar.com.

Washington Mutual, Seattle, has announced the grand opening of two home loan centers and a loan processing center in Miami, the latest phase in its joint commitment with former basketball great Earvin "Magic" Johnson to boost homeownership in underserved communities.The openings also mark the beginning in Miami of Solid Start, a free, four-part financial education and credit building program available in English and Spanish. WaMu said it has now opened 25 home loan centers in eight cities across the country in conjunction with Johnson Development Corp., of which Mr. Johnson is chairman and chief executive officer. Two more centers are scheduled to be opened this year, one more in Miami and one in Newark, N.J. WaMu can be found online at http://www.wamu.com.

Ramco-Gershenson Properties Trust, Farmington Hills, Mich., has announced the early repayment (without penalty) of $99.3 million of mortgage loans secured by 10 of the company's assets.The loans from Lincoln National Life Insurance Co. carried a blended interest rate of 8.3% and were due to mature on Jan. 10, 2006, the real estate investment trust said. The loans were repaid through an interim secured term facility with KeyBank, which took an assignment of the mortgages, leases, and rents along with a repayment guaranty. The new loan bears interest at 140 basis points over the London interbank offered rate and matures on Dec. 29, 2005. The shopping center REIT can be found on the Web at http://www.ramcogershenson.com.

Class L of Bear Stearns Commercial Mortgage Securities Inc. commercial mortgage pass-through securities, series 1999-WF2, has been downgraded from CCC to CC by Fitch Ratings.In addition, six classes in the deal were upgraded and the ratings on seven other classes were affirmed, Fitch said. The reason for the downgrade is that losses on class M are expected to reduce its balance to zero and "significantly impair" the balance of class L, according to the rating agency. Fitch can be found online at http://www.fitchratings.com.

Two classes of Ace Securities Corp. series 1999-LB2 mortgage-backed securities have been downgraded by Fitch Ratings.Class M-2 was downgraded from A to A-minus, and class B was downgraded from BBB to BBB-minus. In addition, Fitch affirmed the ratings on 13 classes from five Ace Securities deals and upgraded three classes. The rating agency said the downgrades resulted from higher-than-expected collateral losses and a deteriorating relationship between loss expectations and credit support. "Losses have exceeded excess spread in five out of the last six distribution dates, resulting in a decline of [overcollateralization] to $1.85 million, below its target of $2.08 million," Fitch said. The pool consists of adjustable- and fixed-rate, first-lien residential subprime mortgage loans.

Five classes from three issues of CDC Mortgage Capital Trust mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-HE1, class B, from BBB-minus to BB-plus; series 2002-HE2, class B-1, from BBB to BB-plus, and class B-2, from BBB-minus to BB; and series 2002-HE3, class B-1, from BBB to BBB-minus, and class B-2, from BBB-minus to BB-plus. In addition, Fitch affirmed the ratings on 33 classes from seven CDC deals. The rating agency attributed the downgrades to a deterioration in the relationship between credit enhancement and expected losses. "While Fitch feels there is no material risk of a principal writedown of the downgraded classes under the expected-case scenario, the affected classes are currently unable to satisfactorily sustain the projected stressed-case scenarios required to maintain their respective initial ratings," the rating agency said. The pools consist of fixed- and adjustable-rate subprime mortgages, primarily for one- to four-family residential properties. Fitch can be found online at http://www.fitchratings.com.

The PNC Financial Services Group has announced the launch of a joint venture with Wells Fargo Home Mortgage to make homeownership easier for customers in the Greater Washington area.PNC said the venture, PNC Mortgage LLC, will offer a wide range of home financing products and services and will enable PNC Bank customers to apply for mortgages through consultants based in branches, PNC Advisors' offices, and PNC's call center. Though the launch of PNC Mortgage is in Greater Washington, it will expand to include all PNC markets later this year, the company said. PNC Financial can be found online at http://www.pnc.com.

The average 30-year fixed mortgage rate rose from 5.71% to 5.74% over the seven-day period ended Sept. 15, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.30% to 5.32%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages rose from 5.24% to 5.26%, and the average rate for one-year Treasury-indexed ARMs climbed from 4.45% to 4.46%. Fees and points averaged 0.6 of a point for all four mortgage categories. "Mortgage rates were relatively unchanged this week as the markets wait for the results of the upcoming Federal Reserve policy committee meeting," said Frank Nothaft, Freddie Mac's chief economist. "The core Consumer Price Index released this week came in lower than had been expected, which led the market to believe that the Fed has further room to take a pause in raising rates, and this has kept financial markets fairly quiet this week." A year ago, the average 30-year and 15-year fixed rates were 5.75% and 5.13%, respectively, and the average one-year ARM rate was 4.03%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Documentation is the real issue lenders should focus on as a result of HMDA data released Sept. 13 by the Federal Reserve Board, according to panelists at the Nonprime Forum in Philadelphia.Many lenders are putting themselves at risk by pushing loans through too quickly with less paper, said panelists at the forum, which is co-sponsored by the National Association of Mortgage Brokers and the National Home Equity Mortgage Association. Leonard Bernstein, a partner with Reed Smith LLP, said lenders should expect consumer groups and plaintiffs' lawyers to initiate further attacks on the industry. "Raw data alone does not show that discrimination has taken place," he told the audience. "The Fed has said the data can lead to inaccurate conclusions and the restriction of credit to people who need it." Bob Levy, executive director of the Mortgage Bankers Association of New Jersey, said the release of Home Mortgage Disclosure Act data will open the door to fair-lending investigations. "Regulators will come into your shop and put loan files side by side," Mr. Levy said. "It's going to happen in a big way."

For the first time ever, leaders from the Mortgage Bankers Association, the National Home Equity Mortgage Association, and the National Association of Mortgage Brokers came together on the same stage Sept. 14 for the Nonprime Forum in Philadelphia.At the conference, co-sponsored by the NAMB and NHEMA, the trade groups said a uniform national lending standard is necessary for the good of the industry. "Five or ten years ago, I never would have thought this could happen," said Debbie Rosen, chair of NHEMA and managing director of subprime lending at Countrywide Home Loans. "Issues with [the Home Mortgage Disclosure Act and the Real Estate Settlement Procedures Act] opened our eyes. We are better and stronger together rather than separate." Ms. Rosen said financial literacy is more important than ever before. Programs like Borrow Smart focus on consumer choice and education, she said. "Consumer groups can't say we aren't doing anything," Ms. Rosen declared. "We are getting people out of apartments and into homes, creating opportunities in their community." The organizations can be found online at http://www.mortgagebankers.org, http://www.nhema.org, and http://www.namb.org.

Argent Mortgage has announced a commitment to match up to $1 million in donations from independent mortgage brokers to HomeAid America, a nonprofit provider of transitional homes, in connection with Hurricane Katrina relief.Argent and its affiliates have already committed $3 million to jump-start HomeAid's initiative to begin constructing transitional housing for displaced families, the company said. Brokers can contribute and qualify for Argent matching donations by sending a check made out to HomeAid directly to Argent (Argent Mortgage, 3 Park Plaza, Irvine, Calif. 92614, Attn: Arlene Steinert) or by clicking on the Katrina Relief link on Argent's website at https://www.argentmortgage.com/Katrina.cfm.