Originations

Fannie Mae has expanded its product line to include 40-year fixed-rated and hybrid adjustable-rate mortgages.Starting June 1, all Fannie lenders can submit 40-year mortgages through its automated underwriting system, Desktop Underwriter, for approval. Previously, the secondary market agency limited originations of 40-year mortgages to 22 credits union that participated in a pilot program. "The 40-year mortgage is ideal for borrowers who face affordability issues and think homeownership is beyond their reach," Fannie said. In addition to a standard fixed-rate mortgage, Fannie is offering 3/1, 5/1, 7/1 and 10/1 hybrid ARMs that amortize over 40 years. Freddie Mac does not offer 40-year loans.

Carmel Partners, San Francisco, has closed a second multifamily institutional real estate investment fund with $400 million in equity commitments, the firm said.The fund’s strategy is to buy underperforming multifamily assets and actively manage and renovate the properties, making improvements. Carmel Partners will also consider development and "strategic joint venture" opportunities with real estate operators. Ron Zeff, the firm’s founder, said, "We believe the current economic environment and pending demographic shifts will produce continued buying opportunities with higher long-term rent growth and improved occupancy rates." More than 95% of the investors in Carmel’s first multifamily fund have committed to the new fund, Carmel said.

The New York City-based law firm of Traiger & Hinckley LLP, has released a study of 2004 data from ten leading national mortgage lenders, which shows "no meaningful differences" in the pricing of first lien home purchase loans with reported rate spreads.The law firm said lenders are treating minority and women homebuyers fairly. Traiger & Hinckley, which advises financial institutions on complying with federal and state anti-discrimination laws, looked at Home Mortgage Disclosure Act data from ABN AMRO, Bank of America, Citigroup, Countrywide, GMAC, JPMorgan Chase, National City, PHH, Washington Mutual and Wells Fargo. According to an analysis of more than 90,000 loans, African-American and white borrowers paid essentially the same average rate spread, and Hispanic borrowers paid less on average than whites. The average rate spreads for men and women were almost identical. "So far, analyses of 2004 HMDA data have been largely limited to comparing the extent of loans with and without rate spreads for different borrower groups," said Warren Traiger, a partner at the firm. "The value of such analyses is hotly contested, since without information on borrower qualifications and loan characteristics, there is no way to assess the appropriateness of an APR. However, if, as some have alleged, minorities and women are being overcharged for loans, that disparity should carry over into loans with reported rate spreads."

Two classes from Option One Mortgage Loan Trust series 2000-3 and 2001-1 have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are class M3 of series 2000-3 and class M2 of series 2001-1. In addition, Moody's placed on review for possible upgrade 30 certificates from 12 Option One deals. The reviews for possible downgrade were prompted by credit enhancement levels that are low in view of projected losses on the underlying pool. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," the rating agency said. The transactions are backed by first- and second-lien adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.

Two classes of Morgan Stanley Capital I Inc. commercial mortgage-backed securities pass-through certificates, series 1997-RR, have been downgraded by Fitch Ratings.Class G-1 was downgraded from B-minus to CC, and class G-2 was downgraded from B-minus to CCC. In addition, one class in the deal was upgraded and the ratings on four classes were affirmed. The downgrades were attributed to expected losses on the specially serviced loans in the underlying transactions. The certificates are secured by 40 subordinate commercial mortgage pass-through certificates from 21 separate securitizations. The underlying transactions were securitized from 1994-1997 by various issuers and are secured by a variety of property types.

Six classes of Chase Funding subprime mortgage loan asset-backed certificates have been downgraded by Fitch Ratings.The downgrades were as follows: Chase Funding series 2000-1 group 1, class IB, from BBB to BBB-minus; series 2000-2 group 1, class IB, from BBB to BBB-minus; series 2000-3 group 1, class IM-2, from A to A-minus, and class IB, from BBB to BB; series 2001-4 group 2, class IIB, from BBB to BBB-minus; and Chase Funding Loan Acquisition Trust series 2001-C2 group 1, class IB, from BBB to BBB-minus. In addition, Fitch upgraded two classes from one Chase Funding deal and affirmed the ratings on 101 classes from 16 Chase Funding issues. The downgrades reflect worse-than-expected performance by the underlying collateral and concerns about the adequacy of credit enhancement for the remaining subordinate bonds, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

The industrial real estate market grew vigorously in the first quarter, absorbing 10 times the square footage of industrial property that was absorbed in the first quarter of 2004, according to Colliers International, a Boston-based commercial real estate manager.Absorption totaled 41.5 million square feet, compared with 4.1 million square feet a year earlier, Colliers said. "The drivers of the U.S. industrial market have been experiencing vigorous growth, and look likely to maintain this health tempo throughout the year," said Ross Moore, vice president and director of research at Colliers. "Many sectors -- including transportation and distribution, manufacturing, retail, and housing -- continue to post positive results." New construction totaled 26.5 million square feet in the first quarter, compared with 33.8 million square feet in the fourth quarter and 35.8 million square feet in the first quarter of 2004, Colliers reported. The company can be found online at http://www.colliers.com.

The Massachusetts Division of Banks has issued a regulatory bulletin under the Massachusetts Fair Lending Policy that focuses on the need for licensed mortgage lenders to detect and eliminate discrimination in the residential mortgage lending process, according to the Washington law firm Lotstein Buckman LLP.The division has developed examination procedures that it expects licensees to incorporate in order to make fair lending a goal in their loan policies. It suggests regular staff training and the review of compensation structures to ensure that they do not encourage disparate treatment of loan applicants. The division also suggests the establishment of a clear written policy that outlines the loan pricing process, regular review of marketing strategies, comparison of denied applications with approved applications to determine whether compensating factors were applied fairly and consistently, and the creation of a comprehensive audit and oversight system.

Fitch Ratings has affirmed GMAC Commercial Mortgage's CMS2-plus U.S. master servicer rating and its CPS2-plus primary servicer rating despite its recent downgrading of GMAC.Fitch recently downgraded General Motors' and GMAC's corporate ratings from BBB-minus to BB-plus. In addition, it has been announced that the division that includes servicing, GMACCM Holdings, may be partially divested from GMAC. However, based on conversations with senior management, Fitch said it believes these factors should not affect GMACCM's day-to-day operations, including advancing obligations. "The servicing divisions have sufficient liquidity and access to capital to fund their operations and maintain the quality of service that supports the rating affirmation," the rating agency said. As of April 30, GMACCM was primary or master servicer on 304 commercial mortgage-backed securities transactions totaling $102 billion, Fitch reported.

Fitch Ratings is advocating the extension of the Terrorism Risk Insurance Act for two more years, arguing that market disruptions are likely if the backstop is not extended beyond its Dec. 31, 2005 expiration."There are no guaranties that availability of coverage will not be as serious a problem as it was before TRIA passed, which underscores the importance of a long-term solution," said Richard Carlson, a Fitch director. Mr. Carlson said he expects that, in the absence of the federal backstop, pricing could become an issue again and cause the price of the insurance to rise. This would especially affect high-profile "trophy" properties in major cities. And commercial mortgage servicers could have a more difficult time enforcing terrorism insurance coverage requirements, he said. The rating agency can be found online at http://www.fitchratings.com.

Commercial Capital Bancorp Inc., a multifamily lender based in Irvine, Calif., and its subsidiary Timcor Exchange Corp. have announced the acquisition of North American Exchange Co., Walnut Creek, Calif., from North American Asset Development Corp. in an all-cash merger transaction.The terms of the deal were not disclosed. NAEC facilitates tax-deferred real estate exchanges under Section 1031 of the Internal Revenue Code. As part of the transaction, Timcor, NAEC, and their affiliated companies entered into a strategic alliance with North American Title Group Inc. under which the companies will engage in a cross-referral of clients and develop business opportunities related to 1031 exchanges and title and escrow orders, CCBI said. North American Title is the parent company of North American Asset Development. CCBI can be found online at http://www.commercialcapital.com, and Timcor, a provider of services to real estate investors that has offices in Los Angeles, Houston, and Miami, can be found at http://www.timcorfinancial.com.

The average 30-year fixed mortgage rate fell from 5.71% to 5.65% over the seven-day period ending May 26, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.27% to 5.21%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was unchanged, at 5.07%, and the average rate for one-year Treasury-indexed ARMs declined from 4.26% to 4.21%. Fees and points averaged 0.6 of a point for fixed-rate mortgages and 0.7 of a point for ARMs. "Release of the May Federal Open Market Committee minutes this week reinforced the notion that inflation in the economy in the first three months of the year was contained, and upward price pressure in the near term seems unlikely," said Frank Nothaft, Freddie Mac's chief economist. "And when inflation is contained, mortgage rates decline. Housing continued to help fuel the economy this year, accounting for about 20% of real GDP growth in the first quarter alone." A year ago, the average 30-year and 15-year fixed rates were 6.32% and 5.69%, respectively, and the average one-year ARM rate was 3.87%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Acadia Realty Trust, a White Plains, N.Y.-based real estate investment trust, has replaced Boston Communications Group in the Standard & Poor's SmallCap 600 Index.S&P said the company will be added to the index's REIT sub-industry index. The overall index consists of 600 domestic stocks chosen for market size, financial viability, liquidity, and industry sector representation. The shopping center REIT, which owns and develops properties chiefly in the Eastern United States, can be found on the Web at http://www.acadiarealty.com.

There is a bubble in U.S. home prices that is likely to burst and possibly be followed by a recession, according to Robert Schiller, a Yale University professor.Speaking at Flagstone Securities' Mortgage Finance Industry Summit in New York, the professor said a home price index he created shows that home prices have been "like a rocket taking off" since 1997, even though construction costs have not gone up that much. "The idea that a house is a great investment is a sign of the times," he noted. Responses to a survey conducted with another academic in 2004 indicate that people are expecting home values to rise over the next 10 years, Dr. Schiller said. Another indication is that more interest-only or adjustable-rate mortgages are being taken out. The professor said he sees a high likelihood of an eventual home price decline in Los Angeles and other "bubble cities," but "relatively little risk" in Milwaukee and other "stable cities."

The senior unsecured ratings of General Motors, GMAC, and the majority of affiliated entities have been downgraded from BBB-minus to BB-plus by Fitch Ratings.The long-term and short-term ratings of GMAC, including GMAC Bank and GMAC Commercial Mortgage Bank, were lowered in connection with the downgrade of GM, which reflected a decline in its sales of sport utility vehicles and growing competition in the pickup truck market, the rating agency said. (The short-term ratings were lowered from F3 to B.) "The Rating Watch Evolving on GMAC Bank reflects its position within the newly created Residential Capital Corp. and GMAC's intention to ring-fence its residential mortgage business in order to achieve a higher rating," Fitch said. A Rating Watch Evolving outlook was also assigned to GMAC Commercial Mortgage Bank "in order to assess GMAC's intent to divest a partial stake in this business," the rating agency said. Fitch can be found online at http://www.fitchratings.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 699.2 to 729.6 on a seasonally adjusted basis during the week ended May 20, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 4.0% on the week and were up 14.9% from their level of a year earlier. The Purchase Index rose from 469.3 to 482.3 on a seasonally adjusted basis, while the Refinance Index climbed from 2036.7 to 2167.9. Refinancings represented 40.3% of total applications, up from 39.3% the previous week, while adjustable-rate mortgages accounted for 34.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.73% to 5.63%, and points (including the origination fee) increased from 1.17 to 1.27 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Sales of new single-family homes rose slightly in April to a record seasonally adjusted annual rate of 1.32 million units from the downwardly revised rate of 1.31 million in March, according to figures released Wednesday by the Commerce Department.The latest number represents a record rate, even though it falls below the originally reported rate of 1.43 million units in March. The April rate was 13.3% above the revised April 2004 estimate of 1.16 million. The median sales price of new houses sold in April stood at $230,800, and the average sales price was $283,500, the department said. The estimate of new houses for sale at the end of April was 440,000, representing a 4.1-month supply at the current sales rate. The Commerce Department can be found on the Web at http://www.doc.gov.

Three classes of Merrill Lynch Mortgage Investors Inc.'s series 1997-C2 certificates have been downgraded by Fitch Ratings.The downgrades were as follows: class G, from BB-minus to B-plus; class H, from B to B-minus; and class J, from CCC to C. In addition, Fitch affirmed the ratings on six other classes in the deal. The rating agency attributed the downgrades to expected losses on 10 of the 14 specially serviced loans in the transaction. The certificates are collateralized by 115 commercial and multifamily mortgage loans, down from 147 loans at issuance.

The Baa3 senior debt ratings of Fidelity National Financial Inc. have been placed on review for possible downgrade by Moody's Investors Service following FNF's announcement that it intends to create a publicly traded, majority-owned title insurance holding company.The restructuring calls for borrowing an additional $500 million under a new bank credit facility at the new holding company, which would subordinate the creditors of the ultimate holding company, the rating agency said. Moody's also affirmed the insurance financial strength ratings of FNF's primary insurance operating subsidiaries at A3, but the rating outlook was changed to negative because of concern that FNF may increase its use of financial leverage. Moody's also affirmed the ratings (Ba3 senior) of FNF's 75%-owned subsidiary, Fidelity National Information Services. Moody's said several factors point toward further strain on the company's leverage profile, including FNF's "history of aggressive use of debt, a demonstration of management's willingness to maximize shareholder value to the potential detriment of creditors, and management's indication that it is considering large-scale acquisitions that could be financed in part through debt."

The sales of existing homes rose 4.5% in April to 7.18 million units on a seasonally adjusted annualized basis, breaking the record of 7.02 million set in June 2004, according to figures compiled by the National Association of Realtors.The total, which includes single-family homes, townhomes, condominiums, and co-operatives, was up significantly from the downwardly revised rate of 6.87 million units recorded in March, the trade group said. The figure was up 5.7% from the 6.79 million rate of April 2004. "A new record is a bit unexpected, but so is the performance of mortgage interest rates, which have been lower than forecast," said NAR chief economist David Lereah. "When we look at recent job gains, we see all the positive factors coming together to coincide with a powerful demographic demand for housing." Single-family resales alone totaled 6.28 million units in April on an annualized basis, also a record high and 5% higher than the 5.98 million rate recorded in April 2004. The NAR can be found online at http://www.realtor.org.