Originations

Capstead Mortgage Corp., Dallas, and Crescent Real Estate Equities, Fort Worth, Texas, have entered into a $200 million joint venture to invest in commercial real estate mezzanine loans.Capstead and Crescent are forming two partnerships to target investments that will generate returns on equity of over 15%, according to the companies. Capstead is putting up $150 million of the capital, with Crescent putting up the rest. With the use of additional debt funding, they said they expect to invest over $600 million in mezzanine loans. Andrew F. Jacobs, Capstead's president and chief executive officer, said the partnership will target assets that are less sensitive to changes in interest rates. Crescent, which has an ongoing mezzanine program, will identify the opportunities and manage the loan portfolio, for which it will earn a fee.

Purchase applications hit record levels as the Market Composite Index, an overall measure of mortgage applications, rose from 714.1 to 781.0 on a seasonally adjusted basis during the week ended May 6, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 9.8% on the week and were up 5.3% from their level a year earlier. The Purchase Index rose from 482.5 to 526.2 on a seasonally adjusted basis, while the Refinance Index climbed from 2061.2 to 2263.3. "Strong support for home sales has been provided by a recent decline in interest rates, a strong jobs market, and nice weather during the spring buying season," said MBA chief economist Douglas Duncan. "These factors have led to a record level of purchase applications on both weekly and four-week rolling averages." Refinancings represented 39.2% of total applications, up from 39.1% the previous week, while adjustable-rate mortgages accounted for 35.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.74% to 5.77%, and points (including the origination fee) increased from 1.18 to 1.25 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Consumer spending growth is slowing and will depend chiefly on the strength of the housing market during the summer, according to Deloitte Research's Leading Index of Consumer Spending.The spending slowdown stems from declines in real wages and a tax burden that has risen slightly in the past year as economic growth pushed some households into higher income brackets, Deloitte reported. "Home sales rebounded sharply in the most recent month, but, surprisingly, we have not seen a corresponding uptick in sales of home-related goods," said Carl Steidtmann, chief economist at Deloitte Research and the author of the monthly index. "As we're seeing more lower- to middle-income households enter the housing market, there is less disposable income to furnish their new homes." The company can be found online at http://www.deloitte.com/us.

Occupancy in the national office market has reached levels not seen since the fourth quarter of 2000, according to Colliers International, a Boston-based commercial real estate manager.The national vacancy rate stood at 15.2% in the first quarter, down from 15.4% at the end of 2004 and 16.2% a year earlier, Colliers said. "Although office-using employment slowed in the first quarter, the office market itself maintained a healthy tempo," said Ross Moore, vice president and director of research at Colliers. "We anticipate further growth in the second quarter and for the balance of 2005. Just a few office markets project a slowdown, with the vast majority forecasting demand to meet or surpass first-quarter levels." (Office-using employment refers to employment related to information, financial, professional, and business services.) Absorption totaled 18.5 million square feet, up from 10.1 million square feet in the first quarter of 2004, Colliers said. The company can be found online at http://www.colliers.com.

Argent Mortgage Co., Irvine, Calif., has announced an update to its fair mortgage lending practices aimed partly at helping brokers better inform consumers about the lending process.One new feature is a consumer education resource center that "walks borrowers through key questions about homeownership, getting a loan, and key lending laws," Argent said. The company has also added a new set of "plain language" disclosures to help the borrower understand the mortgage process, verify key information, and identify estimated and final costs. Moreover, Argent said it has added new limits to broker fees, which may not exceed 5% of the loan amount. "Many brokers are concerned about recent and pending legislation and its potential impact on providing fair fees for the valuable services they offer," said Jeff Gillis, Argent's executive vice president of operations. " .... We are leading the way by providing cost levels that are fair and reasonable for consumers and brokers alike." The company can be found online at http://www.argentloans.com.

Vineyard Bank, Rancho Cucamonga, Calif., has launched a residential mortgage lending program, Vineyard MortgageLine, in conjunction with MoneyLine Lending Services, a provider of private-label outsourcing based in Irvine, Calif.Under the new program, Vineyard Bank customers can submit loan applications and track real-time loan status at any of the bank's branches by telephone or online. The bank's customers and frontline branch personnel will be assisted by MoneyLine's mortgage professionals throughout the process, the companies said. Vineyard Bank previously operated an in-house mortgage department and used the services of another outsourcing provider, the bank said. The companies can be found online at http://www.vineyardbank.com and http://www.moneylinelending.com.

United Guaranty Corp., a Greensboro, N.C.-based member company of American International Group, has acquired an equity position with Investors Mortgage Asset Recovery Co. LLC, a provider of mortgage fraud recovery services headquartered in Irvine, Calif.Robert Simpson will remain as president and chief executive officer of IMARC. The company provides assignment services, under which it recovers fraud losses on a contingency basis, retaining a portion of what is recovered; and "gameplan" services, under which it consults with mortgage lenders on the problems created by flipping schemes. "Every participant in the mortgage process -- the consumer, lender or servicer, insurer, and investor -- stands to benefit from recovered losses, but many cases are either too difficult or too small to handle through typical recovery methods," said Cindy Kirkley, vice president and group executive of AIG United Guaranty's Domestic Services Group. "IMARC effectively solves these problems at minimal cost to the client." IMARC can be found online at http://www.mortgagefraud.com, and UGC can be found at http://www.ugcorp.com.

Brandywine Realty Trust, a real estate investment trust based in Plymouth Meeting, Pa., has filed a $1.5 billion universal shelf registration statement with the Securities and Exchange Commission.The registration statement, which has not yet become effective, would allow Brandywine to register $750 million of debt securities and $750 million of preferred and common stock and other securities. The filing would replenish the capacity under the shelf registration filled by Brandywine in 2004, the company said. The REIT can be found online at http://www.brandywinerealty.com.

The Washtenaw Group Inc., a holding company for Washtenaw Mortgage Co., a wholesaler based in Ann Arbor, Mich., has reported a net loss of approximately $1.7 million ($0.37 per share) for the first quarter, compared with a net loss of $3.1 million ($0.69 per share) a year earlier.Mortgage origination volume totaled $169 million in the first quarter, down 57% from $394 million in the first quarter of 2004. Charles C. Huffman, chairman and chief executive officer of Washtenaw, noted that the company has introduced "many of the newest mortgage products," such as zero-downpayment, interest-only, and alternative-A loans. "In fact, we are expanding the criteria for alt-A mortgages to cast a wider net and attract additional borrowers," he said. "We are well positioned from product, personnel, and technology standpoints to take advantage of any uptick in business activity."

Higher oil prices are likely to restrain economic growth, causing mortgage interest rates to rise less than expected and home sales to remain strong through next year, according to the National Association of Realtors.The forecast, released at the start of the NAR's Midyear Legislative Meetings & Trade Expo in Washington, calls for the 30-year fixed mortgage rate to rise gradually to 6.4% in the fourth quarter and then average about 6.8% in 2006. "The essentially sideways movement in mortgage interest rates recently has defied the consensus of earlier forecasts, with only a modest uptrend detectable over time," said David Lereah, the NAR's chief economist. "The simple effect, in an economy with an improved labor market, is a higher demand for homes." The NAR can be found online at http://www.realtor.org.

Class G of COMM 2002-FL6 commercial mortgage pass-through certificates has been downgraded from A-minus to BBB-plus by Fitch Ratings.The rating agency also affirmed the ratings on eight other classes in the transaction. Fitch attributed the downgrade to decreased occupancy and lower base rent at the 500 West Monroe office building in Chicago, which represents 78.8% of the collateral pool.

Starwood Hotels & Resorts Worldwide Inc., White Plains, N.Y., has announced that its founder, Barry S. Sternlicht, will resign his post as executive chairman of the company to devote more time to his real estate investment and private equity firm, Starwood Capital.Mr. Sternlicht, who retired as chief executive officer last year after leading a search to identify his successor, will also resign from the Starwood Hotels board and assume the title of founder and chairman emeritus. "Eighteen months ago, I made the decision to reduce my involvement in the company to spend more time with my family and focus on my other business interests," Mr. Sternlicht said. Starwood also announced that Lizanne Galbreath has been elected a director to fill the vacancy created by Mr. Sternlicht's resignation from the board, and that Bruce W. Duncan has been elected chairman of the board. The company can be found online at http://www.starwoodhotels.com.

The Securities and Exchange Commission's disclosure rules for asset-backed securities, which servicers must comply with beginning Jan. 1, 2006, were adopted to deal with the fact that "one size does not fit all asset classes," according to Jennifer Williams, an attorney adviser with the SEC's Office of Rulemaking.Speaking at the Mortgage Bankers Association's Asset Administration and Technology conference in Chicago, Ms. Williams noted that while the rules were effective as of March, a transition period is in effect during which the disclosures are voluntary. Ms. Williams clarified that servicers need not disclose all their procedural details and that disclosures are limited to "what a reasonable investor would find material." For instance, facts relating to a servicer's operating policies that are immaterial to investors need not be disclosed. In addition, "sensitive pricing information" doesn't need to be disclosed. This means that a servicer has to make a judgment call, she noted. If a servicer does not disclose something that turns out to be material, she advised that the best course of action would be to contact the SEC staff in the post-offering period.

If the Terrorism Risk Insurance Act is not extended this year, there could be a bigger impact than was felt immediately after 9/11, according to Daniel Rubock, a vice president/senior credit officer with Moody's Investors Service.Speaking at a panel session at the Mortgage Bankers Association's Asset Administration and Technology conference in Chicago, Mr. Rubock noted that about 50%-75% of properties have conditional terrorism coverage and so a large chunk of it could disappear, creating a market disruption. If they want borrowers to get stand-alone coverage, servicers could cite court decisions favoring lenders, he said. Erin Stafford, a senior vice president with Dominion Bond Rating Service, said her company is adopting a "cautious approach," taking into account the possibility that the coverage may not be extended. Stephanie Petosa, a senior director at Fitch Ratings, said the rating agency is reviewing fusion deals (which combine large deals with smaller ones) and finding that larger trophy properties do have stand-alone terrorism coverage. Kathy Marquardt, senior vice president at GMAC Commercial Holding Corp., said the servicer community "doesn't want to deal with this." Some pooling and servicing agreements are requiring special servicers of "B" pieces to make decisions, she said.

A record half a million workers are now employed in the mortgage banking and brokerage sectors, according to preliminary government figures released May 6.In March, mortgage/nonmortgage broker employment totaled 126,600 jobs and real estate credit professionals accounted for 375,100 full-time positions, bringing total industry employment to 501,700, an 0.8% gain from February's level. The March figure is believed to be the largest industry employment reading ever recorded. Four years ago about 350,000 workers made their livelihoods from mortgages. Residential production is expected to reach $2.9 trillion or so this year, a slight gain from last year's volume but still below the record year of 2003, when $3.9 trillion worth of loans were funded.

The recently created Greenwood Small-Cap REIT Index declined 5.42% in the first quarter, according to The Greenwood Group LLC, Chicago.The move resulted from a 6.69% decrease in the stock prices of 50 real estate investment trusts tracked by the index that was partially offset by a 1.27% dividend-related increase, the company said. "While systemic factors including rising interest rates and supply/demand disequilibrium affect commercial real estate regardless of corporate size or structure, company-specific cash flow issues disproportionately impact smaller REITs and those with fewer capital market options," said Louis G. Conforti, Greenwood's managing member. The company can be found online at http://www.greenwoodllc.com.

Class O of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2001-C1, has been downgraded from CCC to CC by Fitch Ratings.In addition, Fitch affirmed the ratings on 16 other classes in the transaction. The downgrade was attributed to expected losses from specially serviced loans that would reduce the credit enhancement level of the class. Four loans representing 2.9% of the transaction are currently in special servicing, with losses projected on three. The largest is a 375-unit multifamily property in Mesquite, Texas, that is real estate owned.

Four classes of MKP CBO I Ltd., a collateralized debt obligation supported in part by residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings and removed from Rating Watch Negative.The downgrades were as follows: class A-1L, from A-minus to BBB-minus; class A-2L, from BB to CCC; class B-1A, from B-minus to CC; and class B-1L, from B-minus to CC. The downgrades were attributed to "continued deterioration in the credit quality of MKP CBO's collateral pool and the continued negative impact of its interest rate hedge." In addition to RMBS and CMBS, the portfolio supporting the CDO is backed by commercial and consumer asset-backed securities. Fitch can be found online at http://www.fitchratings.com.

NetBank Inc., an Atlanta-based online bank, has reported a mortgage-related net loss of $2.0 million ($0.04 per share) for the first quarter, compared with net income of $9.4 million ($0.20 per share) a year earlier.The production of conforming mortgages totaled $2.1 billion in the quarter, a decline of 8.6%, and the production of nonconforming mortgages totaled $630 million, a decline of 18.4%, the company reported. "The current-period loss is largely centered in our nonconforming mortgage operation," said Douglas K. Freeman, NetBank's chairman and chief executive officer. ".... More aggressive pricing industrywide and higher-than-normal provision expenses pushed results well below the level our other developing lines of business can offset today. We consider the prevailing nonconforming business conditions atypical. We are fully committed to the nonconforming operation and believe in its ability to contribute significant profitability to our bottom line in normal conditions." The company can be found online at http://www.netbank.com.

The typical American family's ability to purchase a median-priced home increased in the first quarter as a result of rising family income, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 132.9, up from 131.8 in the fourth quarter but down from 141.2 a year earlier. The latest index number means that the typical household in the United States had 132.9% of the income needed to purchase a home at the first-quarter median existing-home price, which was $188,800, the association said. "Rising family income offset higher mortgage interest rates and home prices in the first quarter, boosting the overall homebuying power of the typical family," said NAR chief economist David Lereah. "Generally, home prices have been rising faster than income over the last four years, but the biggest factor -- the monthly mortgage payment -- remains historically low." The NAR can be found online at http://realtor.org.