Originations

ECC Capital Corp., a mortgage finance company based in Irvine, Calif., has announced an agreement under which its retail subsidiary, Bravo Credit Corp., will acquire certain assets and retail mortgage branches from America's MoneyLine Inc.As part of the proposed transaction, Bravo will extend employment to America's MoneyLine employees at the mortgage branches in Connecticut, Maryland, New Jersey, North Carolina, and Texas. It will also offer positions in its Tampa, Fla., office to Tampa employees of America's MoneyLine, which is a wholly owned subsidiary of Saxon Capital Inc., ECC Capital said. Shabi Asghar, president and co-chief executive officer of ECC Capital, said the proposed acquisition is in line with the company's plan to expand its retail origination platform. James V. Smith, Saxon's executive vice president for production, said the new platform would provide "significant opportunities for America's MoneyLine and Saxon to fully leverage [our] centralized operation centers, improve productivity levels, increase geographic flexibility, and reduce our overall net cost to produce." Saxon can be found online at http://www.saxoncapitalinc.com.

United Financial Mortgage Corp., Oak Brook, Ill., has announced an agreement to acquire the eight prime wholesale production offices of Dallas-based AmPro Mortgage Corp. as well as AmPro's Phoenix operations center.The terms of the proposed transaction were not disclosed. UFMC said it expects the acquisition to contribute $2.4 billion to $3.0 billion in additional annual originations, which would represent a 90%-112% increase from its fiscal 2005 origination total. Steve Khoshabe, UFMC's president and chief executive officer, termed the agreement a "significant development for our company" that contributes to its "accretive acquisition" strategy. "This acquisition will give us a significant presence in states where we currently have no infrastructure, including Arizona, Colorado, and Texas, and will add scale in other markets where we currently operate, such as Florida and Georgia, and will solidify our already strong presence in California," Mr. Khoshabe said. The company can be found online at http://www.ufmc.com.

The average 30-year fixed mortgage rate fell to 5.75% for the seven-day period ending May 5 from 5.78% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate decreased from 5.33% to 5.31%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 5.20% to 5.16%, while the average rate for one-year Treasury-indexed ARMs crept up from 4.21% to 4.22%. Fees and points averaged 0.6 of a point for fixed-rate mortgages and hybrid ARMs and 0.7 of a point for one-year ARMs. "Long-term mortgage rates, which dropped again for the fifth consecutive week, remain low enough to keep refinancing activity a viable option for many," said Frank Nothaft, Freddie Mac's chief economist. "Not only can homeowners take some equity out of their home, many may also be able to lower their mortgage rate at the same time." A year ago, the average 30-year and 15-year fixed rates were 6.12% and 5.47%, respectively, and the average one-year ARM rate was 3.76%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Adjustable-rate mortgages and interest-only products accounted for 63% of mortgage originations in the second half of last year, according to a survey by the Mortgage Bankers Association.The Single-Family Mortgage Activity Survey also found that nonprime and alternative-A loans increased their market share to nearly a third in the second half, ARM originations split almost evenly between traditional and hybrid ARMs, and the dollar volume of second-mortgage production rose 17% from that of the first half, the MBA reported. MBA chief economist Doug Duncan said consumers typically shift to ARMs when long-term rates rise at the end of a refinance boom and the spread between long- and short-term rates widens. "This interest rate cycle is unusual in that the increase in ARMs has occurred with a much smaller increase in rates than in past cycles," Mr. Duncan said. "One reason is that house-price appreciation leading up to this ARM cycle was much stronger than in previous ones, creating affordability constraints that led a number of buyers to seek lower payments with ARMs."

Overall conditions in the mortgage market remain "fundamentally strong" even though there may be "tiny bubbles" of concern in certain areas, Mortgage Bankers Association chief economist Doug Duncan told attendees May 4 at the MBA's National Secondary Market Conference.Mr. Duncan said small housing bubbles may exist in markets that have not only high home price appreciation, but also high volumes of interest-only purchase loans, large amounts of stated income/alternative-A credit mortgages, and numerous home purchases in which buyers quickly "flip" the houses for a profit soon after purchase. Mr. Duncan said that, despite this, in general the national mortgage market is healthy. But it is unlikely to match last year's phenomenal heights, he said. The MBA can be found on the Web at http://www.mortgagebankers.org.

Class O of Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1, has been downgraded from B-minus to CCC by Fitch Ratings.Fitch also affirmed 16 other classes in the transaction. The downgrade was attributed to expected losses on the specially serviced loans. Currently, 11 loans (7.6%) are in special servicing, five of which are real estate owned, the rating agency said. An appeal of a court ruling regarding three loans is under way, and depending on the outcome, the expected losses related to the loans could change, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

The official name of the Morgan Stanley REIT Index will be changed to the MSCI US REIT Index as of June 20, New York-based MSCI has announced.The company, whose majority shareholder is Morgan Stanley and whose minority shareholder is Capital International Inc., said the index will continue to be calculated with dividends reinvested on a daily basis. The company said it will also introduce a price-only index that will be calculated in real time and distributed by the American Stock Exchange over Network B of the Consolidated Tape Association and by MSCI to Reuters and Bloomberg. In addition, MSCI will assume from Amex the calculation and dissemination of all information about the MSCI US REIT Index as of June 20. MSCI can be found online at http://www.msci.com.

The common stock of United Financial Mortgage Corp., Oak Brook, Ill., has been approved for listing on the Nasdaq SmallCap Market, according to UFMC.The company said the first trading date for its stock on Nasdaq is expected to be May 18, and that it will continue to trade on the American Stock Exchange until the close of business on May 17. The expected ticker symbol is UFMC. Steve Khoshabe, president and chief executive officer of UFMC, said the company has been pleased with its dealings with Amex but that the move to Nasdaq is expected to "improve the liquidity in our common stock and increase our visibility, while at the same time providing investors in our common stock with better pricing and faster execution." The company can be found online at http://www.ufmc.com.

The credit performance of U.S. commercial mortgage loans improved markedly in 2004, according to a recent report by Standard & Poor's Ratings Services.The study found that there were only 306 additional defaults in 2004 among the 29,827 loans originated between 1993 and 2002 that were pooled for S&P-rated commercial mortgage-backed securities issued in the United States. The increase was 24% fewer than the 404 defaults in 2003, S&P said. The study, "Defaults and Losses of Standard & Poor's Rated U.S. Commercial Mortgage Loans: Year-End 2004," was authored by Dr. Joseph Hu, research head of S&P's Global Real Estate Finance group, and Roy Chun, head of CMBS Surveillance. "The 1995-1997 vintages continued to be the worst performers, with cumulative default rates of 8.92% to 9.56%, an increase of between 81 and 128 basis points from year-end 2003," said Dr. Hu. "Holding seasoning constant, however, the 2000 vintage, now in its fifth year, continued to have the worse cumulative default rate at 6.12%." S&P can be found online at http://www.standardandpoors.com.

Winston Hotels Inc., a real estate investment trust based in Raleigh, N.C., and hospitality lender GE Commercial Finance, Franchise Finance have announced the introduction of a "one-stop shop" hotel finance program.The program will provide loans for up to 85% of a project's construction cost, and will also be available for hotel acquisitions and refinancing, the companies said. "Typically, a developer negotiates with the first-mortgage, or 'A-piece', lender and then conducts a separate negotiation with the mezzanine lender to obtain financing for as much as 85% of a project's cost," said Joe Green, president and chief financial officer of Winston Hotels. "Borrowers must then coordinate between those two lenders, which can be a very involved, often lengthy, and costly process that requires a substantial amount of additional time and paperwork. This loan program cuts through that extended process and boils it down to one negotiation with one lender for both the A and B pieces. The borrower has one blended rate and one mortgage payment." The companies can be found online at http://www.winstonhotels.com and http://www.gefranchisefinance.com.

Allied Capital Corp., Washington, has announced the sale of its portfolio of commercial mortgage-backed securities and collateralized debt obligation bonds and preferred shares to a Canadian pension and insurance fund manager for approximately $976 million in cash.Allied Capital said the transaction resulted in a net realized gain of approximately $216 million. The company said it has also entered into a letter of intent with the Canadian fund manager, Caisse de depot et placement du Quebec, regarding the rest of Allied's commercial real estate assets. Additional agreements could involve the sale of some or all of the assets, Allied Capital said. "Investing in commercial mortgage-backed securities has become more competitive, and the markets have recognized the ability to leverage this asset class in excess of what a BDC structure can accommodate," said Bill Walton, the company's chairman and chief executive officer. "We therefore concluded that these assets are better suited to a more leveraged capital structure and that the best opportunity for our shareholders is to sell the portfolio as a whole and realize its significant value." Allied Capital can be found online at http://www.alliedcapital.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 712.4 to 714.1 on a seasonally adjusted basis during the week ended April 29, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 0.7% on the week but were down 8.0% from their level a year earlier. The Purchase Index rose from 482.0 to 482.5 on a seasonally adjusted basis, while the Refinance Index climbed from 2052.5 to 2061.2. Refinancings represented 39.1% of total applications, down from 39.3% the previous week, while adjustable-rate mortgages accounted for 33.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.75% to 5.74%, and points (including the origination fee) decreased from 1.28 to 1.18 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

General Growth Properties, a Chicago-based real estate investment trust, has reported net income of $13.1 million ($0.06 per share) for the first quarter, compared with $59.1 million ($0.27 per share) for the first quarter of 2004.John Bucksbaum, GGP's chief executive officer, said the first quarter was the first full quarter of combined operations for The Rouse Co. and GGP, which GGP acquired last fall. "Although we have already captured some efficiencies, there are still significant benefits we expect to obtain throughout the remainder of this year and next," he said. The retail REIT's funds from operations for the first quarter were $0.72 per share, a 20% increase from $0.60 per share for the first quarter of 2004. GGP can be found online at http://www.generalgrowth.com.

The Eleventh Federal Home Loan District Cost of Funds Index continued its slow rise in March for the 10th consecutive month.According to data released by the Federal Home Loan Bank of San Francisco, the index for March stood at 2.400%, up just over 8 basis points from February's 2.317%. Since bottoming out last May at 1.708%, the index has increased just over 69 bps, with the largest jump (and the only double-digit jump) occurring in February when it increased by over 11 bps. COFI is a weighted average calculation of the interest expense paid by FHLBank-SF member thrifts in Arizona, California, and Nevada.

The secondary market is beginning to question the unbridled growth of interest-only mortgages, 40-year loans, and other products designed to capitalize on the rapid run-up in housing prices.Interest-only loans "have a place, but where we get nervous is their suitability to the borrower," Thomas Lund of Fannie Mae said at the Mortgage Bankers Association's National Secondary Market Conference in San Francisco. Such loans may be appropriate for some borrowers, but they could prove disastrous for those who are relying solely on skyrocketing values, Mr. Lund said. Borrowers are "not saving much [in the form of lower monthly payments] in relation to the potential for an upward adjustment" in the interest rate, he said. Donald Disenius of Freddie Mac said he had similar concerns, particularly when consumers use their mortgages to accumulate wealth through appreciation rather than amortization. And William Batz, executive vice president of the Federal Home Loan Bank of Pittsburgh, said making interest-only and 40-year loans to some people could smack of predatory lending. "IOs may be suitable for the right market," he said, "but they could be characterized as predatory for the wrong borrower."

The Pending Home Sales Index, which the National Association of Realtors has touted as a new leading indicator for the housing market, stood at 122.8 in March, 0.3% below its February level but 1.7% above that of a year earlier.The index is based on pending sales of existing homes, including single-family, condominium, and cooperative. (A sale is deemed pending when the contract has been signed but the transaction has not closed, a period that typically lasts one or two months, the NAR said.) "Considering we've set records for home sales in each of the last four years, the level of contract activity is exceptionally strong," said David Lereah, the NAR's chief economist. An index of 100 is equal to the average level of contract activity in 2001, the first year for which the NAR has analyzed data. The association can be found online at http://realtor.org.

After a disastrous first two months of the year, the amount of primary new insurance written by the members of the Mortgage Insurance Cos. of America increased by 24.3% in March.The six companies wrote $17.15 billion in new insurance during the month, compared with a revised total of $13.8 billion in February and $14.0 billion in January. The number of applications received increased by 33.3% over February's level, from 110,384 to 147,105. New pool risk written totaled $30.3 million, compared with a revised total of $29.6 million in February and $23.3 million in January. The changes, which affected the bulk portion of the primary new insurance written in those months as well as the pool risk written, were made to account for an adjustment made by one company, MICA said. For the second consecutive month, cures outnumbered defaults, 38,862 to 36,322, for a ratio of 107%. MICA can be found online at http://www.micanews.com.

South Carolina Bank and Trust NA, Columbia, S.C., has announced an agreement to acquire the assets of Devine Mortgage LLC, which was established in Columbia in 2003.The terms of the agreement were not disclosed. Leslie Francis, Devine's managing member, will join SCBT as a mortgage production manager and will manage all aspects of the lending process for the bank's Midlands Region, the company said. Kelley Lynn will also join SCBT. Devine Mortgage will become one of the bank's loan production offices. SCBT can be found online at http://www.scbandt.com.

Following a move by New York Attorney General Eliot Spitzer, Inner City Press/Fair Finance Watch is calling on more than 30 state attorneys general to take action against lenders who have shown evidence of discriminatory lending practices.The industry watchdog said it recently completed a study showing that 12 of the nation's largest lenders "are to varying degrees disparate by race in distributing high-cost loans." ICP reviewed the 2004 Home Mortgage Disclosure Act data in which it compared not only denial rates but also new information concerning which loans are subject to a rate spread. "It's obviously not just a New York problem," said Matthew Lee, executive director of ICP. "The danger here is most of these lenders claim to have best practices in place. But the data is quantifiable. We're not dealing with anecdotes here." Mr. Lee said the group wants the AGs to take lenders to court and get a commitment to reduce the lending disparities.

Warning that an ill-informed outcry by the news media over the latest Home Mortgage Disclosure Act data could be deafening, the next president of the Mortgage Bankers Association cautioned lenders to "be ready to combat knee-jerk reaction."Regina Lowrie, president of Gateway Funding Diversified Mortgage, said reporters won't be interested in the complex reasons behind the numbers. "Calls for more regulation" are far more likely than the full story, she told the MBA's National Secondary Market Conference in San Francisco. "It could get ugly." Media scrutiny over HMDA is just one of the issues the MBA chairwoman-elect expects to reach a crossroads in the coming months. She said lawmakers also are likely to finally come to grips with creating a stronger, empowered -- and preferably "cautious" -- regulator for Fannie Mae and Freddie Mac. "MBA supports a GSE regulator with real enforcement authority," Ms. Lowrie said. She also reiterated that the MBA does not want legislation that would cap the government-sponsored enterprises' own portfolios, but that for the sake of clarity it needs a once-and-for-all definition of where origination ends and the secondary market begins.