Originations

The Market Composite Index, an overall measure of mortgage applications, fell from 674.3 to 644.5 on a seasonally adjusted basis during the week ended April 1, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 4.5% on the week and were down 35.1% from the level of a year earlier. The Purchase Index fell from 470.9 to 446.0 on a seasonally adjusted basis, while the Refinance Index declined from 1857.2 to 1798.8. Refinancings represented 38.3% of total applications, up from 37.8% the previous week, while adjustable-rate mortgages accounted for 35.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 6.08% to 5.91%, and points (including the origination fee) decreased from 1.34 to 1.26 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Fleetwood Enterprises, a Riverside, Calif.-based producer of manufactured homes and recreational vehicles, is selling its manufactured housing financial services business, HomeOne Credit Corp.It is also looking to exit the retail manufactured home sales business, the company said. Offers will be solicited for both businesses combined or separately. "We are taking this action in order to stem losses and concentrate our attention on our core businesses," said president and chief executive Elden L. Smith. "We are convinced that returning Fleetwood to its traditional focus on manufacturing operations and wholesale distribution channels in both our manufactured housing and in our recreational vehicle businesses provides us with the best opportunity to regain our former position as the industry leader in both." Mr. Smith, who rejoined Fleetwood on March 9, said the company hopes the retail sales business and HomeOne can be sold to one buyer to minimize disruption at the companies. Until 1997 when he retired, Mr. Smith was in charge of the company's recreational vehicle group. For its third fiscal quarter, ended Jan. 23, 2005, Fleetwood had a net loss of $54.7 million ($0.99 per share), compared with a loss of $10.2 million ($0.26 per share) for the third quarter of fiscal 2004.

MetLife is selling its 200 Park Avenue property in Midtown Manhattan, also known as the MetLife Building, to Tishman Speyer for $1.72 billion.Tishman Speyer expects to own the property through a joint venture with two pension funds, the NYC Employees Retirement System and Teachers' Retirement System, according to published reports, with Lehman Brothers providing additional debt financing. The building will continue to serve as the insurance company's headquarters, and MetLife said its logo will remain in place. MetLife acquired the property in 1981 and expects an after-tax gain of over $750 million from the sale.

Many appraisers are responding to increased pressure from loan originators in a highly competitive marketplace by inflating property values during the buying and refinancing of homes, according to a report from the public policy group Demos.As a consequence, homeowners have borrowed more money than their homes are really worth, says "Home Insecurity: How Widespread Appraisal Fraud Puts Homeowners At Risk," the new Demos report. "Appraisal fraud is part of a bigger, more ominous picture," said David Callahan, author of the report and director of research at Demos. "As home prices have continued to increase above inflation, even nearing 20% per year in some cities, American homeowners are vulnerable as never before to financial ruin if home prices fall to their natural market value." Demos said more Americans have reduced the equity in their home to meet rising living expenses, like education and health care, or to pay off credit card debts. From 2001 to 2004, homeowners pulled out a staggering $485 billion worth of equity, and the trend is expected to continue. Adjustable-rate mortgages accounted for 34% of loans in 2004, leaving borrowers dangerously vulnerable to a rise in interest rates, the report said.

American Business Financial Services, Philadelphia, formerly a leading subprime mortgage lender, has announced that it plans to wind down its operations and dispose of its assets through a Chapter 11 liquidation plan.The retail and wholesale lender said it closed its office in Texas April 1 and was slated to close its offices in California and Maryland on April 4. Layoffs of Philadelphia-based employees are scheduled to begin on April 11, and ABFS said it expects the corporate headquarters to be closed by the end of July. David Coles of Alvarez & Marsal, the chief restructuring officer of ABFS, said an analysis of the company's prospects had convinced the restructuring team and ABFS senior management that "the cash requirements to create a sustainable operation were significantly greater than the company's available funding."

The Eleventh Federal Home Loan District Cost of Funds Index rose to 2.317% in February, the ninth consecutive month it has recorded an increase.The index stood at 2.183% in January. Since reaching a low of 1.708% in May 2004, COFI has increased more than 60 basis points. The index is a weighted average calculation of the cost of mortgage money for thrifts in Arizona, California, and Nevada.

Commercial and multifamily mortgages outstanding rose to $2.29 trillion at the end of 2004, up 10.6% from the amount outstanding at the end of 2003, according to the Mortgage Bankers Association.Multifamily mortgage debt alone stood at $601 billion at the end of 2004, up 7.9% from the figure for 2003, based on an analysis of Federal Reserve data, the MBA said. "With the tight integration that has developed between commercial mortgage markets and capital markets, both domestic and international, the first few months of 2005 are showing that trend continuing," said Doug Duncan, the MBA's chief economist and senior vice president. Commercial banks hold 43% of the outstanding commercial and multifamily mortgage debt, followed by commercial mortgage-backed securities pools, at 18% of the total, and life insurance companies, at 11%. Savings institutions hold 8% of the total, and the government-sponsored enterprises and "federally related mortgage pools" hold 8%. Considering just multifamily mortgage debt, Fannie Mae, Freddie Mac, and Ginnie Mae hold the biggest share, at 30% of the outstanding debt, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

The Mortgage Bankers Association has launched an online resource center it describes as a one-stop shop to help the industry combat mortgage fraud.The Mortgage Fraud Against Lenders Resource Center will be a central repository for information about fraud against mortgage lenders, the MBA said. The resource center will include such information as fraud-alert updates on emerging fraud schemes, a Lender Tool Box to help lenders protect themselves against fraud, and a resource library of reports and Web links. Jonathan L. Kempner, the MBA's president and chief executive officer, said the association wants the center to become "a virtual meeting place for lenders to share information and resources to protect their companies from being victimized by mortgage fraud against the real estate finance system." The center can be found online at http://mbafightsfraud.mortgagebankers.org.

Homebuilder KB Home, Los Angeles, will offer all of its website content in Spanish after recently completing a redesign of its website.The functionality of the site remains identical to the English version, with users having to click a button, labeled "Espanol," at the top of the page to direct them to Spanish-language content on the website. "With Spanish being the primary language for so many of our customers who visit the website, this was a natural and necessary step," said Wendy Marlett, KB Home senior vice president of marketing and communications. "We want our new website to be informative and interactive for every buyer, while also free from any language barriers." Hispanics are the fastest-growing population segment in the U.S. and the nation's largest minority group at 12% of the entire U.S. population, according to the U.S. Census Bureau. Users logging on to the website can now search for new KB Home communities in Spanish, as well as research mortgage information and view design choices. KB Home can be found online at http://www.kbhome.com

If January was a bad month for the private mortgage insurance companies, February was worse.Dollar volume of primary new insurance written was $13.8 million for the month for the member firms of the Mortgage Insurance Cos. of America, down from just under $14 million in January and $14.3 million in February 2004. Traditional primary new insurance written was at $9.8 billion, down from $10.9 billion in January. Primary insurance in force, once as high as $618.9 billion fell to $602.9 billion. New pool risk written was $56.2 million for the month. One of the few good signs during the month was that for the first time in 11 months, there were more cures than defaults. Cures totaled 43,205 for the month while there were 38,421 defaults for a ratio of 112.5%. MICA is located on the Web at http://www.micanews.com.

GMAC Commercial Mortgage Corp. has provided a total of $75 million in permanent, fixed-rate financing for two different projects. The company has allotted $50 million for a Houston office building and $25 million for phase one of Columbus Commons, a newly built Philadelphia retail property. The Houston property is one of the four major office buildings on the site, which also includes the Omni Hotel. The 481,222-square-foot office building is situated on 28 acres adjacent to the Buffalo Bayou. In Philadelphia, the commercial retail property is located at Columbus Boulevard and is anchored by a 315,000-square-foot IKEA and a 161,000-square-foot Lowe's. Major tenants include a 30,000-square-foot Best Buy, a 35,000 square-foot Linens 'n Things, a 12,800-square-foot R&S Strauss and a 10,700-square-foot Pier 1 Imports. Both transactions were arranged through GMAC's Proprietary Lending Group.

CitiMortgage, St. Louis is offering an extensive suite of mortgage and construction loan financing options designed exclusively for HouseRaising Inc. homebuyers. The partnership allows CitiMortgage to be the sole lender with "the right of first offer on all construction and permanent mortgage financing" to HouseRaising, a Charlotte based company that provides a patented homebuilding and management process to buyers who act as contractors in building their own homes. According to senior vice president of CitiMortgage's retail lending business, Fred Bolstad, the lender's goal is "to provide as many outlets for homeownership as we can." HouseRaising chairman and CEO, Charles Skibo noted that one of the main advantages to the partnership consists in the CitiMortgage broad range of lending options and its geographic presence that serve both HouseRaising and its customers. HouseRaising said the new CitiMortgage product features a single closing process, fixed rate financing, flexible reserves for change orders, a built-in review of the contractor and construction/renovation project, and a range of financing and payment options.

Freddie Mac is moving ahead with plans to grow its $664.5 billion mortgage portfolio even though Congress is considering ways to cut or slow its growth.Rep. Richard Baker, R-La., is expected to unveil a GSE bill (possibly on April 5) that will require Freddie and Fannie Mae to reduce their mortgage holdings over time. Nevertheless, Freddie executive vice president Patricia Cook told investors and analysts that recent changes in interest rates are "likely to present an opportunity to grow the portfolio a little quicker than in 2004." Long-term, Freddie expects portfolio growth will stay in line with the overall growth of mortgage debt outstanding, she said during a conference call on the company's 2004 financial results. At the same time, Freddie is expanding its loan purchases to serve "all segments of originations," chief operating officer Eugene McQuade said. This means the government-sponsored enterprise will purchase more subprime products for its retained portfolio or for securitization. Through the guarantee business and capital markets operation, Freddie wants to "buy the market and distribute the risk," Mr. McQuade said.

Federal banking regulators have issued public guidance in a question and answer format that discusses the background and uses of the new Home Mortgage Disclosure Act pricing data that identifies subprime loans for the very first time and the limitations of that data."If the new HMDA data show that minorities pay more for loans than whites on average, will that difference prove unlawful discrimination? No. However, such a disparity indicate a need for closer scrutiny," the guidance says. Lenders are expected to use this guidance in responding to questions or accusations about their subprime lending activities. (Upon request, mortgage lenders are required to release their 2004 HMDA, including the new pricing data, starting March 31.) The guidance notes that the HMDA data is limited and does take into account credit scores, debt-to-income ratios and other factors that are important in pricing a loan. "Though the price data do not support definitive conclusions, they are a useful screen, previously unavailable, to identify lenders, products, applicants, and geographic markets where differences among racial or other groups are sufficiently large to warrant further investigation," the guidance says.

Origen Financial Inc., a Southfield, Mich.-based real estate investment trust that originates manufactured housing loans is reducing its reported interest income and earnings recognized by $1.7 million for the 14-month period ended Dec. 31, 2004.The reduction, it said, comes from "an isolated interpretive error" in accounting for a pool of loans acquired at a discount in October 2003. Loans acquired from others at a discount must be accounted for differently than loans originated by Origen. The pool, which has a face value of $56 million, was bought for $48 million; the discount was because of the known and anticipated number of delinquencies in the pool. The appropriate accounting treatment will reduce earnings per share at Origen by $0.03 per share for the period Oct. 8, 2003 to Dec. 31, 2003 and will increase the loss per share for 2004 by $0.06. Therefore, Origen has a loss of $3.0 million or $0.14 per share for 2004, instead of the reported $1.8 million or $0.08 per share loss.

The Mortgage Industry Standards Maintenance Organization will have a compliance effort for credit reporting transactions completed by April with other MISMO Workgroups still handing in specs to define MISMO compliance across the board throughout the year.At press time the remaining workgroups within MISMO were working on specifications that would determine the minimum requirement for MISMO Compliance to be able to deliver a full compliance tool at a later date. Going further, SMART Doc and e-mortgage compliance services are expected by year’s end, according to the MBA.

In a move to broaden their reach to the small-to medium-size lender market Fiserv has acquired Del Mar Database, San Diego, the two companies said.Del Mar will continue to be run independently with no management changes, according to John Walsh, Del Mar Database president. Mr. Walsh said the acquisition will "add a lot of credibility to Del Mar." Leslie Muma, Fiserv president and chief executive officer, said the acquisition is a key milestone in the company's goal of "building the most complete technology solution for the lending industry." The actual price and terms of the deal were undisclosed. Del Mar can be found on the Web at http://www.delmard.com.

The average 30-year fixed mortgage rate rose to 6.04% for the week ending March 31 from 6.01% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.56% to 5.58%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.43%, up from 5.35%,and the average rate for one-year Treasury-indexed ARMs rose from 4.24% to 4.33%. Fees and points averaged 0.7 of a point for fixed-rate mortgages and 0.8 of a point for ARMs. "Financial markets currently are very inflation sensitive, putting upward pressure on mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. However, several economic indicators suggest that the economy isn’t overheating and that inflation is relatively contained.” A year ago, the average 30-year and 15-year fixed rates were 5.52% and 4.84%, respectively, and the average one year-year ARM rate was 3.46%. Freddie Mac can be found online at http://www.freddiemac.com.

Freddie Mac's 2004 net income fell 41% from 2003 to $2.8 billion, reflecting losses related to derivatives used to minimize interest rate risk.Diluted earnings per common share fell to $3.78 in 2004, compared to $6.68 in 2003. Freddie Mac said a $4.5 billion decline in the value of derivative instruments that do not qualify for hedge accounting treatment was the primary driver of the drop in earnings. At the same time, Freddie Mac said that it exceeded a minimum regulatory capital threshold by $10.8 billion and that the fair value of net assets attributable to common stockholders increased 17% to $26.7 billion at the end of last year. Unlike net income under GAAP, the fair value measure takes all of Freddie Mac's assets, liabilities and other factors into account. Patricia Cook, executive vice president at Freddie Mac, said in a conference call with investors and analysts that the fair value measure eliminates the "bias" associated with derivative gains and losses.

SL Green Realty Corp., New York, is acquiring One Madison Avenue in Midtown Manhattan for $918 million from Metropolitan Life Insurance.The property consists of two buildings totaling 1.4 million square feet, the real estate investment trust reports, and SL Green plans to convert one of the buildings -- a 41-story property with 267,000 square feet -- into residential condominium units. The other building, consisting of about 1.2 million square feet, is 95.5% net leased to Credit Suisse First Boston, SL Green said. CSFB is also providing debt financing for the acquisition. SL Green intends to tap $805 million in financing to fund the acquisition and development of the property and has so far obtained $690 million in fixed-rate financing, according to the REIT. The "air rights" associated with the property also could allow for the development of another 470,000 square feet of additional space, SL Green believes. The acquisition is in keeping with the REIT's strategy of "capitalizing on corporate divestitures of real estate," according to SL Green.