Originations

NovaStar Financial Inc., Kansas City, Mo., is entering the warehouse lending business through its NovaStar Capital Inc., Atlanta, subsidiary. Kenneth D. Logan, formerly the head of national warehouse lending at PCFS Financial Services, has joined NovaStar Capital as executive vice president and chief operating officer.There are two programs being offered through NovaStar Capital. NovaFund is a traditional warehouse line for correspondent lenders. It provides short-term funding for loans that may be delivered to NovaStar Mortgage or other approved investors. NovaFund Express is a managed line which facilitates warehouse financing for brokers with a lender's license by allowing them to use investor guarantees and approved service providers to fulfill requirements typically expected of a dedicated lender. In doing so, it eases the infrastructure needs of these emerging broker/bankers, the company said.

Merrill Lynch Credit Corp., New York, has expanded its correspondent group with the hiring of six industry veterans.Bob Bodell will serve as national sales director; previously he was an executive vice president at First Nationwide Mortgage Corp. Hired as regional sales managers are: Gary Rosenberger, Southeast region; Patricia Slepkow, Northeast and sections of the North Central regions; Fred Hurt, Midwest region; Dennis Brodhecker, Western region; and David Smith, Central region. The group will be headquartered in Jacksonville, Fla. It will offer correspondents bulk and flow execution as well as customized deal structuring for jumbo and superjumbo loans. Larry Washington, chairman and chief executive of Merrill Lynch Credit Corp., said, "Our financial strength provides us with the distinctive ability to create flexible and customizable arrangements to meet unique client needs."

Mortgage applications rose 2.4% on a seasonally adjusted basis for the week ended March 25, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were up 2.4% on the week, but down 36.5% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index rose from 446.4 to 470.9, and the Refinance Index fell from 1894.4 to 1857.2. Refinancings represented 37.8% of total applications, up from 39.5% the previous week, while adjustable-rate mortgages accounted for 36.6%. The average contract interest rate for 30-year fixed-rate mortgages increased from 5.95% to 6.08%, and points (including the origination fee) increased from 1.22 to 1.34 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

Cornerstone Realty Income Trust, Richmond, Va., is being replaced by American Land Lease, Clearwater, Fla., in the S&P REIT composite index, Standard & Poor's reported.The change will be effective after the close of trading on April 1. Cornerstone Realty, a multifamily real estate investment trust, is being acquired by Colonial Properties Trust, another S&P REIT Composite company, and this is what brings about the change, according to S&P. American Land Lease has interests in the manufactured housing arena.

Almost equal amounts of consumers surveyed said the lack of financial security (24%) and saving for a downpayment (23%) were among the biggest obstacles to homeownership.The survey, conducted by Caravan Opinion Research Corp., for GMAC Mortgage, Horsham, Pa., found that these financial issues, taken together, were nearly as challenging to consumers as finding the right house (37%). The survey also found that consumers want greater homeowner education. When asked in which areas, 20% said finding the right loan, 18% said managing debt, 17% said evaluating credit, 16% said finding the right home, 10% said saving for a downpayment and 7% said finding a qualified Realtor. The survey involved approximately 1,000 households reached by telephone and had a margin of plus or minus three percentage points at the 95% confidence level.

National Tax Search, a provider of property tax management services, will provide property tax services for Cohen Financial, a commercial real estate finance company.NTS will provide property tax tracking, reporting and payment services to Cohen Financial’s commercial mortgage loan servicing portfolio. NTS’s property tax system, TaxQ, will automatically monitory different taxing schedules and multiple due dates, the company said. NTS’s website is located at http://www.nationaltaxsearch.com.

American International Group, New York, has formed AIG Real Estate Solutions, a unit that will solely focus on the insurance and risk management needs of the real estate sector.To further support AIG's real estate clients, some other AIG member companies could offer other real estate-related services, AIG reports, including real estate investment, development and management; commercial mortgage lending; management of commercial mortgage-backed securities and unsecured real estate investment trust debt portfolios; affordable housing sponsorship and residential mortgage guaranty insurance. John Willett of Lexington Insurance Company will be the practice leader for the new unit, AIG said. Kristian P. Moor, executive vice president for domestic general insurance at AIG, said, "Real estate operations face a broad spectrum of exposures that are unique to their industry. AIG RES was created with these issues in mind to provide the real estate sector with access to the full range of AIG's insurance offerings and eliminate many of the gaps in coverage that typically result when dealing with multiple carriers."

With more borrowers seeking to modify their commercial mortgage backed securities loans in increasingly complicated ways, Fitch Ratings has published a new report explaining its rationale for evaluating these requests.The report is designed to educate borrowers and CMBS servicers about the evaluation process and document needs when Fitch is asked for a rating confirmation. In issuing a confirmation, Fitch confirms that a modification to an existing loan will not affect the ratings of the transaction. The paper covers request issues such as assumptions, defeasance, management changes, and more complicated issues such as tenants-in-common structures.

HSBC Bank USA has announced the opening of a West Coast headquarters office in downtown Los Angeles with a staff that includes a mortgage specialist.The bank said the opening is part of its continuing expansion in California, where it now boasts eight branches, six in Southern California and two in the San Francisco Bay area. In addition to a mortgage specialist, the multilingual staff includes a financial adviser, an insurance specialist, and a small-business relationship manager, the bank said. The company, the principal subsidiary of HSBC USA Inc., can be found on the Internet at http://us.hsbc.com.

Class M-PS of COMM 2001-FL4 commercial mortgage pass-through certificates has been downgraded from B3 to Caa1 by Moody's Investors Service.In addition, Moody's affirmed the ratings on three other classes in the transaction. The rating agency attributed the downgrade to "poor property fundamentals." The certificates are collateralized by an $82 million senior participation interest in the 100 Pine Street Loan, the only remaining loan in the trust, which is secured by a class A office building in San Francisco's financial district. The property was 81.4% occupied as of December 2004, compared with 65.2% in October 2004 and 97.7% at securitization, Moody's said.

AmeriDream Inc., Gaithersburg, Md., has announced the formation of the Association for Homeowners Across America, a first-of-its-kind nonprofit membership group that AmeriDream says will provide a one-stop resource for homeownership-related education, services, exclusive offers, and advocacy."Homeowners and homebuyers often feel intimidated before, during, and after the homebuying process, because of the enormous commitment that buying a home entails," said AmeriDream president and chief executive Ann Ashburn. "AHAA will be there, in their communities, to provide education, answer their questions, offer them exclusive opportunities, and serve as their voice to local, state, regional, and national lawmakers." Beginning in June, AmeriDream said AHAA members will receive homeownership preparation classes; financial planning and wealth-building assistance; exclusive home safety and inspection opportunities and information; downpayment assistance; and home retention and loss mitigation assistance.

The hotel sector is in comeback mode, according to a report from Moody's Investors Service."After experiencing two years of RevPAR [revenue per available room] declines in 2001 and 2002, and only a minimal gain in 2003, U.S. hotels posted a RevPAR increase of 7.8% in 2004 as urban markets, which experienced the greatest increase in vacancies, are seeing more rooms booked as corporate travel increases with the expansion of the economy," say Moody's analysts EJ Park and Natalka Purij, the authors of the report. The analysts said the outlook for the hotel industry, "barring any further terrorism-related incidents," looks good for 2005 and 2006, with expected RevPAR increases ranging between 5% and 7% each year. In another sign of improvement in the hotel sector, the rating agency is seeing more hotel collateral being included in commercial mortgage-backed securities deals. Moody's has already rated about $1.21 billion of hotel loans so far this year.

MasterCraft Builders, a homebuilder based in Kenosha, Wis., has announced the formation of Signature Banc, a full-service mortgage company.The bank will offer loans requiring only interest payments during construction, with rates locked for up to 18 months, MasterCraft said. Loans will be available to buy land as well covering up to 100% of building costs. "Customers can save time by combining their walk-through and closing," said Mike Lawrence, general manager of MasterCraft. "Because Signature Banc is the exclusive lender to MasterCraft Builders, the customer can complete the necessary paperwork and close onsite following the walk-through." The homebuilder can be found online at http://www.mastercraftbuilders.com.

GE has priced a secondary offering of stock in Genworth Financial, the spinoff that includes GE's mortgage insurance business.A total of 85,000 shares of Genworth class A common stock are being sold in the secondary offering at a price of $26.50 per share. The underwriters do not have an overallotment option. Concurrently, Genworth will repurchase directly from GE approximately 19.4 million shares of Genworth's class B common stock for $500 million. GE, as the selling stockholder, will receive net proceeds of approximately $2.6 billion and after the transactions will own approximately 52% of Genworth's common stock. GE chairman and chief executive Jeff Immelt termed the offering an "important next step in the reduction of our investment in insurance." GE said that, subject to market conditions, it expects to continue reducing its investment over the next two years as Genworth transitions to full independence.

A group headed by former Fannie Mae executive Stuart McFarland is buying a controlling stake in a small Indiana thrift chaired by Chuck Chamness, a former Federal Housing Finance Board official.The thrift, Assurance Partners Bank, Carmel, Ind., is owned by the National Association of Mutual Insurance Cos., an Indianapolis-based trade group that represents 1,200 property/casualty insurers with $90 billion in premiums. The thrift, which makes first- and second-lien loans, has about $38 million in assets. (The mortgage products are actually offered to the public through NAMIC's member insurance firms.) Assurance has been losing money since its inception in 2000. Under Mr. McFarland, the thrift will expand by adding retail branches in Indiana as well as Washington, D.C., and Maryland. (See the March 28 issue of National Mortgage News for more details.)

The average 30-year fixed mortgage rate rose to 6.01% for the seven-day period ending March 24 from 5.95% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.47% to 5.56%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.31% to 5.35%, and the average rate for one-year Treasury-indexed ARMs rose from 4.20% to 4.24%. Fees and points averaged 0.7 of a point for fixed-rate mortgages and five-year hybrid ARMs and 0.8 of a point for one-year ARMs. "Renewed concern over the threat of inflation pushed up long-term mortgage rates, while the most recent [Federal Open Market Committee] statement caused short-term rates to float upwards," said Frank Nothaft, Freddie Mac's chief economist. "Although mortgage rates have risen these past six weeks, they still remain at very affordable levels." A year ago, the average 30-year and 15-year fixed rates were 5.40% and 4.70%, respectively, and the average one-year ARM rate was 3.36%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

New single-family home sales rebounded 9.4% in February as builders continue to sell homes at a much faster rate than they can build them.The U.S. Census Bureau reported that new-home sales jumped from a seasonally adjusted annual rate of 1.12 million in January to 1.23 million in February. Builders have a huge backlog of unfilled orders, and lenders can expect to see more loan closings than sales this year, according to National Association of Home Builders economist Michael Carliner. About 100,000 homes were started in 2004 that won't get to closing until this year. "Even though we expect sales to be down 4%-5%, the number of loan closings should be up in 2005," he said.

The Market Composite Index, an overall measure of mortgage applications, fell from 727.6 to 658.8 on a seasonally adjusted basis during the week ended March 18, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 9.2% on the week and were down 39.3% from the level of a year earlier. The Purchase Index fell from 462.8 to 446.4 on a seasonally adjusted basis, while the Refinance Index declined from 2267.5 to 1894.4. Refinancings represented 39.5% of total applications, down from 42.9% the previous week, while adjustable-rate mortgages accounted for 33.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.91% to 5.95%, and points (including the origination fee) decreased from 1.23 to 1.22 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

An open question in the proposed Ney-Kanjorski bill is the treatment of yield-spread premiums paid to mortgage brokers, according to E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey.Speaking at the regional conference of mortgage bankers associations in Atlantic City, Mr. Levy said the bill -- which would establish a national lending standard -- is ambiguous on whether the computation of what constitutes a high-cost loan would include the YSP. He interprets the bill as now written to include the YSP in the calculation. Current federal law does not. Another issue raised by Mr. Levy is that the bill includes the term "reasonable tangible net benefit." That term has been included in other state laws, including New Jersey's, and is undefinable, he said. Michael Petrie, chairman of the Mortgage Bankers Association, added that what could derail Ney-Kanjorski is the release of the Home Mortgage Disclosure Act data. The raw data, which do not include other factors such as credit scores, could become a public relations nightmare because a disproportionate number of high-cost loans might have been made in low- and moderate-income neighborhoods.

Existing-home sales slipped 0.4% in February while prices on single-family homes and condominiums continued to surge.The National Associations of Realtors reported that sales of single-family homes, condos, and co-ops fell from a seasonally adjusted annual rate of 6.82 million in January to 6.79 million in February. Separately, single-family homes declined 0.3% to a seasonally adjusted annual rate of 5.94 million in February, and condo/co-op sales declined 1.2%. Condo prices surged at a 20.5% annual rate in February, while single-family home prices jumped 9.4%. The February sales rate was 6.1% above the rate in February 2004. Nevertheless, NAR chief economist David Lereah said he believes the market is settling down after setting sales records for the past three years. "The cooling in sales this year means we'll be transitioning from a white-hot housing market to a very strong market," Mr. Lereah said. The NAR can be found online at http://www.realtor.org.