Originations

Foreign investors interested in U.S. regulated investment companies (such as real estate investment trusts) stand to gain from tax incentives provided by the American Jobs Creation Act of 2004, according to special report by CCH Capital Changes.The company, a part of the Wolters Kluwer Corporate & Financial Services division, said the old tax rules imposed potential U.S. income tax liabilities and reporting requirements for foreign investors in REITs and other investment companies. "Under the 2004 tax act's new provisions, these rules have been favorably modified, reducing tax and reporting obligations and thereby making it less cumbersome and more attractive for a tax perspective for foreign investors to participate in these U.S. market-based investments," said Stevie D. Conlon, senior tax analyst for CCH Capital Changes. The company can be found online at http://www.cap.cch.com.

Citigroup has announced an agreement to sell its $1.4 billion manufactured housing loan portfolio to 21st Mortgage Corp., a manufactured housing lender based in Knoxville, Tenn.The terms of the transaction were not disclosed. Citigroup said the cumulative effect of the sale would be an after-tax loss of approximately $120 million in the first quarter. The companies can be found online at http://www.citigroup.com and https://www.21stmortgage.com.

American Financial Realty Trust, Jenkintown, Pa., has reported the completion of a strategic realignment of its senior management team's responsibilities along more functional lines.James T. Ratner, American Financial's senior vice president and chief financial officer, has been promoted to executive vice president for finance and corporate strategy, while David J. Nettina, the company's chief real estate officer, will assume the additional role of CFO. Robert J. Delany, SVP for capital markets and corporate strategy, has been promoted to EVP and chief operating officer for Europe. In additional, Glenn Blumenthal and Edward Matey Jr. have been promoted to EVP, and they will continue in their roles as COO and general counsel, respectively. The real estate investment trust can be found online at http://www.afrt.com.

First Industrial Realty Trust, a Chicago-based real estate investment trust, has formed a joint venture with the California State Teachers' Retirement System to invest up to $950 million in industrial properties nationwide.The joint venture, which has a five-year time horizon, is expected to have a capitalization of 35% equity and 65% debt, including $300 million in equity from CalSTRS and $33 million in equity from First Industrial, the REIT said. "This joint venture provides us greater capacity to expand our share of the most lucrative part of the industrial real estate business, the development and repositioning of corporate real estate assets," said Mike Brennan, First Industrial's president and chief executive officer. First Industrial is selling about $86 million of unimproved land and buildings that require repositioning to seed the venture, for which JPMorgan Chase has provided a $100 million credit facility, First Industrial said.

Randy Pool has been named executive vice president and general manager of the newly formed National Correspondent Lending Division of New Century Financial Corp., Irvine, Calif.Mr. Pool will report to Patrick J. Flanagan, president of the New Century Mortgage Corp. He was most recently an executive vice president at Argent Mortgage Co., and previously held various senior management positions at Community Home Funding Group, The Money Store, U.S. Property and Appraisal Services, and The Associates Financial Services Co., New Century said. New Century can be found online at http://www.ncen.com.

GMAC Commercial Mortgage Corp., Horsham, Pa., has announced the formation of a Manufactured Home Community Loan Origination Division.The new division will be led by directors Charlie Williams in the Phoenix loan origination office and Damon Reed and Dan Armstrong in the Birmingham loan origination office. In 2004, GMACCM originated and closed manufactured home transactions totaling approximately $500 million and, for the first time, was the nation's No. 1 lender for manufactured home community loans through the Fannie Mae DUS Flow Program, GMACCM said. The company can be found online at http://www.gmaccm.com.

Troubled mortgage giant Fannie Mae said late Thursday that, once again, it could not report quarterly earnings in a timely manner, but also said its anticipated losses could be lower by about $1 billion.In a Form 12b-25 filing with the Securities and Exchange Commission, Fannie said its restatement in regard to hedge accounting (FAS 133) may be $8.4 billion, not $9 billion as previously thought. Its losses on certain "purchase and sell commitments" may be $2.4 billion, compared with an earlier estimate of $2.8 billion. Fannie, which has not reported earnings since the second quarter of 2004, is operating under a supervisory agreement with the Office of Federal Housing Enterprise Oversight. It is continuing an intense audit of its books and says it expects to restate earnings for the past three years. A new analyst report released by Smith Barney predicts that if interest rates rise, the company's anticipated losses "could shrink further in size."

Two mortgage lenders and six real estate investment trusts have reported a 15-day delay in the filing of their annual Form 10-K reports with the Securities and Exchange Commission.Accredited Home Lenders Holding Co., a San Diego-based mortgage banker, said the delay resulted from "the additional demands on management and other resources in complying with both the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the shortened 10-K filing deadline applicable to Accredited as an accelerated filer." Flagstar Bancorp, a mortgage originator based in Troy, Mich., also cited Sarbanes-Oxley requirements. The REITs seeking a filing delay are Cousins Properties Inc., Atlanta; Essex Property Trust, Palo Alto, Calif.; First Industrial Realty Trust, Chicago; General Growth Properties, Chicago; Impac Mortgage Holdings, Newport Beach, Calif.; and The Macerich Co., Santa Monica, Calif. Several cited the need to review methods of accounting for leases and leasehold improvements in the light of a Feb. 7 letter from the SEC to the American Institute of Certified Public Accountants. In the case of Impac, the REIT said its commitment of resources to restate earnings for prior periods prevented it from completing a report on its internal control over financial reporting, delaying the completion of an audit by its independent auditor.

Pennsylvania has a high foreclosure rate, and the majority of the state's foreclosures involve subprime loans, according to the Pennsylvania Department of Banking.Eight states had higher rates than Pennsylvania's prime foreclosure rate of 0.85% in 2003, but only three had higher subprime foreclosure rates than its 11.9%, according to figures reported by the Mortgage Bankers Association. The banking department said a statewide study of foreclosures by The Reinvestment Fund also found that Pennsylvania experienced an estimated 14% increase in sheriff's sales between 2000 and 2003. In order to offer more consumer protection, the department is adding an investigative unit and increasing the staff in the licensing and examinations bureaus, said Pennsylvania Banking Secretary Bill Schenck. The department said it plans to institute a "best practices" program for mortgage brokers, lenders, and servicers and is suggesting that the general assembly create a new licensing category for individual mortgage loan solicitors.

Executive at two of the nation's largest mortgage insurers say their captive reinsurance arrangements are different from those made by title companies, and thus they are less worried about any possible investigation.Bob Quint, executive vice president and chief financial officer of Philadelphia-based Radian Group Inc., told a questioner at the Piper Jaffray Financial Services Conference that "we believe our reinsurance arrangements are true risk transfers." Furthermore, he added, the company has outside opinions saying that is the case. MGIC Investment Corp. president and chief executive Curt Culver told MortgageWire after his presentation that part of the issue Colorado had raised with the title companies is that the reinsurance arrangements did not have an actuarial opinion behind them. Milwaukee-based MGIC and its competitors get actuarial opinions for their captives and there is an actual risk transfer involved, Mr. Culver said. "Obviously we are watching what happens, but there are differences," he said.

The average 30-year fixed mortgage rate rose to 5.95% for the seven-day period ending March 17 from 5.85% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate increased from 5.38% to 5.47%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 5.22% to 5.31%, and the average rate for one-year Treasury-indexed ARMs fell from 4.24% to 4.20%. 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. "The 30-year mortgage rate in February was uncommonly low and the weather tame across much of the country," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "That combination pushed housing starts in February to a 21-year high. But we will probably see some moderation in the housing sector as mortgage rates slowly rise in coming months." A year ago, the average 30-year and 15-year fixed rates were 5.38% and 4.69%, respectively, and the average one-year ARM rate was 3.39%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Consumer groups are slamming a newly introduced bipartisan predatory lending bill on the grounds that it guts enforcement of Home Ownership and Equity Protection Act violations."They have a lot of stuff in the bill that looks good at first blush," said Margot Saunders, managing attorney for the National Consumer Law Center in Washington. But there is "no enforcement whatsoever, and that is the intent of the bill," she told MortgageWire. The bill introduced by Reps. Bob Ney, R-Ohio, and Paul Kanjorski, D-Pa., contains provisions that ban abusive lending practices on high-cost subprime loans. The bill undercuts consumer attorneys that bring cases against lenders, Ms. Saunders said. "You can't get attorney fees if any reasonable offer is made, which is a whole new rule just for HOEPA loans," the consumer attorney said. It also makes the rescission of a loan impossible, and weakens the assignee liability language in HOEPA, she said. "The bottom line is that the rules on assignee liability make it totally impossible to ever be able to prove a case against an assignee," Ms. Saunders declared.

Anthracite Capital, New York, says it sees an opportunity in European commercial real estate lending that is in a "nascent stage," according to Richard Shea, president and chief operating officer of the real estate investment trust.At a recent Piper Jaffray Financial Services Conference in New York, Mr. Shea said Anthracite brings together capital markets expertise with loan underwriting and real estate expertise. He therefore sees a "great opportunity" for the commercial mortgage REIT to bring in a platform combining these two aspects of the European market, Mr. Shea said. While it may take awhile for Anthracite to sift through the opportunities, Mr. Shea said he expects significant growth in this area.

United Mobile Homes Inc., a real estate investment trust based in Freehold, N.J., has announced that it will revise its financial statements for 2002, 2003, and part of 2004 to correct its accounting treatment of certain interest rate swaps.The REIT said it had determined, in conjunction with its external auditors, that its accounting for the swaps did not meet technical documentation requirements for hedge accounting under the FAS 133 derivative accounting rule. Estimated noncash adjustments to the financial statements are expected to decrease net income by approximately $531,000 for 2002, increase it by approximately $390,000 for 2003, and increase it by approximately $249,000 for the first nine months of 2004, the company said. The manufactured housing REIT can be found online at http://www.umh.com.

CharterMac, New York, has announced that due to accounting errors it will revise its 2004 financial statements in a way that is expected to boost earnings.The company said it has not yet completed its assessment of the impact of the errors, which relate primarily to its deferred tax benefit. "The revisions are confined to accounting misstatements, most of which stemmed from complexity arising upon the acquisition of Related Capital Co.," said Alan P. Himes, CharterMac's chief financial officer. "Because they are confined to the timing of established revenues and tax deductions, they do not affect CharterMac's 2004 cash flow or [cash available for distribution], nor do they affect the company's compliance with debt covenants, financial strength, business prospects, or our earnings outlook for 2005 and beyond." CharterMac, which provides financial services for the multifamily sector, can be found online at http://www.chartermac.com.

Entertainer-businessman Merv Griffin has announced the formation of a real estate investment banking firm that will structure joint ventures and raise capital for owners and developers.Griffin & Co. LLC, Beverly Hills, Calif., will be headed by Lawrence Cohen, the president and chief executive officer of The Griffin Group, another Griffin company. His title at the new company will be managing director/CEO. In addition, Randall Zisler, formerly a partner in Jones Lang LaSalle, has been hired as managing director/chief investment officer of the new company. Mr. Griffin, the creator of "Wheel of Fortune" and "Jeopardy!", will be the "hands-on chairman" of the new enterprise.

SouthStar Funding, an Atlanta-based wholesale lender, has announced the formation of a Partnership Division focused on specialized services, products, and pricing for large homebuilders and mortgage bankers.Joe Trovato, the company's national sales manager, will head the new division. "By creating a separate division with a dedicated team of underwriters and closers, we streamline operations internally and are able to meet the special needs of our larger customers," Mr. Trovato said. The company can be found on the Web at http://www.southstar.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 704.8 to 727.6 on a seasonally adjusted basis during the week ended March 11, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 3.5% on the week but were down 33.4% from the level of a year earlier. The Purchase Index rose from 451.7 to 462.8 on a seasonally adjusted basis, while the Refinance Index climbed from 2176.8 to 2267.5. Refinancings represented 42.9% of total applications, up from 42.6% the previous week, while adjustable-rate mortgages accounted for 32.4%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.69% to 5.91%, and points (including the origination fee) were unchanged, at 1.23, for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Single-family housing starts continued to defy gravity last month, rising to an annualized pace of 1.775 million units, a slight gain from January.According to government figures, total housing starts (single-family and multifamily) advanced to a seasonally adjusted annual rate of 2.195 million units, or 0.5%, a new 21-year high. Economists were surprised by the increase. "The ongoing vigor of the housing sector is confounding," Greenwich Capital said in a report. "Though some moderation is overdue, with the help of firming employment and income gains, housing demand may remain robust well into the spring, unless mortgage rates move considerably higher." At MortgageWire's deadline on Wednesday, the yield on the 10-year Treasury stood at 4.47%, close to a seven-month high. Meanwhile, conventional mortgages rates continue to rise, with some lenders charging as much as 6%.

Nearly half of American consumers do not understand key facts about credit scores, according to a new survey by the Consumer Federation of America and Fair Isaac Corp., and they have prepared a free brochure to help remedy the situation.The survey found that 49% of respondents did not understand that credit scores measure credit risk and 45% incorrectly thought that increasing one's income would improve one's credit score, according to the CFA and Fair Isaac, developer of the FICO credit score. The new brochure "contains the most important information about the score most businesses use -- the FICO credit score -- including what factors influence its rise and fall, and how consumers can get their own scores," said Cheri St. John, vice president of global scoring and consumer solutions for Fair Isaac. The brochure, titled "Your Credit Scores," can be obtained from the Federal Citizen Information Center at 1-800-878-3256. It is also available online at three websites: http://www.pueblo.gsa.gov, http://www.myfico.com, and http://www.consumerfed.org.