Originations

With regulators clamping down on captive title reinsurance arrangements, three of the nation's largest title insurers say they have ended or will end these arrangements.First American, Fidelity National, and LandAmerica have been in the crosshairs of regulators in Colorado, California, and Washington over such arrangements. John Garamendi, California's insurance commissioner, has described the arrangements as "phony" and said homeowners have been victimized in the amount of over $1,000 per home. LandAmerica struck back, challenging the comments as untrue and misleading. Michelle Gluck, LandMark's executive president and general counsel, declared that the arrangements "have not resulted in any injury to consumers" but that the company has "voluntarily ended these arrangements in Colorado and is in the process of doing so nationwide." First American filed a statement with the Securities and Exchange Commission Feb. 18 saying it had entered into an agreement with Colorado regulators without admission of liability or wrongdoing. It will pay affected policyholders nationwide "to avoid even the appearance of mistaken or improper conduct," and as a result will take a $24.0 million pretax charge to its fourth-quarter 2004 earnings. Fidelity said it will continue to cooperate with Mr. Garamendi's office and noted that it had previously announced its voluntary discontinuance of all reinsurance agreements.

Commercial Defeasance LLC, Charlotte, N.C., recently added two new calculators to its website.The Return on Equity and Sensitivity calculators complement the Quick Quote defeasance cost calculator, providing borrowers with analytical tools to help them decide whether to defease their securitized commercial mortgages. (Defeasance is a substitution of collateral in which a portfolio of government securities replaces the property as the collateral.) The Return on Equity calculator enables borrowers to compare the cost of defeasing and obtaining a new loan at current interest rates, obtaining mezzanine financing and refinancing at maturity at prevailing rates, and doing nothing and refinancing at maturity at prevailing rates, the company said. The Sensitivity calculator allows borrowers who are not ready for defeasance to anticipate future shifts in the yield curve and simulate the effects of higher or lower yields on government Treasuries. The company can be found online at http://www.defeasewithease.com.

Nationwide Advantage Mortgage Co., Columbus, Ohio, has announced a partnership with FedEx Employees Credit Association, Memphis, under which the latter will offer low-cost mortgages to its 66,000 members.The low-cost, low-rate mortgages will be offered through Nationwide Advantage's Expanse program, and the company will also provide the loan processing and closing functions as well as the servicing. The Web-based Expanse program was designed to simplify the application process and provide free loan approvals in as little as 10 minutes, the company said. Nationwide Advantage, the mortgage affiliate of Nationwide Mutual Insurance Co., can be found on the Web at http://www.nationwide.com.

CBA Commercial LLC, a commercial mortgage finance firm based in Stamford, Conn., has announced the issuance of its first capital markets offering, a $102 million securitization of commercial, mixed-use, and multifamily mortgage loans.The deal -- CBA Small Balance Commercial Mortgage Pass-Through Certificates, series 2004-1 -- included 265 loans with an average principal balance of approximately $387,000. RBS Greenwich Capital was the initial purchaser of the certificates, and Midland Loan Services Inc. is the servicer and special servicer, CBAC reported. CBAC is a specialty commercial mortgage finance firm that acquires and securitizes small-balance multifamily, commercial, and mixed-use mortgage loans. The company can be found online at http://www.cbaloans.com.

The Lightstone Group, Lakewood, N.J., is acquiring Prime Group Realty Trust, Chicago, for about $889.4 million, Prime Group has reported.This includes $7.25 in cash for each Prime Group common share and limited partner unit of Prime Group's operating partnership, as well as the assumption of $595.4 million of Prime Group's debt outstanding (including its joint-venture-related debt) and the "liquidation preference" on some outstanding Prime Group preferred shares. Prime Group's portfolio consists mostly of Chicago-area industrial and office properties. Jeffrey A. Patterson, Prime Group's president and chief executive officer, said the purchase price provides a premium to common shareholders of about 12.8% over its average closing price in the last month. And David Lichtenstein, chairman and principal of Lightstone, said the acquisition furthers Lightstone's strategy of acquiring companies "with good management teams and high-quality assets in locations that we believe provide opportunities as markets recover." Prime Group had been looking at other offers since last year and had even announced a deal with Chicago-based Prime/Mansur Investment Partners, but the deal fell through and Prime/Mansur initiated a lawsuit against Prime Group.

A class action suit has been filed against Fannie Mae and Freddie Mac in Superior Court of California in Los Angeles on behalf of borrowers who claim they paid more for residential real estate loans because of inflated prices for guarantee fees.The law firm of Milberg Weiss Bershad & Shulman LLP is representing the plaintiffs in the case, according to Laurence Platt, a partner with the Washington law firm of Kirkpatrick & Lockhart LLP. The lawsuit alleges that Freddie Mac and Fannie Mae entered into a contract in 2001 to "fix, raise, maintain or stabilize" g-fees paid in connection with residential real estate loans. According to the suit, in 2004, despite declining losses due to defaults, guarantee rates were kept far above cost at artificially high prices, allowing Fannie Mae and Freddie Mac to bring in g-fees totaling $4 billion in 2004. Mr. Platt told MortgageWire he thinks the plaintiffs are "trying to criminalize the normal give-and-take of negotiated trend transactions between sellers and purchasers. The significant feature is that unidentified lenders, anyone who got these incorrect high g-fees, are named as co-conspirators." Mr. Platt said the ambiguous nature of the class action could lead to the naming of a number of lenders in the lawsuit, which is now only against Fannie and Freddie.

Classes E and F of Morgan Stanley Dean Witter Capital commercial mortgage pass-through certificates, series 2001-PPM, have been placed on Rating Watch Negative by Fitch Ratings.The classes were placed on the watchlist due to expected interest shortfalls, Fitch said. Interest shortfalls began in January 2005 due to the modification of three cross-collateralized and cross-defaulted specially serviced loans. In addition, the special servicer liquidated an office property in Bensalem Township, Pa., on Feb. 1, the rating agency said. "This liquidation will result in a one-time liquidation fee, which will be incurred at the February 2005 distribution," Fitch said. "The payment of this fee will result in additional interest shortfalls that will affect the class E and F certificates."

Mills Corp., Arlington, Va., has announced that it will restate its audited financial results for 2002 and 2003 and its unaudited quarterly results for 2004.The real estate investment trust said the restatements were necessary to correct accounting related chiefly to its treatment of equity in earnings from joint ventures, the capitalization of interest and certain other costs, and the timing of gains on the sale of partnership interests. It estimated that the adjustments would reduce net income by 16-20 cents per share for 2003 and 34-38 cents per share for 2002. Mills also estimated that the adjustments would increase funds from operations by 2-6 cents per share for 2003 and reduce FFO by 22-26 cents per share for 2002. "While the company has not completed its financial statements for 2004, it currently expects to report FFO per diluted share for 2004 between $3.93 and $3.98, as compared to its original guidance of $3.90-$4.00 per diluted share," Mills said. "The net effect of the adjustments, which together is estimated to have a positive impact on FFO for 2004, is expected to be partially offset by higher-than-anticipated asset writeoffs."

Countrywide Home Loans Inc., Calabasas, Calif., is using a nontraditional marketing tool to reach out to Hispanic borrowers: it has become the official sponsor of a home makeover reality television show on Telemundo, one of the nation's largest Spanish-language networks.The new show -- titled "Lo Dejo en Tus Manos," meaning "I'm leaving it in your hands" -- aims to spur viewers to follow up with Countrywide on homeownership opportunities and education. As a sponsor, Countrywide will offer special gifts of $10,000 to deserving families and a $10,000 prize for the winner of a customer promotion contest, and will offer practical buyer tips on the show. "The reality platform is ideal for seamlessly promoting the Countrywide brand, highlighting our broad range of customized home loan products, and demystifying the homebuying process to help viewers feel hopeful and confident about securing financing for a new home," said Countrywide's executive vice president of multicultural markets, Rodolfo Saenz. Using a reality show to educate Spanish-speaking viewers, he said, is a next step in informing customers about affordable housing options. Telemundo said Countrywide is the first mortgage company to participate in its home improvement programming.

Freddie Mac has announced an expansion of its Initial Interest mortgage products to include Constant Maturity Treasury and London interbank offered rate 3/1, 5/1, and 7/1 adjustable-rate mortgages with a 10-year interest-only period.Borrowers choosing these new Initial Interest ARMs will make fully amortizing principal and interest payments only after the 10-year initial interest period expires, Freddie Mac said. The government-sponsored enterprise also announced that starting July 1, originators could sell Initial Interest mortgages through the company's Web-based selling system and opt for Cash or Guarantor executions. Initial Interest mortgages are currently eligible for Guarantor executions through MIDANET or Gold Connection for Delivery. "Freddie Mac's Initial Interest ARMs with 10-year interest-only periods give savvy borrowers three important new ways to match their homebuying ambitions to their individual financial situations," said David Stevens, senior vice president of mortgage sourcing at Freddie Mac. "This also gives originators using Loan Prospector new marketing muscle by expanding the secondary market for an even wider range of interest-only mortgage product."

The average 30-year fixed mortgage rate rose to 5.62% for the week ending Feb. 18 from 5.57% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.10% to 5.14%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages climbed from 4.99% to 5.05%, and the average rate for one-year Treasury-indexed ARMs rose from 4.11% to 4.15%. 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. "Mixed economic indicators can push the market up or down, depending on the timing of the release, and that's what we saw happen this week," said Frank Nothaft, Freddie Mac's chief economist. "The market seemed to focus on the positive, causing mortgage rates to inch up." A year ago, the average 30-year and 15-year fixed rates were 5.58% and 4.87%, respectively, and the average one-year ARM rate was 3.53%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

RAIT, a Philadelphia-based commercial mortgage real estate investment trust, has reported net income of $60.9 million ($2.48 per share) for 2004, compared with $47.2 million ($2.23 per share) for 2003.For the fourth quarter, the REIT reported net income of $16.2 million ($0.63 per share), an increase of 20% from $13.5 million ($0.60 per share) for the fourth quarter of 2003. RAIT provides structured financing for real estate, including mezzanine loans and preferred equity investments. The REIT also acquires real estate for its own account.

California households at the state median income of $53,240 fell more than $56,000 short of the qualifying income needed to buy a home in the fourth quarter at the state median price of $470,920, according to the California Association of Realtors.The association's Homebuyer Income Gap Index is a quarterly analysis of the difference between the median household income and the qualifying income needed to purchase a median-priced, single-family home for California and certain regions of the state. The qualifying income stood at $109,320 in the fourth quarter, according to the index. The latest income gap of $56,070 was 41.6% higher than the $39,610 recorded in the fourth quarter of 2003, CAR said. At that time, the median household income stood at $51,860, and the qualifying income needed to buy a median-priced home at $390,250 was $91,460, according to CAR. The Los Angeles-based association can be found online at http://www.car.org.

Washington Mutual, Seattle, has announced that it is teaming up with former basketball great Earvin "Magic" Johnson to celebrate the grand opening of three home loan centers and a loan processing center in the San Francisco Bay Area.WaMu said the event will kick off a new phase of its commitment to boost homeownership in underserved communities by introducing Solid Start, a free, four-part financial education and credit building program. The thrift institution said it is the first time that Mr. Johnson, who is chairman and chief executive officer of Johnson Development Corp., has expanded his community development efforts to Hispanic and Asian communities. "Economic growth is the key to solving many problems faced by minority community residents, and by joining forces with Washington Mutual, we hope to help rebuild urban communities, stimulate local economies, and bring much-needed services to residents," Mr. Johnson said.

Lenderinspection.com, a Scottsdale, Ariz.-based provider of construction-inspection services for mortgage lenders, has announced that its upper management has completed a buyout of the company.The terms of the deal were not disclosed. Donald Giebelhausen, the new owner, has taken over from Joseph Adams and Philip Mikal, who started the business three years ago, the company reported. Mr. Giebelhausen, who has been involved in the construction industry since 1984, joined Lenderinspection.com in 2002 as director of inspection services and managed the day-to-day operations and administration of inspection personnel.

Total existing-home sales -- including condominiums and co-operatives -- set the second-highest pace on record in the fourth quarter, rising in 40 states and the District of Columbia from the levels recorded a year earlier, according to the National Association of Realtors.The seasonally adjusted annual resales rate was 7.76 million units in the fourth quarter, up 7.3% from 7.24 million in the fourth quarter of 2003. (The record high of 7.80 million units was set in the second quarter of 2004, the NAR reported.) The biggest year-over-year gains were recorded in Arizona, where the resale rate was up 28.8%; North Carolina, up 25.4%; and Georgia, up 21.7%. The NAR can be found online at http://realtor.org.

The Market Composite Index, an overall measure of mortgage applications, fell from 735.9 to 732.3 on a seasonally adjusted basis during the week ended Feb. 11, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 2.0% on the week but were down 12.9% from the level of a year earlier. The Purchase Index fell from 444.6 to 423.3 on a seasonally adjusted basis, while the Refinance Index climbed from 2430.7 to 2530.1. Refinancings represented 49.9% of total applications, up from 48.9% the previous week, while adjustable-rate mortgages accounted for 30.7%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.48% to 5.50%, and points (including the origination fee) increased from 1.25 to 1.27 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 jumped 2.7% in January to 1.76 million units on an annualized basis, according to new figures released by the Commerce Department.Total housing starts -- including multifamily construction -- came in at 2.159 million units, the highest level in almost 20 years. But the news isn't all rosy. Government figures show that home construction in the South (up 20% from December to January) is where most of the action is. Single-family starts actually fell by almost 9% in the West, 12.9% in the Northeast, and 15.2% in the Midwest. The January increase caught some housing economists by surprise. It was anticipated that bad weather in the Northeast and rain in the West might hold down construction activity even more. But builders broke ground on the largest number of new homes and apartments since February 1984 when construction starts hit an annual rate of 2.26 million units. At last check, lenders were charging 5.6% for 30-year conventional mortgages.

Mark A. Casale has been named senior vice president of capital markets at Radian Guaranty Inc., a Philadelphia-based provider of mortgage insurance.Mr. Casale will be responsible for promoting continued growth in Radian's customized credit enhancement products and services in the nonprime mortgage markets, the company said. He will replace Trez Moore, who is leaving Radian. Mr. Casale was previously Radian's senior vice president for strategic investments. Before joining Radian, Mr. Casale held several positions in Advanta Corp.'s mortgage group involving the nonprime mortgage and capital markets, Radian said. Radian can be found online at http://www.radian.biz.

Regency Centers, Jacksonville, Fla., and its joint venture partner Macquarie CountryWide Trust of Australia are buying a 101-property retail portfolio for about $2.74 billion from a joint venture between the California Public Employees Retirement System and First Washington, Bethesda, Md.Regency said its ownership stake in the 13 million-square-foot portfolio -- which will expand the two companies' holdings in new markets and enhance their presence in key markets -- will be 35% and Macquarie's will be 65%. To finance the acquisition, the partners said they intend to tap about $900 million of assumed secured debt on the properties; $800 million of bridge financing from affiliates of Wachovia Capital Markets and JPMorgan Chase Bank; and equity stakes, with Regency funding its $400 million stake through its line of credit and about $275 million in bridge financing from Wells Fargo Bank. The companies said they expect to refinance most of the existing mortgage debt on the properties in six months and use the proceeds to fully repay the bridge loan. "The combination of population density and household income makes the First Washington/CalPERS portfolio one of the highest ranking in terms of buying power," said Martin E. Stein Jr., chairman and chief executive officer of Regency Centers.