Originations

Prudential CA/NV/TX Realty, Pleasanton, Calif., has announced the introduction of a 103% loan-to-value loan product that targets Hispanic homebuyers in Northern California.The loan was developed by The Home Loan Group, a joint venture with Chase Home Finance. Prudential said the features of the loan product include interest-only payments for an initial five-, seven-, or 10-year period and financing of 100% of the purchase price plus another three percentage points to cover closing costs. "The 103% LTV loan was designed to help Hispanic homebuyers, one of the youngest segments of California's population, move beyond their perceived hurdle of an 80% conventional loan," said Tom Borrelli, senior vice president at Chase Home Finance. "This is especially important in the expensive Northern California market."

Meanwhile, Countrywide Home Loans Inc. has introduced a mortgage program designed to support homeownership for enlisted U.S. military personnel with minimal funds for downpayments and closing costs.The U.S. Military Optimum Loan Program allows qualifying enlisted personnel to buy homes with little down and to use nontraditional income sources, the company said. The program's flexible guidelines allow for a minimum cash downpayment of $500, or 1% of the sales price; the inclusions of different types of military pay, such as flight or hazard pay, as income sources; and the use of income from a boarder for families who rent out a room during a family member's deployment. Countrywide said the guidelines also permit the use of supplemental undocumented income from borrowers who have taken second jobs for which the pay is not easily verified, and cosigning by a family member or close friend for a primary borrower buying a home during a deployment.

Countrywide Financial Corp., Calabasas, Calif., has reported that fourth-quarter earnings declined to $343 million ($0.56 per share) from $564 million ($0.94) in the fourth quarter of 2003 as a hedging loss took a bite out of the company's results.Overall, Countrywide said loan production volume totaled $95 billion in the fourth quarter, up 25% from the fourth quarter of last year. For the full year, loan production totaled 363 billion, down 17% from the record-breaking volume of 2003. The servicing portfolio grew to $838 billion, maintaining Countrywide's status as the largest originator and servicer of home loans. Fourth-quarter results were hurt by the loan servicing sector, where earnings declined by $255 million from those of the third quarter as a result of a flattening of the yield curve, a tightening of mortgage swap spreads, and a reduction in interest rate volatility. These factors diminished the value of hedging instruments. At the same time, flat mortgage rates meant that the value of the MSR asset did not increase as much as expected to offset the hedge losses. Countrywide was the most actively traded stock on the New York Stock Exchange Wednesday morning. It was down 4.2% ($1.61) at noon. The company can be found online at http://www.countrywide.com.

Standard & Poor's Ratings Services says it has evaluated the impact of anti-predatory-lending statutes on the funding of high-cost loans through the capital markets and found that only 0.01% of the U.S. residential mortgage loans it rated last year were high-cost loans.Given that only $87 million of the approximately $758 billion rated in 2004 were high-cost loans, S&P said it is clear that the capital markets are not financing the origination of such loans. Since the anti-predatory-lending legislation that has become effective over the past couple of years generally targets high-cost loans, it would appear that such legislation has limited the origination of these loans. However, S&P said it is unable to determine whether such loans are being originated but not included in securitizations.

The Market Composite Index, an overall measure of mortgage applications, rose from 658.1 to 706.4 on a seasonally adjusted basis during the week ended Jan. 28, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 23.7% on the week but were down 18.8% from the level of a year earlier. The Purchase Index rose from 439.0 to 440.3 on a seasonally adjusted basis, while the Refinance Index climbed from 1932.8 to 2253.9. Refinancings represented 48.7% of total applications, up from 46.5% the previous week, while adjustable-rate mortgages accounted for 32.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.58% to 5.61%, and points (including the origination fee) increased from 1.22 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.

Digital Realty Trust Inc., Menlo Park, Calif., has announced a public offering of 3 million shares of series A cumulative redeemable preferred stock at $25 per share.The company said it intends to use the proceeds to repay borrowings under its unsecured credit facility, for possible real estate acquisitions, and for general corporate purposes. The underwriters have been granted an option to buy up to 450,000 additional shares to cover any overallotments. The joint book-running managers of the offering are Citigroup and UBS Investment Bank, and Merrill Lynch & Co. is the co-lead manager.

Douglas Krupp has been named chairman of the board of Berkshire Income Realty Inc., a Boston-based real estate investment trust, to succeed his brother George Krupp, who has resigned.The multifamily REIT said George Krupp resigned to "concentrate on other business strategies that will strengthen Berkshire Property Advisors LLC," an adviser to the REIT. Douglass Krupp was chairman of Berkshire Realty Co., a REIT, from 1996 to 1999 and chairman of Harborside Healthcare Corp. from 1996 to 1998. Berkshire can be found on the Web at http://www.berkshire-group.com.

Archstone-Smith, Denver, has reported earnings of $1.11 per share for the fourth quarter, a 76% increase from $0.63 per share for the same period of 2003.The multifamily real estate investment trust said it delivered a record EPS of $2.69 in 2004, a 23.4% increase from $2.18 the year before. The REIT reported funds from operations of $1.22 per share for the fourth quarter, compared with $0.73 per share for the fourth quarter of 2003. Archstone-Smith's results for the year reflect the impact of "significant gains" from some property sales, the REIT said. "We expect our substantial development pipeline will contribute significantly to our earnings growth rate over the next five years as these projects are completed and stabilized,"said Charles E. Mueller Jr., Archstone-Smith's chief financial officer.

The dollar volume of primary new mortgage insurance written by the members of the Mortgage Insurance Cos. of America increased 12.5% in December, according to the trade group.A total of $19.0 billion of primary new insurance was written during December, of which $14.6 billion was traditional and $4.4 billion bulk. (The total compares with $16.6 billion in November and $20.7 billion in December 2003.) Meanwhile, application volume in December was 129,645, up from 124,731 in November but down from 145,213 in December 2003. For calendar year 2003, the MI companies' best month for dollar volume was June, at $21.6 billion, while March was the best month for applications, with 189,311. At the end of the year, $609.2 billion of primary insurance was in force and $141.6 billion of primary risk was in force, down from $619.1 billion and $143.7 billion, respectively, at the end of 2003. New pool risk written totaled $52.4 million in December, bringing the total pool risk in force to $10.8 billion, down from $13.6 billion one year ago. There were 34,747 cures and 44,608 defaults in December, a ratio of 77.9%. (There were only two months in 2004 with more cures than defaults.) All the private MI companies belong to MICA except for Radian Guaranty. MICA can be found online at http://www.micanews.com.

In a 4-3 decision, the California Supreme Court has held that California's anti-predatory-lending law pre-empts Oakland's predatory lending ordinance.The ruling, issued Jan. 31, is good news for California, according to the American Financial Services Association, which brought the case against the city of Oakland, because it means that legitimate subprime lenders can remain in business. "This decision means that lenders who serve higher-risk borrowers will be able to operate with parity throughout the state of California, avoiding the balkanization of the regulatory landscape, which would levy compliance costs too high to bear," the AFSA said. Bob Armbruster, president of the National Association of Mortgage Brokers, said the verdict is good news for the industry and consumers. "This is a win for consumers, because there is not another layer of laws put upon them," he said. For the past few years, a battle has been raging in the California courts over the extent of municipal authority to adopt predatory lending ordinances. The Los Angeles City Council passed a similar ordinance in 2002, but agreed to postpone enforcement pending the outcome of the Oakland case.

The ratings on Classes D and E of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2002-FL-1, have been affirmed and removed from Rating Watch Negative by Fitch Ratings.In addition, Fitch upgraded two classes in the deal and affirmed the rating on one other class. The rating agency attributed the removal of the classes from the watchlist to the payoff of the One Kendall Square loan and the changeover of the deal to a sequential pay structure from a modified pro rata pay structure.

Class B of ABFC mortgage loan asset-backed certificates, series 2001-AQ1, has been placed on review for possible downgrade by Moody's Investors Service.Moody's also placed on review for possible upgrade five certificates from Ameriquest Mortgage Co. asset-backed securitization deals. The transactions consist of fixed-rate and adjustable-rate first-lien subprime mortgage loans. The negative rating action was based on the fact that credit enhancement levels are low given projected losses on the underlying pools, Moody's said. "The transaction has taken losses, and pipeline loss could cause eventual erosion of the overcollateralization," the rating agency said. Moody's can be found online at http://www.moodys.com.

New single-family home sales ended 2004 on a dull note but still set an annual record for the fourth consecutive year.New-home sales totaled 1.18 million in 2004, easily beating (by 8.3%) the previous year's record of 1.09 million, according to the U.S. Census Bureau. The record year included a 13% drop in sales in November and no rebound in December. The Census Bureau reported that new-home sales held steady at a seasonally adjusted annual rate of 1.1 million in November and December. Economists at the National Association of Home Builders say they have not detected any "softness" in the new-home market, but they expect a 3%-4% decline in sales this year due to rising mortgage rates.

The American Stock Exchange has launched trading in options on Crescent Real Estate Equities Co., a Fort Worth, Texas-based real estate investment trust.The options opened with position limits of 3.15 million shares and will trade on a January expiration cycle, Amex said. The specialist will be Stuyvesant Trading Group. Amex can be found online at http://www.amex.com.

National City Mortgage, Miamisburg, Ohio, and ServiceLink LP, Aliquippa, Pa., have announced the formation of NationalLink LP, a joint venture that will provide appraisal, title, and closing management services nationwide.Jeff Coury, ServiceLink's chief executive officer, said the new company "will focus on compressing the time to close loans while maintaining the ServiceLink quality standard and will operate as a seamless extension of National City Mortgage's loan fulfillment operations." The new company will be based in Aliquippa. National City originates residential mortgage loans through its 1,200 bank branches and a network of more than 500 wholesale and retail offices in 43 states, the company said. ServiceLink is a centralized loan closing management company. The companies can be found online at http://www.nationalcitymortgage.com and http://www.servicelinklp.com.

MuniMae, Baltimore, is acquiring MONY Realty Capital from AXA Financial in a deal that will add to MuniMae's investment advisory business and expand its area of operation beyond the multifamily arena.The terms of the deal were not disclosed. MRC has over $2 billion in assets under management, and its regional network of about 35 employees source, underwrite, and manage commercial real estate investments, MuniMae said. "It [the acquisition] increases our assets under management by more than 20%, jump-starts the growth of our investment advisory business, and expands our platform beyond multifamily housing," said Michael Falcone, MuniMae's chief executive officer and president. It will also increase the company's product offerings and customer base and "build upon some very strong investor relationships," he said. After the transaction closes, MRC will operate under the name MMA Realty Capital. Its entire team will remain intact and continue under the leadership of Thomas McCahill, who will join MuniMae's senior management committee, MuniMae said.

Total residential mortgage production, though still strong by historical standards, will decline each year through 2007, according to a forecast by the Mortgage Bankers Association that projects economic growth of about 3.5% for the period.The forecast calls for total production of $2.542 trillion this year, consisting of $1.559 trillion in purchase loans and $983 billion in refinance loans, a refi share of 39%. The MBA is predicting total volume of $2.206 trillion (31% of it refis) for 2006 and $2.115 trillion (26% refis) for 2007. However, purchase loan volume is seen rising from $1.517 trillion in 2006 to $1.556 trillion in 2007. The MBA is also projecting that home sales will fall over the next three years, but remain at historically high levels. The forecast calls for new-home sales of 1.12 million this year, 1.01 million in 2006, and 976,000 in 2007, and resales of 6.14 million, 5.70 million, and 5.61 million, respectively. Employment in the mortgage industry has been increasing since August, but Doug Duncan, the MBA's chief economist, said he expects layoffs to start later this year. Mr. Duncan said he expects mortgage interest rates to rise modestly through 2007: about 50 to 65 basis points this year, reaching about 7% for a 30-year, fixed-rate mortgage by the end of 2007. The MBA can be found online at http://www.mortgagebankers.org.

Fitch Ratings has affirmed and removed from Rating Watch Negative its A-minus financial strength ratings for the title insurance underwriting subsidiaries of Fidelity National Financial Inc. and its BBB-minus long-term issuer rating of FNF.In addition, Fitch assigned a BB-minus rating to the senior secured credit facility entered into by FNF's subsidiary Fidelity National Information Services. Fitch had downgraded FNF and placed its ratings on Rating Watch Negative after the announcement of a recapitalization plan for the subsidiary that would leverage the parent company's consolidated balance sheet to a debt-to-capital ratio of approximately 50%, Fitch said. The rating agency said it removed those ratings from the watchlist after analyzing the title operations separately from information services and determining that FNF-only leverage and coverage would be "supportive of the current ratings."

IndyMac Bancorp Inc., Pasadena, Calif., the holding company for IndyMac Bank, has reported record pro forma net earnings of $211.3 million ($3.40 per share) for 2004, compared with $171.3 million ($3.01 per share) in 2003.Mortgage loan production totaled a record $37.9 billion, up 30% from the volume recorded the year before, IndyMac said. (The company said the pro forma earnings, related to SEC Staff Accountability Bulletin No. 105 and adjustments related to IndyMac's acquisition of Financial Freedom Holdings, were reported to provide comparability to historical performance figures.) For the fourth quarter, the company reported pro forma net earnings of $58.4 million ($0.91 per share), compared with $43.3 million ($0.75 per share) in the fourth quarter of 2003. Mortgage loan production totaled a record $11.2 billion, up 79% from that of a year earlier. "While industry volumes declined 26% in 2004 from 2003 levels, we grew our mortgage volumes 30%, and as a result, we achieved 74% growth in market share for the full year, to 1.34%," said Michael W. Perry, IndyMac's chief executive officer. The company can be found online at http://www.indymacbank.com.

Wells Fargo Home Mortgage, Des Moines, Iowa, has announced the introduction of an interest-only adjustable-rate mortgage that doesn't require a principal payment for 10 years.The 10-year ARMs, which can be used for purchase or refinance transactions, are designed for homebuyers who don't intend to occupy their homes for more than a few years or who want to redirect their cash flow to high-yield and tax-deferred savings or to maximize retirement contributions, the company said. Previously, Wells Fargo Home Mortgage offered the IO feature only on five- and seven-year ARMs. "The interest-only feature is a great option for customers who need to invest funds in other ways," said Joe Rogers, executive vice president for pricing, products, and programs in the company's National Consumer Lending Sales area. The company can be found online at http://www.wellsfargo.com.