Originations

PMAC, West Covina, Calif., has launched a website that provides information and services aimed at consumers, mortgage brokers, and other groups affiliated with the mortgage banking industry.The company said it has restructured its operations to focus on three key lending areas: wholesale, outsourced, and retail. "PMAC's Wholesale Lending Group is an exciting new venture for us in that we can now offer competitive loan programs," said Jon Magill, president and chief executive officer of PMAC. "Many of these programs are unique to PMAC and offered directly to mortgage brokers and third-party originators." The new website can be found online at http://www.pmac.com.

Expect single-family mortgage originations to decline by 10% to 20% in 2005, according to two secondary-market economists.Fannie Mae chief economist David Berson sees originations falling from $2.74 trillion in 2004 to $2.15 trillion this year. His pessimistic forecast is based on a 7%-8% decline in home sales and a slowdown in house price appreciation to 3.5%. His crosstown rival at Freddie Mac expects 2005 loan production will decline by only 10% to $2.42 trillion. Freddie chief economist Frank Nothaft is forecasting that home sales will slow by 4%-6% from last year's record pace, and that increases in house prices will slow to 5%-7%. "That would be the slowest in six years," Mr. Nothaft told reporters during a news briefing sponsored by the National Association of Home Builders. Home prices rose by 10.5% last year.

Mortgage lenders added 4,300 full-time employees to their payrolls in November, according to the December employment report released Jan. 7 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector rose from 464,500 in October to 468,800 in November. (There is a one-month lag in BLS reporting of mortgage-sector employment data. The December data will not be released until Feb. 4.) Employment in the mortgage finance sector has been rising since August, and Friday's jobs report indicated that the hiring would continue in December. "Over the year, strength in the housing market continued to stimulate hiring in the [financial services] industry," the BLS said. "Credit intermediation added 9,000 jobs in December, bringing the total to 64,000 for all of the year." Meanwhile, the BLS report showed that the U.S. economy generated 157,000 new jobs in December, and the unemployment rate was unchanged at 5.4%. The BLS can be found online at http://stats.bls.gov.

First Line Data Inc., Boulder, Colo., has announced the launch of its exclusive Alert! Summary and Firstline Score on the company's Broker Verification Review reports.The enhancements provide wholesale mortgage lenders the decision-support information needed to more quickly determine the approval of a third-party originator, the company said. Alert! messages are for material discrepancies between submitted information and records found or any derogatory information found within a BVR report. An Alert! summary is also provided on the front page, along with the Firstline Score&trade, which uses a risk-based scoring model that calculates the combined weighted average of all Alerts found in the report. "A First Line Data BVR report in a file will quickly demonstrate to a third party the procedures employed in determining the initial approval of a business partner," said Nancy Cowley, senior account executive at First Line. "Our reports provide clear evidence of a sound due-diligence process." First Line can be found online at http://www.firstlinedata.com.

Fitch Ratings says it will not rate any residential mortgage-backed securities that contain Indiana high-cost home loans under the state's new High Cost Home Loan Law because assignee liability for such loans is unquantifiable.Fitch said it will now expect sampling for all mortgage loans located in Indiana. The number of loans to be reviewed in the random sample should be the greater of five loans and 10% of the loans in the pool. If the review uncovers any high-cost home loans, then a review of every loan in the pool originated in Indiana is expected in order to comply with the criteria. There are two triggers, including the APR test and the total-points-and-fees test. The APR test is triggered when the annual percentage rate exceeds the yield on U.S. Treasury securities with comparable maturities by 8% for first-liens and 10% for subordinate liens at the time of origination. The total-points-and-fees test is triggered when the sum of the points and fees exceed 5% of the total loan amount for a loan of at least $40,000, or 6% if the loan is less than $40,000.

Prime Group Realty Trust, a Chicago-based office real estate investment trust, has reported that Prime/Mansur Investment Partners has filed a lawsuit against it in connection with the recent termination of a merger agreement between the two parties.The suit, filed in Maryland State Court, alleges that Prime Group "wrongfully terminated and otherwise breached the previously announced merger agreement with Prime/Mansur on November 9, 2004," Prime Group said. The REIT said it will continue to pursue a lawsuit it filed last December in Maryland State Court asking for the merger agreement to be terminated. Prime Group will also continue exploring other "strategic alternatives," the REIT said. Mansur Investment Partners did not return a call seeking comment on the suit by MortgageWire's deadline.

First Franklin Direct, a retail division of mortgage lender National City Bank of Indiana, has unveiled a new consumer brand, NationPoint, designed to reflect its nationwide presence.The company also announced the launch of a website in connection with the new brand. In addition to highlighting the company's national scope, NationPoint executive vice president Michael Petree said the new brand launching "also helps avoid any consumer confusion with the rest of First Franklin, which remains focused on wholesale business." First Franklin Financial Corp., San Jose, Calif., is a subsidiary of National City. NationPoint can be found on the Web at http://www.nationpoint.com.

Growing demand for hybrid adjustable-rate mortgages and greater lender discounts for introductory ARM rates were among the findings of Freddie Mac's 21st annual ARM survey.Hybrid ARMs -- annually adjusting ARMs with an initial fixed-rate period of more than one year -- have accounted for the majority of purchase-money ARMs since 2002, and the dominant variety has been 5/1 ARMs, those with an initial fixed-rate period of five years, said Frank Nothaft, Freddie Mac's chief economist. About 40% of all ARMs were 5/1 ARMs in 2004, he reported. Regarding average discounted introductory rates, the survey found that they grew from about three-eighths of a percentage point for conventional one-year Treasury-indexed ARMs at the beginning of 2004 to 1.34 percentage points at the end of the year. "When the interest-rate difference between a 30-year fixed-rate mortgage and the fully indexed ARM rate decreases, lenders generally offer a larger initial rate discount on the ARM," Mr. Nothaft said. Bigger discounts increase the initial rate benefit of an ARM and help lenders maintain ARM originations, he added.

The average 30-year fixed mortgage rate fell to 5.77% for the week ending Jan. 7 from 5.81% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.23% to 5.21%, while the average rate for one-year Treasury-indexed ARMs declined from 4.19% to 4.10%. In addition, Freddie Mac has begun reporting rates for five-year Treasury-indexed hybrid ARMs, which averaged 5.03%. Fees and points averaged 0.7 of a point for 30-year FRMs and one-year ARMs, 0.6 of a point for 15-year FRMs, and 0.5 of a point for five-year hybrid ARMs. "Economic news seems to reflect steady growth and low inflation, placing little upward pressure on interest rates," said Amy Crews Cutts, Freddie Mac's deputy chief economist. She said the 5/1 ARM rates were added to the survey because "our annual ARM survey confirmed that the market for hybrid ARM products has grown large enough for us to track the direction this market segment is taking." (See item below.) A year ago, the average 30-year and 15-year fixed rates were 5.85% and 5.15%, respectively, and the average one-year ARM rate was 3.72%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

1LoanCenter, Long Beach, Calif., has reported that it will respond to the Indian Ocean tsunami disaster by donating $2,000 to the American Red Cross and $250 from the fees of every new loan it completes for a borrower with a goal of contributing a total of $10,000."As part of an Asian refugee family, my thoughts and condolences go out to the tens of thousands of people who have died and are suffering through this great tragedy," said the company's president Kiri Suykry. 1LoanCenter can be found on the Web at http://www.1loancenter.com.

Foreign investors are planning to reduce their U.S. real estate acquisitions to 55% of their global real estate investments for 2005, down from 71% of the total allocation for 2004, according to the Association of Foreign Investors in Real Estate.The AFIRE survey, conducted by Kingsley Associates, includes AFIRE members who collectively have about $300 billion invested globally, the Washington, D.C.-based association said. About 60% of survey respondents said it has become "very difficult" to find attractive real estate opportunities in the United States, compared with 38% who gave this response in 2003 and 32% in 2002. "It has been a challenging market, particularly for organizations like ours which are committed to offering both stable rates of return, and the ability to sell in the future at a profit," said Steve Zoukis, a partner in Jamestown, a German real estate fund. He added, however, that "the transparency, openness, and liquidity of the [U.S.] marketplace, as well as its huge size, continue to attract large amounts of foreign capital." Respondents identified Washington, New York, Los Angeles, San Francisco, and Miami/Fort Lauderdale/West Palm Beach as the most attractive cities for real estate investments.

Inland Retail Real Estate Trust Inc., Oak Brook, Ill., has reported the acquisition of four affiliated companies that have provided it with advice and property management services.The acquired companies are: Inland Retail Real Estate Advisory Services Inc., Inland Southern Management Corp., Inland Mid-Atlantic Management Corp., and Inland Southeast Property Management Corp. The terms of the transaction were not disclosed. The transaction is "an integral part of our business plan of becoming a self-administered and self-managed real estate investment trust, which is generally considered a prerequisite for publicly traded REITs," said Robert D. Parks, chairman of Inland Retail Real Estate Trust. The company can be found online at http://www.inlandgroup.com.

Oak Hill Financial Inc., Jackson, Ohio, has reported the sale of the consumer loan portfolio (including second-mortgage loans) of its Action Finance Co. subsidiary for $9.2 million and the closing of its Action Finance operations.As part of the shutdown, Action Finance's five retail lending offices in southern Ohio are being closed, Oak Hill said. The company said it expects to take a one-time after-tax charge of $2.3 million as a result of the sale and discontinuation of operations. "In our region, the market for traditional finance company loans has changed dramatically over the past few years," said R. E. Coffman Jr., Oak Hill's president and chief executive officer. "As a result, we no longer saw a cost-effective path for growth at Action Finance, and we felt that our efforts and resources were better directed toward our bank and insurance subsidiaries." Mr. Coffman said Action's credit quality deteriorated "considerably" over the past year, and chargeoffs ran about twice their historical rate over the past several months.

The Market Composite Index, an overall measure of mortgage applications, fell from 677.4 to 605.7 on a seasonally adjusted basis during the holiday week ended Dec. 31, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 9.4% on the week but were up 0.2% from the level of a year earlier. The Purchase Index fell from 483.8 to 417.3 on a seasonally adjusted basis, while the Refinance Index declined from 1803.9 to 1701.3. Refinancings represented 48.0% of total applications, up from 46.2% the previous week, while adjustable-rate mortgages accounted for 32.6%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.72% to 5.67%, and points (including the origination fee) rose from 1.33 to 1.35 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Ten classes of Morgan Stanley Capital I Inc. commercial mortgage pass-through certificates, series 2003-TOP11, have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are classes C through H and J through M. The rating actions were attributed to concerns about possible losses related to two specially serviced loans. The Alabama/Arizona Warehouse/Distribution Loan (2.3% of the pool) is secured by two warehouse distribution facilities in Montgomery, Ala., and Glendale, Ariz., each 100% occupied by KB Toys Inc., which filed for Chapter 11 bankruptcy protection in January 2004, Moody's said. KB Toys has closed 389 stores and has announced plans to close 140 to 240 more by Jan. 31, according to the rating agency. The Troy Technology Park Portfolio Loans (2.2% of the pool) consist of three cross-collateralized and cross-defaulted loans secured by 11 flex/industrial buildings in Troy, Mich. The major tenant is General Motors, which has vacated approximately 20% of the premises and indicated that it will vacate the remainder of its space shortly, Moody's said. The rating agency can be found online at http://www.moodys.com.

The Massachusetts Division of Banks has issued final regulations to clarify the implementation of the controversial "borrower's interest" standard, according to the Massachusetts Mortgage Bankers Association.The final regulations revise emergency regulations issued on Nov. 8, 2004. "The final regulations, in our opinion, look good," said Kevin Cuff, president of the MMBA. "They address most questions people had with regard to how to oversee or manage them." The regulations clarify that the prohibition on refinancing a home loan applies to loans consummated within 60 months prior to the lender's receipt of an application for a new home loan. Safe harbors on determining borrower's interest are revised by increasing the APR threshold from 2.25% to 2.5% for first-lien closed-end loans and from 3.25% to 3.5% for subordinate-lien closed-end loans. A new safe harbor is added -- if the borrower is able to recoup the costs of refinancing the home loan within two years, and the interest rate on the new home loan is reduced without increasing the amortization period. Under the regulations, a lender cannot shift the burden to the borrower to demonstrate that the new loan is in the borrower's interest or require a borrower to sign a waiver of future claims from a violation of the borrower's-interest standard.

The Mortgage Bankers Association and The PMI Foundation have announced a partnership with Habitat for Humanity under which each will provide $50,000 in grants to local Habitat affiliates to build homes.The $100,000 will be distributed as 10 $10,000 grants to Habitat affiliates that partner with an MBA State & Local chapter. The MBA said it and its member companies have sponsored 56 Habitat homes since 1998. The MBA can be found on the Web at http://www.mortgagebankers.org.

The chairman and founder of Rock Financial/Quicken Loans, Dan Gilbert, is heading up an investment group that is purchasing majority ownership in the Cleveland Cavaliers of the National Basketball Association."Our background is building winning teams in the business world," Mr. Gilbert said. "Our philosophy centers around two things: creating an environment and culture where our entire team can achieve their maximum potential and delivering a 'world class' experience to our clients, or in this case, our fans. We plan to bring this same philosophy to the Cavaliers organization." Ironically, Rock Financial is the "presenting sponsor" of the Detroit Pistons, the NBA franchise located closest to the company's headquarters in Livonia, Mich. The 2004-05 presenting sponsorship agreement involves a number of marketing elements. Rock Financial will be featured in all Pistons broadcasts, all television, radio and print ads, and a variety of other printed materials. Cleveland and Detroit are rivals in the NBA's Central Division, where the Cavs hold a one-game lead over the Pistons, the defending NBA champions. Quicken Loans can be found online at http://www.quickenloans.com.

The NAREIT Composite REIT Index closed 2004 with a total return of 30.4% for the year, according to the National Association of Real Estate Investment Trusts.Last year was the fifth consecutive year that the real estate investment trust index has outperformed other stock market benchmarks, the REIT industry trade association said. For 2005, REIT industry analysts are looking for total returns ranging from negative-10% to as high as 16%, NAREIT said, with the average forecast in the 5%-10% gain range (which is "in line with historical performance," according to NAREIT).

The Eleventh Federal Home Loan District Cost of Funds Index for November 2004 stood at 2.025%, marking the first time since July 2003 the index has been above 2%.The increase is a rise of 6.5 basis points from 1.960% in October 2004, according to the Federal Home Loan Bank of San Francisco. It is quite likely that COFI will continue to rise in the coming months. The index is a weighted average calculation of the cost of mortgage money for thrifts in Arizona, California, and Nevada, and one source of mortgage money is deposits. According to the Federal Reserve Bank of St. Louis, the secondary-market rate for the one-month certificate of deposit, which bottomed out at 1.03% as of Feb. 1, 2004, stood at 2.09% at the start of November. COFI, in contrast, bottomed at 1.708% in May, and has increased by only 31 bps since then. Because it is a weighted average, COFI generally lags other rates by three to six months.