Originations

American Residential Funding Inc., a nationwide mortgage banking and brokerage firm based in Costa Mesa, Calif., has begun trading over the counter on the Pink Sheets under the symbol ARFG.Vincent Rinehart, president and chief executive officer of AmRes, said the company's mortgage banking division will expand banking services to its own branch network, and that AmRes will roll out a wholesale loan program to other mortgage brokers in January. The company, which said it is licensed to originate loans in over 30 states, will remain a majority-owned subsidiary of Anza Capital Inc.

A California appeals court has ruled that the state's predatory-lending law does not require lenders to include yield-spread premiums in the points-and-fees test.In Wolski v. Freemont Investment & Loan, the appellate court said state legislators were aware of the mechanics of YSPs when they passed the predatory-lending law, but they did not include YSPs in the points-and-fees test. Daniel Wolski contended that the loan made by the Anaheim, Calif., mortgage broker violated the state predatory-lending law and was a "covered" loan because the points and fees exceeded 6% of the loan amount. However, FI&L successfully argued that it was not a covered loan and that the plaintiffs erroneously included the $3,700 YSP in the points-and-fees test. The California law is similar to the Truth in Lending Act, which does not include YSPs in the points-and-fees test, according to Jon Jaffe, a partner in the San Francisco office of Kirkpatrick & Lockhart. "This is good news, but it is not definitive news," Mr. Jaffe cautioned. He noted that plaintiff attorneys could pursue similar cases in other appellate districts.

Class J of Mortgage Capital Funding Inc.'s multifamily/commercial mortgage pass-through certificates, series 1997-MC1, has been downgraded from C to D by Fitch Ratings.In addition, the ratings on eight other classes in the transaction were affirmed. The downgrade was attributed to $6.1 million of losses resulting from the liquidation of two loans: a 274-room airport hotel property in Cheektowaga, N.Y., and a retail center in Manchester, Tenn. The rating agency said it does not expect the principal loss to be recovered.

Classes A-1 and A-2 of Diversified Asset Securitization Holdings I LP have been downgraded from AA-plus to A-minus by Fitch Ratings.Fitch said DASH I is a collateralized debt obligation that was originated and managed by Asset Allocation & Management LLC, which closed Dec. 18, 1999. The portfolio backing the CDO consists of residential and commercial mortgage-backed securities, asset-backed securities, and other CDOs. The downgrades stem from collateral deterioration that has decreased overcollateralization ratios, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

The Mills Corp., a retail and entertainment real estate investment trust based in Arlington, Va., has refinanced its $500 million credit facility and $200 million term loan with a $1 billion unsecured revolving credit facility and a new $200 million loan.The three-year facility carries an interest rate of 95-145 basis points over the London interbank offered rate, Mills said. The facility and the term loan both have one-year extension options. The co-arrangers are J.P. Morgan Securities Inc. and Bank of America Securities LLC. Mills can be found online at http://www.millscorp.com.

BRE Properties Inc., San Francisco, has announced that its earnings for the fourth quarter and the year will likely fall short of consensus estimates by financial analysts.The real estate investment trust said it expects funds from operations to range from $0.40-0.42 per share in the fourth quarter, compared with consensus estimates of $0.55-0.59, and from $2.06-2.08 per share for the year, compared with consensus estimates of $2.22-2.34. The REIT said its estimates include an expected one-time charge relating to the retirement of the company's chief executive officer, litigation costs, and other accounting charges. The retirement of CEO Frank McDowell, who will be succeeded by Constance Moore, is based on a mutual agreement to exercise the early-termination-without-cause provision of an executive transition employment agreement, BRE said. The one-time charge associated with the retirement will total approximately $4.5 million ($0.09 per share) in the fourth quarter. The REIT can be found online at http://www.breproperties.com.

Kramont Realty Trust, Plymouth Meeting, Pa., has announced an agreement under which it will be acquired and merged into Centro Watt America REIT III LLC, an affiliate of Centro Properties Ltd., Melbourne, Australia.Under the agreement, other affiliates of Centro would be merged simultaneously into Kramont Operating Partnership LP and Montgomery CV Realty LP. Holders of shares of Kramont and limited partnership units of the operating partnerships will receive: $23.50 per common share and per OP unit; $25 plus accrued and unpaid dividends per series E cumulative preferred share; and either one series B-1 preferred share in Centro Watt America REIT or, under certain circumstances, $25 plus accrued and unpaid dividends, per series B-1 preferred share. The transaction, which was unanimously approved by Kramont's board, is subject to the approval of Kramont's common and series B-1 shareholders voting together, the company said. Kramont, a shopping center real estate investment trust, can be found online at http://www.kramont.com.

Class F of RMF's commercial mortgage pass-through certificates, series 1995-1, has been downgraded from C to D by Fitch Ratings.In addition, the ratings on four classes in the transaction were affirmed. The downgrade was attributed to losses incurred after the liquidation of a portion of the pool. Fitch said it does not expect the principal loss to class F to be recovered. The rating agency said it "remains concerned with the concentrations within the pool and a high percentage of specially serviced loans." Only five loans remain, all of which are secured by health care facilities.

Class C of DLJ Commercial Mortgage Corp.'s mortgage pass-through certificates, series 1999-CG3, has been downgraded from CCC to CC by Fitch Ratings.In addition, the ratings on 16 other classes in the deal were affirmed. The downgrade stems from an increase in the amount of expected losses associated with the five specially serviced loans, Fitch said. The largest loan, a multifamily property in Dallas, is currently real estate owned, and a new property manager is assessing life/safety issues at the property, the rating agency said. The second-largest loan is collateralized by a multifamily property in Memphis and is also REO.

The stockholders of Horizon Group Properties Inc., Rosemont, Ill., have approved a board proposal to terminate the company's status as a real estate investment trust.Voting at their recent annual meeting, the stockholders also approved amendments to HGP's charter that retain share ownership limitations designed to preserve the company's ability to use net operating losses for federal income tax purposes, and that will "facilitate the future re-election of REIT status," which cannot occur before 2009, HGP reported. The company said it will continue to operate, manage, and develop its portfolio of factory outlet centers. "The termination of REIT status allows us to pursue future opportunities unencumbered by the restrictions on the sources of income we may earn or types of assets in which we may invest that are imposed by the REIT rules," said Gary J. Skolen, HGP's chairman, president, and chief executive officer. "The primary benefit of being a REIT is the ability to eliminate federal income taxes at the corporate level. Given our accumulated net operating and capital losses, we do not anticipate incurring income taxes in the near future." HGP can be found online at http://www.horizongroup.com.

Household Finance Corp., Prospect Heights, Ill., has been merged into Household International Inc., which has changed its name to HSBC Finance Corp., according to HSBC-North America, the holding company for HSBC's U.S. and Canadian businesses.Household Finance was a wholly owned subsidiary of Household International and the owner of Household's domestic U.S. operations, HSBC-North America noted. "There is a substantial overlap of the companies, as Household Finance Corp. holds $110.9 billion of Household International's $127.8 billion assets, as of Sept. 30, 2004," the company said. "As this resulted in little difference in the reported financial results between Household Finance and its parent, the merger will eliminate the need to prepare and file two sets of largely duplicative financial statements." HSBC-North America can be found online at http://www.hsbcnorthamerica.com.

Option One Mortgage Corp., Irvine, Calif., and ValuAmerica, Pittsburgh, have announced an agreement to develop a new vendor management company in Tampa, Fla.The new company, a wholly owned subsidiary of Option One, is named AcuLink Mortgage Solutions LLC. It will initially provide settlement services, including title and closing services, to H&R Block Mortgage Corp., an Option One subsidiary that originates residential mortgage loans directly to consumers nationwide. During a pilot test of the new program, title commitments were delivered in an average of two days, title conditions were cleared in another two days, and final title policies were received within two days of funding, the companies said. ValuAmerica, a provider of settlement services and vendor management technology, will develop work processes and provide turnkey recruiting, training, licensing and other consulting services. Option One can be found online at http://www.optiononemortgage.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 696.2 to 689.0 on a seasonally adjusted basis during the week ended Dec. 10, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 3.0% on the week but were up 0.6% from the level of a year earlier. The Purchase Index fell from 490.9 to 488.9 on a seasonally adjusted basis, while the Refinance Index declined from 1890.6 to 1852.4. Refinancings represented 46.0% of total applications, up from 45.6% the previous week, while adjustable-rate mortgages accounted for 34.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.68% to 5.65%, and points (including the origination fee) rose from 1.27 to 1.28 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

The average 30-year fixed mortgage rate fell to 5.68% for the week ending Dec. 17 from 5.71% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.14% to 5.11%, while the average rate for one-year Treasury-indexed ARMs climbed from 4.15% to 4.18%. Fees and points averaged 0.6 of a point for fixed-rate mortgages and 0.7 of a point for ARMs. "The Commerce Department report on housing starts showed a considerable drop in starts in November," said Frank Nothaft, Freddie Mac's chief economist. "However, with December's mortgage rates continuing to dip even further, we expect housing starts will bounce back fairly quickly." A year ago, the average 30-year and 15-year fixed rates were 5.88% and 5.24%, respectively, and the average one-year ARM rate was 3.77%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Mortgage loan production margins for mortgage banking companies declined by 40% in the first half of this year, according to peer group surveys conducted by the Mortgage Bankers Association and the Stratmor Group.Despite the decline, the MBA said profit margins remained respectable following the record-breaking profits of 2003. Average pretax production margins fell to 54 basis points during the first six months of the year, compared with an all-time high of 90 bps, or 0.9% of the loan balance, for all of 2003. Driving the decline was lower origination volume, which in turn resulted in higher origination costs, the MBA said. On the bright side, average servicing income was $24 per loan in the first half, a sharp improvement from an average loss per loan of $107 last year. More information about the peer group survey can be found at http://www.mbastratmor.com.

Single-family housing starts fell 11% in November as the hurried pace of housing construction finally took a breather.The U.S. Census Bureau reported that single-family starts fell from a seasonally adjusted annual rate of 1.64 million in October to 1.45 million in November. National Association of Home Builders economists have been expecting a slowdown for some time, and they expressed surprise at the 5.7% jump in October to a 1.64 million rate. They deemed 1.54 million a more sustainable pace -- which on a chart would level out the jump in October and the drop in November. Despite a slower pace, "we are still on track for a record year in single-family starts," NAHB economist Michael Carliner said. The Census Bureau also reported that multifamily starts dropped 19.3% in November to 288,000.

The senior subordinated and senior unsecured debt of LNR Property Corp., Miami Beach, Fla., have been downgraded by Fitch Ratings and removed from Rating Watch Evolving.The senior subordinated debt rating was lowered from BB-minus to B-minus, and the senior unsecured debt rating was lowered from BB-plus to B. The rating outlook is stable, Fitch said. The rating actions are based on the expectation that "there will be meaningful changes in LNR's leverage, capitalization, funding, and liquidity profile" as a result of the acquisition of the real estate investment company by Cerberus Capital Management LP, the rating agency said. "The terms of the company's planned credit facilities will encumber all existing available unencumbered assets and cash flows," Fitch said. "While the market value of LNR's total asset base will be meaningfully in excess of the company's total indebtedness, all available assets will effectively be used to secure funding." Fitch can be found online at http://www.fitchratings.com.

Demand for commercial real estate space will escalate over the next two years in response to growth in the U.S. economy and a rise in exports, according to the National Association of Realtors."New jobs are filling office and industrial space, and vacancies will generally decline in the commercial real estate market," said David Lereah, the NAR's chief economist. "A silver lining to the recent slide of the U.S. dollar on foreign currency markets is an expected boost to U.S. exports that could also stimulate foreign purchase of U.S. commercial property." In its Commercial Real Estate Quarterly," the NAR said office vacancy rates in 57 metropolitan markets tracked by the organization are likely to fall from 16.2% this year to 15.3% next year and 14.1% in 2006. Net absorption of office space (which includes leasing of both new and existing space) will nearly triple to 55.9 million square feet this year from 20.0 million in 2003, the NAR said. The organization projects that 50.4 million square feet will be absorbed next year, and 59.7 million square feet in 2006. The NAR can be found on the Internet at http://realtor.org.

Five classes of Banc of America Commercial Mortgage Inc. commercial mortgage pass-through certificates, series 2001-1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class K, from Ba2 to B1; class L, from Ba3 to B2; class M, from B1 to B3; class N, from B2 to Caa2; and class O, from B3 to Ca. In addition, Moody's affirmed the ratings of 12 other classes in the deal. The downgrades were attributed to realized and expected losses from specially serviced loans and loan-to-value dispersion. Moody's said 25.5% of the conduit pool has an LTV greater than 100%, compared with 4.1% at securitization. Three of the top 10 loans are watchlisted by the master servicer, including the sixth-largest, Tally Plaza; the eighth-largest, Northwest-Hidden Valley; and the ninth-largest, Keswick Village Apartments. The certificates are collateralized by 177 mortgage loans secured by commercial and multifamily properties, of which 11 loans, representing 7.0% of the pool, are in special servicing, Moody's said. The rating agency can be found online at http://www.moodys.com.

Market Street Mortgage, Clearwater, Fla., has announced an agreement to acquire 14 residential production offices from Guaranty Residential Lending Inc., a mortgage lending subsidiary of Temple-Inland Inc. based in Austin, Texas.The terms of the deal were not disclosed. Market Street also reported that it had previously acquired five Guaranty offices in Arizona, Arkansas, and Texas for an undisclosed amount, and that those offices began operating under the Market Street brand on Dec. 6. The 14 offices covered by the latest agreement are located in Georgia, Illinois, North Carolina, Tennessee, and Virginia. Randall C. Johnson, chief executive officer of Market Street, said the transaction is part of a strategic plan to further diversify the company's retail mortgage operations by expanding its presence in "desirable" mortgage markets around the country. Market Street said the 19 Guaranty offices involved in the two deals originated more than $875 million in mortgage loans in 2003. Market Street, a wholly owned subsidiary of NetBank Inc., can be found online at http://www.marketstreetmortgage.com.