Originations

The Greenwood Group, a Chicago-based investment and advisory company, has announced the creation of the Greenwood Small Cap REIT Index.The index provides what the company termed the "first-ever comprehensive performance measure" for small-capitalization equity real estate investment trusts by tracking a market-weighted basket of 50 stocks. The companies represent a cross-section of all property types with market capitalizations ranging from $50 million to $1 billion, Greenwood said. The company can be found on the Web at http://www.greenwoodllc.com.

Coldwell Banker Commercial Capitol Realty Services, Tysons Corner, Va., has announced the formation of the National MultiFamily Finance Group, which will provide apartment financing to clients of Coldwell Banker Commercial affiliates nationwide.Coldwell Banker Commercial said it will announce a correspondent's agreement with a Fannie Mae DUS lender and a Freddie Mac Seller/Servicer to provide multifamily loans to the clients of its 450 branch offices. Thomas Mulroney, who most recently led his own commercial mortgage company, Mulroney and Associates Inc., will head the new group. "Our agreement with Coldwell Banker Commercial will allow us to create tremendous cross-selling opportunities with the commercial brokers of the firm's franchise operations nationwide," Mr. Mulroney said. Coldwell Banker Commercial can be found online at http://www.cbcapitol.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 727.3 to 758.3 on a seasonally adjusted basis during the week ended Nov. 12, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 7.5% on the week but were up 15.0% from the level of a year earlier. The Purchase Index fell from 483.0 to 480.3 on a seasonally adjusted basis, while the Refinance Index climbed from 2148.7 to 2375.4. Refinancings represented 48.6% of total applications, up from 45.2% the previous week, while adjustable-rate mortgages accounted for 34.0%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.69% to 5.70%, and points (including the origination fee) fell from 1.36 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 rebounded 5.7% in October as low mortgage rates and strong homebuyer demand continued to fuel another record-breaking year for homebuilders.The U.S. Census Bureau reported that single-family starts increased from a seasonally adjusted annual rate of 1.56 million in September to 1.65 million in October. The National Association of Home Builders estimates that single-family construction activity this year will beat the 2003 record of 1.50 million starts by 6%. Meanwhile, a November survey by the NAHB shows that builders remain optimistic about the momentum in the housing market. That confidence is based not just on low mortgage rates, but also on the "interest they are seeing from customers," said NAHB economist Michael Carliner. Mr. Carliner said he expects a pick-up in job growth to support the housing market next year, despite rising mortgage rates. The Census Bureau also reported that multifamily (five or more units) starts rose 7.0% to a seasonally adjusted annual rate of 338,000 in October from a 316,000 rate in September.

Emeritus Assisted Living, Seattle, has announced that it will delay reporting its third-quarter financial results pending completion of a review of issues related to previously announced earnings restatements for 2003 and 2004.The restatements will correct the booking of a 2003 transaction as a sale-leaseback that should have been booked as a refinance under Financial Accounting Standard No. 98, Accounting for Leases, Emeritus said. The company said it expects the restatements to decrease net income to common shareholders by approximately $470,000 in 2003, increase net loss to shareholders by approximately $310,000 in the first quarter of 2004, and decrease net loss to shareholders by approximately $10,000 in the second quarter of 2004. The company can be found online at http://www.emeritus.com.

The median prices of existing homes rose at double-digit rates for more than a third of surveyed metropolitan areas in the third quarter, the National Association of Realtors has reported.The association's metro area home price report for the third quarter found that 45 of the 127 areas surveyed experienced double-digit annual increases in median resale prices. "Nationally, the annual rate of price growth is slower than in the second quarter, and that is good for long-term gains in the market," said NAR chief economist David Lereah. "Home prices are still rising faster than historic norms because we continue to have more buyers than sellers. However, those conditions vary widely, with the greatest pressure on home prices in California and Florida." The top rates of year-over-year increases in median resale prices were in Las Vegas, where the median price was up 53.7%, to $283,200, "the highest rate of price growth ever measured in any metropolitan area"; Bradenton, Fla., up 40.7%, to $248,000; and the Riverside-San Bernardino area of California, up 36.2% to $311,700. The NAR can be found online at http://realtor.org.

Desert Capital REIT, Las Vegas, has announced an agreement to acquire Consolidated Mortgage Corp., Las Vegas, on an installment basis for $9 million in cash and 450,000 shares of Desert Capital's common stock.Desert Capital, a real estate investment trust that invests in loans to owners and developers of real estate, said the initial closing of 25% of Consolidated's equity is expected to occur within 30 days, pending the receipt of regulatory approvals from the state of Nevada. The purchase is expected to be completed by Sept. 30, 2005. "CMC's origination fees will now serve as an additional income stream for Desert Capital REIT, thereby providing additional revenue for dividend payments," said Todd B. Parriott, the REIT's chairman, chief executive, president, and chief investment officer. The company can be found online at http://www.desertcapitalreit.com.

Highwoods Properties Inc., a real estate investment trust based in Raleigh, N.C., has reported net income of $13.8 million ($0.16 per share) for the third quarter and announced the filing of restated financial results for the years 2001-2003 and the first quarter of 2004.The cumulative effect of the restatements was a reduction of aggregate net income by $17.1 million ($0.32 per share), which represented approximately 6.1% of total net income during the period, the REIT said. The restatements related to, among other things, the accounting for certain real estate transactions between 1999 and 2003, reclassifications related to discontinued operations, the accounting for minority interest in the REIT's operating partnership, and the accounting for a debt retirement transaction in early 2003, Highwoods said. The company can be found on the Web at http://www.highwoods.com.

The Nehemiah Corp. of America, a nonprofit provider of downpayment gift assistance based in Sacramento, Calif., has unveiled the Nehemiah Code of Conduct, a guideline based on the company's existing "best practices."Nehemiah called on all other downpayment assistance providers to adopt similar standards and offered to join forces with the Department of Housing and Urban Development to "institutionalize reforms" that would better protect homebuyers. Among the code's highlights are: restricting gift funds to the acquisition of the homebuyer's principal residence, and for only those costs allowed by federal law and regulation; informing home sellers that a contribution to a nonprofit DAP is not deductible as a charitable contribution; prohibiting parties from increasing the sale price of a home based on the buyer's receipt of downpayment assistance; and barring the payment of commissions or kickbacks to mortgage brokers, real estate agents, builders, or sellers for securing downpayment assistance. The complete code of conduct can be found at: http://www.getdownpayment.com/pdfs/codeofconduct.pdf.

Zacks.com, Chicago, has placed Old Republic International Corp., Chicago, on its list of Stocks to Sell Now.The ranking of 4 (Sell) given to Old Republic, is one step below the worst ranking, 5 (Strong Sell). The company noted that stocks with the 4 (Sell) ranking should be avoided over the next one to three months. In its synopsis of why Old Republic should be sold by investors, Zacks.com said the company's third-quarter earnings fell short of consensus by about 9% because of the mortgage (Republic Mortgage Insurance Co.) and title insurance (Old Republic Title Insurance Co.) groups.

Universal Express Inc., a Boca Raton, Fla.-based company that provides postal services, has announced its intention to form a real estate division.The subsidiary will focus on commercial property acquisitions, commercial loans, and other lending activities. It will also seek to be the lead investor in private placements, limited partnerships, and other activities, with the goal of developing a portfolio sufficient to operate the company as a real estate investment trust, Universal Express said.

There is better than a one-in-six chance of a general decline in home prices over the next two years, according to the PMI Risk Index.The average value of the index for the 50 largest metropolitan statistical areas stood at 186 in November, up from 171 in August, said PMI Mortgage Insurance Co., the Walnut Creek, Calif.-based mortgage insurer that created the index. The index value means that these MSAs have on average an 18.6% probability of experiencing a home price decline in the next two years. San Jose, Calif., topped the index with a 509 (and therefore a 50.9% chance of a decline), followed by Boston, with 483, and Oakland, Calif., with 473. San Francisco and San Diego ranked fifth and sixth, with 419 and 405, respectively, and New York ranked seventh, at 383. PMI can be found online at http://www.pmigroup.com.

Consumers who use mortgage brokers tend to be more satisfied with the mortgage lending process than those who deal directly with lenders, according to the J.D. Power and Associates 2005 Home Mortgage Study.The marketing information firm said the study found that 29% of its more than 11,000 respondents contacted a broker during the mortgage lending process. Those customers tended to be "substantially more satisfied" with broker personnel than respondents overall were with lender personnel, J.D. Power reported. Interestingly, however, the most-satisfied respondents were those who contacted a broker while shopping but then applied directly to an originating lender. "Brokers appear to perform significantly better in meeting customer expectations," said Jeremy Bowler, director of the firm's finance and insurance practice. "Brokers are perhaps more dependent on customer referrals than the direct lenders. As a result, brokers may be more in tune with the cause-and-effect of customer satisfaction and advocacy." Lenders who received the top rankings in overall customer satisfaction were USAA, World Savings, Branch Banking & Trust, Bank of America, and Cendant. J.D. Power, headquartered in Westlake Village, Calif., can be found online at http://www.jdpower.com,

Standard & Poor's has announced that Weingarten Realty Investors, a Houston-based real estate investment trust, will replace L-3 Communications in the S&P MidCap 400 Index.L-3 Communications is being replaced because it is being moved to the S&P 500 on a date to be announced, S&P said. The rating agency can be found online at http://www.standardandpoors.com.

Although the stock of New Century Financial Corp., Irvine, Calif., reached a new all-time high on Nov. 10, investors are "quite pessimistic toward the equity," according to an "Option Byte" issued by Schaeffer's Investment Research, Cincinnati.Put-option volume on Nov. 10 exceeded five times the average put volume for New Century stock, Schaeffer's said. Put options outstanding on New Century outnumber calls by a ratio of over 150 to 100. "Also illustrating a large amount of pessimism is the high level of short interest on New Century," Schaeffer's said. "Total short interest represents more than 13% of the floated shares, which could easily help to power a short-covering rally." According to Yahoo, New Century reached a high of $63.60 Nov. 10, but settled down to $62.05 late in the afternoon. In related news, Piper Jaffray initiated coverage on New Century Financial, rating it "outperform."

U.S. Bank Home Mortgage, Minneapolis, has announced a program aimed at providing mortgage education and tailored mortgage services to military personnel, especially those moving their families while on active duty.The U.S. Bank HomeFront Mortgage program will focus on the distinct needs of the more than 300,000 service members who have a permanent change of station and need help in buying a new home, the company said. "Through HomeFront Mortgage, we will act as a liaison, as a financial mentor, and as a friend," said Dan Arrigoni, president of U.S. Bank Home Mortgage. The company is a unit of U.S. Bancorp, which can be found on the Web at http://www.usbank.com.

Prime Group Realty Trust, Chicago, has announced the termination of its previously announced merger agreement with Prime/Mansur Investment Partners, Chicago.The agreement was terminated automatically because Prime/Mansur failed to obtain a financing commitment that satisfied the requirements of the pact, under which Prime/Mansur would have acquired Prime Group, the latter company reported. Prime Group said it would continue to explore the possibility of doing a "strategic transaction." The company can be found online at http://www.pgrt.com.

The Federal Open Market Committee has raised its target for the federal funds rate by 25 basis points, to 2%.The FOMC, a committee of the Federal Reserve Board, described output as moving at a "moderate pace," indicated that labor conditions have improved, and said "inflation and longer-term inflation expectations remain well contained." In reaction to the statement, RBS Greenwich Capital chief economist Steve Stanley said that "market participants may argue for awhile about whether the description of growth as 'moderate' is bullish or bearish." Mr. Stanley opined in an e-mail report that "'measured tightening' remains the operating principle" for the committee, although he noted that if future economic data contradict that statement, the committee's position on the short-term rates might change.

The average 30-year fixed mortgage rate rose to 5.76% for the week ending Nov. 12 from 5.70% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 5.08% to 5.16%, while the average rate for one-year Treasury-indexed ARMs climbed from 4.00% to 4.16%. Fees and points averaged 0.7 of a point for fixed-rate mortgages and 0.6 of a point for ARMs. "October's fervent job growth statistics, mixed with upward revisions in previous months, led financial markets to believe the economy is picking up steam," said Frank Nothaft, Freddie Mac's chief economist. "A large number of people re-entered the work force, leading to an uptick in the national unemployment rate to 5.5%, which we expect to ease back to 5.4% before the year is out." A year ago, the average 30-year and 15-year fixed rates were 5.98% and 5.31%, respectively, and the average one-year ARM rate was 3.73%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The net cost of originating a mortgage loan totaled $739 in 2003, 26% less than in 2002, according to the Mortgage Bankers Association.The MBA's 2004 Cost Study surveyed 190 mortgage companies to determine the income and costs associated with originating and servicing one- to four-unit residential loans. It found that mortgage banks with the highest average percentage of purchased production incurred the lowest net cost to originate, $480 per loan. The study also found that net income from warehousing declined to $516 per loan in 2003 from $522 in 2002. In addition, the study found that net secondary marketing income, including capitalized servicing, once again provided the largest contribution to the bottom line in 2003, at $1,528 per loan. Meanwhile, amortization of mortgage servicing rights accounted for $166 per loan in losses, according to the MBA study. The MBA can be found online at http://www.mortgagebankers.org.