Originations

Thomas L. Brodie has been named president of the Town and Country Trust, a multifamily real estate investment trust based in New York, succeeding Harvey Schulweis in that post.Mr. Schulweis will remain chairman and chief executive officer of the REIT, the company said. Mr. Brodie will also retain his current title of co-chief operating officer. Town and Country can be found on the Web at http://www.tctrust.com.

Commercial real estate in smaller cities is riskier than that in larger cities, even after accounting for lower debt levels in larger cities, according to a default and delinquency study by Moody's Investors Service.The study, covering the period from 1995 to 2003, looked at about 40,000 commercial real estate loans (valued at about $330 billion) backing commercial mortgage-backed securities deals. Moody's said it considered the possibility that loans in larger cities perform better because of a different property type distribution -- for example, that bigger cities might have more institutional-quality office buildings. But Sally Gordon, the Moody's analyst who did the study, said that doesn't appear to be the case. "The answer is [that] other than the 10 largest cities having a disproportionate share of offices, there does not appear to be a profound difference in the property-type composition of large and small MSAs," she said. Another finding of the study is that CMBS loan delinquencies do not follow the "hill-shaped curve" pattern of delinquency common in life insurance company loans, with delinquencies peaking after three to five years and declining thereafter. Moody's can be found online at http://www.moodys.com.

Fannie Mae has expanded the criteria for manufactured housing loans that it will purchase from lenders who make such loans.The agency had been doing a pilot with 10 lenders on the product since February. Under the new criteria, borrowers will be able to make a 5% downpayment for loans with terms of up to 30 years on a manufactured home used as a principal residence. Fannie said it will buy purchase-money mortgages, while cash-out refinance loans will be bought on a limited basis. The changes go into effect on Dec. 1. "We announced several measures last June to strengthen our requirements for mortgages secured by manufactured homes," said Chuck Rumfola, Fannie's vice president for manufactured housing. "Today's changes will allow us to further broaden the availability of financing for this affordable-housing type." Fannie Mae can be found online at http://www.fanniemae.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 761.7 to 727.3 on a seasonally adjusted basis during the week ended Nov. 5, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications fell 5.6% on the week but were up 16.2% from the level of a year earlier. The Purchase Index fell from 496.5 to 483.0 on a seasonally adjusted basis, while the Refinance Index declined from 2303.9 to 2148.7. Refinancings represented 45.2% of total applications, down from 45.7% the previous week, while adjustable-rate mortgages accounted for 35.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.65% to 5.69%, and points (including the origination fee) rose from 1.26 to 1.36 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Delta Financial Corp., Woodbury, N.Y., has reported a net loss of $1.8 million ($0.09 per share) for the third quarter, compared with net income of $41.6 million ($2.24 per share) a year earlier.While third-quarter 2003 earnings were positively affected by an income tax benefit of $30.5 million, the earnings for the third quarter of 2004 were negatively affected by a switch in Delta's securitization structure from gain-on-sale accounting to portfolio accounting. The company originated a record $682.0 million of subprime mortgages during the third quarter, up 30% from $524.8 million a year earlier. The cost to originate as a percentage of loan production fell from 3.1% to 2.7% during that time frame. Company executives said Delta should return to profitability by the first quarter of 2005. Delta can be found online at http://www.deltafinancial.com.

Criimi Mae, Rockville, Md., has reported a net loss of $9.3 million ($0.60 per share) for the third quarter, a deterioration from the net loss of $7.4 million ($0.49 per share) for the third quarter of 2003.The real estate investment trust said the third-quarter results for this year include an impairment charge of $13.2 million, or about $0.86 per share. Barry Blattman, Criimi Mae's chairman and chief executive officer, said that "the more subordinated CMBS [in Criimi Mae's portfolio] continue to be impacted by higher loss expectations that we have estimated for the portion of our mortgage loan portfolio that is still struggling to improve." This produced the impairment charge, which resulted in the net loss for the quarter, he said. Criimi Mae also reported that its net interest margin increased 25% to $9.9 million in the third quarter. Specially serviced mortgage loans totaled 6.3% of the $13.8 billion in loans backing Criimi Mae's CMBS portfolio as of Sept. 30, with loans backed by hotel property accounting for $407.3 million, or almost half, of the specially serviced loans. The commercial mortgage REIT can be found online at http://www.criimimaeinc.com.

Freddie Mac and the National Association of Mortgage Brokers have announced the launch of a three-state pilot consumer credit education campaign using Freddie's bilingual CreditSmart financial literacy curricula.The pilots will be managed by NAMB affiliates in California, Florida, and Texas. CreditSmart and CreditSmart Español are national, community-based curricula that help prepare English- and Spanish-speaking communities for the financial responsibilities of homeownership by teaching money management skills, Freddie Mac said. NAMB president Bob Armbruster said the association views credit education as the best way to ensure that consumers "don't fall prey to abusive lending tactics." Freddie Mac can be found online at http://www.freddiemac.com, and the NAMB can be found at http://www.namb.org.

An increasing number of Internet homebuyers who often are entering the housing market for the first time prefer an adjustable-rate mortgage loan product, according to a Bankrate Consumer Focus survey.The survey found that people 25 to 34 years old who do not have children and are first-time homebuyers are 52% more likely than others to choose an ARM. From February to September 2004, one-third of all online applicants, 31.9%, received an ARM compared with 24.1% during the December 2003 to March 2004 survey period and the August to November 2003 period. The most recent BCF survey monitored 6,982 participating consumers who were looking for mortgage lenders. First-time buyers also are more inclined to approach institutions they are more familiar with, or have been personally referred to, Bankrate said. About 94.3% consider interest rates as the most important selection criteria. Bankrate, which is based in North Palm Beach, Fla., can be found online at http://www.bankrate.com.

Standard & Poor's Ratings Services says it has become "increasingly concerned" by several trends in the commercial mortgage-backed securities market, including deteriorating underwriting and origination standards.Other troubling trends cited by S&P include relaxed requirements for capital expenditure, tenant improvement, and leasing commission reserves; a growing number of interest-only loans and loans with IO periods; and "relaxed adherence" to structural and legal safeguards. "Although we are not yet convinced that these trends are endemic or widespread within the market, Standard & Poor's is troubled that they are looming on the horizon," said Kim Diamond, a managing director in S&P's Global Real Estate Finance Group. S&P said balloon-balance refinancing risk is a growing concern that "will only be exacerbated by increasing interest rates and a higher percentage of interest-only loans." S&P can be found online at http://www.standardandpoors.com.

Emeritus Assisted Living, a Seattle-based provider of assisted-living and related services to senior citizens, has announced that it will restate its financial results for 2003 and 2004 and expects to make downward revisions to earnings.The company said it expects to decrease net income to common shareholders by approximately $470,000 in 2003 and approximately $310,000 in the first quarter of this year. Emeritus said the reason for the restatements was a determination by its Audit Committee that its sale of four communities in September 2003 should not have been accounted for under sale/leaseback accounting. As part of the transaction, Emeritus said it provided a letter of credit against the default of the underlying loans and continued a security interest in facility receivables, among other things. The Audit Committee concluded that this constitutes "continuing involvement" in the communities, which precludes the use of sale/leaseback accounting, Emeritus said. The company can be found online at http://www.emeritus.com.

The Washtenaw Group Inc., Ann Arbor, Mich., has reported a loss of $2.26 million ($0.50 per share) for the third quarter, compared with record net income from continuing operations of $3.83 million ($0.86 per share) a year earlier.Washtenaw Group, the parent of Washtenaw Mortgage Co., was spun off from Pelican Financial Inc., also of Ann Arbor, on Dec. 31, 2003. For the first nine months of the year, Washtenaw has lost $5.25 million ($1.17 per share), compared with net income from continuing operations of $9.9 million ($2.22 per share) for the same period in 2003. The results for the third quarter of 2004 were lowered by a mortgage servicing rights impairment of $101,000. In the third quarter of 2003, the company had a valuation credit of $2.2 million. Losses on loan repurchases for the third quarter totaled $1.6 million. Meanwhile, mortgage origination volume was one-fifth of what it was one year ago, going from $1.0 billion in the third quarter 2003 to just $212.2 million for the most recent period.

Crescent Real Estate Equities, a real estate investment trust based in Fort Worth, Texas, has announced that it is entering into joint venture transactions valued at $1.2 billion involving five of its office properties.The five properties -- The Crescent, Trammell Crow Center, and Fountain Place in Dallas, and the Houston Center and Post Oak Central in Houston -- are to be sold in two phases. The first phase involves a joint venture of three of the properties, valued at $898.5 million, with JP Morgan Asset Management, whereby JPM will hold a 60% interest in the properties. Crescent said it is negotiating with another institutional partner to further reduce the office REIT's stake in these properties to 24%. JPM is also acquiring a 76% interest in the other two properties, valued at $320.5 million and totaling 2.3 million square feet, leaving Crescent with a 24% interest in them, the REIT said. Crescent said it expects to generate $316 million in net cash proceeds and to post a $211 million gain on the sale of these interests in the fourth quarter. The REIT will continue to manage and lease the properties.

NorthMarq Capital Inc., Omaha, Neb., has announced an equity investment of unspecified amount in AmeriSphere Multifamily Finance LLC, one of 26 Fannie Mae Delegated Underwriting and Servicing lenders.NorthMarq is a commercial real estate investment banking firm with offices in 28 major markets across the United States. AmeriSphere, also based in Omaha, was formed in 2000 by Rodrigo Lopez and the McCarthy Group Inc. to provide capital to the multifamily housing industry, according to NorthMarq. Mr. Lopez said AmeriSphere will "help increase the availability of affordable multifamily housing through financing of properties that qualify for low-income housing tax credits and tax-exempt bonds."

Meanwhile, the NAR is forecasting that total home sales will maintain historically high levels next year, coming in second only to this year's expected record high.The forecast, released at the association's annual Realtor conference and expo in Orlando, Fla., calls for record existing-home sales of 6.55 million this year and 6.30 million next year, and record new-home sales of 1.17 million this year and 1.07 million in 2005. Housing starts are forecast at 1.93 million this year and 1.84 million next year. "At the beginning of 2004, forecasters were calling for a gradual rise in mortgage interest rates, but we've experienced a pleasant surprise for the housing sector," said NAR chief economist David Lereah. "The 30-year fixed-rate mortgage is now hovering close to 5.7%, and even though we're expecting rates to rise slowly, they will stay in a historically low range and a strong momentum of home sales will carry over into 2005."

A large pool of first-time homebuyers is providing liquidity to the housing market, according to a new survey released by the National Association of Realtors.The NAR Profile of Home Buyers and Sellers, based on transactions from mid-2003 to mid-2004, found that the first-time homebuyers account for about four in 10 home purchases. David Lereah, the NAR's chief economist, said the market share of first-time homebuyers has been stable since 1993. "Strong activity by entry-level buyers has provided solid and substantial growth to the housing market over the last decade," Mr. Lereah said. Demographics favor a continuation of the trend, he said, because "echo-boomers, the children of the baby boom generation and almost as large, will be in the prime years for buying a first home for the next decade. These findings demonstrate a fundamental underlying demand that will be driving the housing market at a higher plateau for the foreseeable future." The NAR said the typical first-time buyer is 32, has a household income of $54,500, and makes a 3% downpayment on a home costing $139,000. The NAR can be found on the Internet at http://realtor.org.

Two classes of Diversified Asset Securitization Holdings II LP have been downgraded by Fitch Ratings.The downgrades were as follows: class A-2L, from A-minus to BBB-plus; and class B-1, from BB-minus to B. The two classes were also removed from Rating Watch Negative. Fitch said DASH II is a collateralized debt obligation that was originated and managed by Asset Allocation & Management LLC, but that Western Asset Management Co. became the substitute asset manager for AAMCO in October 2002. The portfolio backing the CDO consists of residential and commercial mortgage-backed securities and commercial and consumer asset-backed securities. Fitch said the original ratings assigned to the downgraded classes "no longer reflect the current risk to noteholders." Fitch can be found online at http://www.fitchratings.com.

Carrollton Bancorp, Baltimore, has reported that accounting errors related to the handling of certain fees and costs at its Carrollton Mortgage Services Inc. subsidiary have necessitated a restatement of earnings for the first and second quarters.The company said the restatement will reduce its net income by over $368,000, to $662,112, for the first half of 2004, and its earnings from $0.36 per share to $0.23 per share. Carrollton reported net income of $148,883 for the third quarter, compared with $365,353 in the third quarter of 2003. The company is the parent of Carrollton Bank, which can be found on the Web at http://www.carrolltonbank.com.

Fitch Ratings, like Standard & Poor's, is saying "no" to rating securitizations containing high-cost Massachusetts loans because of "heightened assignee liability" stemming from the state's Predatory Home Loan Practices Act.The law, which goes into effect Nov. 7, applies to "high cost home mortgage loans" secured by a borrower's principal dwelling. It excludes reverse mortgage loans, but includes most other mortgage types such as open- and closed-end and first- and second-lien loans. The annual-percentage-rate threshold is breached if the spread above the comparable maturity Treasury security exceeds 8% for first-lien loans, or 9% for second-lien loans. A loan would also be classified as a high-cost mortgage if its total points and fees exceed 5% of the total loan amount or $400, whichever is greater, Fitch said. A "safe harbor" is allowed, and the purchaser must have a policy in place that prohibits the purchase of high-cost home mortgage loans. The seller must exercise reasonable due diligence at the time of purchase of the loan.

About 14 million U.S. jobs are at risk for offshoring, and about 3.5 million of them are likely to be offshored, according to Dwight M. Jaffee, a finance professor at the University of California, Berkeley.Speaking at a panel session on the impact of outsourcing at the Urban Land Institute's fall meeting in New York City, Mr. Jaffee mentioned Dallas as a city that has a high concentration of jobs that are vulnerable to offshoring. Other cities on the list include Washington; Atlanta; Boston; San Jose, Calif.; and Stamford, Conn., he said. Based on one estimate of 250 square feet of office space per U.S. office sector worker, this translates into an implied loss of about 875 million square feet of office space, or about 6.7% of the office space in the United States, according to Mr. Jaffee. Another panelist, Leann Lachmann, president of New York-based Lachmann Associates, said she believes the nation is not creating replacement jobs for the ones lost to offshoring. Therefore, she said she expects the next three to five years to be "dire" for office landlords. Joseph Gyourko, a finance professor at the Wharton School of the University of Pennsylvania in Philadelphia, said offshoring is "productivity enhancing" and "encourages us to focus on things we are relatively good at."

The National Association of Realtors will begin publishing a new index in March that promises to provide a better handle on the market for existing homes.The Pending Home Sales Index will be based on signed rather than closed contracts, thereby delivering "a more current read ... than any other indicator currently available," NAR chief economist David Lereah said at the group's annual convention in Orlando, Fla. According to Mr. Lereah, the vast majority of pending sales translate into closed deals, typically within four to eight weeks. The NAR's existing-home sales series, which focuses on seasonally adjusted sales, median prices, and inventory levels, account for some 85% of all residential sales activity. But it is a lagging indicator because it covers transactions closed the previous month. As a leading indicator, the new PHSI will project national sales that will settle in the next month or two. The idea for creating the index was hatched more than two years ago in a meeting with the Federal Reserve Board, Mr. Lereah said. The NAR can be found on the Internet at http://realtor.org.