Originations

For the fourth consecutive month, the Eleventh Federal Home Loan District Cost of Funds Index has increased.According to the Federal Home Loan Bank of San Francisco, the index for September stood at 1.931%, a rise of nearly 6 basis points from 1.875% in August. Another interesting point is that the new index is slightly above the index for September 2003, when it was 1.923%. COFI is a lagging indicator, generally moving three to six months behind other rates. In May the 10-year Treasury yield, according to data on Yahoo!, ranged from 4.50% to 4.85%. For October the yield ranged from 3.97% to 4.24%, closing at 4.03% on the last business day of October. However, short-term rates are moving in the opposite direction. On May 1, according to data compiled by the Federal Reserve Bank of St. Louis, the secondary-market rate on the one-month certificate of deposit stood at 1.05%. For the week of Oct. 22, the rate was 1.88%. During the same period, the rate on the three-month CD rose from 1.20% to 2.04%, and the six-month CD rate increased from 1.46% to 2.18%.

The volume of private mortgage insurance written by members of Mortgage Insurance Cos. of America totaled $19.2 billion in September, compared with $18.5 billion in August.However, the amount of traditional insurance written declined from $15.4 billion in August to $14.7 billion in September, MICA reported. Bulk policies written reached their highest total so far this year in September, at $4.5 billion, up from $3.2 billion the month before. Application volume fell 7.6% in September, from 145,993 in August to 134,842. At the end of September, $613.7 billion of primary insurance was in force, down from $619.1 billion at the end of December 2003. Pool risk written for September was $66.1 million, up from $21.3 million in August, but well below the $605.0 million written in September 2003. The cure/default ratio for September was 78.9%, compared with 86.2% in August. The reporting companies had 34,451 primary insurance cures and 43,656 primary insurance defaults. MICA can be found online at http://www.micanews.com.

Freddie Mac and Chase Home Finance have launched a campaign in Miami to debunk misconceptions about homeownership that are believed to be stopping financially able families from considering buying a home.Collaborating with Freddie Mac and Chase in the "Homeownership. Let the TRUTH Move You" campaign are the Housing Finance Authority of Miami-Dade County, the Miami-Dade Affordable Housing Foundation Inc., and the National Association of Hispanic Real Estate Professionals - South Florida. Freddie Mac said its research has found that nearly half of African-Americans and Latinos believe that they need a 20% downpayment and nearly perfect credit to buy a home. In addition, more than half believe that they must have the same job for at least three years to get a loan, Freddie said. Freddie Mac can be found online at http://www.freddiemac.com.

Prime/Mansur Investment Partners, a Chicago-based joint venture of E. Barry Mansur and Michael W. Reschke, is acquiring Prime Group Realty Trust, Chicago, for a total price of about $877.2 million.The price includes $598 million of the real estate investment trust's debt and the liquidation value of its series B preferred shares, the companies said. Prime Group shareholders are to receive $6.70 per share in cash for each common share of the office and industrial REIT and $6.70 in cash per limited partnership unit of its operating partnership. Jeffrey A. Patterson, Prime Group's president and chief executive officer, said the $6.70-per-share price represents a premium of approximately 14.4% over the company's 30-day average daily closing price through Oct. 22. After the transaction closes, Mr. Mansur will be chairman of the company, and he and Mr. Reschke will be the co-CEOs.

Charlotte, N.C.-based 1st Metropolitan Mortgage has entered into a transaction with NovaStar Home Mortgage Inc., Kansas City, Mo., whereby some NovaStar net branches will become 1st Metropolitan MetroBranches by the end of the year.In addition, through a special marketing agreement, NovaStar Financial Inc., the wholesaler parent of NovaStar Home Mortgage, will become a preferred lender for nonconforming mortgages originated by 1st Metropolitan. The NovaStar Home branches involved have traditionally originated mostly conforming mortgages, 1st Metropolitan said. The branches will be able to seamlessly move their pipeline of loans in progress from NovaStar to 1st Metropolitan. "We want to minimize the effect that a deal such as this could have on the families involved because we know their livelihoods depend on uninterrupted loan production," said Daniel Jacobs, chief executive of 1st Metropolitan. The company did not specify how many NovaStar branches are being transferred.

Fifth Third Bancorp, Cincinnati, has announced the introduction of a mortgage program designed to increase homeownership opportunities for immigrants who are tax-paying residents of the United States.The Fifth Third Immigrant Homeownership Loan program, available with 30-year fixed-rate and adjustable-rate options, will be introduced in the following Midwestern metropolitan areas on Nov. 8: Cincinnati; Columbus, Ohio; Chicago; Indianapolis; Naples, Fla.; and Grand Rapids, Mich. The program also offers expanded sources of acceptable proof of identification, broader income sources, and nontraditional credit references, the bank said. "We understand that many immigrants are first-time homebuyers, have no formal relationship with U.S. financial institutions, have limited traditional credit histories, and may have difficulty accumulating funds for downpayment," said Stewart M. Greenlee, senior vice president at Fifth Third. The bank can be found online at http://www.53.com.

The average 30-year fixed mortgage rate fell to 5.64% for the week ending Oct. 29 from 5.69% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.07% to 5.01%, while the average rate for one-year Treasury-indexed ARMs declined from 4.02% to 3.96%. Fees and points averaged 0.7 of a point for fixed-rate mortgages and 0.8 of a point for ARMs. "Home sales are very sensitive to mortgage rates," said Frank Nothaft, Freddie Mac's chief economist. "Low mortgage rates drove the uptick in sales during September. And with mortgage rates at their lowest level in six months, home sales should continue strong through the autumn months." A year ago, the average 30-year and 15-year fixed rates were 6.05% and 5.39%, respectively, and the average one-year ARM rate was 3.76%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Fiducial, an international provider of outsourcing services to small businesses, has announced an agreement to acquire Frontier Lending Corp., an Indianapolis-based mortgage banker, as well as Frontier Financial Consultants and Diamond Title & Escrow Inc.The terms of the agreement were not disclosed. Yves Morard-Lacroix, Fiducial's executive vice president, said acquiring Frontier has put Fiducial on the financial services map. "This acquisition -- we are now a broker-dealer and a mortgage banker -- is a major step for Fiducial because it enables us to offer services that our small-business clients expected from us and to be a one-stop-shop provider to them," said Mr. Morard-Lacroix, who heads Fiducial's U.S. operations. The lending and financial companies will be operating as Fiducial Lending Corp. and Fiducial Investment Advisors Inc., respectively, while the title company will retain its pre-acquisition name. Fiducial can be found online at http://www.fiducial.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 709.9 to 703.9 on a seasonally adjusted basis during the week ended Oct. 22, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 10.1% on the week and were up 8.1% from the level of a year earlier. The Purchase Index fell from 461.4 to 440.9 on a seasonally adjusted basis, while the Refinance Index climbed from 2155.2 to 2233.8. Refinancings represented 47.7% of total applications, up from 45.6% the previous week, while adjustable-rate mortgages accounted for 34.9%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.64% to 5.54%, and points (including the origination fee) rose from 1.30 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.

A pullback by Fannie Mae and Freddie Mac, which are beset by accounting and political problems, shouldn't have a major impact on the housing market, according to a Wall Street economist."We will see them grow more slowly," Michael Moran, chief economist of Daiwa Securities America Inc., told a National Association of Home Builders construction forecast conference. But he noted that, in his view, the two secondary-market agencies have a minimal impact (7 to 25 basis points) on mortgage interest rates. In terms of financing affordable housing for minorities, the private sector does a better job, he said. "It will not be that big of a deal," Mr. Moran said.

Mortgage loan originations for 2004 should total $2.7 trillion, but decline to $2.1 trillion next year, according to the chief economist of the Mortgage Bankers Association.At a press briefing at the group's annual convention in San Francisco, Doug Duncan noted that the 10-year Treasury note is trading at around 4%. Typically mortgages price 150-to-165 basis points above that. Mr. Duncan forecast that by the end of this year the 10-year yield will be at 4.3% and the 30-year fixed mortgage rate at 5.9%, and that by the end of next year the mortgage rate will be up to 6.5%. When asked about a possible bubble in home prices, Mr. Duncan noted that home sales are up, while the inventory of properties going on the market is down, indicating a constraint on supply. He said it is hard to see where an across-the-board collapse would come from, but that there could be a decline in some markets.

New single-family home sales jumped 3.5% in September as lower mortgage rates continue to support strong demand in the housing market.The U.S. Census Bureau reported that new-home sales rose to a seasonally adjusted annual rate of 1.21 million in September from 1.17 million in August. National Association of Home Builder chief economist David Seiders said he continues to be surprised by the strength of the market. His forecast calls for a decline in new-home sales in the fourth quarter, but that may be "overly conservative," he said at an NAHB construction forecast conference. The NAHB is forecasting that single-family housing starts will decline by 4% to 5% in 2005.

General Growth Properties, Chicago, has reported net income of $63.97 million ($0.29 per share) for the third quarter, compared with $61.43 million ($0.29 per share) for the third quarter of 2003.On a funds-from-operations basis, the real estate investment trust reported FFO per share of $0.66 for the third quarter, a 15.8% increase from $0.57 a year earlier. John Bucksbaum, GGP's chief executive officer, said the retail REIT is moving toward its "anticipated fourth-quarter closing of the Rouse transaction," referring to the REIT's acquisition of The Rouse Co., another retail REIT, earlier this year.

Bank of America, Charlotte, N.C., has announced that it aims to become the "nation's No. 1 community development lender" while pursuing a goal of lending and investing $750 billion for economic development over the next 10 years, primarily in low- and moderate-income communities.BoA said the nationwide initiative focuses on four key areas, including affordable housing, small business/small farm loans, consumer loans, and economic development, and "will entail a corporate-wide, cross-functional effort to drive more than $205 million in community development activity every day." The goal is to invest $500 billion in affordable housing, $125 billion in small business and small farm loans, $75 billion in consumer loans, and $50 billion in economic development.

GMAC-Residential Funding Corp., Minneapolis, unveiled its new first-lien home equity line of credit product Oct. 25 at the Mortgage Bankers Association's 91st Annual Convention & Expo in San Francisco.In an interview, Danny Hellams, senior vice president and managing director, said the new product is aimed at "aging baby boomers." This group of consumers will be looking for a way to use the equity they have accumulated in their homes in a liquid fashion, he said. It has a minimum FICO score of 660, with loan-to-value ratios of 95% when used as a purchase loan or a rate-and-term refinance, or 85% for cash-out refis. Access can be through cash, card, or electronic funds transfer. Mr. Hellams said RFC has been getting requests from its clients to use the product, often seen in second-lien loans, as a first-lien product. The term of the loan is 25 years, with a 10-year draw period and a 15-year amortized repayment period. The product will be on the market in December, he said.

U-Store-It Trust, a Cleveland-based real estate investment trust, has priced an initial public offering of 25 million shares of common stock at $16 per share.The shares will trade on the New York Stock Exchange under the symbol YSI, the self-storage REIT said. Lehman Brothers Inc. was the sole bookrunning manager of the offering. The underwriters have been granted an option to buy up to 3.75 million additional shares to cover any overallotments.

Countrywide Financial Corp., Calabasas, Calif., and Taylor Woodrow Homes, a homebuilder headquartered in Bradenton, Fla., have announced the formation of TWH Mortgage under the aegis of Countrywide Mortgage Ventures LLC.The joint venture will offer homebuyers in Northern and Southern California a variety of loan programs, including zero-downpayment loans and streamlined Fast & Easy loans. Taylor Woodrow is developing and constructing planned communities, with both condominium and single-family projects, at 23 locations around the state in addition to its 42 existing communities, Countrywide said. Countrywide can be found online at http://www.countrywide.com.

Wells Fargo Home Mortgage, Des Moines, Iowa, has announced an expansion of its sales force in California to serve the state's growing population of Latino, African-American, and Asian-American homebuyers.The company said it hopes to open 30 new stores in diverse neighborhoods over the next few months and hire more than 250 bilingual home mortgage consultants. In addition, Wells Fargo said it has launched a multimillion-dollar "multilingual, in-culture" advertising campaign to reach Hispanic, African-American, and Asian-American homebuyers through television, print, radio, and outdoor advertising. "By opening more stores in multicultural communities and hiring more bilingual, bicultural consultants, we intend to achieve our goal of being a trusted adviser to all of our customers and provide the advice, education, and the products and services they need to realize their homebuying goals," said Brad Blackwell, executive vice president and national sales manager of Wells Fargo Home Mortgage. The company can be found online at http://www.wellsfargo.com.

Colonial Properties Trust, Birmingham, Ala., is acquiring Cornerstone Realty Income Trust, Richmond, Va., for about $1.5 billion, including the assumption or refinance of about $850 million of Cornerstone's secured debt.Colonial is a diversified real estate investment trust with a portfolio of multifamily, office, and retail properties. "The combined company will have a total enterprise value in excess of $5 billion and possess one of the largest Sunbelt-focused multifamily platforms," said Thomas H. Lowder, Colonial's chairman and chief executive officer. The acquisition also provides geographic diversification for the REIT and expands its presence in some "high-growth" metropolitan areas, according to the REIT. Glade M. Knight, Cornerstone's chairman and CEO, is slated to join Colonial's board after the expected closing of the merger in the first quarter of 2005. Cornerstone shareholders can opt to receive either 0.2584 of a Colonial common share per Cornerstone share or 0.422 of Colonial preferred depositary shares, which have a $25 liquidation preference and a 7.62% dividend rate, Colonial said. Colonial common stock opened at $42 Monday and Cornerstone opened at $9.97, according to Yahoo! Finance.

Wayne, Pa.-based GHR Systems has announced that both Washtenaw Mortgage and DeepGreen Financial have joined the company's multilender transaction portal, BrokerOneSource.BOS currently has over 5,000 brokers using the site as a point-of-sale tool and over 25 lenders, as well as various third-party service providers, according to GHR Systems. The addition of the two lenders will further diversify the services offered, as Washtenaw is a wholesale mortgage bank and DeepGreen is a business-to-business home equity lender. The announcement came at the Mortgage Bankers Association Annual Convention in San Francisco. GHR's BOS can be found on the Web at http://www.brokeronesource.