Originations

Hansen Quality, a division of Fidelity National Financial Inc., Jacksonville, Fla., is expanding its due diligence services to include credit and compliance reviews of mortgage loan packages.Clients will be able to outsource the loan file evaluation function to ensure that verifications, reports, and worksheets are accurate before the loans are sold into the secondary market or securitized. Speaking at a news conference at the Mortgage Bankers Association convention in San Francisco, Ernest D. Smith, president of real estate and mortgage information services for Fidelity Information Services, said the various data products the company offers make it impossible for mortgage fraud to take place. This is because it is a data exchange between one large organization, Fidelity, and another, the lender. Brian Herskowitz, president of FNF's mortgage information and services division, added that there are only a couple of players in this area and that the product takes advantage of the company's strength in credit analysis and risk analysis.

Charles Schwab Bank, Reno, has introduced a pledged-asset mortgage that allows well-heeled borrowers in certain states to use their stock portfolio as collateral for buying a home.Rather than selling stock to get cash for a downpayment and closing costs, the loan leverages eligible securities in a client's investment portfolio as a guarantee for a mortgage loan. Applicants must have at least $250,000 in assets and meet other requirements to qualify. "Our clients told us they want to be able to buy a home without having to liquidate assets and alter their investment strategy," Richard Musci, the bank's chief lending products officer, said at the Mortgage Bankers Association convention in San Francisco. The Schwab Pledged Asset Mortgage provides up to 100% financing, and borrowers have access to their accounts and execute trades during the loan's term. There are no interest rate premiums or private mortgage insurance requirements. However, clients cannot pledge more than 60% of their liquid assets and cannot pledge retirement assets or volatile securities such as options and low-value stocks.

Existing-home sales rebounded in September as buyers took advantage of lower interest rates.According to the National Association of Realtors, existing homes sold at an annual rate of 6.75 million units in September, a 3% gain from August and 1% higher than in the same month of last year. September's home sales reading was the third-best ever, the trade group said. NAR economist David Lereah noted that interest rates have been "fairly stable over the last month, hovering near generational lows." Mr. Lereah said continued low rates are increasing the purchasing power of homebuyers "trying to get into the market." Greenwich Capital economist Steve Stanley said September's sales figures underscore "the stellar underlying demand" for housing. At deadline time, the yield on the 10-year Treasury note was still under 4%. The NAR can be found on the Internet at http://realtor.org.

J.P. Morgan Chase, the corporate parent of Chase Home Finance, has reported earnings of $1.4 billion ($0.39 per share) for the third quarter, down from $1.6 billion ($0.78 per share) a year earlier.A net increase in the home finance unit's operating earnings contributed positively to the company's financial results, but was not enough to offset merger-related costs that dragged its quarterly earnings per share and net income to a level below last year's. Some mortgage-related business lines fared better than others during the quarter, but on a net basis the home finance unit's quarterly earnings were up $163 million from those of a year earlier, at $340 million. J.P. Morgan Chase can be found online at http://www.jpmorganchase.com.

Washington Mutual Inc., Seattle, has reported earnings of $674 million ($0.76 per share) for the third quarter, down from $999 million ($1.09 per share) a year earlier, a decline it attributed partly to reduced mortgage refinancings.Net income for WaMu's mortgage banking segment totaled $271 million in the third quarter, up from $117 million a year earlier and from a loss of $63 million in the second quarter, the company said. Originations of home loans totaled $40.49 billion for the quarter, down from $111.95 billion a year earlier. However, WaMu touted the improved performance of its mortgage servicing rights, which rose $601 million from that of the second quarter "due to lower medium-term interest rates and a widening of the spread between mortgage rates and the rates on certain financial instruments the company uses to hedge the MSR risk." Loans held in portfolio rose by $11.62 billion from the second-quarter level due chiefly to "strong growth" in WaMu's home equity loans and lines of credit and short-term adjustable-rate mortgages, the company reported. WaMu can be found online at http://www.wamu.com.

Responding to market speculation, Archstone-Smith, a Denver-based multifamily real estate investment trust, has reported that the company "is not currently engaged in any discussions to acquire another publicly traded company."Scot Sellers, Archstone-Smith's chairman and chief executive officer, said it is not the company's practice to comment on rumors, but that "the level of speculation reached a point that we felt that it was appropriate to clarify our position." He added that the REIT is in the process of marketing some of its "noncore" assets to pay a special dividend. The REIT owns and operates multifamily properties in a number of key metropolitan areas.

Capital Title Group Inc., a title insurance underwriter based in Scottsdale, Ariz., and Charter One Bank, Cleveland, have announced an agreement whereby a CTG subsidiary will acquire the assets of Real Estate Appraisal Services Inc., a wholly owned subsidiary of the bank.The terms of the deal were not disclosed. CTG's subsidiary CTG Real Estate Information Services will acquire REAS, a provider of appraisal and flood determination services for residential and commercial property in five states. "The vertical integration of REAS's current services with the technological support of Nationwide Appraisal Services, a CTG REIS subsidiary headquartered near Pittsburgh, will produce effective cost-saving synergies," CTG said. The companies can be found online at http://www.capitaltitlegroup.com and http://www.charterone.com.

General Motors Corp., GMAC Mortgage, and ditech.com have announced a program that rewards customers with a $500 certificate toward the purchase of an eligible GM vehicle for select homebuyers who close a mortgage with GMAC Mortgage or ditech.com between Oct. 1 and Dec. 31, 2004.Customers can apply the certificate toward the purchase or lease of an eligible new or unused 2004 or 2005 Chevrolet, Pontiac, Cadillac, Buick, GMC, Oldsmobile, Saturn and Hummer (excluding H1) from an authorized GM dealer, the companies said. (The offer is not valid on any 2005 Saturn model or any Saab model.) GM cited a recent Forrester research report that said people are 20% more likely to buy a car following the purchase of a home.

Five classes of COMM 2001-FL4 commercial mortgage pass-through certificates have been downgraded by Moody's Investors Service.The downgrades were as follows: class K-PS, from Ba1 to B3; class L-PS, from Ba2 to B3; class M-PS, from Ba3 to B3; class K-CH, from Baa1 to Ba1; and class M-CH, from Baa3 to Ba3. In addition, Moody's affirmed the ratings on four other classes in the deal. The downgrades were attributed to poor performance. The certificates are collateralized by three mortgage loans ranging in size from 19.0% to 60.9% of the pool. As of the Oct. 15 distribution date, the aggregate certificate balance had declined by about 84.4%, from $862.7 million at closing to $134.6 million, due to eight loan payoffs and the partial payoff of the Cherry Hill Office Portfolio Loan, the rating agency said.

IndyMac Bancorp Inc., Pasadena, Calif., has lowered its expected earnings for the third quarter to $0.78 per share from its previous forecast of $0.85-0.95 per share.The company attributed the change in the earnings outlook to declining net interest and gain-on-sale margins (mitigated by an increase in mortgage production and market share); an underestimation of the impact of purchase accounting adjustments related to the acquisition of Financial Freedom Holdings Inc.; and the continuing effects of the Securities and Exchange Commission Staff Accounting Bulletin No. 105 on gain-on-sale margins as the pipeline clears out. Michael W. Perry, IndyMac's chief executive officer, said the $0.78 earnings-per-share estimate still reflects "strong performance given the fact that the overall mortgage industry volumes declined 44% year over year, and industry margins have compressed as well." IndyMac, the holding company for IndyMac Bank, can be found online at http://www.indymacbank.com.

The Blackstone Group, a New York-based commercial real estate investor, is acquiring Boca Resorts, an owner and operator of Florida resort properties, for about $1.25 billion.Blackstone is paying $24.00 for each share of Boca Resorts, which represents a 28% premium over the Oct. 20 closing price of $18.76, according to Boca Resorts. Acquisition financing for the transaction is being provided by Bank of America, Bear Stearns, and Merrill Lynch. The board of directors of Boca Resorts has approved the merger, which is expected to close in late 2004 or early 2005, the company said. Boca Resorts chairman and chief executive Wayne Huizenga, who holds about 98% of the company's vote, is voting in favor of the merger, the company said.

Few investment banking firms have been as bullish on Countrywide's stock as Sandler O'Neill. But those days are over.After reviewing Countrywide's third-quarter earnings statements, Sandler O'Neill analyst Mike McMahon reduced his rating on the stock to "hold" from "buy." Among his concerns, Mr. McMahon cited a larger-than-expected servicing impairment charge booked by the company. Even though Countrywide earned $582 million, it represented a 45% decline in earnings. It also revealed a $796 million servicing impairment charge that was offset, in part, by a $591 million hedging gain. Late Wednesday, Smith Barney slapped Countrywide with a "sell" rating. Countrywide's shares sold off in trading Wednesday, falling 11.5% on the day to $33. Its 52-week high is $39.93, its low, $23.00.

The average 30-year fixed mortgage rate fell to 5.69% for the week ending Oct. 22 from 5.74% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.14% to 5.07%, while the average rate for one-year Treasury-indexed ARMs crept up from 4.01% to 4.02%. Fees and points averaged 0.7 of a point for 30-year fixed-rate mortgages and ARMs and 0.6 of a point for 15-year FRMs. "Treasury bond yields eased somewhat this week, causing long-term mortgage rates to drift a little lower from last week," said Frank Nothaft, Freddie Mac's chief economist. "Mortgage rates for one-year adjustable-rate mortgages, however, were almost unchanged, rising only 1 basis point in the same time frame." A year ago, the average 30-year and 15-year fixed rates were 6.05% and 5.36%, respectively, and the average one-year ARM rate was 3.79%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Equity Inns Inc., Germantown, Tenn., has priced a common stock offering of 5.25 million shares at $9.75 per share.The real estate investment trust has granted the underwriters an option to buy up to 787,500 additional shares to cover any overallotments. Citigroup is the sole book-running manager of the offering, and Friedman, Billings, Ramsey is the co-lead manager. The hotel REIT can be found on the Internet at http://www.equityinns.com.

Brandywine Realty Trust, Plymouth Meeting, Pa., has announced an agreement by its operating partnership, Brandywine Operating Partnership LP, to sell $275 million of 4.50% unsecured notes and $250 million of 5.40% unsecured notes.The notes are due Nov. 1, 2009, and Nov. 1, 2014, respectively. The real estate investment trust said its operating partnership plans to use the net proceeds of the offering to repay debt. J.P. Morgan Securities Inc. and Bear, Stearns & Co. are the joint book-running managers of the offering. The REIT can be found online at http://www.brandywinerealty.com.

The single-family housing market improved slightly in the third quarter, according to Mortgage Guaranty Insurance Corp.'s national Market Trends Index.The index reading rose from 6.66 in the second quarter to 6.70 in the third, MGIC reported. The company looked at 73 metropolitan statistical areas and found eight to be strong, 11 weak, and the rest stable. "The U.S. economy grew at a steady rate as annual employment rose 1%, its strongest gain since 2001," said Neil Siegel, senior market analyst for the Milwaukee-based mortgage insurer. "However, cutbacks in the airline and auto industries, moderately higher interest rates, and rising energy costs could dampen the rate of economic growth." MGIC said a reading of 6 to 8 indicates a stable market. The company can be found on the Web at http://www.mgic.com.

In a finding likely to have significant implications for both the commercial and residential real estate markets, nearly 4.2 million people "usually" worked at home in 2000, up from 3.4 million in 1990, according to the latest Census Bureau numbers.That's 300,000 less people than were counted in the Bureau's more recent American Community Survey, which said that 4.5 million people worked at home in 2003. But of most importance, the latest release (based on a sampling of the one in six households that filled out long forms during the 2000 count) found that the 23% increase in home-based workers aged 16 and above was double the growth of the overall work force during the 10-year period. The two estimates differ because the Census Bureau used different questions, survey concepts, data processing, and estimation methods for each study. In addition, "usually" was defined to mean most days during the week. People who worked at home part of the week, but elsewhere more days than at home, were not counted as at-home workers.

Wells Fargo & Co., San Francisco, has reported net income of $1.75 billion ($1.02 per share) in the third quarter, up 12% from $1.56 billion ($0.92 per share) a year earlier, despite a 58% decline in mortgage originations.Mortgage originations totaled $68 billion in the third quarter, down $28 billion from the level recorded in the previous quarter and down $93 billion from $161 billion in the third quarter of 2003, the company said. However, Mark Oman, group executive vice president for home and consumer finance, put the best face on the results. "The advantage of Wells Fargo's multichannel, anytime, anywhere sales approach is reflected in the growth of the home equity portfolio, which is up 43% from the prior year to $46 billion," Mr. Oman said. Noting the "unusually volatile" markets in the third quarter, Wells chief financial officer Howard Atkins said the company sold approximately $4 billion of securities and adjustable-rate mortgages, resulting in $10 million of bond gains and $35 million of loan losses. The owned servicing portfolio (including commercial servicing) totaled $777 billion as of Sept. 30, up from $681 billion a year earlier. The company can be found online at http://www.wellsfargo.com.

Countrywide Financial Corp., Calabasas, Calif., has reported earnings of $582 million ($0.94 per share) for the third quarter, down 47% from $1.1 billion ($1.93 per share) in the record-setting third quarter of last year.Pretax earnings by the company's mortgage banking operations totaled $633 million in the third quarter, down from $1.41 billion a year earlier. "On a year-over-year basis, third-quarter earnings are difficult to compare given the record refinance volume and the convergence of other favorable events experienced during last year's third quarter, which generated by far the best financial results in the company's history," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. ".... In line with a reduction in volume and a loan production mix shift to lower-margin adjustable-rate product, overall production margins declined 43 basis points from last year and 12 basis points from the second quarter of 2004, to 82 basis points." Countrywide said its servicing portfolio rose to a record $786 billion, up $141 billion from the level at the start of the year. As of shortly before noon Wednesday, Countrywide's stock had fallen 13.7%, to $32.36 per share. The company can be found online at http://www.countrywide.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 658.2 to 709.9 on a seasonally adjusted basis during the holiday-shortened week ended Oct. 15, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were down 2.8% on the week but were up 8.4% from the level of a year earlier. The Purchase Index rose from 436.3 to 461.4 on a seasonally adjusted basis, while the Refinance Index climbed from 1949.2 to 2155.2. Refinancings represented 45.6% of total applications, up from 44.5% the previous week, while adjustable-rate mortgages accounted for 34.8%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.69% to 5.64%, and points (including the origination fee) held steady at 1.30 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.