Originations

Spirit Finance Corp., a real estate investment trust based in Scottsdale, Ariz., has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering.Spirit Finance said the proposed offering would amount to $300 million. The REIT specializes in single-tenant real estate.

Citing liability issues, Standard & Poor's Ratings Services has announced that it will not permit "High Cost Home Loans" governed by the Indiana Home Loan Practices Act into its rated structured finance transactions.Under that law, purchasers and assignees may be subject to indeterminate liability on loans defined as high-cost that are originated on or after Jan. 1, 2005, S&P said. With respect to all Indiana home loans, the act permits a borrower to rescind a loan in accordance with the federal Truth in Lending Act for "a violation of law." Because the exposure of purchasers is quantifiable, Indiana home loans not defined as high-cost may be included in S&P's rated transactions. However, S&P said it is unclear whether the phrase "a violation of law" refers to a violation of the act itself, a violation of TILA, or a violation of any other law, state or federal. "It is not feasible for Standard & Poor's to review all laws to determine whether such laws have clear and objective standards for compliance," the agency said. Therefore, S&P said it will require additional credit enhancement for Indiana home loans originated by national banks and their operating subsidiaries, federal thrifts, and state-chartered banks on or after Jan. 1. S&P can be found online at http://www.standardandpoors.com.

Investor purchases appear to have been behind some of the unusually high home price appreciation in parts of the United States over the past year, and those purchases may be leveling off, according to Fannie Mae."The pickup in the investor share has been greatest in some of the areas with the largest rise in home prices (e.g., Las Vegas, San Diego, Monterey)," Fannie Mae chief economist David Berson said in a report released Oct. 18. "When investors decide to leave the housing market (as they always do at some point), demand growth will slow (indeed, the level of demand could decline) and supply growth will rise (as investors put their properties on the market). We may be seeing the beginning of this today." Senior economist Orawin Velz told MortgageWire that the report was based on a comparison of home price appreciation data from the Office of Federal Housing Enterprise Oversight and data from San Francisco-based LoanPerformance Inc. on the investor share of purchase mortgage originations.

AmNet Mortgage Inc., the parent company of American Mortgage Network, a San Diego-based wholesale mortgage bank, has announced the launch of AmNet's correspondent channel.The business, headquartered in Columbia, Md. (a suburb of Baltimore), will buy loans from small to midsize mortgage banks, credit unions, and community banks, AmNet Mortgage said. John M. Robbins, AmNet Mortgage's chief executive officer, said the new operation "provides access to a customer base not currently covered under traditional wholesale channels. A team of mortgage professionals -- who are highly tenured specialists in this market segment and have backgrounds in credit unions, small banks, small thrift institutions, mortgage banks, and large mortgage brokers -- have joined AmNet to begin reaching out to these new customers and building loan volume." AmNet can be found online at http://www.amnetmortgage.com.

Freddie Mac is listening to its customers, and will be simplifying its A-minus loans and improving its low-downpayment products, according to Freddie Mac president and chief operating officer Eugene McQuade.Mr. McQuade acknowledged that Freddie Mac's A-minus loan product is too complex and said the company is working to simplify it to lift more families out of the subprime market. Freddie is also creating new mortgage products that allow low downpayments and low -- but still acceptable -- credit scores. He added that Freddie Mac is going to manage credit risk, and "not simply avoid it." The new products are in development, and will be rolled out over the next 12 months. Mr. McQuade spoke before the America's Community Bankers annual convention in Washington. It was his first public speech as Freddie's new president. Freddie Mac can be found online at http://www.freddiemac.com, and ACB can be found at http://www.americascommunitybankers.com.

Single-family housing starts fell 8.2% in September to a seasonally adjusted rate of 1.54 million units, according to new figures released Oct. 19 by the Commerce Department.Compared with the level of a year earlier, new housing starts rose 0.2%. Analyzing the results, Greenwich Capital noted that groundbreaking activity in the Northeast plunged 27%, but the firm blamed the decline on "weakness in the region" exaggerated by hurricane-related flooding that reached the Northeast. Overall starts, which include multifamily construction, came in at 1.90 million units, a 6% decline from the level of the previous month. Even though September's results were negative, the National Association of Home Builders released a new survey that finds builder confidence at a yearly high. The trade group says builders are optimistic because of improving economic conditions, low mortgage rates, and strong house-price performance. The Commerce Department can be found online at http://www.doc.gov.

Three classes of MeriStar Commercial Mortgage Trust commercial mortgage pass-through certificates, series 1999-C1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class B, from Aa3 to A3; class C, from Baa1 to Ba1; and class D, from Ba1 to B2. In addition, Moody's confirmed the ratings of three classes in the same transaction. The rating agency attributed the downgrades to poor pool performance. The principal asset of the trust is a mortgage loan secured by 19 hotel properties located in 10 states. As of the Oct. 5 distribution date, the transaction's principal balance has decreased by approximately 7.9%, from $330.0 million to $304.0 million, as a result of amortization, Moody's said. The properties are owned by entities associated with MeriStar Hospitality Corp., which owns 79 primarily upscale hotels in 23 states. "In spite of recovery in many hospitality markets, performance at the collateral properties continues to decline," Moody's said, citing in particular the Somerset (N.J.) Marriott, the Hilton Sacramento (Calif.), and the Crowne Plaza San Jose (Calif.).

The Prieston Group, San Rafael, Calif., is teaming up with AppIntelligence Inc., Weldon Springs, Mo., to offer a new mortgage fraud insurance product called DISSCO(TPG).The product takes an enriched version of AppIntelligence's DISSCO fraud detection and prevention product and adds TPG's Mortgage Assurance Solutions, an integrated suite of fraud protection, mitigation, and indemnification services. "This solution is a reflection of our campaign to encourage the use of fraud prevention tools and the adoption of quality lending processes," said TPG's Arthur Prieston. "Based on the experiences that our clients have shared with us, as well as on a comprehensive survey we've been conducting among our client base, we've shown that AppIntelligence's DISSCO can reduce fraud." Mr. Prieston said the product combination can reduce severity rates on claims, resulting in "significant savings" that can be passed on to clients.

Fannie Mae estimates that half of subprime borrowers have only slightly blemished credit records, and the mortgage giant intends to be more aggressive in serving this market, according to Fannie Mae chairman and chief executive Franklin Raines."Fannie is moving ahead with a concerted effort to serve the subprime market," Mr. Raines told the America's Community Bankers annual convention. "And helping our ACB partners compete and succeed in this market is a vital part of the strategy." [It could not be immediately determined whether this would require a charter revision for the government-sponsored enterprise.] Mr. Raines noted that $323 billion of subprime loans were originated last year and the market is growing. "We estimate that about half of subprime borrowers have only slightly blemished credit and are just a notch away from qualifying for Fannie Mae's prime conventional financing," Mr. Raines said. He added that Fannie Mae could serve those subprime borrowers without lowering its credit standards. Fannie Mae can be found online at http://www.fanniemae.com, and ACB can be found at http://www.americascommunitybankers.com.

Bank of America Corp., Charlotte, N.C., has reported net income of $3.76 billion ($0.91 per share) for the third quarter, up from $2.92 billion ($0.96 per share) a year earlier, but said it had taken a $250 million loss in its mortgage banking operations.The loss in mortgage banking income resulted from lower origination volume and a writedown of mortgage servicing rights, BoA said. The company also reported that it realized $732 million in securities-related gains "as it repositioned its mortgage-backed securities to reduce mortgage prepayment risk." BoA touted its commercial MBS underwriting operations, saying it had become the top U.S. deal manager in CMBS in the first nine months of 2004. The company can be found online at http://www.bankofamerica.com.

ABN Amro Mortgage Group Inc., Ann Arbor, Mich., has announced the roll-out of two new adjustable-rate mortgage loans through mortgage.com.The first, an interest-only ARM, will enable consumers to afford a larger house with a lower monthly payment or "substantially" reduce monthly payments on their current home, according to ABN Amro. The interest rate remains fixed, and the homeowner pays only on the loan's interest, for the first three, five, seven, or 10 years of a 30-year term. The second new product, an ARM tied to the London interbank offered rate, offers lower initial interest rates and monthly payments than a conventional fixed-rate product, the company said. Periodic and lifetime rate caps determine the maximum allowable increases in the interest rate, and the program offers one-, three-, five-, seven-, and 10-year LIBOR loans.The company can be found online at http://www.abnamro.com and http://www.mortgage.com.

Inland Real Estate Corp., a real estate investment trust based in Oak Brook, Ill., and the New York State Teachers' Retirement System have entered into a joint venture to acquire up to $400 million of retail properties in Inland's target markets in the Midwest.Initially, Inland will contribute eight retail centers with an approximate net equity value of $100 million, and NYSTRS will contribute about $50 million of equity capital to the venture, Inland said. NYSTRS will also contribute an additional $100 million for future acquisitions if certain conditions are satisfied. The joint venture will use debt funding as well, the REIT said. Inland will manage the properties for the venture. "Our partnership with NYSTRS will enable us to further diversify our capital resources and will allow us to enhance our growth by expanding our core strategy of acquiring high-quality shopping centers in infill Midwest markets," said Mark Zalatoris, Inland's chief operating officer.

The Washington-based National Community Reinvestment Coalition and the National Community Capital Association, Philadelphia, have launched a website to oppose a federal effort to exempt about 90% of the nation's banks from Community Reinvestment Act compliance requirements.The Federal Deposit Insurance Corp. has proposed a rule that aims to relieve nearly 900 midsize banks in 37 states of their CRA requirement to support affordable housing, community development, small business loans, and capital for nonprofits. The organizations warn that if the proposed rule is passed, it is expected to cause a "grave drawback" in such investments. The NCCA, a national network of over 150 private-sector community development financial institutions that invest in affordable housing for underserved communities, said the SaveCRA.org website will facilitate public opinion feedback before the comment period on the FDIC proposal ends Oct. 20. The website provides state-by-state data on the number of banks with $250 million to $1 billion in assets that the FDIC would relieve of CRA requirements. The website can be found online at http://www.savecra.org.

First Defiance Financial Corp., Defiance, Ohio, has entered into a settlement for contingent liabilities incurred as a result of the sale of its Leader Mortgage Co. subsidiary to U.S. Bank NA, Minneapolis.The sale took place in January 2002. The settlement will result in a pretax charge of $1.9 million for First Defiance that will be recorded in the third quarter of 2004, the company said. After tax, the charge amounts to $1.25 million, or $0.20 per share. Leader and U.S. Bank were seeking repayment for "'charges, advancements, and other Payments' that Leader made and for which it was not reimbursed," said a First Defiance 10-Q filing in August. William J. Small, chairman, president, and chief executive officer of First Defiance, stressed that the settlement "in no way relates to any of our existing operations and will not have any impact on our operating results going forward. We previously recognized an after-tax gain from the sale of Leader of $7.7 million, or $1.16 per share, so even with the recognition of this item, we are still satisfied with that transaction."

Fog Cutter Capital Group, Portland, Ore., has announced that the company's common stock has been delisted from the NASDAQ Stock Market, but that it will continue to appeal the delisting decision.Fog Cutter said the company's stock will continue to be traded on the OTC Pink Sheets, and that the company will seek to establish relationships with market makers to provide other trading opportunities. Fog Cutter has several operating segments, including commercial real estate mortgage brokerage activities.

Three classes of Credit Suisse First Boston Mortgage Securities Corp.'s multifamily mortgage pass-through certificates, series 2002-TFL1, have been placed on Rating Watch Negative by Fitch Ratings.The affected classes are: classes E, F-WBC, and G-WBC. Fitch said the negative rating actions stemmed from the deteriorating performance of the Williamsburg and the Commons loan, which represents 12.7% of the pool and is secured by two apartment complexes in Cincinnati. The loan matures Nov. 11, and "will not meet the extension criteria," Fitch said.

American Business Financial Services Inc., Philadelphia, has reported a loss of $115 million ($34.07 per share) for its fiscal year ended June 30, compared with a loss of $29.9 million ($9.32 per share) a year earlier.Even though the company's first fiscal quarter of 2005 ended on Sept. 30, it reported the fiscal year 2004 results on Oct. 13. For the fourth quarter, the loss was $30.9 million ($8.81 per share), which is actually an improvement on the fourth fiscal quarter 2003 loss of $34.1 million ($10.62 per share). "Factors impacting the company during fiscal 2004 included a high level of loan prepayment activity and an inability to generate new loan originations for a six-month period early in the year," said ABFS executive vice president and chief financial officer Albert W. Mandia. "However, we have made numerous strides to counteract these issues, and exiting fiscal 2004 we believe that the transition to our adjusted business model, which is focused on increasing loan originations and whole loan sales, will generate improved financial performance during fiscal 2005." ABFS said it anticipates reporting a loss for the just-ended first fiscal quarter of 2005.

GMAC Global Relocation Services Inc., Oak Brook, Ill., has selected Stewart Relocation Services, Houston, as one of its primary suppliers of title insurance, escrow, and closing services.GMAC Global is a business unit of GMAC Home Services, which already has a marketing partnership with Stewart to offer title programs for GMAC franchisee brokers and owners. Stewart Relocation is a division of Stewart Title Guaranty Co.'s National Title Services. The companies can be found on the Web at http://www.gmacglobalrelocation.com and http://www.stewart.com.

A new study by the Association of Community Organizations for Reform Now shows a persistence in lending discrimination against minorities.The study found that nationally, even upper-income African-Americans -- families earning 120% or more of the metropolitan area's median income -- were 2.6 times more likely to be turned down by a lender than upper-income whites. The report analyzed data from 120 metropolitan areas in 2003, 1998, and 1993. Findings indicate that by 2003, earlier gains in lending to minorities and lower-income people in the 1993-1998 period were lost, ACORN said. Lending denial rates for African-American applicants in 2003 were back at the same level as in 1993, and higher than in 1998, when African-Americans were 1.8 times more likely to be denied than their white counterparts. The same pattern is visible among Latinos. Even though denial rates were slightly lower in 2003 than in 1993, when Latinos were 1.7 times more likely to be denied, the rates were still higher than in 1998, when Latinos were 1.4 times more likely to be denied housing loans, ACORN reported.

The average 30-year fixed mortgage rate fell to 5.74% for the week ending Oct. 15 from 5.82% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.24% to 5.14%, while the average rate for one-year Treasury-indexed ARMs declined from 4.08% to 4.01%. Fees and points averaged 0.6 of a point for all three mortgage categories. "The decline in mortgage rates was primarily due to a weak employment report for September, which suggested economic growth is still a bit subdued," said Frank Nothaft, Freddie Mac's chief economist. ".... Of late, there has been no compelling economic reason to believe mortgage rates would climb out of their recent range." A year ago, the average 30-year and 15-year fixed rates were 5.95% and 5.26%, respectively, and the average one-year ARM rate was 3.69%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.