Originations

Despite an initial increase in delinquencies, Fitch Ratings, New, York said any negative long-term effects from Hurricane Charley are unlikely for its commercial mortgage-backed securities universe.However, Fitch said it will closely monitor ten CMBS transactions with a 20% or greater exposure to Florida, the state most affected by the hurricane and the fourth largest contributor of U.S. CMBS collateral. These transactions include CDC 2002-FX1, CSFB 1995-M1, CSFB 2004-TFL1, GMAC 2000-FLF, JP Morgan 2000-FL1, LTC Commercial Mortgage 1996-1, Morgan Stanley 1995-GAL1, Morgan Stanley Dean Witter 2002-XLF, Nationslink Funding 1998-1 and SASCO 1996-CFL1. "While there will likely be an uptick in CMBS delinquencies as borrowers are coming out of pocket to pay the deductibles and access to properties is limited, this should generally be a short-term phenomena," said Mary MacNeill, senior director, Fitch Ratings. Borrowers of commercial properties are required to carry insurance, including wind damage, which generally carries a 5% loss deductible, as well as property interruption insurance. Fitch said it has contacted the major servicers to determine the impact on their current portfolio. The extent of the damage is still being assessed at this time due to the continuing power outages and phone connectivity issues, the company said.

The Blackstone Group, New York, has agreed to acquire Prime Hospitality Corp., Fairfield, N.J., for $12.25 per share, a 42% premium to its closing price on Aug. 18.Including debt, the total value of the transaction is over $790 million. Of the 256 hotels it operates and franchises, Prime owns 112. As part of the deal, Prime will start a tender offer for $178.7 million of senior subordinated notes outstanding. Bear Stearns & Co. served as Prime's financial advisor, while Banc of America Securities did the same for Blackstone. Bank of America's CMBS Capital Markets Group is providing the acquisition financing.

AgStar Financial Services, Mankato, Minn., has made a counter-offer to acquire Farm Credit Services of America, Omaha, Neb.FCSA has entered into what is turning out to be a controversial agreement to be acquired by Dutch banking company Rabobank. Under the AgStar offer, FCSA shareholders will continue to own and control their lending association, retain borrower rights and protections, receive a cash distribution of $650 million and ongoing patronage allocations in future years. AgStar president and chief executive Paul DeBriyn said, "Since the Rabobank acquisition offer was announced July 30th, we have been struck by the level of opposition to this deal expressed by Farm Credit Services of America stockholders and customers, as well as farm leaders and public officials. People have told us that not only did the board sell FCSA too cheap, but they are also deeply concerned about losing their ownership, voting control, borrower rights and protections along with other benefits they have come to value as a member of the Farm Credit System." A spokeswoman for FCSA said the company has not yet received the proposal from AgServices. When it does, its senior leaders will work with its board of directors to review it.

Average fixed mortgage rates have fallen for the eighth consecutive week in a row, according to Freddie Mac.The average 30-year rate dropped to 5.81% during the week ending Aug. 19 from 5.85% the previous week and the average 15-year rate declined to 5.19% from 5.24% during the same period. The average one-year Treasury-indexed adjustable rate mortgage rate also moved downward to 4.01% from 4.08% the previous week. One-year Treasury-indexed ARMs and 15-year fixed-rate mortgages had an average of 0.6 points and 30-year fixed-rate mortgages had an average of 0.7 points. "Mortgage rates eased even further this week in response to a setback in economic growth during June and possibly July," said Frank Nothaft, Freddie Mac vice president and chief economist. "However, we believe the slowdown to be temporary and we expect growth to pick back up in the second half of this year." A year ago, the average 30-year fixed mortgage rate was 6.24%, the average 15-year mortgage rate was 5.58% and the average one-year Treasury-indexed ARM rate was 3.75%. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Moody's Investors Service has downgraded two classes of GE Mortgage Capital Commercial Mortgage Corp. commercial mortgage pass through certificates, series 2000-1.The downgrades were as follows: class H, to B1 from Ba2 and class I, to B2 from Ba3. In addition, Moody's affirmed the ratings on classes A-1, A-2, X, B, C, D, E and F. The downgrades are of classes H and I and are due to realized losses, anticipated losses on specially serviced loans and a change in the loan-to-value dispersion in the transaction, according to Moody's. Recently, Moody's found that the pool had a LTV greater than 100%. Only 0.3% of the pool had an LTV higher than 100% at securitization, the rating agency said. Moody's can be found online at http://www.moodys.com.

Fannie Mae and Crow Tribal Chairman Carl Venne have signed an agreement that will make conventional mortgage financing available on Crow tribal lands by removing a significant obstacle to homeownership on reservations, the tribe's jurisdiction over all land on reservations.The announcement was made at the Fourth Annual "Building Foundations for Housing" symposium in Billings, MT, a two-day conference on increasing affordable housing on tribal lands attended by nearly 150 tribal members, housing specialists, lenders, developers and nonprofit groups that specialize in tribal housing issues. "Today we accept the responsibility to build and finance our own homes," said chairman Venne, whose Office of Economic Development sponsored the legislation that permitted this agreement with Fannie Mae. Going forward, Native-Americans interested in buying a home on tribal lands can use traditional lenders for financing as a way to avoid falling victims to predatory lending and have more mortgage options. Fannie will provide needed liquidity to encourage more lenders to make conventional loans available to tribal members.

Fannie Mae and Freddie Mac have both increased their monthly origination forecasts for the year slightly.Both government-sponsored enterprises increased their projections to about $2.4 trillion from $2.3 trillion. Fannie Mae said in its report Wednesday that this would be a decline of 39% from last year's record level but would still make 2004 the third strongest origination year ever. Fannie Mae can be found online at http://www.fanniemae.com and Freddie Mac can be found online at http://www.freddiemac.com.

The thrift industry funded $203 billion in home mortgages in the second quarter, a 6% decline compared to the same quarter last year, according to new figures released by the Office of Thrift Supervision.However, compared to the first quarter, residential production rose 36%. Washington Mutual, Seattle, the nation's largest thrift, funded $76.35 billion in mortgages during the second quarter, or 38% of the thrift industry's total residential production, according to calculations done by MortgageWire and the Quarterly Data Report. Second quarter production was healthy thanks to rate declines this spring, which caused refinancings to increase. The OTS said the thrift industry, as a whole, earned $3.38 billion in the second quarter, a 4.2% decline compared to the same quarter last year.

According to the Weekly mortgage Applications Survey conducted by the Mortgage Bankers Association, Washington, refinance activity rose 40.7% from 37.2% a week ago."The jump in refinance loans came after a fairy steady drop in rates over the last month," said MBA vice president of research and economics Jay Brinkmann. Interest rates on 30-year fixed mortgages decreased to 5.75% from 5.80% a week prior, 15-year fixed mortgage rates fell to 5.15% from 5.16% during the same time period, and one-year ARM rates increased to 3.95% from 3.85% during the same time period. The market composite index of mortgage loan applications also rose 11.9% from a week prior to 689.4. On an adjusted basis, the index inched up 10.6% in the same time period but fell 5.5% when compared to two weeks ago.

Don't expect Washington Mutual's board of directors to push for a sale of the company, at least not yet, according to a new research report released recently by Smith Barney, a subsidiary of Citigroup.In the report Smith Barney analyst Matt Vetto said that investors may question "the degree to which" the thrift's board will tolerate the company's recent "missteps," but notes that the very same board, "signed off on both management's cost cutting and expansion plans and it would seem that they will be allowed to run their course at least through the rest of the year." The Seattle-based WaMu, the nation's third largest residential servicer (formerly first) has been mentioned as a takeover candidate for several months now. Potential buyers mentioned include HSBC, and Citigroup, which owns Smith Barney. WaMu, as a policy, does not comment on sale rumors.

Cendant Corp., New York, late Tuesday confirmed that it has ended talks with a potential buyer of its mortgage company.Mortgage officials told MortgageWire that the buyer was Countrywide Home Loans, Calabasas, Calif. In a statement Cendant Corp. said it has "terminated discussions with the party referred to" in a late July press release. Both Cendant and Countrywide never commented publicly that Countrywide was the potential buyer. The parent company said it, "will continue the process of receiving proposals and holding preliminary discussions with other parties regarding the sale of such business and, as previously stated, is also considering other strategic alternatives for the business." Cendant Mortgage is the 10th largest residential servicer and 11th largest lender in the U.S., according to the Quarterly Data Report.

United Financial Mortgage Corp., Oak Brook, Ill., has agreed to acquire Vision Mortgage Group, a privately-held retail mortgage originator headquartered in Rockford, Ill.Terms of the deal were not disclosed. Vision has four branches, three in Illinois and one in the state of Washington. The founders, Cass Wolfenberger and Michael Urnezis, will remain after the deal is completed and become president and senior vice president, respectively of the Vision Mortgage division of UFM. Vision had a volume of $148 million in 2003 and $78.6 million for the first seven months of 2004. Steve Khoshabe, president and chief executive of UFM, said, "We are excited about incorporating Vision Mortgage's business model, which is focused on developing Realtor and builder relationships, into our retail origination network. We also anticipate that we will improve Vision Mortgage's financial performance as a result of our secondary market execution, lower cost of warehouse financing and the introduction of administrative synergies."

Single-family housing starts rose 8.5% in July to 1.651 million units annualized, according to new figures released Tuesday by the Commerce Department.The increase reflects activity from June to July. But compared to the same month a year ago, new housing starts rose 7.5%. The figures exclude multifamily construction, which totaled 260,000 units (annualized) in July. The multifamily figure is the weakest reading for that sector in several months. Meanwhile, builder optimism remains high. According to the National Association of Home Builders, builder optimism is at its highest level since October of 2003. According to NAHB president Bobby Rayburn, "Potential buyers who might have been sitting out started diving back into the market when rates headed downward." He added: "With the ongoing favorable financing climate and solid house-price performance, we have good reason to expect continued strength in the housing market in the months ahead."

Don McClain, host of the nationally syndicated radio show "Commercial Real Estate Insight," has been named president of Houston-based Reliance One Mortgage.Mr. McClain has been in commercial and residential real estate lending for 12 years. Don Strouse, recruiter for Reliance One, said having Mr. McClain as president "will elevate Reliance One Mortgage to the premier net-branch mortgage company in the nation" because its branches will be able to provide a greater diversity of service. "Access to commercial real estate markets will separate us from other net-branch companies," Mr. Strouse said.

Recent consolidation in the telecommunications industry has broadcast and wireless tower collateral seeking out commercial mortgage-backed securities issuers for financing, a trend that requires an unconventional approach when assessing this type of collateral, according to Fitch Ratings.Each tower pool has unique characteristics related to tower type, use and ownership interest, which, according to Wit Solberg, a director at Fitch Ratings, "negates the standard loan-to-value and debt service coverage ratio sizing approaches common in CMBS transactions." Fitch said, "The emergence of satellite and cable television has, on the surface, rendered broadcast towers more susceptible to technological obsolescence." But the rating agency also noted that, "although broadcast towers appear to be an outdated or declining medium for television and radio content distribution, 20% of the U.S. audience still receives television content over the air. Compelling regulatory, economic and technical arguments also indicate long-term stability of this business." Fitch can be found online at http://www.fitchratings.com.

Deutsche Bank, whose U.S. headquarters are in New York, has agreed to acquire the mortgage origination and servicing assets of commercial lender Berkshire Mortgage Finance Limited Partnership, a subsidiary of The Berkshire Group, Boston.Berkshire Mortgage specializes in providing funding for multi-family properties using government-sponsored enterprise and government-insured products. It did $3.5 million in loan volume in 2003 and has a servicing portfolio of over $18 billion. Upon closing Berkshire Mortgage will become part of Deutsche Bank's global Real Estate Debt Markets group. Douglas Krupp, chairman of The Berkshire Group, said "our divestiture of Berkshire Mortgage is consistent with our long-term strategy of creating new businesses, growing those businesses to be market leaders and creating significant value for our equity holders." Berkshire Mortgage was formed in 1987. Its headquarters are, and will remain in, Boston. It also has platform offices in Bethesda, Md., and Irvine, Calif. Financial terms of the deal were not disclosed.

American Campus Communities, Austin, Texas, has priced an initial public offering of 12 million shares of common stock at $17.50 per share.The real estate investment trust, which focuses on the financing, development, and management of student housing, said the shares will trade on the New York Stock Exchange under the symbol ACC. Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were the joint book-running managers of the offering. ACC said it has granted the underwriters an option to buy up to 1.815 million additional shares to cover any overallotments.

Meanwhile, the National Association of Realtors has also reported that the median prices of existing homes rose at double-digit rates during the second quarter in many metropolitan areas.The association's metro area home price report for the second quarter found that 49 of the 128 areas surveyed experienced double-digit annual increases in median resale prices. "A tight supply of available homes in a record sales market has been favoring sellers," said NAR chief economist David Lereah. "Even so, the low level of mortgage interest rates and loan origination costs are providing the headroom necessary for buyers to handle higher prices in most areas." The top rates of year-over-year increases in median resale prices were in Las Vegas, where the median price was up 52.4%, to $269,900; Anaheim-Santa Ana (Orange County, Calif.), up 38.7%, to $655,300; and the Riverside-San Bernardino area of California, up 38.5% to $294,500.

Total existing-home sales -- including condominiums and co-operatives -- reached record heights in the second quarter, rising by double-digit rates in 34 states and the District of Columbia from the levels recorded a year earlier, according to the National Association of Realtors.The seasonally adjusted annual resales rate was 7.79 million units in the second quarter, up 16.0% from 6.72 million in the second quarter of 2003. The previous record rate of 7.36 million units was set in the third quarter of 2003. The biggest year-to-year gains were recorded in Nevada, where the resale rate was up 32.5%; Idaho, up 31.0%; and Arizona, up 25.1%. The NAR can be found online at http://realtor.org.

The average 30-year fixed mortgage rate fell to 5.85% for the week ending Aug. 13 from 5.99% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.40% to 5.24%, while the average rate for one-year Treasury-indexed ARMs was unchanged, at 4.08%. Fees and points averaged 0.6 of a point for all three mortgage categories. "Last Friday's unexpectedly weak employment report caused interest rates on long-term Treasury bonds -- and by extension, mortgage rates -- to fall as investors worried about the health of the U.S. economy," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "The Fed's rate hike on Tuesday was expected, and the Fed's cautiously optimistic outlook calmed the market. As a result, 30-year fixed mortgage rates should stay steady, near or just below 6%, for a while, giving prospective homebuyers another chance to get in with a low rate." A year ago, the average 30-year and 15-year fixed rates were 6.34% and 5.66%, respectively, and the average one-year ARM rate was 3.80%, Freddie Mac said.