Originations

Paul W. Knutson has been promoted from controller to vice president at The First American Corp., Santa Ana, Calif., a provider of title insurance, mortgage information, and other business data.Mr. Knutson joined First American in 1988 as a staff auditor for the company's largest subsidiary, First American Title Insurance Co., and after various promotions became controller of First American Title in 1998 and of the parent company in 2001. The company can be found on the Web at http://www.firstam.com.

Kite Realty Group Trust, an Indianapolis-based real estate investment trust, has priced an initial public offering of 16.3 million shares of common stock at $13 per share.The shares will trade on the New York Stock Exchange under the symbol KRG. Lehman Brothers acted as the sole bookrunner for the IPO, and Wachovia Capital Markets LLC was the joint lead manager. The shopping center REIT has granted the underwriters an option to buy up to 2.445 million additional shares to cover any overallotments.

Federal Home Loan Bank originations under the Mortgage Partnership Finance program totaled $7.6 billion in the second quarter, down 66% from those of a year earlier, though up from $4.6 billion in the first quarter, according to the Chicago FHLBank.The year-over-year decline far exceeds the overall slowdown in the mortgage market. (Preliminary estimates by National Mortgage News indicate that second-quarter originations are down 28% from the same quarter of last year.) In 2003, the MPF program funded $72.1 billion in single-family loans, including $22.6 billion in the second quarter. A Chicago FHLBank spokesman said the drop in originations reflects the slowdown in the mortgage market and the increased preference for adjustable-rate mortgages. The nine participating FHLBanks in the MPF program purchase only fixed-rate mortgages.

Southwest Securities Bank, Arlington, Texas, has hired Arthur Ochoa to start a single-family mortgage banking operation."We believe the single-family mortgage business will further diversify the bank while adding an important new source of revenues," said Dick Driscoll, chief executive of Southwest Securities Bank. Mr. Ochoa started as a loan officer at Bankers Life Mortgage before opening his own mortgage company in 1987, Southwest said. After seven years he sold the company and returned to Bankers Life, which was soon renamed Principal Residential Mortgage. Mr. Ochoa then opened a number of markets across the state for Principal. In his new role, Mr. Ochoa will open offices for Southwest Securities Bank in the Dallas-Fort Worth suburbs of Arlington and Hurst, as well as in Granbury, approximately 50 miles away. There are plans for further expansion, the company said.

The Market Composite Index, an overall measure of mortgage applications, fell from 620.4 to 616.1 on a seasonally adjusted basis during the week ended Aug. 6, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications declined 1.4% on the week and were down 24.2% from the level of a year earlier. The Purchase Index fell from 452.0 to 440.0 on a seasonally adjusted basis, while the Refinance Index climbed from 1600.3 to 1640.5. Refinancings represented 37.2% of total applications, up from 35.8% the previous week, while adjustable-rate mortgages accounted for 34.2%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.97% to 5.80%, and points (including the origination fee) decreased from 1.48 to 1.24, for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

The B1 preferred stock rating of U.S. Restaurant Properties Inc., a Dallas-based real estate investment trust, has been placed under review for possible downgrade by Moody's Investors Service in the wake of the REIT's announcement of a planned merger.The rating action reflects the fact that the merger with CNL Restaurant Properties Inc. and 18 CNL income funds would be a leveraged transaction, at least initially, and that CNL's capital structure is weaker than U.S. Restaurant's, Moody's said. The transaction would also be "legally and structurally complex," the rating agency said. "Moody's recognizes that the transaction should generate operating synergies through the leveraging of the existing CNL Restaurant Properties management team over a larger operating base and elimination of redundancies in operations," Moody's said. The new REIT, with $2.5 billion in pro forma assets, would operate under the CNL name, own 1,900 properties, and have financial interests in approximately 3,000 properties in 49 states. The combined portfolio would be the largest restaurant REIT in the United States, the rating agency said. Moody's can be found online at http://www.moodys.com.

Simon Property Group Inc., Indianapolis, has announced the completion of a court-ordered sale of its 27.5% partnership interest in Mall of America to Triple Five of Minnesota Inc. and has indicated its intent to pursue its appeal of the court decision.Simon said it has not recorded a contribution to net income or funds from operations for Mall of America, located in Bloomington, Minn., since the court's decision in September 2003. It said it will recognize no additional gain or loss from the sale. The real estate investment trust said it has appealed the court order to the Eighth Circuit Court of Appeals and will "vigorously pursue" that process. The REIT said it will continue to manage the mall through its subsidiary management company under the terms of its existing contract. The company can be found online at http://www.simon.com.

The Chase Credit Cos., a unit of Fiserv Inc., Brookfield, Wis., has created ValuStar, a product that combines a merged credit report with an automated property valuation score.The product was developed in conjunction with a sister company, Fiserv Case Shiller Weiss. Mark Nogaki, vice president of sales at Chase Credit, said people in the real estate industry have indicated that they could use a product like ValuStar because it provides two of the most important elements in deciding whether to begin the process of making a loan. "This product is unique in that it offers a graphic interface coupled to a narrative that provides for a very quick judgment on a property's value," Mr. Nogaki said. "ValuStar also will allow the user to obtain a full automated valuation, but this product gives the user fast decision-making power at a very reasonable price." Fiserv CSW's ValuScore technology provides the property value assessment portion of ValuStar.

U.S. Restaurant Properties, Dallas, is acquiring CNL Restaurant Properties, a unit of Orlando, Fla.-based CNL Financial Group, and 18 CNL income funds in a $540 million transaction that is expected to create a "one-stop" financing source for restaurant-related real estate transactions.The new company, which will continue trading on the New York Stock Exchange and operate under the CNL Restaurant Properties name, will be the largest restaurant real estate investment trust in the United States, according to U.S. Restaurant Properties, owning 1,900 properties and having financial interests in about 3,000 properties in 49 states. "Not only will we own and trade properties, but we will provide the full range of financial services and M&A advisory expertise that owners and operators require today," said Robert Stetson, chief executive officer of U.S. Restaurant Properties. Curtis McWilliams, president and CEO of CNL Restaurant Properties, will continue in the same positions at the merged company, the companies said.

State and national fair-lending advocates are opposing the California Association of Mortgage Brokers' recently announced definition of predatory lending, according to the California Reinvestment Coalition.In a news release issued before CAMB had made its announcement, the CRC and about 20 other endorsers urged the association to rewrite the definition because it is too narrow. Specifically, neither discriminatory intent nor showing the "primary purpose" of the originator is required for a fair housing violation to occur, and these subjective standards should not be prerequisites for predatory lending, the CRC said. Moreover, in looking to what kinds of loans are offered to other consumers in the region, the CRC said CAMB appears to legitimize abusive loans by originators who discriminate equally against all borrowers. Ted Grose, immediate past president of CAMB, said the CRC's comments and the definition both cover excess fees and points, discrimination, equity stripping, and fraud misrepresentation. "They agreed with our position on most things," Mr. Grose said. ".... Someone has to step out first on predatory lending and get a meaningful discussion going. We want to make sure it is strong enough to protect consumers and flexible enough so lenders can continue to serve all markets."

The California Housing Finance Agency has announced that its Housing Enabled by Local Partnerships program is now accepting applications from local government agencies seeking funding for affordable housing projects.The HELP program is offering another $10 million -- it operates in semiannual funding cycles of $10 million each -- in low-interest loans to California cities, counties, housing authorities, redevelopment agencies, and community development commissions to acquire, develop, rehabilitate, or preserve affordable rental or ownership housing. The agency said it uses a competitive process to award 10-year loans at a 3% interest rate. CalHFA, the state's affordable housing bank, can be found online at http://www.calhfa.ca.gov.

BioMed Realty Trust Inc., San Diego, has priced an initial public offering of 27 million shares of common stock at $15 per share.Raymond James & Associates Inc. is the lead book-running manager of the IPO, and the co-managers are Friedman, Billings, Ramsey & Co., KeyBanc Capital Markets, Legg Mason Wood Walker Inc., and RBC Capital Markets Corp. BioMed said it has granted the underwriters an option to buy up to 4.05 million additional shares to cover any overallotments.

Industry veteran Arthur D. Ringwald has been named president of loan production at Metrocities Mortgage LLC, Sherman Oaks, Calif.Mr. Ringwald, who praised Metrocities' "proven purchase-loan, Realtor-centric strategy," was most recently president and chief executive officer of Ocwen Technology Xchange Inc. from April 2001 to January 2003, Metrocities said. He previously held positions as president and CEO of Ellie Mae, and from 1993 until its acquisition by NationsBank, he served as Bank of America's group executive vice president, overseeing all residential, second-lien, and home equity mortgage financing. Following NationsBank's acquisition of BoA in 1998 until early 2000, he served as executive vice president of retail mortgage lending, according to Metrocities. Earlier in his career, Mr. Ringwald was executive vice president and national production executive at Sears Mortgage Corp.

The California Association of Mortgage Brokers has published what it calls the first "official definition" of predatory lending, saying consumers can use the standard to protect themselves from unscrupulous lenders."We want to be sure that efforts to deliver the American Dream do not become a nightmare due to dishonest predatory lending practices," CAMB president Jon Eberhardt said at a news conference. Mr. Eberhardt, president of Prime Equity Management Inc., Torrance, Calif., said the "clear and concise" definition is not designed to head off legislation in California, which has not yet taken up the issue of abusive lending practices at the state level. Rather, it is an effort to teach consumers how to spot illegal or unethical practices and protect themselves from wrongdoers. "This is more targeted at education," he said. As defined by CAMB, predatory lending is "placing consumers in loan products with significantly worse terms and/or higher costs than loans offered to similarly qualified consumers in the region for the primary purpose of enriching the originator and with little or no regard for the costs to the consumer."

Mortgage lenders added 3,000 full-time employees to their payrolls in June, according to the July employment report released Aug. 6 by the U.S. Bureau of Labor Statistics.The BLS report shows that jobs in the mortgage banking/broker sector rose from 454,300 in May to 457,300 in June. (There is a one-month lag in BLS reporting of mortgage sector employment data.) But after five consecutive months of employment gains, BLS economists estimate that the mortgage sector lost jobs in July. The credit intermediation industry shed 16,000 jobs in July, and mortgage banking makes up a large piece of that interest-rate-sensitive industry, according to BLS economist Michael Stropel. Although the actual mortgage banking numbers for July will not be released until next month, Mr. Stropel said the estimate is based on what "we have seen in the past versus what we are seeing right now," including a "stark" decline in refinancings. The BLS can be found online at http://stats.bls.gov.

Criimi Mae, Rockville, Md., has reported a net income of $18.1 million ($1.15 per share) for the second quarter, a significant improvement from the net loss of $3.6 million ($0.24 per share) a year earlier.The real estate investment trust's performance highlights for the period include a 23% increase in net interest margin compared with that of a year earlier and a decrease in its specially serviced loan balance from $855 million at the end of the first quarter to $693 million. In addition, Criimi Mae has reduced recourse debt and obtained a $500 million warehouse facility from Deutsche Bank that it will use to fund its commercial mortgage originations. "Our focus during the balance of the year is staffing the originations business and putting in place the right systems to differentiate Criimi Mae," said Mark Jarrell, Criimi Mae's president and chief operating officer. In a related teleconference, Mr. Jarrell said the commercial mortgage REIT's new focus, in what he called a "paradigm shift," will be to move away from the "short-term arbitrage model that characterizes most of the currently operating commercial mortgage platforms" to one that prides itself on "stabilized credit analysis, end-to-end customer service, and repeat transactions."

CharterMac, New York, has reported net income of $24.4 million ($0.47 per share) for the second quarter, an increase of 34.2% from $18.2 million ($0.37 per share) for the second quarter of 2002.CharterMac's mortgage banking subsidiary, PW Funding Inc., originated a record $418.1 million of loans in the second quarter, an increase of about 143.5% from its origination volume a year earlier, according to the affordable multifamily finance company. "Through the expansion of its origination staff and the increase in the company's national presence, PWF has succeeded in expanding its market share this year," said Stuart Boesky, CharterMac's president and chief executive officer. CharterMac can be found online at http://www.chartermac.com.

The Washtenaw Group Inc., a holding company for Washtenaw Mortgage Co., Ann Arbor, Mich., that resulted from the wholesale mortgage company's spinoff from Pelican Financial Inc., has reported net income of approximately $117,000 ($0.03 per share) for the second quarter, down dramatically from $3.41 million ($0.76 per share) a year earlier.Mortgage origination volume totaled $384 million in the second quarter, down 70% from $1.3 billion in the second quarter of 2003. The company said the results for the quarter were aided by a valuation-adjustment charge of approximately $3.94 million to the mortgage servicing rights portfolio that was required under generally accepted accounting principles. Charles C. Huffman, chairman and chief executive officer of Washtenaw, said he was not happy with the results but that the company had performed well in view of the spinoff from Pelican and the industrywide downturn in residential mortgage activity. "We have quickly adapted to market conditions by downsizing, without compromising response time or service quality," he said. "We continue to increase our broker network, which exceeds 2,000 independent brokers across the U.S."

Delta Financial Corp., Woodbury, N.Y., has reported a loss of $1.8 million ($0.11 per share) for the second quarter, compared with net income of $11.7 million ($0.58 per share) a year earlier.The company said the loss was due to a shift from gain-on-sale to portfolio accounting in the treatment of its securitizations. Hugh Miller, Delta's president and chief executive officer, noted that the company's loss narrowed from $0.35 per share in the first quarter to $0.11 per share in the second quarter. "We expect our quarterly loss to continue to narrow throughout the remainder of 2004, as we continue to build our loan portfolio, and ultimately report a profit by the first quarter of 2005." Loan production volume for the second quarter totaled $671.9 million, up 93% from that of the previous year.

Wachovia Corp., Charlotte, N.C., and SouthTrust Corp., Birmingham, Ala., have announced a $75 billion community plan for their proposed merger that calls for $15 billion in affordable mortgages as well as downpayment assistance and homebuyer education.The five-year plan is more than twice the size of the one made at the time of the merger of Wachovia and First Union in 2001, Wachovia said. In addition to the $15 billion for affordable mortgages (and $45 billion in small business loans, among other nonmortgage commitments), it calls for up to $5 billion in downpayment mortgage assistance and the provision of homeownership education to 10,000 homebuyers. The companies can be found online at http://www.wachovia.com and http://www.southtrust.com.