Originations

Sales of existing condominiums and cooperatives set a record in the second quarter with a seasonally adjusted annual rate of 996,000, the first time the condo and co-op resales rate has neared the one-million mark, according to the National Association of Realtors.The condo and co-op resales rate in the first quarter was 934,000, and in the second quarter of 2003 the rate stood at 863,000. "First-time homebuyers and baby boomers, the 'bookends' of the housing market, are driving condo sales," said NAR chief economist David Lereah. "While affordability is a factor for entry-level buyers, changing lifestyles are a major reason that condos are a bigger market share today than in years past." The association also reported that the median existing-condo price was $189,400 in the second quarter, up 12.1% from that of a year earlier. The NAR can be found online at http://realtor.org.

The average 30-year fixed mortgage rate fell to 5.99% for the week ending Aug. 6 from 6.08% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.49% to 5.40%, while the average rate for one-year Treasury-indexed ARMs declined from 4.17% to 4.08%. Fees and points averaged 0.7 of a point for 30-year fixed-rate mortgages and 0.6 of a point for ARMs and 15-year FRMs. "Additional economic indicators this week confirmed that June was a weak month for the nation as a whole," said Frank Nothaft, Freddie Mac's chief economist. "Consequently, the upward pressure on interest rates eased, allowing mortgage rates to return to earlier, lower levels." A year ago, the average 30-year and 15-year fixed rates were 6.14% and 5.44%, respectively, and the average one-year ARM rate was 3.68%, Freddie Mac said.

Equity Residential, Chicago, has reported net income of $108.55 million ($0.39 per share) for the second quarter, down from $112.15 million ($0.41 per share) for the comparable period of 2003.Equity Residential, the largest multifamily real estate investment trust by market capitalization, also made its first New York City acquisition in the second quarter -- a 259-unit Midtown Manhattan property purchased for $93.1 million, representing a capitalization rate of 5.2%. "We are encouraged by improving revenues in the majority of our top 20 markets, which we believe is a sign of the continuing recovery of the apartment industry," said Bruce W. Duncan, Equity Residential's president and chief executive officer. "The improvement in our revenues is a result primarily of increases in occupancy, and therefore we continue to remain cautious about the strength of the recovery until we see meaningful improvement in rental rate." Equity Residential can be found online at http://www.equityapartments.com.

Nationwide Advantage Mortgage Co., Columbus, Ohio, has announced a partnership with The Adams National Bank, Washington, D.C., to boost homeownership among the bank's diverse customer base.Under the alliance, Adams National will use technology from Nationwide that features free loan approvals in as little as 10 minutes, low interest rates and fees, and a "dramatically" simplified application and approval process, Nationwide said. Kate Carr, president of Adams National, said the partnership is "a natural extension of our original charter, which involves serving the financial needs of women, minorities, and the communities in which we operate." Nationwide is the mortgage affiliate of Nationwide Mutual Insurance Co. Nationwide can be found on the Web at http://www.nationwideadvantage.com, and Adams National can be found at http://www.adamsbank.com.

PMI Mortgage Insurance Co., Walnut Creek, Calif., has introduced a new product, Premium Advantage, that will enable borrowers to finance their mortgage insurance premiums on up to a 100% loan-to-value basis.PMI said Fannie Mae has agreed to structure transactions on deals that use the new rate plan, and it described the joint announcements as part of a PMI and Fannie Mae alliance called "Gateway to Homeownership in a New Century." Taia Lockhart, vice president of emerging markets at PMI Mortgage Insurance, said Premium Advantage will help borrowers reduce monthly payments and will aid PMI's customers by enabling them to qualify more first-time homebuyers. The new plan will be made available through Fannie Mae's Desktop Underwriter for transactions up to 100% LTV, including the base loan amount plus the financed portion of the mortgage insurance premium.

Dana Capital Group Inc., a privately held mortgage lender based in Laguna Woods, Calif., has announced a partnership with KComm LLC to launch a nationwide marketing services program.Under the partnership, Dana Capital Marketing Services, members of Dana Capital's nationwide retail network will use Orange County-based KComm as their one preferred source for marketing systems and services. Four membership levels are available to suit different marketing and budgetary needs, Dana Capital said. The company can be found online at http://www.danacapital.com.

The Market Composite Index, an overall measure of mortgage applications, fell slightly from 621.4 to 620.4 on a seasonally adjusted basis during the week ended July 30, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications declined 0.3% on the week and were down 35.6% from the level of a year earlier. The Purchase Index rose from 444.8 to 452.0 on a seasonally adjusted basis, while the Refinance Index declined from 1648.8 to 1600.3. Refinancings represented 35.8% of total applications, down from 36.8% the previous week, while adjustable-rate mortgages accounted for 33.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages was unchanged, at 5.97%, and points (including the origination fee) increased from 1.32 to 1.48, for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

June was the best month of the year in dollar volume for the companies that are members of the Mortgage Insurance Cos. of America.In that month, these firms did $21.5 billion in primary new insurance written, up 10% from May's $19.3 billion. By category, the companies wrote $17.75 billion of traditional insurance (up from $16.7 billion in May) and $3.8 billion of bulk insurance (up from $2.6 billion). These were the highest totals in both categories so far this year. Application volume increased by 10.5% in June to 169,220. The best months for applications this year were March (189,311) and April (181,471). New pool risk written in June totaled $131.9 million, up from May's $85.5 million. The cure/default ratio continued to decline, from 86.6% in May to 76.6% in June, the second-lowest it has been this year. There were 32,346 cures and 42,208 defaults. MICA has six members: Genworth Financial (formerly GE Mortgage Insurance Co.), Mortgage Guaranty Insurance Corp., The PMI Group (including its CMG joint venture), Republic Mortgage Insurance Co. (a subsidiary of Old Republic Corp.), Triad Mortgage Insurance Co., and United Guaranty (a subsidiary of American International Group). Radian Guaranty discontinued its MICA membership in July 2003 and no longer provides statistics to the group. MICA can be found online at http://www.micanews.com.

A study described as the most detailed yet on the aspirations of Hispanic Americans estimates that 2.2 million Latino households could be homeowners by the end of the decade if the housing industry's "gatekeepers" would only reach out to them.Research by the Tomas Rivera Policy Institute, a Latino-centric think tank affiliated with the University of Southern California's highly rated School of Policy, Planning and Development, found that the majority of the nation's fastest-growing population want to own the roofs over their heads but don't know how to go about it. The Latino community is "not a 'self-editing' population," said the report, which was released in Los Angeles. "They are not opting out of the housing market by choice. The majority have expressed a strong desire to buy a home." The study of 1,400 renters and recent first-time buyers in the Los Angeles, Houston, and Atlanta areas is "quite possibly the most concrete picture ever drawn of the potential Latino homeowner and the obstacles that stand in the way," said Harry Pachon, president of the Rivera Institute and a professor of public policy at USC. The study found that 11% of the renters in the three metro areas are actively involved in the homebuying process and 44% hope to buy within the next five years.

Morgan Stanley has downgraded Countrywide Financial, the nation's largest residential originator, to "equal-weight" from "overweight."In a new research report, Morgan analyst Ken Posner notes that despite the downgrade, the investment banker "modestly" increased its price target on Countrywide to $81. At deadline time, the California-based mega-lender/servicer was trading at $68.90, down almost 4%. "With moderate upside and estimates in line with consensus, we no longer see a basis for overweighting the stock relative to the group," Mr. Posner writes. Morgan Stanley says Countrywide has increased its production of niche mortgage products and should perform adequately as long as a price war for loans does not develop. "The mortgage industry appears to be competing rationally, in line with our thesis, even as we head deeper into the refi bust," Mr. Posner says.

Guaranty Residential Lending, Austin, Texas, has decided to shed its nonbank retail mortgage lending network.A spokesman for Temple-Inland, Guaranty's parent, confirmed that the paper products company is repositioning the origination activities of its subsidiary, but offered few details. "It came as a real shocker," said a source close to the company. In a statement, Temple-Inland confirmed that all retail mortgage offices not located in branches of Guaranty Bank will be sold or closed. Asked if TI had hired an investment banker to sell the branches, the spokesman declined to comment. GRL is an affiliate of the bank., which is owned by TI. GRL/GB plans to continue funding residential loans through brokers and correspondents. About half its production is retail, according to figures compiled by National Mortgage News. GRL is the nation's 44th-largest lender. TI can be found online at http://templeinland.com.

Lender Lead Banc, Melville, N.Y., has announced that Jerry Orbach, the award-winning actor who recently left the cast of NBC's "Law and Order," will serve as the official spokesman for the company's reverse mortgage lead generation program, called Senior Lending Network.A free educational video starring the actor will be offered to seniors when they call or log on to SLN, and shipments will be followed up with a live phone call from one or two members of the network, the company said. The multimedia campaign is scheduled to roll out nationally this month with commercials on cable networks. In addition, Mr. Orbach will appear on seniorlendingnetwork.com, bicoastal radio campaigns, a multiple-piece print campaign, and direct mail series. A reverse mortgage allows homeowners 62 years old and up to turn the equity in their homes into tax-free cash without making monthly loan repayments, the company said. Lender Lead Banc can be found online at http://www.seniorlendingnetwork.com.

Municipal Mortgage & Equity, Baltimore, has reported net income of $11.2 million ($0.32 per share) for the second quarter, a steep 64% decline from the $31.1 million ($1.06 per share) reported for the second quarter of 2003.The investor in multifamily debt and equity said that its cash available for distribution per share increased 17% to $0.61 for the period, from $0.52 for the comparable period of 2003. The company said it structured $688 million of multifamily financing for the second quarter and raised $244 million in tax credit equity. "Production volume increased over 50% compared to the second quarter of 2003. and our pipeline looks healthy," said Mark K. Joseph, chairman and chief executive officer of MuniMae. MuniMae can be found on the Web at http://www.munimaemidland.com.

CenterPoint Properties Trust, Oak Brook, Ill., has signed a contract to acquire a 3.8 million-square-foot industrial portfolio from Chicago-based Prime Group Realty Trust for $125.1 million.Prime said the portfolio represents "substantially all" of its industrial holdings and consists of 29 industrial properties, one office/technology building, and three parcels of industrial land totaling approximately 128 acres. The company estimated that its net proceeds would total $54 million after prorations, credits, debt assumption, the payment of tax indemnification obligations, and the deduction of escrows. "This transaction enables [Prime] to focus on its core portfolio of Chicago CBD and suburban office assets," said Jeffrey A. Patterson, Prime's president and chief investment officer. CenterPoint, a real estate investment trust, can be found online at http://www.centerpoint-prop.com.

The typical American family's ability to buy a median-priced home declined in the second quarter as a result of rising interest rates and higher home prices, but it remained at a historically high level, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 133.6, down from 144.1 in the first quarter and from 143.8 a year earlier. (The first-quarter level was the second-highest index reading since 1973, the NAR said.) The latest index number means that the typical household in the United States had 133.6% of the income needed to purchase a home at the second-quarter median existing-home price, which was $183,800. "Housing affordability conditions for the U.S. as a whole have been so favorable that even with a decline, the current reading is quite good," NAR chief economist David Lereah said. "The last time the affordability index was at this level was in the second quarter of 2002, and that was a record year for home sales." The NAR can be found online at http://realtor.org.

Office and industrial markets nationwide saw increased uptake of space in the second quarter, according to Colliers International, a Boston-based commercial real estate manager.As much as 16.3 million square feet of office space was absorbed in the second quarter, up from 13 million square feet in the first quarter, Colliers said. This represents the fifth consecutive period of positive absorption for office markets. In comparison, total uptake for 2003 was 27 million square feet, the firm said. Colliers says it now expects that total office market space absorption for 2004 could be as much as 60 million square feet, an upward revision of its earlier forecast of 50 million square feet. "Healthy gains in job growth during the first half of the year will translate into sustained demand for office space throughout 2004," said Ross Moore, vice president and director of research at Colliers. Industrial real estate markets also improved in the second quarter, with 38.4 million square feet of absorption, up from 9.8 million square feet in the first quarter. Year-to-date industrial space absorption is now 48.2 million square feet, Colliers said. "We have nearly equaled the absorption from 2003 already this year, and most markets are forecasting that demand will stay at current levels or higher for the remainder of 2004," Mr. Moore said.

The Eleventh Federal Home Loan Bank Cost of Funds Index rose a scant five basis points to 1.758% in June, according to the Federal Home Loan Bank of San Francisco.It was the third month-to-month increase in COFI in the past 12 months. COFI also increased in December, when it went up nearly 8 bps, and in February, when it rose by 3 bps. For historical reference, according to data on the FHLBank-SF website, the last time COFI rose in successive months was between March and June of 2002. The index of 2.847% for June 2002 was the highest in the past two years and 109 bps higher than in the current month, the second-lowest mark in COFI's history. The last long-term rise in COFI started when the May 1999 index hit what turned out to be a temporary bottom at 4.480%, before peaking in December 2000 at 5.617%. Since that time, except for the occasional upward movement, COFI has been in a downward trend. However, that may soon be reversing.

Prime Rate Investors Inc., Coral Gables, Fla., has announced the retention of New York-based Windsor Capital to search for "a prominent, regional 'hard equity' mortgage company" in the Northeast to be acquired by Prime Rate.Prime Rate lends through its subsidiary Tampa Bay Mortgage Solutions Inc. "The company realizes that the time is perfect for growth and expansion in our market as interest rates are rising, which makes our rates more affordable to our borrowers," said Richard Astrom, president of Prime Rate. The company can be found on the Web at http://www.prrm.us.

The financial institutions division of the New Mexico Regulation and Licensing Department has published final regulations regarding the Home Loan Protection Act.The regulations provide guidance on loan flipping, approved third-party nonprofit counselors, and new limitations on the liability exposure of creditors and assignees, according to the Washington law firm Lotstein Buckman LLP. Under one of the new regulations, a creditor is deemed not to have "knowingly and intentionally" engaged in the act of flipping if the new loan provides a "reasonable, tangible net benefit" to the borrower. The regulation does not establish a mandatory method to determine the "reasonable, tangible net benefit" standard, but it provides examples of what constitutes such a benefit. Based on the rule, the financial institutions division clarifies that it approves any third-party, nonprofit counselor approved by the New Mexico Mortgage Finance Authority or the U.S. Department of Housing and Urban Development to issue a counseling certification required by the Home Loan Protection Act. Liability is imposed for violations of the law on those who buy or are otherwise assigned a high-cost home loan unless that person can demonstrate that a reasonable person exercising due diligence could not determine that the mortgage was a high-cost home loan.

Since North Carolina became the first state five years ago to enact a comprehensive law against predatory mortgage lending, such practices have declined dramatically in the state and subprime lending continues to thrive, according to the Center for Responsible Lending in Durham, N.C.The market grew by an estimated 40% this year, the center said. During the first year alone, citizens of North Carolina saved an estimated $100 million as a result of the law, the nonprofit organization reported. "Abusive home lending practices, particularly among subprime mortgage refinances, cost U.S. consumers an estimated $9.1 billion every year," the center said. In order for legislation to be effective, according to the center, it must limit abusive prepayment penalties that trap borrowers in high-cost loans and kickbacks to brokers that encourage steering and the financing of excessive fees. Predatory lending laws must prevent "flipping" and ensure that homeowners have a right to pursue meaningful remedies and defend their homes against foreclosure even after their loans have been sold, the center said.