Originations

Stockholders of Wells Fargo & Co., San Francisco, have overwhelmingly rejected a proposal by the Coalition for Responsible Growth asking the company's board to conduct a special executive compensation review to address so-called predatory lending practices.The company did not report the total vote, which came April 27 at the company's annual stockholders' meeting in San Francisco. Members of the Association of Community Organization for Reform Now supported the proposal to protest what ACORN calls "abusive mortgage loans" at Wells Fargo. The company said it does not engage in such lending and has implemented numerous policies and procedures to help consumers make informed borrowing decisions. Wells also said its compensation practices do not reward executives for deviation from stated policies, including those regarding lending practices.

First Community Bancshares Inc., Bluefield, Va., has announced plans to exit the mortgage banking business by selling its Richmond, Va.-based subsidiary United First Mortgage to certain members of UFM's management.The details of the proposed sale of 100% of UFM's stock were not disclosed, but the company said it resulted in a charge to net income of $651,000 in the first quarter. First Community reported net income of $4.2 million ($0.37 per share) for the first quarter, compared with $6.7 million ($0.62 per share) a year earlier. The year-over-year reduction in earnings "was largely attributable to a $1.9 million decline in net income of the mortgage banking segment," the company said.

The Market Composite Index, an overall measure of mortgage applications, rose from 744.5 to 748.0 on a seasonally adjusted basis during the week ended April 23, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications rose 1.3% on the week and were down 26.6% from the level of a year earlier. The Purchase Index climbed from 434.1 to 463.5 on a seasonally adjusted basis, while the Refinance Index fell from 2550.3 to 2403.0. Refinancings represented 44.0% of total applications, down from 47.3% the previous week, while adjustable-rate mortgages accounted for 32.7%. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.84% to 6.01%, and points (including the origination fee) fell from 1.36 to 1.28 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Robert F. McCadden has been named chief financial officer and executive vice president of Pennsylvania Real Estate Investment Trust, Philadelphia.Mr. McCadden, a partner in the Philadelphia office of KPMG LLP, will join PREIT on May 17. Mr. McCadden has more than 25 years' experience as a certified public accountant and in the real estate industry, PREIT said.

The board of directors of Inland Real Estate Corp., a real estate investment trust based in Oak Brook, Ill., has announced that it is splitting the role of chairman and chief executive officer at the REIT.The board appointed Daniel L. Goodwin to serve as chairman, and Robert D. Parks will continue as president and CEO (and will remain on the board). Inland also announced that Mark E. Zalatoris, the company's chief financial officer and treasurer, has been promoted to executive vice president and chief operating officer. The company is applying to list its shares on the New York Stock Exchange and said it expects trading to begin on June 9.

Holliday Fenoglio Fowler LP, a Los Angeles-based commercial real estate capital intermediary, has announced the formation of HFF Securities LP.The parent company said HFF Securities will be integrated with HFF's intermediary business and will be led by a management team composed of Dan Cashdan, Susan Barlow, Tom Mizo, and Doug Bond, all located in Los Angeles. HFF said the affiliate will "access project, entity-level, and programmatic capital" for real estate operating companies and real estate investment trusts from pension funds and their advisers; raise capital for commingled real estate funds; and advise real estate companies and institutional investors regarding transactions that require a licensed broker-dealer.

Sales of existing single-family homes jumped 5.7% in March as low mortgage rates fueled a strong start for the spring homebuying season.The National Association of Realtors reported that resales rose from a seasonally adjusted annual rate of 6.13 million rate in February to a 6.48 million rate in March -- the highest sales pace since September 2003. NAR chief economist David Lereah told reporters that he expects the relatively low rates to fuel strong sales in April and May. "There appears to be some fence jumping," he said. "It happens every time rates begin to go up." He said he expects sales to slow as mortgage rates gradually climb to 6.5% by the end of the year. But he also noted that homebuyers are turning to adjustable-rate mortgages to deal with rising rates on fixed-rate mortgages. The NAR's forecast calls for 5.9 million in sales in 2004, slightly below last year's record. "If we continue to get to big numbers like this, we will have to revise it upward," Mr. Lereah said. The NAR can be found on the Internet at http://realtor.org.

Fannie Mae has announced the appointment of 26 new members to its 55-member Housing Impact Advisory Council, which meets three times a year with the company's senior management to discuss affordable housing issues.One of the new appointees, Lloyd W. Brown II, senior vice president and division executive for the Bank of New York's community development division, will co-chair the council along with returning member Loretta A. Armenta, president and chief executive officer of the Albuquerque Hispano Chamber of Commerce. Council members include civic leaders; executives of nonprofit organizations, state housing agencies, and financial institutions; developers; and professionals in the fields of law, housing, and real estate. Members serve staggered two-year terms. Fannie Mae can be found online at http://www.fanniemae.com.

Delinquencies on permanent mortgage debt backed by housing and care properties for senior citizens increased to 4.6% in the fourth quarter of 2003, according to the National Investment Center for the Seniors Housing & Care Industries, Annapolis, Md.The NIC, a nonprofit organization that provides senior-living industry information, also reported that loan volume placed in the sector fell to $763 million in the fourth quarter from $834 million a year earlier. However, citing a recent industry conference call, the NIC said it expects that traditional lenders will become more active and that loan volume in the sector will increase as the yields on these loans grow. "Because rates have dropped so dramatically, the extra yield makes it more compelling for traditional debt buyers to invest in seniors housing and care than in apartments or other real estate classes," said Arnold Whitman, chief executive officer of Formation Capital. "This, in turn, puts pressure on traditional mortgage lenders to lower their interest rates."

The Bush administration should use its authority and direct insurance companies to continue to offer terrorism insurance in 2005, according to 19 Republican members of the House Financial Services Committee.The Terrorism Risk Insurance Act gives the Treasury Department until Sept. 1 to extend a requirement that commercial property-casualty insurers provide terrorism insurance coverage for another year. Otherwise, those insurance companies will be able to drop the coverage at the end of this year. "An extension will ensure that terrorism coverage is widely available while the Treasury does its good work and while private market solutions are still being developed," the 19 Republicans said in a letter to Treasury Secretary John Snow. A House Financial Services subcommittee hearing on terrorism insurance is scheduled for April 28.

New home sales jumped 8.9% in March to set a new monthly record, and it is beginning to look like 2004 could be a record year for home sales.The U.S. Census Bureau reported that new single-family home sales rose from a seasonally adjusted annual rate of 1.128 million in February to 1.228 million in March. With a blistering sales pace in the first quarter, economists at the National Association of Home Builders now believe 2004 will at least match last year's record of 1.086 million. "It could easily be higher," NAHB economist Michael Carliner said, even though he said he expects sales to slow in the second half and interest rates to rise. He noted that the actual sales number (not seasonally adjusted) in March was exceptionally strong.

Washington Mutual, Seattle, has made some personnel changes in its multifamily operations, promoting Edward Ely to head of the multifamily lending division.Mr. Ely, who will be executive vice president and head of the division, will oversee WaMu's multifamily lending activities nationwide, the company reported. Mr. Ely was previously senior vice president and Western Region manager, overseeing WaMu's multifamily offices on the West Coast. And Al Brooks, who previously headed WaMu's multifamily lending division, has been promoted to chief lending officer for the company's commercial group, WaMu said. In this role, Mr. Brooks will oversee the company's multifamily lending, commercial real estate lending, homebuilder financing, mortgage banker financing, commercial banking and commercial marketing.

Down payment assistance programs have become efficient economic tools in helping low-to-moderate-income families become homeowners and accumulate wealth, according to a first-ever study of the economic impact of privately funded DPA programs launched by the Nehemiah Corporation of America, Sacramento, Calif.Conducted by the Milken Institute, Santa Monica, Calif., the study examined over 36,000 Nehemiah down payment assistance recipient families in six major markets: Sacramento, Calif., Columbus, Ohio, Philadelphia, St. Louis, Atlanta and Baltimore. The study found that nationally, between 1997 and 2003, over 115,000 primarily low- to moderate-income families --that represent about 70% of Nehemiah's total DPA program portfolio -- reported an aggregated rise of over $2.2 billion in home equity value, or an average of more than $18,000 per family. As to minority families, on average African-American homeowners reported equity rises of $7,200 per family, compared to rises of $12,000 per family reported by Hispanic families. Over the last six years since Nehemiah pioneered its DPA product, besides increasing homeownership rates, the Nehemiah Program has generated $287 million in municipal and county property tax revenue in the aforementioned six markets.

Home building and sales remain strong across the country but reports about mortgage lending activity are mixed, according to the Federal Reserve Board's Beige Book.Mortgage lending "slowed somewhat," despite "some reports of new rounds of refinancing," the Atlanta Federal Reserve Bank said in its section of the Beige Book. The Atlanta FRB also noted an increased in the use of adjustable rate mortgages. The Chicago FRB reported that the refinancing "mini-boomlet" had subsided but originations remained strong in early April. Meanwhile, Philadelphia FRB found that lenders are anticipating a slowdown in mortgage activity. "Although demand for residential mortgage lending is currently high, bankers are uncertain that the recent pace of growth in mortgage lending will persist."

New Century REIT Inc., a corporation created by New Century Financial Corp., Irvine, Calif., to operate its business after it converts to a real estate investment trust, has filed a registration statement with the Securities and Exchange Commission to make a public offering of $750 million worth of common stock.The joint book-running managers will be UBS Securities LLC and Friedman, Billings, Ramsey & Co. New Century Financial is a subprime mortgage wholesaler.

Delta Financial Corp., Woodbury, N.Y., has made an offer to redeem all outstanding shares of its Series A 10% preferred stock.The stock will be bought back at par and the aggregate price is approximately $13.9 million. The scheduled date of the transaction is June 14. Richard Blass, Delta's executive vice president and chief financial officer said, "the redemption of our preferred stock, which will be completed using cash generated from our operations, will save us approximately $1.3 million in annual preferred dividend expense." Following the redemption, Delta's only class of outstanding securities will be its common stock.

The Washtenaw Group Inc., Ann Arbor, Mich., has reported a loss of $3.1 million ($0.69 per share) for the first quarter, compared with a profit of $2.7 million ($0.60 per share) a year earlier.This is the first quarter Washtenaw is reporting as a stand-alone company. Until Dec. 31, 2003, its subsidiary Washtenaw Mortgage Co. was a subsidiary of Pelican Financial Inc. Washtenaw was hurt both by reduced origination volume for the quarter, as well as a valuation adjustment to its servicing portfolio of $2.9 million, equivalent to $0.65 per share. One year earlier the adjustment was $1.8 million or $0.40 per share. Mortgage origination volume was $395.6 million, less than half of the $896.9 million of production from the first quarter of 2002. Charles C. Huffman, chairman and chief executive of Washtenaw, said, "We're hopeful that the spring and summer home buying season will lift new mortgage volume and that homeowners will return to the refinance market because rates are still very attractive even though they are up from recent lows."

More than 125 members of Association of Community Organizations for Reform Now will demonstrate outside Wells Fargo's annual meeting on Tuesday, April 27, at the bank's San Francisco headquarters to protest what ACORN calls "abusive mortgage loans."A small group of ACORN members will also attend the meeting to speak in support of a shareholder resolution presented by the Coalition for Responsible Growth. The shareholder resolution calls on Wells to review the relationship between executive compensation and performance in preventing predatory lending practices. Representatives for ACORN say that lawsuits related to predatory lending have cost other large lenders hundreds of millions of dollars. "We're at a loss to understand exactly what it is they want," said Janice Smith, corporate communciations spokesperson for Wells Fargo. "Our mortgage business meets or exceeds what ACORN has demanded from other lenders."

Five classes of Red Mountain Funding LLC's commercial mortgage pass-through certificates, series 1997-1, have been downgraded by Fitch Ratings and three others are being placed on watch for a possible downgrade.The downgrades were as follows: $6.4 million class D to BB+ from BBB; $3.2 million class E to BB from BBB-; $8.7 million class F to CCC from BB; $4.0 million class G to CC from B-; and $4.0 million class H to C from CC. Fitch placed classes C, D and E on watch for possible downgrade and removed classes F and G from watch. In addition, Fitch reported that $58.7 million class A-2 remained steady at AAA, interest-only class X-2 also remained steady at AAA; $10.3 million class B remained steady at AA+; and $8.7 million class C remained steady at A+. The downgrades are due to uncertainty related to the resolution of the Fairfield pool (12%). The Fairfield pool, secured by four nursing facilities in Connecticut and operated by Lexington Healthcare Group, is currently 90+ days delinquent. After Lexington filed bankruptcy in March 2003, a receiver appointed by the state was installed at the properties. To date, one of the facilities has been closed. The special servicer is evaluating workout options and large losses are expected. However, since there are several properties in this loan, it might take a while before the loss on this loan is realized. The placement of classes C, D and E on rating watch negative is due to increasing interest shortfalls and the concern with the Fairfield loan.

Ann Arbor, Mich.-based Entyre Inc has launched it’s Web-based X4 Wholesale Lending System, an ASP-based closing system that gives lenders control of who “touches” their loans, and what those participants are allowed to do.The technology was designed to give Wholesale Lenders more control over the closing process. A company spokesman said that Entyre is in the middle of three major implementations of the X4 Wholesale Lending System, including a top 20 lender, which is expected to be formally announced in early May. Entyre prepares loan closing documents for brokers, bankers and correspondent lenders and investors. The company can be found on the Web at http://www.entyre.com.