Originations

New-home sales slipped by 1.7% in January compared with those of the previous month, according to new figures compiled by the U.S. Commerce Department.However, compared with sales in the same month a year ago, new-home sales rose 9.6% to 1.106 million units. The government says there is a 4.1-month supply of new homes for sale, the highest such reading since April of last year. According to Greenwich Capital analyst Steve Stanley, the January figure is "the eighth straight reading above 1.1 million, a level never seen before last June, but it is also the lowest level since May." The median sales price of a new home was $197,000, and the average sales price was $258,600, the government reported. The Commerce Department can be found online at http://www.doc.gov.

The board of directors of the Alaska Housing Finance Corp. has approved a $100 million loan to Aurora Military Housing LLC to fund the development of 1,194 housing units at the Elmendorf Air Force base in Anchorage.AHFC said it expects total development costs of the Elmendorf project to surpass $230 million, although it said negotiations with the Air Force are still under way. The project involves the demolition of old units, the renovation of 310 units, and the construction of 710 units. The Air Force will provide a 50-year lease for the improved land. The Elmendorf project is part of a national initiative by the military to improve housing for military personnel by creating incentives for private investors.

Contrary to popular belief, investing in economically disadvantaged communities and lending to low-income people is as safe as, or safer than, loans to wealthier individuals and communities, according to a study of the performance of over 100 community development financial institutions in 2002.The new study was released by the National Community Capital Association, Washington, D.C., in cooperation with the Community Investing Program of the Social Investment Forum Foundation and Co-op America. For instance, the NCCA study found that the net chargeoff rate for community development financial institutions was 0.70% in 2002, compared with 0.97% for all commercial banks. It also found that over the last 30 years, 138 CDFIs invested about $6.6 billion in financing for distressed and underserved communities around the country, producing 185,874 jobs, 283,415 housing units, and 3,849 community facilities. "This study shows that CDFIs provide investors the opportunity to be socially responsible and financially prudent at the same time," said NCCA chief executive officer Mark Pinsky. "Community investors now have 30 years of experience and evidence that making investments in low-income communities is no riskier than doing business in mainstream markets."

Commercial Capital Bancorp Inc., a multifamily lender based in Irvine, Calif., and TIMCOR Financial Corp., a provider of services to real estate investors that has offices in Los Angeles and Houston, have announced a marketing agreement under which they will make mutual business referrals.Under the pact, TIMCOR will promote CCBI as a provider of banking, deposit, and lending products and services, and CCBI will promote TIMCOR as a facilitator of tax-deferred real estate exchanges under Section 1031 of the Internal Revenue Code. "Nearly 90% of TIMCOR's business is generated from transactions in California, and over 80% results from purchases and sales of income property," said Stephen H. Gordon, chairman and chief executive officer of CCBI, the holding company for Commercial Capital Bank. "With the bank being the fastest-growing bank and one of the largest multifamily lenders in California, the agreement is a natural fit, having tremendous potential to increase volumes and revenues for both companies." The companies can be found online at http://www.commercialcapital.com and http://www.timcorfinancial.com.

The rating outlook for U.S. real estate investment trusts and real estate operating companies is stable, according to Moody's Investors Service, despite "continued negative trends" in, most notably, the multifamily and office sectors.Moody's expressed concern about whether REIT managements will continue to exercise financial discipline as REITs are faced with more pressure to return to a "growth mode" in 2004. Weakened real estate fundamentals have already taken a toll on REITs, and they are left with little cushion at current rating levels to "absorb the effects of further revenue declines on their franchises, risk profiles, or balance sheet fundamentals," Moody's said. The rating agency also cited a concern that an interest rate shift could cause property values to drop, which would negatively affect REIT financing. Moody's said it expects mergers and acquisition activity in the REIT sector to resume -- especially in the multifamily, office, and community retail sectors -- but that deals will "probably be smaller" in the near term. "We do not expect significant improvement in REITs' credit profiles until there is sustainable recovery in the economy and employment levels," said John J. Kriz, a managing director in the Moody's real estate finance group. Moody's can be found online at http://www.moodys.com.

The Market Composite Index, an overall measure of mortgage applications, rose from 837.1 to 854.5 on a seasonally adjusted basis during the week ended Feb. 20, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.However, on an unadjusted basis, applications fell 6.7% on the week and were down 24.1% from the level of a year earlier. The Purchase Index climbed from 413.9 to 423.5 on a seasonally adjusted basis, while the Refinance Index rose from 3298.3 to 3361.9. Refinancings represented 55.7% of total applications, down from 56.6% the previous week, while adjustable-rate mortgages accounted for 27.1%. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.46% to 5.49%, and points (including the origination fee) slipped from 1.40 to 1.39 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mortgagebankers.org.

Sales of existing single-family homes fell 5.2% in January, but stayed above the 6 million mark for the seventh consecutive month.The National Association of Realtors reported that resales fell from a seasonally adjusted annual rate of 6.37 million in December to a 6.04 million rate in January. December resales were revised downward from 6.47 million. "We expected a modest dropoff in sales after a record-breaking year in 2003," NAR chief economist David Lereah told reporters. He blamed bad weather in the Northeast and the Midwest for some of the dropoff in sales. But he noted that the supply of homes is a constraint on sales in the Northeast. "I think supply is the biggest problem in the housing market, not demand," Mr. Lereah said. In the Midwest, job losses "may be inhibiting home buying," he said. Sales of previously owned homes fell 13.2% in the Midwest, 12.5% in the Northeast, and 5.7% in the West, and rose 2.0% in the South.

Inland Real Estate Corp., Oak Brook, Ill., is looking to get its common shares listed on the New York Stock Exchange.Robert D. Parks, Inland REC's chief executive officer, said listing is "a major component of our overall strategy. We have patiently built our asset base and believe that the market will now recognize our efforts." The retail real estate investment trust made an initial public offering of its common shares in 1995, according to a company spokesman. The REIT said it plans to hire an adviser to help evaluate whether to go forward with the listing. If the listing is approved, it will take "several months" for the process to be completed, the REIT said.

Omega Healthcare Investors Inc., Timonium, Md., has announced that its largest stockholder, Explorer Holdings LP, proposes to offer approximately 18.12 million shares of Omega's common stock in an underwritten public offering.Omega, a real estate investment trust, said a registration statement relating to the securities has been filed with the Securities and Exchange Commission but has not yet become effective. The REIT said it would not receive any proceeds from the sale of shares offered by Explorer, but would receive proceeds if the underwriters exercise an overallotment option on up to approximately 2.72 million shares offered by Omega. The joint book-running managers for the offering are UBS Investment Bank and Deutsche Bank Securities. Omega also announced plans to offer approximately $200 million of unsecured notes in a private placement. The company can be found online at http://www.omegahealthcare.com.

The California Mortgage Bankers Association has announced that a member company, Alliant Information Services Inc., Fullerton, Calif., has developed two new products to help solve problems caused by property taxes and assessment liens.The Alliant Tax Bill Estimation report uses the same methodology used by counties to forecast supplemental and future secured tax bills based on the purchase price and expected closing date, the CMBA said. The other new product, Priority Lien Check, determines whether a property is subject to an accelerated foreclosure lien imposed by land-secured financing, the association said. Alliant's research director, Jeanne Klimowski, said the products help minimize risk by letting the parties know the state's property tax requirements up front. "California's complex property taxes have long been a problematic part of real estate transactions in this state," she said. "Property taxes can change dramatically after transfer, especially given the strong real estate market of the past several years." The association can be found online at http://www.cmba.com, and Alliant can be found at http://www.alliantinfo.com.

Freddie Mac has announced that it now offers greater flexibility for newly originated multifamily mortgages in the form of a Float-to-Fixed-to-Float Option.Under the new feature, "borrowers can take advantage of low short-term floating rates to maximize cash flows early in the life of the mortgage, lock in a fixed rate for the remainder of the term up front in order to eliminate the risk of rising rates in the future, and use up to an additional year of floating-rate debt at the end of the loan to arrange an exit strategy," Freddie Mac said. The government-sponsored enterprise said the new option allows for an initial floating-rate period of one or two years, during which the rate is based on the one-month Freddie Mac Reference Bill index. The combined term of the initial floating-rate period and the fixed-rate period can be five to 15 years. The fixed rate is based on Treasury securities with maturities similar to the combined term, the GSE said. The final floating rate will be set at a fixed spread above the prevailing one-month Reference Bill rate. Freddie Mac can be found online at http://www.freddiemac.com.

Master Financial Inc., a mortgage banking corporation based in Orange, Calif., has announced that it will add interest-only payment options to its Score Select product.Under this program, borrowers will pay off all the interest that would accumulate on the loan before touching the principal. These initial lower payments make it easier for borrowers to qualify for home loans and borrow larger amounts. "By paying only the interest portion of their loan for three to five years, borrowers can enjoy lower monthly payments, making it easier to qualify for homes in their current price range or even allow them to move their sights up to higher valued properties," said Christopher Mullins, senior vice president of Master Financial. "This is a great opportunity for consumers to increase their borrowing power." Master Financial purchases and services alternative lending products such as alternative-A and subprime first trust deeds and no-equity second trust deeds with high loan-to-value ratios.

Aames Financial Corp., a Los Angeles-based subprime mortgage lender, has announced that its board of directors is considering converting into a real estate investment trust.Upon converting to a REIT, the company would raise additional capital through a concurrent public offering of REIT common stock and its stockholders would become stockholders of the REIT. The company said its current capitalization includes three series of convertible preferred stock and common stock. The preferred stock has several characteristics that are different from those of the common stock, such as a liquidation preference equal to their stated value, a 6.5% dividend rate, and class voting rights, Aames said. In order to receive stockholder approval of the conversion and public offering, the company said it would need Specialty Finance Partners, its largest stockholder (which controlled over 90% of the votes eligible to vote on the proposed transaction as of Dec. 31), to approve the transactions and relinquish various rights and controls related to its ownership of preferred stock. The board has established a special committee of independent directors to evaluate the terms proposed by Specialty Finance Partners and to negotiate with Specialty Finance on behalf of the holders of the common stock.

ARCS Commercial Mortgage Co., Calabasas Hills, Calif., has announced the closing of over $17.2 million in tax-exempt variable bond financing for an affordable housing portfolio in urban Los Angeles.Loans ranging from $1.0 million to $10.3 million were originated through the Fannie Mae Delegated Underwriting and Servicing program in partnership with the investment banking firm RBC Dain Rauscher. The transaction includes six seniors and multifamily properties owned by a 501(c)(3) entity created by the Housing Authority of the City of Los Angeles. ARCS said it reduced the borrower's debt service by nearly 50% "due to the low, all-in rate of 2.23%." Excess cash flow will be reinvested in property upgrades and general maintenance.

Foreign investment in U.S. real estate is expected to increase 11.9% in 2004 (after rising 59% in 2003), with foreign investors targeting 56% of their international allocations for U.S. real estate, according to a survey conducted by the Association of Foreign Investors in Real Estate, Washington, D.C.The survey said the top five cities being targeted by foreign investors are: Washington, D.C.; New York; Los Angeles; San Francisco; and Chicago. "As an asset class producing very respectable returns in an extremely volatile equities market, real estate has become a serious competitor for investors' dollars," said Jim Fetgatter, AFIRE's chief executive officer. According to AFIRE's survey respondents, North American real estate constitutes, on average, 50% of their global real estate portfolios. However, 94% of the respondents reported that it was "somewhat difficult" or "very difficult" to find attractive U.S. opportunities in 2003. At the top of the list of property types favored by these investors is retail, followed by multifamily and hotel.

Thrift originations of one- to four-family loans plunged 37% in the fourth quarter to $143.9 billion, down from a record $230.0 billion in the third quarter, according to the Office of Thrift Supervision.In 2003, the 928 OTS-regulated institutions originated a record $806 billion in mortgage loans, surpassing the 2002 record by 50%. Thrifts also posted record earnings of $13.7 billion in 2003, up 16% from 2002. Fourth-quarter earnings totaled $3.45 billion -- the second-best quarter in history -- as servicing fee income rebounded to $800.1 million from $140.5 million in the third quarter. For the whole year, servicing fee income was a negative $713.04 million due to runoff and impairment charges.

Standard & Poor has decided to rate structured finance transactions that include North Carolina loans governed by the state's anti-predatory-lending law.High-cost home loans and consumer home loans will be rated in accordance with specific criteria a lender must follow. Among the criteria that define a high-cost loan under the Usury Law are that it exceeds the law's thresholds for annual percentage rates, points and fees, or prepayment fees. Previously, S&P had not issued statements regarding anti-predatory-lending statutes, but the rating agency said it decided to do so in this case because it had received numerous inquiries on the North Carolina law. For lenders who choose to make loans covered by the law, failing to comply with its guidelines could result in liability for the originator. S&P can be found on the Web at http://www.standardandpoors.com.

The average 30-year fixed mortgage rate fell to 5.58% for the week ending Feb. 20 from 5.66% the previous week, its lowest rate since the 5.52% recorded last July, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 4.96% to 4.87%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages dipped from 3.57% to 3.53%, also the lowest these rates have been since July. Fees and points averaged 0.6 of a point for all three mortgage categories. "Mortgage rates this week are at seven-month lows and teetering on the 45-year low levels of last summer," said Frank Nothaft, Freddie Mac's chief economist. "There continues to be no sign of inflation on the horizon and, as a matter of fact, core inflation is at a generational low." A year ago, the average 30-year and 15-year fixed rates were 5.84% and 5.21%, respectively, and the average one-year ARM rate was 3.81%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Option One Mortgage Corp., Irvine, Calif., has announced updated best practices for its wholesale and retail loan origination businesses and its mortgage servicing operation.Option One said it revised and updated its best practices to make the information more accessible to borrowers. One practice touted by the company is the establishment of escrow accounts so borrowers can put aside money each month to pay real estate taxes and homeowners' insurance, thus avoiding the need for large lump-sum payments. The company also pointed to its practice of not charging for certain standard services, such as automatic payment withdrawals, copies of payment histories and loan documents, and payoff statements, among others.

American Financial Realty Trust, Jenkintown, Pa., has obtained $520 million financing from Lehman Brothers to partly fund the $704.5 million acquisition of State Street Financial Center, a 1.05 million-square-foot Boston office property.The 20-year loan has an initial floating interest rate period of six months, during which the loan will bear interest at the London interbank offered rate plus 1.25%, the real estate investment trust said. After that, the loan will carry a 5.79% fixed rate for the remainder of the term. This arrangement will enable AFRT to take advantage of the current low interest rate environment "without assuming long-term interest rate risk," according to AFRT. For the remainder of the acquisition price, AFRT is using available cash as well as money from the issuance of $35.9 million of units in the operating partnership of the office property to the original developers.