Originations

Freddie Mac and R&G Financial, a Puerto Rico-based financial holding company, have launched CreditSmart Espanol, an credit education initiative designed to educate Puerto Rican families about homeownership.The campaign aims to teach a wide range of consumer credit and money management skills and to promote good financial habits, such as saving for college education. It consists of 11 modules that cover topics such as: becoming a homeowner; thinking like a lender; establishing and maintaining good credit; banking services; and goal setting. Freddie Mac said the initiative is another effort by the company to help increase homeownership rates among Hispanics. Freddie can be found online at http://www.freddiemac.com.

The single-family housing market held steady at 6.58 in the fourth quarter, according to Mortgage Guaranty Insurance Corp.'s national Market Trends Index.The index was down from 6.70 a year earlier. The company looked at 73 metropolitan statistical areas and found six to be strong, nine weak, and the rest stable. "Overall, the national housing market is still considered stable," said Neil Siegel, senior market analyst for the Milwaukee-based mortgage insurer. "With home price appreciation slowing versus a year ago, existing-home sales recorded a double-digit gain. This helped keep the supply of existing homes low -- in the range of four to five months." The index uses a scale of 1 to 10, with 10 being the strongest. MGIC said a reading of 6 to 8 indicates a stable market. MGIC can be found on the Web at http://www.mgic.com.

Wells Fargo Home Mortgage, Des Moines, Iowa, funded a record $470 billion in home mortgages in 2003, the company has reported.But the bank-owned mortgage lender did not crack the half-trillion-dollar mark, as overall loan production fell by 56% from the third to the fourth quarter. (Total residential production was $71 billion, compared with $161 billion in the third quarter.) During the first three quarters, Wells funded almost $400 billion in residential loans. At year end its servicing portfolio totaled $710 billion, an 11% gain from the third-quarter total and a 24% gain from that of a year earlier. WFHM's servicing portfolio has an average coupon rate of 5.90%, compared with 6.67% a year ago. The portfolio has a carrying value of $6.9 billion.

E*Trade Financial Corp., New York, and TD Bank Financial Group, Toronto, have said the parties mutually agreed to terminate discussions that could have led to a possible merger transaction.The statement said both companies agree that "while there were potential benefits to concluding a transaction that merited serious discussions, they were unable to arrive at mutually agreeable terms." E*Trade originates mortgages through E*Trade Mortgage. TD Bank Financial Group is the parent of investment firm TD Waterhouse and of Canadian retail banker TD Canada Trust. E*Trade can be found on the Web at http://www.etrade.com.

Based on the recent and surprising decline in mortgage rates and the continued disappointing employment numbers, the chief economist of the National Association of Home Builders now believes housing could see record home sales again in 2004.As recently as a week ago, David Seiders was predicting that new- and existing-home sales would decline slightly this year from last year's all-time high. He based his projection on the belief that the Federal Reserve Board would start driving up interest rates shortly after the November election. But now, he said at the NAHB's convention, there's "a distinct chance" the central bank will hold the federal funds rate at 1% "through the entire year," giving sales a chance to "be as good as 2003 or even better." David Berson, chief economist at Fannie Mae, also said it's possible 2004 "could be the fourth year in a row for record sales." But he stopped short of predicting it would, sticking to his earlier projection that sales will slow by about 5%. "But if I'm wrong," he added, "sales will be stronger, not weaker, and we could well have a fourth record year." The NAHB can be found online at http://www.nahb.com.

PS Business Parks Inc., Glendale, Calif., has priced a public offering of 6 million depositary shares, each representing a tiny fraction of a share of preferred stock, at $25 per share.Each depositary share represents one-thousandth of a share of the company's series H 7.000% cumulative preferred stock. The company granted the underwriters an option to buy up to 900,000 additional shares to cover any overallotments. Citigroup was the lead manager of the offering. PS Business Parks, an equity real estate investment trust, can be found online at http://www.psbusinessparks.com.

Reckson Associates Realty Corp., Melville, N.Y., has priced an offering of $150 million of 5.15% senior unsecured notes due Jan. 15, 2011.The notes were priced at 99.735 to yield 5.196%, a spread of 168 basis points above the seven-year Treasury rate, Reckson said. Citigroup and J.P. Morgan Securities were the joint bookrunners for the offering. The real estate investment trust, which specializes in office properties in the New York tri-state area, can be found on the Web at http://www.reckson.com.

New York-based iStar Financial, a real estate investment trust, has announced a $350 million offering of 4.875% senior notes due 2009 to qualified institutional investors.The proceeds are expected to be used to repay secured debt, iStar Financial said. The REIT can be found online at http://www.istarfinancial.com.

Maguire Properties Inc., a Los Angeles-based real estate investment trust, has priced a public offering of 9 million shares of 7.625% series A cumulative redeemable preferred stock at a liquidation-preference price of $25 per share.The offering was led by Citigroup Global Markets Inc.; Friedman, Billings, Ramsey & Co.; and Wachovia Securities. The underwriters have been granted an option to buy up to 1 million additional shares to cover any overallotments, Maguire said. The REIT can be found online at http://www.maguireproperties.com.

HEI Hospitality, Norwalk, Conn., plans to increase its hotel investments to more than $1 billion, according to the company.The company's target acquisitions include single-asset portfolios and portfolios of "first-class, full-service" hotels with 200 to 500 rooms in the continental United States. HEI said it has hired Clark W. Hanrattie as senior vice president and chief investment officer from Olympus Real Estate Partners, a private real estate investment firm. "We continue to have an aggressive appetite for growth through acquisitions, and Clark will play a key role in our expansion plans," said Gary Mendell, HEI's chairman and chief executive officer. "His proven track record in single-asset and large portfolio acquisitions brings valuable experience to our team."

Availent Financial Inc., a mortgage banking company based in Dallas, has announced the acquisition of "substantially all" the assets of First Texas Residential, a Houston-based mortgage brokerage firm.The details of the transaction were not disclosed, but Availent said the purchase price was largely paid with a promissory note maturing on Feb. 1. "First Texas provides us with a significant presence in the Houston market along with strategic relationships with real estate brokerage firms and developers," said Patrick A. McGeeney, president and chief executive officer of Availent. The company can be found on the Web at http://www.availentfinancial.com.

J.P. Morgan Chase's purchase of Bank One, Chicago, would create the nation's largest second-lien lender, according to figures compiled by National Mortgage News and Home Equity Wire.Based on third-quarter production of seconds, Chase Home Finance ranked third nationwide, with $7.4 billion, and Bank One sixth, with $4.7 billion. The market leader, Washington Mutual, Seattle, funded $9.6 billion in seconds during the quarter. If the second-lien production volumes of Chase and Bank One are combined, the firms would rank first, with $12.13 billion, based on third-quarter figures. The second-lien volumes come from a survey of conforming lenders and represents mostly 'A' credit quality loans. But JPM's purchase of Bank One is not expected to alter the first-lien residential market much because Chase is already a large player and Bank One is not.

The B-minus rating on class B-8 of DLJ Commercial Mortgage Corp. commercial mortgage pass-through certificates, series 1999-CG1, has been affirmed and removed from Rating Watch Negative by Fitch Ratings.The rating agency also affirmed the ratings on 13 other classes in the deal. The removal of class B-8 from Rating Watch Negative was attributed to the recent liquidation of a specially serviced loan, which resulted in a lower loss than expected.

Dennis J. Gilmore, who heads the Property Information Segment of The First American Corp., Santa Ana, Calif., has been named executive vice president of the company.In the new post, Mr. Gilmore will focus on products and services that involve multiple operating segments, First American said. However, he will continue to lead the Property Information Segment, which consists of five subsidiaries, including First American Real Estate Solutions and eAppraiseIT LLC. Parker S. Kennedy, First American's president and chief executive officer, said Mr. Gilmore's "extensive knowledge of title operations, mortgage-related services, and property information technology uniquely qualifies him for this important role." The company can be found online at http://www.firstam.com.

Jack A. Thrift has been hired as chief financial officer of Transnational Financial Network Inc., a wholesale and retail mortgage bank based in San Francisco.Mr. Thrift was previously CFO of two unnamed private brokerage and investment banking firms and an auditor and manager with three major public accounting firms, where he specialized in the financial services industry, Transnational said. The company can be found on the Internet at http://www.transnational.com.

Radian Group Inc., Philadelphia, has reported that it will add $96 million to the loss reserves of a financial guaranty subsidiary in anticipation of $111 million in claims from a manufactured housing transaction originated and serviced by Conseco Finance Corp.The action will result in a $62 million ($0.66 per share) after-tax reduction in earnings for the fourth quarter, Radian said. Radian Insurance Inc., a subsidiary of private mortgage insurer Radian Guaranty Inc., provided credit enhancement on three classes in a $1 billion transaction that closed in June 2000, Radian said. "This transaction performed within expectations until the end of 2002," said Radian chief financial officer Bob Quint. "At that time, the bankruptcy of Conseco led to a deterioration in performance." Radian can be found online at http://www.radiangroupinc.com.

The splitting up of the senior notes of large loans in commercial mortgage-backed securities deals into parallel pieces that are securitized into different pools has given rise to some concerns, according to Moody's Investors Service.The rating agency said more attention needs to be paid in the CMBS rating process to the "complex relationship" between the holders of the split notes. However, "with defaulted loan control rights and advancing decisions among the trusts evolving into more diffuse structures from the original one-servicer-fits-all approach, we do not believe that this complexity has yet reached the stage where credit support adjustments are necessary," Moody's said. Such structures became more prevalent in the post- 9/11 world as it became difficult to obtain adequate or affordable terrorism insurance on many high-profile properties, according to Moody's. Fitch Ratings has voiced similar concerns. Moody's can be found online at http://www.moodys.com.

All segments of the commercial real estate industry should do well in 2004, according to an annual real estate forecast by Grubb & Ellis Co., a real estate services firm based in New York.As the economy picks up, leasing activity in the office sector should increase and vacancy rates in the industrial sector should fall to a little above 9% by year end, but the recovery will not be strong enough to boost rental rates for warehouse/distribution space in most markets, the company said. "Real estate is on the upswing, although it will take some time to fully reverse the effects of the 2001 recession and the job-loss recovery of 2002 and 2003," said Robert Bach, national director of market analysis at Grubb & Ellis. The company can be found online at http://www.grubb-ellis.com.

The average 30-year fixed mortgage rate dropped to 5.66% for the week ending Jan. 16 from 5.87% the previous week as mortgage rates fell to six-month lows, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.17% to 4.97%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages declined from 3.76% to 3.62%. Fixed rates were at their lowest levels since the week ended July 11, 2003, and the ARM rate was the lowest since the week ended July 18, Freddie Mac said. Fees and points averaged 0.6 of a point for 30-year fixed-rate mortgages and 0.7 of a point for ARMs and 15-year FRMs. "Expecting job growth on the order of about 150,000 in December, financial markets were taken aback, to say the least, when those figures came in at only around a thousand new jobs," said Amy Crews Cutts, Freddie Mac's deputy chief economist. "The lackluster employment report had a chilling effect on the market's recent exuberance, causing mortgage rates to slide to this week's low levels." A year ago, the average 30-year and 15-year fixed rates were 5.97% and 5.36%, respectively, and the average one-year ARM rate was 4.03%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

J.P. Morgan Chase's $60 billion purchase of Bank One Corp., Chicago, will have little immediate impact on the residential mortgage market.According to figures compiled by National Mortgage News, JPM's Chase Home Finance unit is ranked fourth in both servicing and production, and the addition of Bank One's residential finance unit will change its market share slightly but leave it at number four. Over the past year Bank One has been de-emphasizing mortgages. In June it exited the wholesale channel entirely, agreeing to sell the unit to RBC Mortgage, a Canadian-owned company. Bank One ranked 27th among residential funders in the third quarter, and 19th among servicers. Meanwhile, JPM said in a statement that Stephen Rotella, the head of Chase Home Finance, will serve on the "executive committee" of the combined banks. (See the Jan. 19 issue of NMN for full details.)