Originations

Freddie Mac has established a Multifamily Targeted Affordable Seller/Servicer network that it says is aimed at boosting its purchases of mortgages that finance "targeted affordable housing."Targeted affordable housing loans include mortgages on properties that receive federal subsidies or are subject to low-income housing tax credits, and transactions in which Freddie Mac provides credit enhancement for a mortgage that backs tax-exempt bonds, a trust certificate, or related instruments. The first companies approved as network members are GMAC Commercial Mortgage Corp., MMA Financial Services, PNC Multifamily Capital, and PW Funding Inc. "Working closely with this special network of seller/servicers will enhance our ability to find new and innovative ways to support affordable housing," said H. L. "Van" Van Varick, vice president in charge of targeted AH initiatives in Freddie's Multifamily Division. "We are willing to consider giving nationwide approval for targeted affordable loans to other companies if they have the capability, experience, and committed resources needed to provide one-stop shopping for targeted affordable developers, which includes construction lending and debt and equity financing."

The president of the National Association of Mortgage Brokers, A. W. Pickel, has reiterated his call for all in the industry to contact their senators and representatives over labor-related provisions of the Harkin Amendment.The amendment would prevent the Department of Labor from reviewing standards for exempt employees, Mr. Pickel told the Southeastern Mortgage Brokers Conference in Destin, Fla. Former NAMB president Neill Fendly, also speaking at the conference, said "it's going to change the way you do business" if the Labor Department is unable to review the standards. Mr. Fendly explained that if loan officers are found to be non-exempt employees, it will raise brokers' operating costs significantly because of the overtime salary and related payments that will be due to workers. Mr. Pickel noted that President Bush has threatened to veto the bill that the Harkin Amendment is attached to, but he said a veto is highly unlikely because of the appropriations contained in the bill.

The series A City of Indianapolis multifamily revenue bonds (Sunrise Apartments Project) have been downgraded from CCC to C by Fitch Ratings.The $3.3 million in bonds are secured by a first mortgage on the 320-unit Sunrise Apartments project, which is required by state and federal laws to offer 20% of its units to families with incomes at or below 50% of the area's median income. Fitch attributed the downgrade to "the property's weak operating performance, the exhaustion of the series A debt service reserve balance, and the limited availability of refinancing options." The rating agency can be found online at http://www.fitchratings.com.

RAIT Investment Trust, Philadelphia, has priced an offering of 2.0 million shares of common stock at $22.75 per share.The real estate investment trust estimated that its net proceeds will total $43.4 million, which will be used to repay debt, originate loans, and acquire loans and property interests. The co-managers of the offering were U.S. Bancorp Piper Jaffray Inc. and Stifel, Nicolaus & Co. The REIT can be found on the Web at http://www.raitinvestmenttrust.com.

New York-based iStar Financial, a real estate investment trust, has reported net income of $66.1 million ($0.63 per share) for the third quarter, up from $43.4 million ($0.47 per share) for the third quarter of 2002.The commercial mortgage REIT said it closed 15 new financing commitments for a total of $847.8 million during the third quarter. The company's transactions reflect its business strategy of "originating structured financing transactions for leading corporations and private owners of high-quality commercial real estate assets across the United States," iStar said. Jay Sugarman, chairman and chief executive officer of the REIT, said iStar's investment pipeline "remains strong and reflects our increasing market penetration." The company's new financings "continue to be dominated by first mortgages and investment-grade corporate tenant leases," reflecting the REIT's near-term outlook, according to Mr. Sugarman.

PNC MultiFamily Capital, Pittsburgh, has announced the establishment of a tax-credit equity fund focused on the construction of multifamily housing that targets low- and moderate-income families and senior citizens.The company, a division of PNC Real Estate Finance, said the $140 million Columbia Housing/PNC Institutional Fund XIX consists of 25 properties in 13 states across the country totaling nearly 3,000 apartment units. Eight institutional investors, who funneled between $5 million and $70 million into the fund to acquire limited partnerships, will derive a return based chiefly on the receipt of Low Income Housing Tax Credits and passive losses from real estate depreciation, the company said. PNC can be found online at http://www.pnc.com.

Countrywide Financial Corp., Calabasas, Calif., has reported record consolidated net earnings of $1.1 billion ($7.70 per share) in the third quarter, up 381% from $228.5 million ($1.74 per share) a year earlier and nearly triple its second-quarter earnings.Countrywide funded $125.9 billion of mortgage loans in the third quarter, up 98% from $63.6 billion a year earlier. Countrywide's servicing portfolio reached $606 billion at the end of September, up from $406 billion last year. "This was by far the most successful quarter in the company's history, as earnings for the three-month period exceeded 2002's full-year results," said Countrywide chairman and chief executive officer Angelo Mozilo. ".... Mortgage banking earnings rose to record levels, bolstered by strong improvement in our servicing sector, which benefited from net impairment recovery of [mortgage servicing rights] and other retained interests of $231 million before tax." Countrywide can be found online at http://www.countrywide.com.

The average 30-year fixed mortgage rate remained unchanged, at 6.05%, for the week ending Oct. 24, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose slightly from 5.36% to 5.39%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages declined from 3.79% to 3.76%. Fees and points averaged 0.7 points for all three mortgage categories. "Mortgage rates were mostly unchanged this week in reaction to quiet market conditions," said Frank Nothaft, Freddie Mac's chief economist. ".... Judging by the current flow of mortgage applications reported by the Mortgage Bankers Association of America, it looks like we will close out the year in record-breaking territory again." A year ago, the average 30-year and 15-year fixed rates were 6.31% and 5.70%, respectively, and the average one-year ARM rate was 4.30%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

The single-family housing market declined slightly in the third quarter, according to Mortgage Guaranty Insurance Corp.'s national Market Trends Index.The index stood at 6.58 for the quarter, down from 6.63 in the second quarter and 6.90 a year earlier. The company looked at 73 metropolitan statistical areas and found six to be strong, nine weak, and the rest stable. "Though the number of soft or weak markets has increased from a year ago, almost 80% of the markets are still rated stable," said Neil Siegel, senior market analyst for the Milwaukee-based mortgage insurer. "In addition, the inventory of homes in most markets is still considered to be low." 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.

Pooling and servicing agreements for two recent commercial mortgage-backed securities deals rated by Fitch Ratings have incorporated explicit terms on servicer advance reimbursements.According to the agreements, any advance deemed recoverable in respect of any mortgage loan before it gets corrected, together with interest accrued, is to be reimbursed with first priority on the collection date from principal payments. If the available principal is not sufficient for full reimbursement, the reimbursement is to be deferred to the next collection period. Interest payments are not to be used for the reimbursement of the advances. Mary Metz, a Fitch managing director, said one benefit to the trust from incorporating these specific terms is that "it will save the expense of interest on the advances." Principal payments to senior certificateholders may be deferred, which could extend the life of the certificates, but this does not constitute "a negative credit event," according to Fitch.

Zacks.com, Chicago, has issued a "5(Strong Sell)" ranking on the stock of MGIC Investment Corp., Milwaukee, placing it on Zacks' list of Stocks to Sell Now.The report notes that MGIC recently reported earnings per share that were sharply lower than EPS from a year earlier and below the consensus forecast. "The company stated that record new insurance written volume was more than offset by higher incurred losses," Zacks said. "Specifically, the company said that the losses were a result of an increase in delinquent loans and an increase in claims paid which were impacted by the lack of job growth." Several analysts have issued lower earnings forecasts, and the company's earnings estimates for this year and next have also declined, Zacks.com said. Stocks with a 5(Strong Sell) rank should be sold or avoided in the next one to three months, according to Zacks. The company can be found online at http://www.zacks.com.

Golden West Financial Corp., Oakland, Calif., has reported net earnings of $282.9 million (a record $1.83 per share) for the third quarter, up from $244.5 million ($1.56 per share) a year earlier.Mortgage loan originations -- chiefly adjustable-rate mortgages -- totaled a record $10.1 billion, up 50% from $6.7 billion in the third quarter of 2002. Herbert Sandler, Golden West's chairman and chief executive officer, noted that interest rates on ARMs are not as volatile as those on fixed-rate mortgages, and he said rates at Golden West were "low and stable" in the third quarter, spurring loan volume to all-time highs. The record volume "exceeded by far the payoffs and sales of our mortgages," he said. "The net result was a significant increase in the size of our mortgage portfolio." The company said the ARMs in its portfolio increased $3.5 billion (a 21% annualized rate) in the third quarter. Golden West, the parent of World Savings Bank, can be found on the Web at http://www.gdw.com.

Buoyed by record mortgage originations, Wells Fargo & Co., San Francisco, has reported net income of $1.56 billion ($0.92 per share) in the third quarter, up 8% from $1.44 billion ($0.84 per share) a year earlier.The EPS figure was also a record, the company said. Wells Fargo said its mortgage origination volume totaled an industry record $161 billion in the third quarter, up from an industry record $135 billion in the second quarter. "Year to date we have originated an industry record of $399 billion, already surpassing the $333 billion we originated for all of last year," said Mark Oman, Wells Fargo's group executive vice president for home and consumer finance. The owned mortgage servicing portfolio rose to $674 billion in the third quarter, up 18% from the level recorded a year earlier, the company said. Mortgage servicing rights were carried on the balance sheet at $5.8 billion on Sept. 30, up from $3.8 billion as of June 30, Wells Fargo said. Wells Fargo can be found on the Web at http://www.wellsfargo.com.

Freddie Mac has announced the purchase of a $6 billion portfolio of multifamily mortgages from Washington Mutual Bank FA and Washington Mutual Bank in exchange for Freddie Mac PCs.The portfolio consists chiefly of five- to 50-unit mortgages, which Freddie Mac termed "especially significant because affordable housing goal regulations provide special incentives to encourage Freddie Mac's financing of mortgages on apartment buildings of this size." The government-sponsored enterprise said the transaction includes contractual incentives such as $100 million in fees to WaMu, payable on the issuance of individual Freddie Mac securities during September and October of this year. The GSE can be found online at http://www.freddiemac.com.

Mortgage rates will remain close to their current levels for the rest of the year, the Mortgage Bankers Association of America's chief economist told a press briefing Oct. 21 at the group's annual convention in San Diego.The average rate for the 30-year fixed rate mortgage stood at 6.0% at the end of the third quarter, and might slip to 5.9% in the fourth quarter, Douglas Duncan said. For 2004, there should be a modest rise to 6.5% by the end of the fourth quarter, and to 7.0% by the end of the fourth quarter of 2005, according to the MBA forecast. In the macroeconomic section of his presentation, Mr. Duncan said the mortgage industry added 150,000 to 200,000 jobs in past three years. Now that rates are rising, there will be some "transition out," but Mr. Duncan asked rhetorically how many of the new jobs had been filled by temporary workers. Such workers left industries that were in decline to fill the need in the mortgage industry, and now they will return to those industries, he said.

The Market Composite Index, an overall measure of mortgage applications, rose to 652.8 on a seasonally adjusted basis during the week ended Oct. 17 from 649.6 the week before, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were off 9.7% on the week and down 42.7% from a year earlier. The Purchase Index increased from 359.0 to 386.1 on a seasonally adjusted basis, while the Refinance Index declined from 2340.1 to 2204.1. Refinancings represented 50.5% of total applications, down from 53.9% the previous week, while adjustable-rate mortgages accounted for 26.2%. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.81% to 5.97%, and points (including the origination fee) decreased from 1.49 to 1.39 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

United Mobile Homes Inc., a real estate investment trust based in Freehold, N.J., has been added to the Morgan Stanley REIT Index as part of the quarterly rebalancing of the index.The REIT said the index is a market capitalization-weighted, total-return index of REITs that meet certain liquidity requirements. Stocks are selected "based on a prescribed set of selection criteria and rebalancing rules that should permit investors to replicate index performance," the manufactured housing REIT said. The company can be found online at http://www.umh.com.

Brandywine Realty Trust, Plymouth Meeting, Pa., has announced the sale of approximately 2.6 million of its common shares to Legg Mason Wood Walker Inc. and McDonald Investments Inc.The real estate investment trust said the net proceeds of the offering totaled approximately $64.1 million. The sale included 337,500 shares to cover underwriter overallotments. The REIT can be found online at http://www.brandywinerealty.com.

Glimcher Realty Trust, Columbus, Ohio, has announced the closing of a new $150 million secured bank credit facility.The real estate investment trust said the three-year facility replaces a line of credit that was scheduled to mature on Jan. 31, 2004. The interest rate will range from 1.15% to 1.70% over the London interbank offered rate, depending on the REIT's ratio of debt to total asset value. The line of credit is secured by a mortgage on three malls and 11 community shopping centers. Glimcher can be found on the Web at http://www.glimcher.com.

Vornado Realty Trust, Paramus, N.J., has made a $200 million mezzanine loan on the General Motors Building in Midtown Manhattan.Conseco sold the property recently to Macklowe Properties for $1.4 billion. Vornado, an office real estate investment trust, said the loan is subordinate to $900 million of other debt. Interest on the loan is variable, based on the London interbank offered rate plus 8.685% (with a LIBOR floor of 1.5%), Vornado said. The current yield on the three-year loan, which can be extended for three one-year periods, is 10.185%. Vornado is also participating in another $50 million loan on the property with an affiliate of Soros Fund Management, the REIT said. This $25 million loan -- which is also a subordinate loan, junior to the first $1.1 billion of loans -- carries interest at LIBOR plus 12.81%, and currently yields 14.31%. It matures in October 2005, with three possible one-year extensions. Vornado said it expects to fund the second loan in the next month.