Originations

The rating outlook for Equity Office Properties Trust, Chicago, has been revised from stable to negative by Moody's Investors Service.In addition, Moody's affirmed its Baa1 senior debt rating of EOP Operating LP and its Baa2 preferred stock rating of EOPT. Moody's said the negative outlook reflects its expectation that economic weakness and competitive pressures will continue to hurt the company's operating performance in the near term and that earnings may decline further. "In addition, we are concerned about its ability to cover dividends with current cash flow given its high dividend payout ratio," the rating agency said. EOPT is an umbrella partnership real estate investment trust that invests primarily in commercial office properties. Moody's can be found online at http://www.moodys.com.

LandAmerica Financial Group Inc. has acquired Ten Mile Title Inc., to increase its presence in Colorado.Ten Mile has offices in Breckenridge and Dillon and will become a part of LandAmerica's Lawyers Title. LandAmerica is a principal provider of real estate transaction services, with more than 700 offices throughout the U.S. and around world.

Metrociti Mortgage LLC, Encino, Calif., has announced the formation of a luxury real estate division called the Private Mortgage Banking Group.PMBG will expand Metrociti Mortgage's product and service offerings to include high-end real estate financing up to $20 million, unique properties, second-home financing, and construction loans, the company said. The group also specializes in difficult appraisals, jumbo and super-jumbo financing for purchases and refinances of all types. "The group is ideally suited to cater to sophisticated clients with complex ownership issues, clients who do not wish to state income, assets, or employment data, and high-end clients with less-than-perfect credit," Metrociti said. The new division can be found online at http://www.pmbg-metrociti.com.

Fitch Ratings has indicated that it will rate properly identified high-cost loans in areas where either the Office of Thrift Supervision or the Office of the Comptroller of the Currency has indicated that it pre-empts what Fitch considers to be problematic anti-predatory lending laws."Fitch has previously indicated that it will not rate residential mortgage-backed securities (RMBS) transactions which contain mortgage loans that are originated in jurisdictions which have enacted legislation that may result in unlimited purchaser or assignee liability for predatory lending practices of an originator, broker or servicer," Fitch said in an Aug. 21 report. "Such criteria is still applicable, including the assessment of additional credit enhancement, for loans originated in any jurisdiction by non-OTS-regulated entities and in Georgia by any entity which is not an OCC-regulated entity or a Georgia-chartered bank or savings association." Fitch Ratings can be found on the Web at http://www.fitchratings.com.

GMAC Commercial Mortgage still holds sway as the number one servicer of commercial mortgages by volume for the second quarter (with a $172.281 billion portfolio), according to the Mortgage Bankers Association's CMBS servicing survey.Wachovia Securities came in next at $96.073 billion, followed by Midland Loan Services (78.822 billion), CapMark Services ($75.592 billion) and GEMSA Loan Services ($57.042 billion). The MBA survey only includes firms with at least $1 billion of total named servicing -- primary, master and special -- for CMBS loans. Considering only CMBS servicing portfolios, GMAC was still at the top of the list ($103.903 billion), followed by Wachovia ($70.863 billion), Midland ($55.804 billlion), CapMark ($39.996 billion) and ORIX Capital Markets ($31.298 billion). The survey includes servicing of commercial mortgage-backed securities, life company loans and others.

Commercial and multifamily lending volume for the second quarter ($29.5 billion) was up 56% from the first quarter ($18.9 billion), and 29% from the second quarter of 2002 ($22.9 billion), according to the Mortgage Bankers Association's second quarter survey of commercial and multifamily mortgage originations.The increase was seen in lending on all property types, with the largest dollar increases seen in the multifamily sector, the mortgage bankers' trade association reports. Jeff Weidell, senior vice president of Northmarq Capital and vice chair of the MBA's commercial/multifamily research committee, said, "With interest rates at or near their lowest point in more than 40 years, the cost of financing new transactions and refinancing existing commercial debt presented an unprecedented opportunity for most market participants, and has been the major factor in driving up loan demand." Loans on retail properties were up 44% from a year ago, lending on office properties rose 39% and multifamily lending was up 21%. Loans backed by healthcare properties registered a sharp 200% rise (one lender accounted for a major portion of the increase) and lending on hotel properties rose 35%. Conduit lenders funded 37.4% of the total loan volume for the second quarter, life insurance companies 19.5% and commercial banks 13.3%, the MBA reports.

Thrift originations rose 22% in second quarter to nearly $200 billion as refinancings pushed production to a new industry record.Originations of 1-4 family loans rose from $160.2 billion in the first quarter to $195.7 billion in the second quarter, according to the Office of Thrift Supervision. Adjustable-rate mortgages comprised only 15% of production in the second quarter. "The favorable interest rate environment of the past year has sustained a mortgage refinancing boom that has helped the thrift industry to a series of records in earnings, profitability and capital," OTS director James Gilleran said. Thrifts sold $213.8 billion of single family loans into the secondary market during second quarter.

The Market Composite Index, an overall measure of mortgage applications, fell to 736.7 on a seasonally adjusted basis during the week ended Aug. 15, down from 824.6 the week before, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were down 11.2% on the week and 33.9% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index decreased from 409.6 to 389.5, and the Refinance Index declined from 3238.4 to 2756.8. Refinancings represented 53.4% of total applications, down from 55.8% the previous week, while adjustable-rate mortgages accounted for 23.3%. "One factor that no doubt negatively affected mortgage applications last week was the blackout in the Northeast that shut down many mortgage offices for at least a day," said Jay Brinkmann, the MBA's vice president of research and economics. "Unfortunately, the nature of our data is such that we cannot estimate the magnitude of the impact." The average contract interest rate for 30-year fixed-rate mortgages rose from 6.00% to 6.22%, and points (including the origination fee) increased from 1.37 to 1.50 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

The average 30-year fixed mortgage rate inched up to 6.28% for the week ending Aug. 22 from 6.24% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate was up slightly from 5.58% to 5.60%, and the average rate for one-year, Treasury-indexed, adjustable-rate mortgages rose from 3.75% to 3.84%. Fees and points averaged 0.8 points for the aforementioned fixed-rate mortgage categories and 0.7 points for the aforementioned ARM category. "The recent upswing in mortgage rates does not seem to have slowed the new home construction market, if July's housing start figures are any indication," said Frank Nothaft, Freddie Mac's chief economist. "Total starts hit a 17-year high in July while single-family starts in the same month were ... at the highest level since 1978. Even as mortgage rates continued to climb in August, builder confidence reached its highest level in three-and-one-half years, according to the National Association of Home Builders. This would seem to indicate that 2003 will continue to be an outstanding year for the housing industry." A year ago, the average 30-year and 15-year fixed rates were 6.27% and 5.71%, respectively, and the average one-year ARM rate was 4.34%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

American Real Estate Partners, Mount Kisco, N.Y., has appointed Keith Meister president and chief executive officer of American Property Investors, its general partner, replacing Albo J. Antenucci Jr. in the position.Mr. Antenucci resigned the post effective Aug. 15, but he will act as a consultant to AREP for approximately nine months, the company said. Mr. Meister will continue in his present position as senior investment analyst of High River LP, a company owned by API chairman Carl C. Icahn, AREP said. AREP, a commercial real estate investor and manager, recently reported that net earnings for the quarter ended June 30 decreased by $18.6 million from that of a year earlier, primarily due to a writedown of mortgages and notes receivable ($18.8 million), decreased interest income ($9.2 million), and decreased earnings from land, house, and condominium operations ($3.8 million).

Changes in ownership of real estate through real estate investment trusts and real estate operating companies were mixed in 2002, rising for retail malls and non-mall retail properties and falling for hotels, apartments, and warehouses, according to Prudential Real Estate Investors, Parsippany, N.Y.The increases totaled 2.5% for retail malls and 0.5% for non-mall retail properties, and the declines ranged from 0.1% for apartments to 0.7% for warehouses and 1.6% for hotels, says the annual PREI study of public market penetration in commercial real estate. For offices, public ownership remained unchanged. PREI said capital inflows to public real estate firms rose from $18.8 billion in 2001 to $19.8 billion last year, still far below the $45.3 billion recorded in 1997. "New capital is critical in an industry that cannot rely heavily on retained earnings for rapid growth," said Youguo Liang, managing director of research at PREI. "Despite relatively strong stock price performance, limited new equity was raised because the lack of buying opportunities in the current property markets provided little incentive for companies to issue new stock." PREI can be found online at http://www.prudential.com/prei.

Credit union originations of single-family fixed-rate loans jumped 78% in the first six months of this year, compared with production in the same period last year.According to the National Credit Union Administration, originations of fixed-rate mortgages jumped from $20.5 billion in the first half of 2002 to $36.0 billion in the first six months of this year. CUs also sold $19.5 billion of their loans into the secondary market during the first half of this year. With a 2.5% market share, CUs believe they are finally making their presence known in the mortgage market. "We are in the marketplace and people are coming to us," said NCUA spokesman Clifford Northrup. Credit unions held $107.9 billion in single-family loans in portfolio as of June 30, up from $95.8 billion on June 30, 2002.

Blaming rising mortgage rates, Fannie Mae has cut its residential origination forecast for this year and next, predicting that production will plunge by a stunning 56% in 2004.The mortgage giant believes that refinancings will fall to $400 billion next year but that the "purchase money" market will remain strong. Fannie Mae is now forecasting production of $1.5 trillion for 2004, down from a recent forecast of $1.7 trillion. Earlier, it had forecast about $2 trillion. Fannie's downward revision comes a day after the Mortgage Bankers Association of America cut its origination forecast for this year and next. The MBA believes production will total $1.5 trillion next year and $3.2 trillion this year. Fannie is predicting $3.4 trillion for this year. According to figures compiled by National Mortgage News, lenders funded $2.03 trillion through the first six months of the year. (See the Aug. 18 issue of NMN for more details.)

Anworth Mortgage Asset Corp., a real estate investment trust based in Santa Monica, Calif., has priced a follow-on public offering of 3.5 million shares of common stock at $14.30 per share.Friedman, Billings, Ramsey & Co., the Arlington, Va.-based lead manager for the offering, said the underwriters have an option to buy up to 525,000 additional shares to cover any overallotments. FBR said the net proceeds to Anworth, a mortgage REIT, will be approximately $47.3 million, assuming no exercise of the overallotment option. The companies can be found on the Web at http://www.anworth.com and http://www.fbr.com.

The rating on class D of Salomon Brothers commercial mortgage pass-through certificates, series 2001-MM, has been placed on Rating Watch Negative by Fitch Ratings.In addition, one other class in the same deal was upgraded, and the ratings on five other classes were affirmed. The rating agency said the Rating Watch placement was chiefly due to a "significant decline" in the performance of the Cabana Crowne Plaza loan, which is collateralized by a full-service hotel in Palo Alto, Calif. Fitch can be found online at http://www.fitchratings.com.

Robert L. Hiatt has been named executive vice president and chief financial officer of United Financial Mortgage Corp., Oak Brook, Ill.Mr. Hiatt was most recently vice president of finance and chief accounting officer for an unnamed publicly traded health care company. Before that, he was employed for nine years at the now-defunct Arthur Andersen accounting firm. UFMC can be found on the Web at http://www.ufmc.com.

Bascom Northwest Ventures, an apartment redevelopment company formed by the Irvine, Calif.- based Bascom Group, has announced that it plans to acquire $300 million worth of apartments over the next three years.Brian Wirtz, a former vice president of acquisitions with Essex Property Trust and AvalonBay Communities, has been tapped to head the venture's push into Northern California, Oregon, Washington, and Utah from his San Francisco base, Bascom said. The venture's strategy will be to acquire apartment properties in good locations and then reposition them with "extensive capital improvements and institutional-quality property management," which will result in increased rents, reduced expenses, and "significant added resale value," the company said. "We believe the timing is right to invest in value-added opportunities in the Bay Area and the Pacific Northwest," said Jerry Fink, founder of the Bascom Group. "Continued job losses, overbuilding, and home purchases have combined to produce significant deterioration in the cash flow for apartments in these regions. However, these are all great long-term markets, many with high barriers to entry."

Mortgage Guaranty Insurance Corp., Milwaukee, has announced that it will insure mortgages under a Mississippi Home Corp. lease-to-own program for people with impaired credit.Under the Get On Track program, prospective homeowners can move into a home during a lease period while getting their finances in order, MGIC said. They identify a home they would like to own, and MHC buys it, becoming the initial mortgagor. Freddie Mac has agreed to buy the mortgages. MGIC said it will insure such mortgages and waive a premium adjustment that is typically applied when the mortgagor is not the occupant of the property. "Because the focus of the GOT program is to help individuals improve their credit so that they can obtain prime-priced homeownership, we determined that GOT mortgages in which MHC is the borrower should not be subject to the usual 'investor loan' risk premium," said Geoffrey Cooper, MGIC's director for emerging markets. "GOT represents a very prudent approach to helping borrowers with impaired credit get on the right path to homeownership." MGIC can be found online at http://www.mgic.com.

After nearly a year of rising production forecasts, the Mortgage Bankers Association of America has lowered its mortgage origination prediction for 2003 to $3.2 trillion.At its annual convention last October, the MBA was forecasting $1.8 trillion in loan originations. Since then the forecast has been revised upward six times, reaching a peak of $3.4 trillion in July. In addition to its downward revision for this year, the latest forecast calls for $1.5 trillion in loan production next year, down from the $1.9 trillion the MBA was predicting recently. The drops in the forecasts are due entirely to expected declines in refinancings, which are now estimated at $2.1 trillion for this year and only $430 billion next year (versus the previous estimate of $833 billion), the MBA said. "We have been forecasting mortgage interest rates to slowly increase, eventually drying up the refinance markets, but the recent upsurge in rates has moved that event forward," said Douglas Duncan, the MBA's chief economist and senior vice president of research and business development. Mr. Duncan added, however, that he expects rates to fall from recent highs "because current levels are not in line with economic fundamentals." The association can be found online at http://www.mbaa.org.

Single-family housing starts rose 1.9% in July as the construction of new homes hit its highest level since November 1978.The U.S. Census Bureau reported that single-family starts rose from a seasonally adjusted annual rate of 1.49 million units in June to 1.52 million units in July. The previous high in the past two years was 1.51 million in January 2003. For the first seven months of this year, single-family housing starts are ahead of last year's pace by 1.9%. The National Association of Home Builders is forecasting that single-family construction will exceed last year's mark of 1.36 million starts by a nose. Meanwhile, multifamily starts fell 1.8% in July to 319,000 units.