Originations

The National Association of Realtors is still forecasting record home sales this year for both new and existing homes, but it has lowered its predicted sales levels while hiking its projection for mortgage rates.The revised forecast calls for 5.65 million resales in 2003, up 1.5% from a record 5.57 million in 2002 (but down from the 5.73 million in the NAR's July forecast). New-home sales are now projected at a record 992,000 (down from 1.0 million in last month's forecast), and housing starts are expected to rise 0.4% to 1.71 million. "We now think the 30-year fixed [mortgage rate] should stay below 6.5% for the balance of 2003, and that's still very favorable when you look at where rates have been over the last four decades," said David Lereah, the NAR's chief economist. The trade group was forecasting a 7.0% mortgage rate by year-end in January, but by July it had lowered the forecast dramatically, to 5.7%. The NAR can be found online at http://realtor.org.

The Leading Hotels of the World Ltd., New York, has announced the formation of The Leading Trust, a real estate investment vehicle that will be managed by Leading Hotels Fund Advisors, a partnership between affiliates of Leading Hotels and Trinity Hotel Investors LLC, also based in New York.The trust is aimed at investing in luxury hotels to preserve their distinctive character and charm, Leading Hotels said. The company said the acquisition of hotels by the trust represents "the culmination of a five-year business plan" to evolve from a hotel representation organization into "a full-service provider of products and services to the luxury hotel market sector." The trust will offer hotels a chance "to preserve their character and protect them from forced sales to multinational chains," according to Leading Hotels. The company can be found on the Web at http://www.lhw.com.

Paul R. Allen has been named chief executive officer of Taylor, Bean & Whitaker Mortgage Corp., a wholesale lender based in Ocala, Fla.A veteran of more than 25 years in the mortgage industry, Mr. Allen comes to TBW from Oakmont Advisors LLC, an Oakton, Va.-based consulting firm of which he was founder and president. He was previously executive vice president and chief financial officer at North American Mortgage Co. Mr. Allen began his career as a senior economist at Freddie Mac, where he became a divisional vice president. He later joined Fannie Mae as vice president of financial consulting for its Single Family Business Division. Mr. Allen will join TBW chairman Lee Farkas and president Ray Bowman on the company's executive committee. TBW can be found online at http://www.taylorbean.com.

The average 30-year fixed mortgage rate climbed to 6.34% for the week ending Aug. 8 -- its highest level since August 2002 -- from 6.14% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate jumped from 5.44% to 5.66%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages rose from 3.68% to 3.80%. Fees and points averaged 0.7 points for all three mortgage categories. "Signs that the economy is finally improving have generated upward pressure on fixed-rate mortgage rates over these past few weeks," said Frank Nothaft, Freddie Mac's chief economist. "Although the one-year ARM rate rose this week, the spread between the one-year ARM and the 30-year FRM reached its widest peak since 1986." A year ago, the average 30-year and 15-year fixed rates were 6.31% and 5.69%, respectively, and the average one-year ARM rate was 4.37%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Bedford Property Investors Inc., Lafayette, Calif., has announced the closing of a private placement of $40.25 million of its 8.75% series A cumulative redeemable preferred stock.The real estate investment trust said it may use the net proceeds to finance the acquisition or development of properties and for general corporate uses, which may include repurchases of its outstanding shares. The REIT's website address is http://www.bedfordproperty.com.

Classes J, K, and L of Bear Stearns Commercial Mortgage Securities Inc. commercial mortgage pass-through securities, series 2000-WF1, have been placed on review for possible downgrade by Standard & Poor's Ratings Services.The reason for the review status is that 2.36% of the pool's principal balance is in special servicing and interest shortfalls -- mainly the result of appraisal subordinated entitlement reductions -- have accumulated on classes K and L, S&P said. The rating agency can be found online at http://www.standardandpoors.com.

A study of loan losses on commercial mortgage-backed securities by Fitch Ratings has found that the overall dollar losses as of year-end 2002 in the transactions studied amounted to only 0.17% of the total loan balances in Fitch-rated conduit, large-loan, and fusion CMBS deals.The rating agency said it expects losses at the end of this year to remain under 0.20% of the total conduit collateral, an amount that Fitch sees as "insufficient to impact CMBS investment-grade classes." Loans resolved through a servicer-negotiated discounted payoff had an average loss of 28.9%, with an average resolution time of 11.9 months, while loans that became real estate owned had an average loss severity of 64.3% and took 23.4 months to resolve. However, "DPO resolutions are less likely to be available as an option on collateral that is older, obsolete, or in a declining market," said Mary O'Rourke, a Fitch senior director. In dollar terms, Fitch saw an additional $241.5 million in loan balance losses on the loan defaults that were resolved in 2002. Of the 228 defaulted loans that were resolved, 55% did not result in any realized losses. The 2002 losses represented 21% of the "original total balance" of the defaulted loans that were resolved, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

The Mortgage Insurance Companies of America has elected William V. Nutt Jr., the head of Greensboro, N.C.-based United Guaranty Corp., as its new president and chief executive officer.The UGC chief will serve a two-year term. He succeeds Curt S. Culver, president and CEO of Mortgage Guaranty Insurance Corp. Mr. Nutt is a 25-year veteran of UGC, a subsidiary of American International Group, New York. The mortgage insurance industry has been relatively healthy over the past two years, though in recent quarters residential delinquencies have begun to hurt earnings. MICA can be found on the Web at http://www.micadc.org.

Fannie Mae has announced a $15 billion affordable housing investment strategy that will provide homeownership and rental opportunities to over 150,000 low- to moderate-income and minority families in Oregon over the next five years.Investment will also target community development and neighborhood revitalization in cooperation with local lenders, city and state housing agencies, and nonprofit organizations, the government-sponsored enterprise said. The initiative, which is part of Fannie Mae's "American Dream Commitment," is the second such plan applied in the state. Fannie's previous five-year investment strategy, a $10 billion program begun in 1998, provided affordable housing to 97,000 Oregonians, the GSE said. Fannie Mae can be found online at http://www.fanniemae.com.

Countrywide Home Loans, Calabasas, Calif., and Star Real Estate have announced the formation of Terra Mortgage, a joint venture that will be an operating division of Countrywide Mortgage Ventures LLC.Terra Mortgage will offer more than 130 loan programs, including zero-downpayment loans and a variety of fixed- and adjustable-rate options, the companies said. "By joining forces to create the new mortgage company, Countrywide and Star Real Estate will provide easy, one-stop shopping for homebuyers in Southern California," said John W. Stewart, executive vice president of strategic business development for Countrywide. Frank McDowell, chief executive officer and owner of Orange County-based Star Real Estate, said prospective homebuyers "can get pre-approved in our offices, saving the time and hassle of seeking pre-qualification and pre-approval elsewhere before coming to us." Countrywide can be found online at http://www.countrywide.com.

The Market Composite Index, an overall measure of mortgage applications, rose to 983.2 on a seasonally adjusted basis during the week ended Aug. 1 from 972.4 the week before, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were up 1.2% on the week and down 6.9% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index increased from 426.9 to 456.4, and the Refinance Index declined from 4145.8 to 4047.5. Refinancings represented 58.3% of total applications, down from 60.4% the previous week, while adjustable-rate mortgages accounted for 21.7%. "The relatively modest drop in refinancing activity despite a rather sharp increase in interest rates indicates some borrowers decided this might be their last chance to refinance before rates went up further," said Jay Brinkmann, the MBA's vice president of research and economics. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.87% to 6.37%, and points (including the origination fee) decreased from 1.64 to 1.36 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

In his first major speech to the investment banking community, Freddie Mac's new chief executive has promised that the mortgage giant will "foster an open culture" at the company and overhaul its disclosure practices.At a private luncheon closed to the news media, CEO Greg Parseghian promised equity analysts that, "You are going to hear it from us straight -- whether we have a great year or a bad year -- and we're going to tell you why it happened." Mr. Parseghian was named CEO 60 days ago after the company's board ousted its three top officers in the wake of an accounting scandal. A copy of the speech was provided to MortgageWire Wednesday morning, a few hours before Mr. Parseghian was set to deliver it. In the prepared speech, Mr. Parseghian promised, among other things, that Freddie Mac will rectify "each and every accounting policy issue" identified in the so-called Doty Report, an internal investigation into its accounting problems. Freddie Mac has also hired the law firm of Covington & Burling to help it benchmark its disclosure processes. (See the Aug. 11 issue of National Mortgage News for complete details.) Freddie Mac can be found online at http://www.freddiemac.com.

The senior unsecured debt rating on Summit Properties Partnership LP has been lowered from Baa3 to Ba1 by Moody's Investors Service, and its rating outlook has been revised from negative to stable.In addition, the preferred stock shelf rating on Summit Properties Inc., Charlotte, N.C., was lowered from (P)Ba1 to (P)Ba2. Moody's attributed the downgrades to the company's replacement of its unsecured line of credit with a secured credit facility. The rating agency said the secured credit line should result in savings on fees and interest, but that using such a facility as the main working capital line is "inconsistent with an investment-grade rating, as it materially weakens protection for unsecured bondholders." Moreover, the secured facility "will significantly increase secured debt levels, which were on the high side: secured debt was 23% of gross assets June 30, 2003," Moody's said. Summit is a real estate investment trust that specializes in luxury apartment communities. Its debt ratings were also recently lowered by Standard & Poor's Ratings Services. Moody's can be found online at http://www.moodys.com.

Jere N. York has been named executive vice president and chief operating officer of Hurd-Harter Mortgage Support and Hurd-Harter Mortgage Co., both of Jacksonville, Fla.Mr. York, a 30-year veteran of the mortgage industry, will be responsible for expanding the national presence of Hurd-Harter Mortgage Support and launching Hurd-Harter Mortgage Co.'s Florida expansion, the companies said. He was most recently principal consultant to Bank Mortgage Advisory Group, and previously served as national sales manager for nonconforming initiatives at Aurora Loan Services, HomeSide Lending, and EquiCredit Corp. Hurd-Harter also announced the promotion of Earline Veltman to vice president and operations manager.

First Independent Bank, Vancouver, Wash., has reported the acquisition of Qualfund Lending, Bellevue, Wash., which has become First Independent Mortgage.The terms of the transaction were not disclosed. The bank said the mortgage company averaged more than $50 million per month in funding over the past quarter. Roger Jones, president of First Independent Mortgage and the bank's chief financial officer, said the move will give the mortgage company guaranteed funding that doesn't rely on a third party. "It will also give them the ability to make faster decisions with a streamlined qualification process," he said. First Independent Bank has a virtual branch, Indy On-Line, that can be found at http://www.firstindy.com.

Michigan Attorney General Mike Cox has jumped into the legal fray surrounding the Simon Property Group's bid for a hostile takeover of Taubman Centers, disputing a recent federal court ruling that favored Simon.The ruling by U.S. District Court Judge Victoria Roberts deprived the Bloomfield Hills, Mich.-based Taubman of its ability to block the hostile takeover by the Indianapolis-based Simon, the state AG said. He said his brief argues that the judge "erroneously inferred a 'deemed acquisition' concept not found in Michigan law." The case involving the two real estate investment trusts is on appeal to the Sixth Circuit Court of Appeals.

Mid-America Apartment Communities Inc., Memphis, has signed a letter of intent with Blackstone Real Estate Advisors to buy Blackstone's two-thirds ownership stake in their joint venture.Mid-America said it will pay $117 million for all the fixed assets, to be partially funded by the assumption of $79.8 million of debt. Approximately $22 million will be paid to Blackstone for its two-thirds equity share, Mid-America said. The joint venture, which is managed by Mid-America, was formed in 1999 with 10 properties containing 2,793 apartments, the company said. Mid-America can be found online at http://www.maac.net.

The S&P U.S. CMBS delinquency rate, influenced by a few large loans, rose from 1.56% at the end of the first quarter to 1.69% at the end of the second, according to Standard & Poor's Ratings Services.The rate has been trending higher, but its rise has been "well contained" by the volume of new issuance of commercial mortgage-backed securities, said credit analysts Roy Chun and Larry Kay of S&P's Structured Finance Real Estate group. All asset classes had a net increase in delinquencies, the analysts said in the latest edition of CMBS Quarterly Insights. However, S&P said the number of current loans going into special servicing slowed in the second quarter, which could portend lower default levels in the future. Current but specially serviced loans rose 4.7% in the second quarter compared with a 16% increase in the first quarter, said Mr. Chun, a managing director in S&P's Structured Finance Surveillance group. Mr. Chun said CMBS losses are mounting, largely from dispositions of real estate owned. He said the increase could indicate that special servicers are more willing to accept losses because they perceive more risk in holding REO, given the state of the economy and unfavorable outlook for near-term property value increases.

Sales of existing condominiums and cooperatives reached a record seasonally adjusted annual rate of 861,000 in the second quarter, up 4.7% from 822,000 a year earlier, according to the National Association of Realtors.The rate was 828,000 in the first quarter. The previous record was an annual rate of 829,000 units in the fourth quarter of 2002. "The pace of condo sales during the first half of this year is unprecedented, and we should easily set an annual record for 2003," said NAR chief economist David Lereah. "In fact, this will be the eighth consecutive year in which condo and co-op sales set a record, with low interest rates stimulating all sectors of the market." The association also reported that the median existing-condo price was $163,500 in the second quarter, up 15.1% from that of a year earlier. The NAR can be found online at http://realtor.org.

Classes F, G, and H of J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-through certificates, series 1998-C6, have been placed on Rating Watch Negative by Fitch Ratings.The rating agency attributed the actions to interest shortfalls caused by the modification of a Days Inn-Airport loan with a retroactive effective date of January 2003. "As a result, Midland Loan Services LP, the master servicer, who was advancing on the loan during this period, will be taking back $350,000 in advances, as well as approximately $11,000 in advance interest," Fitch reported.