Originations

Standard and Poor’s will continue to rate structured finance transactions containing mortgage loans from Arkansas after the state's anti-predatory-lending law goes into effect July 16, the rating agency has announced.Among the deals that S&P said it will rate are those with loan pools that include high-cost home loans, despite the assignee liability provision in the Arkansas Home Loan Protection Law. S&P said it will require third-party verification from sellers who maintain that there are no high-cost loans in their loan pools. It will require even stricter criteria for pools containing high-cost loans, to ensure that none of the loans violate the Arkansas law. S&P can be found on the Web at http://www.standardandpoors.com.

American Home Mortgage Holdings Inc., Melville, N.Y., has agreed to acquire Apex Mortgage Capital Inc. for approximately $200 million in an all-stock transaction.The acquisition will convert American Home Mortgage into a real estate investment trust, changing the company's financial platform and tax structure and adding a complementary line of business to American Home's operations. The acquisition gives American Home a distribution channel to securitize debt and sell to the secondary market, as well as to set up a proprietary fund of its own. American Home can be found online at http://www.mortgageselect.com.

Housing affordability in California was down by one percentage point in May from a year earlier, according to the California Association of Realtors.Housing affordability stood at 27% in May, down from 28% a year earlier and unchanged from the level recorded in April, CAR said. The index indicates the percentage of households that can afford to buy a median-priced home in California, which cost $369,290 in May. The minimum household income needed to buy a median-priced home was $84,980, up from $81,510 a year earlier, CAR said. (The figures are based on a 30-year fixed-rate mortgage at a 5.62% interest rate, assuming a 20% downpayment.) CAR can be found on the Web at http://www.car.org.

The Mortgage Bankers Association of America and the Commercial Mortgage Securities Association are seeking to file a friend-of-the-court brief with the New York state Supreme Court in support of CIGNA Investments and others in litigation involving terrorism insurance.The trade associations are asking the court to reconsider a June 3 decision of the Appellate Division in the litigation with Four Times Square Associates. The decision, relating to terrorism insurance on a $430 million commercial mortgage on the Conde Nast Building in Times Square, "invalidates legal remedies permitted under the loan documents," the associations said. The court had ruled that CIGNA, the mortgage lender on the building, could not divert money from the building's accounts to pay for terrorism insurance, since this would damage the goodwill of the owner. The groups argue that the economics of commercial mortgage transactions will be "severely undermined if the decision is allowed to stand" because the loan document provisions in that case were not able to be enforced. The MBA is concerned that the resulting uncertainty could restrain investors from accessing their collateral and potentially "threaten credit availability" to properties in New York. The CMSA says the decision "undermines fundamental arrangements upon which the liquidity and efficiency of the commercial mortgage-backed securities market depend." The groups can be found online at http://www.mbaa.org and http://www.cmbs.org.

The mortgage industry is not likely to have a "soft landing" when the current refi boom ends, according to John Courson, chairman of the Mortgage Bankers Association of America.Speaking at the Western Secondary Market and Mortgage Bankers Conference in San Francisco, Mr. Courson said, "My fear is we will not do any better this time coming out of it than we did the last two times." If there is not a soft landing, there will probably be a lot of shake-out in the industry, Mr. Courson said. He pointed out that experts such as Fannie Mae economist David Berson see refinancings falling from $2.4 trillion this year to $800 billion in 2004. There is "an awful lot of infrastructure" that will be affected by such a dropoff, he said, and mortgage bankers could see a profit squeeze as a result. "A large part of the industry could have a difficult time coming out of the refi boom," Mr. Courson said. The MBA chairman is the president and chief executive of Central Pacific Mortgage, a 100-branch retail lender operating in small markets in 20 states.

Health Care REIT, Toledo, Ohio, is planning to sell approximately 1.58 million shares of its common stock to certain clients of Cohen & Steers Capital Management.The real estate investment trust said it expects to generate net proceeds of approximately $48 million from the sale, which will be used to invest in additional health care properties. The REIT has also completed a sale of four million shares of 7.875% preferred stock, generating approximately $96.6 million in net proceeds. A portion of these proceeds will be used to redeem three million shares of the company's 8.875% preferred stock, the REIT said. Health Care REIT can be found on the Internet at http://www.hcreit.com.

Community Central Bank, Mount Clemens, Mich., has agreed to purchase substantially all the assets and liabilities of North Oakland Community Bank for approximately $1.3 million.David A. Widlak, chairman and chief executive officer of Community Central Bank Corp., Community Central Bank's holding company, said the planned acquisition is aimed at spreading the company's banking and mortgage banking operations to the Northern Oakland County region. The holding company is also the parent of Community Central Mortgage Co. LLC. North Oakland is a subsidiary of Michigan Community Bancorp Ltd. Community Central can be found on the Web at http://www.communitycentralbank.com.

CommunityBanks Inc., Harrisburg, Pa., has announced the acquisition of Erie Financial Group Inc., a mortgage banking company with offices in York, Pa., and Gaithersburg, Md.The terms of the deal were not disclosed. Erie will continue to operate as a subsidiary of CommunityBanks, and Sandy Korman will remain as its president and chief executive officer, CommunityBanks said. Mr. Korman will also become senior vice president of CommunityBanks and oversee the bank's residential mortgage operations. The company can be found on the Web at http://www.communitybanks.com.

The Mortgage Bankers Association of America is the most accurate economic forecaster among active participants in the Blue Chip Economic Indicators Survey, according to a study by the Federal Reserve Bank of Atlanta.The Atlanta Fed examined the accuracy of forecasts of the 70 major investment banks, corporations, consulting firms, trade associations, and academic institutions that participated in the monthly Blue Chip Survey between 1986 and 2001, and found that MBA forecasts scored highest among those of active participants, the MBA said. The consensus forecast in the Blue Chip Survey ranked ahead of all the individual forecasters. Other organizations ranked in the top 10 by the Atlanta Fed included U.S. Trust Co., CoreStates Financial Corp., Northern Trust Co., and Bank of America.

Countrywide Home Loans Inc., Calabasas, Calif., has introduced an adjustable-rate mortgage loan that is a first-lien home equity line of credit.The FlexSaver ARM loan has a 25-year term, with an initial draw period in the first five years that may be extended for an additional five years, Countrywide said. During the draw period, the minimum monthly payment due is the interest-only amount. The loan, which can be for amounts as high as $1 million, is fully amortized during a 15-year repayment period, the company said. "The FlexSaver ARM closely mirrors a traditional first-lien mortgage, but since it is a first-lien HELOC, borrowers have a lot more flexibility and control over their monthly payments," said Vijay Lala, Countrywide's senior vice president of product development and support. The FlexSaver ARM offers three payment options: using the loan's credit balance to make the monthly payment; paying the minimum balance due; or paying the minimum plus an additional amount to reduce the principal balance. The company can be found online at http://www.countrywide.com.

The average 30-year fixed mortgage rate climbed to 5.52% for the week ending July 11 from 5.40% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 4.75% to 4.85%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages rose from 3.49% to 3.55%. Fees and points averaged 0.6 points for fixed-rate mortgages and 0.7 points for ARMs. "Although mortgage rates rose this week, they are still about 1% lower than they were at this time last year, which has led to the current frenzy of refinancing," said Frank Nothaft, Freddie Mac's chief economist. "As a matter of fact, over the first six months of the year, applications for refinancing are running over 100% above last year's pace, according to the Mortgage Bankers Association of America." A year ago, the average 30-year and 15-year fixed rates were 6.54% and 6.00%, respectively, and the average one-year ARM rate was 4.66%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Arbor Realty Trust Inc., a newly formed real estate investment trust based in Uniondale, N.Y., has announced the completion of a private financing.The financing included a private placement of the company's units, each consisting of five shares of common stock and one warrant to purchase one share of common stock, Arbor said. The REIT also reported a concurrent equity contribution by Arbor Commercial Mortgage LLC, which formed Arbor Realty to invest in real-estate-related structured finance assets. Gross proceeds from the private financing and the equity contribution totaled approximately $165 million, the REIT said. Arbor Realty will be managed by Arbor Commercial, and Ivan Kaufman will be its chief executive officer.

The Lighthouse Group, Lakewood, N.J., is acquiring Prime Retail, a Baltimore-based retail real estate investment trust, for a total consideration of about $638 million, including the assumption of $523 million of debt.Under the terms of the acquisition agreement, the series A preferred stockholders of Prime Retail will receive $16.25 per share in cash; the series B preferred stockholders, $8.66 per share; and the holders of common stock, $0.18 per share. Prime said its board of directors, as well as a special committee made up of "disinterested members" of the board, have approved the merger agreement and are recommending that shareholders vote in favor. Prime will continue to operate out of Baltimore. David Lichtenstein, president and chief executive officer of Lighthouse, said the merger will "provide a solid platform for Lighthouse to further expand its real estate holdings into the retail arena," an area in which the company sees "great opportunity for the future."

The Market Composite Index, an overall measure of mortgage applications, fell to 1346.3 on a seasonally adjusted basis during the holiday-shortened week ended July 4 from 1635.5 the week before, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On a seasonally adjusted basis, the Purchase Index decreased from 438.4 to 414.1, and the Refinance Index declined from 8599.1 to 6768.3. "The number of refinance applications fell back to the levels we saw at the beginning of May," said Jay Brinkmann, the MBA's vice president of research and economics. "So while there was a decline, it was a decline from unbelievably high levels to merely extraordinarily high levels." Refinancings represented 72.1% of total applications, down from 75.6% the previous week, while adjustable-rate mortgages accounted for 13.6%. The average contract interest rate for 30-year fixed-rate mortgages rose from 5.23% to 5.37%, and points (including the origination fee) increased from 1.45 to 1.46 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

Meanwhile, Freddie Mac is now predicting a home sales record for this year even higher than that of a recently revised forecast by the National Association of Realtors.In its July economic outlook, the government-sponsored enterprise foresees total single-family home sales of 6.91 million units, which would exceed last year's record of 6.54 million by 5.6%. (The NAR is forecasting 5.73 million sales of existing single-family homes in 2003, and 1.0 million sales of new homes, for a total of 6.73 million.) Freddie Mac is also forecasting economic growth of only 1.5% for the second quarter, but with significantly higher growth of 3.5% to 4.0% in the second half and in 2004. As for mortgage rates, the GSE expects 30-year fixed rates to average 5.3% for the rest of the year and 5.6% next year. Freddie Mac can be found online at http://www.freddiemac.com.

Home sales are expected to remain strong over the next 18 months, but refinancings are really going to tumble next year, according to a panel of housing economists.David Seiders, chief economist of the National Association of Home Builders, said home sales will set new records this year, but he expects sales to decline by only 2.1% in 2004. Meanwhile, refis could hit a record $2.6 trillion this year, Fannie Mae chief economist David Berson told a housing forum sponsored by the Homeownership Alliance. But he expects refis will "tumble" to $850 billion in 2004. Commercial bankers are indicating that refinancings "may have peaked in May," said Paul Merski, chief economist for the Independent Community Bankers of America. The economists expect economic growth to pick up in the second half. However, they indicated that the impact on mortgage rates would be gradual, and that the 30-year fixed mortgage rate would not exceed 5.7% at the end of the year. Freddie Mac chief economist Frank Nothaft said he believes the default rate (at least 90 days past due or in foreclosure) on conventional prime mortgages will peak in the second half and come down in 2004. Mr. Berson said, "We are right at the peak."

United Guaranty Corp., Greensboro, N.C., has hired Todd Chamberlain as national accounts vice president for its domestic residential group.Mr. Chamberlain will manage United Guaranty’s relationships with all government-sponsored enterprises, as well as Charter One Mortgage Corp. and BB&T. He joins the mortgage insurer from American Home Mortgage Holdings, Melville, N.Y., where he served as executive vice president of production support. While at AHMH, a nondepository mortgage banking firm, Mr. Chamberlain managed national recruiting, training, marketing, and Internet strategy. UGC can be found online at http://www.ugcorp.com.

CenterPoint Properties Trust, Oak Brook, Ill., has renewed its $350 million unsecured revolving line of credit that was due to expire in October 2003.The industrial real estate investment trust said the interest rate on the extended facility is 80 basis points above the London interbank offered rate, comparing favorably with the previous rate of LIBOR plus 100 bps. The new maturity date on the line is June 2006. Banc One Capital Markets is the lead arranger of the facility, and Bank One is the administrative agent.

Banc of America Large Loan Inc. commercial mortgage pass-through certificates series 2001-WBM has been downgraded from Baa2 to Baa3 by Moody's Investors ServiceMoody's attributed the action to its downgrade of reinsurer Royal Indemnity Co., whose insurance financial strength rating was lowered to Baa3 by Moody's on July 4. The collateral for the certificates is a leasehold mortgage on the Waikiki Beach Marriott Resort in Honolulu. Moody's said Financial Structures Ltd. issued a debt service insurance policy that guarantees timely payment of all principal and interest on the certificates. Royal entered into a reinsurance agreement with FSL under which Royal guarantees that FSL will perform all its obligations under the primary debt service policy in a timely manner, the rating agency said.

Home sales this year will beat earlier projections and easily exceed last year's record for both new and existing homes, according to the National Association of Realtors.David Lereah, the NAR's chief economist, said lower-than-expected mortgage rates are the primary factor behind the revised forecast, which now calls for 5.73 million resales in 2003, up 2.9% from a record 5.57 million in 2002. New-home sales are now projected at 1.0 million, up 3.1%, and housing starts are expected to rise 0.5% to 1.71 million. "Mortgage interest rates appear to have reached bottom and are likely to rise slowly to the range of 5.7% for a 30-year fixed-rate by the end of the year," Mr. Lereah said. "With a tight inventory of homes available for sale, home prices will continue to rise above historic norms." The NAR is forecasting a 3.8% rise in the national median price for new homes this year, to $194,700, and a 6.0% increase in median resale prices, to $167,800. The NAR can be found online at http://realtor.org.