Originations

Mortgage companies added 3,000 new employees to their payrolls in the month of April as the mortgage boom shows few signs of slowing anytime soon.The U.S. Bureau of Labor Statistics reported that jobs in the mortgage banker/broker sector increased from 421,800 in March to 424,800 in April. In the past 12 months, employment in the mortgage sector grew by 18%. "From January 2001 to February 2003, this [mortgage] industry added 123,000 workers, accounting for all the net growth in the finance industry," BLS said in its April employment report. Meanwhile, the unemployment rate rose from 5.8% in March to 6.0% in April. BLS reported that 48,000 workers lost their jobs in April. "This followed two months of job losses totaling 477,000," the BLS said. The agency can be found online at http://stats.bls.gov.

H&R Block Mortgage Corp., Kansas City, Mo., has announced the appointment of David J. Vida Jr. as vice president of prime secondary marketing and finance and Wilbur A. McKesson Jr. as vice president of affordable housing.Mr. Vida will be responsible for the company’s prime and government loan product development and delivery strategies, and for financial planning and coordination, H&R Block Mortgage said. Before joining the company, Mr. Vida was executive vice president and chief financial officer at Delphi Global Solutions, a technology company, and he was a co-founder and president of City Mortgage Services. Mr. McKesson will be responsible for developing and implementing an affordable housing business plan that focuses on the mortgage needs of H&R Block tax clients. He was most recently senior vice president and director of emerging markets at CitiMortgage.

Colonial National Mortgage, a division of Fort Worth, Texas-based Colonial Savings, has announced the introduction of a corporate mortgage program that companies can offer employees who are buying or refinancing a home.The Colonial Select Group Mortgage Program offers, among other benefits: discounted lender fees; preferred rates on appraisals, credit reports, and service fees; discounted personal loans and a free checking account from Colonial Savings for the life of the mortgage loan; and free home-buying seminars. "Making the homebuying process easier, more affordable, and with additional value is a great way to provide a new benefit to employees without adding additional expense to the company," said Jim DuBose, president of Colonial Savings. The company can be found online at http://www.colonialsavings.com.

In an attempt to add further claims to their Michigan lawsuit against Taubman Centers, the Indianapolis-based Simon Property Group and Westfield America, the U.S. subsidiary of an Australian property trust, are alleging a "breach of fiduciary duties" by the Bloomfield Hills, Mich.-based Taubman.According to the two retail real estate investment trusts, which are engaging in an attempt to take over Taubman, the Taubman board has improperly used the Taubman Centers share repurchase program to increase "the relative voting power" of the Taubman family prior to an election of board members. Simon and Westfield said the Taubman board is further breaching its fiduciary duties to Taubman shareholders by appointing "its own handpicked director," Myron Ullman III, for a board seat left vacant by the resignation of Alfred Taubman in December 2001. (The Taubman patriarch was jailed after being linked to price-fixing activity at Sotheby's art auctions). Taubman is trying to ensure that the seat will not be up for election until 2005, improperly extending its three-year term into a six-year term, Simon and Westfield said. The action is invalid under Taubman's charter and by-laws and under Michigan law, the two REITs allege. Taubman had not returned calls seeking comment by MortgageWire's deadline.

Wells Fargo Home Mortgage Inc., Des Moines, Iowa, has teamed up with Financial Freedom Senior Funding Corp., Irvine, Calif., to offer what the companies say is the only reverse mortgage product specifically designed for high-value homes.The Financial Freedom Cash Account provides access to millions of dollars in equity, whereas a typical reverse mortgage limits the amount that can be withdrawn to less than $325,000, the companies said. Reverse mortgages, which are available to persons 62 and older who own their own home, enable homeowners to withdraw equity and receive tax-free benefits without selling their home, giving up title, or taking on a new mortgage payment. "With the increased awareness of reverse mortgage programs among senior homeowners with high home values, many are looking to explore the opportunities which only jumbo reverse mortgages can provide," said Jeffrey S. Taylor, a vice president in Wells Fargo Home Mortgage's senior products group. "These homeowners may enjoy the benefits of a higher credit line, wealth transfer, and funding for health care or medical treatment." The companies can be found online at http://www.financialfreedom.com and http://www.wellsfargo.com.

A decline of nearly 4 basis points sent the Eleventh Federal Home Loan District Cost of Funds Index to a new record low in March.The Federal Home Loan Bank of San Francisco said the index for March was 2.210%, compared with 2.257% in February. The current index is 44 bps below where it was one year ago, and 63 bps below its peak in July 2002. COFI lags other interest rates by three to six months. In March 2002 (about five months before COFI peaked), the rate on the six-month certificate of deposit was 94 bps higher than it is now, according to data from the Federal Reserve Bank of St. Louis. That was the most recent peak for that product. In November 2002, the six-month CD rate was down 76 bps (a drop of nearly 30 bps from October). This indicates that COFI (which is a weighted average of the rates paid by thrifts for mortgage funds, including deposits) could drop another 15-20 bps. If so, COFI could be threatening to break the 2.0% barrier by the end of the summer, if not sooner.

The average 30-year fixed mortgage rate fell to 5.70% for the week ending May 2 from 5.79% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.12% to 5.03%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages decreased from 3.79% to 3.74%. Fees and points averaged 0.6 points for all three mortgage categories. "Mortgage rates dropped for the third week in a row, bringing rates closer to the 40-year record low that was set in March of this year," said Frank Nothaft, Freddie Mac's chief economist. "As a matter of fact, mortgage rates have fallen enough over the last few months that families who refinanced in 2001 are now able to do so again, according to the results of Freddie Mac's quarterly refinance review released [April 30]." A year ago, the average 30-year and 15-year fixed rates were 6.78% and 6.26%, respectively, and the average one-year ARM rate was 4.75%, Freddie Mac said.

Fannie Mae's charter as a government-sponsored enterprise is "a balancing of pluses and minuses," according to Franklin D. Raines, the GSE's chairman and chief executive officer.Mr. Raines made the comment in response to a question at the UBS Warburg Global Financial Services Conference in New York, asking whether Fannie Mae would ever consider giving up its GSE status. If the minuses began to outweigh the pluses, he would have "a fiduciary duty" to the company's stockholders to do something about that, Mr. Raines said. "The burdens on us are not so overwhelming that it makes it impossible to raise private capital," he continued. Later, at the breakout session, he was asked about Fannie Mae's battles with opposition groups in Washington. Mr. Raines said these groups have hired lobbyists "who are being paid to stir the pot," but that they are not making any progress. FM Watch is losing supporters, he continued, but he stopped short of declaring victory over the group. Fannie Mae can be found online at http://www.fanniemae.com.

MFA Mortgage Investments Inc., New York, has announced the pricing of 6.75 million shares of MFA stock at $9.20 per share.Net proceeds are expected to total approximately $58.4 million. The company said it has granted the underwriters a 30-day option to buy up to approximately 1.01 million additional shares to cover any overallotments. UBS Warburg LLC was the lead underwriter, and the co-managers were Friedman Billings Ramsey & Co. Inc. and RBC Capital Markets Inc. MFA, a real estate investment trust that invests in adjustable-rate mortgage-backed securities, can be found online at http://www.mfa-reit.com.

Lexington Corporate Properties Trust, New York, has announced an agreement to sell 4.5 million of its common shares to Wachovia Securities, with net proceeds of $16.44 per share.The real estate investment trust said it plans to use the net proceeds of approximately $74 million to repay debt, to fund future acquisitions, and for general business purposes. Wachovia is the sole underwriter. The REIT can be found on the Web at http://www.lxp.com.

Nationwide Health Properties Inc., Newport Beach, Calif., has priced a private placement of $115.5 million of common stock to a number of large institutional investors on behalf of certain client accounts and the Teachers Insurance and Annuity Association of America.NHP, a real estate investment trust, said 9.625 million shares will be sold at $12 per share and will yield net proceeds of approximately $113 million, which will be used to reduce the company's debt. Cohen & Steers Capital Advisors acted as placement agent for the transaction. NHP also declared a common stock dividend of $0.37 per share for shareholders of record on May 16, but announced that it plans to reduce the dividend in the future "to take into account the effects of the equity transaction and to establish a more conservative dividend payout." The REIT can be found on the Web at http://www.nhp-reit.com.

Weingarten Realty Investors, Houston, has announced the adoption of several governance initiatives, including the expensing of stock options.Weingarten, a real estate investment trust, said its board of directors approved the expensing of stock options as of Jan. 1, and eliminated the ability to re-price such options. Other governance initiatives include the regular scheduling of executive sessions for independent trustees; the adoption of formal annual evaluations of the performance of the board and of individual trustees; the adoption of a set of governance policies; and the formalization of a code of conduct and ethics for Weingarten managers, officers, and associates. The REIT can be found online at http://www.weingarten.com.

The Market Composite Index, an overall measure of mortgage applications, fell to 1050.8 on a seasonally adjusted basis during the week ended April 25 from 1055.8 the week before, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were down 0.3% on the week but up 87.7% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index fell from 359.9 to 356.0, and the Refinance Index fell from 5103.9 to 5092.0. Refinancings represented 68.4% of total applications, unchanged from the previous week's level, while adjustable-rate mortgages accounted for 14.3%. The average contract interest rate for 30-year fixed-rate mortgages fell from 5.67% to 5.51%, and points (including the origination fee) increased from 1.44 to 1.47 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

Berkshire Income Realty Inc., Boston, a recently formed real estate investment trust, has announced that its 9% series A cumulative redeemable preferred stock is now trading on the American Stock Exchange.The REIT said the stock began trading April 29 under the symbol BIR. Berkshire, which was formed to acquire, own, and operate multifamily residential properties, can be found on the Web at http://www.berkshire-group.com.

Urstadt Biddle Properties, a Greenwich, Conn.-based real estate investment trust, has announced that it is proposing to offer up to $40 million of a new series C of senior cumulative preferred stock in a private offering.The REIT said the net proceeds would be used to acquire income-producing properties consistent with its business strategy and to fund renovations or capital improvements to existing properties.

Equity Office Properties Trust, the largest real estate investment trust by market capitalization, has reported net income of $141.7 million ($0.35 per share) for the first quarter, down from $201.4 million ($0.48 per share) for the first quarter of 2002.The Chicago-based office REIT attributed the decline to lower occupancy levels in its portfolio, lower lease termination fees, and asset sales of nearly $600 million since Jan. 1, 2002. "We are anticipating a slow recovery starting in the latter part of 2003," said Richard Kincaid, EOPT's president and chief executive officer. "We continue to take advantage of the very strong property market by selling assets and maintaining a high level of liquidity." Early lease terminations occurring during the first quarter affected approximately 1.8 million square feet in office portfolio occupancy, the REIT said. EOPT can be found online at http://www.equityoffice.com.

The performance of large loans in certain commercial mortgage-backed securities deals is a matter of growing concern, especially for CMBS transactions with so-called rake structures, according to Fitch Ratings.Fitch senior director Mary MacNeill said the rating agency's concerns stem from the declining performance of such loans in large-loan deals, as well as in fusion and single-borrower deals. "In particular, 'rakes' present a problem because while the 'rake' serves as subordination to the loan it supports, a significant drop in performance in one large loan can translate into bond downgrades or Rating Watch Negative placement on the rake as well as the pooled portion of the trust." In a rake structure, the A notes are pooled into the proceeds of a deal, but the B notes (and other classes of subordinated notes) are carved out as a separate tranche, Ms. MacNeill said. "There is more event risk with rake structures," she said. The rating agency said it reviewed 102 CMBS deals in the first quarter, affirming 671 tranches in 73 deals, downgrading 35 tranches in 15 deals, and upgrading 29 tranches in 14 deals. "While downgrades for the first quarter exceeded upgrades, Fitch Ratings expects this trend to reverse for the remainder of the year, even as downgrades continue to rise," Ms. MacNeill said. Fitch can be found online at http://www.fitchratings.com.

United Financial Mortgage Corp., Oak Brook, Ill., has announced an agreement to acquire Portland Mortgage Co., a privately held retail and wholesale mortgage banker based in Portland, Ore.The terms of the deal were not disclosed. Ron Rudy, the founder of Portland Mortgage, will remain as president of the company. Portland Mortgage originated $476 million in mortgage loans in 2002, UFMC said. "This acquisition will provide us with greater visibility in the Northwestern United States while adding significantly to our revenues and net income," said Steve Khoshabe, UFMC's president and chief executive officer. UFMC can be found on the Internet at http://www.ufmc.com.

An executive at Chase Home Finance says the company has stayed completely out of the "high-cost loan" market despite the fact that one of its goals is to invest more heavily in high-margin loan channels."We have never done a high-cost loan," said Sam Cooper, executive vice president and B&C home equity executive at the company, referring to a category of more highly regulated lending that various state and local laws define in nonstandard ways. Mr. Cooper said the regulations have subjected certain lenders to more scrutiny than others, leading to a business environment that is "not a level playing field." Stephen J. Rotella, Chase Home Finance's president and chief executive officer, said he would favor a national standard over the emerging patchwork of high-cost loan laws. Currently, "good lenders are being squeezed" because of existing laws, he said.

Countrywide Financial Corp., Calabasas, Calif., has reported record earnings of $326 million ($2.44 per share) for the first quarter, up 95% from $168 million ($1.32 per share) a year earlier.Pretax earnings by the company's mortgage banking operations totaled $354 million in the first quarter, up 85% from $192 million in the first quarter of 2002. "This marks the second consecutive quarter in which fundings surpassed the $100 billion mark and exceeded loan portfolio prepayments by over $50 billion," said Angelo R. Mozilo, Countrywide's chairman and chief executive officer. "Our servicing portfolio has surpassed $500 billion, driven almost exclusively by our internal production efforts." The servicing portfolio stood at $355 billion in March 2002. Mr. Mozilo also pointed to the expansion of the company's new business lines, which achieved pretax earnings of $170 million in the first quarter, representing 32% of total pretax earnings. The company can be found online at http://www.countrywide.com.