Originations

It remains questionable whether the revised Georgia Fair Lending Act clears up all the concerns that have caused lenders to flee the market.Adam Bass, senior executive vice president of Ameriquest Mortgage Co. and holding company Ameriquest Capital Corp., told attendees at the American Securitization Forum seminar in New York March 12 that the new legal environment for lending in Georgia is "a lot better than it was," but added that "that doesn't mean it's good enough to do business." The ASF can be found online at http://www.americansecuritization.com.

The average 30-year fixed mortgage rate fell to yet another survey-record low of 5.61% for the week ending March 14 from 5.67% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from a survey-record low of 5.01% to 4.93%, while the average rate for one-year Treasury-indexed adjustable-rate mortgages dropped from a survey-record low of 3.76% to 3.68%. Fees and points averaged 0.6 points for 30-year fixed-rate mortgages and ARMs, and 0.5 points for 15-year FRMs. "The escalating tensions within the U.N. over the impending resolution on Iraq and dismal economic news this week sent the stock market tumbling, and with it went bond and mortgage rates," said Amy Crews Cutts, Freddie Mac's deputy chief economist. ".... We expect interest rates for fixed-rate mortgages will stay around 5.7% in the near term -- good news for housing markets, which should be even stronger this year than in 2002 in terms of sales and construction." A year ago, the average 30-year and 15-year fixed rates were 7.08% and 6.59%, respectively, and the average one-year ARM rate was 5.08%, Freddie Mac said. Freddie Mac can be found online at http://www.freddiemac.com.

Standard & Poor's is adding Apartment Investment & Management Co. to the S&P 500 Index.AIMCO, a Denver-based multifamily real estate investment trust, will be added to the REIT component of the S&P 500 following the close of trading on March 13, S&P said. AIMCO, the third-largest multifamily REIT by market capitalization, is replacing AMR Corp., an airline company that is the parent of American Airlines, on the index. AMR is being removed because of low market capitalization and its share price, S&P said. The S&P 500 is widely used as a benchmark for assessing relative performance by the money management industry.

Boston Properties Inc., Boston, has reported the pricing of $300 million of 5.625% senior unsecured notes by its operating partnership, Boston Properties LP.The notes were priced at 99.898 to yield 5.636%. The real estate investment trust said it intends to use the proceeds of the offering to repay secured debt and for general business purposes. The notes have been offered only to "qualified institutional buyers" and to certain foreign investors, Boston Properties said. The office and industrial REIT can be found online at http://www.bostonproperties.com.

New York City's predatory lending statute does not increase the risk to residential mortgage securitizations, according to Moody's Investors Service.Moody's said the statute does not affect the collectability of the loans or create the risk of financial liability for the trusts. The statute, which took effect Feb. 18, differs from many other predatory lending laws in two ways, the rating agency said. "First, the penalty for violation does not impose direct monetary damages on assignees, such as securitization trusts, or void the loan," Moody's said. "Instead, the offending party is prohibited from doing business with New York City if it is a 'predatory lender' within the meaning of the statute. Second, the statute includes a defined safe harbor by which a lender can comply with the law." Moody's can be found online at http://www.moodys.com.

Standard & Poor's has announced that it will resume rating structured finance transactions that include Georgia loans, based on the recently enacted amendment to the Georgia Fair Lending Act.S&P said it will rate deals including Georgia loans originated on or after March 7, 2003 (the date the amendment was signed into law) "in accordance with its criteria in effect at the time of the transactions, including receipt of appropriate representations and warranties related to compliance with the Amended Act." The revised law imposes no liability on buyers of Georgia loans that are covered by the act but are not defined as "high-cost loans," and S&P said it will rate deals containing such loans. However, the law continues to impose liability on buyers of high-cost loans that violate its provisions, S&P said. "Because such liability is now capped, Standard & Poor's will review transactions that propose to include high-cost loans on a case-by-case basis," the rating agency said. ".... All transactions proposing to include high-cost loans must provide for credit support to cover this liability in full." S&P said it will not, for now, rate transactions that include loans governed by the prior act that were originated between Oct. 1, 2002 and March 7, 2003, but that it is reviewing whether to rate such transactions. S&P can be found online at http://www.standardandpoors.com.

The Refinance Index skyrocketed to a record high during the week ended March 7, surpassing the previous record by 2000 points, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.The refi index rose to 8920.9 from 6614.0 the week before, compared with the previous high of 6926.9 recorded last October. This surge powered the Market Composite Index to a record high of 1603.1, shattering the previous record of 1317.0 set last October, the MBA said. On an unadjusted basis, applications overall were up 26.2% on the week and 190.1% from the level recorded a year earlier. Refinancings represented 79.8% of total applications, also a record high (beating the 78.4% recorded in November 2001), while adjustable-rate mortgages accounted for 11.4%. The average contract interest rate for 30-year fixed-rate mortgages fell from a record low of 5.57% to a new record of 5.42%, and points (including the origination fee) increased from 1.46 to 1.55 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

AmeriDream, Gaithersburg, Md., has joined the month-long international celebration of women's role in the workforce, announcing that it has helped about 35,000 women become homeowners by providing downpayment gift assistance.AmeriDream executives said the company is proud "to have helped so many women" while pursuing its mission to expand homeownership rates among underserved borrowers and communities. According to a 2000 Census Bureau report, women generally earn only 73% of what men earn, averaging $13,000 less in annual income.

Standard & Poor's is adding Gables Residential, a Boca Raton, Fla.-based multifamily real estate investment trust, to its S&P Small Cap 600 Index.Gables will replace Corinthian Colleges on the index, S&P said. The change will be effective after the close of trading March 12. "Our research-driven strategy based on economic diversification and forward demographic fundamentals were likely factors that S&P considered in making their decision to add us to the index," said Chris Wheeler, the REIT's chairman and chief executive officer. However, S&P maintains that the additions and deletions of companies to and from an S&P equity index "do not in any way reflect an opinion on the investment merits of the company."

Real estate markets are not likely to hit bottom until late this year, but the worst of the market contraction is past, according to a forecast by PNC Real Estate Finance, Pittsburgh.Nicholas Buss, vice president and director of real estate market research at PNC, says in the company's annual Real Estate Industry Outlook that new construction linked to the "tech-boom hangover" will overshadow any improvement in the demand for space resulting from modest economic growth. "This should position real estate for recovery in 2004, but it will likely be a slow and steady re-emergence," he said. Mr. Buss predicts that the vacancy rate in the office sector will peak at 17% this year and that the apartment sector faces "another challenging year" as overbuilding becomes "a real concern" in a growing number of markets. The company can be found online at http://www.pncrealestatefinance.com.

A study by MGIC Investor Services Corp., Milwaukee, has found that lenders increased their retention rates slightly between November 2001 and November 2002.In November 2001, retention rates were 21.6%; by November 2002, they had increased to 24.5%. "The record $2.5 trillion origination market, 60% of which were refinances, caused stress on the loan processing infrastructure of all servicers," said Mark E. Marple, MGIC's vice president for mortgage banking strategies. "Servicers are increasingly concentrating their efforts to win back previous customers and retain existing customers -- and we are seeing signs of success. For example, when comparing the retail channel to other channels of business, we find that retention rates are nearly 40% higher." In March 2003, retention rates for the month hit just over 15%. But as prepayment rates started to rise, so did servicer portfolio defense mechanisms, allowing them to retain more loans, Mr. Marple said.

Pennsylvania Real Estate Investment Trust, Philadelphia, has sold its multifamily portfolio to Morgan Properties for $420 million in a deal that will seal the company's exit from the multifamily sector and transform it into a retail REIT.The company also reported that it is buying six Philadelphia area retail properties from The Rouse Co. for a total consideration of $548 million. On completion of the latter transaction, PREIT will be the largest retail owner/operator in the Philadelphia market, the REIT said. PREIT said "a substantial portion" of the expected gain from the sale of its multifamily portfolio is expected to meet the requirements for a tax-deferred exchange with the Rouse mall acquisition. As part of the Rouse transaction, PREIT will assume about $285 million of nonrecourse mortgage debt. Upon completion of the two transactions, PREIT's retail portfolio will consist of 28 properties totaling approximately 17.4 million square feet in seven states, PREIT said. The net effect will be to add $0.25 per share in funds from operations for 2003, the company said.

Wells Fargo & Co., San Francisco, has received a preliminary injunction barring the commissioner of the California Department of Corporations from taking action against its mortgage lending subsidiary.Commissioner Demetrios A. Boutris had threatened to suspend Wells Fargo Home Mortgage's license in a dispute between the lender and the state. Prior to the threat, Wells Fargo filed a suit in the U.S. District Court for the Eastern District of California in Sacramento seeking to stop the department from forcing it to make refunds to borrowers over two alleged violations of state law. According to a statement from Wells Fargo, the federal court ruled that the company was likely to prevail in its argument that subsidiaries of a national bank are subject to exclusive regulatory jurisdiction by the Office of the Comptroller of the Currency. "Because the court has ruled that Wells Fargo is likely to prevail on its claim that state licenses are not necessary to conduct our business in California, we will voluntarily surrender licenses issued by the California Department of Corporations," said Pete Wissinger, chief executive of Des Moines, Iowa-based WFHM. "I also want to assure our customers and business partners that we will continue to comply with all state and federal laws that apply to our business."

Thornburg Mortgage Inc., Santa Fe, N.M., has outsourced its retail origination function to Nexstar Financial Corp., St. Louis.This includes providing services to participants (mostly financial planners) in the Thornburg Plus program. "Our corporate philosophy is to outsource to best-in-class companies that can provide exceptional, concierge-level customer service at a competitive cost," said Joseph H. Badal, chief executive of Thornburg Mortgage Home Loans Inc., Thornburg Mortgage's mortgage lending subsidiary. Thornburg originated $2.3 billion in 2002 and expects a 15% to 20% increase in volume this year. Nexstar's online and call center system for Thornburg will use the lender's proprietary underwriting guidelines. Thornburg can be found online at http://www.thornburg.com.

The PMI Group is rolling out a new rate structure for mortgage insurance that will allows homebuyers to finance or pay part of the premium up front.The new split-premium rate structure reduces the monthly MI premium so borrowers can shave $19 to $53 a month off their monthly mortgage payments. "When you are talking about affordability and somebody is right on the edge of qualifying, this can make the difference," said Taia Lockhart, PMI's director of emerging markets. Four lenders are already working on affordable housing products that use the split-premium rate structure, she said. The upfront premium ranges from 1.5% to 2.5% on loans with loan-to-value ratios of 90% or higher. But the borrower can use gifts from family members, downpayment assistance from nonprofit organizations and cities, and seller concessions to pay the upfront premium.

Simplicity Mortgage Corp., a Midwest residential mortgage broker, has announced the completion of its merger with DMI Mortgage, Des Moines, Iowa.The company said the merger marks the beginning of its Midwest expansion, including additional state licenses and new branch locations. The new management team of Simplicity Mortgage includes Terry McCombs, president and chief executive officer, and regional vice presidents Eric Busch (Des Moines), Matt Eller (Minnetonka, Minn.), Tom Hall (Davenport, Iowa), and Robert Shear (Rockford, Ill.). Simplicity said it plans to add nine state licenses to its portfolio over the next 30 days, bringing to 15 the number of states in which the company can operate. The company’s 18 branches now employ 125 mortgage professionals in three states -- Illinois, Iowa, and Minnesota. Mr. McCombs said Simplicity will focus on originating loans, while satisfying the regulatory requirements to operate as both a mortgage banker and a mortgage broker. The company can be found online at www.simplicitymortgage.com.

AARP Georgia has blasted the newly enacted revision of the Georgia Fair Lending Act, terming the March 7 bill signing "the culmination of a seven-week misinformation campaign against Georgia consumers."The retirees' lobby rejected the notion that the law, which amends certain GFLA provisions and repeals others, will be good for "those vulnerable to scam artists and unscrupulous lenders." Kathy Floyd, AARP Georgia's advocacy director, said the group had endorsed a compromise measure that "addressed secondary market concerns and kept strong, i.e. real, consumer protections against predatory lenders," but that Georgia Gov. Sonny Perdue refused to discuss the compromise with consumer groups. Ms. Floyd termed assertions that the mortgage market was drying up in Georgia as a result of GFLA "totally fabricated." The new legislation repeals the category of "covered loans," but does not change the "high-cost home loan" category. For the secondary market, it repeals assignee liability for violations, so long as assignees have policies prohibiting the purchase of high-cost home loans. It requires the seller to represent and warrant that the loans being purchased are not high-cost home loans.

Fannie Mae has confirmed that it has reached an agreement with Berkadia Equity Holdings Inc. to service the manufactured housing securities the agency owns or guarantees from Conseco Finance, St. Paul, Minn.Berkadia is a venture between Berkshire Hathaway, Omaha, Neb., and Leucadia National Corp., New York, that lost the bidding war for Conseco Finance to CFN Investment Holdings LLC. A Fannie Mae spokeswoman said Berkadia has agreed to use Fannie Mae's servicing protocol. In return, Fannie Mae agreed to waive the securitization adequate protection lien, to increase the servicing fee to 125 basis points, and to designate only Berkadia as the successor servicer. Attempts to reach an agreement with CFN were not successful, she added. Fannie Mae owns or guarantees close to $10 billion in manufactured housing securities, and Conseco Finance services 70% of those, the spokeswoman said. CFN consists of J.C. Flowers & Co. LLC, Birmingham, Ala., and Fortress Investment Group LLC and Cerberus Capital Management, both of New York. The transaction still needs the approval of the Bankruptcy Court for the Northern District of Illinois in Chicago.

Weingarten Realty Investors, Houston, has reported the sale of $136 million of medium-term notes in seven transactions so far this year.The notes carry a weighted average maturity of 11.4 years and a weighted average interest rate of 5.4%, Weingarten said. Proceeds were used to pay down amounts outstanding under the real estate investment trust's $350 million revolving credit facility. "The issuance of these notes brings our short-term debt to only 16% of total debt, one of the lowest such ratios in the industry," said Drew Alexander, Weingarten's president and chief executive officer. The REIT can be found online at http://www.weingarten.com.

Three classes of Commercial Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates, series 1997-ML1, have been downgraded by Moody's Investors Service.The downgrades were as follows: class F-1, from Ba3 to B1; class F-2, from B1 to B2; and class G, from Caa2 to Caa3. The ratings on nine other classes in the deal were affirmed. Moody's attributed the downgrades to the poor performance of the Shilo Inns and Newton Oldacre McDonald loans, which represent 21.4% of the pool. The certificates are collateralized by 11 mortgage loans secured by 51 office, hotel, retail, and multifamily properties in 18 states, and about 59.7% of the pool is concentrated in Pennsylvania, Texas, Massachusetts, California, and Minnesota, Moody's said. Moody's can be found online at http://www.moodys.com.