Originations

January was the third-best month ever in terms of loan production for Countrywide Financial Corp., Calabasas, Calif.Loan fundings reached $33.7 billion, an increase of 127% from the $14.8 billion funded in the same month last year, the company reported. Purchase fundings were $7.8 billion, up 61% from $4.8 billion in January 2001. In 12 months, Countrywide's servicing portfolio grew by 37%, from $342 billion to $469 billion at the end of January. As for the future, the pipeline of loans in progress as of Jan. 31 totaled $48.2 billion, up 110% from that of a year earlier, the company said. Countrywide can be found online at http://www.countrywide.com.

Two classes of Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1997-D5, have been downgraded by Fitch Ratings and will remain on Rating Watch Negative.The downgrades were as follows: class B-1, from B-plus to B; and class B-2, from B to CCC. In addition, classes B-3, B-4, and B-5 remain on Rating Watch Negative, and the ratings on 13 other classes of the same series were affirmed. Fitch attributed the downgrades to the increased number of loans of concern and expected losses on existing loans of concern. "There are several old Builder's Square properties and Kmart properties whose leases to Kmart Corp. were rejected in bankruptcy," Fitch said. "The aggregate loss severity on the loans secured by these properties is expected to be in excess of 50% of the loan amount." Fitch can be found online at http://www.fitchratings.com.

Favorable mortgage interest rates should help maintain a strong housing market this year, according to the National Association of Realtors.In the association's February economic and housing forecast, NAR chief economist David Lereah said the organization is predicting existing-home sales of 5.40 million units this year, second only to the record 5.56 million units in 2002, and 959,000 new-home sales, down modestly from last year's record of 976,000. "Growth in the U.S. gross domestic product should rise to 2.9% this year from 2.4% in 2002; however, we project the GDP will pick up steam and reach an annual growth rate of 4.1% in the fourth quarter," Mr. Lereah said. "The silver lining will be a continuation of affordable mortgage interest rates, especially during the first half of this year, which will help to sustain the strong momentum we currently have in the housing market." The NAR economist said he expects the 30-year fixed mortgage rate to average 6.2% in the first half before rising to 6.6% in the fourth quarter. The NAR can be found on the Internet at http://realtor.org.

Mortgage industry veteran David S. Loeb, a co-founder of IndyMac Bancorp Inc., Pasadena, Calif., has retired as chairman of IndyMac as a result of health concerns.Mr. Loeb, 78, has been chairman of IndyMac since its inception in 1985 and was also a co-founder of Countrywide Financial Corp. in 1969. He will serve in the honorary capacity of chairman emeritus of IndyMac, the holding company for IndyMac Bank FSB, the company said. IndyMac's board of directors has appointed Michael W. Perry, the company's vice chairman and chief executive officer, to replace Mr. Loeb as chairman. Mr. Perry praised Mr. Loeb's "wisdom, foresight, and industry experience spanning more than four decades" for their "invaluable influence" on the company. IndyMac Bank can be found online at http://www.indymacbank.com.

New Century Financial Corp., Irvine, Calif., has entered into three forward commitments to sell $2.6 billion of its production.The commitments will provide the company with an exit strategy for its January volume and most of its February originations, New Century said. "By locking in loan sale prices, we mitigate our future interest rate risk and protect our future profit margins, which we expect to favorably influence our overall financial results for the first quarter of 2003," said Kevin Cloyd, president of New Century's secondary marketing unit, NC Capital Corp. NC Capital has also completed a $494 million asset-backed securitization containing five classes of certificates with a face value of $484 million. Credit enhancement was provided through excess spread, over-collateralization, and subordination. New Century can be found online at http://www.ncen.com.

Ramco-Gershenson Properties Trust, Southfield, Mich., will replace IRT Property Co. in the S&P REIT Composite Index after the close of trading Feb. 12, Standard & Poor's has announced.S&P said the reason for the change is that IRT is being acquired by Equity One. Ramco-Gershenson specializes in community shopping centers.

CarrAmerica Realty Corp., Washington, has called for the redemption of 2.0 million shares of its 8.57% series B cumulative redeemable preferred stock at $25 per share plus accrued and unpaid dividends.The company said the redemption, representing about 69.3% of the outstanding series B preferred stock, will be made on an approximately pro rata basis from all holders. Including accrued and unpaid dividends (without interest) from March 1, 2003, through the March 18 redemption date, the redemption price will total about $25.11 per share. Citibank NA will be the paying agent. CarrAmerica, which owns, operates, and develops office properties in 12 markets around the country, can be found on the Web at http://www.carramerica.com.

Capital Trust Inc., New York, has announced that it will elect to be taxed as a real estate investment trust for the current year and that it has modified its investment management venture with Citigroup Inc.The company said it will seek shareholder approval of certain charter amendments consistent with its REIT election and of a proposed one-for-three reverse stock split. Capital Trust cited various steps it has already taken to qualify as a REIT. Stichting Pensioenfonds ABP, a Netherlands-based pension fund, has purchased 1.5 million shares of common stock from Capital Trust's largest shareholders to address ownership concentration issues, Capital Trust said. In addition, the company has organized all its investment management activities into CT Investment Management Co., which will operate as a taxable REIT subsidiary of Capital Trust. The company also settled certain interest rate hedge liabilities and wrote off certain deferred tax assets. Capital Trust said it expects to report a loss of approximately $14 million for the fourth quarter and of approximately $10 million for 2002. Regarding its venture with Citigroup, the company said it has acquired warrants to purchase 8.5 million shares of Capital Trust's common stock from Citi affiliates.

The best and cheapest times for client acquisition is to ask a current client for referral business during or after the origination process, according to a speaker at the 2003 Turn On Your Million Dollar Brain workshop in Delray Beach, Fla.Before a transaction, getting a client can cost as much as $500 a loan, because the broker needs to market through the Internet, mailers, telemarketing, and newspaper ads, said Bill Hogarty, president of Olympic Funding, Pleasanton, Calif. During the process, it costs nothing, especially if the broker gives the customer a "wow" experience, he said. "Invest your marketing dollar back into people who know and love you," Mr. Hogarty said. After the process, maintain contact with client, which Mr. Hogarty said he does through letters such as "Evidence of Success" letters and "Letters From the Heart." The cost for this is approximately $35 per loan, he said. The workshop was presented by the Mortgage Speakers Bureau.

The liability provisions of the Georgia Fair Lending Act could be changed in one of several different ways to address the credit concerns recently cited by Standard & Poor's Rating Services, according to the rating agency.S&P recently announced that it would not rate transactions that include loans covered by the GFLA because of the "potentially severe liability" created by the legislation's provisions on assignee liability. One approach that would satisfy S&P's concerns is the removal of assignee liability from the act, and another is the exemption from liability of securitization trusts (or other issuing vehicles) and their special-purpose entity depositors, S&P said. "A third approach would provide for the act to recognize that assignees -- who are not responsible for originating loans in the first place -- should be held to a lesser standard of liability than the originating creditors," the rating agency said. S&P can be found online at http://www.standardandpoors.com.

Insignia Financial Group Inc., New York, has acknowledged that it is engaged in merger talks with CBRE Richard Ellis Inc.Insignia stressed that the discussions may not result in a transaction, and said it would have no further comment on them. "Insignia and CBRE have, in the past, engaged in discussions about similar combinations, none of which have come to fruition," Insignia said. The company can be found on the Web at http://www.insigniafinancial.com.

Keystone Property Trust, a real estate investment trust based in West Conshohocken, Pa., has announced its intention to form a joint venture with the Mercantile Safe Deposit and Trust Co. as trustee for the AFL-CIO Building Investment Trust.Under the terms of the agreement, Keystone will contribute a $90 million portfolio of properties that are located primarily in Indianapolis, and the venture will have the capacity to acquire an additional $120 million of properties, the REIT said. Keystone will retain a 20% equity interest, and the AFL-CIO BIT will contribute the remaining 80% of the equity. "I believe that the joint venture model is a good one for industrial REITs, and this venture represents a natural step in our evolution as a focused owner/operator of industrial properties," said Jeffrey E. Kelter, president and chief executive officer of Keystone. Keystone can be found on the Internet at http://www.keystoneproperty.com.

Housing affordability in California was down by five percentage points in December from a year earlier, according to the California Association of Realtors.Housing affordability stood at 28% in December, down from 33% a year earlier and from 30% in November, CAR said. The index indicates the percentage of households that can afford to buy a median-priced home in California, which was $338,110 in December. The minimum household income needed to buy a median-priced home was $81,120, up from $71,450 a year earlier, CAR said. (The figures are based on a 30-year fixed-rate mortgage at a 6.10% interest rate, assuming a 20% downpayment.) CAR can be found on the Web at http://www.car.org.

Economic recovery should strengthen this year and might lead to improvements in the real estate sector in the second half, according to Prudential Real Estate Investors, Parsippany, N.J.PREI said it expects corporate confidence to improve in 2003, spurring economic gains and stabilizing property fundamentals. In its annual outlook report on the debt and property markets and real estate investment trusts, PREI said weakening market fundamentals last year "did little to slow the pace" of issuance of commercial mortgage-backed securities. "While total 2002 [CMBS] issuance fell $2 billion short of the $97 billion in 2001, the brisk pace of loan originations in the final months of 2002 suggests that new issuance could remain strong in the first half of this year," PREI said. The company can be found online at http://www.prudential.com/prei.

Wilmington, N.C., has grabbed the top spot in the latest ranking of housing markets showing signs of improvement over the next two years based on a mortgage risk index maintained by United Guaranty Corp., Greensboro, N.C.The other top-ranked metropolitan statistical areas are: Phoenix; Charleston, S.C.; Fort Pierce, Fla.; and McAllen, Texas. The report is based on UGC's quarterly ACUFactor mortgage risk index, which projects geographic market risk for the top 200 MSAs over the next four to eight quarters, the company said. The index uses a scale of 1 to 10, with 1 representing the least likelihood of further declines in model variables, which include home prices, the local economy, population stability, and mortgage delinquency trends. Wilmington, with a score of 1 in the first quarter, had a low annualized home price appreciation rate of 3.2% in the third quarter of 2002 and has experienced stable employment levels and favorable income growth in recent quarters, UGC said. The other four MSAs had scores of 2 in the latest report. UGC can be found online at http://www.ugcorp.com.

Prime Group Realty Trust, a troubled real estate investment trust based in Chicago, has announced the termination of discussions with Northland Capital Partners LP and its affiliates about a recapitalization proposal.The office and industrial REIT said its board of directors had decided to pursue other options, including a sale or merger. Prime Group owns 15 office properties containing 7.8 million square feet of net rentable space and 30 industrial properties with 3.9 million square feet of net rentable space. The company can be found on the Web at http://www.pgrt.com.

Paragon Financial Corp., Ponte Vedra Beach, Fla., has announced the acquisition of Paragon Homefunding Inc., an unaffiliated company based in Orlando, Fla., for an undisclosed amount.Paragon Financial currently focuses on originating and brokering residential mortgage loans, and Paragon Homefunding maintains relationships with more than 30 mortgage wholesalers. Steve Burleson, Paragon Financial's chief executive officer, said the company plans to make further acquisitions and that adding loan volume "propels us closer to consolidating common business functions in a centralized location, and allows us to compete more effectively for improved premiums in the secondary mortgage market." Paragon Financial can be found on the Web at http://www.paragonfinancialcorp.com.

The average 30-year fixed mortgage rate dipped to 5.88% for the week ending Feb. 7 from 5.90% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.28% to 5.27%, while the average rate for one-year Treasury-indexed adjustable-rate mortgages remained unchanged at a record low of 3.89%. Fees and points averaged 0.6 points for 15-year fixed-rate mortgages and 0.7 points for 30-year fixed-rate mortgages and ARMs. "Mortgage rates are in a holding pattern right now as the country tries to smooth out the knots in the economy," said Frank Nothaft, Freddie Mac's chief economist. "Low rates are a real boost to an already thriving housing market. Not only did we see record home sales and the national homeownership rate peak [at] an all-time high of 68.3% last year, but 2003 is shaping up to be equally as strong." A year ago, the average 30-year and 15-year fixed rates were 6.88% and 6.36%, respectively, and the average one-year ARM rate was 5.04%, Freddie Mac said. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Employment in the mortgage banking and brokerage sectors rose 1% in December from the previous month as lenders added workers to handle the tidal wave of loan applications.Compared with the same month a year ago, the two sectors (which are listed as one in government statistics) increased their employment ranks by 16.6%. At the end of December mortgage jobs totaled 412,400, according to the Bureau of Labor Statistics. A year ago the number stood at 353,500. How much longer the industry will continue to add workers remains unclear. According to preliminary survey information being compiled by National Mortgage News, the industry funded a record $940 billion in the fourth quarter alone. And residential loan volumes continued strong in January as well. "I think the first quarter is going to be very good for this industry," one investment banker told MortgageWire. The BLS can be found online at http://stats.bls.gov.

The nation's residential lenders funded close to $1 trillion worth of home loans in the fourth quarter, according to preliminary (but almost final) survey data collected by National Mortgage News and its affiliate, the Quarterly Data Report.If the number holds, it means that mortgage bankers funded a record-breaking -- not to mention stunning -- $2.7 trillion worth of home loans last year. Although NMNis still finalizing its numbers, it appears that more than $941 billion in residential loans were funded in the fourth quarter alone, a record. Three companies -- Wells Fargo, Washington Mutual, and Countrywide -- funded $100 billion or more in the quarter. The top 100 producers funded about $786 billion. (See the Feb. 10 issue of NMN for full details and rankings.)