Originations

Aames Financial Corp., Los Angeles, has reported net income of $2.1 million for the quarter ended Dec. 31, compared with $1.5 million a year earlier.The company said it took a $31.9 million writedown to the carrying value of its residual interests as a result of changes in certain assumptions about credit losses and annual prepayment rates that are used in estimating the fair value of the residual interests. Aames reported record loan production of $1.3 billion for the quarter, up 56.6% from $834.6 million a year earlier. Aames can be found online at http://www.aames.net.

New York-based iStar Financial, a diversified real estate investment trust, has reported net income of $215.3 million ($1.93 per share) for 2002, down from $229.9 million ($2.19 per share) in 2001.For the fourth quarter, the company reported net income of $63.0 million ($0.56 per share), up from $58.8 million ($0.56 per share) a year earlier. "Given the continued weak macroeconomic and uncertain geopolitical environment, our investment strategy this quarter continued to emphasize risk mitigation and capital preservation, with first mortgages and investment-grade sale/leasebacks representing 82% of the quarter's origination volume," said Jay Sugarman, iStar's chairman and chief executive officer. The company can be found online at http://www.istarfinancial.com.

More community banks and thrifts sold residential mortgage loans into the secondary market last year, but the sales still represented only 45% of their loan production, according to an annual survey by America's Community Bankers.The ACB survey found that 72% of the respondents sold loans to secondary market agencies and private wholesalers in the first nine months of 2002, up from 55% in 2001. The 315 respondents sold $22.5 billion in residential mortgage loans, including $9.5 billion to Fannie Mae, $7.6 billion to private wholesalers/conduits, and $3.2 billion to Freddie Mac. However, they still retained $22.5 billion in originations on their books. The author of the survey, ACB senior financial economist Steven Davidson, pointed out that the smaller community banks tend to do more business with Freddie Mac, while the larger banks (with more than $1 billion in assets) tend to do more business with Fannie Mae. Only 9% of the banks and thrifts in the survey participate in the Federal Home Loan Banks' Mortgage Partnership Finance program and the Mortgage Purchase Program, and they sold $888,000 in loans to the FHLBanks. ACB can be found online at http://www.acbankers.org.

Sales of existing condominiums and cooperatives totaled 824,000 in 2002, a 10.5% increase that set a record for the seventh straight year, according to the National Association of Realtors.Sales of existing condos and co-ops totaled 746,000 in 2001. In the fourth quarter, the seasonally adjusted annual rate for existing condo and co-op sales was 818,000 units, down 0.2% from 820,000 in the third quarter but up 13.8% from 719,000 a year earlier. "Although condo sales account for only 12.9% of total home sales in 2002, growth in this sector has been stronger and more consistent than growth in the single-family housing market," which ran at 5% last year, said NAR chief economist David Lereah. The association also reported that the median existing-condo price rose 11.3% in 2002 to $137,100. The NAR can be found online at http://realtor.org.

The California Department of Corporations has issued a letter of intent to revoke the residential mortgage lending license of Wells Fargo Home Mortgage Inc., citing the lender's refusal to refund what the department alleges were excessive loan fees charged in violation of state law.Corporations Commissioner Demetrios A. Boutris said the department is taking the action because Wells "chose not to make the requested refunds to its mortgage customers" when confronted with the allegations, and instead "challenged California's authority in federal court." A Wells spokeswoman said the company is confident that its license and ability to provide mortgages in the state will not be affected by the legal challenge. "We want to reassure all our mortgage customers that it's business as usual," she said. "All mortgage interest payments that we charge customers are fully legal under federal law. … Courts have ruled time and again that federal law takes precedence over inconsistent state laws, and we're confident that precedent will continue in this case."

RAIT Investment Trust, Philadelphia, has priced an offering of 1.75 million common shares at $20.75 per share.The real estate investment trust said it will use the estimated net proceeds of $34.7 million to repay debt, originate and purchase loans, and acquire property interests. RAIT has granted the underwriter, Friedman, Billings, Ramsey & Co. Inc., a 30-day option to buy an additional 262,500 shares to cover any overallotments. The REIT can be found online at http://www.raitinvestmenttrust.com.

Bear, Stearns & Co. Inc., New York, has announced that it is expanding its coverage of real estate investment trusts to include some of the biggest owners of strip shopping centers in the United States.Coverage of Kimco Realty Corp. and Equity One Inc. was initiated with "Outperform" ratings, and New Plan Excel Realty Trust was assigned a "Peer Perform" rating. "Our investment thesis for the REIT sector is to focus on those property types that are relatively less dependent on job growth as a fundamental driver of demand," said Ross Smotrich, a REIT analyst at Bear Stearns. "Strip shopping centers are typically anchored by grocery stores and discount retailers which provide convenience and fulfill basic consumer needs, making them relatively less sensitive to economic stress."

Citing the results of a fourth-quarter survey, Boston-based Colliers International is projecting that demand for office space will remain "anemic" for the next few quarters.Absorption remained negative for the eighth consecutive quarter, and vacancy rates rose to 16.3% from 15.8% in the third quarter and 14.1% a year earlier, the company said. Sublease space accounted for 20.5% of all vacant space, totaling more than 140 million square feet in the United States, double the 70 million square feet in a normal office market, Colliers said. "With moderate levels of new construction added to the market and continued delivery of sublease space, we still have a few quarters of flat to moderately negative growth to come," said Ross Moore, the company's director of research. "With continued job losses, low business confidence indicators, and looming geopolitical risks, we can't expect a return to robust real estate markets any time in the near future." Colliers can be found online at http://www.colliers.com.

The four states that have consistently recorded higher "Fraud Index" levels over several quarters are California, Georgia, Missouri, and Nevada, according to a report on mortgage fraud by Affinity Corp., West Hills, Calif.The 2002 Fourth Quarter National Fraud Report found that Oregon, Wyoming, Texas, Minnesota, Ohio, New Jersey, and Vermont were also among the states with the highest levels of fraudulent activities during the last three months of the year. Among the states that scored best during the fourth quarter are New York, Pennsylvania, Virginia, Kentucky, Indiana, Alabama, Arkansas, Iowa, North Dakota, and Montana. Overall, Affinity said, the national fraud scores improved from the third to the fourth quarter. The index is supposed to be a predictive indicator of mortgage fraud, as it is based upon data from the nation's most recent loan applications.

GMAC Commercial Mortgage Corp., Horsham, Pa., tops the Mortgage Bankers Association of America's annual ranking of commercial loan servicers.At the end of 2002, GMAC was administering nearly $133.8 billion in master and primary servicing. Runner-up Wachovia Securities, Charlotte, N.C., handled $83.6 billion. In terms of loans, GMAC services nearly 50,900 mortgages, almost three times as many as the 13,876 loans handled by Wachovia, according to the MBA's tally, which was released at the group's annual Commercial Real Estate Finance/Multi-Family Housing Convention in San Diego. GMAC, GEMSA Loan Services, CapMark, and Prudential Asset Resources are the largest servicers for life companies and other private investors. The largest administrators of apartment loans by Fannie Mae and Freddie Mac are Berkshire Mortgage Finance, ARCS Commercial Mortgage, GMAC, and Prudential. GMAC, Reilly Mortgage, Prudential, Midland, and Greystone Servicing Corp. are the largest servicers of multifamily loans insured by the Federal Housing Administration.

Mortgage applications fell 2.5% on a seasonally adjusted basis for the week ended Jan. 31, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were up 10.0% on the week and 101.7% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index climbed from 365.5 to 371.1, and the Refinance Index fell from 5858.1 to 5621.6. Refinancings represented 73.1% of total applications, down from 75.4% the previous week, while adjustable-rate mortgages accounted for 13.9%. The average contract interest rate for 30-year fixed-rate mortgages was unchanged at 5.72%, and points (including the origination fee) increased from 1.60 to 1.68 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

Instead of closing its 78 retail production offices, Principal Financial Group, Des Moines, Iowa, has agreed to sell them to American Home Mortgage Inc., New York.Principal announced Jan. 29 that it was closing those offices to concentrate its retail efforts on call center and consumer direct. American Home will pay Principal "a guaranteed profit margin on its current application pipeline, purchase the assets of the branch network, and assume related liabilities," a joint statement said. The existing pipeline will be closed on behalf of Principal. Adding the Principal branches will give American Home 209 retail branches. A trio of Principal executives will make the move to American Home: its head of retail production, Ron Rosenblatt; the head of the Eastern branches, Doug Norman; and the head of the Western branches, Curt Sedgley. The Principal branches had 2002 production of $3.35 billion.

Countrywide Home Loans Inc., Calabasas, Calif., has announced that it will extend its $100 Billion Challenge and expand it to a $600 billion commitment to increase homeownership among low-income and minority homebuyers by 2010.In a speech to the Harvard Joint Center for Housing Studies and the National Housing Endowment, Countrywide chairman Angelo Mozilo noted that the company met its $100 billion goal three years early and is "committing to an even greater goal." To reach the new target, the company says it will further expand its House America branches to the inner cities of all the nation's largest metropolitan areas; seek out loan programs that offer greater flexibility in loan qualifying and help borrowers build equity faster; and increase the number of employees who are experienced in generating emerging-markets business. Mr. Mozilo, who delivered the John T. Dunlop Lecture sponsored by the Joint Center and the endowment, urged mortgage professionals and housing experts to address the obstacles that produce an "intolerably wide" gap in homeownership between minority and lower-income families and the rest of the population. He recommended the elimination of mortgage downpayment requirements, educational efforts to make the mortgage process easier to understand, and the reduction and streamlining of loan application documentation. Countrywide can be found online at http://www.countrywide.com.

The AmeriDream Charity Inc., Gaithersburg, Md., a nonprofit provider of downpayment assistance to low- and moderate-income homebuyers, has changed its name to AmeriDream Inc.The organization was founded in 1999 with the establishment of The AmeriDream Downpayment Gift Program. It also operates The AmeriDream Redevelopment Program, which renovates and rehabilitates distressed properties and returns them to the market at prices affordable to low-mod homebuyers. Ann Ashburn, AmeriDream's chief executive officer, said the name change is intended to "better reflect the diversity" of the organization's programs. "We will continue to operate the Downpayment Gift Program, which has helped more than 95,000 families nationwide become homeowners since 1999," Ms. Ashburn said. "In addition, we are developing new programs every day, each committed to making homeownership a reality for every American." The organization can be found on the Web at http://www.ameridream.org.

Albert L. Jones has been named executive vice president of real estate finance at Republic First Bank, Philadelphia, where he will lead the bank's Commercial Real Estate Finance Group.The bank said Mr. Jones will be responsible for both construction loans and mortgage loans. Mr. Jones was most recently group vice president at Commonwealth Bank, where he led the CRE group. Republic can be found on the Web at http://www.firstrepublic.com.

Greenlight Financial Services, Irvine, Calif., is now offering a guaranteed price to borrowers for settlement services related to mortgage refinancings.The company is now offering the "$995 Flat Fee Refi" program. Borrowers of conforming loans pay only $995 for all nonrecurring closing costs when they do a refi. Services provided include title, escrow, appraisal, and notary, among others. Joann Pham, president and chief executive of Greenlight, said her company "has always been committed to offering the best deal with excellent customer service, and the unprecedented '$995 Flat Fee Refi' program is an extension of that philosophy."

The typical American family's ability to purchase a median-priced existing home increased in the fourth quarter, according to the National Association of Realtors.The NAR's composite Housing Affordability Index stood at 140.7, up from 135.9 in the third quarter but down from 141.3 a year earlier. The latest index number means that the typical household in the United States had 140.7% of the income needed to purchase a home at the fourth-quarter median existing-home price, which was $161,600. "Essentially, the drop in mortgage interest rates coupled with a modest rise in family income more than offset an increase in home prices," said NAR chief economist David Lereah. "We project housing affordability conditions to remain fairly stable during the first half of 2003, which means we'll continue to have historically high levels of home sales." The index measures affordability for homebuyers making a 20% downpayment. An index level of 100 is defined as the point at which a median-income family has the income necessary to buy a median-priced existing home. The NAR estimated the median family income to be $52,950 in the fourth quarter. The NAR can be found online at http://realtor.org.

Delta Financial Corp., Woodbury, N.Y., has reported net income of $17.6 million ($1.04 per share) for 2002, compared with a net loss of $80.5 million ($5.07 per share) in 2001.(The net loss excluded an extraordinary item totaling $19.3 million for the early extinguishment of debt.) For the fourth quarter, Delta reported net income of $4.7 million ($0.28 per share), compared with a net loss of $3.4 million ($0.21 per share) a year earlier. Mortgage originations totaled $872 million in 2002, up 40% from $622 million the year before, Delta said. Originations for the fourth quarter totaled $258 million, up 86% from $139 million a year earlier. Delta can be found online at http://www.deltafinancial.com.

Commercial real estate lending in the final quarter of 2002 jumped 18% above that of the same period a year ago, according to the Mortgage Bankers Association of America.The 44 lenders participating in the quarterly MBA survey said they originated $29.4 billion in mortgages in the period, as opposed to $24.8 billion in the fourth quarter of 2001. But MBA chief economist Doug Duncan warned that commercial lenders would find it difficult to sustain their relatively high volume levels until the economy picks up steam and starts generating the jobs necessary to cause employers to think about expanding. Anthony Pierson of CIGNA's flagship real estate account, TimesSquare, also said 2003 is likely be an off year. "The economy has to stabilize before it can recover, and right now it has not yet stabilized," the economist said. On an annual basis, according to the MBA, CRE lending was up 5.2%, rising from $82.2 billion in 2001 to $86.5 billion in 2002. Led by the multifamily market -- which was responsible for $41 billion, or 47.5% of the total -- every property type was up except the office sector, which was off by 6.5%. The MBA can be found online at http://www.mbaa.org.

Former subprime chief executive Michael J. Fanghella was sentenced to 10 years in prison Monday for his role in the collapse of PinnFund USA, a San Diego-based mortgage banker.Prosecutors said that investors in PinnFund lost about $224 million and that Mr. Fanghella and others were essentially running a Ponzi scheme at the company. Under a plea arrangement, he will serve the 10 years without being eligible for parole. PinnFund originated subprime loans and sold them in the secondary market to investors, including Finance America, Saxon, and Residential Funding Corp. PinnFund was closed in March 2001. At one point it had 20 branches and employed 200 people. Prosecutors said Mr. Fanghella hid operating losses at the mortgage banker and transferred more than $100 million of investor money to himself to live a lavish lifestyle. Investigators said the former CEO spent at least $10 million of investor funds on Kelly Cook, a one-time girlfriend and pornographic film star known as Kelly Jaye. He also used company money to fund a $120,000 New Year's Eve party in New York for 15 people. (See the Feb. 10 issue of National Mortgage News for complete details.)