Originations

The counterparty credit ratings on members of the Fidelity National Title Insurance Cos. Group and the parent company, Fidelity National Financial Inc., Irvine, Calif., have been placed on Credit Watch with developing implications by Standard & Poor's.S&P attributed the actions to FNF's recent announcement that it has agreed to buy the financial services division of Alltel Information Services in a stock-and-cash transaction valued at about $1.05 billion. The acquisition "has the potential to add earnings diversity via a significant non-interest-rate-sensitive steady income stream to the varied menu of FNF's real-estate-related products," the rating agency said. S&P added, however, that it is concerned about the size of the transaction, the fact that it is not directly related to title insurance, and the "considerable" amount of goodwill involved. S&P can be found on the Web at http://www.standardandpoors.com.

Mid-Atlantic Realty Trust, Lutherville, Md., has closed a $100 million, three-year, unsecured revolving credit agreement with a six-bank syndicate led by Allfirst Bank.Under the terms of the facility, MART has options to increase the facility to $125 million and to extend it for a year. The facility bears an interest rate of 115-180 basis points over the London interbank offered rate, depending on the leverage ratio of the real estate investment trust. The new facility replaces a $75 million credit line with Allfirst Bank. The REIT can be found online at http://www.martreit.com, and the bank can be found at http://www.allfirst.com.

A hearing on the sale of the assets of Conseco Financial Corp., St. Paul, Minn., has been scheduled for March 5 by the U.S. Bankruptcy Court in Chicago.Its soon-to-be-former parent company, Conseco Inc., Carmel, Ind., made the announcement in conjunction with the filing of its reorganization plan with the court. If the plan is approved, Conseco Inc. will only be in the insurance business. CFN Investment Holdings LLC -- an investor group consisting of Fortress Investment Group LLC and Cerberus Capital Management LP, both of New York, and J.C. Flowers I LP, Montgomery, Ala. -- has agreed to buy Conseco Financial. If approved, CFN will pay an amount equal to that of Conseco Finance's outstanding secured debt as of the closing date of the deal.

Once again, the Eleventh Federal Home Loan District Cost of Funds Index has fallen to a record low.For December, the index was 2.375%, down some 16.2 basis points from November's 2.537%. This decline is slightly smaller than the 17.1-bp decline between the October and November index levels, as announced by the Federal Home Loan Bank of San Francisco. These two dropoffs are the largest declines of the calendar year. The index was 3.074% in December 2001, and it declined 25.1 bps in the following month. For the full year, COFI declined 69.9 bps. In comparison, during the rapid decline in the index in 2001, it fell 254.3 basis points for the year, and in 2000 the index rose over 76 basis points over the 12-month period.

The ratings on two classes of Banc of America Large Loan Inc.'s series 2002-FLT1 have been placed on Rating Watch Negative by Fitch Ratings.The affected classes are class H, rated BBB-plus, and class J, rated BBB. The rating actions were attributed to a decline in performance of two loans, Windsor Court Hotel and Starrett Lehigh. Fitch can be found on the Web at http://www.fitchratings.com.

Market conditions in the apartment sector remain soft, although investor demand for apartment properties is still high, according to a quarterly survey by the National Multi Housing Council.The Survey of Apartment Market Conditions also found that its Market Tightness Index fell to 29 in January, its lowest level since January 2002, the NMHC said. (An index reading of less than 50 indicates that market conditions are getting looser.) Mark Obrinsky, the NMHC's chief economist, said the survey showed a drop in apartment sales volume, but that "anecdotal reports from NMHC's Apartment Markets Conference on Jan. 15 indicate that apartments remain the most desired real estate asset for more investors." The trade group can be found online at http://www.nmhc.org.

Chase Home Finance, the mortgage division of JPMorgan Chase Bank, has announced a $500 billion commitment through 2010 to increase home financing to minorities, immigrants, and low- to moderate-income borrowers.Chase said its DreaMaker Commitment is the largest of its kind ever made by a lending institution. Stephen J. Rotella, chief executive officer of Chase Home Finance, said the company is "answering President Bush's call and making it our mission to help close the homeownership gap in America." Chase said it plans to open new mortgage offices in key markets (including New York, California, and Texas) and announced the creation of a National Housing Advisory Council consisting of leaders from "underserved segments" of the market such as African-, Asian-, and Hispanic-Americans and gays. Chase also said it will increase its focus on strategic alliances with government-sponsored enterprises and minority associations; expand partnership programs with educational groups; and develop a counseling referral system for applicants who are "not yet mortgage-ready." The company can be found online at http://www.jpmorganchase.com.

American Residential Investment Trust Inc., San Diego, has announced that the trading of its common stock will move from the New York Stock Exchange to the American Stock Exchange Jan. 31 as a result of its plan to relinquish its status as a real estate investment trust.The decision to change status during the first quarter means the company would be unable to meet the NYSE's continued listing standards. American Residential, which traditionally invested in subprime residential mortgage assets, began originating mortgages last year through its mortgage banking subsidiary, American Mortgage Network. American Residential can be found on the Web at http://www.amerreit.com.

The senior unsecured notes and preferred stock of BRE Properties Inc., a San Francisco-based real estate investment trust, have been downgraded by Fitch Ratings.The $955 million of senior notes, due 2004 through 2013, were downgraded from BBB-plus to BBB, and the approximately $129 million of outstanding preferred stock has been downgraded from BBB to BBB-minus, the rating agency said. The rating outlook is Stable. BRE's credit statistics "have been pressured by macroeconomic conditions affecting all apartment owners, primarily a low interest rate environment and job losses which have weakened demand for apartment units," Fitch said. The REIT's exposure to San Francisco (representing 26% of total net operating income) and Seattle (11%) has caused BRE to be disproportionately affected, the rating agency said.

If a war with Iraq turns into a protracted conflict, consumer confidence and stock prices could fall, tipping the U.S. economy into recession and causing commercial property markets to decline further, according to a University of Southern California professor.Stuart Gabriel, director of USC's Lusk Center for Real Estate, noted that a similar chain of events was set in motion at the start of the Gulf War. "Further weakening in economic activity would exacerbate the slump in the nation's commercial property markets," he said. In this scenario, demand for office space would fall further and rents could soften; consumer confidence would fall, hurting retail sales and demand for retail space; businesses would spend less on plant and equipment, causing a decline in demand for industrial space; and the hotel market could relapse. In an alternate scenario, gross domestic product could grow 3.5%, Mr. Gabriel said. "The war would have to be avoided or quickly ended, consumer spending would have to be moderately strong, business confidence pick up, hiring recover, and business capital spending pick up," he said. "Stock prices would also have to improve."

Principal Residential Mortgage Inc., Des Moines, Iowa, has announced that it will close its retail branch offices by Feb. 28 and concentrate its loan origination business in its Mortgage Direct telephone and online operation.The company said it will continue to expand its correspondent, wholesale, and servicing businesses. The change will have no effect on customers with existing loans, and loans being processed in retail branches will be handled as usual, with as many as possible being closed by the end of February, the company said. Paul Bognanno, president and chief executive officer of Principal Residential, said consumers "recognize the cost advantages associated with getting their loan via the phone or online, as demonstrated by the more than 300% growth experienced by our Mortgage Direct operation in the first nine months of 2002." In that period, loan production rose 17%, and 90% of the growth came from the correspondent, wholesale, and Mortgage Direct distribution channels, he said. The company can be found online at http://www.principal.com/moreinfo/mortgagedirect.htm.

Fitch Ratings has revised its rating outlook for the U.S. private mortgage insurance industry from Stable to Negative.The negative outlook "largely relates to several systemic concerns that are challenging the industry's operating fundamentals," the rating agency said in its review-and-outlook report on PMI. "These include the continuation of severe competition from within and outside the industry, resulting in the proliferation of various risk-sharing arrangements; the industry's increasing involvement in the subprime market, primarily through the bulk channel; and likely adverse selection related to increased levels of 'piggyback' loans, which may increase insurers' natural default rate on prime business." Fitch said it generally defines a negative industry outlook as the expectation that rating downgrades will exceed upgrades over 12-18 months and that the downgrades will be "material to the rated universe." But because of the small number of PMI companies (eight), the definition was expanded to include expected changes in insurers' rating outlooks, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

The average rate for adjustable-rate mortgages hit a record low of 3.89% for the week ending Jan. 31, while the average 30-year fixed mortgage rate fell slightly from 5.91% the previous week to 5.90%, according to Freddie Mac's Primary Mortgage Market Survey.The average rate for one-year Treasury-indexed ARMs dipped from 3.93% to 3.89%, the lowest level since Freddie Mac began tracking it in 1984. The average 15-year fixed mortgage rate fell from 5.31% to 5.28%. Fees and points averaged 0.6 points for fixed-rate mortgages and 0.7 points for ARMs. "Mortgage rates are currently in a kind of limbo, with no impetus to drive the figures either up or down," said Frank Nothaft, Freddie Mac's chief economist. "Risks seem to be pretty evenly balanced .... The upside risk would be rapid economic growth and inflation, while the downside might be extended hostilities in the Mideast or a wider scope of weakness in the economy." A year ago, the average 30-year and 15-year fixed rates were 7.02% and 6.51%, respectively, and the average one-year ARM rate was 5.12%, Freddie Mac said. Freddie Mac can be found on the Web at http://www.freddiemac.com.

American Home Mortgage Holdings Inc. has reported record earnings of $13.5 million ($0.81 per share) for the fourth quarter, compared with $9.6 million ($0.77 per share) in the same period of 2001.The company's total closed originations increased to a record $4.6 billion during the year from $2.6 billion in 2001. American Home Mortgage Holdings can be found online at http://www.americanhm.com.

IndyMac Mortgage Holdings Inc., Pasadena, Calif., the holding company for IndyMac Bank, has reported record net earnings of $143 million ($2.41 per share) for 2002, compared with $116.4 million ($1.84 per share) in 2001.Net earnings totaled $36 million ($0.63 per share) for the fourth quarter. Mortgage production totaled a record $20.3 billion for the year, up 23% from $17.5 billion in 2001. "With our balance sheet growth, including strong balances in both our mortgage loans held for sale and held for investment, and our pipeline at near-record levels, we are well positioned for another good year in 2003," said Michael W. Perry, IndyMac's chief executive officer. The company's board of directors has reestablished a policy of paying cash dividends and declared a dividend of $0.40 per share for the coming year in quarterly increments of $0.10 per share. IndyMac's website address is http://www.indymac.com.

Classes E and F of RMF commercial mortgage pass-through certificates, series 1995-1, have been placed on Rating Watch Negative by Fitch Ratings.The rating action was attributed to interest shortfalls to classes E and F stemming from a decline in the collateral performance of the pool, as well as concerns about possible future shortfalls to those classes and to investment-grade-rated classes in the deal. "The master servicer, ORIX Capital Markets, is recouping approximately $769,000 in principal and interest advances and legal fees associated with the EHA portfolio," Fitch said. "At this time, ORIX is taking back these fees over time to limit the interest shortfalls to the non-investment-grade-rated classes.... However, ORIX will review the transaction on a monthly basis and will reserve the right to recoup any of these or other outstanding fees at once." Fitch can be found on the Web at http://www.fitchratings.com.

Chris Hayward has been promoted to executive vice president and chief operating officer of Equix Financial Services, a Milwaukee-based company that provides outsourced origination and fulfillment services to mortgage lenders.Mr. Hayward joined Equix in 2000 and has held the title of EVP. His responsibilities will include client relationship management, loan production, marketing, origination, production, and sales, Equix said. The company can be found on the Web at http://www.equix.us.

Douglas K. Freeman, chief executive of NetBank Inc., Atlanta, has added the job of chairman to his responsibilities, replacing T. Stephen Johnson.Mr. Freeman was the chief executive of Resource Bancshares Mortgage Group when NetBank acquired that company. After the acquisition was completed, Mr. Freeman took over the chief executive's job at NetBank, which had been buying a number of mortgage banking companies. Before buying RBMG, NetBank acquired Market Street Mortgage Corp., and it later acquired Meritage Mortgage Corp. "We've come to an exciting and critical point in the company's ongoing evolution," Mr. Freeman said. "In just over six years, the company has grown from a start-up retail bank into a highly diversified financial services provider." NetBank can be found online at http://www.netbank.com.

Binswanger/CBB, Philadelphia, has announced the formation of alliances in Houston and Atlanta aimed at expanding the firm's coverage of office real estate markets in the two cities.In Houston, Binswanger has teamed up with Conine & Robinson, which was established in 1985. That firm's two main principals, R. Dennis Conine and Stewart O. Robinson, each bring more than 25 years of real estate experience to the partnership, which will be known as Binswanger Conine & Robinson/CBB, Binswanger said. In Atlanta, a partnership has been formed with The Dryman Team, whose expertise lies in tenant/purchaser representation and agency leasing, Binswanger said. Joining Binswanger from Dryman are three seasoned real estate professionals, including company president John S. Dryman.

Freddie Mac closed 2002 with a record $14.3 billion in multifamily lending volume, according to the government-sponsored enterprise.The GSE credited "strong representation" by its Program Plus correspondents for the good performance. Adrian Corbiere, Freddie Mac's senior vice president of multifamily, said more than 90% of the business funded by Freddie Mac in 2002 was in the affordable housing arena. Among the results reported by the GSE for different components of its multifamily business are: $6.9 billion through "flow programs," financing more than 160,000 rental units; $3.5 billion in negotiated transactions; $883 million invested in Low-Income Housing Tax Credits; $1.4 billion of business through the new fixed-to-float option and nearly $4 billion via the early rate-lock delivery option; and more than $230 million in seniors housing mortgages.