Originations

The ratings on classes H-PAL and J-PAL of Credit Suisse First Boston Mortgage Securities Corp. commercial mortgage pass-through certificates, series TFL1, are being reviewed for possible downgrade by Moody's Investors Service.Moody's attributed the rating actions to concerns about the $440.0 million Palisades Center Loan, the largest in the pool, which is secured by fee and leasehold interests in a 2.3 million-square-foot super-regional mall in West Nyack, N.Y. Approximately 270,000 square feet of space was built in the development which the borrower did not have governmental approval to lease. Local voters must approve the use of the excess space before the issuance of a certificate of occupancy, and they voted down the measure in a referendum last year, Moody's said. The property's overall vacancy rate is 8.0%, up from 5.7% a year ago.

Moody's says it may upgrade the commercial mortgage-backed securities deals that were downgraded last year on terrorism insurance-related concerns if adequate insurance policies are procured on the assets following the implementation of the Terrorism Risk Insurance Act of 2002.However, Moody's analyst Daniel Rubock said the rating agency is concerned that there could be delays by the Treasury in certifying a terrorist act as being of foreign origin (the act does not cover domestic terrorism). This could cause delays in paying out insurance proceeds. In addition, insurers are not required to notify lenders of what borrowers are doing about terrorism insurance coverage. The real estate industry has urged the Treasury to adopt regulations requiring that commercial mortgage lenders and servicers be "put in the loop" on terrorism insurance. While the legislation is limited to acts of foreign terrorism, Moody's said it believes that will suffice to allow CMBS bonds to meet acceptable risk levels and merit the highest investment-grade ratings. The rating agency can be found online at http://www.moodys.com.

Robert G. Rosen has been named president of Fog Cutter Capital Group Inc., a Portland, Ore.-based investment group specializing in mortgage and real-estate-related assets.Mr. Rosen, who is president of Fog Cutter Capital Markets Inc., a company subsidiary, was most recently executive vice president of the parent company. He was previously senior vice president of asset securitization and capital markets for Wilshire Financial Services Group Inc. Fog Cutter can be found on the Internet at http://www.fccgi.com.

Subprime lender New Century Financial Corp., Irvine, Calif., produced a record $1.74 billion in home mortgages in December, bringing its fourth-quarter production total to $4.47 billion.The company, a nondepository, also said it increased its warehouse credit facilities to $3.47 billion. Previously, New Century had reported facilities of $2.55 billion. Company chief executive Robert Cole said the lender increased its warehouse lines to "support the record pace of fourth-quarter loan production and our growth initiatives for fiscal 2003." New Century is the fifth-largest subprime lender in the United States, according to figures compiled by National Mortgage News and the Quarterly Data Report. In trading late Tuesday morning, the firm's shares were down slightly to just over $26. Its share price fell below $20 in November, but has rebounded nicely over the past few weeks. (See Jan. 13 issue of NMN for more details.)

Fidelity Federal Bancorp, Evansville, Ind., has completed the sale of two affordable housing subsidiaries and related assets to Pedcor Funding Corp. for approximately $1.7 million in cash.Fidelity said the sale resulted in a pretax gain of $223,000 for the fourth quarter, noting that it had previously recorded an impairment charge of $905,000 related to the asset sales. "Completion of this transaction has substantially increased regulatory capital for United Fidelity Bank [Fidelity Federal's savings bank subsidiary] and provided additional liquidity for Fidelity Federal Bancorp," said Fidelity president Donald R. Neel. "This will allow us to further sharpen our focus on community banking activities." Fidelity can be found online at http://www.unitedfidelity.com.

Investors Capital Corp., the wholly owned broker/dealer subsidiary of Investors Capital Holdings Ltd., Lynnfield, Mass., has raised the $3 million minimum needed to launch Gen-Net Lease Income Trust Inc., a real estate investment trust.Investors Capital said the REIT, which will be managed by Genesis Financial Group Inc., Grosse Ile, Mich., will acquire single-tenant, stand-alone, net lease office properties, chiefly for creditworthy corporate and state and federal government tenants. Investors Capital, the lead underwriter, is heading a syndicate of broker/dealers working to reach a $25 million capital fund-raising maximum by the second quarter. The companies can be found on the Web at http://www.investorscapital.com and http://www.gennet.biz.

Midwest Banc Holdings Inc., Melrose Park, Ill., has completed the acquisition of Big Foot Financial Corp., Long Grove, Ill., the holding company for Fairfield Savings Bank FSB.The details of the stock transaction were not disclosed. Big Foot, which provided mortgage and consumer loans as well as checking and savings accounts, had approximately $200 million in total assets and three locations in the Chicago area, Midwest said. The acquisition expands Midwest's branch network to 15 locations in the Chicago metropolitan area, the company said. The three Fairfield branches have become part of Midwest Bank and Trust Co., Midwest's flagship subsidiary.

Hovnanian Enterprises Inc., a homebuilder based in Red Bank, N.J., has acquired Brighton Homes, Houston, for an undisclosed cash price.Hovnanian said the purchase, combined with its earlier acquisition of the Houston-based Parkside Homes, is expected to make the company the seventh-largest homebuilder in the Houston market. Ara K. Hovnanian, president and chief executive of Hovnanian, said the company will run Brighton and Parkside as separate operating divisions but will, in addition, "leverage their combined strengths." Hovnanian can be found on the Web at http://www.khov.com.

ARV Assisted Living Inc., Costa Mesa, Calif., has agreed to merge with Prometheus Assisted Living LLC, an affiliate of Lazard Freres & Co. LLC.Under the agreement, Prometheus will acquire all the outstanding shares of ARV common stock not already owned by Prometheus or its affiliates at a cash price of $3.90 per share. Prometheus has said it intends to combine ARV with Atria Inc. and Kapson Senior Quarters Corp., two other assisted-living companies. Prometheus now owns approximately 43.5% of ARV's common stock as well as warrants that, if exercised, would bring the total to about 45.8%, ARV said. The two companies also announced that they have reached agreements regarding settlements of stockholder class action lawsuits that were filed after the announcement of a preliminary merger proposal by Prometheus. ARV can be found on the Web at http://www.arvi.com.

Orix Capital Markets LLC, Dallas, has made a new proposal to acquire Rockville, Md.-based Criimi Mae Inc. for approximately $11.50 per common share in cash.Even though Orix has "refused to eliminate certain conditions and contingencies in its latest proposal," Criimi Mae said it is continuing negotiations with the company. The commercial mortgage lender said the Orix proposal, in its current form, gives Orix great leeway in opting out of any transaction. The latest proposal was made Jan. 2 after the Criimi Mae board rejected an earlier Orix proposal to acquire Criimi Mae assets for $520 million. The Criimi Mae special committee has told Orix that before it can begin serious negotiations, Orix "must commit to closing with a sufficient degree of certainty." In the meantime, Criimi Mae said its earlier financing agreement with Brascan Real Estate Finance and Bear Stearns is proceeding toward a Jan. 15 closing. Criimi Mae can be found on the Web at http://www.criimimaeinc.com.

The ratings of classes K-WS and L-WS of COMM 2000-FL3 commercial mortgage pass-through certificates are being reviewed for possible downgrade by Moody's Investors Service.Moody's said the rating action stemmed from concerns about the $120.0 million 40 Wall Street loan, the third-largest loan in the pool. The loan is secured by a first-leasehold interest in a 1.1 million square foot Class A office building in Manhattan's Financial District. The property's performance has been negatively affected by "significant increases in operating expenses, a weakening in the Lower Manhattan office market, and a slight decline in occupancy," the rating agency said. The property's net income for the trailing 12 months ended in June was approximately 17% below original projections, Moody's said.

Three classes of DLJ Commercial Mortgage Trust 2000-CKP1 have been downgraded by Moody's Investors Service and three others are being reviewed for possible downgrade.The downgrades were as follows: class B-7, from B1 to B3; class B-8, from B2 to Caa2; and class B-9, from B3 to Ca. Classes B-3, B-5, and B-6 have been placed on review. The downgrades were attributed to approximately $24 million of expected losses associated with nine loans (totaling 4.06% of the outstanding loan balance) that were in special servicing as of the Dec. 10 distribution date. The pool contains 10 loans, totaling 6.12% of the outstanding pool balance, secured by properties leased to Kmart. "Three of these loans were transferred to special servicing after Kmart rejected the respective leases as part of its bankruptcy filing," Moody's said. "The remaining seven loans are on the master servicer's watchlist. It is reported that Kmart is considering closing additional stores, but an official announcement has not yet been made." The rating agency can be found on the Web at http://www.moodys.com.

T. Wilson Eglin, president of Lexington Corporate Properties Trust, has been named chief executive officer of the New York-based real estate investment trust.The office of CEO was previously shared by E. Robert Roskind, who will continue as chairman of the board, and Richard J. Rouse, Lexington's vice chairman, who has also been named chief investment officer, the REIT said. Mr. Eglin, 38, has been president of Lexington since May 1995, and was chief operating officer of the REIT prior to that. Mr. Roskind observed that the promotion "more accurately reflects reality" and would allow Mr. Rouse and himself to "continue to focus our energies in our respective areas." Moreover, from a corporate governance standpoint, "the CEO function should be separate from the chairman and vice chairman function," he said. The REIT can be found on the Web at http://www.lxp.com.

David C. Smith has been named president of GMAC Commercial Holding Capital Corp., Denver, and its subsidiary, GMAC Commercial Holding Capital Markets Corp.Mr. Smith will have direct responsibility for mortgage financing and investment banking services for the multifamily affordable housing industry. He was a founder in 1978 of Newman & Associates Inc., which is now known as GMAC Commercial Holding Capital Markets. Both companies can be found online at http://www.newmanfs.com.

The volume of primary new mortgage insurance written rose in November thanks to a surge in bulk insurance, according to data collected by the Mortgage Insurance Cos. of America.Mortgage insurance firms wrote $25.56 billion of traditional MI and $4.45 billion of bulk MI in November, for a total of $30.11 billion. The amount of traditional insurance written was off 0.3% from October's total, but bulk volume surged 133.7%. Applications decreased by 4% to 269,436 in November. New pool risk written totaled $668.1 million, a 184% increase from that of October. The cure/default ratio increased from 80.6% in October to 88.4% in November. MICA can be found on the Web at www.micadc.org.

Equity real estate investment trusts outperformed the Standard & Poor's 500 index in 2002 with a total return of 4.0%, compared with a total return decline of 22.2% for the S&P 500, according to SNL Financial, Charlottesville, Va.However, the REIT sector's positive performance is largely due to the dividend effect. On a "price-only basis," equity REITs were actually down 2.8% for the year, the data firm said. But even then, compared with the S&P 500's 23.4% decline when only price appreciation is considered, REITs turned in a better performance for 2002. Retail REITs, with a 21.1% total return, turned in the best performance for the year. Multifamily REITs, on the other hand, were down 5.8% on a total-return basis, even after considering an aggregate dividend yield of 7.7%, SNL said. Office REITs were also in the red, with a negative total return of 4.2% for the year. Paul Reeder, director of real estate at SNL Financial, said this is the third year in a row that REITs have outperformed the "broad markets."

The Eleventh Federal Home Loan District Cost of Funds Index dropped 17 basis points to a record low of 2.537% in November from 2.708% in October, according to data from the Federal Home Loan Bank of San Francisco.The previous low for the index was set in March 2002, at 2.653%. COFI, which lags other rates by three to six months, is calculated from the average interest paid by savings institutions in California, Arizona, and Nevada for their sources of funds.

Mortgage applications rose 4.7% on a seasonally adjusted basis for the week ended Dec. 27, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were down 36.4% on the week, but up 134.0% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index fell from 359.4 to 332.4, and the Refinance Index climbed from 4101.0 to 4548.8. Refinancings represented 75.9% of total applications, up from 72.5% the previous week, while adjustable-rate mortgages accounted for 11.2%. The average contract interest rate for 30-year fixed-rate mortgages decreased from a survey-record low of 5.74% to a new record of 5.69%, and points (including the origination fee) decreased from 1.56 to 1.53 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

The Department of Housing and Urban Development has officially increased the limits on single-family mortgages insured by the Federal Housing Administration.As of Jan. 1, the new "floor," or basic mortgage limit, is $154,896, while the maximum, or "ceiling," in high-cost areas is $280,749. The new FHA loan limits are based on the increase in the ceiling on conventional home loans that can be purchased or securitized by Freddie Mac, which rose 7.3% as of Jan. 1, from $300,700 to $322,700. The floor, which covers most of the nation's 3,000-plus counties, is set at 48% of the Freddie Mac limit. The ceiling, which applies to about three dozen high-cost markets, is 87% of the conforming loan limit or 95% of the median house price for the area, whichever is less. Loan limits have also been increased for two- to four-unit properties and for houses outside the continental United States. The new nationwide basic limits are: $198,288 for two-unit structures; $239,664 for three-unit structures; and $297,840 for four-unit buildings. For high-cost areas, the new ceilings are: $359.397 for two-unit homes; $434,391 for three-unit properties; and $539,835 for four-unit structures. In Alaska, Guam, Hawaii, and the Virgin Islands, the limits are 150% of the new maximums.

The average 30-year fixed mortgage rate sank to yet another survey-record low of 5.85% for the week ending Jan. 3 from 5.93% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.Freddie Mac began tracking the rate in 1971, but the government-sponsored enterprise said figures compiled by the Federal Housing Finance Board indicate that it has not been this low since the early 1960s. The average 15-year fixed mortgage rate fell from 5.32% to a survey-record low of 5.24%, while the average rate for one-year Treasury-indexed adjustable-rate mortgages rose from a survey-record low of 4.01% to 4.06%. Fees and points averaged 0.6 points for fixed-rate mortgages and 0.7 points for ARMs. "Just when we were sure mortgage rates couldn't possibly drop any lower, we were surprised yet again," said Frank Nothaft, Freddie Mac's chief economist. "Current issues such as the possibility of military actions abroad, heightened terrorism alerts, and an unexpected drop in consumer confidence contributed to the decline in mortgage rates this week." A year ago, the average 30-year and 15-year fixed rates were 7.14% and 6.62%, respectively, and the average one-year ARM rate was 5.26%, Freddie Mac said. Freddie Mac can be found on the Web at http://www.freddiemac.com.