Originations

Class G of Prudential Securities Secured Financing Corp. commercial mortgage pass-through certificates, series 1995-MCF2, has been placed on Rating Watch Negative by Fitch Ratings.Ratings on the other Fitch-rated classes in the series were affirmed, the rating agency said. Fitch said the master servicer on the deal, Midland Loan Services, made nonrecoverable advance determinations on three loans in the pool. "Midland is in the process of recovering these advances, a total of approximately $1.5 million, which will cause interest shortfalls to the trust," Fitch said. ".... Fitch expects class G to remain on Rating Watch Negative until it is determined that the interest is ultimately recoverable and the class is affirmed, or that the class will not recover these shortfalls and the rating will be lowered." Fitch can be found on the Web at http://www.fitchratings.com.

Speculation about a "bubble" in some prominent office markets has little basis, according to a study conducted by Grubb & Ellis, PNC Real Estate Finance, and Real Capital Analytics.The researchers concluded that "the headline-grabbing activity is limited to a small set of investors buying the best properties in a handful of markets," rather than being a widespread problem. One survey respondent noted, "For every investor who thinks there’s a bubble, five others outbid him," the researchers said. Bob Bach, national director of market analysis at Grubb & Ellis, said the findings "clearly indicate that investors are exhibiting rational exuberance as they consider investment options, choosing to buy the best assets in the best markets for high prices in order to avoid market risk." This, he believes, is "a rational response to historically low mortgage rates, the lack of compelling investment alternatives, and the willingness of investors to trade lower yields for lower risk in the post-bubble. post-Enron era." The study found that investors are bidding aggressively on "the right properties" in the District of Columbia, Midtown Manhattan, and Southern California.

Criimi Mae Inc., Rockville, Md., has reported receiving a proposal from Orix Capital Markets LLC, Dallas, to buy all the company's outstanding common stock at a negotiated price or up to 100% of its subordinated commercial mortgage-backed securities for $520 million.The commercial mortgage company said a special committee of its board of directors is evaluating Orix's proposals. Criimi Mae noted that it recently entered into an investment agreement with Brascan Real Estate Finance Fund and a commitment letter with Bear, Stearns & Co. Inc. to recapitalize and refinance the company. BREF and Bear Stearns have completed their due diligence, and the parties are moving toward a closing by Jan. 15, Criimi Mae said, adding that the transaction would not preclude subsequent asset or stock sales.

America's Senior Financial Services, Jupiter, Fla., is launching its "Branch Partners" origination platform.The company believes the new channel, its fourth, could contribute as much as $250 million in additional loan production in its first year. America's Senior has been planning such a division since July 2002. Initially, the company seeks to have 10 "partner" locations, and a percentage of their volume could be funded directly through America's Senior. Right now, the company is working to complete the funding needed to launch Branch Partners. Other channels at America's Senior include traditional mortgage lending, senior market (reverse mortgage) lending, and wholesale.

Sterling National Mortgage Co. Inc., Great Neck, N.Y., has acquired the assets and business of Capital Mortgage Funding Inc., a mortgage broker based in Charlotte, N.C., for an undisclosed amount.Sterling's ultimate parent, Sterling Bancorp, said Capital Mortgage specializes in originating nonconforming residential mortgages on a referral basis and closed more than $60 million in loans over the past 12 months. "The move into the Charlotte area expands our geographic presence beyond the Northeast and mid-Atlantic markets we now serve, and enhances cross-selling opportunities of other financial products," said Louis J. Cappelli, chairman and chief executive officer of Sterling Bancorp. Sterling National Mortgage is a subsidiary of Sterling National Bank, the principal subsidiary of Sterling Bancorp. The parent company can be found online at http://www.sterlingbancorp.com.

Los Angeles Mayor Jim Hahn signed an anti-predatory-lending ordinance Dec. 18 designed to address high-cost refinance home loans.The ordinance defines such loans as having an annual percentage rate that “exceeds by more than six percentage points the yield on the Treasury Securities having a period of maturity typically used by the lenders within the industry as the basis for home loans.” The Los Angeles Housing Department will annually designate the period of maturity “typically used” for home loans in the rules and regulations. Also captured under the ordinance will be refi loans whose points and fees exceed four percentage points of the total loan amount. However, a refi with points and fees up to $1,500 will not be subject to the provisions. Practices prohibited under the ordinance include: mandatory arbitration clauses without full disclosure; lending without home loan counseling; and lending without reasonable belief in the borrower’s ability to repay the loan. The ordinance will also affect the secondary market, stating that a purchaser of a refi loan is subject to "all claims, actions, and defenses related to that high cost refinance home loan that the borrower could assert against the original lender.”

Fannie Mae thinks next year will be a darn good one for residential production but that 2004 looks a bit dicey.The secondary giant's chief economist, David Berson, is predicting $2.034 trillion in production next year and $1.45 trillion in 2004. The latter would be an ugly 28% decline from 2003 and a 42% plunge from 2002. If the industry does produce $2 trillion next year, it will be the third year in a row of $2 trillion-plus production. Even though Fannie anticipates a decline in refinancings next year, the purchase money business should be good, Mr. Berson predicted. At a media luncheon Dec. 18, Mr. Berson also noted that cash-out refinancings will likely set a record in 2002, eclipsing last year's volume of $110 billion. "About $65 billion of that amount was spent [by consumers]," he said. Next year should be a good one for cash-out refis, the economist said, but he did not offer any hard dollar numbers for either 2002 or 2003. Fannie Mae can be found on the Web at http://www.fanniemae.com.

The average one-year ARM rate hit a record low for the week ending Dec. 20 as the average 30-year fixed mortgage rate fell slightly to 6.03% from 6.04% the previous week, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell from 5.46% to 5.42%, while the average rate for one-year Treasury-indexed adjustable-rate mortgages dropped from 4.18% to 4.07%, its lowest level since Freddie Mac started tracking it in 1984. Fees and points averaged 0.6 points for all three mortgage categories. "It was no great surprise that housing starts rose for the second time in three months, since mortgage rates in November reached levels not seen since the mid-1960s," said Frank Nothaft, Freddie Mac's chief economist. "Since mortgage rates are not expected to increase significantly, we remain confident that the housing industry will continue to be alive and active well into 2003." A year ago, the average 30-year and 15-year fixed rates were 7.17% and 6.65%, respectively, and the average one-year ARM rate was 5.27%, Freddie Mac said. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Aames Financial Corp., Los Angeles, has reported the completion of its debt exchange offer.Under the offer, holders of 5.5% convertible subordinated debentures due 2006 were to tender them for new 4.0% convertible subordinated debentures due 2012. After several extensions, the exchange period closed Dec. 13 with 43.5% of the outstanding units tendered, representing a principal amount of $49.5 million. Aames said that on Dec. 23 it will redeem, through a scheduled mandatory sinking fund payment, 40% of the new debentures then outstanding on a pro rata basis at a redemption price equal to 100% of their principal amount plus interest.

Donald P. Lofe Jr. has been named executive vice president and chief financial officer of The PMI Group Inc., Walnut Creek, Calif.Mr. Lofe was most recently senior vice president for corporate finance at CNA Financial Corp., PMI said. He was previously a partner at PricewaterhouseCoopers LLP. PMI, a provider of private mortgage insurance, can be found on the Web at http://www.pmigroup.com.

Fidelity National Financial Inc., Irvine, Calif., has promoted Raymond R. (Randy) Quirk to president.Mr. Quirk joined FNF in 1985 and was most recently co-chief operating officer. His other positions at the company have included vice president and county manager, regional manager, and division manager. Mr. Quirk replaces Patrick F. Stone, who relinquished the position to concentrate on his duties as chief executive officer of Fidelity National Information Systems, a separate publicly traded company of which FNF is the majority owner. Mr. Stone remains as a director of FNF.

If mortgage rates hit 7% the refi market will "evaporate," according to a new study commissioned by the Homeownership Alliance, which is funded in part by Fannie Mae and Freddie Mac.Written by Mark Zandi, chief economist for Economy.com, the study says that if rates rise to 6.5%, about one-third of borrowers will be eligible to refinance. According to figures compiled by National Mortgage News, refis account for about 65% of all loans funded. (The information is contained in NMN's Quarterly Data Report.) The new HA study says about $1.24 trillion in mortgage debt will be refinanced in 2002, compared with $1.2 trillion in 2001. "There is also worry over the potential for heightened credit-risk posed by the increased mortgage debt loads of cash-out borrowers," writes Mr. Zandi. But he says even if rates rise a bit, refis could continue strong in 2003 thanks to the growing popularity of adjustable-rate mortgages -- especially 3-1, 5-1, and 7-1 structures. Based in Washington, and managed by a former top aide to Sen. John McCain, R-Ariz., the Homeownership Alliance is bankrolled by other housing/mortgage-related groups as well as Fannie and Freddie. It can be found online at http://www.homeownershipalliance.com.

Mortgage applications rose 14.2% on a seasonally adjusted basis for the week ended Dec. 13, according to the Mortgage Bankers Association of America's Weekly Mortgage Applications Survey.On an unadjusted basis, applications were up 14.0% on the week and 83.1% from the level recorded a year earlier. On a seasonally adjusted basis, the Purchase Index rose from 358.8 to 379.9, and the Refinance Index climbed from 3793.8 to 4507.6. Refinancings represented 73.0% of total applications, up from 70.0% the previous week, while adjustable-rate mortgages accounted for 14.1%. The average contract interest rate for 30-year fixed-rate mortgages decreased from 5.95% to 5.91%, and points (including the origination fee) increased from 1.42 to 1.50 for loans with 80% loan-to-value ratios, the MBA reported. The MBA can be found online at http://www.mbaa.org.

Essex Property Trust, Palo Alto, Calif., has acquired John M. Sachs Inc.'s multifamily portfolio in a transaction valued at approximately $301 million.Essex Property Trust, Palo Alto, Calif., has acquired John M. Sachs Inc.'s multifamily portfolio in a transaction valued at approximately $301 million. The portfolio consists mostly of apartment communities, with some recreational vehicles and manufactured housing. The merger will increase the size of Essex’s San Diego apartment portfolio from 326 units to 3,009 units, representing 13% of its total apartment portfolio, the real estate investment trust said. Essex is funding the merger through a combination of stock, assumption of liabilities, and cash. The REIT will issue 2.719 million shares of common stock at $49.25 each. In addition, it is assuming mortgages totaling approximately $64.6 million (at a fixed interest rate of 5.51%) on four of the acquired properties, and will be responsible for repaying existing liabilities of about $33 million. "San Diego’s diverse employment base and above-average job growth is highly desirable to renters and investors alike," said Keith R. Guericke, president and chief executive officer of Essex.

Charter Municipal Mortgage Acceptance Co., New York, has agreed to acquire 100% of the ownership interests of Related Capital Co. and "substantially all" the businesses operated by RCC in a transaction valued at up to $338 million.CharterMac, a financier of multifamily housing, said the acquisition will enable it to end its outside management agreement with Related Charter LP, an RCC affiliate, and become a self-advised and self-managed company. The terms of the deal include an initial payment of $210 million in stock and cash and a contingent payment of up to $128 million in stock, depending on the determination of RCC's adjusted audited earnings for the year ending Dec. 31. "The acquisition of Related Capital will allow CharterMac to further diversify its revenue sources and expand its business lines, while eliminating the perceived conflicts of interest associated with an external management structure," said Stuart J. Boesky, CharterMac's chief executive officer. The investment banking firm of Dresdner Kleinwort Wasserstein acted as financial adviser to the Special Committee of CharterMac's board of trustees that explored its strategic alternatives. The company can be found on the Web at http://www.chartermac.com.

Conseco Inc., Carmel, Ind., and its subsidiary, Conseco Finance Corp., St. Paul, Minn., have filed separate petitions for Chapter 11 protection in the Federal Bankruptcy Court for the Northern District of Illinois.As part of the filings, Conseco Finance announced it has reached an agreement in principle to be acquired by CFN Investment Holdings LLC, a joint venture of Fortress Investment Group LLC, J.C. Flowers & Co. LLC, and Cerberus Capital Management LP. The proposed purchase price would equal the amount of Conseco Finance's secured debt as of the deal's closing date, subject to adjustment. Conseco Finance has obtained $125 million in debtor-in-possession financing from an affiliate of the buyer and one of its existing lenders. While the parent company had been in debt problems for some time, the likelihood of bankruptcy at Conseco Finance only became apparent when it announced that it had not made $4.7 million in guarantee payments on Dec. 2 related to manufactured housing securitization trusts.

Berkshire Mortgage Finance, Boston, now services more than $3 billion of Freddie Mac multifamily mortgage loans, the company has announced.The milestone means Berkshire Mortgage Finance is Freddie Mac's second-largest multifamily loan servicer. Berkshire Mortgage Finance is the largest privately held commercial mortgage lender in the United States, servicing a total portfolio of more than $15 billion. Berkshire said it is also Freddie Mac's third-largest Program Plus correspondent this year.

New Century Financial Corp., Irvine, Calif., has received a "#1 Strong Buy" rating from Zacks.com, Chicago.The subprime lender has forward commitments totaling $3.5 billion for the fourth quarter, most of it to previous buyers of its product. "Analysts seem satisfied as well, with this year's estimates rising slightly over the past several months, but next year's improving by approximately 30 cents in just the past seven days," Zacks said. "This vote of confidence from its investors, along with a good track record of meeting or exceeding earnings estimates, suggests that an investment in NCEN may be just as good as taking out a second mortgage."

Charles E. Miller Jr. has been named chief financial officer of Sizeler Property Investors Inc., New Orleans.Mr. Miller has worked at various real estate companies with investments in the same types of properties that Sizeler has in its portfolio, such as retail, multifamily, and other income-producing properties, the real estate investment trust said. Thomas A. Masilla Jr., Sizeler's vice chairman and president, had assumed the duties of interim CFO pending the appointment. The REIT can be found on the Web at http://www.sizeler.net.

The commercial real estate sector is likely to see a modest rebound over the next two years, according to the National Association of Realtors.The Washington-based trade association is basing its outlook on a pickup in leasing activity. “With low inventories and very low borrowing costs, we expect business capital spending to rise and create more jobs over the next two years, so we are cautiously optimistic for a rebound in the commercial sector,” said David Lereah, the NAR’s chief economist. The NAR expects 25 metro office markets -- including Washington, D.C., New York City, and Los Angeles -- to outperform other markets over the next two years, with above-average occupancies. In the warehouse sector, 26 markets -- including Los Angeles, St. Louis, and East Bay, Calif. -- are expected to outperform other markets. Twenty-one retail markets -- including San Diego, New York, and Boston -- are expected to lead the rest. In the multifamily sector, the trade association expects 22 markets to have “the most favorable demand/supply fundamentals over the next two years.” They include Minneapolis, Chicago, Boston, and northern New Jersey.