Originations

Friedman, Billings, Ramsey & Co., Arlington, Va., has established research coverage for the four publicly traded stand-alone mortgage insurance companies.Paul Miller, an analyst for FBR, said mortgage insurance companies offer "plenty of upside over the next 12 to 18 months. While earnings-per-share growth rates will slow down from the 17%-plus EPS growth rates experienced over the last five years, returns on equity should remain strong and the relative valuations remain very inexpensive at current levels, with the group currently trading at eight times fiscal year 2003 estimates." FBR rates MGIC Investment Corp. and Triad Guaranty Inc. as "market perform," and PMI Group Inc. and Radian Group Inc. as "outperform."

Chelsea Property Group, Roseland, N.J., is acquiring four outlet centers from New Plan Excel Realty Trust for $193 million in cash.The four properties, totaling 1.3 million square feet, are the Jackson Outlet Village in Jackson, N.J.; Factory Outlet Village Osage Beach in Osage Beach, Mo.; St. Augustine Outlet Center in St. Augustine, Fla.; and Factory Merchants Branson in Branson, Mo. Chelsea said the transaction "marks another significant trend in the consolidation of the outlet industry." The transaction is expected to close in December. Chelsea, a retail real estate investment trust, can be found online at http://www.cpgi.com.

William J. Popejoy, a former president of Freddie Mac, and Donald E. Lange, a former president of the Mortgage Bankers Association of America, have been appointed to the board of directors of New Century Financial Corp., Irvine, Calif., increasing the size of the board to nine members.Mr. Popejoy, 64, is chief executive officer of Pacific Capital Investors and serves as a trustee of PIMCO Funds that manage $200 billion in assets, New Century said. He was previously president and CEO of several publicly traded companies, including Freddie Mac; chairman and CEO of American Savings and its parent, Financial Corp. of America; and CEO of both Far West Savings and Financial Federation. Mr. Lange, 57, a certified mortgage banker, is president and CEO of Pacific Financial Services, a mortgage banking and specialty finance company. He served as president of the MBA in 1999, and now serves on the MBA's Commercial Board of Governors.

Large potential acquirers that were last in the market for mortgage companies in 2000 and 2001 have recently begun to show renewed interest in buying originators that produce $1 billion or more annually, according to investment banking firm Startbank, New York.Richard Easton, chairman and chief executive officer of Startbank, said this stems in part from the fact that those former buyers have just finished digesting their past acquisitions. In addition, he said sellers' offering prices have reached a point where they are more in line with what buyers are willing to pay than they have been in the past. Mr. Easton said his company represents both buyers and sellers. Startbank represents 16 companies in the latter category, each of which originates from $300 million to $1 billion per year. Startbank can be found on the Web at http://www.startbank.com.

RE/Max of New York Inc., a residential real estate sales network, and Personal Lines Insurance Brokerage Inc. have formed an alliance that will help real estate buyers find personalized insurance products and services. "The real estate buying process can be confusing and stressful, especially for first-time homebuyers," said RE/Max president Henry Weber. "Securing the appropriate insurance for a new home is one of the most important steps in the homebuying process." As part of the alliance, information about the services and insurance products offered by PLI Brokerage will be prominently displayed on the RE/Max website, at http://www.800remax-ny.com.

New York-based iStar Financial has announced that an underwritten public offering of 8.0 million shares of its common stock is now under way.In addition, Starwood Opportunity Fund IV LP is proposing to sell 2.0 million shares of common stock owned by the fund, and it has agreed to sell up to an additional 1.5 million shares to the underwriters to cover any overallotments. The net proceeds from the offering of iStar's shares will be used to repay secured indebtedness. As part of the offering, iStar and the fund have agreed not to sell any other shares of common stock for 90 days, subject to customary exceptions. Assuming that the overallotment option is exercised in full, the Starwood fund will own approximately 20.1% of iStar's common stock after the offering, iStar said. The joint lead managers of the offering are Lehman Brothers Inc. and Merrill Lynch & Co. The finance company, which specializes in commercial real estate, can be found on the Web at http://www.istarfinancial.com.

New Plan Excel Realty Trust is acquiring a portfolio of 58 community and neighborhood shopping centers from Equity Investment Group, a private retail real estate investment trust, for approximately $437 million.The purchase price includes the assumption of about $152 million of outstanding debt, the issuance of about $25 million worth of units in a New Plan-controlled partnership, and about $260 million of cash, New Plan said. The retail REIT expects to finance the cash portion of the purchase price initially through its existing credit facility. The portfolio, totaling 7.9 million square feet, is located in 22 states, predominantly in the Central and Eastern regions of the United States. Glenn J. Rufrano, New Plan's chief executive officer, said the transaction "represents the continued execution of our stated business plan to be a dominant, national owner of high-quality and well diversified community and neighborhood shopping centers."

Countrywide Credit Industries, Calabasas, Calif., has announced that its name has been changed to Countrywide Financial Corp. to reflect the company's evolution into a provider of diversified financial services.To commemorate the event, Angelo R. Mozilo, Countrywide's chairman, chief executive officer, and president, and Stanford L. Kurland, its chief operating officer, will ring the opening bell at the New York Stock Exchange on Nov. 13, when the company's new ticker symbol (CFC) will be introduced. In addition to Countrywide's mortgage banking operations via its Countrywide Home Loans subsidiary, the company now includes five other business segments: loan closing services through its LandSafe companies; insurance services through several subsidiaries; capital markets services via Countrywide Securities Corp.; banking services via Countrywide Bank, a division of Treasury Bank NA; and global mortgage processing and servicing via Global Home Loans. The company can be found on the Web at http://www.countrywide.com.

Federally subsidized housing has a significantly smaller adverse effect on neighboring property values than commonly believed, according to a study sponsored by the NAR's new Housing Opportunity program.Using new methodology to judge the impact of housing for low-income residents, the study by George Galster of Wayne State University in Detroit found that various forms of assisted housing have had insignificant effects on the value of surrounding properties. In some cases, it has even had a positive effect on values. Moreover, in places where prices fell, the decline was related more to the size and scale of the subsidized project than to the fact that its residents received assistance to pay their rents. Dr. Galster faulted previous studies on the topic, saying they suffer from serious shortcomings that render them of questionable value. However, he said his methodology must be replicated in more research before drawing definite conclusions.

Sometimes missing from the affordable housing table, the National Association of Realtors now promises to be absent no more.At its annual convention in New Orleans, the NAR officially launched a Housing Opportunities program that outgoing president Martin Edwards called "a big deal for this organization." Mr. Edwards said few others can bring as much to the affordable housing arena as realty professionals. "It's an area where the Realtor can be extremely effective," he said. "They understand housing and they are local. They are community-based entrepreneurs who make their livings at the corner of 4th and Main." The ambitious program is aimed at equipping the real estate community and others interested in advancing the cause with tools to research successful programs, communicate ideas, and train themselves and others. Another aspect of the effort will be to build national, state, and local coalitions that promote affordable housing at all levels.

The politically influential NAR has been asked to put forth the "same energy" to protect homebuyers and owners from property insurers who use credit scores to deny coverage or jack up rates that it has used to keep banks out of real estate.Lynn King, director of legislative and regulatory affairs at the National Community Reinvestment Coalition, said her group is "very, very troubled at the increased use of scoring in the insurance field." She told the NAR convention that 92% of all carriers use scoring but won't reveal how ratings are calculated. However, Donald Griffin of the National Association of Independent Insurers defended the practice. He said actuaries believe scoring is now "the No. 1 predictor" of homeowner insurance losses. At the same time, though, he admitted that the industry hasn't done as good a job as it should in proving the correlation, and vowed to do better. Meanwhile, the NAR, concerned that property insurance has become increasingly difficult and more expensive to obtain, has created a task force to recommend what actions the 840,000-member group can take. "There is not a state where we don?t have insurance issues," said Jeanette Way of Gateway Realty, Vacaville, Calif.

The typical owner of multiple residences is significantly older than previously believed, new research by the National Association of Realtors has found.Earlier data extrapolated from the NAR?s semiannual profile of all buyers and sellers had pegged the median age at a relatively young 46. But a new survey that NAR chief economist David Lereah believes will now become the benchmark for the second market found that the median age is really 61. The survey, released over the weekend at the NAR?s annual convention in New Orleans, also discovered that the second-home market is far larger than originally thought, accounting for roughly 6% of all homes sold annually. And in what Mr. Lereah called "another real surprise," the survey of 3,100 owners found that most buy second homes as vacation spots. Only 22% are buying another residence purely as an investment play. But either way, they are seeing their second properties appreciate at a much faster pace than their primary residences. The study found that prices in the second-home sector rose nearly 27% from 1999 to 2001.

Although housing must "ultimately co-exist" with the rest of the economy, not even a prolonged war with Iraq will put much of a dent in the market, the chief economist of the National Association of Realtors said over the weekend at the NAR's annual convention in New Orleans.At worst, David Lereah said, a war will bring existing-home sales down to the 5.1 million-a-year level, or about the equivalent of a 150-basis-point increase in loan rates. "That's still a pretty healthy housing environment," he said. On the other hand, a short-lived fight like the Gulf War a decade ago would cause only a brief dip in the market. Some people will postpone buying, "but they will come right back" once the fighting is over, the NAR economist said. Absent any conflict, Mr. Lereah is predicting that mortgage rates will rise "modestly" to an average of 6.8% next year, driving existing-home sales down only marginally to 5.27 million. Even at that, 2003 would still go down as the third-best year ever for resale houses. When the final tally for 2002 is taken, he projects that sales will reach a record 5.47 million units, a 3.4% increase from 2001. The NAR can be found online at http://realtor.org.

Banc of America Large Loan Inc.'s commercial mortgage pass-through certificates, series 2001-WBM, has been downgraded from A to BBB-plus and removed from CreditWatch with negative implications by Standard & Poor's Ratings Services.The outlook is Developing. The certificates are collateralized by a $130 million fixed-rate, interest-only loan secured by a leasehold mortgage on the Waikiki Beach Marriott Resort in Hawaii, S&P said. The rating action was attributed to the recent lowering of the financial strength rating of Royal Indemnity Co. from A to BBB-plus. Royal reinsures the guarantee by Financial Structures Ltd. to pay interest and principal on the hotel loan. S&P can be found on the Web at http://www.standardandpoors.com.

Sales of existing condominiums and cooperatives slipped 1.3% in the third quarter to 815,000 units, but are still on track to set a new annual record, according to the National Association of Realtors.While third-quarter sales were down from the 826,000 units sold in the second quarter, they were up 5.4% from the 773,000 units sold a year earlier, the NAR said. David Lereah, the NAR's chief economist, said the three strongest quarters on record for condominium sales were all in 2002. "So far this year, the annual pace of condo sales has averaged an 826,000-unit pace," he said. "This is far above our previous annual record of 746,000 units set in 2001, so we'll easily set a new record this year." Low mortgage interest rates continue to spark condominium sales, with the average commitment rate on a 30-year fixed-rate mortgage at 6.29% for the third quarter, down from 6.82% in the second quarter, the NAR noted, citing Freddie Mac's mortgage market survey. The median price of an existing condo stood at $143,000 for the third quarter, up 14.9% from the third quarter of 2001.

Charlotte, N.C., has topped the latest list of housing markets showing signs of improvement over the next two years based on the mortgage risk index maintained by United Guaranty Corp., Greensboro, N.C.The other top-ranked metropolitan statistical areas are: Dallas; Sacramento, Calif.; Las Vegas; and West Palm Beach, Fla. 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. Charlotte, with a score of 1 in the fourth quarter, had a low annualized home price appreciation rate of 2.3% in the second quarter and has experienced a significant drop in unemployment, UGC said. The other four MSAs had scores of 2 in the latest report. UGC can be found online at http://www.ugcorp.com.

NovaStar Mortgage Inc., Westwood, Kan., has announced plans to step up its government lending operation in the wake of its recent approval as a direct-endorsed government lender.Plans call for a rollout to all of NovaStar's branch and wholesale broker communities by the end of the first quarter of 2003, the company said. The program is now being offered to a select group of NovaStar?s 180 branch offices each month. In connection with the new program, NovaStar said it will offer extensive training in government lending for brokers "who wish to gain a better understanding of compliance issues and other intricacies of government lending." All brokers must pass a standardized test in order to offer Federal Housing Administration and Department of Veterans Affairs products. NovaStar Mortgage is a subsidiary of NovaStar Financial Inc., a real estate investment trust that originates single-family residential mortgage loans. NovaStar can be found on the Web at http://www.enovastar.com.

Fannie Mae does not buy into housing "bust" fears, but its vice president of credit policy is expressing caution about local markets.Speaking at an underwriting conference in Washington, Joseph Biegel said, "It's possible that local housing markets will appreciate more slowly or go negative." He added that some markets "have really inflated, and it's inevitable they will go down." In a speech to the conference, sponsored by the Mortgage Bankers Association of America, he did not single out any geographic areas. (However, over the past few months some housing economists have singled out Austin, Texas, the technology belt in California, and certain regions in New England as areas of concern.) Mr. Biegel also noted that Fannie Mae has reported "hundreds and hundreds" of appraisers to state agencies over the past year because of concerns about their work. Mary Crate, a credit policy manager for Freddie Mac, also spoke at the meeting, noting that the investor is making some underwriting changes to its niche programs, including construction-to-permanent loans. The two government-sponsored enterprises can be found online at http://www.fanniemae.com and http://www.freddiemac.com.

The Financial Accounting Standards Board is expected to issue a statement of position in the next few weeks that would create a new accounting regime for purchased loans that have deteriorated in credit quality, and the SOP is likely to have implications for the acquisition of mortgage companies.The SOP would eliminate allowances for loan losses on purchased loans and require the buyer to record the loan based on expected cash flows. Further deterioration of the loans would trigger loss recognition, while improved cash flows would prompt the buyer to recognize a higher yield. The Securities and Exchange Commission has signaled that the new SOP will be applied to acquisitions of banks and mortgage companies, which would eliminate the creation of allowances for losses by the acquirer. Regarding disclosure, the SOP is designed to give a clearer picture of loan quality and loan performance over time by comparing contractual cash flows with expected cash flows. "We thought that would be useful information for investors -- to be able to get some idea of the quality of the loans you're buying," said Dorsey Baskin, who has been working on the SOP for the past five years. Mr. Baskin is with Grant Thornton in Dallas. Lenders will have a year to implement the changes.

CharterMac, New York, has reported net income of $12.2 million for the third quarter, an 18.3% increase from $10.3 million in the third quarter of 2001.On a per-share basis, though, the multifamily financier's net income declined to $0.28 per share, down 11.8% from $0.31 per share a year earlier. The company's revenues rose to $28.6 million, up 48.3% from $19.3 million in the comparable period of last year. Stuart Boesky, president and chief executive officer of the company, said CharterMac is "poised to meet all of our year-end goals." CharterMac can be found on the Web at http://www.chartermac.com.