Originations

Nomura Securities Co. Ltd. subsidiary Capital Company of America, San Francisco, has priced $1.1 billion in commercial mortgage pass through certificates through trust fund CASC Commercial Mortgage Trust 1998-D7.Bridge/Telerate reported that the largest piece of the deal, a $633 million, 9.7-year tranche carrying the top investment grade rating priced at 155 basis points to the Treasury curve. The deal was backed by a pool of 194 fixed-rate mortgages secured by first liens on 366 commercial and multifamily properties, according to a preliminary prospectus supplement. It was the first securitization done by Capital Company of America since major CMBS player Ethan Penner left the firm and the company confirmed that it had taken a loss related to recent market volatility that upset the CMBS market's pricing.

To pay for the Higher Education Act (H.R. 6), House and Senate conferees agreed to increase the Ginnie Mae guaranty fee from 6 basis points to 9 bp, starting Oct. 1, 2004.The delayed effective date is strictly a budgetary device to pay for higher interest rate subsidies on student loans in the second five years of the authorization bill. However, proponents of increasing Ginnie Mae fees secured their first victory and it leaves the possibility open that the next Congress will go for an immediate increase in Ginnie Mae fees to pay for some other program. The Congressional Budget Office estimates a 3 bp increase in Ginnie Mae fees raises $40 million in extra government revenues per year and a 6 bp increase raises $80 million. The conferees were "under strong pressure" to go with an immediate 6 bp increase, a source said. But the conferees decided to pay for the first five years by eliminating the discharge of student loans in bankruptcy. The bankruptcy provision raises $215- $260 million over five years. "Although this [Ginnie Mae] fee increase is outside our committee's jurisdiction, it is the understanding of the conferees that it can be implemented in a way which does not adversely affect low-income homebuyers," the H.R. 6 conference report says. The House and Senate are expected to pass the conference report this week and send it to the President for his signature.

Prime Group Realty Trust, a REIT that invests in Chicago-area office and industrial real estate, has been sued for wrongfully terminating its contract to purchase IBM Plaza in Chicago and National City Center in Cleveland.In dispute is $20 million of earnest money being held in escrow. Richard S. Curto, president and CEO of the REIT, disputed the claims and said the firm would "vigorously defend the litigation and pursue other available remedies." The company's portfolio consists of 24 office properties, containing an aggregate of 5.8 million net rentable square feet and 46 industrial properties that also contain an aggregate of 5.8 million net rentable square feet. The portfolio also includes 224.5 acres of developable land and rights to acquire more than 324.8 additional acres of developable land.

Acting Comptroller of the Currency Julie Williams is warning bankers about eroding underwriting standards on home equity loans and high LTV loans."While competition is steadily driving down prices, the risks of home equity lending are increasing," the comptroller warned. Consumers are struggling with heavy debt loads, she said, and consumer loans may not be a safe haven in the next economic downturn. "Given the high costs of foreclosure and remarketing, that portion of any loan -- first or second -- that exceeds 85% to 90% of the home's appraised value is tantamount to unsecured credit at secured prices -- a bargain no sensible banker should accept," Ms. Williams told an American Bankers Association conference in Orlando, Fla., this morning.

Amresco has issued a $1 billion home equity securitization with a Freddie Mac guaranty on the $275 million fixed-rate portion of the offering.The fixed-rate classes of the series 1998-3 security, A-1 through A-6, are backed by mortgage loans that conform to Freddie Mac's subprime standards, Amresco said. "As ABS spreads have widened significantly in the last couple of weeks, this unique Amresco transaction has received significant economic benefits from the Freddie Mac wrap, in addition to deepening the investor base," said Scott J. Reading, president of Amresco Home Equity Lending, Ontario, Calif. Credit enhancement for the approximately $725 million floating-rate portion of the deal was provided through a senior/subordinate structure. The collateral consists mainly of first lien home equity loans originated or acquired by Amresco. The company said it was the first Amresco transaction to include a special servicer role that is controlled by the residual holder. Amresco Residential Mortgage Corp. will be the servicer and contractual special servicer for the deal. Amresco's website address is http://www.amresco.com.

ContiMortgage Corp., New York, has priced a $2.1 billion securitization of home equity loans.ContiMortgage Home Equity Loan Trust 1998-3 is structured with 22 tranches and a combination of subordinated classes and a surety wrap for credit enhancement. All the class A tranches were priced at or near par, while classes B-1 and B-2 were priced at 96.5 and 97.2, respectively, ContiMortgage said. Yields range from 5.55% to 6.382% for the class A fixed-rate tranches and from 16 to 32 basis points over the London Interbank Offered Rate for the adjustable-rate tranches. The yield on the class B tranches is 9.05%. The trust also issued two interest-only classes, priced to yield 6.21%. The lead underwriter was Morgan Stanley Dean Witter. Co-managers were: Bear, Stearns & Co. Inc.; ContiFinancial Services Corp.; Credit Suisse First Boston; Greenwich Capital Markets Inc.; Merrill Lynch & Co. Inc.; and NationsBanc Montgomery Securities.

Sales of existing, single-family homes slid 3.7% in August as a result of the recent correction in the stock market, according to data released Friday by the National Association of Realtors.The NAR said existing, single-family homes sold at a seasonally adjusted annual rate of 4.73 million units in August, down from a record 4.91 million in July. Year over year, resales are up 10.5%. "The dip in numbers reflects a cautious correction in the market," said NAR president Layne Morrill. However, the trade group's consulting economist John Tuccillo said fluctuations in the market should ultimately have a positive impact on the real estate market. "The recent waves in the foreign markets have resulted in many investors' putting their money into U.S. Treasury bills, which has pushed bond yields down to extremely low levels," Mr. Tuccillo added. NAR is forecasting resales to top 4.70 million units in 1998, up from last year's record pace of 4.21 million sales. Meanwhile, the national median existing home price for August was $132,900, an increase of 4.2% from a year ago. The NAR's website address is http://nar.realtor.com.

United Companies Financial Corp., Baton Rouge, La., has announced the pricing of a $150 million securitization of manufactured housing contracts originated mainly by its subsidiary United Companies Funding Inc. UCFC Funding Corp., a subsidiary of UCFI, will act as the depositor of the trusts that will issue the securities.The lead underwriter will be Credit Suisse First Boston, and the co-manager will be First Chicago. UCFC's website address is http://www.unitedcompanies.com.

Countrywide Credit Industries Inc., Calabasas, Calif., has reported record unaudited earnings of $95.1 million for the fiscal second quarter ended Aug. 31, up 27% from $74.7 million (from ongoing operations) a year earlier.Earnings per share were $0.81, up from $0.67 (from ongoing operations) a year before, Countrywide said. Angelo M. Mozilo, Countrywide's CEO, said the highlight among many production records set during the quarter was record fundings of $22.9 billion, up 117% from a year before. "While this is predominantly a refinance market, purchase mortgage fundings also reached an all-time high of $11.5 billion during the quarter," Mr. Mozilo said. "This is especially significant since demand for purchase mortgages is less sensitive than refinance volume to interest rates." Subprime and home equity loans accounted for 14% of the production sector's pretax profits, he said. Countrywide's servicing portfolio was $195 billion at the end of the quarter with a weighted average coupon of 7.7%, and prepayments and servicing hedge performance "were in line with expectations based on the current rate environment," Mr. Mozilo said. Countrywide's website address is http://www.countrywide.com.

IMN Financial Corp., Melville, N.Y., has acquired Bankers Direct Mortgage Corp., a retail mortgage banking company, from C.F.I. Mortgage Inc. IMN Financial said the acquisition was based on an earn-out formula linked to profitability and did not require any stock issuance or cash payment.Edward R. Capuano, IMN's CEO, said the acquisition would bring the company's annualized total from retail mortgage closings through all subsidiaries to more than $1 billion. IMN is a full-service mortgage banking firm with 49 branches in 22 states. Bankers Direct has nine offices, seven in Florida and two in Colorado.

First Chesapeake Funding Corp., Plantation, Fla., has signed agreements to acquire three undisclosed mortgage companies.Terms were not released. The transactions will create an organization with monthly closed loan production in excess of $30 million and historic net profits of more than $2 million annually. First Chesapeake Funding will have 13 branches in seven states that offer conventional and alternative documentation loans on a wholesale and retail basis. First Chesapeake Funding's president, Les Salzman, said the company "will be in markets that we are comfortable with and can manage effectively while offering a blend of loans that provide a hedge against interest rate sensitivity."

The merger of Travelers Group Inc. and Citicorp into a combined company to be called Citigroup Inc. has received conditional approval from the Federal Reserve Board.Following the Fed announcement, the companies said current plans call for completing the merger on Oct. 8 after a mandatory post-approval 15-day waiting period. Under the transaction, Travelers will become a bank holding company -- and the largest financial services company in the world -- by acquiring Citicorp and retaining certain nonbanking subsidiaries such as Salomon Smith Barney Inc., the nation's largest underwriter of mortgage-backed securities. The Fed said the approval is subject to the condition that Travelers and the combined company, Citigroup, conform the activities and investments of Travelers and its subsidiaries to the requirements of the Bank Holding Company Act. This includes the divestiture as necessary, within two years of the merger, of nonconforming activities by Travelers so that such activities would represent less than 15% of Citigroup's total assets and less than 20% of its revenues, the Fed said. The companies said Citigroup shares will trade on the New York and Pacific stock exchanges under the symbol CCI. Citicorp shares will be converted at the ratio of 2.5 Citigroup shares for each Citicorp share, while Travelers shares will be converted on a one-for-one basis, they said. The Fed's website address is http://www.federalreserve.com.

The average 30-year fixed mortgage rate inched down to 6.64% for the week ending Sept. 18 from the record low 6.66% the week before, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate fell to 6.32% from 6.35%, and the average rate for one-year Treasury-indexed adjustable-rate mortgages dipped to 5.42% from 5.43%. Fees and points averaged 1.0 for 30-year mortgages, 0.9 for 15-year mortgages, and 1.1 for one-year ARMs, according to the survey. "Interest rates remain the lowest in Freddie Mac history; indeed, they are the lowest we have seen since 1967," said Frank Nothaft, Freddie Mac's deputy chief economist. "Because of the current low interest rate environment, Freddie Mac economists expect that existing home sales figures will continue at a brisk pace of 4.8 to 4.9 million units in August and September." Mr. Nothaft said very low inflation and an "essentially nonexistent" budget deficit are keeping mortgage rates at historical lows. If the Federal Reserve Board lowers interest rates at its next meeting, it would be likely to have more effect on one-year ARM rates than on longer-term rates, he said. A year ago, the average 30-year and 15-year fixed rates were 7.28% and 6.86%, respectively, and the average one-year ARM rate was 5.51%. Freddie Mac's website address is http://www.freddiemac.com.

Chase Manhattan Funding, Woodcliff Lake, N.J., is looking for strategic alliances among the battered subprime lending companies.Chase executive vice president Sam Cooper told a Housing Roundtable meeting in Washington, D.C. Thursday morning that he just received approval to seek out strategic alliances. "Companies at $30 a share I didn't like. At $15 a share I felt OK about. At $5 a share they look pretty attractive," he said. Chase recently completed a whole loan sale of $2.5 billion in subprime mortgages, and since January the company has been diversifying its originations. "We have moved very dramatically into retail," Mr. Cooper said. CMF has opened 18 retail offices this year.

The Indiana Housing Finance Authority has dropped the interest rate on its First Home mortgage loans from 6.50% to 6.25%, the lowest rate the IHFA has ever offered.The new rate applies to conventional loans as well as loans backed by the Federal Housing Administration, the Department of Veterans Affairs, and the U.S. Department of Agriculture. The IHFA funds 30-year fixed-rate loans for low- and moderate-income families buying homes in Indiana, in cooperation with about 100 banks and mortgage companies, the agency said. The First Home program, generally limited to first-time homebuyers except in certain rural and inner-city areas, derives its funding from the sale of bonds to private investors.

The Bank of New York Co. Inc. has announced the creation of a new Asset Based Lending Sector, including BNY Mortgage Co., that will be headed by senior executive vice president Robert J. Mueller.In addition to BNY Mortgage, the new sector includes BNY Financial Corp., BNY Capital Funding LLC, and its regional commercial banking, business and professional banking, real estate, and marine transportation divisions, the company said. The change came as part of a structural realignment and numerous appointments, including that of senior executive vice president Thomas J. Perna to head the newly formed Financial Companies Services Sector. The sector encompasses the banking needs of the financial services, government banking, and securities industries. BNY's website address is http://www.bankofny.com.

United Companies Financial Corp., Baton Rouge, La., has announced the pricing of a $1.3 billion home equity loan securitization.UCFC Acceptance Corp., a subsidiary of UCFC, will act as the depositor of the trusts that will issue the securities. The lead underwriter for the sale of the deal's $425 million of fixed-rate securities will be Prudential Securities Inc., and the co-managers will be Salomon Smith Barney and First Union Capital Markets. The lead underwriter for the sale of the $900 million of adjustable-rate securities will be Morgan Stanley Dean Witter, with J.P. Morgan Inc., Prudential, and Nations Bank NA as co-managers. The certificates are expected to be insured by Financial Guaranty Insurance Co. As in its previous quarterly transactions, UCFC Acceptance will hold a percentage of the proceeds from each sale in a pre-funding account pending delivery of additional home equity loans to the trustee, UCFC said. UCFC's website address is http://www.unitedcompanies.com.

Mortgage applications rose 24.1% for the week ended Sept. 18 from the holiday-shortened Labor Day week, but despite a real increase in the Refinancing Index the overall Market Index was down slightly on a seasonally adjusted basis, according to the Mortgage Bankers Association of America's weekly Mortgage Application Survey.The Purchase Index rose 13.6%, the Refinancing Index jumped 32.5%, the Conventional Index increased 24.9%, and the Government Index was up 20.5%, the survey indicated. On a seasonally adjusted basis, the Market Index slipped from 572.3 the previous week to 570.5; the Purchase Index decreased from 302.5 to 278.3; the Refinancing Index rose from 2141.9 to 2269.9; the Conventional Index inched up from 742.6 to 744.7; and the Government Index fell from 288.2 to 279.8. Refinancings represented 59.1% of total applications, up from 55.4% the previous week, while adjustable-rate mortgages accounted for 7.7%, unchanged from the week before. Overall, applications were 94.1% higher than in the same week last year. The address of the MBA's website is http://www.mbaa.org.

The Mortgage Guaranty Insurance Co., Milwaukee, is testing a new valuation service with selected clients that completely eliminates the need for on-site appraisals.The largest mortgage insurer is taking samples of already closed loans and running the transmittal summaries through a database, MortgageWire has learned. One lender said that more than 75% of its loans passed and MGIC would not require an appraisal to insure the loan. "It would be a tremendous service," the lender said. "The turnaround time is one day, which means we could close a loan in a few days." MGIC officials declined to comment on the testing program. A spokesman said the company is not ready to make an announcement.

Norwest Asset Securities Corp., Frederick, Md., has announced the offering of approximately $368 million of securities backed by fixed 10- and 15-year relocation and non-relocation mortgage loans.Credit enhancement for NASCOR Mortgage Pass-Through Certificates, Series 1998-27 will be provided through the use of a senior/subordinated structure. The underwriter is Bear Stearns, and the transaction is scheduled to settle on Oct. 29. Issuance and post-issuance information will be available after settlement from the SecuritiesLink Advanced Information Services website (http://www.securitieslink.net).