"Cushman & Wakefield, Healey & Baker Annoucne $112M Merger"

In one of the largest mergers ever of real estate services firms, U.S.-based Cushman & Wakefield, Inc. and the Europe-based Healey & Baker today announced a merger valued at $112 million.

The merger culminates the two firms' eight-year joint initiative, and fully integrates their capabilities in the U.S., Asia, Europe, Africa and the Middle East.

Through this merger, combined annual revenues will reach $700 million, with more than 7,700 employees in 129 offices in 39 countries. Healey & Baker, based in London, will retain its name, and will remain a partnership with responsibility for business throughout Europe, the Middle East and Africa. Cushman & Wakefield, which will maintain its world headquarters in New York City, is committed to providing the capital to expand the business.

As a result of this merger, Cushman & Wakefield is investing $112 million in the Healey & Baker partnership, and in turn, 35% of that will be used by Healey & Baker Partners to purchase shares in Cushman & Wakefield Worldwide. In addition, Cushman & Wakefield will have a majority ownership position in Cushman & Wakefield Asia, which was formed in 1994.

"Panel Outlines Remedies to Cut Property Taxes"
New York Times (09/16/98) P. A27

A New Jersey state commission yesterday offered 60 recommendations on how to reduce property taxes in the state. The options included salary caps on public employees, school district consolidation, taxes on parking and entertainment, and impact fees on developers whose projects will affect local schools and parks. Gov. Christine Todd Whitman should announce today which measures she will support.

"General Accounting Office Finds Silver Lining in Controversial High-LTV Mortgage Lending"
American Banker (09/16/98) P. 28; Barancik, Scott

A recent report issued by the General Accounting Office (GAO) has helped ease some concerns about the growing high loan-to-value (LTV) lending market. The study showed that most consumers use the loans to replace credit card debt because the loans have lower interest rates and longer repayment terms. At the same time, lenders benefit from interest rates on the loans that are higher than traditional home loans. The market for high LTV loans has grown in recent years, with FirstPlus Financial Group Inc. one of the industry's leaders, but Sen. Lauch Faircloth (R.-N.C.) was concerned that consumers borrowing the loans were mortgaging their homes beyond their value. After reading the report, Faircloth said the loans "serve consumers well, without undue effects on consumer debt and the housing markets." But the GAO also warned of the inherent risks in high LTV lending, such as the effects of an economic downturn and the difficulty in selling the home or refinancing the mortgage. A typical high LTV loans averages $30,000 and covers 110 percent of the home's value. Borrowers are normally in their late 30's with annual incomes of $60,000.

"Asset-Backed Securities"
Wall Street Journal (09/16/98) P. C24

Freddie Mac extended its triple-A guarantee on a sizable segment of Amresco's $1 billion home-equity-loan offering. Under terms of the arrangement, fixed-rate bonds represented $418.6 million of the deal and Freddie Mac agreed to back $275.6 million. The Dallas-based mortgage-finance group joined with Freddie Mac, in an effort to sell its bonds despite turbulent market conditions. Amresco has successfully sold a $581.4 million floating-rate segment under its own title.

"Surprise Mortgage Fees Draw Federal Scrutiny"
Philadelphia Inquirer (09/15/98) P. C5; Kristof, Kathy

The Mortgage Bankers Associations (MBA) has acknowledged the need for the overhauling of mortgage settlement rules, as more home buyers reveal their horror stories of discovering unexpected fees and charges at the close of escrow. Since the Real Estate Settlement Procedures Act does not penalize lenders for not disclosing these fees or for even raising fees over an estimated amount, the surprise costs during the settlement process will continue to anger home buyers. "What we are trying to do is change the fundamental premise," said Paul A. Mondor, senior director of regulatory affairs for the MBA. "We think the lender should quote the consumer a guaranteed rate."

"Freddie Mac Mortgage Portfolio"
Dow Jones (09/15/98)

On Tuesday, Freddie Mac released figures for August which indicated that the mortgage company's net portfolio increased by $4.3 billion during the month to $206.9 million. Mortgage purchases also grew significantly from $341 million in July to $874 million in August, while portfolio liquidations remained largely unchanged from $4.0 billion in July to $4.1 billion last month. The company's total mortgage-backed securities rose $7.0 billion to $625.1 billion and net commitments to obtain mortgages also increased to $10.5 billion, from $9.2 billion in July. Alongside the release of this portfolio summary, Freddie Mac also forecast additional growth in the annual net retained portfolio, to a figure between $40 billion and $50 billion.

"New-Home Prices on the Rise"
Philadelphia Inquirer (09/13/98) P. R1; Heavens, Alan J.

Although the Philadelphia market recovered from the early 1990s recession at a slower rate than most other regions, new home prices are finally on the rise. Average single-family home prices rose 7.6 percent to $242,795 in the first six months of 1998 from the same period last year, according to Meyers Housing Data Reports. This was the most significant rise reported in any region of the mid-Atlantic. Ken Sugarman, national operations director for Meyers, attributed the increase to low interest rates, strong consumer confidence, and increased luxury home development. In addition to single-family homes, townhouse prices also rose 2.6 percent, and condo prices rose 17.6 percent. The demand for new homes remains strong, despite stock market volatility. Nationally, the hottest markets in have been noted in the South and Southwest regions. Although prices are rising nationwide, they have increased very slowly, according to Kent Colton, executive vice president of the National Association of Home Builders(NAHB). Normally, home price increases are caused by strong market conditions, consumer demand, and increased cost of materials. This last factor has been important this year, as drywall, insulation, and hardwood prices have all risen. The only surprise has been the price of lumber, which is actually falling, according to David Seiders, chief economist of the NAHB. Lot prices have also increased. Yet, despite the rise in prices, experts say increases have been steady and should not cause inflation.

"Stock Slide Trims Area Home Sales"
Washington Post (09/12/98) P. D12; Lelen, Kenneth

A volatile stock market is starting to affect home sales in the Washington, D.C., area. Some investors are pulling their money out of large housing contracts, and others are avoiding the housing market altogether until the market settles down. Most of the transactions affected are for homes priced higher than $400,000, but the rest of the market is starting to feel the pressure as well. "When potential home buyers hear bad earnings reports or other bad economic news, they may feel insecure about the economy and jump out of making a big purchase like a home," according to Jason Altman, a housing economist with the National Association of Realtors. In other cases, homeowners planning to sell their property must sell their current home first, and this deal may be affected. But one good thing that has come out of stock market uncertainty is that many investors are turning to U.S. Treasury securities, which are making currently low mortgage rates fall even further and making buying a home more affordable.

"Senior Citizens Remain Active in Real Estate Market"
Today's Buyer's Rep (09/98) Vol. 7, No. 9; P. 4

Nevada is projected to have the greatest increase in residents age 65 or older by 2020. According to the U.S. Census Bureau, the elderly population in the state will soar by 115.6 percent by 2020. Nevada will be followed by: Arizona, which is projected to have a 111.9 percent increase in seniors; Colorado, which is projected to have a 108 percent increase in the elderly; and Georgia, which is projected to have a 104 percent increase in older Americans. And the states of Washington, Alaska, Utah, and California are projected to have the size of their seniors markets double by 2020. Nearly 20 states are projected to have at least one million elderly residents, compared to just nine states in 1993.

"Building Online Mortgage Applications Into the Home Buyer Home Pages"
Financial Service Online (09/98) P. 6

More and more companies are delving into the online mortgage business. Take, for example, Fairfax, Va.-based American Finance, which expects to have $1 billion this year in originations from Internet loans. To boost its market share, the mortgage provider has opted to use the name recognition of Microsoft and Intuit to showcase its own services. The newest addition to the online mortgage arena is Microsoft's HomeAdvisor; located at www.homeadvisor.com, the site combines information about home purchasing with mortgage information, and it allows users to also submit a mortgage application. LendingTree's LendingTree.com features 11 lenders on its homepage and charges lenders a flat fee for every approved loan, no matter it's dollar value, which is a real incentive to companies like Eastern Mortgage Service Inc. of Trevose, Pa. Eastern, which already secured $60 million in loans via the Internet by July, plans to have $100 million in online loans for the entire year. A third provider, QuickenMortgage, estimates its page, QuickenMortgage.com, gets 500,000 visitors and between 4,000 to 5,000 applications monthly. While each of the three pages list many mortgage lenders, each tries to offer something different. QuickenMortgage focuses on mortgages and real estate loans, LendingTree gives a wider selection of loan types, and HomeAdvisor features a conceptual organization that guides the user through the home-buying process.

"HomeShark Garner $20M in 3rd Round of Financing"

HomeShark Inc., an online discount mortgage broker and national home listings service, has closed on a $20-million third round financing, co-led by Weiss, Peck & Greer Venture Partners and Hyperion Partners.

"We have had significant interest from the investment community to participate in our third round of financing, but because of their partnership strengths we chose Weiss, Peck & Greer Venture Partners and Hyperion Partners to lead the way," said Ned Hoyt, HomeShark's founder and CEO.

Weiss, Peck & Greer is a recognized technology venture capital leader, and Hyperion is a recognized leader in funding and growing innovative financial services companies.

"They bring to HomeShark a wealth of experience, resources, and affiliations," Hoyt said.

HomeShark, http://www.homeshark.com, allows consumers to shop for a new home and a discount mortgage. HomeShark's core offerings are discounted mortgages from national lenders at less than half of traditional mortgage fees, and the HomeScout search engine that delivers the largest selection of online home listings from top real estate sites.

"GMAC, Case Enter Alliance for Farm Real Estate Market"

GMAC Commercial Mortgage Corp. and Case Credit Corp. have formed a strategic marketing alliance to offer GMAC Farmer's Advantage to farmers nationwide through Case Credit's dealer network. ``This program brings together two leaders in the financing industry,'' said GMACCM president David E. Creamer. ``GMAC Farmer's Advantage offers farmers efficient, flexible financing at competitive rates. Our commitment to this initiative is unparalleled.''

Published: September 16, 1998

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