MBA (8/1/02) Sorohan, Mike
Economic indicators are all over the walls this week. Figures released on a number of fronts suggest that the recession, which some analysts reduced to a mere blip earlier, might have lingered longer than previously thought.

The Commerce Department issued its second quarter Gross Domestic Product estimate yesterday, showing growth of 1.1 percent-failing to meet the 2 percent growth that analysts said would indicate that the economy had recovered. But Treasury officials said that the U.S. economy remained "on track" to reach a growth rate of 3 percent to 3.5 percent by year-end.

At the same time, the Federal Reserve Board, in its periodic "Beige Book," reported that even as the economy had "expanded modestly" in recent weeks, the results proved "uneven" at best. While the Fed described residential real estate as "strong," it also noted that some of its member banks reported softness in rental markets. And it described commercial real estate as "almost universally" weak, though stable in some areas.

Amid all this, the Conference Board reported that consumer confidence had fallen an additional nine points, to its lowest level since February.

The Commerce Department's second quarter GDP estimates, showing growth of 1.1 percent, marked the third consecutive quarter of growth, even if the figures failed to meet more optimistic projections. But Commerce cited a number of factors that it said point to sharper growth by year's end. In addition to what Treasury Secretary Paul O'Neill described as "booming" new home sales and construction and "surging" mortgage refinancing as drivers toward economic recovery, the report cited consumer spending on automobiles and other retail items, increases in industrial output and capital investment

"The data show that the economy is on a solid growth path and the recovery is proceeding as expected," O'Neill said.

President George W. Bush also took a positive position, telling reporters that "when the American people take a look at the facts, they're going to realize that we have a bright future ahead of us."

The Fed's Beige Book appeared more cautious, noting that despite uneven performance among the Fed's 12 districts, growth appeared to be moderate overall.

The Fed noted that the overwhelming majority of districts described the housing market as "robust", with "sturdy gains in sales activity and varying degrees of price appreciation." Only in the Dallas District, which reported "unchanged" residential markets, and weakness in the upper-end markets in Richmond, Chicago, St. Louis, Kansas City and San Francisco districts cast a negative skew in the residential markets.

And the report noted that declining stock prices could have served as a boon to real estate. "A number of Districts indicated that declining stock prices had actually boosted the perceived attractiveness of real estate as an investment," the report said.

The report also noted that residential construction activity appeared "mixed, but generally strong, citing shortages of developable land in the Boston and Chicago districts that appeared to be driving up prices and inhibiting construction activity.

The commercial report was gloomier. The report said that commercial real estate markets remained weak in most areas, with "increasingly slack" conditions in New York, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas and San Francisco. But the Fed also observed that the Cleveland district experienced an "up-tick" in conditions, although that appeared to come from previously low levels. "Commercial construction activity continued to be sluggish in most areas," the Fed said.

The Fed also reported little change in overall lending activity, with continued strong demand for home mortgages and continued weak demand for business loans.

Meanwhile, the Conference Board said that while its Consumer Confidence Index's low level was not "alarming" by historical standards, continued deterioration could "very well jeopardize economic recovery."

"The erosion in consumer confidence represents a significant deterioration in consumer attitudes," said Conference Board spokeswoman Lynn Franco. "The continued decline in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence."
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Cardinal Financial plans to integrate the Wholesale Origination Website from GHR with its own process so that brokers can complete an entire 1003 online without errors. In addition, brokers will be able to view specific risk-adjusted pricing, see transaction specific closing costs and lender stipulations and receive instant loan approvals at anytime.

The site supports uploads of loan application files from any loan origination system (LOS) supporting the Fannie Mae DU 2.0 or 3.0 file export format and is specifically designed to support Calyx, Genesis, Contour and Byte LOS software.

Because the system is 100 percent browser-based, brokers could go through the Internet Explorer and the Cardinal Web site to access the system.

"We wanted to partner with a technology company that could maximize [speed, accuracy and execution] in our origination process," said Bob Angelucci, president and chief executive officer of Cardinal Financial Co. "We are confident that GHR's wholesale origination technology can do just that."

The GATORS Enterprise system will also work with Stewart Relocation Services customers and in residential and commercial processing centers. Plans for the system include managing multi-state transactions with national commercial clients.

"The technology is ideal for large title insurance operations that need to distribute and track orders and manage national networks," said Chris Behning, chief technology officer at GAC.

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MBA (08/01/02) Murray, Michael
Dwinn-Shaffer & Co., Chicago, has arranged a $1.1 million fixed-rate, non-recourse first mortgage loan for a one-story, single-tenant office building on North Elston Avenue in Chicago.

The building is owner-occupied and is the corporate headquarters for Rezmar Corp., one of the ten largest homebuilders in the Chicago area. Rezmar received the loan through local financial institution Mutual Bank.

"We have done close to $100 million with [Rezmar] in financing," said Bud Wineburgh, president of Dwinn-Shaffer & Company, who arranged the deal.

The loan had no surprises with a 5-year term and a 25-year amortization at an interest rate of 7.5 percent, according to Wineburgh. It included an initiation fee of 1 percent to Mutual Bank along with corporate guarantees.

"Office is doing pretty good," Wineburgh said with regard to office property in the Chicago area. "The market is holding up okay. Chicago is a strong market. [Office] is second to apartments."

Meanwhile, terrorism insurance has not been a factor in deals for Dwinn-Shaffer & Co., according to Wineburgh.

Improvements on the recently renovated 7,184 square-foot Rezmar corporate office building include 13-foot ceiling heights throughout the office space. The headquarters also has on-site parking for 10 automobiles.
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