Secondary Market

Mortgage interest rates rose dramatically this week, after lingering around half-century lows for months. The upsurge comes just two weeks after the Federal Reserve announced plans to purchase another $600 billion in Treasury securities, a move that is meant to hold interest rates down. Rates are still extremely low by historical standards, but the sharp increases seen in just one week's time - long-term rates jumped by about 20 basis points in two separate industry studies - serve as an abrupt reminder that trends can reverse on a dime.

According to Jones Lang LaSalle, the majority of the commercial real estate (CRE) industry can expect a commercial comeback in 2011. The economic recovery has relied on government stimulus and monetary policy but the results have been tepid at best. JLL says 2011 will be the year the private sector takes the baton and starts to drive growth. The company predicts investment transaction volume will increase by 36 percent, apartments will top the ""hot list"" for investors, and the hotel sector will rebound more quickly than expected.

Citigroup Inc. has found a buyer for its real estate investment management group, Citi Property Investors (CPI). Apollo Global Management says one of its affiliates has completed the acquisition of the Citi investment unit. Terms of the transaction were not disclosed. Citigroup has been selling off various assets and businesses to shore up its operations and help repay the $45 billion in took in bailout money from the federal government. CPI had assets under management of over $3 billion as of June 30.

Jones Lang LaSalle recently hired Jon Goldstein as SVP of the firm's real estate investment banking practice in Washington, D.C. The company says a marked increase in the level of liquidity and record low interest rates has resulted in a surge of financing activity in the D.C. market. Goldstein brings more than 17 years' experience in the financial services industry to the firm, and will be responsible for debt and equity placement for all commercial property types.

President Obama said Friday that he intends to nominate North Carolina Banking Commissioner Joseph A. Smith, Jr. to head the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac. If confirmed by the Senate, Smith will replace Edward DeMarco, who has served as acting director of the agency since September 2009. The timing of Smith's appointment would put him at the center of the administration's efforts to reform the nation's housing finance system and decide the future of the GSEs.

The board of directors of the Securities Industry and Financial Markets Association (SIFMA) has elected John G. Taft, CEO of RBC Wealth Management, as the association's 2011 chairman. The organization also elected 17 new board members, including representatives from such financial market bastions as Bank of America Merrill Lynch, Credit Suisse Securities, and PIMCO.

Reports from three different agencies paint distinct pictures of the rate at which loans held in commercial mortgage-backed securities (CMBS) are going bad. Two tracked declines in the CMBS delinquency rate for during October - one says it's the first drop in over a year, the other says it's the first in nearly three years - and the third claims delinquencies are still rising on commercial mortgages. Hotels and multifamily complexes claim the highest delinquency rate among property types in all three reports.

Interest rates on home loans sunk to new lows this week, according to figures released by Freddie Mac Thursday. The GSE surveyed 125 lenders across the country and found that rates on 30-year mortgages are now averaging 4.17 percent, while the average rate for 15-year loans dropped to 3.57 percent. The GSE's chief economist expressed concern that although rates are at their lowest level in more than a half century, they've done little to pull would-be buyers from the sidelines as the housing recovery continues to slow.

Ambac Financial Group has filed for Chapter 11 bankruptcy, according to an announcement issued by the company after the market closed on Monday. The company insured billions in subprime mortgage securities during the housing boom, but has taken hit after hit since the market collapsed. Ambac says it was unable to raise additional capital as an alternative and could not reach an agreement with its debt holders. The IRS has also been investigating Ambac's accounting practices related to $700 million in tax refunds.

Mortgage Electronic Registration Systems, Inc. (MERS) has released a statement responding to the accusation by Robert G. Marshall that the company violates a state law because it doesn't pay a fee when a loan changes hands. Marshall requested that Virginia attorney general Ken Cuccinelli launch an investigation on the Reston, Virginia based MERS.