Commercial Mortgage News

Freddie Mac is coming to market with a $1.1 billion MBS backed by multifamily loans. The various pass-through certificates in the bond are collateralized by 68 recently originated multifamily mortgages from Freddie approved seller/servicers. It is the second of six such issuances anticipated during 2010. These "K-006" certificates, which will price on or about March 25 and settle 10 days later, will be offered by several dealers lead by JPMorgan Securities Inc. and Bank of America Merrill Lynch. Co-managers for the transaction include Deutsche Bank Securities Inc., Goldman Sachs, Jefferies & Co. and Sandler O'Neill.

Jefferies & Co. named Mark Green as a managing director and head of CMBS capital markets. Green will report jointly to William Jennings and Johan Eveland, co-heads of Jefferies' MBS/ABS group, as well as Benjamin Lorello, global head of investment banking and capital markets at Jefferies. According to a report in Asset Securitization Report, Green will become part of a team consisting of Joe Accurso and Lisa Pendergast, who co-head CMBS trading and strategy, and Dana Arrighi who heads CRE origination. Green has 11 years of CMBS capital markets experience and joins Jefferies from UBS, where for four years he was a managing director and head of CMBS capital markets. "With the ongoing rebound in capital markets activity, there is an even greater need and demand from our clients for innovative financing and ideas," Jennings and Eveland said. The company views the CMBS market as a major investment banking opportunity this year. Asset Securitization Report is an affiliate of National Mortgage News.

The Federal Open Market Committee issued a statement Tuesday indicating that the Federal Reserve will follow through with its plans to end its purchases of agency mortgage-backed securities this month as well as with plans to end a program supporting loans backed by new-issue commercial MBS in June. The agency MBS and debt purchases "are nearing completion, and the remaining transactions will be executed by the end of this month," the FOMC said. However, the committee also noted that it will "continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability." The FOMC also said in its statement that the Fed plans to follow through with its plans to close its Term Asset-Backed Securities Lending Facility program for loans backed by new-issue commercial mortgage-backed securities on June 30 and close the TALF program for loans backed by other types of collateral by March 31.

The level of U.S. commercial real estate loan delinquencies in collateralized debt obligations has decreased slightly, according to Fitch Ratings. The CREL CDO delinquency rate in January dropped to 12.5% from 13% as a result of asset managers extending loans and disposing of troubled assets, according to Fitch. But Fitch continues to forecast an increase in delinquencies that will reach 25% by the end of the year. "The credit characteristics of many restructured loans remains questionable," said Fitch senior director Karen Trebach. Fitch's statistics reflect its CREL CDO delinquency index, which includes loans and assets that are 60 days or more delinquent, matured balloon loans and the current month's repurchased assets.

It was a productive year for special servicers in 2009, but there's a lot more where that came from, according to a new Fitch Ratings report. Special servicers resolved $8.7 billion in distressed loans last year, or 50% more than the previous year, but there is $74 billion still left in special servicing, Fitch said. In addition, "Recoveries on loans with losses are down markedly compared to prior years," said Fitch managing director Stephanie Petosa.

The Granite Companies, Denver, Colo., are launching a new division to administer and develop new core business opportunities in public and private commercial construction lending markets. Granite Excell Management will be positioned to provide consulting and other professional services to lenders under the Granite umbrella. "Granite is strategizing for the changes lying ahead," said Bill Cobb, president and co-founder of The Granite Companies. The company said it expects to be in growth mode this year and beyond. Granite's other affiliates include Granite Loan Management, Granite Commercial Management and Granite Construction Inspections. GCM and GLM offer risk mitigation services, including construction REO and workout services, property condition assessment reports, and contractor acceptance. GCI provides residential and commercial property inspection services including construction draw, status/audit, damage assessment, tenant improvement, acquisition and development.

Morgan Keegan & Co., Memphis, Tenn., will market Farmer Mac loan programs designed specifically for its bank clients which hold agricultural loans in their portfolios. The primary program to be offered under this agreement is Farmer Mac's Long-Term Standby Purchase Commitment, which shifts the credit risk on loan pools from the bank to the government-sponsored enterprise. Michael Gerber, president of Farmer Mac, said the LTSPC program is designed to give banks that lend on agricultural properties "a reasonable price option to improve a major indicator of their financial health and to help restore their ability to grow their balance sheets." Loans in the LTSPC program are expected to receive favorable capital treatment, freeing up the bank's capital to be used for other purposes.

Many owners of health care facilities are finding that projects that could have gotten financing directly from commercial banks are unable to access that source now, according to an attorney who is an expert in the field. Andrea C. Barach, a partner in the Health Care Practice Group at Bradley Arant Boult Cummings LLP, Nashville, said this is due to tightened credit requirements, increased cost and/or inability to access funds through interbank markets. Ms. Barach, who advises health care facilities regarding financing options, said this has led those who need credit to reconsider applying for Federal Housing Administration-insured loans. "The terms are extremely attractive, and in many cases the FHA financing will be the only viable option for many borrowers. FHA financing offers a way for owners to control costs and maintain a predictable level of debt service," she said. While the FHA program still has its heavy red tape and compliance requirements, it has been streamlined. "The new Lean processing system should make financing more attractive by reducing processing time and bureaucratic red tape," said Ms. Barach, who added borrowers should work with lenders who have experience doing the Section 232 program.

Most commercial mortgage investor groups saw an increase in their loan delinquency rates in the fourth quarter, according to data gathered by the Mortgage Bankers Association. MBA's Commercial/Multifamily Delinquency Report found between the third and fourth quarters, the 30-plus day delinquency rate on loans held in commercial mortgage-backed securities rose 1.63 percentage points to 5.69%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01 percentage points to 0.63%. The 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.04 percentage points to 0.15%. The 90-plus day delinquency rate on loans held by banks and thrifts rose 0.49 percentage points to 3.92%. In a rare bit of good news, the 60-plus day delinquency rate on loans held in life company portfolios decreased 0.04 percentage points to 0.19%. Jamie Woodwell, MBA's Vice president of commercial real estate research, said, "Continued job losses, consumer restraint and a lack of household growth all sustained the pressure on commercial real estate operations and mortgages during the fourth quarter."

The sale of commercial mortgage-backed securities servicer Centerline Servicing Inc. to an Island Capital affiliate has reversed the ratings damage caused by its corporate parent's financial woes, according to analysts. Fitch said Wednesday due to CSI's sale to C-III Capital Partners LLC it has upgraded CSI's CMBS servicer ratings, reversing a December 2009 downgrade based on the financial condition of its corporate parent, Centerline Capital Group. Fitch, which noted that its servicer ratings in part are driven by companies' ability to retain staff and their operational strength, said C-III "has indicated that it plans to retain CSI's servicing management and staff, its servicing and asset management systems and policies and procedures."