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Alvarez & Marsal, a professional services firm specializing in advisory and performance improvement/turnaround services, has started a European real estate advisory services practice. The new real estate advisory services practice will provide services ranging from pre-acquisition due diligence to exit strategies, including real estate asset management. Michael Camp, head of Alvarez & Marsal Real Estate Advisory Services LLC, said a huge amount of real estate debt is coming due in Europe over the next few years.

Another wave of downgrades has hit U.S. residential mortgage-backed securities transactions as the Fitch ratings on 281 bonds in 267 transactions have dropped to D, indicating a principal writedown. The move followed a review of bonds that had speculative grade ratings ranging from CCC to C, indicating a default was expected. Ninety-eight percent of the bonds had CCC ratings. Ninety-eight percent had an outstanding recovery rating of RR6 indicating that minimal recovery was expected. Only the bonds with writedowns were included in the review. Of the 267 transactions impacted, 143 were prime credit deals and 115 were subprime credit deals. Fitch said the balance were "other" product types.

Fitch Ratings has updated its cash flow criteria for U.S. residential mortgage-backed securities with what it describes as improvements to its new issue analysis. This includes changes to ratings of resecuritizations aimed at accounting for potential variability in expected loss timing and prepayment speeds. It also is incorporating into its analysis "back-loaded" loss timing assumptions for current and delinquent loans, a low prepayment scenario and new structured finance interest rate stresses.

Fannie Mae issued $36.2 billion in mortgage-backed securities in May, only slightly above Ginnie Mae's MBS issuance for the month. Ginnie Mae MBS issuance has been higher than Freddie Mac's for some time. But now it looks as if Ginnie Mae may be catching up to Fannie. Ginnie recently reported that its issuers securitized $33.9 billion in FHA and VA guaranteed loans in May. Meanwhile, the serious delinquency rate on Fannie Mae guaranteed single-family mortgages fell for the second consecutive month. The secondary market agency reported that 5.3% of its loans are 90 days or more past due in April, down 29 basis points since February. Fannie has a one-month delay in its reporting delinquency rates.

Marc Insul, former president/COO of Fidelity National Field Services Inc. and Alan Bunker, president/CEO-Spectrum Field Services Inc., recently started a national property preservation company for abandoned and nearly vacant commercial and industrial real estate. Commercial Asset Preservation LLC provides general maintenance and inspection services for commercial REO. Historically, only a small percentage of the commercial properties in the U.S. have defaulted, or become vacant or abandoned. However, the downturn in the economy has caused a sharp decline in commercial occupancy rates, according to Insul. "CAP meets this growing need through securing unprotected buildings, while ensuring that vacant and abandoned properties retain value and do not further deteriorate, become vandalized, or receive citations for their physical condition," he said. CAP's services include boarding/securing, debris/hazard removal, cleaning/janitorial, extermination, winterization, HVAC maintenance, plumbing, electrical, roof maintenance, grounds keeping, parking lot maintenance, graffiti removal, environmental hazard testing/remediation, property inspections/evaluations, and other specialty services designed to meet specific needs for the property.

Prudential Real Estate Investors, Parsippany, N.J., hired Eric Adler as CEO-Europe, responsible for overseeing its investments and transaction capabilities throughout Western Europe and the emerging markets of Central and Eastern Europe. Adler will be located at the London fund management offices of Pramerica Real Estate Investors Ltd. Before joining Prudential, he co-directed Tishman Speyer's European activities and was a member of its global management and investment committees. Earlier, he worked for Morgan Stanley, where he led MSREF¹s activities in Germany, France, Italy and Spain.

DartAppraisal.com is offering a warranty that guarantees mortgage lenders and investors against potential loss for default and disclosure due to valuation inaccuracy. The product, DartAssurance, is being offered in partnership with an "A" rated insurance company and will provide up to $100,000 in coverage. The warranty covers the appraisal for 60 months and it is fully transferable. To be eligible for coverage, the maximum loan amount is $750,000, the loan-to-value ratio or combined LTV cannot exceed 100% and the minimum credit score is 620. First and second lien mortgages are covered. Darton Case, president of DartAppraisal.com, said the company understands the need for all types of risk mitigation for its clients. "We believe that our product will help stimulate the much needed private investors back into the mortgage market," he said.

Over the past year, the number of states with programs offering foreclosure mediation has nearly doubled, from 11 to 21 states, according to the Center for American Progress. Based on their state-by-state assessment of existing programs, the Washington-based think tank argues that automatic scheduling of mediation at the start of the foreclosure process, as opposed to requiring already stressed homeowners to opt in to the program, significantly increases participation rates without reduction in the rate of successful outcomes. In their report, authors Andrew Jakabovics and Alon Cohen, recommend jurisdictions with opt-in programs adopt automatic scheduling, as Connecticut and Philadelphia, among others, have done. Similarly, they argue that successful pilot programs running at the circuit court, city, or county levels should now be scaled to the state level. During a conference call to discuss the issue, Roberta Palmer, program manager for court operations for Connecticut's judicial branch, said for the majority of foreclosures in her state, conversations between homeowners and representatives for large national servicers "aren't happening." "So, bringing the parties into the room and having someone with authority from the large servicers look over options with the homeowner, has been a great benefit. Loan modifications that we enter into are much more sustainable than those done without a third party present in the mediation," she said.

House prices got a push from the homebuyer tax credit and rose 0.8% in April -- the first month-to-month price increase in seven months, according to the Standard & Poor's/Case-Shiller house price index. The non-adjusted 20-city HPI released Tuesday shows that prices are up 3.8% from April 2009. However, S&P index committee chairman David M. Blitzer said the increase in prices is mainly concentrated in California and gains in other markets are modest. He is concerned the April 30 expiration of the tax credit will lead to a "near-future pullback" in the housing market. "Consistent and sustained boosts in economic growth from housing may have to wait til next year," Blitzer said. IHS Global Insight economist Patrick Newport said the tax credit "pumped" up home sales and it will lead to a decline in prices later this year. The Case Shiller HPI is "likely to rise for another two-three months, but then start to decline. In our view, the housing glut and foreclosures will drive the national Case-Shiller index down another 6% - 8% with prices bottoming in 2011," Newport said. The April S&P Case Shiller 20-city HPI is down 30% from the peak in July 2006.

Small mortgage companies benefited from higher loan production in 2009 and posted healthy profits for the year, according to a Mortgage Bankers Association report. The annual report shows that 216 independent mortgage banks and subsidiaries of banks and thrifts on average originated $933 million loans in 2009, compared to $500 million in the prior year. These mortgage banking firms on average posted $4.9 million in pre-tax profits, compared to $700,000 in 2008. "Production profits increased in 2009 over 2008 as higher origination volumes, particularly in refinancing, reduced per-loan production expenses," said Marina Walsh, MBA's associate vice president of industry analysis. During 2009, MBA economists noticed the difference in profitability between the 41 bank subsidiaries and the independent mortgage companies widened. Historically, bank subs have lower overhead and compensation expenses, while independents generally had higher revenues. But now the independents' net production income is lower than their bank and thrift peers. Profits for the bank mortgage subsidiaries averaged 79.5 basis points per loan, compared to 54.9 bp for independents. "It was also clear bank and thrift subsidiaries had an advantage over independent mortgage companies because of lower loan officer compensation per loan and higher net interest spread due to lower warehouse funding costs and the ability to keep loans in warehouse longer," Walsh said.