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First Place Financial Corp., a small Ohio thrift, says it will write down the value of its Fannie Mae preferred stock by $1.3 million and, according to one stock analyst, "a wave of writedowns could be coming for smaller banks." FPFC of Warren, Ohio, declared that its investment in Fannie Mae preferred stock is now in a category called "other-than-temporary," which means it will take a loss on the shares that will flow through to earnings, thus reducing its net income. If FPFC felt it could recover its investment in Fannie's preferred stock it would not have to label the investment "other than temporary" and could avoid taking the charge to earnings. The writedown affects the thrift for the period ending June 30. Daniel Arnold, a stock analyst who covers FPFC for Sandler O'Neill, told MortgageWire that the thrift is not the first financial institution to take a hit on its investment in Fannie Mae's preferred shares, noting that "some big banks have taken hits, but the little ones have not."

Fifteen classes of notes issued by two collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. All the downgraded classes were removed from Rating Watch Negative. The affected securities are as follows: eight classes from Fourth Street Funding Ltd./LLC and seven classes from Jupiter High-Grade CDO VII Ltd./Inc. Both are cash CDOs. The downgrades were attributed to collateral deterioration in subprime RMBS and structured finance CDOs with underlying exposure to subprime RMBS.

Liquidity pressures are limiting the ability of asset managers to remove underperforming loans from U.S. commercial real estate loan CDOs, according to Fitch Ratings. The rating agency said its delinquency index for CREL collateralized debt obligations increased to 1.46% in July, up from 0.36% in October 2007 when Fitch began tracking the numbers. Karen Trebach, a Fitch senior director, said the CREL CDO index has remained relatively low partly because asset managers had been removing underperforming loans, but that many now face capital constraints that will hamper their ability to keep doing so. "Reduced CDO cushions are becoming more commonplace with the dual pressures of reduced liquidity and increased delinquencies," Ms. Trebach said. "Constrained liquidity may also lead to more managers' modifying and extending loans rather than repurchasing them, which, if not merited, may only serve to delay the possible realization of losses on these loans." Fitch can be found on the Web at http://www.fitchratings.com.

DebtX, a Boston-based loan sale adviser, has announced the forthcoming sale of more than $292 million of nonperforming residential real estate loans. The portfolio, to be offered in 19 separate pools, contains $100 million of loans on properties in Florida, $40 million in California, $26 million in Massachusetts, $16 million in Arizona, and $16 million in Nevada, DebtX said. The vast majority (95%) are adjustable-rate loans, and 95% of the properties are occupied by the owner, the company said. The loans will be sold Sept. 18. DebtX can be found online at http://www.debtx.com.

Overstock.com Inc., Salt Lake City, has announced that its website now offers access to online real estate auctions. The company said it has joined forces with Williams & Williams, a real estate auction company based in Tulsa, Okla. "Our site provides Overstock.com customers with information from real estate auctioneers and brokers who have direct access to auction properties and local expertise," said Patrick Byrne, chairman and chief executive officer of Overstock.com. The companies can be found online at http://www.overstock.com and http://www.williamsauction.com.

The share values of Fannie Mae and Freddie Mac hit new 52-week lows Wednesday after Freddie Mac was forced to pay a record amount to raise short-term debt. At deadline time, Freddie's shares were down 21% on the day to just $3.29. Its 52-week high is $65. At one point during the morning its shares fell to $2.95. Meanwhile, Fannie Mae's stock dropped 18% to $4.93. Its intraday low was $4.74, and its 52-week high is $70. Both government-sponsored enterprises have been hurt by speculation that they will be nationalized and their common shareholders wiped out. On Tuesday, Freddie Mac priced new five-year notes at 113 basis points over the comparable Treasury obligation [see above item].

The pricing of Freddie Mac's latest Reference Notes offering at 113 basis points over comparable Treasury obligations -- the highest spread the company has ever paid on such debt -- raises new questions about its ability to raise short-term money at a reasonable cost as it struggles with massive delinquencies. Meanwhile, speculators are shorting its stock, believing that the Treasury Department may have to buy its shares, which could dilute the value of its common stock even further. Freddie hopes to raise $5.5 billion in new capital over the coming weeks but has yet to offer any guidance on how it will do so. Company chairman and chief executive Richard Syron recently said the government-sponsored enterprise will likely sell both common and preferred stock. He admitted that to attract investors to the preferred shares, the company would have to offer a double-digit yield.

The Federal Deposit Insurance Corp. has created a program to systematically modify troubled home loans from IndyMac Federal Bank. FDIC Chairman Sheila Bair said the program is designed to create affordable and sustainable mortgage payments for borrowers and increase the value of the loans by rehabilitating nonperforming loans and turning them into performing ones. She said the program will primarily target IndyMac's alternative-A borrowers. The FDIC said it plans to send 4,000 modification proposals to eligible borrowers this week and thousands more in the weeks to come. The modifications will be designed to create payments that represent 38% debt-to-income ratios for the borrowers. Interest rates may be reduced to below the Freddie Mac survey rate for a period of five years. IndyMac was closed and taken over by the FDIC and the Office of Thrift Supervision on July 11.

The sole class of trust certificates issued by COUNTS Trust series 2004-1, a credit-linked note that provides synthetic exposure to mortgage-related securities, among others, has been downgraded from AA to CCC by Fitch Ratings. The rating has also been removed from Rating Watch Negative. The downgrade was attributed to raised loss expectations due to greater-than-expected collateral deterioration in the reference portfolio, especially in subprime residential mortgage-backed securities issued in 2004, 2005, and 2006. The portfolio consists of U.S. subprime RMBS (7.2%), alternative-A mortgage loans (16.9%), and U.S. diversified structured finance collateralized debt obligations (51.4%), Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Post Properties, an Atlanta-based multifamily real estate investment trust, has been designated the "Bear of the Day" for Aug. 19 by Zacks Equity Research, Chicago. The Bear of the Day is a stock expected to underperform the markets over the next three to six months. Noting that Post is no longer for sale, Zacks said the company will "try to reposition itself" through asset sales and personnel reductions. "Operationally, the company has been underperforming its peer group; management has been focused on a sale of the company," Zacks said. Post had a "weak" second quarter due mainly to impairments on development deals that will not be pursued, and the research firm said it has changed its near-term recommendation on the REIT's stock to Sell. Zacks can be found online at http://www.zacks.com, and the REIT can be found at http://www.postproperties.com.