Origination

The Federal Open Market Committee said in a statement accompanying its decision to drop the fed funds target range to a record low rate of zero to 0.25% that it "stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant." The FOMC said it "will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," including expanding the aforementioned agency program beyond its existing commitment to purchase $500 billion in MBS and $100 billion in debt. The committee said that it "anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time" and that it also is "evaluating the potential benefits of purchasing longer-term Treasury securities."

According to the Zillow Mortgage Marketplace, consumers were being offered 30-year, fixed-rate mortgages for rates below 5% on Monday. Zillow.com said that the average rate for 30-year FRMs offered on the Zillow Mortgage Marketplace dipped to 4.98% on Monday, Dec. 15. That is contributing to a spike in loan applications for refinancing. Refinancing during the first half of December was up 230% from the first half of November, Zillow.com said. Refinancing accounted for more than half of home loan applications in the December period.

October was perhaps the worst month yet for new home sales in California since the housing sector began its tailspin, according to the latest report from the Golden State's homebuilders. Sales in October were 63% below October 2007, according to the monthly count by the California Building Industry Association. Only 1,462 homes and condominiums were sold in October in the subdivisions tracked for CBIA by Costa Mesa-based Hanley Wood Market Intelligence, compared to 3,949 in October 2007. Single-family home sales were down by 62%, while sales of townhouses and two-to-four unit structures were down 64% and condominium sales were off 65%. Compared with the same period last year, the median base price of homes sold dropped by 9%. CBIA President Robert Rivinius said the "huge fall-off" is further proof that the new home sector in "in dire straits" and needs help in persuading people to re-enter the market. "With homebuilding in a depression, there's little chance the overall recession will begin to improve without tax credits and other incentives to push people off the fence and back into the marketplace," Mr. Rivinius said. The industry leader also said that housing production so far this year is by far the lowest since the end of World War II, and that 2009 is shaping up to be equally bad, or even worse.

Single-family housing starts plummeted 17% in November to the lowest level since 1959 (when the government started keeping records) and it could go even lower in the months ahead. The U.S. Census Bureau reported that single-family housing starts dropped from a seasonally adjusted annual rate of 531,000 in October to 441,000 in November, down 46% since November 2008. HIS Global Insight economist Patrick Newport pointed out that the drop in housing permits in November implies single-family starts are "likely to post double-digit declines in both December and January." Bernard Markstein, director of forecasting at the National Association of Home Builders, said it has "gotten so bad" there is "no point" in building. The homebuilders are urging president-elect Barack Obama to back an economic stimulus package that will increase incentives for homebuyers.

Valuation declines in commercial mortgages and "virtually every asset class" contributed to a $2.12 billion net loss at Goldman Sachs during the fourth quarter. "Our results for the fourth quarter reflect extraordinarily difficult operating conditions, including a sharp decline in values across virtually every asset class," said Lloyd C. Blankfein, chairman and chief executive officer. Among these, Goldman noted a net loss of approximately $700 million on commercial mortgage loans and a loss of roughly $1 billion related to non-investment-grade credit origination activities.

Hilco Real Estate LLC, Northbrook, Ill., has named Neil R. Aaronson as its new chief executive and Gregory S. Apter as its new president. Mr. Aaronson replaced Mitchell P. Kahn, 48, who has decided to pursue opportunities outside the Hilco family of companies. Most recently Mr. Aaronson had been executive vice president with Hilco Trading LLC, the parent company of Hilco Real Estate. Mr. Apter was promoted from chief operating officer and will now formally lead Hilco Real Estate's agency transactions group, managing owned and leased property disposition and lease restructuring services. Hilco Real Estate provides comprehensive real estate repositioning services. For more information about the company, visit http://www.hilcorealestate.com.

BioMed Realty Trust Inc., a San Diego real estate investment trust focused on providing real estate to the life science industry, today announced that Kent Griffin has been promoted to president and chief operating officer. He will oversee the day-to-day operational activities while continuing to serve chief financial officer. Alan Gold, BioMed's chief executive said, remarked, "I am very pleased that the board has chosen to recognize the contributions that Kent has made to BioMed, originating with him playing a key role in the company's successful initial public offering in August 2004. As our chief financial officer since 2006, Kent has been a critical member of our leadership team, developing and executing key financial strategies, while also taking an increasingly integral role in managing the growth of our organization and overseeing our operations."

Five Ohio residents have been charged for their roles in a mortgage fraud scheme. Paul A. Lesniak of Strongsville, Uri Gofman of Beachwood, Grennadiy Simkhovich of Highland Heights, Dave Pirichy of Burton and Howard Sieferd, Jr., of Euclid, have been charged with allegedly conspiring to purchase 18 properties in the Cleveland area for almost $2 million. The indictment alleges that Mr. Lesniak completed and submitted false and fraudulent loan applications with the assistance of Mr. Pirichy, a broker for Central National Mortgage, which falsified his employment, overstated his income and assets, falsified his intent to occupy the property and concealed the source of the down payment funds, which were provided by Mr. Gofman and Mr. Simkhovich through their company, Real Asset Fund, in order to obtain the financing to purchase the eighteen properties. The indictment also alleges that Mr. Sieferd served as the title agent on the properties and conspired with Mr. Gofman and Mr. Simkhovich to allow the loan proceeds to be fraudulently and improperly distributed. The defendants allegedly did all of this in order to defraud Long Beach Mortgage Company, Argent Mortgage Company and Mortgage IT into funding the loans.

Material rating actions on Fitch-rated U.S. commercial mortgage-backed securities transactions with significant exposure to General Growth Properties' assets are unlikely if GGP files for bankruptcy, according to Fitch Ratings. Fitch recently downgraded GGP's issuer default rating to 'C', indicating that it believes a default is imminent. "The likelihood for significant rating actions across transactions with GGP property exposure is slim given their strong performance, moderate leverage, and the bankruptcy remote nature of CMBS borrowers," according to Fitch managing director Susan Merrick. In the event of a GGP corporate bankruptcy, CMBS bondholders are protected by the bankruptcy-remote nature of CMBS borrowers. "A key factor limiting term default risk of CMBS loans in the event of a GGP bankruptcy is the strength of the current performance of the properties," said Fitch managing director Eric Rothfeld. "More than 75% of GGP loans rated by Fitch have actual debt service coverage ratios greater than 1.50 times and 67% are greater than 2.0 times." Meanwhile, Chicago-based GGP has refinanced approximately $896 million of mortgage loans. The maturity dates of these mortgage loans range from five to seven years. The proceeds were fully used to retire a $58 million bond issued by The Rouse Company LP that matured on Dec. 11, 2008, as well as to refinance approximately $814 million of mortgage indebtedness scheduled to mature in 2009. These refinanced loans are separate from the $900 million Fashion Show and Palazzo mortgage loans scheduled to mature on Dec. 12, 2008. However GGP said that it has not reached unanimous agreement with its syndicate of lenders to further extend the maturity date and is continuing its discussions with lenders.

Fitch Ratings, New York, has downgraded to RPS4 the primary servicer, master servicer and special servicer ratings for Residential Capital LLC, Minneapolis. The rating downgrades are due to ResCap's deteriorating financial condition, specifically the continued pressure on ResCap's liquidity position and financial flexibility and the potential impact on the company's servicing operations. A company's financial condition is an important component of Fitch's servicer rating analysis, the rating agency explained. As of June 30, 2008, ResCap serviced 3.1 million loans for $437 billion. The servicing portfolio was comprised of 14.3% non-agency prime first and second liens, 9.7% subprime first and second liens, 8.1% Alt-A, 2.4% HLTV, and 9.5% HELOC products, with the balance consisting of conventional conforming, FHA, VA, and manufactured housing loans. ResCap's master servicing portfolio was comprised of over 592,000 loans for $119.3 billion.