Origination

Class L of Bear Stearns commercial mortgage pass-through certificate series 2004-BBA3 has been placed on Rating Watch Negative by Fitch Ratings. The rating action stems from the forthcoming (Nov. 12) maturity of the transaction's remaining loan, Riverside Center, which has no remaining extension options, Fitch said. The Riverside Center is secured by a retail shopping center in Utica, N.Y.

The master servicer rating of The Bank of New York Mellon has been upgraded from RMS2-plus to RMS1-minus by Fitch Ratings. Fitch attributed the action to BNYM's "strong oversight and monitoring of its primary servicers, its continued investment in enhancing its technology, and its increasing use of automation." The company's master servicing operation is based in New Albany, Ohio. Fitch rates residential servicers on a scale of 1 to 5, with 1 being the highest rating. The rating agency can be found online at http://www.fitchratings.com.

Healthcare Realty Trust Inc., a real estate investment trust based in Nashville, Tenn., has announced the pricing of 7 million shares of newly issued common stock at $25.50 per share. The company said it plans to use the estimated net proceeds of $170.5 million to invest in recently closed and expected acquisitions of medical office and other outpatient-related facilities and for general corporate purposes. The company has granted the underwriters an option to buy up to 1.05 million additional shares to cover any overallotments. The joint book-running managers for the offering are Wachovia Securities, J.P. Morgan, Banc of America Securities LLC, and UBS Investment Bank. The REIT can be found on the Web at http://www.healthcarerealty.com.

Nominal home prices were down 10.9% nationally in July from the level recorded a year earlier, according to the latest LoanPerformance Home Price Index. Los Angeles-Long Beach-Glendale topped the index's list of statistical areas experiencing 12-month home price declines, recording a 27.95% decrease. Oakland-Fremont-Hayward (Calif.) ranked second with a 27.28% decline, and Riverside-San Bernardino-Ontario (Calif.) finished third at 26.93%. "The recent price trend is similar to the Massachusetts and Texas house price declines in the 1980s and 1990s that took approximately two years to bottom out," said Mark Fleming, chief economist of First American CoreLogic, the Santa Ana, Calif.-based company that compiles the index. "In both cases there was stabilization in the rate of decline before the lengthy recovery in price levels." The LoanPerformance HPI provides monthly home price indices and median sales prices covering 7,575 ZIP codes and 676 counties in all 50 states and the District of Columbia, the company said. First American CoreLogic can be found online at http://www.facorelogic.com.

The current credit crisis has eclipsed the savings-and-loan crisis of the late 1980s as the most consequential event for the U.S. real estate industry in the past 20 years, according to a survey by DLA Piper, an international law firm. The firm said 90% of the 424 top commercial real estate executives who responded to the survey described their 12-month outlook for the U.S. CRE market as "bearish," up sharply from 68% in October 2007. "On the heels of the Lehman bankruptcy, the unprecedented government bailouts of Bear Stearns, Fannie Mae, Freddie Mac, and AIG, and the historic proposal of a $700 billion financial institutions bailout plan, we remain in a very fluid situation in the capital markets that likely will continue to bog down the U.S. commercial real estate market until financing finally becomes available on a predictable basis again," said Jay Epstien, chair of DLA Piper's U.S. real estate practice. DLA Piper can be found online at http://www.dlapiper.com.

Peter Monroe, a former president of the RTC Oversight Board, and several colleagues have launched a venture capital company to spearhead a "real estate rescue program" in U.S. inner cities. The new company, Wilherst Oxford LLC, Tampa, Fla., will make vacant homes available to inner-city residents through the use of seller financing and low downpayments. "Amid the real estate crisis that led to the current economic difficulties, there are exciting opportunities for Americans to move into millions of already existing, vacant, and therefore affordable houses," Mr. Monroe said. ".... Our fund will invest nationwide and across product lines from residential to income properties." Mr. Monroe, who was president and chief executive of the Resolution Trust Corp. Oversight Board from 1990 to 1993 and chief operating officer of the Federal Housing Administration, said local governments "should encourage entrepreneurs to buy and resell these vacant homes as affordable housing by waiving existing tax/utility liens (which would never be paid anyway) and granting ample time for code compliance." Mr. Monroe can be found online at http://www.petermonroe.com.

American International Group Inc., New York, has signed a definitive agreement with the Federal Reserve Bank of New York, for its $85 million revolving credit facility. The line will have a two-year term, with interest based on the three-month London interbank offered rate plus 850 basis points. There is an initial gross commitment fee of 2%. AIG will also pay a commitment fee on undrawn amounts at the rate of 8.5% per year. Borrowings under the facility are conditioned on whether the New York Fed is reasonably satisfied with AIG's corporate governance, among other things. The facility contains customary covenants, including a requirement to maintain a minimum amount of liquidity. AIG chairman and chief executive Edward M. Liddy said the company is "developing a plan to sell assets, repay the facility, and emerge as a smaller but profitable company. Importantly, AIG's insurance subsidiaries remain strong, liquid, and well-capitalized." A pledge of the capital stock and assets of certain of AIG's subsidiaries will secure the facility. AIG will also give preferred stock worth 79.9% of the company's equity to a trust established for the benefit of the U.S. Treasury.

Chase Wholesale Lending is closing four of its eight regional operations centers, the company says in a memorandum sent to its mortgage brokers. The four centers that are closing are in Garden City, N.Y.; Westmont, Ill.; Tampa, Fla.; and San Ramon, Calif. The centers that will remain open are in Dallas; Charlotte, N.C.; Cleveland; and Orange, Calif. There will be a net loss of 175 jobs, a Chase spokesman said. (The unit currently employs 600 people.) The memo was sent out under the signatures of Rod Brace and Saber Salam, wholesale lending business executives. The company said it plans to expand staffing at these sites to absorb processing from the closing centers. "As anticipated, the national implementation of ChaseLoanCenter has created production efficiencies throughout our organization," the memo said. "We expect to take advantage of scale and become more efficient by operating fewer, but larger centers." ChaseLoanCenter is a loan origination system the company launched this summer. Chase ranked first among all wholesale lenders in the second quarter, table-funding $9.6 billion through loan brokers, a 40% decline from the level of a year earlier, according to National Mortgage News and the Quarterly Data Report. In the first quarter, Chase table-funded $11.4 billion in home mortgages. It ranked first in that quarter as well.

Fannie Mae and Freddie Mac will fall short of their affordable housing goals by a large margin in 2008, according to the Federal Housing Finance Agency, which has asked the government-sponsored enterprises to draw up their own AH goals for 2009. FHFA Director James Lockhart indicated that the affordable housing goals developed by the Department of Housing and Urban Development in 2004 are too ambitious in view of today's market conditions. "With the enterprises now in conservatorships, even if some or all of the goals are found to be unattainable, I will expect each enterprise to develop and implement ambitious plans to support the borrowers and markets targeted by the goals," Mr. Lockhart told the Senate Banking Committee. The FHFA director also noted that his agency is preparing regulations so the Federal Home Loans Banks can use their affordable housing funds to restructure underwater mortgages for borrowers that qualify under a Federal Housing Administration refinancing program called Hope for Homeowners. "FHFA plans to have the regulation in place by Oct.1," he testified.

Commercial real estate prices held steady in June on a national basis and recorded a 12-month increase of 1.5%, according to the S&P/GRA Commercial Real Estate Indices. The highest 12-month rates of return were recorded by the apartment sector, at 3.6%, and the Midwest, at 4.9%, S&P reported. The best monthly performances were turned in by the office sector, at 1.1%, and the Northeast, at 0.8%, according to the company. "While there are some pockets of relative stability in this month's numbers, overall the S&P/GRA Commercial Real Estate Indices appear to be trending down," said David Blitzer, managing director and chairman of S&P's Index Committee. ".... Only one of the regions and two of the property sectors saw price declines during the June/May period; however, most of the regions and sectors continue to show deceleration on an annual basis." The indices can be found on the Web at http://www.standardandpoors.com/indices.