Origination

Fannie Mae says it will not purchase "subprime loans" as defined by a recently passed New York lending law that goes into effect Sept. 1. "Fannie Mae will not purchase or securitize any mortgage loan that meets the definition of a subprime loan under New York law, regardless of whether any provision of the law is pre-empted by federal law with respect to a particular mortgage or for a particular originator," according to Fannie announcement 08-21. The New York legislature created a new category of subprime loans that falls between prime and higher-cost loans. "The [subprime] threshold is so low that FHA loans and lower-grade Fannie Mae and Freddie Mac loans get dangerously close to crossing the threshold, and in some cases cross the threshold," said Don Romano, president of Shelter Rock Mortgage Corp. in Lake Success, N.Y. On Aug. 12, Freddie Mae said it would not purchase New York subprime loans. Fannie can be found online at http://www.fanniemae.com.

Class M-5 of CBA Commercial Assets LLC small-balance series 2006-2 has been downgraded from B to B-minus by Fitch Ratings. Fitch also placed class M-4 on Rating Watch Negative and affirmed the ratings on five other classes in the transaction. The negative rating actions were attributed to higher loss expectations and an increase in the number of specially serviced loans since Fitch's last rating action.

Fifteen classes of notes issued by two Nautilus collateralized debt obligations linked to alternative-A and 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 Nautilus RMBS CDO IV Ltd./LLC and seven classes from Nautilus RMBS CDO III Ltd./LLC. Both are static cash flow CDOs. The downgrades were attributed to credit deterioration within the portfolio and underlying exposure to alt-A and subprime RMBS.

The issuer default rating of First American Corp., a Santa Ana, Calif.-based provider of title, mortgage, and other business information, has been affirmed and removed from Rating Watch Negative by Fitch Ratings. Also removed from Rating Watch Negative were First American's senior debt rating, the trust preferred securities rating of First American Capital Trust, and the insurer financial strength rating of First American Insurance Cos. The rating outlook is negative. Fitch said the actions were based on an improvement in capital adequacy under Fitch's Risk Adjusted Capital model. However, First American "continues to underperform" relative to its peers, and the negative outlook reflects "the negative trends not only in First American's capital, but also reserve levels and profitability," Fitch said. The company can be found online at http://www.firstam.com.

The insurer financial strength ratings of Connecticut Attorneys Title Insurance Co. and Attorneys' Title Insurance Fund Inc. have been affirmed at A-minus by Fitch Ratings, but the rating outlooks for both have been revised from stable to negative. CATIC is an attorney-owned title insurance company, while ATIF, the third-largest title insurer in Florida, is owned by a business trust that is in turn owned by attorneys who act as agents for the company, Fitch said. The rating agency said the outlook revision for CATIC is "consistent" with its view of the title insurance industry overall and reflects the company's "relatively lower tolerance to absorb operating losses in the current environment because it is a modestly-sized underwriter in a concentrated geographic area" with limited access to outside capital funds. In the case of ATIF, the revision reflects the company's "poor operating performance and slower response to cutting operating expenses relative to peers during this current difficult environment of reduced mortgage originations and greater title insurance claims." CATIC can be found online at http://www.caticaccess.com, and ATIF can be found at http://www.thefund.com.

The Issuer Default Rating of Fidelity National Financial Inc. and the insurer financial strength ratings of its nine title insurance subsidiaries have been placed on Rating Watch Negative by Fitch Ratings. The actions reflect the "unsustainability" of Fidelity's current shareholders' dividend, Fitch said, citing the current levels of profitability at the title insurance subsidiaries. The rating agency said the operating performance of the subsidiaries is better than that of their peers, although "down significantly given the pressures on an industrywide down cycle." The companies can be found on the Web at http://www.fnf.com.

The Issuer Default Rating of LandAmerica Financial Group and the insurer financial strength ratings of its title insurance subsidiaries have been downgraded by Fitch Ratings. The IDR was downgraded from BBB to BBB-minus, and the IFS ratings were downgraded from A-minus to BBB-plus. The rating outlooks on all were revised from stable to negative. "Fitch believes LFG's consolidated balance sheet fundamentals lag [those of] national peers at a time in the market cycle where risk-adjusted surplus, financial leverage, and reserve redundancy are critical to financial strength ratings," the rating agency said. The affected subsidiaries are Commonwealth Land Title Insurance Co., Commonwealth Land Title Insurance Company of New Jersey, Land Title Insurance Company of Pasadena, Lawyers Title Insurance Corp., Title Insurance Company of America, and Transnation Title Insurance Co. LandAmerica can be found online at http://www.landam.com.

The insurer financial strength ratings of Stewart Title Guaranty Co. and its wholly owned subsidiary Stewart Title Insurance Co. have been downgraded from A-plus to A by Fitch Ratings. The rating outlook is stable. Fitch said the downgrade stemmed from deterioration in the profitability of the companies' parent, Stewart Information Services Corp. The previous rating had been based partly on an assumption that Stewart Information Services' technology-related investments might enable it to "show better margins than peers in a down market, which has not been the case," Fitch said. The two Stewart companies are now the only title insurers rated by Fitch to have a stable outlook, the rating agency said. Fitch can be found online at http://www.fitchratings.com, and Stewart can be found at http://www.stewart.com..

Wells Fargo executive vice president Mark Oman -- who made the bank into the mortgage powerhouse it is today -- says he will retire from the company by the end of 2009. Mr. Oman oversees four business groups, including mortgages and card services, which will continue to report to him for the time being. Wells is the nation's second-largest residential lender and servicer, second only to Bank of America/Countrywide, according to figures compiled by the Quarterly Data Report. Over the past 15 years Wells has grown rapidly in mortgages by purchasing nonbank residential firms and merging with other depositories. Under Mr. Oman, Wells also ventured into subprime lending -- once ranking first in that niche -- but has yet to suffer the traumatic losses experienced by other firms. Mr. Oman joined Wells' predecessor bank, Norwest, in 1979 and was named mortgage chief in 1985. Wells Fargo can be found on the Web at http://www.wellsfargo.com.

Two classes of JP Morgan Commercial Mortgage Securities Corp. pass-through certificates series 2003-PM1 have been downgraded by Fitch Ratings. Class N was downgraded from B to B-minus, and class P was downgraded from CCC to CCC/DR1. Fitch also affirmed 17 other classes in the transaction. The downgrades were based on expected losses on the four loans currently in special servicing as well as higher-than-expected losses on a loan disposed from the trust, the rating agency said.