Origination

The servicer quality ratings of SN Servicing Corp., Eureka, Calif., have been downgraded by Moody's Investors Service from SQ3-plus to SQ3-minus as a primary servicer of subprime loans and from SQ2-minus to SQ3 as a special servicer. Moody's attributed the downgrades mainly to a change in the company's servicing stability assessment from average to below average. SN is a wholly owned subsidiary of Security National Master Holding Co. LLC, whose core business is purchasing and servicing distressed residential and small-balance commercial mortgages. Moody's can be found on the Web at http://www.moodys.com.

Mission Capital Advisors LLC, a New York-based loan sale adviser, is accepting bids for a $55 million portfolio of nonperforming commercial mortgage loans and real-estate-owned properties. On behalf of an unidentified Southeast bank client, Mission Capital said it is soliciting indicative bids for the purchase of an individual asset, any combination of assets, or the entire portfolio. "The portfolio is divided into 17 single-asset pools, allowing investors to target specific assets by performance, collateral type, or geography based on their individual acquisition criteria," Mission Capital said. The real estate collateral consists of developed condominium, retail, office, mixed-use, and single-family properties, as well as commercial and residential development land, in Florida, Georgia, South Carolina, Nevada, Virginia, Tennessee, and North Carolina. Mission Capital is initially soliciting indicative bids by Aug. 21, with final bids due on Sept. 11. The company can be found online at http://www.missioncap.com.

Home values fell 1.7% in the second quarter, dropping to a level 9.9% below that of a year earlier and posting the largest year-over-year decline in the past 12 years, according to Zillow.com, an online real estate community based in Seattle. Zillow's quarterly national home value report found that median home values stood at a Zillow Home Value Index level of $206,919, the lowest since the fourth quarter of 2004. The company also reported that 29.1% of homeowners who purchased their home since early 2003 have negative equity, owing more than the home is now worth. "The second quarter is the sixth consecutive quarter of home value declines, and we see little promise of turnaround in the short term, as the rates of decline have yet to slow and, in fact, actually accelerated in many markets," said Stan Humphries, Zillow's vice president of data and analytics. Zillow can be found online at http://www.zillow.com.

Only 32% of 50 banks in a Federal Reserve Board survey said they have securitized or sold "conforming jumbo" mortgages to Fannie Mae or Freddie Mac in the past three months. But 44% of the banks expect to securitize or sell jumbo loans to the government-sponsored enterprises over the next six months, according to the Fed's July survey of senior loan officers. Congress raised the maximum loan limit for the GSEs from $417,000 to $729,050 in high-cost areas as part of an economic stimulus package President Bush signed into law Feb. 13. The two GSEs began purchasing jumbos in April and, according to securities filings, Fannie purchased $947 million in jumbos in the second quarter and Freddie $471 million. In its 10-Q filing, Freddie said it does "not anticipate purchasing material amounts of conforming jumbo product in 2008," due to increased competition, especially from the Federal Housing Administration. The Fed's survey also found that 75% of domestic banks tightened their lending standards on prime mortgages -- up from 60% in the April survey. And 80% of respondent banks tightened their standards for approving applications for home equity lines of credit.

Thirty-two classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. All but one of the downgraded classes were removed from Rating Watch Negative. The affected securities are as follows: eight classes from Lexington Capital Funding Ltd./Inc., a cash flow structured finance CDO; six classes from Blue Heron Funding II Ltd.; six classes from Ischus CDO II Ltd./LLC, a cash flow structured finance CDO; five classes from NovaStar ABS CDO I Ltd., a cash flow structured finance CDO; four classes from Lexington Capital Funding III Ltd./LLC, a hybrid cash and synthetic CDO; and three classes from Mulberry Street CDO Ltd./Corp., a cash flow structured finance CDO. The downgrades were attributed to collateral deterioration in subprime RMBS, as well as (in the cases of Lexington III and Mulberry Street) alternative-A RMBS and (in the cases of Lexington, Blue Heron, and Mulberry Street) structured finance CDOs with underlying exposure to subprime RMBS.

The Issuer Default Ratings of Chevy Chase Bank FSB, Bethesda, Md., have been downgraded by Fitch Ratings, partly for mortgage-related reasons. The long-term IDR was downgraded from BBB-minus to BB-plus, and the short-term IDR was downgraded from F3 to B. The downgrades were based on the "continued deterioration" of asset quality, as nonperforming assets rose from 1.7% of loans and real estate owned at Dec. 31, 2007, to 4.2% at June 30, Fitch said. "In March 2008, Fitch affirmed the company's ratings with a negative outlook that included the expectation of continued deterioration," the rating agency noted. "However, the pace in recent periods exceeded the initial expectation." Fitch noted that the bank has discontinued the origination of payment-option adjustable-rate mortgages, which had been "its primary lending product."

The corporate credit and senior unsecured debt ratings on M/I Homes Inc. have been downgraded from B-plus to B by Standard & Poor's Ratings Services. S&P also downgraded M/I's 9.75% preferred stock from CCC-plus to C. The outlook remains negative. "The lowering of the credit rating reflects a weaker second quarter than we originally anticipated," S&P credit analyst Lisa Wright said. "We expect further operating pressure amid very challenging conditions in the company's mid-Atlantic and Florida markets and are concerned that the company will face additional significant impairment charges over the next year." S&P said the preferred stock downgrade was due to the company's announcement that it is barred from paying stock dividends because of a restricted payments basket covenant under its senior notes indenture. The rating agency can be found online at http://www.standardandpoors.com.

Sun Communities Inc., a Southfield, Mich.-based real estate investment trust that owns and operates manufactured housing communities, has posted a net loss of $7.4 million ($0.41 per share) for the second quarter, compared with a loss of $2.2 million ($0.12 per share) a year earlier. Included in the most recent loss was a $6.8 million adjustment to the carrying value of Sun's investment in Origen Financial Inc., also of Southfield, a REIT that until recently was an originator and servicer of manufactured housing loans. Using the funds from operations measurement, Sun had profits of $4.8 million ($0.23 per share), down from $13.7 million ($0.68 per share) for the second quarter of 2007.

BankUnited Financial Corp., Coral Gables, Fla., has reported a mortgage-related net loss of $117.7 million ($3.35 per share) for the second quarter, compared with net income of $23.2 million ($0.62 per share) a year earlier. The loss was chiefly attributable to a $130 million provision for loan losses. Alfred R. Camner, the company's chairman and chief executive officer, said the quarter was "a mix of strong results from our core banking operations offset by continued deterioration in the mortgage portfolio." Mr. Camner pointed to the company's launch of a Mortgage Assistance Program to provide relief to borrowers with payment-option adjustable-rate mortgages. "We will be reaching out to thousands of option ARM borrowers, the largest portion of which are in Florida, to place them into traditional mortgage products, including government agency loans," he said. "We intend to waive prepayment fees and to create additional incentives for these borrowers to make the transition both easy and affordable." The company can be found online at http://www.bankunited.com.

Meanwhile, Radian Group has cut its quarterly dividend from $0.02 per share to $0.0025 per share, a reduction of $0.0175. The reduced dividend is payable on Sept. 19 to stockholders of record as of Aug. 19. "As a result of current volatility in the U.S. residential and mortgage markets, we believe this is an appropriate decision until we return to a more stable environment," said S.A. Ibrahim, chief executive of Radian. "Our current liquidity position remains strong, and this reduction will further support our position."