Origination

Radian Group Inc., Philadelphia, has reported a net loss of $392.5 million ($4.91 per share) for the second quarter, compared with net earnings of $21.1 million ($0.26 per share) a year earlier. The loss is due to a pretax, first-lien, premium deficiency reserve of $421.8 million that was established after updating Radian's loss projections. The company said the reserve is its best estimate of the present value of future losses not already included in the June 30, 2008 reserves. Radian Group also announced that it plans to contribute its investment in Radian Asset Assurance to Radian Guaranty in the third quarter. Radian Asset has $960 million of statutory surplus, which is part of $3 billion in claims-paying resources. As of June 30 (on a pro forma basis following the contribution of Radian Asset), Radian Guaranty would have a 10.3-to-1 risk-to-capital ratio, but its actual risk-to-capital ratio is 14.9 to 1. S.A. Ibrahim, Radian chief executive, said the company "is in the unique position to fill its capital needs through internal resources." The company can be found online at http://www.radian.biz.

Standard & Poor's Ratings Services has downgraded its subordinated debt and preferred stock ratings on Freddie Mac from AA-minus to A-minus and its risk-to-the government rating from AA-minus to A. S&P also affirmed its senior unsecured debt rating of AAA/Stable/A-1-plus on Freddie Mac. The ratings were removed from CreditWatch Negative, but the outlook is negative. "The lower risk-to-the-government, subordinated debt, and preferred stock ratings reflect Freddie Mac's pressured capital position in the face of higher operating losses," said S&P credit analyst Victoria Wagner. "....Higher credit expenses are the driver of net operating losses, as Freddie Mac is not immune to the weak housing markets." The lower subordinated debt and preferred stock ratings reflect "heightened subordination risk," S&P said, noting that recent housing legislation creates a new regulatory structure with receivership powers that would place nonsenior creditors at a greater risk of nonpayment, especially on preferred stock dividends.

Following in Fannie Mae's footsteps, Freddie Mac is doubling its market risk delivery fee to 50 basis points, which will be added to other delivery fees currently in place starting Nov. 7. "We are increasing the Market Condition delivery fee from 25 basis points to 50 basis points," Freddie says in an Aug. 8 bulletin to lenders. Like its fellow secondary-market agency, Freddie is cushioning the delivery fee hike for borrowers with loan-to-value ratios of 85% to 95% and credit scores above 680 by reducing their existing delivery fees by 25 bps or giving them a 25-bp credit. Freddie also notified its lenders about increases in its delivery fees for investor loans and said it will stop purchasing cash-out refinancings with LTVs above 85% starting Nov. 7. In addition, the agency raised its delivery fees on A-minus loans from 3.25% to 4.00% for borrowers with lower credit scores. On Aug. 4, Fannie Mae said it would double its "adverse market" delivery fee to 50 bps effective Oct. 1. Freddie Mac can be found on the Web at http://www.freddiemac.com.

Over 240 members of Congress are urging the Department of Housing and Urban Development to withdraw a proposed RESPA rule and undertake a joint rulemaking effort with the Federal Reserve Board to improve mortgage disclosures. The 243 lawmakers signed a letter circulated by Reps. Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., that says HUD's Real Estate Settlement Procedures Act proposal fails to improve and simplify disclosures of mortgage terms and settlement costs. "We are profoundly concerned that HUD's proposed RESPA rule will hinder rather than help the recovery of the housing market," says the letter to HUD Secretary Steve Preston. Over a dozen housing groups lobbied members of Congress to sign the letter, which was circulated a few weeks ago. "When an overwhelming bipartisan majority in the U.S. House of Representatives asks you to withdraw your rule, it's time to listen to your critics and go back to the drawing board," said Kurt Pfotenhauer, executive vice president of the American Land Title Association. Earlier this year, when HUD first issued the RESPA proposal, the industry groups succeeded in getting 140 members of Congress to sign a petition requesting a 60-day extension of the public comment period. HUD agreed to a 30-day extension.

Class M-7 of CBA Commercial Assets 2005-1 has been downgraded from CCC-minus to D by Standard & Poor's Ratings Services. The downgrade resulted from a $1.1 million principal loss stemming from the liquidation of two assets in special servicing, S&P said. The first asset was a 95-unit multifamily property in Wichita Falls, Texas, and the second was a nine-unit multifamily property in Manchester, N.H.

Four classes from Banc of America Commercial Mortgage Inc. series 2006-3 have been placed on Rating Watch Negative by Fitch Ratings. The affected securities are classes J through M. The negative rating actions were attributed to exposure to seven single-tenant retail loans, of which Boscov's Inc. is the borrower and tenant. "Boscov's filed Chapter 11 bankruptcy on Aug. 4, 2008, and plans to close these stores," Fitch said.

Eight classes from Banc of America Commercial Mortgage Trust 2007-2 have been downgraded by Standard & Poor's Ratings Services. S&P also affirmed the ratings on 18 other classes in the transaction. "The downgrades reflect anticipated credit support erosion upon the eventual resolution of three of the six specially serviced assets," S&P said.

Six classes from J.P. Morgan Commercial Mortgage Trust commercial mortgage pass-through certificates series 2005-CIBC13 have been downgraded by Moody's Investors Service. The downgrades were as follows: class J, from Ba1 to Ba3; class K, from Ba2 to B1; class L, from Ba3 to B2; class M, from B1 to Caa1; class N, from B2 to Caa2; and class P, from B3 to Caa3. In addition, classes F, G, and H were placed on review for possible downgrade. The downgrades were attributed to an overall decline in pool performance, increased dispersion, and estimated losses from specially serviced loans. The other negative actions were due to significant expected losses for loans currently in special servicing, Moody's said. The rating agency can be found online at http://www.moodys.com.

Standard & Poor's Ratings Services has lowered its ratings on 171 tranches (totaling $29.46 billion) from 43 U.S. cash flow and hybrid collateralized debt obligation transactions. The rating agency also removed 93 of the downgraded ratings from CreditWatch with negative implications and affirmed four ratings and removed them from CreditWatch negative. S&P said 27 of the affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are collateralized largely by mezzanine tranches of residential mortgage-backed securities and other structured finance securities. Twelve are "high-grade" structured finance CDOs of ABS, which the rating agency defined as those backed at origination primarily by tranches of RMBS and other structured finance assets that are rated from single-A through triple-A. The other four are CDOs of CDOs backed chiefly by notes from other CDOs. The downgrades reflect various factors, including credit deterioration and recent negative rating actions on subprime RMBS securities, the rating agency said. S&P can be found on the Web at http://www.standardandpoors.com.

The CPS2 commercial mortgage-backed securities primary servicer rating of Capstone Realty Advisors LLC has been placed on Rating Watch Negative by Fitch Ratings. The rating action was attributed to a notice that the entire senior management team is leaving the company. "In addition, Capstone's parent company, National City Corp., is currently rated A by Fitch with a negative outlook," the rating agency said. Fitch rates commercial mortgage servicers on a scale of 1 to 5, with 1 being the highest rating. Fitch can be found on the Web at http://www.fitchratings.com.