Origination

Class M of Merrill Lynch Floating Trust commercial mortgage pass-through certificates series 2006-1 has been downgraded from BBB-minus to BB by Fitch Ratings and removed from Rating Watch Negative. Fitch also affirmed the ratings on 17 other classes in the transaction. The downgrade was attributed to low leasing activity and the forthcoming maturity of the pool's third-largest loan, The Portals III, which is secured by an office building in Washington.

Two classes of J.P. Morgan Commercial Mortgage Finance Corp. mortgage pass-through certificates series 1999-C8 have been downgraded by Fitch Ratings. Class H was downgraded from BB to B, and class J was downgraded from CC/DR4 to C/DR5. Fitch also affirmed the ratings on eight other classes in the deal. The downgrades were due to an increase in specially serviced loans and expected losses, the rating agency said. Fitch can be found on the Web at http://www.fitchratings.com.

Standard & Poor's has announced that Cedar Shopping Centers Inc., a real estate investment trust based in Port Washington, N.Y., will replace Angelica Corp. in S&P's SmallCap 600 Index. S&P said the move, scheduled to occur after the close of trading on Aug. 4, was prompted by the pending acquisition of Angelica by an affiliate of Lehman Brothers Holdings.

MountainView Capital Holdings LLC, Denver, has announced the initial closing of the MountainView Mortgage Opportunities Fund LP, which is slated to invest primarily in alternative-A and subprime first-lien residential mortgage loans in the secondary market. The company said the fund had raised approximately $80 million, primarily from qualified institutional investors, as of the initial closing. The loans acquired by the fund will be serviced "with a view toward mitigating risk of default and maximizing the value of the loans," MountainView Capital said.

GMAC Financial Services, New York, has posted a second-quarter net loss of $2.5 billion, of which $1.9 billion is attributable to losses at Residential Capital LLC. For the same period last year, GMAC Financial had net income of $293 million, although ResCap reported a $254 million net loss. The losses at ResCap are due to asset sales and a higher loan loss provision related to the deterioration of certain European markets, the company said. Offsetting some of the loss was a $647 million gain from a tender offer and the retirement of debt. Prime conforming loan production totaled $12.2 billion for the quarter, down slightly from $12.7 billion a year earlier, but government loan production increased from $800 million to $3.8 billion during the same period. Because of illiquidity in the global capital markets and weakened consumer credit in key markets, ResCap has suspended all its loan production outside the United States, with the exception of Canadian insured loans.

Home prices declined 10.8% nationally over the past 12 months, a rate that has remained in the 10%-11% range in the past four months, according to the latest LoanPerformance Home Price Index. "We are cautiously optimistic that stabilization in the decline rate is the first indicator that house price declines may not be getting any worse nationally," said Mark Fleming, chief economist of First American CoreLogic, the Santa Ana, Calif.-based company that compiles the index. He said 36 states are experiencing price declines, and that homes in California, Nevada, Arizona, and Florida are depreciating at an annualized rate of 18% or more. Riverside-San Bernardino-Ontario (Calif.) headed the index's list of top metropolitan areas with 12-month home price declines with a 25.3% decrease. Los Angeles-Long Beach-Glendale ranked second with a 25.2% decline, and Oakland-Fremont-Hayward (Calif.) finished third at 23.9%. The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,544 ZIP codes and 677 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 housing bill signed by President Bush raises the loan limit in Federal Housing Administration reverse mortgages to at least $417,000 nationwide, but it could be much higher under some interpretations. Peter Bell, president of the National Reverse Mortgage Lenders Association, said he is "getting conflicting feedback" about the section of the bill that raises the loan limits for FHA-insured reverse mortgages, which are formally known as Home Equity Conversion Mortgages. Some believe the loan limit for HECMs could be $625,500 nationwide. Others say the loan limits above $417,000 should be determined by multiplying the median home price by 115%, up to a maximum of $625,000. It looks like the Department of Housing and Urban Development will have to make the final call. "In the end, it will be whatever HUD's attorneys, in consultation with Capitol Hill, decide it is," Mr. Bell said. NRMLA can be found online at http://www.reversemortgage.org.

Five classes of notes issued by Vertical ABS CDO 2006-1 Ltd./Corp., a collateralized debt obligation consisting largely of subprime mortgage-backed securities, have been downgraded and removed from Rating Watch Negative by Fitch Ratings. The downgrades were as follows: class A-S1VF, from BBB-plus to CCC; class A-1, from BBB to CC; class A-2, from BB-plus to CC; class A-3, from B-plus to C; and class B, from CCC to C. The downgrades were attributed to collateral deterioration involving subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Vertical 2006-1 is a hybrid cash flow and synthetic structured finance CDO.

KeyCorp, a Cleveland-based financial services company and mortgage lender, has been designated the "Bear of the Day" for July 30 by Zacks Equity Research, Chicago. The Bear of the Day is a stock expected to underperform the markets over the next three to six months. The research firm noted that KeyCorp reported a second-quarter loss from continuing operations of $2.70 per share, due mainly to a $2.43-per-share charge related to an adverse federal court ruling on a lease adjustment. The company's credit quality "worsened significantly" during the quarter, Zacks said. "Though the company has taken steps to reduce its exposure to the commercial real estate residential properties segment, we anticipate higher losses in the CRE portfolio in the coming quarters, particularly in view of its sizable exposure to the difficult markets of California and Florida," Zacks said, adding that it is maintaining its Sell rating for KeyCorp. Zacks can be found online at http://www.zacks.com, and KeyCorp can be found at http://www.key.com.

Genworth Financial Inc., Richmond, Va., has reported a net loss of $109 million ($0.25 per share) for the second quarter, compared with net income of $379 million ($0.84 per share) in the same period of last year. The company reported net investment losses of $321 million for the period as it took a $326 million impairment related to subprime and alternative-A residential mortgage and asset-backed securities, the majority of which are now rated below single-A. Its U.S. mortgage insurance operations had a net operating loss of $59 million, compared with net operating income of $66 million one year ago. The company said 28% earned premium growth was more than offset by higher incurred losses. Genworth's international business saw an increase in net operating income, from $142 million a year ago to $183 million for the most recent quarter. It affirmed its outlook for 2008 operating earnings to be in the range of $2.25-$2.65 per share. "We continue to manage through a difficult environment in the U.S. housing and financial markets," said Michael D. Fraizer, chairman and chief executive. "We are actively mitigating risk in U.S. mortgage insurance as we build a strong 2008 book based on stringent guidelines and higher prices." The company can be found online at http://www.genworth.com.