Origination

Class L of Greenwich Capital Commercial Funding Corp. series 2006-FL4 commercial mortgage pass-through certificates has been downgraded from BB-plus to BB-minus by Fitch Ratings. Fitch also placed classes N, O, P, and Q on Rating Watch Negative and affirmed the ratings on 12 other classes as well as on 12 classes of nonpooled trust assets. The downgrade was based on the failure of the Galleria Sheraton Metairie loan, located in the New Orleans area, to perform up to expectations, the rating agency said.

Three classes of Morgan Stanley Capital I Trust 2006-IQ11 commercial mortgage pass-through certificates have been downgraded by Fitch Ratings. The downgrades were as follows: class J, from BB-plus to BB; class K, from BB to BB-minus; and class L, from BB-minus to B-plus. Fitch also placed classes G and H on Rating Watch Negative and affirmed the ratings on 14 other classes in the transaction. The downgrades reflect an increase in specially serviced assets and an increase in Fitch's expected losses on those assets, the rating agency said.

Delinquencies on mortgages supporting commercial mortgage-backed securities rose 2 basis points to 0.41% in June, largely as a result of higher delinquencies on retail and office loans, according to a Fitch Ratings loan delinquency index. The rating agency maintained that the retail sector is still under pressure. "An increase in retail bankruptcies and a continued decline in consumer disposable income are evident, though they have yet to impact retail performance," said Susan Merrick, a Fitch managing director. Delinquencies on retail loans rose 25.7% on a month-to-month basis due to the addition of 15 newly delinquent loans in 12 states, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Moody's Investors Service has downgraded the ratings of iStar Financial, a New York-based real estate investment trust, from Baa2 to Baa3 in the wake of an announcement that the commercial REIT expects to take increased loan provisions of $275 million for the second quarter. The outlook remains negative. Moody's said it expects iStar's nonperforming assets and core earnings to continue to be pressured in the near term "given the persistent instability of the credit markets." The negative outlook reflects this instability and the weakening economic environment, the rating agency said. The downgrade also reflects the higher leverage that resulted from the Fremont transaction in mid-2007, Moody's said. The rating agency can be found online at http://www.moodys.com.

More than 10,000 people with criminal records were allowed to work in Florida's mortgage industry, according to a report in The Miami Herald. Of those, more than 4,000 cleared background checks despite committing crimes that state law requires regulators to screen, including fraud, racketeering, and extortion. The state's chief financial officer, Alex Sink, is calling for an executive order to stop issuing and renewing mortgage broker licenses to convicted felons. He has also requested that Florida's chief mortgage regulator, Don Saxon, step down. Mr. Saxon is commissioner of the Office of Financial Regulation.

Freddie Mac has been designated the "Bear of the Day" for July 21 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. "As the housing situation continues to worsen, we anticipate higher losses and writeoffs in the coming quarters," Zacks said. The research firm said Freddie will need to raise more capital, "which is becoming increasingly difficult and expensive," and predicted that the government-sponsored enterprise will suspend or cut its dividend. "Recent measures announced by the Treasury affirm our belief that both the GSEs [Freddie Mac and Fannie Mae] are too big and important to fail, but any investment by the Treasury will further dilute the existing shareholders," Zacks said, adding that it is maintaining its Sell recommendation on Freddie's shares and reducing its six-month target price to $4.50 per share. Zacks can be found online at http://www.zacks.com, and Freddie Mac can be found at http://www.freddiemac.com.

Bank of America confirmed Monday that it is committed to maintaining the wholesale and correspondent platforms of Countrywide Financial Corp., which it purchased on July 1. According to the Quarterly Data Report, the Calabasas, Calif.-based Countrywide was the nation's largest correspondent lender and second-largest wholesaler in the first quarter, with production volumes of $31 billion and $9 billion, respectively. In a presentation released along with its second-quarter earnings, the Charlotte, N.C.-based BoA noted that the Countrywide mortgage franchise would discontinue the origination of certain types of nonconforming loans, including payment-option adjustable-rate mortgages. It reported that Countrywide will "significantly curtail" its use of low-documentation loans. Countrywide is no longer funding subprime loans of any type. In the first quarter, Countrywide's subprime servicing portfolio had a delinquency rate of 33%.

Class J of Gramercy Real Estate CDO 2007-1 Ltd./LLC has been placed on Rating Watch Negative by Fitch Ratings. Fitch also affirmed the ratings on 14 other classes of notes in the collateralized debt obligation. The negative rating action stemmed from the cross-defaulted Sheraton Hotel Miami and Sheraton Hotel Orlando loans, which are now 60 days delinquent and whose borrowers have filed for bankruptcy, the rating agency said. The deal is a revolving commercial real estate cash-flow CDO.

Eight classes of notes issued by Abacus 2005-CB1 Ltd., a synthetic collateralized debt obligation based primarily on subprime residential mortgage-backed securities, have been downgraded and removed from Rating Watch Negative by Fitch Ratings. The downgrades were as follows: class A-1, from A-minus to CCC; class A-2, from BBB-plus to CCC; class B, from BBB to CC; class C, from BBB-minus to CC; class D, from BBB-minus to CC; class E-1, from BB-plus to CC; class E-2, from BB to CC; and class F, from BB-minus to CC. The downgrades were attributed to "significant" collateral deterioration of subprime RMBS in the portfolio. Fitch said the synthetic CDO was created to enter into credit default swaps with Goldman Sachs Capital Markets. The rating agency can be found on the Web at http://www.fitchratings.com.

Maguire Properties, a Los Angeles-based real estate investment trust, has been designated the "Bear of the Day" for July 18 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. Pointing to Maguire's "high debt load due to heavy acquisition activity in 2007," Zacks said the office REIT "was put up for sale, but found no buyer." Most senior management has been replaced, and the company "is scrambling to shore up operations," the research firm said. Zacks can be found online at http://www.zacks.com, and Maguire can be found at http://www.maguireproperties.com.