Origination

Fannie Mae has announced that it will expand liquidity, stability, and affordability in the multifamily market by boosting its investments in key segments of the market. The government-sponsored enterprise said it is increasing its commitment to buy small multifamily loans of up to $3 million ($5 million in certain markets) and plans to boost its participation in the seniors housing market as well. "Affordable rental housing is increasingly needed during this housing and mortgage market downturn," said Phil Weber, senior vice president of multifamily at Fannie Mae. "Fannie Mae is increasing our product offerings to provide additional liquidity to meet the changing market needs." Fannie Mae can be found on the Web at http://www.fanniemae.com.

Senate appropriators are not providing any funds for the Federal Housing Administration to cover losses on FHA-insured mortgages with seller-funded downpayment assistance, and it could snuff out the controversial homebuyer assistance programs run by nonprofits. The Department of Housing and Urban Development has been trying to stop the downpayment assistance programs for years because of high foreclosure rates and losses. A housing bill pending in the Senate would ban seller-funded DPA on FHA loans. But House Democrats strongly support the continuation of the homebuyer assistance programs with some reforms. According to Senate Appropriations Committee staffers, the Congressional Budget Office has ruled that the appropriators must provide funding for DPA losses on a line item for contract expenses in the HUD budget. The HUD budget approved Wednesday morning by the Transportation-HUD appropriations subcommittee does not include such funding. Senate appropriators did provide an additional $39 million to meet the FHA's growing need for additional staffing and technology.

Prospect Mortgage, Northbrook, Ill., has signed an agreement to acquire the majority of IndyMac Bancorp's retail mortgage branches for an undisclosed amount. At deadline time, details were sketchy. No wholesale branches were included in the sale. On Monday, the Pasadena, Calif.-based IndyMac suspended most originations of home mortgages except reverse loans. The sale involves the transfer of about 60 locations that will be rebranded under the Prospect name. A statement released by Prospect, a nonbank, said roughly 750 employees will come to work for them. Prospect said John Johnston and Ron Bergum will remain in leadership roles with the retail branch group and report to Mark Filler, chief executive officer of the company. Mr. Filler used to work for American Home Mortgage, Melville, N.Y., which filed for bankruptcy protection about a year ago. Prospect can be found online at http://www.prospectmtg.com.

Classes M, N, and O of Cobalt CMBS Commercial Trust commercial mortgage pass-through certificates series 2006-C1 have been placed on Rating Watch Negative by Fitch Ratings. The rating actions were attributed to the transfer of the eighth-largest loan (which is shadow-rated by Fitch) to special servicing. The loan, the Fortress/Ryan's portfolio, is collateralized by 130 restaurant properties in 22 states, Fitch said. The loan is current, but was transferred to special servicing when the master lessee and lease guarantor filed for bankruptcy, the rating agency reported. The borrower and the special servicer are reviewing workout options. The rating agency can be found on the Web at http://www.fitchratings.com.

Nine classes of commercial mortgage pass-through certificates from GS Mortgage Securities Trust 2007-GKK1 have been placed on CreditWatch with negative implications by Standard & Poor's Ratings Services. The affected securities are classes A-2, B through H, and J. classes K and L remain in CreditWatch Negative. S&P said the actions followed "a preliminary analysis of the transaction, which included an examination of the current credit characteristics of the pool of assets," the rating agency said.

Synergos Technologies Inc., Austin, Texas, has announced the addition of mortgage-risk data to its quarterly STI:PopStats population data product. The new data, which highlight risk levels created by lending practices involving subprime and adjustable-rate mortgages, represent the first time that mortgage risk has been identified at the neighborhood level across the United States, Synergos said. Among the data fields added to the index are the number of mortgage transactions and average loan-to-income ratios. Company president Robert Welch cited several surprises in the mortgage data, including the discovery that Minneapolis and Baltimore scored high in mortgage risk, and that Houston has only a few pockets of high-risk mortgage activity while Los Angeles has such activity in most neighborhoods. "With today's economy in flux, econometrics is playing a larger role in growing and sustaining profitable businesses," Mr. Welch said. The index can be found online at http://www.popstats.com.

National banks need to deal fairly with all struggling homeowners when it comes to deciding who will qualify for loan workouts and who will slip into foreclosure, according to the comptroller of the currency. "It's important that borrowers aren't being foreclosed on more quickly or denied access to modification programs, because of their race," Comptroller John Dugan said. In the past, fair-lending exams used to be focused mainly on discriminatory lending practices. But now with so many mortgages going into default, banks need to make sure that "similarly situated borrowers who default or become delinquent are treated similarly," Mr. Dugan told an OCC compliance conference. The comptroller also noted that some banks made subprime mortgages that qualified for Community Reinvestment Act. And he called on those banks to continue to make "good loans that will fulfill their CRA obligation."

In light of the announcement from IndyMac Bancorp, Friedman Billings Ramsey has slashed its price target for the company's common stock from $1 to zero. "We are not predicting IndyMac Bancorp's failure, but we expect that the value of the common equity left after today's announced actions [see above item] will be immaterial," said the report written by Paul Miller, Bob Ramsey, and Annett Franke. The report called the decision to leave the forward mortgage business, given the company's business model until now, as "very significant." FBR said there isn't any value in the company left for common stockholders with continued home price declines, management's higher loss estimates, recent rating downgrades of the company's mortgage-backed securities portfolio, and the decision to stop new forward mortgage originations.

Citing regulatory pressure to maintain its capital levels, IndyMac is shifting away from and shutting down much of its forward mortgage origination business to focus on its reverse mortgage unit, Financial Freedom, according to a letter from chief executive Mike Perry posted on IndyMac's corporate blog. IndyMac said as of July 7 it would no longer accept any new loan submissions or rate locks in its retail and wholesale forward mortgage lending channels, except for its servicing retention channel, and would cut roughly half its staff of 7,200 over the next couple of months. The company said it plans to honor all its existing rate-locked loans and continue to fund them. "While the managers and employees in these units have worked incredibly hard, these units are not currently profitable due to the continuing erosion of the housing and mortgage markets," Mr. Perry said. "At the same time, these operations take up significant balance sheet capacity and 'feed' growth in the servicing asset, an asset we need to shrink given its size relative to our existing capital." IndyMac's blog can be found at http://www.theimbreport.com.

Class O of COMM 2006-C8 Mortgage Trust commercial mortgage pass-through certificates has been placed on Rating Watch Negative by Fitch Ratings. The rating action was attributed to the transfer of the 12th-largest loan (which is shadow-rated by Fitch) to special servicing. The loan, the Fortress/Ryan's portfolio, is collateralized by 130 restaurant properties in 22 states, Fitch said. The loan is current, but was transferred to special servicing when the master lessee and lease guarantor filed for bankruptcy, the rating agency reported. The borrower and the special servicer are reviewing workout options.