Origination

Bank of America, Charlotte, N.C., has announced the completion of its acquisition of Countrywide Financial Corp., Calabasas, Calif., creating the nation's largest mortgage originator and servicer. In January, BoA agreed to buy Countrywide for $4 billion in stock, but as the Charlotte bank saw its share price fall this year, so did the value of the deal. The final sale price is in the range of $2.5 billion, on top of the $2 billion that BoA paid last summer for a 16% stake in Countrywide. (At one time Countrywide had a market capitalization of $25 billion.) BoA said it will focus on "responsible home lending" and plans to offer a variety of first-lien mortgages but no subprime loans. It will also discontinue offering payment-option adjustable-rate mortgages, the company said. Among the first-lien mortgages the company says it will offer are: conforming loans underwritten to standard guidelines of the government and the government-sponsored enterprises; nonconforming loans with terms "expected to produce no greater risk of default than conforming loans"; interest-only mortgages subject to a 10-year minimum IO period; and fixed-period ARMs that provide low initial rates with fixed payments. The company can be found online at http://www.bankofamerica.com.

Class L of LB 2006-LLF C5 commercial mortgage pass-through certificates has been downgraded from BBB-minus to BB-minus by Fitch Ratings. Fitch also affirmed the ratings on 14 other classes in the transaction. The downgrade was attributed to the declining performance of the Sheraton Keauhou Bay Resort & Spa loan and three Praedium Rental Portfolio loans.

Seventy-five classes of notes in subprime mortgage-related collateralized debt obligations from six issuers have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The affected securities were as follows: 20 classes from Baker Street Finance Ltd. and Baker Street Finance USD Ltd.; 10 classes from Hanover Street Finance Ltd.; nine classes from Clifton Street Finance Ltd.; nine classes from Dorset Street Finance Ltd.; nine classes from Pembridge Square Finance Ltd.; nine classes from Regent Street Finance Ltd.; and nine classes from Sydney Street Finance Ltd. Fitch said the "driving factor" behind the downgrades was higher loss expectations in the subprime residential mortgage-backed securities and structured finance CDO portions of the managed synthetic CDO portfolios, stemming primarily from "rapid credit deterioration" in the 2005, 2006, and 2007 vintages. Fitch can be found online at http://www.fitchratings.com.

Hilco Real Estate LLC, Chicago, has announced the formation of Hilco Residential Partners LLC, a residential real estate investment fund chartered to purchase distressed residential properties and debt. The size of the investment fund, a joint venture with Chicago-based Real Estate Principal Solutions LLC, was not disclosed. Hilco said three classes of distressed assets will be acquired from lenders: real estate owned portfolios of single-family and multifamily properties, condominiums, and senior housing; closeout units in a residential development; and nonperforming notes on single-family and multifamily projects. "Our goal is to provide immediate balance sheet relief for lenders and eliminate their further involvement with the costs of real estate ownership," said Navin Nagrani, vice president of Hilco Real Estate. "Our nationwide property management and marketing infrastructure enables us to monetize acquired assets more quickly and with less cost, which means the fund can pay more for distressed portfolios." Hilco can be found online at http://www.hilcorealestate.com.

MicroBilt Corp., Kennesaw, Ga., and Annapolis, Md.-based PRBC have announced a planned merger of payment data to help small to medium-size companies do more business with consumers who have thin credit histories. The data will be merged in PRBC's data repository, and MicroBilt will make an equity investment in PRBC under the arrangement. The companies said the credit crunch is forcing smaller businesses to be very cautious in originating new loans, making it "more difficult than ever" for consumers with thin (or no) established credit histories to qualify for competitive rates. "PRBC has done a tremendous job in developing methods and systems of aggregating nonreported bill payment data to help consumers demonstrate good payment track records and qualify for credit at competitive rates," said MicroBilt chairman Bob Raleigh. "By combining PRBC's data with the trade line data reported to MicroBilt by thousands of smaller companies, we can help this large sector build credit histories and receive FICO Expansion scores much faster, and in turn [enable] businesses to grant more credit with less risk." The companies can be found online at http://www.microbilt.com and http://www.prbc.com.

The Senate has approved an amendment by Sen. Christopher S. Bond, R-Mo., that requires lenders to provide better consumer disclosures on adjustable-rate mortgages with teaser rates. ARMs with teaser rates "played a large role in our current subprime mortgage crisis," Sen. Bond said recently during debate on a housing reform and foreclosure rescue bill. The new Truth in Lending Act disclosure would require mortgage lenders or brokers to disclose how high the mortgage payments would go once the teaser rate expires. In addition, they would have to disclose that there is "no guarantee" that the borrower will be able to refinance the loan before the initial low rate ends. "Many potential borrowers either did not understand what they were getting into or were falsely assured [that they could refinance and] everything would be OK," Mr. Bond said. The Senate approved the Bond amendment to the housing bill by unanimous consent on June 25.

Nine classes of Wachovia Bank Commercial Mortgage Trust 2005-C20 have been place on Rating Watch Negative by Fitch Ratings. The affected securities are classes F through H and J through O. The negative rating actions were attributed to concerns about the declining value of the special serviced Macon and Burlington Malls loan due to lower occupancy levels.

Countrywide Financial Corp., Calabasas, Calif., will be replaced by AK Steel in the S&P 500 Index after the close of trading on June 30, Standard & Poor's has announced. S&P said the reason for the change is Countrywide's pending acquisition by Bank of America, a constituent of the S&P 500, in a deal expected to close on or about that date. S&P can be found online at http://www.standardandpoors.com.

Vestin Realty Mortgage I Inc. and Vestin Realty Mortgage II Inc., Las Vegas-based real estate investment trusts, have announced temporary suspensions of dividend payments. Vestin I and II said they expect their operating results to be hurt by an increase in nonperforming assets, the recognition of writedowns on real estate held for sale, and legal expenses related to the defense of various lawsuits. The companies attributed the growth in NPAs and the writedowns largely to "the current state of the real estate markets and the continuing constraints in credit markets." Both REITs are managed by Vestin Mortgage Inc.

Municipal Mortgage & Equity LLC, Baltimore, has announced that it is considering strategic options, including a possible sale or recapitalization of business units. Additional asset sales will also be considered, MuniMae said. The company noted that there is no assurance that the exploration of options will result in any transaction, and said it does not plan to disclose developments unless its board approves a specific transaction. Lazard Ltd. has been advising MuniMae on the process. MuniMae and its subsidiaries arrange debt and equity financing for developers and owners of real estate and clean-energy projects. The company can be found on the Web at http://www.munimae.com.