Origination

Several financial services groups, and even the U.S. Chamber of Commerce, say they support a major housing bill pending in the Senate, but they want a section of the bill dealing with the licensing and registration of mortgage originators dropped from the legislative package. Title VI has "serious faults" and imposes suitability requirements on employees of lending institutions that will create uncertainty in the origination and underwriting process, according to the six industry groups. The American Financial Services Association, the Consumer Bankers Association, the Consumer Mortgage Coalition, the House Policy Counsel of the Financial Services Roundtable, the Mortgage Bankers Association, and the CoC signed the June 17 letter. "We strongly support" the GSE regulatory reforms and the FHA modernization provisions in the housing bill, as well as the FHA foreclosure rescue program, says the letter addressed to Sens. Christopher J. Dodd, D-Conn., and Richard C. Shelby, R-Ala. "Therefore, we urge that Title VI be separated from the rest of the bill and be considered separately once the licensing and registration provisions are perfected," the groups say.

Three classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. series 2005-CIBC12 have been downgraded by Fitch Ratings. The downgrades were as follows: class M, from B-plus to B; class N, from B to B-minus; and class P, from B-minus to CCC/DR1. Fitch also affirmed the ratings on 21 other classes in the transaction. The downgrades were attributed to projected losses on the mortgage pool's three specially serviced loans, which are collateralized by: a retail property in St. Thomas, Virgin Islands, that is 90 days delinquent; a suburban office building in New London, Conn., that is 90 days delinquent; and an office property in Buffalo, N.Y., that has defaulted.

Luminent Mortgage Capital Inc., a real estate investment trust based in Philadelphia, says a triggering event has occurred under the indenture agreement for its convertible senior notes. The event is related to the delisting of Luminent's common stock by the New York Stock Exchange on May 3. The delisting of the stock by NYSE for 30 consecutive trading days constitutes a triggering event, Luminent said. The holders of the $90 million in convertible senior notes may surrender their notes for conversion. The company's common stock currently trades on the over-the-counter bulletin board. On June 16, the common stock closed at $0.20 per share. At the end of March, Luminent announced plans to convert from a REIT to a publicly traded partnership. The company can be found online at http://www.luminentcapital.com.

Nearly 60% of real estate professionals surveyed believe that commercial property in the United States is overvalued, according to a survey by international law firm Bryan Cave LLP. The survey found that 59% of the executives polled believe commercial properties are overvalued and only 4% believe they are undervalued. Barry C. Ross, a partner at Bryan Cave, said 91% of the respondents "believe the credit crunch will continue to reduce capital for commercial real estate financings for at least seven more months." The fifth annual Bryan Cave Real Estate Executives' Forecast Survey was conducted among more than 300 commercial real estate professionals, including brokers, lenders, title insurers, and mortgage bankers. Bryan Cave can be found online at http://www.bryancave.com.

Standard & Poor's has downgraded the financial strength rating of New York-based Radian Asset Assurance Inc. (the financial guaranty unit of Radian Group Inc., Philadelphia) from AA to A. "In our view, business prospects and financial flexibility have declined for Radian Asset, and there is ongoing uncertainty regarding its competitive position and ownership," said S&P credit analyst Robert Green. Because RAA has exited its collateralized debt obligation business lines and the disrupted mortgage market has hurt the company's reinsurance business, par written in the first quarter totaled only $2.6 billion, down from $14.4 billion in the first quarter of 2007. "Looking ahead, we believe that business growth for the company's reinsurance business is uncertain," said Mr. Green. Another issue, S&P said, is that RAA is less likely to receive capital from Radian Group because the parent is raising capital for Radian Guaranty Inc., the mortgage insurance subsidiary. In a statement, Radian Group said the downgrade was not due to a lack of capital adequacy or credit issues, reporting that RAA had $1.6 billion of statutory capital at the end of the first quarter. The downgrade, it said, is likely to restrain RAA's ability to write business. S&P can be found online at http://www.standardandpoors.com.

Aries Hospitality Group LLC, Chicago, has formed an alliance with HI Group LLC, a commercial real estate investment banking firm with offices in Chicago and New York, according to Aries Hospitality's mortgage banking affiliate, Aries Capital. The alliance will provide hotel investment banking to source, process, and close mid-market and upscale hotel equity and sales transactions in the United States, Europe, and the Caribbean, Aries said. "Hotel transactions today are larger and more complicated than ever," said Neil D. Freeman, chairman and chief executive officer of Aries Capital. "Successful execution requires an in-depth knowledge of brands, capital sources, and development. Our professionals have the expertise and relationships with domestic and international investors to ensure that the goals in each transaction are achieved." The companies can be found on the Web at http://www.ariescapital.com and http://www.higroup.net.

Jones Lang LaSalle Inc., a Chicago-based firm specializing in financial and professional services, and The Staubach Co., a Dallas-based real estate services firm, have announced a $613 million merger agreement. Under the agreement, Jones Lang LaSalle will pay $123 million in cash and $100 million in stock at the close of the transaction, with the remainder to be paid in cash over five years. The pact also calls for potential earn-out payments of up to $114, subject to the achievement of certain performance levels, the companies said. The combined firm will operate under the Jones Lang LaSalle name. "The Staubach Company is recognized for exceptional tenant representation expertise and is a leading presence in markets throughout the United States," said Colin Dyer, chief executive officer of Jones Lang LaSalle, which can be found online at http://www.joneslanglasalle.com.

House prices may fall another 15% before they stabilize, and most of the drop will occur before the end of this year, according to the consensus view of economists on the American Bankers Association's economic advisory panel. "We are just about half way through the adjustment process in home prices," said Peter Hooper, chief economist at Deutsche Bank Securities and chairman of the ABA panel. He noted that the Standard & Poor's/Case-Shiller house price index shows house prices have fallen nearly 15% from the peak. "We have another 15% to go," Mr. Hooper said. The bank economists say they expect house prices to continue to decline well into the first half of 2009, but that the most precipitous drop will be in the second half of this year. The ABA can be found on the Web at http://www.aba.com.

Single-family housing starts fell 1% in May and were down 41% from the level recorded a year earlier, as the outlook for home sales continues to deteriorate. The U.S. Census Bureau reported that single-family housing starts declined from a seasonally adjusted annual rate of 681,000 in April to 674,000 in May. Builders are not seeing an improvement in the housing market, according to the latest National Association of Home Builders/Wells Fargo housing market survey. NAHB chief economist David Seiders says he does not expect housing starts to hit bottom until early next year. But his forecast has called for home sales to bottom out soon. "I may be compelled to kick that out a bit further," he told reporters. Mr. Seiders noted that mortgage rates have gone up as a result of the Federal Reserve's attempt to beat down inflation expectations. But the chief economist said he does not expect the Fed to tighten monetary policy this year. "I think we are going to be seeing further economic weakness," Mr. Seiders said. "I am hoping this recent surge on long rates will be easing back down within the next few weeks." If not, it could be a "big problem," he added.

Two classes of COMM 2006-FL2 commercial mortgage pass-through certificates have been downgraded by Fitch Ratings. Class TC-1 was downgraded from BBB to BB-plus, and class TC-2 was downgraded from BBB-minus to BB-plus. Fitch also placed classes MSH-1 through MSH-4 on Rating Watch Negative and affirmed the ratings on 49 other COMM classes. The downgrades were attributed to declining performance at The Avenue at Tower City in Cleveland, and the Rating Watch placement was attributed to "slower-than-expected recovery from ongoing renovations."