Origination

Deutsche Bank has reported taking a 141 million euro ($220 million) loss in the first quarter, a period in which it also took 885 million euros ($1.38 billion) in writedowns on commercial real estate and residential mortgage-backed securities. The RMBS involved in the writedowns were predominantly backed by alternative-A credit mortgages, the company said. "In the month of March, pressure on the banking sector was more intense than at any time since the current credit downturn began," said DB chairman Josef Ackermann.

The Federal Open Market Committee has cut its target for the federal funds rate by 25 basis points to 2% and indicated that it will try to avoid further cuts even though the credit crunch and housing woes are likely to persist. "The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity," the Federal Reserve's monetary policy-making committee said. The FOMC also noted that it remains concerned about inflation, as "some indicators of inflation expectations have risen in recent months." Two committee members voted against the most recent cut, indicating that they preferred no cut be made.

Mortgage lenders are urging the Office of Federal Housing Enterprise Oversight to withdraw its support for appraisal reforms that Fannie Mae and Freddie Mac agreed to implement as part of a settlement with New York Attorney General Andrew Cuomo. The agreement "permits the NYAG to unlawfully exercise authority that resides exclusively with the federal government," according to eight financial services trade groups. And they contend that OFHEO "violated its statutory directive" to be the sole regulator of the two government-sponsored enterprises when it entered into the agreement with the New York attorney general. "We urge OFHEO to withdraw its assent to the agreement, to not permit the GSEs to implement the agreement, and take steps to assure that this type of rulemaking by settlement does not occur in the future," the joint letter says. In comment letters on the appraisal reforms, the same groups strongly oppose the ban on the use of in-house appraisers and subsidiary appraisal firms.

An affiliate of WL Ross & Co. has closed on its $1.3 billion purchase of Option One Mortgage Corp., Irvine, Calif., which services $55 billion in A-minus to D loans. With Option One under his belt, WL Ross chief executive Wilbur Ross said he is now in the hunt to buy savings and loan institutions. His financial backers include sovereign wealth funds. In a recent interview with National Mortgage News, Mr. Ross said he eventually wants to enter the loan production business. Last year, Mr. Ross's company bought the servicing platform of bankrupt American Home Mortgage, Melville, N.Y., a subprime and alternative-A servicer. (For the full story, see the May 5 issue of NMN.)

Seven classes of GMAC 2005-C1 commercial mortgage pass-through certificates have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The downgrades were as follows: class H, from BBB-minus to BB-plus; class J, from BB-plus to BB; class K, from BB to B-plus; class L, from BB-minus to B-minus; class M, from B-plus to CCC/DR1; class N, from B to CC/DR3; and class O, from B-minus/DR1 to C/DR6. Fitch also affirmed the ratings on 15 other classes in the deal. The downgrades were attributed to projected losses on the largest specially serviced asset (1.7%), a parking garage in downtown Detroit.

More than 100 additional classes of subprime mortgage-backed securities were downgraded by Fitch Ratings on April 29. Fitch also affirmed the ratings on classes with outstanding balances of more than $2.6 billion. The securities affected by the latest downgrades were: 94 classes from 17 issues by First Franklin; 11 classes from seven issues by Renaissance Home Equity Loan Trust; five classes from three issues by Fremont Home Loan Trust; and one class from an issue by American Business Financial Services. Fitch can be found online at http://www.fitchratings.com.

Liberty Property Trust, Malvern, Pa., has been designated the "Bear of the Day" for April 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. Zacks said the commercial real estate investment trust's operations "are holding up relatively well in the company's core portfolio, although overall vacancies are increasing," and noted its "attractive yield, now over 7%, although the dividend is barely being covered with operating cash." Office and industrial markets are weakening throughout the United States, Zacks said. "Liberty has a large development pipeline that is only mildly pre-leased, and poses risk should the economy continue to soften in 2008," the research firm said. Zacks can be found online at http://www.zacks.com, and Liberty Property Trust can be found at http://www.libertyproperty.com.

CBRE Realty Finance , Hartford, Conn., has announced modifications to its management agreement with CBRE Realty Finance Management, CB Richard Ellis, and CBRE Melody & Co. to give the company greater flexibility as it explores its strategic options. The modifications give CBRE Realty Finance the right to terminate the management agreement without paying a termination fee to the manager (CBRE Realty Finance Management) and with an option to acquire the manager, the company said. CBRE Realty Finance also said it has agreed to assume certain severance obligations for employees of the manager. The company can be found online at http://www.cbrerealtyfinance.com.

More than two hundred additional classes of subprime mortgage-backed securities were downgraded by Fitch Ratings on April 28. Fitch also affirmed the ratings on classes with outstanding balances of approximately $9 billion. Among the securities affected by the latest downgrades were: 74 classes from 16 issues by CSFB Home Equity Asset Trust; 35 classes from 11 issues by Countrywide (CWABS); 26 classes from nine issues by Option One Mortgage Loan Trust; 26 classes from 10 issues by Long Beach; 22 classes from six issues by Securitized Asset Backed Receivables; 20 classes from four issues by Finance America Mortgage Loan Trust; and 10 classes from four issues by EquiFirst Mortgage Loan Trust. Fitch can be found online at http://www.fitchratings.com.

AmStar Financial Services Inc., Miami, has announced plans to launch a reverse mortgage warehouse facility to serve small Federal Housing Administration correspondents originating FHA-insured Home Equity Conversion Mortgages. AmStar said it has reached an agreement in principle with Value Financial Mortgage Services whereby AmStar would use Value's platform to provide the infrastructure necessary for the launch. Value will commit up to 50% of its future production to the facility, AmStar said. AmStar can be found on the Web at http://www.amstarweb.net.