Originations

Thirty-six classes of notes issued by seven collateralized debt obligations with exposure to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. All but one of the downgraded classes were removed from Rating Watch Negative. The affected securities are as follows: eight classes from Independence VII CDO Ltd., a cash flow structured finance CDO; seven classes from Whateley CDO I Ltd., a cash flow CDO; six classes from Duke Funding VIII Ltd., a cash flow structured finance CDO; six classes from Straits Global ABS CDO I Ltd., a cash flow structured finance CDO; five classes from Capmark VI Ltd. and Capmark VI Delaware Corp., a hybrid CDO; three classes from South Coast Funding I Ltd., a cash flow structured finance CDO; and one class from ABSpoke 2005-X Ltd., a partially funded static synthetic structured finance CDO. The downgrades were attributed to collateral and credit deterioration in the portfolios, especially in subprime RMBS, alternative-A RMBS, or structured finance CDOs.

Mack-Cali Realty, a real estate investment trust based in Edison, N.J., has been designated the "Bear of the Day" for Aug. 29 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 it is maintaining its Sell recommendation on the office REIT "due to macroeconomic factors" and that suburban office landlords are expected to "have a tough time over the next 12 months." Office occupancies in the company's core markets have risen rapidly, making it difficult to hold occupancy and increase rents, the research firm said. Zacks can be found online at http://www.zacks.com, and Mack-Cali can be found at http://www.mack-cali.com.

The PMI Group Inc., a mortgage insurer based in Walnut Creek, Calif., has announced the signing of an agreement to sell its Asia operations to QBE Insurance Group Ltd. PMI said the purchase price of approximately $56 million (subject to adjustment under certain circumstances) represents approximately 100% of the net tangible asset value of PMI Asia under U.S. generally accepted accounting principles as of June 30. The price will be payable 80% in cash and 20% in the form of a promissory note issued by QBE. "This transaction represents further progress in the execution of our five-point plan and provides additional financial resources to support our holding company and core U.S. mortgage insurance business," said Steve Smith, PMI's chairman and chief executive. PMI can be found on the Web at http://www.pmigroup.com.

Fannie Mae says it will not purchase "subprime loans" as defined by a recently passed New York lending law that goes into effect Sept. 1. "Fannie Mae will not purchase or securitize any mortgage loan that meets the definition of a subprime loan under New York law, regardless of whether any provision of the law is pre-empted by federal law with respect to a particular mortgage or for a particular originator," according to Fannie announcement 08-21. The New York legislature created a new category of subprime loans that falls between prime and higher-cost loans. "The [subprime] threshold is so low that FHA loans and lower-grade Fannie Mae and Freddie Mac loans get dangerously close to crossing the threshold, and in some cases cross the threshold," said Don Romano, president of Shelter Rock Mortgage Corp. in Lake Success, N.Y. On Aug. 12, Freddie Mae said it would not purchase New York subprime loans. Fannie can be found online at http://www.fanniemae.com.

Class M-5 of CBA Commercial Assets LLC small-balance series 2006-2 has been downgraded from B to B-minus by Fitch Ratings. Fitch also placed class M-4 on Rating Watch Negative and affirmed the ratings on five other classes in the transaction. The negative rating actions were attributed to higher loss expectations and an increase in the number of specially serviced loans since Fitch's last rating action.

Fifteen classes of notes issued by two Nautilus collateralized debt obligations linked to alternative-A and subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. All the downgraded classes were removed from Rating Watch Negative. The affected securities are as follows: eight classes from Nautilus RMBS CDO IV Ltd./LLC and seven classes from Nautilus RMBS CDO III Ltd./LLC. Both are static cash flow CDOs. The downgrades were attributed to credit deterioration within the portfolio and underlying exposure to alt-A and subprime RMBS.

The issuer default rating of First American Corp., a Santa Ana, Calif.-based provider of title, mortgage, and other business information, has been affirmed and removed from Rating Watch Negative by Fitch Ratings. Also removed from Rating Watch Negative were First American's senior debt rating, the trust preferred securities rating of First American Capital Trust, and the insurer financial strength rating of First American Insurance Cos. The rating outlook is negative. Fitch said the actions were based on an improvement in capital adequacy under Fitch's Risk Adjusted Capital model. However, First American "continues to underperform" relative to its peers, and the negative outlook reflects "the negative trends not only in First American's capital, but also reserve levels and profitability," Fitch said. The company can be found online at http://www.firstam.com.

The insurer financial strength ratings of Connecticut Attorneys Title Insurance Co. and Attorneys' Title Insurance Fund Inc. have been affirmed at A-minus by Fitch Ratings, but the rating outlooks for both have been revised from stable to negative. CATIC is an attorney-owned title insurance company, while ATIF, the third-largest title insurer in Florida, is owned by a business trust that is in turn owned by attorneys who act as agents for the company, Fitch said. The rating agency said the outlook revision for CATIC is "consistent" with its view of the title insurance industry overall and reflects the company's "relatively lower tolerance to absorb operating losses in the current environment because it is a modestly-sized underwriter in a concentrated geographic area" with limited access to outside capital funds. In the case of ATIF, the revision reflects the company's "poor operating performance and slower response to cutting operating expenses relative to peers during this current difficult environment of reduced mortgage originations and greater title insurance claims." CATIC can be found online at http://www.caticaccess.com, and ATIF can be found at http://www.thefund.com.

The Issuer Default Rating of Fidelity National Financial Inc. and the insurer financial strength ratings of its nine title insurance subsidiaries have been placed on Rating Watch Negative by Fitch Ratings. The actions reflect the "unsustainability" of Fidelity's current shareholders' dividend, Fitch said, citing the current levels of profitability at the title insurance subsidiaries. The rating agency said the operating performance of the subsidiaries is better than that of their peers, although "down significantly given the pressures on an industrywide down cycle." The companies can be found on the Web at http://www.fnf.com.

The Issuer Default Rating of LandAmerica Financial Group and the insurer financial strength ratings of its title insurance subsidiaries have been downgraded by Fitch Ratings. The IDR was downgraded from BBB to BBB-minus, and the IFS ratings were downgraded from A-minus to BBB-plus. The rating outlooks on all were revised from stable to negative. "Fitch believes LFG's consolidated balance sheet fundamentals lag [those of] national peers at a time in the market cycle where risk-adjusted surplus, financial leverage, and reserve redundancy are critical to financial strength ratings," the rating agency said. The affected subsidiaries are Commonwealth Land Title Insurance Co., Commonwealth Land Title Insurance Company of New Jersey, Land Title Insurance Company of Pasadena, Lawyers Title Insurance Corp., Title Insurance Company of America, and Transnation Title Insurance Co. LandAmerica can be found online at http://www.landam.com.

The insurer financial strength ratings of Stewart Title Guaranty Co. and its wholly owned subsidiary Stewart Title Insurance Co. have been downgraded from A-plus to A by Fitch Ratings. The rating outlook is stable. Fitch said the downgrade stemmed from deterioration in the profitability of the companies' parent, Stewart Information Services Corp. The previous rating had been based partly on an assumption that Stewart Information Services' technology-related investments might enable it to "show better margins than peers in a down market, which has not been the case," Fitch said. The two Stewart companies are now the only title insurers rated by Fitch to have a stable outlook, the rating agency said. Fitch can be found online at http://www.fitchratings.com, and Stewart can be found at http://www.stewart.com..

Wells Fargo executive vice president Mark Oman -- who made the bank into the mortgage powerhouse it is today -- says he will retire from the company by the end of 2009. Mr. Oman oversees four business groups, including mortgages and card services, which will continue to report to him for the time being. Wells is the nation's second-largest residential lender and servicer, second only to Bank of America/Countrywide, according to figures compiled by the Quarterly Data Report. Over the past 15 years Wells has grown rapidly in mortgages by purchasing nonbank residential firms and merging with other depositories. Under Mr. Oman, Wells also ventured into subprime lending -- once ranking first in that niche -- but has yet to suffer the traumatic losses experienced by other firms. Mr. Oman joined Wells' predecessor bank, Norwest, in 1979 and was named mortgage chief in 1985. Wells Fargo can be found on the Web at http://www.wellsfargo.com.

Two classes of JP Morgan Commercial Mortgage Securities Corp. pass-through certificates series 2003-PM1 have been downgraded by Fitch Ratings. Class N was downgraded from B to B-minus, and class P was downgraded from CCC to CCC/DR1. Fitch also affirmed 17 other classes in the transaction. The downgrades were based on expected losses on the four loans currently in special servicing as well as higher-than-expected losses on a loan disposed from the trust, the rating agency said.

Five classes of notes issued by Trainer Wortham First Republic CBO V Ltd., a collateralized bond obligation linked to subprime residential mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: class A-1, from AA to A-minus; class A-2, from A-plus to BBB-minus; class B, from A to B; class C, from BBB-plus to CC; and class D, from BB-plus to C. All the downgraded classes were removed from Rating Watch Negative. The downgrades were attributed to collateral deterioration in the portfolio and underlying exposure to RMBS, of which 35.6% are subprime.

Five classes of notes issued by Commodore CDO II Ltd./Corp., a collateralized debt obligation linked to subprime residential mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: class A-1MM, from A-minus/F1-plus to BBB/F2; class A-2(a), from BBB-minus to BB; class A-2(b), from BBB-minus to BB; class B, from CCC to CC; and class C, from CCC to C. All the downgraded classes were removed from Rating Watch Negative. The downgrades were attributed to "significant collateral deterioration" in subprime RMBS, which constitute nearly half of the portfolio. Fitch can be found online at http://www.fitchratings.com.

Standard & Poor's Ratings Services has downgraded the counterparty credit ratings of three of the country's largest mortgage insurers. The outlook for all three is negative. S&P downgraded Republic International Corp. from A to A-minus, while its counterparty and financial strength ratings on Republic's core subsidiaries were downgraded from AA-minus to A-plus. The rating agency downgraded PMI Group Inc. from BBB-plus to BBB-minus and its U.S. and European MI subsidiaries from A-plus to A-minus. The ratings were placed on CreditWatch with negative implications. S&P also lowered its counterparty rating on Radian Group Inc. from BBB to BB-plus and its ratings on Radian's MI subsidiaries from A to BBB-plus, while removing them from CreditWatch negative. In addition, S&P affirmed its AA ratings on Genworth Financial Inc.'s core mortgage insurance subsidiaries (outlook negative) and its BBB counterparty rating on MGIC Investment Corp. and its A counterparty and financial strength ratings on MGIC's MI subsidiaries (outlook negative). S&P attributed the downgrades to "expectations for further deterioration in key variables that influence claims, our reassessment of the long-term fundamentals of the mortgage insurance industry, our concerns about the profitability of insured mortgages originated in 2008, and our comparisons of firms' actual results for the first half of 2008 with our forecasts." S&P can be found online at http://www.standardandpoors.com.

PBG Financial Services Ltd., an accounting firm based in Northbrook, Ill., has announced the relaunch of Home123 Mortgage in partnership with Central States Mortgage Inc., a credit union service organization based in Wauwatosa, Wis. "Home123 is the first of the national mortgage brands to re-emerge after falling into bankruptcy related to the subprime credit crisis," the companies said. PBG purchased the rights to Home123 Mortgage and related brands from Home123's former parent company, New Century Financial Corp. Central States Mortgage will provide all financial services, including fixed- and adjustable-rate mortgages, refinancing, Federal Housing Administration and Department of Veterans Affairs loans, interest-only loans, reverse mortgages, and others. Central States Mortgage can be found on the Web at http://centralstatesmortgage.com.

National Association of Mortgage Brokers president Marc Savitt says the industry needs to take its message right to consumers about the state of the market to counteract the news media's focus. Speaking on a panel with regional leaders at the NAMB/Southeast conference in New Orleans, Mr. Savitt said the mainstream media are concentrating on "gloom and doom" and are not hearing that housing affordability is back and rates are still low. Brokers need to tell consumers right now that they have a "window of opportunity," he said. Jeff Farnham, president of the Mississippi Association of Mortgage Brokers, said brokers provide "a great service to our communities as well as to our wholesale partners." The president of the Georgia Association of Mortgage Brokers, Walter Moody, added that "every industry goes through a cleansing period" and the mortgage industry is in one now. But those that make it through will be stronger, he said. Sal Berndas, president of the Louisiana Mortgage Lenders Association, said he wished the industry could convey the same message as the Democratic Party, one of hope and change.

The Hope Now alliance says it modified or entered into new payment plans on 192,034 residential loans during July. The group -- which includes mortgage servicers, investors, and credit counselors -- maintains that it has prevented 2.07 million foreclosures since its inception last summer. Of the 192,034 loans worked out, 58% were subprime and the balance were prime. Meanwhile, the alliance -- basing its information on a survey of nine firms controlling 60% of the subprime servicing market -- estimated that 1.1 million subprime mortgages were scheduled to reset between January and July of this year. At deadline time, the group was holding a news conference about its results.

Starting Oct. 1, the Federal Housing Administration says it will charge homebuyers a 1.75% upfront mortgage insurance premium on single-family loans and a 3% upfront premium on FHA Secure loans for delinquent borrowers. Borrowers with loan-to-value ratios above 95% will pay a 55-basis-point annual premium. Borrowers with LTVs of 95% or less will pay a 50-bp annual premium. A recently passed housing bill requires the FHA to abandon risk-based pricing for 12 months. So the agency has notified lenders that it is temporarily returning to standard pricing. Before July 14, the FHA charged a 1.5% upfront premium and a 50-bp annual premium on all single-family loans. The agency is raising the premiums to reflect higher loss rates and higher risks of refinancing delinquent borrowers. The upfront premium for existing FHA borrowers to refinance will remain at 1.5%.