Originations

Five classes of notes from Slate CDO 2007-1 Ltd./LLC, a hybrid collateralized debt obligation partly collateralized by commercial mortgage-backed securities, have been placed on Rating Watch Negative by Fitch Ratings. The affected securities are classes A3, B1, B2, B3, and C. The negative rating actions were attributed to a decline in the portfolio's credit quality resulting from Fitch downgrades of 11 tranches from seven CMBS B-piece resecuritizations. Fitch said 55% of the Slate CDO 2007-1 portfolio consists of credit default swaps, primarily referencing CMBS and CMBS B-piece resecuritizations, and 45% consists of cash CMBS, commercial real estate CDO cash securities, and cash CMBS B-piece resecuritizations.

Moody's Investors Service has placed several ratings of Wachovia Corp. under review for a possible downgrade after the bank holding company said it would lose at least $2.6 billion in the second quarter. The review will focus on: the potential incremental lifetime losses on the option adjustable-rate mortgage portfolio; Wachovia's ability to offset potential incremental charges through capital growth initiatives; asset quality trends in the company's other portfolios; and strategic initiatives it may take under new chief executive Robert K. Steel. "Initially, we thought the lifetime losses on this book would be around $8.4 billion, but the review will update and possibly increase our loss expectations," said Moody's senior vice president Sean Jones. Moody's said factors supporting Wachovia's credit profile include robust liquidity at both the holding company and the bank, and strong regulatory capital ratios even after the second-quarter loss.

The PMI Group Inc., Walnut Creek, Calif., said paid claims for its U.S. mortgage insurance business for the first six months of 2008 were approximately $370 million, in-line with its guidance for the full year. For the full year, PMI is tightening its U.S. paid claims guidance range to the upper end of its projections. Originally the company said paid claims would range from between $825 million to $975 million; now it projects between $900 million to $975 million. PMI added its loss mitigation efforts are benefiting homeowners. Loan workouts reviewed and approved directly by PMI for the first six months (excluding workouts completed by PMI's delegated servicing partners) of 2008 totaled 3,217, an increase of 124% over the previous six months. Nearly 53% of those approved workouts helped homeowners remain in their homes, the company claimed. The remaining 47% of workouts resulted in a short sale, loan assumption or deed-in-lieu that allowed the homeowner to avoid foreclosure.

Taylor, Bean & Whitaker Mortgage Corp., Ocala, Fla., has completed its acquisition of a controlling interest in Platinum Bancshares Inc., a thrift holding company based in Rolling Meadows, Ill. Neither company is publicly traded. Office of Thrift Supervision approval of the deal was granted in late June. William Leaming, the chief executive of Platinum Community Bank, commented, "We are excited about the resources that TB&W will provide to Platinum. They are one of the premier national players in the prime residential mortgage arena. The transaction will allow Platinum to diversify the products and services that it offers." Platinum Community Bank's only office is located in Rolling Meadows. Its loan activities are concentrated primarily in the Chicago metropolitan area and consist of one-to-four-family residential mortgage loans, but it also originates and participates in commercial real estate and small business loans as well. "Platinum Community Bank is an opportunity for TB&W to participate in the community bank process and essentially pilot the offerings we ask our community bank customers to adopt," said Lee Farkas, chairman of TB&W. "The infusion of technology, resources and strength allows Platinum to offer more to their customers."

NorthStar Realty Finance Corp.'s majority-owned healthcare real estate venture, Wakefield Capital LLC, has sold a $100 million convertible preferred equity interest to Inland American Real Estate Trust Inc. NorthStar is slated to receive about $90 million in net proceeds from the deal. "The capital raised in this transaction, together with the $80 million of convertible notes that we issued in May, further enhances our liquidity and positions NorthStar take advantage of some of the best market opportunities that we have seen in years," said David T. Hamamoto, chairman and chief executive officer of NorthStar.

Consumer understanding of credit scores has improved over the past year, but it remains poor, according to a credit score survey commissioned by the Consumer Federation of America and Washington Mutual Bank. Less than one-third of Americans (31%) understand that credit scores indicate the risk of not repaying a loan, rather than factors like their knowledge of or attitude toward consumer credit, the organizations said. In August 2005, May 2007, and June 2008, Opinion Research Corp. conducted surveys of more than 1,000 representative adults on consumer knowledge of credit scores for the CFA and WaMu. Comparing responses in the 2007 and 2008 surveys revealed that a growing percentage of Americans understand several important facts about credit scores, they said. For example, 28% (up from 24% in 2007) knew that 700 was approximately the lowest credit score needed to qualify for a low-rate mortgage, and 59% (up from 55%) knew that landlords often use the scores in deciding whether one can rent housing. The CFA can be found online at http://www.consumerfed.org, and WaMu can be found at http://www.wamu.com.

A survey conducted for the financial services industry group of Deloitte LLP, New York, found that 67% of consumers that applied for a mortgage over the past year said getting the loan was more difficult. For those that applied for a home equity line of credit, 65% said it was more difficult. Adam Schneider, a principal with Deloitte Consulting LLP, who works with banks and other financial institutions, said, "Business models are changing and some of the best-run banks are taking steps to strengthen their credit and mortgage businesses. They recognize that when balance sheets are rebuilt they will have to restart lending, but are likely to be more conservative and focused on the most credit-worthy." The survey also found that three out of four consumers said they were unlikely to buy a home in the next year and 69% are not likely to refinance their existing home. Almost seven in 10 said they were not planning to sell their home. Of those that have a mortgage, 91% said they have made their payments early or on time in the past year. Deloitte found that only 2% of respondents in the four states cited as hit hardest -- California, Florida, Arizona and Nevada -- said they were late with their mortgage payment, compared with 6% for all respondents.

The White House Council on Financial Literacy is recommending underwriting standards for "responsible" subprime lending in an effort to encourage lenders to make this form of mortgage credit available again in low- and moderate-income communities. The council's report highlights the differences between responsible and irresponsible subprime mortgage lending. It also recommends parameters for fixed- and adjustable-rate subprime mortgages that the council says would benefit borrowers. Council Vice Chairman John Hope Bryant said one feature recommended by the council would benefit borrowers who have made their payments on time but suddenly face the loss of a job or death in the family. "Nobody loses, the person gets six months to deal with their change-in-life event, and those payments go to the back of the loan -- principal and interest," Mr. Bryant said at a recent Federal Deposit Insurance Corp. forum on mortgage lending to low- and moderate-income households. Wells Fargo Home Mortgage, Banco Popular, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency have endorsed the council's recommendations. The report says responsible subprime lending has done more to help the poor out of poverty than anything else in the past 50 years, and that the subprime mortgage crisis is a result of irresponsible, predatory, and greed-based lending, not subprime lending itself.

Six classes of Merrill Lynch Mortgage Trust series 2004-KEY2 have been placed on Rating Watch Negative by Fitch Ratings. The affected securities are classes J, K, L, M, N, and P. The rating actions were attributed to potential losses from two loans in special servicing, one involving apartment buildings in Ft. Myers, Fla., and the other involving a 120-unit student housing property in Kalamazoo, Mich. Fitch can be found on the Web at http://www.fitchratings.com.

Standard & Poor's Ratings Services has downgraded 77 classes of mortgage pass-through certificates from 22 U.S. subprime residential mortgage-backed securities deals from various issuers. S&P also affirmed the ratings on 235 other classes from the transactions and 16 additional deals. With the exception of two classes from different transactions that experienced principal writedowns, S&P said it downgraded the securities due to credit support and projected credit enhancement, based on the dollar amount of loans in the delinquency pipelines of the affected deals. In recent months, these deals have experienced deterioration in credit support and "the delinquency pipelines indicate that the pattern of losses could continue," the rating agency said.

Standard & Poor's has announced that LaSalle Hotel Properties, a real estate investment trust based in Bethesda, Md., will replace USANA Health Sciences Inc. in S&P's SmallCap 600 Index. S&P said the move, scheduled to occur after the close of trading on July 14, was prompted by the fact that USANA is being taken private by an investor group led by its senior management.

LandAmerica Financial Group, Richmond, Va., has announced that its recently reported merger of two title insurance subsidiaries in Colorado is part of a new business model that will reduce the number of "bricks-and-mortar" locations in the state. The company recently announced that it was merging its Transnation Title Insurance Co. subsidiary into its Lawyers Title Insurance Corp. subsidiary as part of an effort to transform its independent businesses into a unified operating company. Theodore L. Chandler, chairman and chief executive officer of LandAmerica, said the company is improving its service capabilities in Colorado while reducing reliance on fixed-cost physical locations. "There are features of this approach that may well be appropriate for other markets and may facilitate further office consolidations over time," Mr. Chandler said. LandAmerica can be found online at http://www.landam.com.

FHM Mortgage Group LLC, a mortgage broker based in Parsippany, N.J., has announced that it is joining forces with collection agencies to help overextended homeowners resolve their past-due debts. FHM president Nick Mastrandrea said he established the company with the goal of serving as an ally of the collections industry. "To make that partnership a reality, we've built a state-of-the-art call center with experienced loan officers prepared to accept inbound calls from collection staff and their customers," he said. The company can be found on the Web at http://www.fhmmortgagegroup.com.

Wachovia has announced that it expects to lose between $2.6 billion and $2.8 billion in the second quarter, after reporting a $350 million loss in the first quarter. The company took a $4.2 billion loan-loss reserve provision, of which $3.3 billion is related to its now-discontinued negative amortization, payment-option, adjustable-rate "Pick-a-Pay" product. Chargeoffs for the second quarter include $500 million related to the neg-am portfolio and $280 million related to commercial real estate. The company said it expects to record a goodwill impairment charge during the quarter, but the amount is yet to be determined. (The goodwill losses are not included in the projected loss.) Wachovia added the Pick-a-Pay product when it purchased Golden West Financial Corp. The bank, which is based in Charlotte, N.C., can be found on the Web at http://www.wachovia.com.

Class L of GMAC Commercial Mortgage Securities Inc. series 1998-C2 has been downgraded from CCC/DR1 to CC/DR3 by Fitch Ratings. The downgrade is the result of an increase in specially serviced assets and loss expectations since Fitch's last rating action, the rating agency said. The pool includes nine specially serviced assets on which significant losses are expected, Fitch said. The rating agency can be found online at http://www.fitchratings.com.

Ten classes of commercial mortgage pass-through certificates from LB-UBS Commercial Mortgage Trust 2006-C7 have been downgraded by Standard & Poor's Ratings Services. S&P also affirmed the ratings on 15 classes in the transaction. The downgrades were attributed to: concerns about 12 loans that have reported debt service coverage below 1.0x, the expected erosion of credit support for the two specially serviced loans, and concerns about the eighth-largest loan. The rating agency can be found online at http://www.standardandpoors.com.

The issuer default rating and outstanding debt ratings of Sovran Self Storage Inc., a real estate investment trust based in Buffalo, N.Y., and Sovran Acquisition LP have been affirmed at BBB-minus and removed from Rating Watch Negative by Fitch Ratings. Fitch said the action was based on Sovran's entry into financing arrangements totaling $375 million that "provide Sovran renewed availability under its revolving credit facility, improve the company's liquidity, and address near-term debt maturities." Sovran can be found on the Web at http://www.sovranss.com.

Fulbright & Jaworski LLP has announced the formation of a Global Subprime and Credit Crisis Practice Group. The law firm said the group would address the needs of financial institutions, brokerage firms, title companies, corporate directors and officers, and public accounting firms. Fulbright said five co-heads from various disciplines have been designated to steer the practice group: Rodney Acker, a financial institutions litigator in Dallas; David Barrack, a bankruptcy litigator in New York; Anne Rodgers, a securities and complex commercial litigator in Houston; Richard Smith, a white collar defense and government investigations litigator in Washington, D.C.; and Chris Warren-Smith, a financial disputes and investigations lawyer in London. "Issues similar to those we now face with the subprime fallout date back to the late 1980s when many of our lawyers were handling litigation involving the failed savings-and-loan industry," said Stephen C. Dillard, the head of Fulbright's Global Litigation Department. "This is an area where we can offer our clients the advice and experience they need to successfully deal with the subprime collapse." The international law firm can be found online at http://www.fulbright.com.

Wells Fargo Home Equity is no longer accepting new applications with a combined loan-to-value ratio greater than 80%, thus reducing its equity loan-to-value ceiling by 5% across the board, according to Wells Fargo & Co., San Francisco. The bank said it would stop accepting submissions of stand-alone transactions with a CLTV greater than 80% on July 12, and advised that all simultaneous Wells Fargo transactions with a CLTV greater than 80% should be registered before July 12. "Exceptions to the 80% maximum will not be allowed," the bank said. Wells Fargo also announced guideline information tips for investors, effective July 14, "for all conventional conforming loans." It included a six-month seasoning requirement for cash-out refinances, among others.

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.