Originations

LandCastle Title LLC, the title company of real estate law firm Morris/Hardwick/Schneider, has announced the establishment of a new vendor management division, LandCastle Lender Services. The division "will allow clients to use LandCastle Title as a one-stop operation for closing, title, and appraisal services in all 50 states," the company said. Using an optimized, Web-based ordering system, clients are able to place title, closing, and appraisal orders using a unique login and password, LandCastle said. Clients can also follow the progress of orders, with current status updates, and can retrieve title and appraisal products online. The company can be found on the Web at http://www.closingsource.net.

Fitch Ratings is withdrawing its ratings of Radian Group Inc., and its mortgage and financial guaranty subsidiaries. Radian first requested that Fitch take the action on Sept. 5, 2007, but at that time Fitch refused. Radian made its request in response to a downgrade of Radian Asset Assurance. Back in September, Fitch said it would maintain ratings coverage of Radian due to investor interest, but would withdraw them if it believed it no longer had access to adequate public and nonpublic information to credibly maintain the ratings. In its latest statement, Fitch said it believes the information available is no longer adequate to maintain credible ratings under its methodologies for rating mortgage insurers and financial guaranty insurers. Fitch added that it will continue to monitor investor interest in its ratings coverage of Radian and may review its methodologies to explore ways to provide ratings using only publicly available information. Fitch can be found online at http://www.fitchratings.com.

Triad Guaranty Inc., Winston-Salem, N.C., is negotiating exclusively with Lightyear Capital LLC, New York, on the creation of a new monoline mortgage insurer. In its most recent 10-K filing, Triad said this was one of the options it was exploring for the future of the company. If the negotiations are successful, after the creation of the new company Triad Guaranty Insurance Corp. will be placed into run-off. Triad's regulator, the Illinois Department of Insurance, has been informed by both parties of the negotiations. It is expected that Lightyear and its investor group will provide up to $400 million ($200 million from Lightyear itself) in capital to the new Illinois-domiciled mortgage insurer. "Certain key members of Triad's current management and many of its employees" will join the new company, which will also purchase certain assets and the right to use certain systems and technologies of Triad, the company said. TGIC is continuing to write new mortgage insurance business and is working on a remediation plan for presentation to Fannie Mae and Freddie Mac. If a definitive agreement is signed this month, the deal could close in the third quarter.

The Federal Housing Administration refinancing bill is on a fast-track in the House of Representatives but has hit a bump in the Senate Banking Committee, where a scheduled May 6 mark-up has been postponed. The House Financial Services Committee passed the FHA refinancing bill on May 1, and the full House is expected to vote on it during the week of May 5. The foreclosure prevention bill provides the Federal Housing Administration with $300 billion in loan commitment authority to refinance "underwater" mortgages. House leaders want to attach the FHA refinancing bill to a larger legislative package that includes FHA modernization and GSE reform bills the House passed last year. The bills increase the loan limits for the FHA, Fannie Mae, and Freddie Mac to $729,750. The package also includes a tax bill that provides revenue bonds to refinance subprime loans and a $7,500 tax credit for first-time homebuyers. Meanwhile, it appears that negotiations over a government-sponsored enterprise bill to strengthen regulation of Fannie and Freddie has bogged down, and Senate Banking Committee leaders will reschedule the May 6 mark-up. Committee Chairman Christopher J. Dodd, D-Conn., wants to tackle the GSE reform and FHA refinancing bills in the same mark-up.

Six classes of notes issued by Pyxis ABS CDO 2006-1 Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings. The downgrades were as follows: class A-1, from BBB-minus to CC; class A-2, from BB to CC; class B, from BB-minus to CC; class C, from B to CC; class D, from CCC-plus to CC; and class X, from CCC to CC. The downgrades reflect "significant collateral deterioration" in the portfolio of the hybrid cash and synthetic CDO, specifically subprime residential MBS and structured finance CDOs with underlying exposure to subprime RMBS, Fitch said.

Eight classes from Silver Martin CDO I Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings, and seven of the classes have been removed from Rating Watch Negative. Fitch attributed the downgrades to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Since the last rating action on the transaction in November, nearly 66% of the portfolio has been downgraded, the rating agency said.

Ten classes from Ridgeway Court Funding II Ltd., a collateralized debt obligation backed partly by subprime mortgage-backed securities, have been downgraded by Fitch Ratings, and nine of the classes have been removed from Rating Watch Negative. Fitch attributed the downgrades to "significant collateral deterioration" in the portfolio, especially subprime residential MBS, alternative-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Since the last rating action on the transaction in November, nearly 77% of the portfolio has been downgraded, the rating agency said.

Sixty-three certificates from 19 First Franklin Mortgage Loan Trust transactions backed by first-lien subprime mortgage loans have been downgraded by Moody's Investors Service. Moody's also placed 11 certificates under review for possible downgrade. The downgrades were attributed to the fact that credit enhancement provided by subordination, overcollateralization, and excess spread for each deal is low compared to projected pipeline losses. "Stepdown and continuous losses have left the deals with thin credit enhancement levels and made them more vulnerable to pool deterioration in the tail end of the deals' lives," the rating agency said. Moody's can be found online at http://www.moodys.com.

More than 100 additional classes of subprime mortgage-backed securities were downgraded by Fitch Ratings on April 30. Fitch also affirmed the ratings on classes with outstanding balances of more than $5 billion. The securities affected by the latest downgrades were: 54 classes from 23 issues by Structured Asset Investment Loan; 31 classes from eight issues by CDC Mortgage Capital Trust; 20 classes from 19 issues by Chase Funding Loan Acquisition Trust; 17 classes from four issues by Structured Asset Securities Corp.; and nine classes from two issues by People's Choice Home Loan. Fitch can be found online at http://www.fitchratings.com.

CapLease Inc., a New York City-based real estate investment trust, has announced its entry into a $250 million term loan and revolving credit agreement with Wachovia Bank NA. CapLease said the two-year facility (with a one-year extension option) eliminated margin call risk to CapLease for general interest rate and credit spread changes on all loan collateral other than commercial mortgage-backed securities. The company used $210.4 million of term-loan borrowings at the closing of the facility to refinance all collateral previously financed on its short-term warehouse agreement with Wachovia.

C. Daniel Clemente, chairman and chief executive officer of Clemente Development Co., has announced the formation of a private equity fund to take advantage of investment opportunities in income-producing commercial real estate created by global financial disarray. The fund has $200 million in commitments, and Mr. Clemente said he is negotiating to leverage the commitments to $2 billion. "With mortgage underwriting standards for commercial real estate tightening and capital availability becoming constrained, defaults are sure to occur upon maturity of loans closed between 2002 and 2007," he said. Mr. Clemente said he believes that, in 2009, asset values will be lower, underwriting standards will be more conservative, and capital will not be readily available to bail out syndicators that overpaid for buildings.

A pair of the nation's largest title insurance underwriters -- Stewart Information Systems Corp. and LandAmerica Financial Group Inc. -- have reported increased losses in the first quarter. The Houston-based Stewart reported a net loss of $22.3 million ($1.24 per share) for the most recent period, compared with a net loss of $4.8 million ($0.26 per share) a year earlier. Its competitor, the Richmond, Va.-based LandAmerica, lost $24.2 million ($1.60 per share) for the first quarter, compared with net earnings of $4.7 million (0.26 per share) a year earlier. "Tight mortgage lending conditions from reduced liquidity in the mortgage-backed securities market were factors in keeping transactional demand at bay," said LandAmerica's chairman and chief executive, Theodore L. Chandler Jr. "These conditions, coupled with a reduction in our commercial business and some increased severity in claims, compressed margins during first-quarter 2008." The co-chief executive and chairman of Stewart, Malcolm S. Morris, said his company is "making progress in reducing our risk exposure by evaluating and potentially canceling agencies [MBS] that our models indicate are at the higher end of the risk spectrum. While we continue to add new agencies, we have increased our qualifying requirements."

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.