Originations

Classes F, G, and H of Wachovia Bank Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2005-C20, have been placed on review for possible downgrade by Moody's Investors Service. Moody's also affirmed the ratings on 17 classes in the deal. The certificates are collateralized by 207 mortgage loans, one of which (representing 4.2% of the pool) is in special servicing. Moody's said it is estimating "a significant loss" from the specially serviced loan, the Macon & Burlington Mall Pool Loan, which is secured by two regional malls in Macon, Ga., and Burlington, N.C. As of December, the Macon Mall was approximately 75% leased and the Burlington Mall was 53% leased, the rating agency said. Moody's said the one owned anchor, Parisan, recently terminated its lease early, and the loan was transferred to the special servicer for imminent default in March.

Class M-5 of CBA Commercial Assets LLC small balance commercial mortgage pass-through certificates, series 2005-1, has been downgraded from Ba2 to B1 by Moody's Investors Service. In addition, classes M-2, M-3, and M-4 were placed on review for possible downgrade and the ratings on two classes were affirmed. Moody's attributed the downgrade to the high percentage of loans (12.1%) in special servicing and the projected losses from those loans. The certificates are collateralized by 263 mortgage loans, with the top 10 loans representing 21.1% of the pool.

More than 100 additional classes of subprime mortgage pass-through certificates were downgraded by Fitch Ratings on April 7 as a result of changes to its subprime loss forecasting assumptions. Fitch also placed five classes of subprime pass-throughs on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of more than $3 billion. The securities affected by the latest downgrades were: 78 classes from 10 issues of Soundview Home Loan Trust mortgage pass-throughs; 15 classes from three issues of Wells Fargo Home Equity Asset-Backed Securities pass-throughs; nine classes from one issue of CSFB Home Equity Asset Trust pass-throughs; and eight classes from one issue of Meritage Mortgage Loan Trust pass-throughs. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." Fitch can be found online at http://www.fitchratings.com.

Moody's Investors Service has downgraded more than 750 tranches in 77 subprime residential mortgage-backed security transactions from three issuers. Of the downgraded tranches, 162 remain on review for possible further downgrade. The negative rating actions affected the following securities: 315 tranches from 31 subprime RMBS deals issued by ACE Securities Corp. Home Equity Loan Trust; 238 tranches from 22 RMBS deals supported by subprime loans originated by Long Beach; and 218 tranches from 24 subprime RMBS deals issued by Merrill Lynch Mortgage Investors Trust. The downgrades were generally based on higher-than-expected rates of delinquency, foreclosure, and real estate owned in the underlying collateral relative to credit enhancement levels, Moody's said. The collateral consists primarily of first-lien subprime mortgage loans. Moody's can be found on the Web at http://www.moodys.com.

The credit crisis is continuing to broaden and spread to other mortgage and corporate debt markets, but emerging markets so far have been largely unaffected by the concern, according to the International Monetary Fund. "Credit deterioration, which was first evident in the U.S. subprime market, is now showing up in higher-quality residential mortgages, U.S. commercial real estate, and the corporate debt markets," the IMF said in a new report. Financial markets continue to be stressed by weakened financial institution balance sheets, a continuing deleveraging process, declining asset prices, and a "macroeconomic environment that is more challenging because of the weakening global growth," said Jaime Caruana, head of the IMF's Monetary and Capital Markets Department.

The reverse mortgage market will look far different in the years ahead, according to the co-chair of the National Reverse Mortgage Lenders Association. While today's senior citizens are using their homes as "a product of last resort" to live out their remaining years as comfortably as possible, future seniors will see their homes as financial assets to be used to live their lives to the fullest, Bart Johnson said at NRMLA's Eastern Regional Meeting in Philadelphia. "People will have to finance their longevity," he said in a luncheon address. "The good news is they have wealth in the form of home equity, and they won't mind using it to maintain the lifestyle they want." Though some are worried that the reverse mortgage field is the next subprime market, Mr. Johnson, who is president of Life Stages Financial, Newport Beach, Calif., said the negative press will eventually blow over and the business will become re-energized. "This is a vastly underserved market," he said. "The unmet needs are huge."

The reverse mortgage business is "a guaranteed growth industry," according to a venture capitalist who says he's willing to invest in practically any aspect of the sector. "Lots of companies need growth capital," Diogo Teixeira of the Revmore Investing Group, Wellesley, Mass., said at the National Reverse Mortgage Lenders Association's Eastern Regional Meeting in Philadelphia. Revmore has already made one reverse mortgage deal with an investment in Your Home for Life, the 10th-largest originator in New England in 2007 and the sixth-largest independent originator. Now it is casting about for other investments, possibly in technology firms or lead generation companies. "We're looking for additional opportunities elsewhere in the country and elsewhere in the business," Mr. Teixeira said on a panel session entitled "Where Is the Capital Coming From?" The private investor said he's particularly interested in firms with strong management teams in place and sound plans for how they'll use his money. NRMLA can be found online at http://www.reversemortgage.org.

Deutsche Bank managing director Michael Commaroto, who has overseen the foreign bank's whole-loan trading operation for much of the decade, has left the company, industry sources have confirmed to MortgageWire. A few months back Paul Mangione, managing director in charge of subprime trading and asset-backed securities for the bank, also departed. He was Mr. Commaroto's deputy. A spokeswoman for Deutsche Bank declined to comment. Mr. Commaroto's departure has been the subject of rumors since December. Sources say he is looking at employment opportunities in the "scratch-and-dent" market. (For full details, see the April 7 issue of National Mortgage News.)

The current response to the foreclosure crisis is "inadequate," and a federally funded program to restructure subprime mortgages in bulk is crucial to avoid the wave of impending foreclosures, according to the National Housing Conference, which is supported by major mortgage lenders and affordable housing advocates. "A bulk restructuring plan, administered and funded by a new agency or division specially empowered to administer this process, would be the most effective solution to the nation's economic crisis," the NHC says in spelling out principles for addressing the mortgage and foreclosure crisis. The housing policy group calls for "substantial principal reductions" along with government assistance to close the affordability gap, which could include a "silent" second mortgage. Freddie Mac, Bank of America, Wells Fargo Home Mortgage, and HSBC Bank USA are key contributors to the nonpartisan council, which was founded in 1931. The NHC noted that the bipartisan housing bill being debated in the Senate "omits any bold plan" for restructuring existing mortgages. The NHC is urging its members to contact their senators and representative and "ask them to take more action in helping families at risk of foreclosure."

Three classes from First Union National Bank Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2002-C1, have been downgraded by Moody's Investors Service. The downgrades were as follows: class L, from B1 to B2; class M, from B2 to Caa2; and class N, from Caa1 to Ca. Moody's also upgraded three classes in the deal and affirmed the ratings of 10 other classes. The downgrades were attributed to realized and projected losses from three specially serviced loans representing 2.3% of the pool. The certificates are collateralized by 96 mortgage loans ranging in size from less than 1% to more than 5% of the pool.

Over 150 additional classes of subprime mortgage pass-through certificates were downgraded by Fitch Ratings on April 4 as a result of changes to its subprime loss forecasting assumptions. Fitch also placed 12 classes of subprime pass-throughs on Rating Watch Negative, removed two from Rating Watch Negative, and affirmed the ratings on classes with outstanding balances of nearly $4 billion. The securities affected by the latest downgrades were: 54 classes from nine issues of Barclays Capital mortgage pass-throughs; 47 classes from seven issues of Asset Backed Securities Corp. pass-throughs; 31 classes from six issues of Bear Stearns Asset Backed Securities I Trust pass-throughs; and 30 classes from four issues of CSFB Home Equity Asset Trust pass-throughs. The rating actions were attributed to changes to Fitch's subprime loss forecasting assumptions that "better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness." Fitch can be found online at http://www.fitchratings.com.

The servicer quality rating of Fremont Investment & Loan as a primary servicer of subprime loans has been downgraded from SQ4 to SQ4-minus by Moody's Investors Service. The rating remains on review for possible further downgrade. In addition, the outlook for Fremont and its parent, Fremont General Corp., remains negative, and the company's servicing stability assessment has been revised from below average to weak, Moody's said. The rating agency said the action was prompted by continued deterioration of financial and operating conditions as well as regulatory actions affecting Fremont and its parent. The Suffolk Superior Court recently issued a preliminary injunction, sought by the Massachusetts attorney general, barring Fremont from initiating or advancing foreclosures on loans that are "presumptively unfair" without first complying with the court's order, Moody's said. The injunction was later modified to further restrict Fremont's efforts to sell mortgage servicing rights on loans serviced in Massachusetts. Moody's said the rating action also stemmed partly from management turnover at Fremont and its parent. Moody's can be found online at http://www.moodys.com.

Reverse Mortgage Solutions, Spring, Texas, has announced plans to expand its operations as a technology systems provider. A start-up just one year ago, the multifaceted company has come of age just as the leading edge of the 80 million-member baby boom generation enter their twilight years and has built a servicing portfolio of 7,500 loans. RMS says it will soon roll out a front-end reverse mortgage origination system dubbed RM Compass. "It's fully integrated with the servicing components in what we think is a better solution than what has been out there," chief operating officer Marc Helm said at the National Reverse Mortgage Lenders Association's eastern regional conference in Philadelphia. "We have had the opportunity to stand back, look at the industry, and build a state-of-the-art, integrated origination system and servicing system from scratch."

Texas Pacific Group, an investment fund managed by a former director of Washington Mutual, is talking to the Seattle thrift about injecting money into the troubled institution, industry sources have told MortgageWire. "We're trying to get it done quickly," said one source, requesting anonymity, "but there's no deal yet." It's expected that WaMu chief Kerry Killinger will stay with the organization, but there could be a wholesale restructuring of the savings-and-loan institution, the nation's largest. Other investors are involved as well, said one banker. In trading on Monday, WaMu's share price skyrocketed 25% to $12.76. News of Texas Pacific's interest in WaMu was first reported by The Wall Street Journal. David Bonderman, founding partner of Texas Pacific, served on WaMu's board but left in 2002. Mr. Bonderman used to work for the Bass Brothers, which at one point owned American Savings, a large California S&L that WaMu eventually purchased.

Forty-six tranches in seven subprime transactions issued by First Franklin Mortgage Loan Trust have been downgraded by Moody's Investors Service. The downgrades were attributed to a growing proportion of severely delinquent loans. "Timing of losses and in some cases, pending stepdown, will cause the protection available to the subordinated bonds to be diminished," Moody's said. The collateral consists primarily of first-lien subprime mortgage loans.

Huntington Bancshares, Columbus, Ohio, has been designated the "Bear of the Day" for April 4 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. "The merger with Sky Financial has weighed on the share price in the current quarter, with the potential for negative implications over the next several quarters," Zacks said. "The relationship with Franklin, inherited with the aforementioned acquisition, contributed significantly to this loss." The research firm noted the weaknesses in the housing and credit environment and said they "are expected to overhang the market in 2008." Zacks can be found online at http://www.zacks.com, and Huntington can be found at http://www.huntington.com.

Radian Guaranty, a Philadelphia-based mortgage insurer, has announced the introduction of Radian FastAdvance, a program aimed at helping servicers assist distressed homeowners via loan modifications and customized repayment plans. "Since there is no single solution that will help every borrower, Radian is advancing funds to servicers so they can take the specific action required to keep borrowers in their homes rather than proceeding with a stressful and costly foreclosure process," the company said. Radian also announced a partnership with Consumer Credit Counseling Service of Delaware Valley that will provide education, customized assistance, and a method of direct communication between borrowers and servicers using the Radian FastAdvance program. Radian can be found online at http://www.radian.biz.

Bayerische Landesbank, Munich, Germany, has taken 4.3 billion euros ($6.7 billion) of writedowns between mid-2007 and the end of March 2008 on a portfolio that includes billions of dollars in U.S. subprime residential mortgage-backed securities. The company and its owners said they are working on a plan "designed to cover theoretical default risks" from asset-backed securities investments up to 4.8 billion euros ($7.5 billion). Bayerische Landesbank saw pretax earnings of 255 million euros ($400 million) during fiscal year 2007, down from 1.33 billion euros ($2.08 billion) in fiscal 2006. In fiscal 2007, it recorded its results under International Financial Reporting Standards for the first time.

The bad news for Triad Guaranty Inc., Winston-Salem, N.C., continues, as Standard & Poor's announced that it will drop the company from its SmallCap 600 Index after the markets close on April 7. As of the close of trading on April 3, when S&P made the announcement, Triad's market capitalization was approximately $39 million, ranking 600th in the index. In early trading on April 4, Triad's common stock price fell even further, crashing through what had been the 52-week low for the stock. At midday on April 4, Triad was trading at $2.05 per share. Triad's place in the index is being taken by Zoll Medical, a heath care equipment company. Separately, S&P's rating unit cut Triad's financial strength ratings from AA-minus to BBB, echoing moves by Fitch Ratings and Moody's Investors Service. Meanwhile, in a Securities and Exchange Commission filing, Triad said it has repaid the $80 million borrowed on an unsecured credit facility and has terminated its agreement with the lenders. It said it took the step to avoid violating any of the agreement's covenants, such as restrictions on Triad's ability to incur liens, merge or consolidate with another entity, or dispose of all or substantially all its assets.

Financial institutions that file "suspicious activity reports" are getting better at detecting mortgage fraud before the loan is funded, according to a Financial Crimes Enforcement Network report. "Suspected fraud was detected prior to loan disbursements in 31% of the mortgage loan fraud SARs filed" in 2006, the FinCEN report says, compared with 21% in previous years. Reporting companies filed 37,313 SARs citing mortgage fraud in 2006 -- a 44% increase from the previous year's level -- and a sample analyzed by FinCEN showed that loans originated by mortgage brokers were reported in over half of those SARs. The SAR update report "demonstrates that in this period of mortgage crisis we also have witnessed a substantial increase in fraudulent activity that targets lenders and borrowers," said Richard Reise, an American Bankers Association executive.