Originations

Three classes of LB-UBS Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2000-C4, have been downgraded by Moody's Investors Service. The downgrades were as follows: class L, from B1 to B2; class M, from B3 to Caa2; and class N, from Caa1 to Ca. Moody's also upgraded two classes and affirmed the ratings of nine classes in the transaction. The certificates are collateralized by 136 mortgage loans ranging in size from less than 1.0% to 10.6% of the pool. The downgrades were attributed to realized and estimated losses from specially serviced loans and increased dispersion in loan-to-value ratios.

Seven classes of J.P. Morgan Chase Commercial Mortgage Securities Trust commercial mortgage pass-through certificates, series 2007-FL1, have been downgraded by Moody's Investors Service. The downgrades were as follows: class RS-1, from Aa3 to Ba1; class RS-2, from A1 to Ba2; class RS-3, from A2 to Ba3; class RS-4, from A3 to B1; class RS-5, from Baa1 to B2; class RS-6, from Baa2 to B3; and class RS-7, from Baa3 to Caa1. The downgrades were due to a recent decline in the Resorts International Portfolio's cash flow, Moody's said. The rating agency can be found online at http://www.moodys.com.

More than 200 additional classes of first-lien subprime mortgage pass-through certificates were downgraded by Fitch Ratings on Feb. 22 as a result of changes to its subprime loss forecasting assumptions. Fitch also affirmed the ratings on classes with outstanding balances of over $1.6 billion. The securities affected by the latest downgrades were 99 classes from seven Asset Backed Securities Corp. deals; 69 classes from five IndyMac ABS Inc. deals; 55 classes from four Asset Backed Funding Corp. deals; and seven classes from one BASIC deal. 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 on the Web at http://www.fitchratings.com.

The economic security of the African-American and Latino middle class is endangered by insufficient assets and high housing costs, according to a new study by Demos and the Institute on Assets and Social Policy at Brandeis University. Entitled "Economic (In)Security: The Experience of the African American and Latino Middle Classes," the report found that the "vast majority" of middle class African-American and Latino families "are either borderline or at high risk of falling out of the middle class altogether." Only 26% of African-American and 37% of Latino middle-class families spend less than 20% of their after-tax income on housing, compared with a national average of 40%, the study says. Jennifer Wheary, a Demos senior fellow and co-author of the report, said the mortgage crisis is having a disproportionate impact on African-American and Latino middle-class families because they are far more dependent than whites on homeownership to facilitate asset accumulation and far more likely to have been caught in the subprime loan trap.

Ambac, a New York-based bond insurer that has been wrestling with U.S. mortgage-related woes, may be getting a capital infusion from a group of banks in the wake of recent regulatory pressure on the industry."We haven't concluded negotiations," said an Ambac spokeswoman Monday afternoon, confirming that the company is considering the possibility among its options. A spokesman for the New York Insurance Department, in noting reports that Ambac has been working with a group of banks, said only, "There is stuff going on." New York Gov. Eliot Spitzer, who said in congressional testimony that he considers bond insurers to be largely within his state's jurisdiction, gave companies in the sector a deadline to do something last week to bolster their flagging ratings, according to a Wall Street Journal article. The governor's office referred queries on the matter to the insurance department. A department spokesman said there is "no actual deadline" and that the period mentioned reflected state officials' expectations about when some action should be taken, ideally "as soon as possible." Standard & Poor's, in updating several bond insurer ratings Monday, affirmed some of Ambac's, citing "the scope of Ambac's capital-raising plans and the company's ability to implement those plans," but left them on CreditWatch with negative implications.

Sales of single-family existing homes edged up 0.5% in January -- the first rise since February of last year -- and it appears that sales are "scratching the bottom," according to Lawrence Yun, chief economist of the National Association of Realtors. Sales have been "soft but fairly steady" over the past five months, Mr. Yun told reporters, and he said he expects sales to move higher later this year as higher loan limits for Fannie Mae, Freddie Mac, and Federal Housing Administration mortgages take effect. The National Association of Realtors reported that resales rose from a seasonally adjusted annual rate of 4.32 million in December to 4.34 million in January. The median price of previously owned homes was $198,700 in January, down 5.1% from that of a year earlier, while the inventory of unsold single-family homes rose 7.7% to 3.65 million. This inventory translates into a 10-month supply at the current sales pace. An NAR survey found that 80% of sellers put their homes on the market because they want to trade up or purchase another home. Mr. Yun said a homebuyer tax credit could break this logjam and bring into the market more buyers that are cautiously waiting on the sidelines.

Class F of LB Commercial Conduit Mortgage Trust II commercial mortgage pass-through certificates, series 1996-C2, has been downgraded from BB-plus to B by Fitch Ratings. Fitch also affirmed the triple-A rating on the interest-only class IO. The downgrade was attributed to higher-than-expected losses on specially serviced assets.

Two classes from GMAC Commercial Mortgage Securities Inc. series 1998-C2 have been downgraded by Fitch Ratings. Class L was downgraded from B-minus to CCC/DR1, and class M was downgraded from CC/DR5 to C/DR6. Fitch also affirmed the ratings on 11 other classes in the deal. The downgrades were based on an increase in specially serviced assets and loss expectations, the rating agency said.

Nine classes from four subprime, second-lien issues of GS Mortgage Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings. Fitch also placed six GSAMP classes on Rating Watch Negative, removed one classes from Rating Watch Negative, and affirmed the ratings on five classes. The downgrades were attributed to deterioration in the relationship between credit enhancements and expected losses.

Thirty-five additional classes of first-lien subprime mortgage pass-through certificates were downgraded by Fitch Ratings on Feb. 21 as a result of changes to its subprime loss forecasting assumptions. Fitch also affirmed the ratings on classes with outstanding balances of over $1.4 billion. The securities affected by the latest downgrades were: 13 classes from one Bear Stearns Asset Backed Securities I Trust deal; 12 classes from one GS Mortgage Securities Corp. deal; and 10 classes from one Option One deal. 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."

Senior Housing Properties Trust, a real estate investment trust based in Newton, Mass., has priced a public offering of 5.6 million common shares of beneficial interest at $21.85 per share. The joint book-running managers of the offering are UBS Investment Bank, Merrill Lynch & Co., and Morgan Stanley & Co. The REIT said it has granted the underwriters an option to buy up to 840,000 additional shares to cover any overallotments. The company can be found online at http://www.snhreit.com.

Despite its exposure to the deteriorating subprime mortgage market, the U.S. life insurance industry is "well-positioned to withstand current market volatility," according to Fitch Ratings. The rating agency estimated that unrealized mark-to-market losses on investments related to subprime and alternative-A mortgages range from $7 billion to $8 billion in the industry. That represents approximately 13% of exposure and 3% of aggregate industry statutory capital, Fitch said in a report titled Subprime Mortgage Exposure for U.S. Life Insurers -- Update and Outlook. "While Fitch expects further deterioration in the performance of subprime residential mortgages, particularly for 2006 and 2007 vintage years, our analysis suggests that the industry is well positioned to withstand current market volatility given its focus on high-investment-grade securities, relatively stable liability profile, and positive cash flow," the rating agency said. "Despite the significant deterioration of subprime mortgage markets and increased credit risk in other fixed-income markets, Fitch views the U.S. life insurance industry as well capitalized." Fitch can be found online at http://www.fitchratings.com.

Senate Democrats are pushing for a cloture vote Feb. 26 on a foreclosure prevention bill that would allow bankruptcy judges to restructure mortgages for distressed homeowners, and the financial services industry is mobilizing to defeat it. If the Democrats can get 60 votes, it opens the door to debate and amendments before final passage. But industry groups like the Mortgage Bankers Association are adamantly opposed to giving bankruptcy courts the leeway to reduce the principal amount or interest rate on a single-family mortgage. "We are fighting this," said MBA vice president Francis Creighton. "There is not a lot of room for compromise." The bill also provides funding for refinancing subprime borrowers and for grants to cities to purchase and rehabilitate foreclosed properties. In addition, it has a tax sweetener that allows lenders, homebuilders, and other companies to carry back 2006 and 2007 losses and receive refunds on taxes paid in prior years. Mr. Creighton said the outcome of Tuesday's vote is "really up in the air" and that the MBA is calling on its members to contact their senators.

Classes L and M of Lehman Brothers Inc.'s commercial mortgage pass-through certificates, series 2006 CCL-C2, have been placed on Rating Watch Negative by Fitch Ratings. Fitch also affirmed the ratings on seven other classes in the transaction. The negative rating actions were attributed to the transfer of the Charlottesville Portfolio loan to special servicing and the likelihood that associated fees and potential expenses could result in interest shortfalls, as well as the continued lack of sales at some of the condominium conversions. The loan is secured by two former multifamily properties in Charlottesville, Va., that are being converted to condominiums.

Class M of PNC Commercial Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates, series 2000-C1, has been downgraded from CCC/DR3 to CC/DR4 by Fitch Ratings. Fitch also affirmed the ratings on 12 other classes in the transaction. The downgrade was based on an increase in expected losses from three new specially serviced loans, the rating agency said.

Two classes of Salomon Brothers Mortgage Securities VII Inc. series 2000-C2 have been downgraded by Fitch Ratings. Class K was downgraded from B-minus/DR1 to CCC/DR2, and class J was downgraded from BB-minus to B. Fitch also affirmed the ratings on nine other classes in the transaction. The downgrades were attributed to additional specially serviced loans with expected losses.

Seventy-eight additional classes of first-lien subprime mortgage pass-through certificates were downgraded by Fitch Ratings on Feb. 20 as a result of changes to its subprime loss forecasting assumptions. Fitch also affirmed the ratings on classes with outstanding balances of more than $800 million. The securities affected by the latest downgrades were 67 classes from five Long Beach deals and 11 classes from one Washington Mutual deal. 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.

Mission Capital Advisors is taking bids on a $131.2 million portfolio of nonperforming mortgages secured by commercial and residential properties in western Florida. Buyers can bid on individual loan pools or the entire portfolio. According to the New York-based Mission, most of the loans have recent appraisals, and all carry "personal guarantees that are expected to add significant value." Preliminary bids are due March 4.

A commercial real estate index maintained by the National Association of Realtors dipped in the fourth quarter, the second straight quarterly decline after hitting a record high last year, according to the NAR. The Commercial Leading Indicator for Brokerage Activity stood at 120.1 in the fourth quarter, down 0.4% from 120.6 in the third quarter but up 0.1% from 119.9 a year earlier, the association reported. The record high of 120.7 was reached in the second quarter of 2007. "The decline in the index implies that commercial activity, as measured by net absorption and the completion of new commercial buildings, is likely to contract moderately over the next six to nine months, which is consistent with an expectation for slower overall economic expansion in upcoming quarters," said NAR senior economist Lawrence Yun. The association can be found online at http://www.realtor.org.

Community bankers are seeing opportunities in the residential mortgage market to increase their market share and maintain a strong origination business, according to a survey by the American Bankers Association. Nearly 40% of 248 respondent banks say they expect their mortgage production to increase this year, and 39% expect it to remain at 2007 levels. "This forecast is consistent with the often-expressed view that community banks are well positioned to gain market share as other lenders falter," ABA executive vice president Robert Davis said. Mr. Davis told reporters that many mortgage brokers and mortgage banks have gone out of business, which reduces competition and creates more opportunities for community banks that specialize in prime loans.