Originations

New York Attorney General Andrew Cuomo has granted Clayton Holdings immunity in exchange for providing information on its due diligence work for Wall Street firms that securitized subprime mortgages. The publicly traded company says it has provided due diligence reports to the New York AG since it was first subpoenaed in June. "Now, at the request of the New York attorney general, we have entered into a cooperative agreement with his office," said Frank Filipps, Clayton's chairman and chief executive. The New York Times first reported the immunity agreement. The New York attorney general's office has not replied to requests for confirmation. Clayton performs due diligence on loans purchased by conduits, and identifies "exceptions" to the issuers' loan guidelines. The Shelton, Conn.-based company also evaluates the performance of loans once they are securitized. A company executive said the percentage of loans securitized in 2006 that had exceptions was about 30%.

The sales of new homes plummeted 26.4% in 2007, including a 4.7% decline in the month of December, according to the latest government housing report. The U.S. Census Bureau reported that sales of new single-family homes fell from a seasonally adjusted annual rate of 634,000 in November to 604,000 in December. The November sales number was revised downward from 647,000. Fannie Mae economists say they expect new-home sales to drop another 10% in 2008. "We expect housing starts and sales to stabilize in the middle of the year, with sustained gains beginning in 2009," said Fannie's director of economics, Molly Boesel. New-home sales totaled 774,000 in 2007, down from 1.05 million the previous year.

Anworth Mortgage Asset Corp., a real estate investment trust based in Santa Monica, Calif., has priced a public offering of 14.3 million shares of common stock at $8.75 per share. Anworth has granted the underwriters an option to buy up to 2.145 million additional shares to cover any overallotments. The mortgage REIT said it plans to use the expected net proceeds of approximately $118.7 million to buy agency mortgage-backed securities. The joint book-running managers of the offering are Deutsche Bank Securities Inc. and Credit Suisse Securities LLC. Anworth can be found on the Web at http://www.anworth.com.

Home prices in 31 states showed a 12-month increase in November, while key markets such as California, Florida, Nevada, and Arizona continued to experience home price depreciation, according to the latest LoanPerformance Home Price Index. Honolulu headed the index's list of top metropolitan areas and their 12-month home price changes, with a 17.1% increase. Salt Lake City ranked second with 10.5%, and San Antonio finished third at 7.5%. At the bottom of the list were Los Angeles-Long Beach-Santa Ana, with a 13.2% home price decline; San Diego-Carlsbad-San Marcos, with a 13.2% decline; and Riverside-San Bernardino-Ontario (Calif.), with a 16.8% decline. The LoanPerformance HPI provides a comprehensive set of monthly home price indices and median sales prices covering 7,462 ZIP codes and 662 counties in all 50 states and the District of Columbia, the company said. The index incorporates more than 30 years of repeat sales transactions from the property database of its parent company, First American CoreLogic Inc. First American LoanPerformance can be found online at http://www.loanperformance.com.

Ashford Hospitality Trust and Prudential Real Estate Investors have formed a joint venture to invest in mezzanine debt and equity interests in hotel properties nationwide. PREI, the Parsippany, N.J.-based real estate investment management affiliate of Prudential Financial, is putting $300 million into the venture, with Ashford, a Dallas-based real estate investment trust, putting in $100 million. The venture is interested in participations in first and second mortgages, stock-secured loans, guarantees, and preferred equity, Ashford said. The two partners will contribute capital required for each mezzanine investment on a 25% to 75% basis, with Ashford putting in 25%. "The displacement in today's credit markets has created a unique opportunity to fill in the gap for many hotel borrowers and lenders," said James P. Walker, a principal at PREI, adding that this partnership will allow them to "capitalize on the current market conditions." The REIT will manage the properties. Ashford's hotel lending efforts will be primarily sourced through the venture, according to the REIT.

Citing the difficult environment in the housing and mortgage lending industries, Old Republic International Corp., Chicago, has reported a net operating loss of $12.2 million ($0.05 per share) for the fourth quarter, compared with net operating income of $103.9 million ($0.45 per share) a year earlier. However, because of realized investment gains of $50 million ($0.14 per share), Old Republic had net income of $20.2 million ($0.09 per share) for the fourth quarter. The mortgage guaranty subsidiary, Republic Mortgage Insurance Co., had a pretax operating loss of $112.6 million, while the title insurance business had a smaller loss of $15.7 million. The mortgage guaranty business saw a 23.6% improvement in net premiums earned compared with those of a year earlier, as traditional new insurance written increased by 85.3% year over year and persistency rose to 77.6% at the end of 2007. But its claims reserve of $644.9 million as of Dec. 31 was 158.4% higher than its level a year earlier.

BankUnited Financial Corp., Coral Gables, Fla., has reported a mortgage-related net loss of $25.5 million ($0.73 per share) for the fourth quarter and announced the closure of four of its nine wholesale residential mortgage sales offices. Alfred R. Camner, the company's chairman and chief executive officer, said BankUnited has made "a strategic decision to significantly reduce our wholesale residential mortgage business." The four wholesale offices closed by the company were located in Arizona, California, Colorado, and Oregon. The company also consolidated nine operations centers into three. "In total, we have reduced our wholesale residential staff by more than 45% and significantly cut our annualized run rate of expenses," Mr. Camner said. "We have also changed our product mix, producing a higher proportion of saleable product, mainly conforming agency and other conduits." BankUnited's fourth-quarter loss was partly attributable to a $65 million provision that increased its allowance for loan losses to $118 million. BankUnited had recorded earnings of $27.4 million ($0.71 per share) a year earlier. The company can be found online at http://www.bankunited.com.

Credit Suisse has moved to consolidate several of its mortgage-related businesses, resulting in an untold number of layoffs, most of which were in New York. A source close to the company said the following four businesses will be combined and report to managing director Michael Marriott: asset-backed securities, collateralized debt obligations, residential mortgage-backed securities, and commercial MBS. "We combined their operations and eliminated redundancies," said the source, adding that Credit Suisse is not exiting any mortgage business and will be staying in warehouse lending as well. (There had been unconfirmed rumors that CS might exit the warehouse arena.) Credit Suisse owns Lime Financial, a subprime lender based in Lake Oswego, Ore., and Select Portfolio Services of Salt Lake City, a subservicer. "The business is soft right now," said the source, "but we're positioning ourselves for when the nonagency securitization business comes back."

Two classes of Morgan Stanley Capital I Inc. commercial mortgage-backed securities, series 2006-XLF, have been placed on Rating Watch Negative by Fitch Ratings. The affected securities are classes M and N-RQK. Fitch also affirmed the ratings on 14 other classes in the transaction. The action on class M was attributed to declining performance of the Holiday Inn-Columbus and Laurel Mall loans. The action on class N-RQK, a rake class collateralized by the B-note of the Resort Quest at Kauai loan, was due to "the property's declining performance since issuance due to a soft Hawaiian hospitality market that shows no signs of improving," Fitch said.

Three classes of Lehman Brothers Inc.'s commercial mortgage pass-through certificates, series 2006-CCL-C2, have been downgraded by Fitch Ratings and removed from Rating Watch Negative. The downgrades were as follows: class M, from BBB-minus to BB-plus; class ASH-1, from BBB to BB-plus; and class ASH-2, from BBB-minus to BB-plus. Fitch also upgraded one class and affirmed the ratings on five other classes in the deal. The downgrade to class M was attributed to the transfer of the Village Oaks loan to special servicing and the likelihood that associated fees and expenses will cause interest shortfalls. The other downgrades were attributed to "the likely accrual of special servicing fees on the Avalon at Seven Hills loan."

The for-sale sector of the housing market may be in disarray, but the apartment segment is holding up fairly well. Rental rates increased 1.9% on the average nationally last year, from $1,082 to $1,103, according to Realty DataTrust. Scottsdale. During the same period, vacancies dipped from 5.4% to 5.3%, the company said. On a square foot basis, the average rental rate increased from $1.20 a foot to $1.21, an 0.8 percent gain. The findings are based on data collected from nearly 100 property management companies that control some 900,000 apartment units. According to the company, it acquires data automatically from each company as reports it as an aggregated total. The company's website is www.realtydatatrust.com.

Downey Financial, a top mortgage lender in California, said non-performing assets -- including delinquent loans and foreclosed real estate -- reached $1.04 billion at year end, or 7.77% of total assets. During the fourth quarter alone NPAs spiked by $618 million. The California thrift lost $56.5 million for the year versus a profit of $199.6 million in 2006. Company president Rick McGill said, "We are clearly disappointed with our results," blaming the company's problems on the weak housing market.

Post Properties, an Atlanta-based multifamily real estate investment trust, has reported a buyout proposal to acquire the company for $44 to $47 per share in cash. The offer comes from the team of Cadim - a division of Quebec, Canada-based Caisse de depot et placement du Quebec - and Williams Realty, an entity controlled by John A. Williams, the former chairman and CEO of Post Properties. The proposal is subject to due diligence, but not dependent on financing contingencies. "As a result of this review as well as input from several of our largest shareholders, our board has authorized us to explore a possible business combination to enhance potential value for our shareholders," said David P. Stockert, Post's president and CEO. Considering that other offers will be considered Post has not yet determined whether to go with the Cadim/Williams offer. Commenting on this development, JP Morgan Securities' REIT research team said in a report that this shows financing is still available for real estate deals. They value Post's shares at $53 each, assuming a 5.3% capitalization rate.

Freddie Mac purchased $55 billion worth of mortgages in December, its best purchase month since September. For the year, its loan acquisitions totaled $577.7 billion, a 15% gain from the prior year. Its retained portfolio grew 2.4% in December to $720.8 billion, while business volumes improved to $55.1 billion. Its total "book of business" grew to $2.10 trillion during the month or 15.1% year over year. A research report released by Credit Suisse says, "Freddie changed its disclosure surrounding it portfolio market value-level sensitivity. Using the prior disclosure percentage change and the dollar amount it now discloses, we estimate that fair value of common equity fell to a range of $11 - 13 per share in November, down from roughly $25 in Q3. This would represent a decline of over 50% in Q4." Freddie releases year-end earnings in late February.

Arguing that Congress needs to do something about the "foreclosure crisis," Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., says he wants to attach a Federal Housing Administration reform bill and an increase in the GSE loan limit to the economic stimulus package Congress and the White House are working on. Sen. Dodd said he will be meeting with House Financial Services Committee Chairman Barney Frank, D-Mass., to discuss how the House and Senate FHA bills can be reconciled quickly and attached to the stimulus package. "I want to send a bill to the president as soon as possible," Sen. Dodd told reporters. The Connecticut senator also said he supports a temporary increase in the loan limits for Fannie Mae and Freddie Mac so the two government-sponsored enterprises can bring liquidity to the jumbo market. But he did not sound optimistic that that would be possible. The chairman also served notice that he has "concerns" about the House-passed GSE regulatory reform bill and that some changes are needed to get the bill through his committee. "I want a strong regulator," he said. "But I am not going to gut the GSEs. It is not going to happen on my watch."

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

General Growth Properties, a Chicago-based real estate investment trust, is denying news reports and blog postings alleging that the REIT may default on its debt obligations or file for bankruptcy. In a news release addressing the rumors, the retail REIT said the company "would ordinarily not respond to these types of statements and suggestions," but decided to do so "in light of the current fragile condition of the real estate capital markets." According to GGP, the company's property portfolio has a strong $15 billion equity position over and above the debt associated with it. In addition, various mortgage loans are available to the company if required. GGP also reported that its malls are well occupied, with long-term leases in place. Earlier this year, GGP had issued a release on the financing plans and options for its retail property portfolio. The REIT can be found online at http://www.generalgrowth.com.

Downey Financial Corp., a Newport Beach, Calif.-based savings and loan, has reported a mortgage-related net loss of $56.6 million ($2.03 per share) for 2007, compared with net income of $199.7 million ($7.16 per share) in 2006. Downey said a key reason for the poor results was a $283.5 million increase in its provision for credit losses stemming from single-family loan delinquencies and foreclosure-related losses. The thrift also cited a $94.8 million decline in net interest income and a $23.3 million decline in net gains on the sale of loans and mortgage-backed securities, among other things, as contributors to the loss. For the fourth quarter, the company reported a net loss of $108.8 million ($3.90 per share), compared with net income of $52.1 million ($1.87 per share) a year earlier. Downey can be found online at http://www.downeysavings.com.

Quicken Loans Inc. and RockBridge Equity Partners, both of Livonia, Mich., have acquired One Reverse Mortgage, a fast-growing provider of FHA-backed reverse mortgage programs that is headquartered in San Diego. Dan Gilbert, chairman of Quicken Loans, is a partner in RockBridge. "This will also help Quicken Loans serve a broader market by adding to the diverse range of products we offer our clients," Mr. Gilbert said. RockBridge partner Brian Hermelin added that One Reverse Mortgage "presents the exact type of opportunity we are pursuing as a private equity group. It's a great company in a growing and attractive industry, led by a talented and entrepreneurial management team." In a second transaction, Quicken Loans' affiliate Title Source Inc., Troy, Mich., has acquired TransUnion Title and Escrow of California. "We've provided closing and escrow services in California for several years, and the acquisition of TransUnion Title and Escrow now gives us the opportunity to offer a complete solution, which now includes title insurance, to lenders and consumers in California," said Title Source president Jeff Eisenshtadt. Quicken Loans can be found online at http://www.quickenloans.com.