Originations

Mission Residential LLC, a multifamily real estate investment firm based in Oakton, Va., has obtained a $100 million Fannie Mae debt financing commitment from Red Mortgage Capital Inc., Columbus, Ohio.Red Mortgage is a Fannie Mae Delegated Underwriting and Servicing lender. Under the terms of the agreement, Fannie Mae will provide permanent first-mortgage debt financing with pre-negotiated underwriting terms and agreed-upon documentation, Mission said. "Access to attractive debt capital during this period of credit market stress provides us with a huge advantage in making acquisitions," said Mission managing principal Christopher C. Finlay. Mission can be found on the Web at http://www.missionresidential.com.

Former mortgage bond executive Jeff Kronthal has returned to Merrill Lynch as a consultant, the company has confirmed.Mr. Kronthal will be advising the firm on issues that include portfolios in the subprime mortgage and collateralized debt obligation areas, a spokeswoman said. He left the company in 2006 in the wake of subprime mortgage concerns.

Delinquencies on U.S. commercial mortgage-backed securities rose in November, climbing 3 basis points to 0.31%, according to Fitch Ratings.For the fifth month in a row, the multifamily sector experienced a rise in delinquencies. Michelle Bayard, a Fitch director, said 87.0% of the newly delinquent multifamily loans were concentrated in Texas, up from 51.5% in October. "The newly delinquent multifamily loans include 17 loans representing 55% with the same principal borrower, all of which are secured by properties located in Texas," Ms. Bayard said. The only other sector in which delinquencies increased was industrial, which ended November with $63.2 million in delinquent loans, up 33.3% from $47.4 million in October. Fitch can be found on the Web at http://www.fitchratings.com.

JER Investors Trust Inc., a McLean, Va.-based company that originates and acquires commercial real estate structured finance products, and JER Partners have announced the closing of a $220 million private equity fund that will invest in loans secured directly or indirectly by real estate.The fund will invest in B-notes, mezzanine loans, whole mortgage loans, preferred equity, commercial mortgage-backed securities, and CMBS-related products. However, nonperforming loans and single-family residential debt and mortgages are outside the scope of the targeted investments, the companies said. Both companies will receive management fees and a percentage of aggregate profits. JER Investors and JER Partners, the private equity arm of J.E. Robert Cos., can be found on the Web at http://www.jer.com.

President Bush says it is "going to take a while to work through this housing bubble," but that his administration does have a strategy for helping subprime borrowers refinance or restructure their mortgages.The president said in a speech on the economy that the Treasury Department has worked with mortgage servicers so borrowers don't "get pinched as their interest rates reset." He also noted that the Federal Housing Administration is helping to refinance subprime borrowers and could do more if Congress passes an FHA modernization bill. (The Senate just passed such a bill, which now has to be reconciled with the House version.) Former Federal Reserve Board Chairman Alan Greenspan has suggested that the federal government could provide cash assistance for distressed homeowners who can’t afford their mortgage payments. Mr. Bush stressed in his Fredericksburg, Va., speech that he is against bailouts for lenders, speculators, and people who bought a house they couldn't afford. "But we can mitigate some of the issues, and I'm concerned about people who are creditworthy enough to live in their homes not being able to deal with these resets," he said.

Single-family housing starts fell to just 829,000 units in November, the lowest reading since April 1991, according to new figures released by the Commerce Department.Compared with the level of the previous month, starts fell 4.4%, but compared with that of a year earlier, the decline was a startling (but not unexpected) 34.9%. "There is no question that builders, especially the large national ones, are in full retrenchment mode right now, as well they should be in light of the sales and inventory situation," said RBS Greenwich chief economist Stephen Stanley. He said the only "good news" is that "new home inventories have been falling this year." There was other good news, though: multifamily starts rose 4.4% from the previous month's level and 22.1% compared with that of November 2006.

The Federal Reserve Board is proposing a "robust set" of rules to clean up subprime lending practices and to address unfair and deceptive practices associated with servicing, mortgage broker fees, and appraisals.On subprime and higher-priced alternative-A mortgages, the Home Ownership and Equity Protection Act proposal would create an ability-to-repay standard, require lenders to verify income and assets to curb stated-income lending, mandate escrow accounts for at least 12 months, and require prepayment penalties to expire 60 days before the first monthly increase in payments. Under pressure from Congress, the Fed was expected to address those subprime practices. However, the Fed decided that it needed to go further to provide a robust and "more comprehensive set of protections" that apply to all mortgages, said Randall Kroszner, a Fed governor. The proposal requires brokers to disclose up front the dollar amount of their fees, including yield-spread premiums, in a written agreement with the borrower. "Creditor payments to a mortgage broker could not exceed the total compensation amount stated in the written agreement," according to the proposal, which is being issued for a 90-day comment period. Servicers could be sued under the Truth in Lending Act for failing to post mortgage payments properly and pyramiding late fees. Lenders and brokers also would be liable for coercing appraisers. "We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated," Fed Chairman Ben Bernanke said.

Seven tranches from Newcastle Mortgage Securities Trust 2007-1 have been downgraded by Moody's Investors Service.The downgrades were as follows: class M-5, from A2 to A3; class M-6, from A3 to Baa2; class M-7-A, from Baa1 to Ba1; class M-7-B, from Baa1 to Ba1; class M-8-A, from Baa2 to Ba3; class M-8-B, from Baa2 to Ba3; and class M-9, from Baa3 to B2. "In its analysis, Moody's has combined its published methodology updates as of July 13th, 2007 to the nondelinquent portion of the transactions," the rating agency said. "Collateral backing these transactions is also experiencing higher-than-anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels." The collateral backing these classes consists primarily of first-lien, fixed- and adjustable-rate subprime mortgage loans.

Forty-five classes of mortgage-backed securities from several issuers have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also placed 31 classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of about $1.5 billion. Among the securities affected by the latest downgrades were: 13 classes from Option One mortgage pass-through certificates; 11 classes from Wells Fargo Home Equity asset-backed certificates; 10 classes from WaMu Home Equity asset-backed certificates; and nine classes of SG Mortgage Securities asset-backed certificates. The rating actions were attributed to changes in 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." The rating agency can be found online at http://www.fitchratings.com.

Twenty-seven classes of certificates from four deals issued by Aegis Asset-Backed Securities Trust in 2005 have been downgraded by Moody's Investors Service.The downgrades were attributed to an analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses. "A high pipeline of seriously delinquent loans has caused the protection available to those tranches to be diminished," Moody's said. "Losses have eroded the overcollateralization, leaving the rated bonds less protected." The deals are backed by subprime mortgage loans.

More bad news for Southern California builders holding a large inventory of finished lots: Land prices have plunged by more than half in the region, dropping to levels not seen since 2002, according to a report by The Hoffman Co., a land brokerage firm based in Irvine, Calif.And prices may still have further to fall, said company principal Norm Scheel. "The decline in the price of land has happened rapidly; in the past two years we've lost five years of appreciation," Mr. Scheel said. "We may see prices drop a few more percentage points in the first half of 2008, but land values already have taken the 'big hit' and whatever comes next will be minor in comparison." The largest decline, 52%, was recorded in the French Valley near Murietta. In West Palmdale and East Lancaster in the Antelope Valley north of Los Angeles, the value of finished lots have shrunk by 38%. In Riverside County, finished lot prices are down 42%; in San Bernardino, they are off by an average of 37%. According to the company, the lower prices are starting to bring investors and speculators back into the market. "After months of stalemate, it's suddenly a competitive environment," said Mr. Scheel, whose firm has more than $100 million in sales closed or under contract in the last three months.

Three classes of notes in Ballantyne Re PLC have been downgraded by Fitch Ratings because certain reserve funds backing the transaction have material exposure to subprime residential asset- and mortgage-backed securities.The downgrades were as follows: class A-1 floating-rate notes, from A-plus to BB; class B-1 subordinated notes, from BB-plus to B; and class B-2 subordinated floating-rate notes, from BB-plus to B. The ratings have been removed from Rating Watch Negative. The downgrades reflect "material mark-to-market declines" in the value of RMBS and ABS in the asset portfolios supporting Ballantyne Re's reserves, resulting in "significant unrealized losses" in the portfolios. Ballantyne Re is a special-purpose company incorporated in Ireland.

Four classes from two issues of NovaStar mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: NovaStar 2003-1, class M-3, from BBB to BB; and NovaStar 2004-4, class B-2, from A-minus to BBB-plus, class B-3, from BBB to BBB-minus, and class B-4, from BBB-minus to B. Fitch also affirmed the ratings on 11 other classes in the two transactions. The downgrades were attributed to deterioration in the relationship between credit enhancement and expected losses. The collateral consists of first- and second-lien subprime mortgage loans.

Fifty-four classes of mortgage-backed securities from several issuers have been downgraded by Fitch Ratings as a result of changes to its subprime loss forecasting assumptions.Fitch also placed 35 classes on Rating Watch Negative and affirmed the ratings on classes with outstanding balances of about $3 billion. Among the securities affected by the latest downgrades were: 14 classes from Credit-Based Asset Servicing & Securitization LLC series 2007-CB4; 11 classes from Natixis mortgage pass-through certificates, series 2007-HE2; 11 classes from Credit Suisse First Boston Home Equity Asset Trust series 2007-2; and 10 classes from Carrington mortgage pass-through certificates, series 2007-FRE1. 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."

New York-based iStar Financial Inc., a commercial real estate investment trust, has announced the pricing of 8 million shares of its common stock at $28.41 per share.The net proceeds of the offering are expected to be approximately $218 million. The joint book-running managers for the offering were Citigroup Global Capital Markets Inc., J.P. Morgan Securities Inc., and Wachovia Securities. The company can be found online at http://www.istarfinancial.com.

Liquid Realty Partners, a San Francisco-based provider of liquidity to limited partners of private real estate funds, has announced the closing of Liquid Realty Partners IV LP with commitments of $572.3 million.The new discretionary real estate secondaries fund will invest globally in all types of real estate funds, partnerships, and trusts. Liquid Realty said over half its past investments have been located outside the United States. The company can be found on the Web at http://www.liquidrealty.com.

Citigroup, New York, has committed to providing its own support facility for its structured investment vehicles, a class of financial instruments that have generally been short of liquidity due to the U.S. subprime-mortgage-sparked global credit crunch.The company said it remains supportive of a larger multicompany effort to build an SIV support facility called the Master Liquidity Enhancement Conduit, but wanted to address its own needs immediately due to recent downgrades of its SIV senior debt ratings. SIVs often have some subprime mortgage exposure, but Citigroup said its own is "immaterial" and "indirect," totaling $51 million. The move to resolve Citigroup's uncertainty regarding senior debt repayment on its SIVs is the first major action by the company's new chief executive officer, Vikram Pandit.

Tighter mortgage standards and significant inventories of new and existing homes for sale portend "another dismal year" for homebuilders in 2008, according to Fitch Ratings.The rating outlook for the homebuilding sector is negative, Fitch said. "If mortgage rates should rise or credit terms further tighten, then Fitch's housing forecast could turn even more pessimistic," the rating agency said. "And, of course, if the economy slides into recession then the downturn would not only deepen, but possibly extend further into 2009." Bob Curran, a managing director and the lead homebuilding analyst at Fitch, said homebuilders will need to manage their balance sheets and liquidity. "Companies have to continue to downsize to the point where they can remain profitable, excluding nonrecurring real estate charges, which means further cuts in staffing and other overhead as well as other cost reductions," Mr. Curran said. Fitch can be found online at http://www.fitchratings.com.

In a series of related actions, Fitch Ratings has placed 38 classes from five first-loss collateralized debt obligations and ReREMICs on Rating Watch Negative.The affected securities were 14 classes from Ansonia CDO 2006-1 Ltd. and Ansonia CDO 2006-1 LLC, nine classes from G-Force 2005-RR2 LLC, eight classes from ARCap 2005-RR5 Resecuritization Inc., five classes from G-Force CDO 2006-1 Ltd./Corp., and two classes from ACT 2005-RR Depositor Corp. The negative rating actions were attributed to an analysis of loans in special servicing. Fitch said the collateral for the CDOs and Re-REMICs consists of "a high concentration of tranches with the least seniority" within a commercial mortgage-backed security transaction, and therefore the tranches are the first to absorb losses.

Federal Realty Investment Trust, a constituent of the Standard & Poor's REIT Composite Index, will replace Lyondell Chemical Co. in the S&P MidCap 400 Index after the close of trading Dec. 20, S&P has announced.The reason for the change is that Lyondell is being acquired. Federal Realty, based in Rockville, Md., is a real estate investment trust that owns, manages, and redevelops shopping centers.