Originations

Eleven classes of mortgage pass-though certificates from four deals issued by GSAMP Trust in 2002 and 2004 have been placed on review for possible downgrade by Moody's Investors Service.The affected securities are as follows: series 2002-HE, class M-1, class M-2, class B-1, and class B-2; series 2004-HE1, class B-2 and class B-1; series 2004-HE2, class B-4; and series 2004-SEA2, class M-2, class M-3, class M-4, and class M-5. The negative rating actions were attributed to analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to expected losses. GSAMP Trust 2002-HE, 2004-HE1, and 2004-HE2 are backed by subprime fixed- and adjustable-rate mortgage loans. GSAMP Trust 2004-SEA2 is backed by subprime fixed-rate seasoned mortgage loans.

Class M of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CK3, has been downgraded from B-minus to CCC/DR1 by Fitch Ratings.In addition, Fitch affirmed the ratings on 14 other classes in the deal. The downgrade was attributed to losses on specially serviced assets.

Two classes from two issues of LaSalle Commercial Mortgage Securities Inc. commercial mortgage pass-through certificates have been downgraded by Moody's Investors Service.The M classes of series 2006-MF2 and 2006-MF3 were downgraded from B3 to Caa1. Moody's also affirmed the ratings on 24 classes from the two transactions. The series 2006-MF2 certificates are collateralized by 447 mortgage loans, of which 176, representing 37.6% of the pool, are on the master servicer's watchlist, the rating agency reported. Eighteen loans are in special servicing, and Moody's said it is estimating approximately $2.3 million of losses from the specially serviced loans. The series 2006-MF3 certificates are collateralized by 424 mortgage loans, of which 135, representing 31.8% of the pool, are on the master servicer's watchlist. Seventeen loans are in special servicing, and Moody's is estimating approximately $3.0 million of losses from the specially serviced loans. The rating agency attributed the downgrades to "the large number of specially serviced loans and the projected losses."

Four tranches of two deals issued by Citigroup Mortgage Loan Trust in 2003 have been downgraded by Moody's Investors Service.The downgrades were as follows: series 2003-HE3, class M-4, from Ba1 to B2; and series 2003-HE4, class M-5, from Ba1 to B1, class M-6, from Ba3 to Caa2, and class M-7, from B2 to C. The downgrades were attributed to higher-than-expected delinquencies and losses. "Moreover, the 2003-HE4 transaction has experienced erosion of overcollateralization due to the recent pace of losses," the rating agency said. The collateral backing the deals consists primarily of first-lien subprime residential mortgage loans.

Two certificates from Ameriquest Mortgage Securities Inc. series 2003-2 have been downgraded by Moody's Investors Service, and a third has been placed on review for possible downgrade.Class M-3 was downgraded from B3 to Ca, and class M-4 was downgraded from Ca to C. Class M-2 was placed on review for possible downgrade. The negative rating actions were based on an analysis of credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to the expected loss, Moody's said. The transaction is backed by adjustable- and fixed-rate subprime mortgage loans. Moody's can be found online at http://www.moodys.com.

Thirteen classes from seven subprime mortgage-backed securities deals issued by Morgan Stanley have been downgraded by Fitch Ratings.Fitch also placed one of the downgraded classes on Rating Watch Negative and affirmed the ratings on 17 other classes from the transactions. The negative rating actions were attributed to deterioration in the relationship between credit enhancement and expected losses. Fitch can be found online at http://www.fitchratings.com.

Standard & Poor's has downgraded 1,713 classes of U.S. RMBS backed by first-lien subprime, first-lien alternative-A, and closed-end second-lien mortgage loans issued in the first half of 2007.The downgraded securities had an original par value of $23.35 billion, which represents 6.28% of the U.S. residential mortgage-backed securities backed by such collateral that were rated by S&P during that period, the rating agency reported. S&P said it also affirmed the ratings on securities representing $245.1 billion of U.S. RMBS backed by such collateral, and placed the ratings of 646 other classes on CreditWatch negative. "Transactions issued in 2007 have not experienced an adequate payment history to reliably apply our traditional surveillance assumptions," S&P said, "however, the same risks that are apparent in transactions issued in 2006 are present in transactions issued in 2007." The rating agency can be found online at http://www.standardandpoors.com.

The U.S. commercial real estate market will cool off next year in a "healthy correction" that will probably "bypass long-term investors" while penalizing speculators and overleveraged buyers, according to an annual survey of CRE industry experts.The report, Emerging Trends in Real Estate 2008, says 78% of the more than 600 respondents anticipate more-stringent underwriting standards in 2008. Nevertheless, they expect most real estate investments to outperform U.S. stocks and bonds, said the Urban Land Institute and PricewaterhouseCoopers LLP, which jointly publish the report. "The commercial real estate market has been going full throttle for several years, with easy money and low interest rates that drove some sectors into questionable lending practices and highly leveraged spending," said Tim Conlon, a partner and U.S. real estate practice leader at PricewaterhouseCoopers. ".... Those who went beyond moderation will likely experience some headaches in 2008." The organizations can be found online at http://www.uli.org and http://www.pwcglobal.com.

Although foreclosure sales declined in California in September, they actually rose by 5% on an average daily basis, according to ForeclosureRadar, Discovery Bay, Calif.The company reported that 8,818 California foreclosures (with a total loan value of $3.60 billion) were sold at auction in September, compared with 9,477 (with a total value of $3.86 billion) in August. "Although it appears that foreclosure activity has slowed this month, digging deeper into the numbers tells another story," said Sean O'Toole, founder and chief executive officer of ForeclosureRadar. "In the month of August there were 23 recording and auction days. In contrast, September had 19 recording days and only 18 auction days, so we actually saw across-the-board increases in average daily foreclosure activity." ForeclosureRadar, a foreclosure listings and software company, can be found on the Web at http://www.foreclosureradar.com.

A Better Business Bureau-type organization called the Better Mortgage Bureau has been formed in Baltimore to provide the tools and education consumers need to make informed homebuying decisions, according to the BMB.The bureau said its mission is to "elevate consumer awareness through shared experiences and industry experts" and to establish the best-practices benchmark for the mortgage industry. Calling itself the "Good Housekeeping Seal of Approval" for the mortgage industry, the organization said consumers can search the repository of all BMB members to find the mortgage professional that meets their needs. "For the first time, consumers can be assured that their mortgage professional is licensed, trained, and will adhere to the BMB code of ethics," the bureau said. The BMB can be found online at http://www.bettermorgagebureau.com.

The PMI Group Inc., Walnut Creek, Calif., has issued a preliminary estimate that it will take a third-quarter loss of approximately $1.05 per share.The company cited incurred losses in its U.S. mortgage insurance operations and a mark-to-market adjustment at its unconsolidated subsidiary, FGIC, as the cause. Defaults significantly worsened in September. As a result, PMI said it expects approximately $350 million in paid claims, loss adjustment expenses, and additions to the reserve for losses for its U.S. mortgage insurance operations in the third quarter. It is withdrawing its full-year total incurred loss guidance and other financial guidance. Regarding FGIC, in which it holds a 42% stake, mark-to-market adjustments on the insured credit derivative will result in an unrealized loss of approximately $206 million. FGIC anticipates that as a result of this adjustment it will report a net loss of approximately $65 million for the third quarter. PMI's share of that loss is $0.32 per share.

The average 30-year fixed mortgage rate held steady at 6.40% for the seven-day period ended Oct. 18, according to Freddie Mac's Primary Mortgage Market Survey.The average 15-year fixed mortgage rate rose from 6.06% to 6.08%, the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages declined from 6.12% to 6.11%, and the average rate for one-year Treasury-indexed ARMs increased from 5.73% to 5.76%, Freddie Mac reported. Fees and points averaged 0.5 of a point for 30-year fixed-rate mortgages and hybrid ARMs and 0.6 of a point for 15-year fixed-rate mortgages and one-year ARMs. "Both economic indicators and mortgage rates came in mixed this week," said Frank Nothaft, Freddie Mac's chief economist. "While retail sales were stronger in September, consumer confidence fell below market expectations in October. Moreover, both the core consumer price index and producer prices for September remained contained." A year ago, the average 30-year and 15-year fixed rates were 6.36% and 6.06%, respectively, and the average hybrid and one-year ARM rates were 6.11% and 5.57%, Freddie Mac said. Freddie can be found online at http://www.freddiemac.com.

Home sales, prices, and construction continued to decline in most areas of the country in September, and many lenders tightened their credit standards, according to the Federal Reserve Board's Beige Book."Lending for home mortgages, equity lines and refinancing continue to soften in most Federal Reserve Bank districts," the Beige Book says. Commercial real estate markets remain "solid." But some district banks are seeing a "move to more conservative financing." In a recent speech, Fed Chairman Ben Bernanke warned that tighter terms and standards on nonprime and jumbo mortgages appear "likely to intensify the correction in housing significantly with adverse implications for construction activity and house prices." The Fed can be found online at http://www.federalreserve.gov.

State attorneys general are not going to take a back seat to the Treasury Department's Hope Now initiative when it comes to working with and monitoring the top 10 subprime servicers and their loan modification activities, despite the suggestions of one mortgage industry group."We think the Hope Now initiative and our initiative are very complementary," Iowa AG Tom Miller said. It is important to have people at the local as well as the federal level involved in the monitoring, he added. In a letter to the Iowa AG, the Consumer Mortgage Coalition said the Treasury is putting together a coordinated effort to prevent foreclosures and that requiring servicers to work with two initiatives will make them less effective. "We believe that by concentrating our efforts in the Hope Now Alliance, we will be able to maximize the benefit for the citizens of your state," CMC executive director Anne Canfield says in the letter. Mr. Miller told MortgageWire that the top 10 servicers have agreed to work closely with a group of state AGs and banking regulators. "None of them have indicated they are not going to honor their commitment," he said.

HRPT Properties Trust, Newton, Mass., has priced a public offering of 12 million common shares of beneficial interest at $10.07 per share.The company said it expects to use the proceeds of the offering, plus borrowings under its revolving credit facility, to redeem all or a portion of its $300 million outstanding 8.75% series B preferred shares. The underwriters have been granted an option to buy up to 1.8 million additional shares to cover any overallotments. The joint book-running managers for the offering are Morgan Stanley, RBC Capital Markets, and UBS Investment Bank. HRPT, a real estate investment trust, can be found on the Internet at http://www.hrpreit.com.

Inland Western Retail Real Estate Trust, a real estate investment trust based in Oak Brook, Ill., has entered into a $225 million unsecured revolving line of credit.The three-year credit facility also has a $75 million accordion feature, the retail REIT said. KeyBank NA is the administrative agent for the facility. Inland Western can be found online at http://www.inland-western.com.

Nationwide Health Properties Inc., a real estate investment trust based in Newport Beach, Calif., has priced $300 million of 6.25% notes due Feb. 1, 2013, at 99.941.NHP said it plans to use the estimated $297 million in net proceeds to repay debt and for general corporate purposes. UBS Securities LLC, J.P. Morgan Securities Inc., and Banc of America Securities LLC were the joint book-running managers of the offering. The REIT can be found on the Web at http://www.nhp-reit.com.

Chief financial officers view mortgage brokers and lenders as the main culprits in the subprime mortgage crisis, according to a recent survey by Financial Executives International, Florham Park, N.J., and Baruch College's Zicklin School of Business, New York.Of the 220 corporate CFOs interviewed the week of Sept. 24, 86% blamed brokers and lenders for the crisis, followed by 40% who blamed credit rating agencies, the organizations said. The third-quarter CFO Outlook Survey also revealed that the CFO Optimism Index for the U.S. economy dropped to 62.85, a three-year low. FEI can be found online at http://www.financialexecutives.org, and Baruch can be found at http://www.baruch.cuny.edu.

The Market Composite Index, an overall measure of mortgage applications, rose from 652.0 to 656.3 on a seasonally adjusted basis during the week ended Oct. 12, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 9.3% on the week but were up 0.7% from the level recorded a year earlier. The Purchase Index rose from 420.2 to 429.1 on a seasonally adjusted basis, while the Refinance Index declined from 2003.2 to 1980.9. Refinancings represented 45.3% of total applications, down from 46.2% the previous week, while adjustable-rate mortgages accounted for 13.5%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages was unchanged, at 6.40%, and points (including the origination fee) rose from 1.00 to 1.04 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

MGIC Investment Corp., Milwaukee, has reported a net loss of $375.2 million ($4.60 per share) for the third quarter, compared with earnings of $130.0 million ($1.55 per share) for the same period last year.The company blamed a series of one-time items for the loss, including a $303.0 million writedown of its investment in C-BASS and $11.3 million in expenses related to the termination of its acquisition of Radian Group Inc., Philadelphia. These were offset by a gain of $105.9 million on the sale of a portion of its holdings in Sherman Financial Group. Because of expected fourth-quarter paid losses of $270-290 million and expected 2008 paid losses of $1.2-1.5 billion, MGIC said it would not be profitable in the fourth quarter or for all of next year. Fitch Ratings revised its ratings outlook for MGIC from stable to negative. However, Fitch said it believes MGIC "will maintain more than enough financial and capital and financial resources to manage through this period, and it will be unlikely that Fitch will downgrade the company's ratings." MGIC can be found on the Web at http://www.mgic.com.