Originations

Mission West Properties, Cupertino, Calif., has reported that previously announced negotiations with an unnamed potential buyer are unlikely to bear fruit because of debt market disruptions, but that three other potential buyers with internal sources of financing are conducting due diligence.The real estate investment trust reported in July that it was negotiating a deal with a "leading real estate private equity fund" to acquire its common shares at $13.55 per share in cash. Those negotiations are continuing, but "closure is unlikely" due to the withdrawal of their primary and secondary lenders from the market, the industrial REIT said. "The potential buyer had completed substantially all of their due diligence and had agreed to the terms of the definitive merger agreement when they were notified by their lender, one of the top five U.S. banks, that they were withdrawing from the market and would not issue their previously agreed-upon financial commitment to the buyer," the REIT said. Mission West can be found online at http://www.missionwest.com.

The acquisition of Accredited Home Lenders Holding Co., San Diego, by Lone Star Fund V (U.S.) LP, Dallas, may be the next victim of the mortgage industry crunch.On Aug. 10, Lone Star filed a statement with the Securities and Exchange Commission stating that "in light of the drastic deterioration in the financial and operational condition of [Accredited], among other things, as of today, [Accredited] would fail to satisfy the conditions to the closing of the tender offer. Accordingly, [Lone Star] does not expect to be accepting shares tendered as of the end of the current offer period," which expires at midnight Eastern time on Aug. 14. In response, Accredited has filed a lawsuit against Lone Star in the Delaware Court of Chancery to compel it to close the transaction, stating that the terms of the deal say Lone Star cannot back out because of a deterioration of the business. Lone Star responded that it "believes the facts will fully support its position." In its statement, Accredited said the failure to close the deal is not an event of default under its warehouse lines. It has $1.6 billion in facilities for U.S. loan originations and C$150 million to do loans in Canada. Lone Star was to pay $15.10 per share for Accredited. As of 11:32 a.m. on Aug. 13, Accredited's stock was trading at $6.07 per share, down $2.32 from the previous close.

Regions Financial Corp., Birmingham, Ala., is exiting the residential mortgage sector, industry sources have confirmed to MortgageWire.A source inside the company said, "We don't have financial problems," but added that the bank's management does not see residential lending as a good fit "at this time." Regions will fund its current loan pipeline but hopes to be out of the production business by mid-September. According to the Quarterly Data Report, Regions ranks among the top 40 originators in the United States. Regions can be found online at http://www.regions.com.

The Office of Federal Housing Enterprise Oversight said Friday that it will not increase the portfolio caps on Fannie Mae and Freddie Mae, referring to the two companies -- in a letter to a key senator -- as "significant supervisory concerns."As previously reported, Fannie Mae had asked OFHEO to increase its portfolio capacity by 10% (roughly $72 billion) as a way to add some liquidity to the nonprime secondary market. In a statement, OFHEO said it is "exploring with each enterprise ways for them to enhance their support for affordable housing, both multi-family and single." The regulator said there is nothing wrong with the conventional secondary market, noting that the two government-sponsored enterprises securitized $500 billion in the first half alone. The agency recently received an inquiry from Sen. Charles E. Schumer, D-N.Y., about the nonprime liquidity crisis and the GSEs' possible role in easing conditions. OFHEO Director James Lockhart told Sen. Schumer that the GSEs have been meeting the needs of their seller/servicers, but he said they remain supervisory concerns "after more than three years of remediation efforts."

Three classes from two subprime issues of Argent Securities mortgage pass-through certificates have been downgraded by Fitch Ratings, and three classes have been placed on Rating Watch Negative.The downgrades were as follows: series 2003-W3, class M-5, from BBB to BB; and series 2003-W10, class M-5, from BBB to BB, and class M-6, from BBB-minus to B. Class M-4 of series 2003-W3, class M-5 of series 2003-W8, and class M-6 of series 2003-W10 were placed on Rating Watch Negative. Fitch also affirmed the ratings on 12 classes from the three Argent deals. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement and loss expectations.

Five classes from three subprime issues of Ameriquest Mortgage Securities Inc. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-AR1, class M-3, from BBB to B, and class M-4, from BBB-minus to B; series 2003-6, class M-5, from BBB to BBB-minus (and removed from Rating Watch Negative), and class M-6, from B to C/DR4 (and removed from Rating Watch Negative); and series 2004-R11, class M-10, from BB-plus to CCC/DR1. Fitch also affirmed the ratings on 16 classes from the three deals. The downgrades were attributed to a deterioration in the relationship between credit enhancement and loss expectations.

Six classes from two CDC Mortgage Capital Trust issues of subprime mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 2002-HE1, class M, from A to A-minus, and class B, from B-plus to CC/DR3; and series 2003-HE2, class M-3, from A-minus to BB-plus, class B1, from BBB to B, class B2, from BB to CC/DR3, and class B3, from B-plus to C/DR5. Fitch also affirmed the ratings on three other classes from the two deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Six classes from Park Place Securities 2004-MCW1 subprime mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: class M-5, from A to A-minus; class M-6, from A-minus to BBB-plus; class M-7, from BBB-plus to BBB; class M-8, from BBB to BB-plus; class M-9, from BBB to BB (and removed from Rating Watch Negative); and class M-10, from BBB-minus to B (and removed from Rating Watch Negative). Fitch also affirmed the ratings on five classes from the deal. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Seven classes from two subprime issues of Aegis Asset-Backed Securities have been downgraded by Fitch Ratings.The downgrades were as follows: series 2003-2, class M2, from A to A-minus, and class B, from BB-plus to CCC/DR2; and series 2004-5, class M2, from A to A-minus, class M3, from A-minus to BBB, class B1, from BBB-plus to BB-plus, class B2, from BBB to BB, and class B3, from BBB-minus to B. Fitch also affirmed the ratings on four classes from the two deals. The downgrades were attributed to deterioration in the relationship between credit enhancement and loss expectations.

Twenty classes from nine Morgan Stanley issues of subprime mortgage-backed securities have been downgraded by Fitch Ratings.The rating agency also placed four classes on Rating Watch Negative and affirmed the ratings on 35 issues from 10 Morgan Stanley MBS issues. The negative rating actions were attributed to a deterioration in the relationship between credit enhancement and loss expectations.

Over 100 classes of subprime residential mortgage-backed securities with outstanding balances totaling more than $2 billion were downgraded by Fitch Ratings on Aug. 9.Fitch also affirmed the ratings on classes with outstanding balances of more than $18 billion. Among the downgrades were the following mortgage pass-through certificates: 48 classes from 11 SAIL issues; 42 classes from six Structured Asset Securities Corp. issues; and 11 classes from two BNC issues. Fitch reported that as of the end of the day on Aug. 9, it had downgraded 671 classes (with an outstanding balance of $12 billion) from subprime RMBS deals placed Under Analysis on July 12 and affirmed the ratings on 1,189 classes with an outstanding balance of $104 billion. Fitch can be found on the Web at http://www.fitchratings.com.

Accredited Home Lenders Holding Co., San Diego, has announced the fulfillment of one of the primary conditions for closing its acquisition by Lone Star Fund V (U.S.) LP, Dallas.The mortgage banker has received regulatory approval for the deal from states representing over 95% of the places where Accredited's 2006 production came from. The Lone Star tender offer, on its second extension, is scheduled to expire on Aug. 14.

Delta Financial Corp., Woodbury, N.Y., has filed a form 12b-25, Notification of Late Filing, with the Securities and Exchange Commission for its second-quarter 10-Q.The company said it has begun to negotiate to add new sources of capital, and that the results would materially affect its financial condition. However, it said it expects to file the 10-Q within five days. In its filing, Delta said it expected to report second-quarter 2007 net income of $777,000 ($0.03 per share), compared with $7.2 million ($0.31 per share) a year earlier. Part of the reason for the decline was a $3.9 million noncash decrease in net interest income as a result of changes in prepayment assumptions. Prepayments are occurring slower than previously anticipated. The $3.9 million is now recognized as deferred revenue. Delta's provision for loan losses increased by $6.3 million during the second quarter. The increase, except for a specific provision for impaired loans, corresponds to the performance and seasoning of loans held for investment, Delta said.

Opteum Inc., Vero Beach, Fla., has filed a form 12b-25 with the Securities and Exchange Commission, notifying the regulator that it will not file its 10-Q until Aug. 14.Opteum revealed that it expects to report a loss of $162.5 million ($6.53 per share) for the quarter, with $82.0 million coming from continuing operations and $80.5 million from discontinued operations (its mortgage originations business). During the second quarter, Opteum shut its wholesale and correspondent channels and sold its retail business. It also sold $5.67 billion of its mortgage servicing portfolio. The company reached an agreement to sell the remainder of the portfolio, $2.97 billion, on July 26. "The magnitude of our second-quarter estimated losses is far greater than we could have imagined when the second quarter began, and such losses were precipitated by the now well-known developments in the secondary market for mortgage loans," said Jeffrey J. Zimmer, chairman, president, and chief executive officer. "We were unable to immunize ourselves from these developments, and our second-quarter results were significantly impacted as a result. However, unlike some other mortgage market participants, we have survived the recent market turmoil and we believe that we are well positioned for the future."

Breeden Capital Management LLC, Greenwich, Conn., the investment fund manager looking to conduct a proxy fight for board seats at H&R Block, has called on that company to "stop the bleeding at Option One."Breeden said Block has not disclosed what additional losses it has taken on Irvine, Calif.-based Option One Mortgage Corp. since it revealed that it lost $1 billion on the mortgage operation in fiscal year 2007 (ended April 30). "We are concerned about the levels of cash being infused into this unit," the Breeden statement said. "We believe the company and the board should find a strategy to curtail further growth in subprime exposure and permit prompt exit from Option One with the lowest possible net losses." Block has agreed to sell Option One to an affiliate of Cerberus Capital Management, New York. The deal is expected to close in Block's second fiscal quarter, which ends in October. However, Block filed an 8-K statement with the Securities and Exchange Commission stating that the deal may close during the third quarter of its fiscal year, on or before Dec. 31, 2007.

Subprime lender NovaStar Financial, Kansas City, Mo., has reported that it lost $54.5 million in the second quarter, noting that the nonprime securitization market "continues to be illiquid."During the quarter, NovaStar set aside $73 million for credit losses and took a $22.5 million impairment charge on mortgage securities. In the same quarter last year, the nondepository earned $33 million. Despite the loss, its shares were up slightly in trading Friday morning.

Mortgage giant Washington Mutual, Seattle -- citing the current subprime crisis -- says in a new public filing that its liquidity may be affected by its "inability to access the capital markets or by unforeseen demands on cash."As of MortgageWire's deadline, WaMu's stock was trading down $1 a share at $36. In a filing with the Securities and Exchange Commission, WaMu noted that liquidity "is essential to the company's business," adding, "liquidity in the secondary market for nonconforming residential mortgage loans and securities backed by such loans has diminished significantly." According to the Quarterly Data Report, WaMu is the nation's sixth-largest residential funder. It also ranks sixth among subprime firms.

In a new filing with the Securities and Exchange Commission, Countrywide Financial Corp. -- the nation's largest mortgage banking firm -- revealed that it had $190 billion in short-term liquidity, but that just one-quarter of it ($46 billion) "is highly reliable and available."In early trading Friday morning, its stock was down 13%, or $4 a share. Countrywide filed its 10-Q with the agency late Thursday night, a day in which world stock markets cratered amid concerns that America's subprime crisis has spread overseas, causing large losses at foreign banks that bought risky nonprime bonds and residuals. In its filing, Countrywide notes that "the secondary market and funding liquidity situation is rapidly evolving and the potential impact on Countrywide is unknown." Countrywide adds that market conditions are forcing it to hold more loans on its balance sheet. The company can be found online at http://www.countrywide.com.

HomeBanc Mortgage, Atlanta, filed for chapter 11 bankruptcy protection Thursday, listing a slew of creditors, including foreign and U.S. banks.The publicly traded nondepository -- the nation's 52nd-largest residential funder -- listed debts of $4.9 billion. However, it claims assets of $5.1 billion. Its unsecured U.S. creditors include Bear Stearns, Fannie Mae, Freddie Mac, J.P. Morgan Chase, and KeyBank, among others. Its foreign creditors include Bank Hapoalim, BNP Paribas, Commerzbank Aktiengesellschaft, and Liquid Funding of Ireland. Some of these creditors had loan repurchase requests out with the lender. Last week HomeBanc agreed to sell assets belonging to five of its retail branches to Countrywide Home Loans.

Four classes of J.P. Morgan Chase Commercial Mortgage Securities Corp. commercial mortgage pass-through certificates, series 2004-CIBC8, have been downgraded by Standard & Poor's Ratings Services.The downgrades were as follows: class J, from BB-plus to BB; class K, from BB-minus to B-plus; class L, from B to B-minus; and class M, from B-minus to CCC-plus. S&P also upgraded two classes and affirmed the ratings on 14 classes from the same transaction. The rating agency attributed the downgrades to a $13.9 million principal loss due to the liquidation of the Parkwoods Apartments loan secured by a multifamily property in Dallas. "The special servicer is attempting to recover additional proceeds on the liquidated asset by pursuing a breach of claim against the originator and claims against the former sponsor," S&P reported. The rating agency can be found online at http://www.standardandpoors.com.