Originations

Eighteen tranches from several 2001, 2002, and 2003 deals with loans originated by New Century Mortgage Corp. have been downgraded by Moody's Investors Service.In addition, five tranches have been placed under review for possible downgrade and the ratings on three tranches have been confirmed. The negative rating actions were based on "recent and expected pool losses and the resulting erosion of credit support," Moody's said. The collateral backing these classes consists primarily of first-lien, fixed- and adjustable-rate subprime mortgage loans. The deals were issued by Ace Securities Corp. Home Equity Loan Trust, Asset Backed Securities Corp. Home Equity Loan Trust, Merrill Lynch Mortgage Investors Trust, New Century Home Equity Loan Trust, and several Morgan Stanley entities. Moody's can be found online at http://www.moodys.com.

Michael House has been named to the newly created post of senior vice president of loan acquisitions at Arbor Realty Trust Inc., a real estate investment trust based in Uniondale, N.Y.Mr. House will focus on acquiring whole loans, B-notes, mezzanine loans, and other real estate debt instruments from investment banks and commercial lending institutions, the REIT said. Mr. House was most recently vice president and group head of real estate capital markets at Genworth Financial. He has "extensive experience in underwriting and analyzing nearly all property types," said Ivan Kaufman, chairman and chief executive officer of Arbor Realty. The REIT, which specializes in real-estate-related bridge and mezzanine loans, can be found online at http://www.thearbornet.com.

T REIT Inc., a real estate investment trust based in Santa Ana, Calif., has announced that it intends to enter into a liquidating trust agreement on or about July 16 to wind up the REIT's affairs and liquidate its assets.The company said it expects to transfer, on or about July 20, its then-remaining assets to the trustee of the T REIT Liquidating Trust, which will also assume any remaining liabilities of the REIT. The company's stock transfer books will be closed as of July 16. The formation of the liquidating trust is in accordance with the company's shareholder-approved plan of liquidation, T REIT said. In addition, Triple Net Properties LLC, the holder of a special limited-partner interest in the REIT's operating partnership, will agree to a complete redemption of its interest in exchange for $1.00, the REIT reported. Triple Net Properties can be found online at http://www.1031nnn.com.

A newly enhanced index that ranks metropolitan statistical areas based on the risk of declining home prices indicates "a shift in risk toward Florida and California, as well as certain areas of the Southwest," according to PMI Mortgage Insurance Co., Walnut Creek, Calif.PMI said its U.S. Market Risk Index now features risk ranks that combine areas with consistent characteristics. The MSAs ranking highest on the index, with at least a 60% chance that home prices will decline over the next two years, are Riverside, Calif.; Phoenix; Las Vegas; and West Palm Beach, Fla. Five of the 11 MSAs facing a greater than 50% (but less than 60%) chance of price decline are in California (Los Angeles, Santa Ana, Oakland, Sacramento, and San Diego) and four are in Florida (Orlando, Fort Lauderdale, Miami, and Tampa), PMI reported. "Our new model gives more weight to the recent volatility of an area's price movements and is better suited for the vastly different market we are in today," said Mark F. Milner, chief risk officer of PMI Mortgage Insurance. "Our prior model, in contrast, was tuned to the rapidly appreciating market we were in from 2002 to 2006." PMI can be found online at http://www.pmigroup.com.

The Market Composite Index, an overall measure of mortgage applications, fell from 666.5 to 643.7 on a seasonally adjusted basis during the week ended June 15, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey.On an unadjusted basis, applications decreased 4.1% on the week but were up 13.2% from the level recorded a year earlier. The Purchase Index fell from 464.7 to 450.9 on a seasonally adjusted basis, while the Refinance Index declined from 1854.8 to 1776.8. Refinancings represented 38.0% of total applications, unchanged from the previous week, while adjustable-rate mortgages accounted for 20.3%, the MBA said. The average contract interest rate for 30-year fixed-rate mortgages dipped from 6.61% to 6.60%, and points (including the origination fee) rose from 1.44 to 1.58 for loans with 80% loan-to-value ratios, the association reported. The MBA can be found online at http://www.mortgagebankers.org.

Morgan Stanley Real Estate has announced the completion of fundraising for what it calls the largest-ever real estate fund, with $8 billion of equity commitments from investors in North America, Europe, the Middle East, and Asia.Morgan Stanley said it invested just over 20% of the equity raised for the fund, MSREF VI International, which it said has buying power in excess of $30 billion. Investments include non-U.S. real estate assets, portfolios, and companies, primarily in developed markets such as Japan, Western Europe, and Australia and emerging markets such as China, India, Russia, Turkey, and Latin America, the company said. "We believe that attractive opportunities to invest in real estate around the globe will continue as demand for all asset types outpaces supply," said Sonny Kalsi, managing director and global co-head of Morgan Stanley Real Estate Investing. "Global employment growth, an aging population in the West, a growing population in the East, and accelerating urbanization in many emerging markets will drive the need for all types of quality real estate." The company can be found online at http://www.morganstanley.com.

National City Home Equity, Cleveland, has announced a new organizational structure that creates two U.S. divisional sales territories: the Eastern Division, headed by Mike Kelly, and the Western Division, headed by Terry McChrystal.Mr. Kelly joined National City as the credit and business risk manager in 2000, the company said. He was previously head of operational risk management at Chase Manhattan Mortgage and held management post in Chase's consumer products division. National City said Mr. McChrystal joined the company in 2002 as retail sales manager and later managed sales support for National City Mortgage. He previously worked with Record Data Inc., TRW Real Estate Loan Services, Strategic Mortgage Services, and Mortgage Information Services. National City can be found online at http://www.nationalcity.com.

Members of the House Financial Services Committee are asking the Securities and Exchange Commission for guidance on restructuring troubled subprime loans in mortgage-backed securities so that servicers can prevent foreclosures.In a letter to the SEC, the committee members note that a lack of clarity is causing some servicers to refrain from making loan modifications for "fear" of violating the Financial Accounting Standard Board's servicing rule (FAS 140). "Does FAS 140 clearly address whether a loan held in trust can be modified when default is reasonably foreseeable or only once a delinquency or default has already occurred?" the June 15 letter inquires. "If not, can it be clarified in a way that will benefit both borrowers and investors?" Separately, the SEC, federal banking agencies, the Internal Revenue Service, the Big Four accounting firms, and mortgage industry officials are scheduled to meet with FASB members and staff on June 22 to discuss similar servicing issues involving loan modifications.

HRPT Properties Trust, Newton, Mass., has priced an offering of $250 million of 6.25% notes due 2017.The real estate investment trust said it plans to use the net proceeds of the offering to reduce debt under its revolving credit facility. The joint book-running managers for the offering were Wachovia Securities, Banc of America Securities LLC, and RBC Capital Markets. HRPT, a real estate investment trust, can be found on the Internet at http://www.hrpreit.com.

Industry lobbyists are trying to tone down a nonbinding resolution sponsored by Rep. Elijah Cummings, D-Md., that would put the House on record in support of tough predatory-lending legislation.The resolution points out that the subprime market has created opportunities for predatory lending and that irresponsible subprime lending has contributed to rising foreclosures rates. "It is the sense of the Congress that legislation should be enacted that protects buyers who have been victims of unscrupulous mortgage brokers and lenders," the resolution says, adding that such legislation should include "an anti-predatory lending provision that bans unfair and deceptive practices." Lobbyists expect the House Financial Services Committee to vote on the Cummings resolution during a June 26 mark-up session -- but the committee has not placed it on the agenda yet. Wright Andrews, executive director of the Coalition for Fair and Affordable Lending, said he expects the resolution to be refined before a mark-up. "The congressman's resolution is well-intentioned, but it could lead to unintended consequences for, not only industry, but the people he is interested in protecting," Mr. Andrews said.

Democrats on the House Financial Services Committee have introduced a bill to extend the federal government's terrorism insurance program by 10 years and expand insurance coverage for nuclear, biological, chemical, and radiological acts of terrorism.The bill also adds group life insurance to the lines of insurance for which terrorism coverage must be made available. "We need to keep in perspective that this bill is necessary for economic development and to protect property owners, building tenants, developers, and people who work or live in high-risk areas," said Financial Services Committee Chairman Barney Frank, D-Mass. The first House hearing on the terrorism insurance bill is scheduled for June 21. Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., said he supports an extension of the Terrorism Risk Insurance Act. "I will examine the House bill as part of this committee's ongoing work to find a more permanent solution to ensure that TRIA's proven economic protections are retained and extended," Sen. Dodd said.

Homebuilders are becoming more pessimistic as higher mortgage rates and tighter subprime lending standards undermine new-home sales, according to an industry survey that shows builder confidence hit a 16-year low in June.The National Association of Home Builders/Wells Fargo Housing Market Index fell to 28 in June, down from 30 in May and 42 in June 2006. "Builders continue to report serious impacts of tighter lending standards on current sales as well as cancellations, and they continue to trim prices and offer a variety of nonprice incentives to work down sizable inventory positions," said NAHB president Brian Catalde. NAHB chief economist David Seiders noted that prime mortgage rates have moved up considerably in the past month. "Home sales most likely will erode somewhat further in the months ahead, and improvements in housing starts probably will not be recorded until early next year," Mr. Seiders said.

Single-family housing starts fell 3.4% in May, but the downturn in new construction appears to be leveling off."We are basically at the bottom," said Michael Swanson, senior economist at Wells Fargo Bank, Minneapolis. The U.S. Census Bureau reported that single-family starts fell from a seasonally adjusted annual rate of 1.21 million in April to 1.17 million in May. April starts were revised downward by 14,000 units. Compared with those of May 2006, single-family starts are down 26%. "When you look at the number of homes that we are starting [per capita], it is extremely low," Mr. Swanson said. "You cannot stay this low for very long." The Wells Fargo economist said it could be another couple of quarters before single-family starts "perk back up." And he said he expects builders to shift from high-end homes to simpler homes because financing costs have risen.

Class B-1 of First Franklin Mortgage Loan Trust series 2006-FFB has been placed on review for possible downgrade by Moody's Investors Service.The action was based on the fact that the credit enhancement levels may be too low to cover projected losses, the rating agency said. The securitization is backed by closed-end subprime second-lien loans.

Two classes of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CIBC1, have been downgraded by Fitch Ratings.Class K was downgraded from B-minus to CCC/DR1, and class L was downgraded from CC/DR4 to C/DR6. Fitch also upgraded two classes in the deal and affirmed the ratings on nine other classes. The rating agency attributed the downgrades to expected losses on two specially serviced loans. Fitch can be found online at http://www.fitchratings.com.

Two classes of the Soundview Home Loan Trust 2006-A transaction have been downgraded by Moody's Investors Service and placed on review for possible further downgrade, and four others have been placed on review for possible downgrade.Class M-10 was downgraded from Ba1 to B3, and class M-11 was downgraded from Ba2 to Caa2. The securities placed on review for possible downgrade are classes M-6, M-7, M-8, and M-9. The negative rating actions were attributed to credit enhancement levels, including excess spread, that "may be too low compared to the current projected loss numbers at the current rating level," Moody's said. The transaction is backed by subprime second-lien loans.

Four classes of certificates from MASTR Second Lien Trust series 2006-1 have been downgraded by Moody's Investors Service, three of which are being maintained on review for possible downgrade.The downgrades were as follows: class M-7, from B3 to C; class M-4, from Baa1 to Ba3; class M-5, from Baa2 to B3; and class M-6, from Baa3 to Caa3. Classes M-4, M-5, and M-6 were maintained on review for possible further downgrade. In addition, classes M-2 and M-3 were placed on review for possible downgrade. "These actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread relative to the expected loss," Moody's said. The transaction is backed by closed-end subprime second-lien loans.

Nine classes of New Century Home Equity Loan Trust series 2006-S1 have been downgraded by Moody's Investors Service, six of which have been maintained on review for possible further downgrade.Moody's also confirmed the rating on one certificate from the deal. The negative rating actions were attributed to the fact that credit enhancement levels may be too low to maintain current rating levels in view of projected losses. The transaction is backed by subprime second-lien loans.

Ten classes from Fremont Home Loan Trust series 2006-B have been downgraded by Moody's Investors Service, and nine of them have been maintained on review for possible further downgrade.The negative rating actions were based on credit enhancement levels, including excess spread, that may be too low in view of the projected losses, the rating agency said. The transaction is backed by subprime second-lien loans.

Nineteen classes from four GSAMP Trust securitizations have been downgraded by Moody's Investors Service, and 21 classes (including eight of those downgraded) have been placed on review for possible downgrade.The negative rating actions stemmed from the fact that credit enhancement levels are low given the projected losses on the underlying pool, Moody's said. The transactions consist of subprime second-lien fixed-rate loans. The primary originators were Fremont Investment & Loans, IndyMac Bank FSB, Long Beach Mortgage Co., and New Century Mortgage Co.